20. DEFERRED TAXATION
The major components of the provision for deferred taxation at the balance sheet date are as follows:
Deferred taxation has not been provided on the deficit arising on the valuation of investment properties as gain or loss arising on the disposal of these properties would not be subject to taxation. Accordingly, the revaluation does not constitute a timing difference for tax purposes.
Neither the Group nor the Company had any significant unprovided deferred taxation for the year or at the balance sheet date.
The Company had no borrowings at the balance sheet date.
The Company had no obligations under finance leases at the balance sheet date.
On 1st April, 1998, the Group acquired an additional 37.5% interest in Lung Kee Malaysia, details of this are set out in note 12(a). The fair value of assets acquired and liabilities assumed was as follows:
Lung Kee Malaysia contributed HK$19,738,229 to the Group's turnover and incurred an operating loss of HK$8,258,015 during the year and it did not contribute significantly to the cash flows of the Group.
Minority interests at 31st March, 1999 included amount payable to minority shareholders of subsidiaries of HK$7,319,000 (1998: HK$8,000,000).
The Company had no material capital commitments at the balance sheet date.
At the balance sheet date, the Group had annual commitments payable within the next year under non-cancellable operating leases in respect of rented premises as follows:
The Company had no material operating lease commitments at the balance sheet date.
The Group operates a defined contribution retirement benefits scheme for all qualifying employees employed by the Group in Hong Kong. The assets of the scheme are held separately from those of the Group in funds under the control of trustees.
The retirement benefits cost charged to the profit and loss account represents contributions payable to the scheme by the Group at rates specified in the rules of the scheme. Where there are employees who leave the scheme prior to vesting fully in the contributions, the contributions payable by the Group are reduced by the amount of forfeited contributions.
At 31st March, 1999, the Group had no material forfeited contributions which arose upon employees leaving the retirement benefits scheme and which are available to reduce the contributions payable in future years (1998: nil).
THE GROUP
1999 1998
HK$ HK$
At beginning of the year 8,615,000 8,615,000
Credit for the year (note 6) (1,866,000) -
---------- ----------
At end of the year 6,749,000 8,615,000
========== ==========
THE GROUP
1999 1998
HK$ HK$
Taxation effect of timing differences attributable to:
Excess of depreciation allowances claimed
for tax purposes over depreciation charged
in the financial statements 9,535,400 10,470,500
Other timing differences (2,786,400) (1,855,500)
---------- ----------
6,749,000 8,615,000
========== ==========
21. BORROWINGS
THE GROUP
1999 1998
HK$ HK$
Bills payable 10,523,329 16,927,878
Trust receipt loan 1,290,000 -
Syndicated bank loan 80,000,000 146,481,91
Short-term bank loan 12,900,000 -
Mortgage loan - 510,457
104,713,329 163,920,245
=========== ===========
Secured - 2,351,552
Unsecured 104,713,329 161,568,693
=========== ===========
104,713,329 163,920,245
=========== ===========
The borrowings are repayable within a period of:
-- not exceeding one year or on demand 24,713,329 17,438,335
-- more than one year but not exceeding
two years 80,000,000 -
-- more than two years but not exceeding
five years - 146,481,910
----------- -----------
104,713,329 163,920,245
Less: amount due within one year shown
under current liabilities (note 15) 24,713,329 17,438,335
----------- -----------
Amount due after one year 80,000,000 146,481,910
=========== ===========
22. OBLIGATIONS UNDER FINANCE LEASES
THE GROUP
1999 1998
HK$ HK$
The maturity of the principal portion of the obligations
under finance leases is as follows:
-- not exceeding one year 2,227,236 2,391,904
-- more than one year but not
exceeding two years 1,299,767 2,622,895
----------- -----------
3,527,003 5,014,799
Less: amount due within one year shown
under current liabilities (note 15) 2,227,236 2,391,904
----------- -----------
Amount due after one year 1,299,767 2,622,895
=========== ===========
23. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES
THE GROUP
1999 1998
HK$ HK$
Operating profit 94,727,528 151,617,737
Dividend income - (22,857)
Interest income (6,190,761) (4,744,709)
Interest expense and finance charges 10,060,624 8,402,283
Deficit arising on revaluation of
investment properties 2,855,913 -
Depreciation and amortisation 64,383,597 52,837,132
Gain on disposal of fixed assets (1,047,781) (220,381)
Gain on disposal of listed investments - (624,109)
Provision for diminution in value in a
jointly controlled entity 2,904,824 -
Capital reserve realised on liquidation
of a subsidiary (151,827) -
Decrease (increase) in inventories 21,733,860 (10,437,619)
Decrease in debtors, deposits and prepayments 33,025,486 6,714,957
Decrease (increase) in bills receivable 3,026,714 (2,338,625)
Decrease (increase) in amounts due from
jointly controlled entities 12,418,894 (716,538)
(Decrease) increase in creditors and
accrued charges (9,517,881) 5,577,158
(Decrease) increase in bills payable (6,404,549) 2,201,300
Exchange differences 350,208 1,383,168
----------- -----------
Net cash inflow from operating activities 222,174,849 209,628,897
=========== ===========
24. ACQUISITION OF A SUBSIDIARY
THE GROUP
1999 1998
HK$ HK$
Fixed assets 11,574,267 -
Inventories 3,950,906 -
Debtors, deposits and prepayments 6,499,770 -
Bank balances and cash 327,001 -
Creditors and accrued charges (10,079,817) -
Obligations under finance leases (1,207,347) -
Bank loans (11,782,702) -
Minority interests 179,480 -
----------- -----------
Net liabilities (538,442) -
Goodwill arising on acquisition 1,710,850 -
----------- -----------
1,172,408 -
=========== ===========
Satisfied by:
Cash 1,811,605 -
Transfer from interests in jointly
controlled entities (248,394) -
Minority interests (390,803) -
----------- -----------
1,172,408 -
=========== ===========
Analysis of net outflow of cash in respect
of the acquisition of a subsidiary:
Cash consideration paid (1,811,605) -
Bank and cash balances acquired 327,001 -
----------- -----------
Net outflow of cash in connection
with the acquisition of a subsidiary (1,484,604) -
=========== ===========
25. ANALYSIS OF CHANGES IN FINANCING DURING THE YEAR
Obligations
under
Bank finance Minority
loans leases interests
HK$ HK$ HK$
At 1st April, 1998 146,992,367 5,014,799 127,053,343
New bank loan raised 12,900,000 - -
Repayment of bank loans (78,775,069) - -
Repayment of obligations under
finance leases - (2,695,143) -
Dividend paid to minority
shareholders of a subsidiary - - (6,500,000)
Repayment to a minority shareholder
of a subsidiary - - (381,000)
Other movements not involving
cash flows:
On acquisition of a subsidiary 11,782,702 1,207,347 -
Minority share of profit for the year - - 16,642,957
Minority share of exchange reserve - - 142,592
Minority share of goodwill written
off to reserve - - (570,283)
----------- ---------- -----------
At 31st March, 1999 92,900,000 3,527,003 136,387,609
=========== ========== ===========
26. CAPITAL COMMITMENTS
THE GROUP
1999 1998
HK$ HK$
Capital expenditure in respect of the
acquisition of fixed assets contracted
for but not provided in the
financial statements 5,878,000 28,206,000
=========== ===========
27. OPERATING LEASE COMMITMENTS
THE GROUP
1999 1998
HK$ HK$
Operating leases which expire:
-- within one year 285,605 1,134,558
-- more than one year but not exceeding
five years 1,709,785 478,619
-- over five years 581,958 539,435
2,577,348 2,152,612
=========== ===========
28. CONTINGENT LIABILITIES
THE GROUP THE COMPANY
1999 1998 1999 1998
HK$ HK$ HK$ HK$
Guarantees given to financial
institutions in respects of
facilities granted to:
-- jointly controlled
entities 14,190,000 25,330,000 - -
-- subsidiaries - - 149,000,000 200,100,000
---------- ---------- ----------- -----------
14,190,000 25,330,000 149,000,000 200,100,000
========== ========== =========== ===========
29. RETIREMENT BENEFITS SCHEME
Source: Lung Kee (Bermuda) Holdings Limited
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