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Strategic Financial Relations (China) Limited
Anita Cheung / Flora Ng / Joan Wong
Phone: (852) 2864 4827 / 2864 4837 / 2864 4839
(Hong Kong, 24 April 2001) - Founder Holdings Limited ("Founder" or the "Group") (stock code: 418), a leading software developer and systems integration provider, today announced its annual results for the year ended 31 December 2000.
For the year 2000, the Group achieved a turnover of HK$2,088 million, representing an increase of 32% as compared to the previous year. Gross profit doubled to HK$434 million with margins improving to 20.8% from 12.6%. Net profit attributable to shareholders rebounded to HK$181 million from a loss of HK$223 million recorded in the previous year. Earnings per share was HK16.2 cents against a loss per share of HK23.4 cents in 1999. Net assets per share also increased to HK$0.68 from HK$0.50 in 1999.
The Board of Directors does not recommend the payment of a final dividend for the year ended 31 December 2000.
Mr. Alan Cheung, President and Executive Director of Founder, said, "We are very pleased to announce that the Group rebounded to profitability. During the year, our business expanded successfully beyond the media sector into the financial and banking, insurance, government and other sectors. We will continue to ride on this positive trend to maximize our business opportunities."
In 2000, while the business from software development and systems integration for the media sector increased by 2%, business for the non-media sector grew over 168%. These two businesses accounted for around 31% and 40% respectively of the Group's total turnover. Software development and systems integration for the non-media sector, with its appealing gross margin of 29.7%, contributed to approximately 58% of the Group's gross profit. Software development and systems integration for the media sector contributed 36%, and the rest of around 6% was provided by the sales of information products, where the margin improved to 4.8% from 2.2%.
Mr. Cheung continued, "The rapid growth in our business in the non-media sector was mainly attributable to the acquisition of Beijing Founder Order Computer System Company Limited ("Beijing Founder Order") in the second half of 1999. Through Beijing Founder Order, we successfully established a strong clientele in the financial and banking, insurance, aviation, government, telecom and electric power sectors in the PRC. Currently, we are the largest computer system provider for the Industrial and Commercial Bank of China."
"As for our business in software development and systems integration for the media sector, our customer base has spread across most of the industries under this sector, including newspapers, publishing, commercial printing, television and broadcasting. It has also expanded beyond the PRC and Hong Kong to Japan, Malaysia, Singapore, Taiwan, Korea, Canada and the United States. During the year, we upgraded a number of electronic publishing systems which can be based upon the internet infrastructure using a browser interface."
With regard to the sales of information products, the Group currently represents and distributes over 10 product lines for its own brands as well as for well-known international brands such as Sun Microsystems, IBM, Apple Computers, Compaq and 3Com. The product lines include servers, workstations, notebook computers, laser printers, ink-jet plotters, scanners and networking products.
In September 2000, Founder disposed of all its 70% interest in Founder Data Corporation International Limited to Hong Kong-listed Management Investment & Technology (Holdings) Limited ("MITH") (stock code: 618) and subscribed to 16 million shares of MITH. MITH then changed its name to EC-Founder (Holdings) Company Limited ("EC-Founder"), and has now become a 39.45% Founder owned associated company.
"EC-Founder is the flagship of Founder's non-media e-commerce business on the Stock Exchange of Hong Kong." Mr. Cheung said, "EC-Founder, having gained a listing status of its own, will be able to operate more independently, enjoy more readily accessible financial resources and expand its e-commerce business at full speed, in view of the escalating e-commerce demand in today's internet era."
"We are also pleased to introduce Softbank, the renowned international capital investor, and Mitsubishi, the renowned international trading corporation, as strategic investors of Founder International Inc., our subsidiary for developing business in Japan. With the help of these two partners, we can explore the Japanese market much more successfully. At present, we have already won a number of contracts in relation to e-marketing solutions in Japan."
At the end of 2000, Founder established additional research and development teams in Zhuhai, Wuhan, Shenzhen and Toronto in addition to its facilities in Beijing, nesting a strong force totally over 600 professionals in this area. Based on its advanced technology on Chinese electronic publishing systems, the Group developed the Eagle RIP System, which will be marketed to western countries. With the use of the fingerprint technology developed by Peking University Founder Group Corporation, the Group is currently developing a number of industrial and consumer products. These fingerprint products are expected to be available for marketing in the second half of 2001. In addition, the "e-book" integration system, developed for the media sector by the Group, is expected to be introduced to the market in early 2002. The trial test conducted by students of Peking University in December 2000 resulted in a highly encouraging response.
Mr. Cheung concluded, "At the moment, we have net cash of HK$196 million with a low long term debt to equity ratio at 0.5%. Leveraging this strong financial position and our leadership rose in software development and systems integration, we will accelerate our business expansion across the media and non-media sectors, in both the PRC and overseas markets. Currently, we have contracts on hand amounting to over HK$460 million, and are extremely confident of Founder's performance in the future."
Website: www.founder.com.hk www.irasia.com/listco/hk/founder
AUDITED RESULTS
The Board of Directors (the "Board") of Founder Holdings Limited announces the audited results of Founder Holdings Limited and its subsidiaries (together the "Group") for the year ended 31 December 2000 as follows:
Year ended 31 December
2000 1999
HK$'000 HK$'000
TURNOVER 2,087,853 1,583,073
Cost of sales (1,653,433) (1,382,910)
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Gross profit 434,420 200,163
Other income 193,608 6,019
Selling and distribution costs (178,078) (132,792)
Administrative expenses (186,843) (171,088)
Other operating expenses (69,368) (120,803)
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PROFIT/(LOSS) FROM OPERATING ACTIVITIES 193,739 (218,501)
Finance costs (9,065) (9,552)
Share of profits and losses of:
Jointly-controlled entities 1,445 5,602
Associates (6,499) -
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PROFIT/(LOSS) BEFORE TAX 179,620 (222,451)
Tax (Note 2) (1,315) (879)
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PROFIT/(LOSS) BEFORE MINORITY INTERESTS 178,305 (223,330)
Minority interests 2,701 259
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NET PROFIT/(LOSS) FROM ORDINARY ACTIVITIES
ATTRIBUTABLE TO SHAREHOLDERS 181,006 (223,071)
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EARNINGS/(LOSS) PER SHARE (Note 3)
- Basic 16.2 cents (23.4) cents
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- Diluted 15.9 cents N/A
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Notes:
1. Basis of consolidation
The consolidated financial statements have been prepared using the merger basis of accounting. Under this basis, the Company has been treated as the holding company of the subsidiaries acquired pursuant to the Group reorganisation under a scheme of arrangement sanctioned by the High Court of Court of First Instance Hong Kong which became effective on 31 March 2000 for both years presented rather than from the date of their acquisition. Accordingly, the consolidated results and cash flows of the Group for the years ended 31 December 1999 and 2000 include the results and cash flows of the Company and its subsidiaries acquired pursuant to the Group reorganisation as from 1 January 1999 or since their respective dates of incorporation where there is a shorter period. Other subsidiaries established, acquired or disposed of subsequent to the Group reorganisation are consolidated from or to the dates of their establishment, acquisition or disposal. The comparative consolidated balance sheet as at 31 December 1999 has been prepared on the basis that the Group reorganisation was in place at that date. This basis has been consistently adopted for the preparation of comparative amounts in the financial statements.
2. Tax
Year ended 31 December
2000 1999
HK$'000 HK$'000
Group:
Elsewhere 1,033 879
Share of tax attributable to associates 282 -
----------- -----------
Tax charge for the year 1,315 879
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No Hong Kong profits tax has been provided as there were no assessable profits arising in Hong Kong during the year.
Beijing Founder Electronics Company Limited, a wholly owned PRC subsidiary of the Group, is subject to PRC profits tax at 50% of its standard tax rate for the three fiscal years commencing 1 January 1998 and ending 31 December 2000. Beijing Founder Order Computer System Company Limited, a wholly owned PRC subsidiary of the Group, is exempted from PRC profits tax for the three fiscal years commencing in 1999 and ending 31 December 2001 and, thereafter will be taxable at 50% of its standard tax rate in the fourth to sixth years, inclusive. At present, the standard tax rate applicable to the PRC subsidiaries is 15%. No provision for PRC profits tax has been made as the relevant PRC subsidiaries were either under the tax free period or incurred losses during the year.
Taxes on profits assessable elsewhere have been calculated at the applicable rates of tax prevailing in the countries in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.
There was no significant unprovided deferred tax in respect of the year (1999: Nil).
3. Earnings/(loss) per share
The calculation of basic earnings/(loss) per share is based on the net profit attributable to shareholders for the year of HK$ 181,006,000 (1999: loss of HK$223,071,000) and the weighted average number of 1,116,405,000 (1999: 951,275,000) ordinary shares in issue during the year.
The calculation of diluted earnings per share is based on the net profit attributable to shareholders for the year of HK$181,006,000. The weighted average number of ordinary shares used in the calculation is 1,116,405,000 ordinary shares in issue during the year, as used in the basic earnings per share calculation, and the weighted average of 23,986,000 ordinary shares assumed to have been issued at no consideration on the deemed exercise of all share options during the year.
Diluted loss per share for the year ended 31 December 1999 has not been calculated as the impact of the outstanding share options was anti-dilutive.
DIVIDEND
No interim dividend was paid during the year and previous year. The Directors do not recommend the payment of any final dividend for the year (1999 : Nil).
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