Hong Kong, July 20, 2005 - Hong Kong's leading knitted-fabric manufacturer Victory City International Holdings Limited (HKEx: 539) today announces that, for the year ended March 31, 2005, the Group achieved record turnover and earnings for the seventh consecutive year. During the year, the Group posted a total turnover of HK$2.4 billion, representing a 40% increase year on year. Operating profit was also boosted to HK$253.3 million with net profit rising substantially by 33% to HK$203.7 million. Basic earnings per share increased from HK30.4 cents in 2004 to HK36.3 cents in 2005. The Group declared a final dividend of HK5.5 cents per share which, together with the interim dividend of HK5.5 cents, represents a 22% increase in full-year payout of HK11.0 cents.
Mr Chen Tien Tui, Managing Director of Victory City International, noted: "We attribute these encouraging results to our well-established strategies which are designed to strengthen our position in pursuing both overall growth for our core businesses and new business opportunities complementary to our corporate goals. These efficiency- and profit-enhancement strategies include product and geographical diversification, timely infrastructure investments and planning, unrelenting cost controls, regular plant upgrades, in-house management re-engineering, and the recruitment of industry talents."
The production and sale of knitted fabrics and dyed yarns continued to be the principal Group activities and accounted for 71% of its consolidated turnover. Segment turnover reached HK$1.7 billion, an increase of 56% year on year, bolstered by an enhanced monthly knitted-fabric production capacity which as from October 2004 rose from 6 million to 12 million lbs. This capacity increase was supplemented by improvements in production efficiency and product quality through investments in state-of-the-art machinery, as well as increased business-development efforts.
The yarn-dyeing business, which commenced operations in August 2003, was another driver of Group turnover and profit growth. Commanding a premier yarn-dyeing capability of 5 million lbs per month, the Group has been able to enhance its competitive edge by providing comprehensive high-quality services to customers in an efficient manner.
Despite uncertainties surrounding the abolition of the quota system and the subsequent protectionist measures, the Group's garment-trading business continued to demonstrate steady growth during the reporting year. Turnover in this segment, which accounted for 29% of Group consolidated turnover, achieved a 13% increase to HK$701.8 million. Keen price competition during the transition to the quota-free era resulted in a slight drop in profit margin. To grow this business segment further, the Group will leverage its existing worldwide sourcing network to meet varying customer needs, and will continue to diversify its clientele and product portfolios.
"With the management's long-term vision, the Group has grown into a dynamic vertical enterprise, providing customers with one-stop integrated services centered on our in-house yarn-dyeing and knitted-fabric capabilities and on our apparel-sourcing and export competencies. Our efforts are reflected in the performance of each individual segment and, as we look ahead, we will continue to deliver innovative, expertise-led solutions to fulfill our commitment to customers in the face of rapid changes in trends and market conditions," Mr Chen added.
To secure a stable and cost-competitive power supply for its plants in China, the Group installed a second coal-fired generator within its factory premises in August 2004, to help stabilize power supply and further reduce fuel costs.
During the year under review and with a view to reducing finance costs, the Group successfully secured a syndicated loan of HK$688 million from 27 banks to refinance an existing syndicated loan of HK$288 million arranged in June 2003. The balance of the syndicated loan is used for general corporate purposes. With this facility in place, the Group is able to make further long-term expansion plans.
Counting on new opportunities emerging from the elimination of garment quotas in 2005, the Group made the decision to expand further downstream by starting a garment manufacturing business in late 2004. Production facilities for this business segment have been established in China and in certain offshore countries. Managed by an expert team with solid experience in garment manufacturing, merchandising, marketing and logistics, the segment will build its core strength on a multi-location production capability.
"In the years to come, through continued enhancement of our business portfolio, expansion of market share, and sharpening of our competitive edge, we will dedicate our efforts to achieving our corporate vision of becoming a worldwide premier supplier of choice for textile and garment products," said Mr Chen. As at March 31, 2005, the Group had total assets of HK$2,582,392,000 (March 31, 2004: HK$1,968,941,000), and maintained current and gearing ratios of 1.9 (March 31, 2004: 1.7) and 76% (March 31, 2004: 51%) respectively.
Financial Highlights| Year ended March 31, | ||
| 2005 | 2004 | |
| HK$ '000 | HK$ '000 | |
| Turnover | 2,403,384 | 1,714,821 |
| Profit from operating activities | 253,318 | 193,040 |
| Net profit attributable to shareholders | 203,655 | 153,290 |
| Earnings per Share | ||
| - Basic | HK36.3 cents | HK30.4 cents |
| - Diluted | HK35.8 cents | HK29.6 cents |
| Final dividend per share | HK5.5 cents | HK4.5 cents |
| Full-year dividend per share | HK11.0 cents | HK9.0 cents |
About Victory City
Victory City International Holdings Limited (SEHK:539) is one of Hong Kong's major manufacturers of knitted fabrics, with a production plant of approximately 10 million sq ft located in Xinhui City, Guangdong Province. The Group's principal business operations include the production and sale of knitted fabrics and dyed yarns, and the trading of apparel.