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Strategic Financial Relations (China) Limited
Anita Cheung / Cynthia Ng / Karen Chen
Telephone: (852) 2864 4827 / 2864 4894 / 2864 4850
(Hong Kong, April 24, 2001) - EC-Founder (Holdings) Company Limited, ("EC-Founder" or the "Group") (stock code: 618), the PRC e-Commerce services and solutions provider, today announced its annual results for the year ended December 31, 2000.
The Group recorded an audited consolidated turnover of HK$259 million in the year 2000, compared to approximately HK$314 million in 1999. Loss attributable to shareholders recorded was approximately HK$39.8 million. Loss per share were HK 11.57cents. The Board of Directors does not recommend the payment of a final dividend.
Mr. Ricky Lei, President of EC-Founder, said, "The Group has been engaged in the manufacture and sale of electronic products over the years. Following with the successful acquisition of Founder Data Corporation International Limited from Founder Holdings Limited in September last year, the Group is now focusing on the development of e-Commerce and internet-related services and solutions businesses and changed the company name to EC-Founder (Holdings) Company Limited. Backed by a stable revenue base from the electronic products business, we will make every effort to develop the high growth and high yield IT business."
After the business acquisition and reorganization in September 2000, the Group began to develop its e-Commerce business and recorded a turnover of approximately HK$10 million and a gross profit margin of 38.2%, bringing in a gross profit of approximately HK$3.86 million to the Group. Turnover for the Group's existing electronic products business increased by 11.2% during the year, reaching approximately HK$249 million. The strong increase in the sale of semi-conductors in Singapore contributed to this growth. The gross profit margin for electronic products business was approximately 9.5%, with gross profit recording a figure of approximately HK$23.6 million. In addition, the Group terminated the low value-added lighting products trading arrangement with the joint venture company during the year, thus concluding the year with lower turnover than in 1999.
The Group recorded a loss during the year mainly due to additional operating and marketing expenses for developing the e-Commerce business and also because of the increase in production and operating expenses for the electronic products business. On the other hand, the Group received exceptional income of approximately HK$19 million in 1999 and ceased to benefit from such in 2000.
Mr Lei said, "EC-Founder intends to become a leading e-Commerce enabler in the PRC. Although reorganization of the Group's business has been completed for only a few months, there is an escalating need for e-Commerce and internet services in the PRC. With the Group's talents and technology, the reputation and market leadership of our parent company Founder Group in the PRC, and support from our two strategic partners Yahoo! and SuneVision, we believe we will accelerate the development of the Group's e-Commerce business."
Looking into the future, EC-Founder will focus on developing its e-Commerce business in four areas - network security products and solutions, enterprise information solutions, location based business intelligence and e-Finance solutions.
In the area of network security products and solutions, EC-Founder successfully developed and launched FireGate in March 2001. FireGate is the first product to obtain the highest level of firewall testing certification from the Public Security Ministry, proving the Group's sound technical capabilities. This product has also been well received by the market.
Mr. Lei said, "The information security industry will become the major sector in the PRC's IT industry. Its market size amounted to approximately RMB 5 billion in 2000, equivalent to approximately 10% of the total network products market in the PRC in 2000. Therefore, the Group will actively explore this market and targets to become one of the top three suppliers in information security products."
The Group introduced the Enterprise Application Portal (EAP) solutions to PRC enterprises in early 2001, which is comparatively more suitable for Chinese enterprises than Enterprise Resources Planning (ERP) system. Recently, the Group's EAP system has been applied to an e-commerce system of mobile phones and communication equipment company which has over 500 distributors in Hong Kong.
The Group is also committed to developing location based business intelligence arena. The application of GIS is a major area of development in the PRC's tenth 5-year plan. In view of this, the Group has developed and launched its own brand name GIS product, Founder Mirage in March 2001. It includes the professional version, the development platform, map components etc. The Group also distributes MapInfo software exclusively in the Greater China region. This software now ranks third in sales in the world market with high growth. The applications of MapInfo are broad, covering the government, industries and enterprises. Location based business intelligence can also be applied in other areas, such as logistics, enterprise business intelligence management and resources intelligence management.
In addition, the Group established an e-Finance division in the beginning of the year specializing in providing B2B platforms to the finance industry. With its strong technology background and leadership in providing excellent services, the Group successfully won two contracts from the China Construction Bank for its major customer service system, which establishes strong foundations for the Group's future. Under the contracts, the Group is mainly responsible for developing the software applications, providing a B2B transaction clearing platform and enabling real-time fund transfer and monitoring. This e-Finance transaction clearing platform allows brokerage companies to make real-time transactions with banks so that they can enjoy the advantages of the wide retail banking branch network.
Mr. Lei concludes, "In this internet era, the application of internet and e-Commerce is growing tremendously. As an "e-Commerce Enabler", the Group will provide effective e-Commerce application software to different industries. We are determined to establish EC-Founder as a leading regional e-Commerce service and solutions provider."
AUDITED RESULTS
The board of directors (the "Directors") of EC-Founder (Holdings) Company Limited (the "Company" or "EC-Founder") announces the audited consolidated results of the Company and its subsidiaries (the "Group" or "EC-Founder Group") for the year ended 31 December 2000, together with the comparative figures for the corresponding period of last year as follows:
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 31 December
2000 1999
Note HK$'000 HK$'000
TURNOVER 1 258,664 314,296
Cost of Sales (231,194) (280,115)
------------ -----------
Gross Profit 27,470 34,181
Other revenue 6,735 22,161
Selling expenses (17,678) (2,392)
Administrative expenses (48,342) (35,949)
Other operating expenses (13,708) (8,022)
------------ -----------
PROFIT /(LOSS) FROM OPERATING
ACTIVITIES (45,523) 9,979
Finance costs (7,411) (6,237)
Share of profit / (loss) of:
Jointly controlled entities 14,014 14,830
Associated companies 2,159 (1)
------------ -----------
PROFIT / (LOSS) BEFORE TAX (36,761) 18,571
Tax 2 (3,075) (531)
------------ -----------
PROFIT / (LOSS) BEFORE MINORITY
INTERESTS (39,836) 18,040
Minority interests (5) -
------------ -----------
PROFIT / (LOSS) ATTRIBUTABLE
TO SHAREHOLDERS (39,841) 18,040
============ ===========
EARNINGS / (LOSS) PER SHARE 3
- Basic (11.57 cents) 10.16 cents
============ ===========
- Diluted N/A 10.08 cents
============ ===========
Notes:
1. Turnover
(a) The analysis of turnover by activities are summarized as follows:
Year ended 31 December
2000 1999
HK$'000 HK$'000
Sale of software and provision of
e-Commerce services 10,072 -
Manufacture and sale of electronics products 248,592 314,296
---------- ----------
258,664 314,296
(b) The analysis of turnover by geographical area are summarized as follows:
Year ended 31 December
2000 1999
HK$'000 HK$'000
The People's Republic of China (the"PRC")
Hong Kong 48,272 60,687
Elsewhere 51,667 29,423
Asia 44,107 26,531
United Kingdom 26,437 29,780
United States of America ("USA") 87,291 159,910
Others 890 7,965
---------- ----------
258,664 314,296
2. Taxation
No provision for Hong Kong or overseas tax has been made in the accounts for the year as the Group no assessable profits.
Taxation on profits assessable elsewhere have been calculated at the applicable rates of tax prevailing in the countries in which the Group operates.
There was no significant unprovided deferred tax in respect of the year. (1999 : Nil)
3. Earnings / (Loss) per share
The calculation of basic loss per share is based on the net loss attributable to shareholders for the year of HK$ 39,841,000 (1999: profit of HK$18,040,000) and the weighted average of 344,219,000 (1999: 177,602,040) ordinary shares in issue during the year.
The diluted loss per share for the year ended 31 December 2000 has not been calculated as the impact of the outstanding share options was anti-dilutive.
The calculation of diluted earnings per share in 1999 is based on the net profit attributable to shareholders for the year of HK$18,040,000. The weighted average number of ordinary shares used in the calculation is 177,602,040 ordinary shares in issue during 1999, as used in the basic earnings per share calculation and the weighted average of 1,326,316 ordinary shares assumed to have been issued at no consideration on the deemed exercise of all share options during 1999.
DIVIDEND
No interim dividend was paid during the year and prior period. The Directors do not recommend the payment of any final dividend for the year (1999 : Nil)
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