Hong Kong, July 24, 2002 - Gold jewellery manufacturer Hang Fung Gold Technology Limited (SEHK: 870) today announces the audited results for the year ended March 31, 2002. Group turnover for the year was HK$1,568,757,000, an 18% increase over HK$1,327,753,000 of the prior year. Profit attributable to shareholders was HK$34,555,000. The Group's directors did not recommend the payment of a final dividend.

The Group unveiled its "3D-GOLD" Tourism Exhibition Hall on January 28, 2001. The hall has now become a unique tourist spectacle in Hong Kong and since its opening, has attracted over one million visitors. During the year, "3D-GOLD" "Tourism Exhibition Hall has helped improve the cashflow and overall liquidity of the Group. The success of the hall has also helped raise the recognition of the Group's two house brands - "3D-GOLD" and "La Milky Way" - both on the Mainland and abroad in a short period of time.

The decline in net profit was primarily due to a change in product portfolio, including the increase in sales of the lower-margin gold jewellery products. To cope with the increasingly competitive market, the Group also adopted a more aggressive pricing strategy, further lowering overall gross margin from 15% of last year to 14% of the year under review. Additional expenses associated with the opening of the "3D-GOLD" Tourism Exhibition Hall and the promotion costs for the "3D-GOLD" and "La Milky Way" brands, accounted for a considerable increase of the selling and distribution expenses for the year.

Dr. Lam Sai Wing, Chairman, Hang Fung Gold Technology Group, noted: "We believe that strategic investments made during a downtime will provide the best returns. We will continue to drive our growth through capacity expansion and capability enhancement. I am convinced that the Group's initial investment in the "3D-GOLD" Toruism Exhibition Hall, including the associated promotion costs, will prove to be a wise investment for the Group and will help us broaden our revenue base. In the long term, the increase in contribution from the retailing business line will result in higher group profit margins."

The current capacity of the "3D-GOLD" Tourism Exhibition Hall in Hunghom is almost fully utilized. In view of this and the anticipated continued increase in visitors from the Mainland and Taiwan, the Group has already planned to make available a further 30,000 sq ft of retail space. The new area is expected to be put into operation by the end of this year, with an expected significant increase in revenue for the Group.

In the year under review, gold jewellery remained the Group's core product. In addition, the Group is continuously developing higher-margin sterling-silver, 18K-gold and diamond jewellery lines, and has introduced new product series under the Group's house brands. In a bid to open up the relatively untapped youth jewellery market, Group has collaborated with the media in promoting a line of products designed for entertainment celebrities, including the "La Milky Way - TVB/EEG" Collection. In recognition of its innovative marketing strategies, the Group was awarded a Citation for Innovation in the HKMA/TVB Award for Marketing Excellence.

The Group will continue to expand the "3D-GOLD" Tourism Exhibition Hall as well as actively consider introducing counters in the hall for other non-jewellery merchandise such as branded watches and leather goods to attract more tourist purchases.

Over the past year, the tragic September 11 incident which had a dampening effect on the Group's overseas markets. As a result, the Group's overseas sales showed a slight decrease over the prior year. The Mainland China market performed satisfactorily. The Group furthered its expansion of retail network on the Mainland China for its "3D-GOLD" and "La Milky Way" branded products, with retail outlets increasing to over 30 outlets, leveraging on synergies from the Group's "3D-GOLD" Tourism Exhibition Hall in Hong Kong. Contribution of the Mainland China and Hong Kong markets to turnover increased from 58% of the previous year to 76% of the year ended March 31, 2002.

"Management intends to increase the number of retail outlets to about 100. The expansion of retail business will help to improve margins. We consider that the China market and tourism related sales will become the major momemtum in our growth in the years to come," concluded Dr. Lam.

About Hang Fung Gold Technology
Hang Fung Gold Technology Limited (SEHK: 870) is a leading jewellery manufacturer in Hong Kong with production facilities in Hong Kong and Shatoujiao, and a staff of over 2,000. The Group was awarded ISO 9001:2000 quality accreditation for its entire management, production and sales process, and was awarded Certificates of Merits by the Hong Kong Productivity Council. With a heritage of over 20 years and numerous award-winning designs, the Group has established a renowned reputation worldwide as a leading manufacturer of gold and precious metal jewellery products. The Group has successfully developed and introduced two house brands - "3D-GOLD" and "La Milky Way".

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