Television Broadcasts Limited — Earnings Release 2001

Jul 30, 2001

Yew Sang Hong (Holdings) Limited

耀 生 行 （ 集 團 ） 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

Annual Results Announcement for the year ended 31st March, 2001

The Board of Directors (the "Board") of Yew Sang Hong (Holdings) Limited (the "Company") is pleased to announce the audited combined results of the Company and its subsidiaries (the "Group") for the year ended 31st March, 2001 together with comparative figures for the previous year as follows:

Year ended 31st March,

2001 2000

Note HK$'000 HK$'000

Turnover (2) 354,444 461,246

Cost of Sales (273,441 ) (394,551 )

Gross Profit 81,003 66,695

General and Administrative Expenses (26,136 ) (28,786 )

Profit from operations 54,867 37,909

Other Revenue 3,381 7,681

Interest Expense (1,296 ) (1,333 )

Profit before taxation 56,952 44,257

Taxation (3) (8,149 ) (7,401 )

Profit after taxation 48,803 36,856

Minority Interests (1,608 ) (625 )

Profit Attributable To Shareholders 47,195 36,231

Retained Profits, beginning of year 32,470 16,391

Dividends (6)(14,380 ) (20,152 )

Retained Profits, end of year 65,285 32,470

Earnings Per Share (4) 28 cents 21 cents

Notes:

(1) Group Reorganisation and Basis of Presentation

Yew Sang Hong (Holdings) Limited ("the Company") was incorporated in the Cayman Islands on 2nd January, 2001 as an exempted company with limited liability under the Companies Law (2000 Revision) of the Cayman Islands. The Company is an investment holding company. Its subsidiaries are principally engaged in electrical engineering contracting and trading of electrical equipment and materials. Its shares have been listed on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") since 3rd May, 2001.

Pursuant to a group reorganisation scheme in preparation for the listing of the Company's shares, the Company became the ultimate holding company of the companies comprising the group (collectively referred as "the Group") on 3rd April, 2001. The group reorganisation involved companies under common control, and the Company and its subsidiaries resulting from the reorganisation are regarded as a continuing group.

Yew Sang Hong Limited ("YSHL"), Yew Sang Hong Trading Limited ("YSHTL") and Brongham Park Limited ("BPL") are engaged in the business of electrical engineering contracting and the trading of electrical equipment and materials. During the period up to 22nd December, 2000, YSHL and YSHTL were wholly-owned by Mr. Lai Sai Sang ("Mr. Lai"), a substantial shareholder of the Company, while BPL was 70% owned by Mr. Lai. As part of the reorganisation, on 22nd December, 2000, Mr. Lai acquired the remaining 30% shareholding in BPL, which then became wholly-owned by Mr. Lai. On 3rd April, 2001, the entire issued share capital of YSHL, YSHTL and BPL were transferred by Mr. Lai to Yew Sang Hong (BVI) Limited ("YSH (BVI)"), a company wholly-owned by YSH Investments Limited ("YSHIL"), in consideration of allotment and issuance of shares by YSHIL, credited as fully paid. As at the same date, the Company acquired from YSHIL the entire issued share capital of YSH (BVI) by allotment and issuance of the Company's shares, credited as fully paid, to YSHIL.

The combined results include results of operations of the Company and its subsidiaries as if the group structure resulting from the aforementioned reorganisation executed on 3rd April, 2001 had been in existence throughout the years ended 31st March, 2000 and 2001 or since the date of incorporation of the respective group companies where this is a shorter period, except for the indirect acquisition of the 30% equity interest of BPL on 22nd December, 2000, which is accounted for using acquisition accounting.

All significant transactions and balances among the companies comprising the Group have been eliminated on combination.

(2) Turnover

An analysis of the Group's combined turnover by principal activities and their respective contributions to profit before taxation for the year ended 31st March, 2001 is as follows:

Contribution to profit before

Turnover taxation

2001 2000 2001 2000

HK$'000 HK$'000 HK$'000 HK$'000

Electrical engineering contracting 274,850 407,845 27,359 37,134

Sales of goods 79,594 53,401 29,593 7,123

354,444 461,246 56,952 44,257

No analysis of the Group's combined turnover and profit before taxation by geographical location is presented because all of the Group's combined turnover and profit before taxation for the year ended 31st March, 2001 were derived from activities carried on in Hong Kong.

(3) Taxation

The Company is exempted from taxation in the Cayman Islands until 2021. Hong Kong profits tax has been provided at the rate of 16% (2000: 16%) on estimated assessable profit arising in or derived from Hong Kong.

There was no significant unprovided deferred taxation as at 31st March, 2001.

(4) Earnings per Share

The calculation of the basic earnings per share is based on the combined profit attributable to shareholders of approximately HK$47,195,000 (2000: HK$36,231,000) and assuming 170,000,000 ordinary shares were in issue throughout 2000 and 2001.

Diluted earnings per share for the years ended 31st March, 2000 and 2001 are not presented because there were no dilutive potential ordinary shares in existence during the years.

(5) Movement of Reserves

Capital Retained

reserve profit Total

HK$'000 HK$'000 HK$'000

1st April, 1999 - 16,391 16,391

Dividends paid - (20,152 ) (20,152 )

Net profit for the year - 36,231 36,231

1st April, 2000 - 32,470 32,470

Capital reserve arising from Group reorganisation 1,848 - 1,848

Dividends paid - (14,380 ) (14,380 )

Net profit for the year - 47,195 47,195

31st March, 2001 1,848 65,285 67,133

(6) Dividends

No dividends have been paid or declared by the Company since its incorporation. The dividends paid or declared by the Company's subsidiaries to its then shareholders are as follows:

2001 2000

HK$'000 HK$'000

Brongham Park Limited 5,380 1,050

Yew Sang Hong Limited 8,000 19,102

Yew Sang Hong Trading Limited 1,000 -

14,380 20,152

Dividends

During the year, three group companies declared and paid dividends totalling approximately HK$14,380,000 to its former shareholders prior to the group reorganisation described in note 1 to the audited combined results.

The directors do not recommend the payment of a dividend.

Results

The audited combined profit attributable to shareholders for the year ended 31st March, 2001 amounted to approximately HK$47,195,000 (2000: HK$36,231,000), about 30% increase from last year and about 5% over the profit estimate in the Company's Prospectus dated 11th April, 2001. Turnover was approximately HK$354,444,000 (2000: HK$461,246,000), a decrease of 23%.

BUSINESS REVIEW

Market and Industry Overview

During the year under review, the housing policy of the Hong Kong Government has undergone a structural revision, which caused market contraction in the industry. Yet it is still a prior concern for the Chief Executive of Hong Kong to stabilize a number of construction projects and to improve the general living standard in the coming future. These include the construction of residential units tailoring for the single elderly persons, the re-development of old urban residential areas and the construction of infrastructure facilities.

Besides, a series of housing construction defects have been revealed in recent months, leading to the loss of public confidence towards the quality of public housing and the construction industry. In January 2001, Hong Kong Housing Authority (the "HKHA") published a consultative document, calling for partnering with stakeholders, including contractors and material suppliers, as the best possible way to achieve sustained improvements in quality and efficiency.

Operational Review

As an experienced electrical engineering contractor with strong track record in the public sector, the Group has been benefited from the Government's long-term public housing strategy in previous years as well as the year ended 31st March, 2001. Besides, the continued upgrading and improvement of electrical systems required by the HKHA's public housing redevelopment program also generates business opportunities for the Group.

However, the overall market contraction and the declined public confidence in the public housing have decreased its demand for electrical engineering contracting services. As the contracting business is the Group's principal source of revenue, the drop in the demand has inevitably hindered the Group's performance in its core business. Together with the cutthroat tendering prices causing an increase in competition in the industry, the Group's success rate in project tendering have also adversely affected.

In view of the shrinkage in the public sector electrical engineering works and its overall unfavorable market condition, the Group is stretching out from its traditional practice and more emphasis is put on the development in the private sector. During the year under review, the market weight of private sector has been improved from last year's 17% to this year's 35% due to reduced engineering contracting business turnover in the public projects and expansion in trading business turnover in the private sector.

During the year, the Group also extends its share of trading in electrical equipment and material in its core business from last year's 12% to this year's 22%, in order to benefit from business diversification as well as the economies of scale.

FINANCIAL REVIEW & ANALYSIS

As at 31st March, 2001, the Group had a strong balance sheet position, with bank borrowings of only HK$7,416,000 and the gearing ratio was 6% (2000: 11%). The drop in the ratio is partly attributable to the enhanced operating results of the Group for the year. The Group's repayment of bank loans about HK$10,164,000 (net) during the year also contributed to the improvement in the Group's gearing at the end of the year.

During the year, the interest covering ratio, which is the ratio between the earnings before interest and the amount of bank loan interest was about 45 times. As at 31st March, 2001, the Group's aggregate cash and fixed deposits amounted to approximately HK$67,000,000. The available banking facilities in aggregate were approximately HK$184,000,000 whilst the utilized and unused banking facilities amounted to approximately HK$13,000,000 and HK$171,000,000 respectively. As at 31st March, 2001, the Group had internal available funding of approximately HK$185,000,000, net of fixed deposits approximately HK$53,000,000 that are subject to lien with financial institutions.

As at 31st March, 2001, the Group's current ratio was about 2.7 times (2000: 1.2 times). With shareholders' funds of HK$80,657,000 as at 31st March, 2001 and the current year profit attributable to shareholders of HK$47,195,000, the Group's return on equity is 59% for the current year (2000: 79%.)

Subsequent to the end of the financial year, the Company raised net proceeds of approximately HK$25,000,000 through the placing of 20,000,000 new shares and the public offer of 10,000,000 new shares (the "Share Issue"). The increase in the Company's equity capital through the Share Issue has further strengthened the Group's financial position and lowered its gearing ratio.

OUTLOOK

Electrical Engineering Contracting Business

Looking forward, the management team of the Group is placing more emphasis on the development in the private sector. It will continue to explore contracting business from the private housing so as to avoid over-reliance on public sector.

Besides, considering the tightened regulations on fire safety and electrical engineering systems, and inspection requirements for aging buildings prompting the demand for maintenance services, the Group also spots the possible business diversification coming ahead.

Through entering into strategic partnerships with various organizations and enterprises, the Group will make use of its existing technique and experience in electrical engineering installation and maintenance, which resembles other types of building services installation, to expand horizontally into the business of fire service installation and air-conditioning engineering installation. Through such expansion, the Group is diversifying into other building services and is fulfilling its mission to becoming a total solution provider in the building industry in Hong Kong.

Equipment and Materials Trading Business

Apart from horizontal expansion, the Group is also determined to strengthen its business vertically. The Group is now enlarging the share of the equipment and material trading business and this focus will continue in the future. By doing so, the Group will benefit from the synergy effect, with a lower material cost, which helps to increase the competitiveness of its contracting business.

Subsequent to the financial year ended 31st March, 2001, the Group is negotiating for distributorship, from Italy, of two innovative and high technology products, including optical fibre cables, hazardous-free cables and flame-retardant power cables and various types of lighting fitting. Stretching out from its usual practice of importing electric cables from England, the Group starts to explore other suppliers and its first attempt is to introduce products from Italy. The Group is now planning to enter into more agency or distribution agreements from major equipment and material suppliers, with the aim to broadening its supply source of trading equipment and materials.

Environmental Engineering

Identifying the growing public concern for environmental conservation in Hong Kong, the Group is planning to expand into the environmental engineering business by first engaging in the supply and installation of ARCS, an environmental friendly refuse disposal system to be equipped in all public housing estates and Home Ownership Scheme housing completed after 1st January, 2001.

To be eligible to tender for environmental engineering contracts of public housing, the contractor must have first been admitted to the approved list of contractors by the HKHA. Subsequent to the financial year-end date, the Group has already submitted the corresponding application and is now waiting for approval. It has also entered into a distributorship agreement with a supplier of ARCS systems and intends to start marketing the ARCS systems in 2001.

Opening up of the PRC market

In view of its imminent admission to World Trade Organisation and Beijing's successful bid to host the 2008 Olympic Games, the PRC is expecting for an extensive scale of infrastructure construction over a wide area of the country, heralding market opportunities for the building industry. To grasp such opportunities, the Group is now preparing to penetrate into the PRC domain to provide quality electrical products.

Besides establishing a comprehensive sales network in the PRC, a China Operation Office has been set up in Hong Kong responsible for the PRC business development. Through its global network and industrial renown, Hong Kong serves as a perfect business platform bridging the PRC and the oversea markets. While introducing its products to the international market, it also helps the PRC absorbing information and technology from the rest of the world. This will not only generate infinite market capacity for the Group, but also enhance its international and industrial recognition.

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from 25th September, 2001 to 28th September, 2001, both days inclusive, during which period no share transfer will be registered. In order to qualify for attendance at the Company's forthcoming annual general meeting convened to be held on 28th September, 2001, all transfer forms together with the relevant share certificates must be lodged with the Company's branch share registrar, Hong Kong Registrars Limited, at 2/F., Vicwood Plaza, 199 Des Voeux Road Central, Hong Kong.

CODE OF BEST PRACTICE

In the opinion of the directors, the Company has complied with the Code of Best Practice (the "Code") as set out in Appendix 14 of the Listing Rules since the listing of the Company on the Stock Exchange on 3rd May, 2001.

PUBLICATION OF THE FINAL RESULTS ON THE INTERNET WEBSITE OF THE STOCK EXCHANGE OF HONG KONG LIMITED

The financial and other information required by Paragraph 45(1) to 45(3) of Appendix 16 of the Listing Rules will be published on the website of The Stock Exchange of Hong Kong Limited in due course.

AUDIT COMMITTEE

The Company has set up an Audit Committee (the "Committee") on 3rd April, 2001, comprising two independent non-executive directors of the Company namely, Mr. Lau Chun Kay and Wong Chi Kit, Peter, with terms of reference prepared based on "A Guide for the formation of an Audit Committee" published by the Hong Kong Society of Accountants. The principal duties of the Committee are to review and supervise the Group's financial reporting process and internal control system. The first meeting of the Committee was held on 26th July, 2001.

PRUCHASE, SALE OR REDEMPTION OF SHARES

The Company's shares were listed on the Main Board of the Stock Exchange on 3rd May, 2001. Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed shares since that date.

By Order of the Board

Lai Sai Sang

Chairman

Hong Kong, 27th July, 2001

Yew Sang Hong (Holdings) Limited

耀 生 行 （ 集 團 ） 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the annual general meeting of the Company (the "Annual General Meeting") will be held at 13/F., Hing Yip Centre, 37 Beech Street, Tai Kok Tsui, Kowloon, Hong Kong at 3:00 p.m. on Friday, 28 September 2001 for the following purposes:

1. To receive and consider the audited combined financial statements and the Reports of the Directors and Auditors for the year ended 31st March, 2001.

2. To re-elect directors and to fix their remuneration.

3. To appoint auditors and to authorise the board of directors to fix their remuneration.

4. To consider as special business and, if thought fit, pass with or without amendments the following resolutions as Ordinary Resolutions:

Ordinary resolutions

(A) "THAT the directors of the Company be and are hereby granted an unconditional general mandate to repurchase issued shares in the capital of the Company in accordance with all applicable laws and subject to the following conditions:

(a) such mandate shall not extend beyond the Relevant Period (as defined in sub-paragraph (c) below);

(b) the aggregate nominal amount of the shares of the Company to be repurchased or agreed conditionally or unconditionally to be repurchased by the directors of the Company pursuant to this resolution shall not exceed 10% of the aggregate nominal amount of the shares of the Company in issue at the date of passing of this resolution; and

(c) for the purpose 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 by the articles of association of the Company or any applicable laws to be held; and

(iii) the date on which the authority set out in this resolution is revoked or varied by an ordinary resolution of the shareholders in a general meeting."

(B) "THAT the directors of the Company be and are hereby granted an unconditional general mandate to issue, and allot and deal with additional shares in the capital of the Company or securities convertible into shares, and to make or grant offers, agreements and options in respect thereof, subject to the following conditions:

(a) such mandate shall not extend beyond the Relevant Period (as defined in sub-paragraph (c) below) save that the directors may during the Relevant Period make or grant offers, agreements and options which might require the exercise of such powers after the end of the Relevant Period;

(b) the aggregate nominal amount of the shares allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the directors, otherwise than pursuant to a Rights Issue (as defined in sub-paragraph (c) below) or pursuant to the grant or exercise of options issued under any share option scheme adopted by the Company for the grant or issue to employees of the Company and/or any of its subsidiaries and/or associated companies of options to subscribe for or rights to acquire shares of the Company, or pursuant to any scrip dividend or other similar arrangement providing for the allotment of shares in lien of the whole or part of a dividend on shares of the Company pursuant to the articles of association of the Company or with the consent of the Company in general meeting, shall not exceed 20% of the aggregate nominal amount of the shares of the Company in issue at the date of passing of this resolution; and

(c) for the purpose of this Resolution:

"Relevant Period" means the period from the passing of this resolution until whichever is the earliest of:

(i) the conclusion of 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 by the articles of association of the Company or any applicable laws to be held; and

(iii) the date on which the authority set out in this resolution is revoked or varied by an ordinary resolution of the shareholders in a general meeting.

"Rights Issue" means an offer of shares open for a period fixed by the directors of the Company to holders of shares of the Company or any class thereof of members on the register on a fixed record date in proportion to their then holdings of such shares or class thereof (subject to such exclusion 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 of , or the requirements of any recognized regulatory body or any stock exchange in, any territory outside Hong Kong)."

(C) "THAT the general mandate granted to the directors of the Company to issue and dispose of additional shares pursuant to Ordinary Resolution 4(B) set out in the notice convening this meeting be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of the share capital of the Company repurchased by the Company under the authority granted pursuant to Ordinary Resolution 4(A) set out in the notice convening this meeting, provided that such amount shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of this resolution."

By Order of the Board

Francise Woo

Company Secretary

Hong Kong, 27th July, 2001

Notes:

(1) A member entitled to attend and vote at the above meeting may appoint one or more proxies to attend and, on a poll, vote instead of him. A proxy need not be a member of the Company.

(2) In order 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 thereof, must be deposited at the Company's principal place of business at 13/F., Hing Yip Centre, 37 Beech Street, Tai Kok Tsui, Kowloon, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof (as the case may be).

(3) The Register of Members will be closed from 25th September, 2001 to 28th September, 2001 (both dates inclusive) during which period no transfer of shares will be registered.

Please also refer to the published version of this announcement in the i-Mail.