INTERIM RESULTS
The directors (the "Directors") of Lung Kee (Bermuda) Holdings Limited (the "Company") are pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30th September, 1998 as follows:
Notes:
(1) Taxation
Hong Kong Profits Tax is calculated at the rate of 16% (1997: 16.5%) of the estimated assessable profit for the period. There was no significant unprovided deferred taxation for the period.
(2) Dividends
(3) Earnings Per Share
The calculation of the basic and diluted earnings per share for the six months ended 30th September, 1998 is based on the following data:
INTERIM DIVIDEND
The Directors have declared an interim dividend of 3 cents (1997: 6 cents) per share in respect of the six months ended 30th September, 1998 to be payable on 29th December, 1998 to shareholders whose names are on the Register of Members on 24th December, 1998.
BUSINESS REVIEW AND PROSPECTS
The Group enjoyed continuous growth in productivity and turnover for the first half year. However, the profit decreased when compared with last corresponding period. For the six months ended 30th September, 1998, the Group has achieved a turnover amounting to HK$344 million, representing a growth of 3.74 per cent as compared with HK$332 million for the same period in previous year. Profit attributable to shareholders for the six months ended 30th September, 1998 amounted to HK$31 million, representing a drop of 42.38 per cent as compared with HK$54 million for the same period in the previous year.
The recent Asia financial turmoil induced credit crunch for many industries. Some of the Group's customers were affected by the situation. In order to overcome the trouble of the customers, the Group has to go together with them. Therefore, the prices of the products were reduced to lower the cost of manufacturing of the customers. The drop in profit for the first half year was mainly due to this price reduction. The Directors are closely monitoring the situation and action plans are in place to improve the situation. The situation is expected to be stabilized in the second half of the financial year.
The Group's mould base business kept steady growth during this period. The plants in Hong Kong, Dongguan and Shanghai, People's Republic of China ("PRC") continued to produce quality mould base for the Group.
The Group's another core business, mould steel trading, also maintained its level. The increased varieties of mould steel products continued to bring steady contribution to the Group.
Guangzhou, PRC plant started its production in June 1998. It produces mould base for the export market. This plant will become main factory for the export market. The rented factory in Malaysia maintained its production output and managed to fulfil the customer demand. The Japanese joint venture maintained its turnover.
The new plant in Heyuan, PRC is under construction. This new plant can increase the Group's production capacity and lower the cost of mould base production. It is expected to be completed next year.
In view of the adverse economic situation, the Group has taken a few measures to reduce costs by improving operating efficiency and cutting non-essential expenses and to maintain a healthy financial position. The Directors also feel their obligation to maintain a stable society during this period of economic turmoil and have not taken severe actions in respect of drastic headcount reduction. However, the Directors will closely monitor the situation to ensure that the Group will improve its operation in future. It is still expected that its market leader position in the mould industry will be strengthened.
THE YEAR 2000 PROBLEM
The year 2000 problem arises from the practices by the computer and its related industries to store and process calendar year information in a two-digit format. With the approach of the year 2000, certain computer systems may wrongly interpret the year 2000 as year 1900, which can potentially cause many date calculation and comparison routines inside computer systems and computer-related systems to malfunction. It is therefore essential that the Group should ensure that its computer systems and computer-related equipment could overcome these problems as the year 2000 approaches.
The Group's Year 2000 compliance project is headed by the Group's in-house management information systems department which has performed a series of system improvement to bring hardware and software Year 2000 compliance. Since the Group developed its main system during 1990's, four-digit format has been used during the development phase. So it is Year 2000 compliant. All other minor systems have already undergone investigation to ensure that they are Year 2000 compliant before first half of 1999.
At present, most of the Group's computer systems are used for internal purposes such as accounting, manufacturing, document processing and communications. There is very limited business interaction with outside parties through computer systems. No major problem with customers, suppliers and other relevant parties is therefore envisaged.
However, taking into consideration the comments made in various publications which indicate that the year 2000 problem can affect a lot of areas, including public utilities and public facilities. There may also be problem areas which people may not have noticed and corrective action not yet started. The Group therefore takes the assumption that the computer and computer-related systems for all public utilities and public facilities will be operating normally in the year 2000 and will not have major adverse impact on the Group's operations.
In the current financial year, the Group spent insignificant amount on new computer equipment and application software, which have all been charged to the current year profit and loss accounts, in respect of ensuring Year 2000 compliant. Such treatment has been made in accordance with the generally accepted accounting standards.
CLOSURE OF REGISTER OF MEMBERS
The Register of Members of the Company will be closed from 18th December, 1998 to 24th December, 1998, both days inclusive, during which period no share transfers will be effected.
In order to qualify for the abovementioned dividend, all share certificates accompanied by the completed transfer forms either overleaf or separate or Standard Transfer Form, must be lodged with the Hong Kong Branch Registrars of the Company, Central Registration Hong Kong Limited of 17th Floor, 183 Queen's Road East, Hong Kong for registration not later than 4:00 p.m. on 17th December, 1998.
DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS IN SHARES
As at 30th September, 1998, the interests of the directors, chief executives and their associates in the share capital of the Company and its associated corporations recorded in the register kept by the Company pursuant to section 29 of the Securities (Disclosure of Interests) Ordinance (the "SDI Ordinance") were as follows:
Notes:
(1) Messrs. Siu Tit Lung and Siu Yuk Lung jointly held 3,734,375 shares in the Company and each owned a further 1,562,500 shares in the Company registered in their own name.
(2) Rickdee Investments Limited, which is wholly-owned by a discretionary trust of which Mr. Siu Tit Lung and his family members are beneficiaries, held 37,500,000 shares in the Company.
(3) Robin Hill Investments Limited, which is wholly-owned by a discretionary trust of which Mr. Siu Yuk Lung and his family members are beneficiaries, held 37,500,000 shares in the Company.
(4) Pan Island Investments Limited, which is wholly-owned by a discretionary trust of which Messrs. Siu Tit Lung and Siu Yuk Lung and certain members of their families are beneficiaries, held 159,375,000 shares in the Company.
As at 30th September, 1998, in addition to the interests stated above, certain directors also held share options granted to them under the Employees' Share Option Scheme of the Company and its subsidiary entitling them to subscribe for the following number of shares of the Company and its subsidiary:
Save as disclosed above and other than certain nominee shares in subsidiaries held in trust for the Group, none of the directors, chief executives or their associates have any other interests in the share capital of the Company or any of its associated corporations (as defined in the SDI Ordinance).
SUBSTANTIAL SHAREHOLDERS
As at 30th September, 1998 according to the register required to be kept under section 16(1) of the SDI Ordinance, the shareholders who were interested in 10% or more of the issued share capital of the Company were as follows:
Save as disclosed above, no other person is recorded in the register as having an interest of 10% or more of the issued share capital of the Company.
CODE OF BEST PRACTICE
During the six months ended 30th September, 1998, the directors are not aware of any information that would indicate that the Company was not in compliance with the "Code of Best Practice" as set out in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
PURCHASE, SALE OR REDEMPTION OF SECURITIES
There was no purchase, sale or redemption of shares or other securities of the Company by the Company or any of its subsidiaries during the six months ended 30th September, 1998.
On behalf of the Board
Siu Yuk Lung
Managing Director
Hong Kong, 30th November, 1998
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