Kwong Hing International Holdings (Bermuda) Limited

(Incorporated in Bermuda with limited liability)

FINAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31ST MARCH, 2001

The Board of Directors (the “Board”) of Kwong Hing International Holdings (Bermuda) Limited (the “Company”) announced the audited annual results of the Company and its subsidiaries and associate (the “Group”) for the year ended 31 March 2001 together with comparative figures for the year ended 31 March 2000 as follows

		2001		2000
	Notes	HK$’000		HK$’000
Turnover	1	371,177		343,664
Cost of sales		(335,251	)	(313,825	)
Gross profit		35,926		29,839
Other revenue		2,311		3,409
Selling expenses		(6,110	)	(6,628	)
Administrative expenses		(18,718	)	(19,140	)
Provision for bad and doubtful debts		(6,870	)	259
Unrealised gain on trading securities		9		-
Profit from operations		6,548		7,739
Finance costs		(347	)	(1,691	)
Impairment loss recognised in respect of other securities		(9,409	)	-
Share of loss of an associate		(13,277	)	-
(Loss) profit before taxation		(16,485	)	6,048
Taxation	2	(402	)	(331	)
Net (loss) profit for the year		(16,083	)	6,379
(Loss) earnings per share	3
Basic and diluted		(1.01) cents		0.52 cents

Notes:

1. SEGMENTAL INFORMATION

Sales of knitted fabrics and dyed yarns account for more than 90% of the Group’s turnover for the year ended 31st March, 2001, substantially all of which are made to customers based in Hong Kong.

	2001	2000
	HK$’000	HK$’000
The turnover comprises:
Sale of goods	365,963	336,023
Subcontracting fee income	5,214	7,641
	371,177	343,664

2. TAXATION

	2001		2000
	HK$’000		HK$’000
The taxation (credit) charge comprises:
Hong Kong Profits Tax	13		16
Overseas taxation	55		83
	68		99
Deferred taxation
Current year	(470	)	(430	)
	(402	)	(331	)

Hong Kong Profits Tax is calculated at 16% of the estimated assessable profit for both years. Overseas taxation is calculated at the rates prevailing in the respective jurisdictions.

3. (LOSS) EARNINGS PER SHARE

The calculation of the basic and diluted (loss) earnings per share is based on the following data:

	2001		2000
	HK$’000		HK$’000
(Loss) earnings for the purposes of basis and diluted (loss) earnings per share	(16,083	)	6,379
Weighted average number of ordinary shares for the purposes of basic (loss) earnings per share	1,587,794,521		1,231,797,814
Effect of dilutive potential ordinary shares in respect of share options	-		259,970
Weighted average number of ordinary shares for the purposes of diluted (loss) earnings per share	1,587,794,521		1,232,057,784

The exercise of the share option outstanding during the year ended 31st March, 2001 would result in reduction in loss per share.

RESULTS

For the year ended 31st March, 2001, turnover was approximately HK$371,177,000 which represents a growth of approximately 8% over that of the previous year. Net loss attributable to shareholders was approximately HK$16,083,000 as compared with a net profit of approximately HK$6,379,000 last year. This was mainly attributable to the impairment provision of losses for approximately HK$22,686,000 which were made and shared by the Group.

DIVIDEND

The Directors do not recommend the payment of a dividend for the year ended 31st March, 2001 (2000: Nil).

BUSINESS REVIEW

For the year ended 31st March, 2001, despite the difficult business environment resulted from extreme competition and increase of production cost, the Group recorded a turnover of approximately HK$371,177,000 and gross profit of approximately HK$35,926,000 in comparison to approximately HK$343,664,000 and HK$29,839,000 respectively last year. The improvement was mainly attributed to the expansion of Group’s diversified production capacity which enables the Group to provide excellent services as well as high quality products to its customers. Moreover, the Group has continuously controlled its production costs and overhead expenses which improved its gross margin despite price reduction in the Group’s products due to severe competition in the market. As a result, the profit from operation before provision of bad and doubt debt of HK$6,870,000 was approximately HK$13,418,000 representing a growth of approximately 79% over that of last year. Moreover, the finance cost was also reduced to HK$347,000 from HK$1,691,000 of previous year. However, due to provision for the impairment loss in respect of other securities and share of the loss from an associate and the provision for bad and doubt debt made by the group under the prudent approach adopted by the Board, the Group recorded a net loss of HK$16,083,000 this year.

During the year, management has focused on controlling its operation cost and satisfactory results have been achieved. Under the extreme competitive environment, the Group could still maintain its production cost and overhead expenses at its normal level, proofing the success of the Group’s effective cost management and its competitiveness in the industry.

During the year under review, the Group invested approximately HK$20,000,000 in property, plant and equipment to upgrade its factory and production facilities as to increase its productivity and to enhance its production quality. These investments and previous capital investments have strengthened Group’s competence, as well as its market position, and contributed additional revenues to the Group.

The Group had acquired 7% of shareholding of Victory Tech Investment Limited with an option of acquisition of its further 8% interest within one year commenced from 21st July, 2000, such option was not exercised. Moreover, the Group had also acquired 40% of issued share capital of Global Network Holdings Limited, which in turn hold 8% of shareholding of China Medicine On-line Company Limited. However, worldwide financial market suffered dramatic decline in 2000 leading to a consequence of significant and unfavourable valuation adjustments, especially against high tech investments not limited to internet companies which caused the Group to make provision for impairment loss of HK$9,409,000 in respect of other securities and have to share the loss of HK$13,277,000 from an associate which also mainly arisen from the provision for impairment loss for the investment in securities held by the associate.

PROSPECTS

The Group will continuously upgrade and expand its factory and production facilities so as to increase its productivity and to enhance its product quality. These upgrading and expansion will also lower our production cost.

Moreover, the Group will continuously pursue its cautionary credit policy for its customers and continuously improve its product quality, cost and inventory control measures.

Despite the business environment in the coming year is expected to remain highly competitive and challenging, the Board believes that the Group business will be improved in the coming year as the benefit from the enhanced production facilities and the above control measures will continuously contribute to the Group.

Looking forward, the Group will aim to integrate its business to become a total solution provider to create high value-added tailored products and services to the customers, and will also continue to explore any business opportunities as to achieve a better return for its shareholders.

LIQUIDITY AND FINANCIAL RESOURCES

At 31st March, 2001, the Group’s shareholders’ equity amounted to HK$291,206,000 while total debts amounted to HK$1,017,000. The ratio of total debts to shareholders’ equity is 0.35% while the current ratio is 3.6. Cash on hand was approximately HK$39,653,000. The Board believes that the Group’s sound and healthy financial position will enable the Group to discharge its debts, finance its operation and explore other business development opportunities.

STAFF AND REMUNERATION POLICIES

As at 31st March, 2001, the Group had approximately 800 employees. The Group mainly determines staff remuneration in accordance with market terms and individual qualifications.

The Company maintains a share option scheme, pursuant to which share options are granted to selected eligible executives, with a view to provide senior management with an appropriate incentive interest in the growth of the Group.

PLEDGE OF ASSETS

At the balance sheet date, certain of the Group’s leasehold land and buildings with an aggregate net book value of approximately HK$2,620,000 (2000: HK$13,848,000) have been pledged to banks as security for general banking facilities granted to the Group

PURCHASE, SALE OR REDEMPTION OF THE COMPAN’S LISTED SECURITIES

During the year ended 31st March, 2001, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

CORPORATE GOVERNANCE

The Company has complied throughout the year ended 31st March, 2001 with the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

PUBLICATION OF ANNUAL RESULTS ON THE WEBSITE OF THE STOCK EXCHANGE OF HONG KONG LIMITED

Information required by paragraphs 45 (1) to 45 (3) inclusive of Appendix 16 of the Listing Rules of The Stock Exchange of Hong Kong Limited will be published on the website of The Stock Exchange of Hong Kong Limited in due course.

By Order of the Board

Li Man Ching

Chairman

Hong Kong, 27th July, 2001

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of shareholders of Kwong Hing International Holdings (Bermuda) Limited will be held at Level 2, Ballroom B, Great Eagle Hotel, 8 Peking Road, Tsimshatsui, Kowloon, Hong Kong on Monday, 27th August, 2001 at 3:00 p.m. for the following purposes:

1. To receive and adopt the audited financial statements and the reports of Directors and Auditors for the year ended 31st March, 2001;

2. To re-elect Directors and authorize the Board of Directors to fix the Directors’ remuneration;

3. To re-appoint Auditors and authorize the Board of Directors to fix their remuneration;

4. As special business, to consider and, if thought fit, to pass the following resolutions as Ordinary Resolutions:

A. “THAT:

(a) subject to paragraph (c) of this Resolution, the exercise by the Directors of the Company during the Relevant Period (as defined below) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements and options which would or might require the exercise of such powers be and is hereby generally and unconditionally approved;

(b) the approval in paragraph (a) of this Resolution shall authorize the Directors of the Company during the Relevant Period (as defined below) to make or grant offers, agreements and options which might require the exercise of such powers after the end of the Relevant Period (as defined below);

(c) the aggregate nominal amount of share capital allotted or ageed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors of the Company pursuant to the approval in paragraph (a) of this Resolution otherwise than pursuant to (i) a Rights Issue (as defined below); or (ii) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the Bye-laws of the Company, or (iii) the exercise of rights of conversion or subscription under the terms of any securities which are convertible into shares of the Company or the share option scheme or similar arrangement of the Company for the time being adopted for the grant or issue to directors and/or employees of the Company and/or any its subsidiaries of shares or rights to acquire shares of the Company, shall not exceed the aggregate of: (aa) 20 percent of the aggregate nominal amount of the issued share capital of the Company in issue at the date of passing of this Resolution and (bb) if the Directors of the Company are so authorized by a separate ordinary resolution of the shareholders of the Company, the nominal amount of share capital of the Company purchased by the Company subsequent to the passing of this Resolution up to a maximum equivalent to 10 percent of the aggregate nominal amount of the share capital of the Company in issue at the date of passing this Resolution and the said approval shall be limited accordingly; and

(d) for the purposes of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until whichever is the earliest of:

(i) the conclusion of the next annual general meeting of the Company;

(ii) the expiration of the period within which the next annual general meeting of the Company is required to by Bermuda law or the Company’s Bye-laws to be held; and

(iii) the revocation or variation of the approval given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting; and

“Rights Issue” means an offer of shares open for a period fixed by the Directors of the Company to holders of shares on the register of members on a fixed record date in proportion to their then holdings of such shares (subject to such exclusions or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws, or the requirements of any recognized regulatory body or any stock exchange in any territory outside Hong Kong ).”

B. “THAT:

(a) Subject to paragraph (b) of this Resolution, the exercise by the Directors of the Company during the Relevant Period (as defined below) of all the powers of the Company to purchase shares in the capital of the Company be and is hereby generally and unconditionally approved;

(b) The aggregate nominal amount of the shares of the Company which the Company is authorized to purchase pursuant to the approval in paragraph (a) of this Resolution shall not exceed 10 per cent of the aggregate nominal amount of the share capital of the Company in issue at the date of passing of this Resolution, and the said approval shall be limited accordingly; and

(c) for the purposes of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until whichever is the earliest of:

(i) the conclusion of the next annual general meeting of the Company;

(ii) the expiration of the period within which the next annual general meeting of the Company is required to by Bermuda law or the Company’s Bye-laws to be held; and

(iii) the revocation or variation of the approval given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting.”

C. “THAT conditional upon the passing of Resolution no. 4B set out in the notice of this Meeting, the aggregate nominal amount of shares which are purchased by the Company pursuant to and in accordance with the said Resolution no. 4B shall be added to the aggregate nominal amount of the shares of the Company that may be allotted, issued or dealt with or agreed conditionally or unconditionally to be allotted, issued or dealt with by the Directors of the Company pursuant to and in accordance with Resolution no. 4A set out in the notice of this Meeting.”

By Order of the Board

Fung Chi Ki

Company Secretary

Hong Kong, 27th July, 2001

Notes:

(1) A member entitled to attend and vote at this Meeting is entitled to appoint a proxy or proxies to attend and vote instead of him. A proxy need not be a member of the Company.

(2) To be valid, a form of proxy, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power of attorney or authority must be deposited with the Company’s head office and principal place of business in Hong Kong at Units C-D, 8th Floor, Mai Shun Industrial Building, 18-24 Kwai Cheong Road, Kwai Chung, New Territories, Hong Kong, not less than 48 hours before the time appointed for holding this Meeting or adjourned meeting (as the case may be).

(3) The Register of Members will be closed from Tuesday, 21st August, 2001 to Monday, 27th August, 2001 (both dates inclusive) during which period no transfer of shares can be registered. All transfers of shares accompanied by the relevant share certificates and transfer forms must be lodged with the Company’s Hong Kong Share Registrar, Secretaries Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong for registration not later than 4:00 p.m. on Monday, 20th August, 2001.

(4) In respect of Resolution 4A, the Directors of the Company have no immediate plans to issue any new shares. In accordance with the terms of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong , the general mandate lapses unless it is renewed at each Annual General Meeting.

(5) An explanatory statement containing further details as regarding Resolutions 4A to 4C will be despatched to the shareholders shortly together with the annual report.

Please also refer to the published version of this announcement in the i Mail dated 30/7/2001.