Page 2 Mission Statement & Contents€¦ · Directors’ Profile 50 Financial Review 52 Report of the Directors 66. ... machines NOV 1993 Formed a joint venture — Shanghai Bao Shun

Page 2Mission Statement & Contents

MISSIONSTATEMENTVSC strives to be the best total solution provider of

materials in China through global supply chain

management and value-added processing.

Through Supply Chain Management, we will provide

quality steel and products to customers in the

construction industry.

Through Value-Added Processing, we will provide

quality industrial products and reliable services to

customers in information technology, home appliances

and automobile parts industries.

Van Shung Chong Holdings LimitedAnnual Report 2004

Page 1

CONTENTS

Key Milestones 2Corporate Information 4Financial Highlights 6Ten Years Financial Summary 8Chairman’s Statement 10Management Discussion and Analysis 16Directors’ Profile 50Financial Review 52Report of the Directors 66

Page 2Key Milestones

KEY MILESTONES1961

Founded as an importer of steel rebars

1964

Started importing high quality engineering plastic

resins

1975

Started distributing plastic injection moulding

machines

NOV 1993

Formed a joint venture — Shanghai Bao Shun

Chang International Trading Company Ltd. with

Shanghai Baoshan Steel Group

DEC 1993

Obtained ISO 9002 Certificate for steel products

FEB 1994

Listed on the Main Board of The Stock Exchange

of Hong Kong Limited (“SEHK”)

JUN 1995

Identif ied potential of the PRC market and

commenced Dongguan Coil Centre operation

NOV 1997

Diversified into building products to widen product

offering

JAN 1998

Further tapped the PRC market by forming a joint

venture — Baosteel Jingchang at Nansha with

Shanghai Baosteel Corporation and Japan Mitsui

& Co. Ltd.

NOV 1999

Acquired Shougang Concord Steel Company

Limited and became the leader in Hong Kong

steel industry

APR 2000

iSteelAsia Holdings Limited (founded in December

1999) listed on the Growth Enterprise Market

(“GEM”) of SEHK

Van Shung Chong Holdings LimitedAnnual Report 2004

Page 3

MAY 2001

Recognising telecommunication industry is one

of the fastest growing industries in Mainland

China, acquired an OEM telecommunication

equipment manufacturer in China to form Van Jia

Yuan (“VJY”)

JAN 2002

Obtained ISO 9001 Certificate for VJY

MAR 2002

Obtained ISO 9001 Certificate for the Dongguan

Coil Centre

APR 2002

Enhancing the breadth of our business and

launched Leisure Plus, a one-stop lifestyle outlet

for bath and kitchen products

JUL 2002

Sponsored firework display celebrating the 5th

Anniversary of the establishment of HKSAR

DEC 2002

Expanding on the VSC Group’s China network by

partnering with Shougang Corporation to establish

a PPGI production plant in Beijing

JUN 2003

As Shanghai is the hub for information, capital,

human resources and steel usage, VSC has

chosen to set up our China head office there

JUL 2003

Realising the growing needs of service centres,

set up a second wholly owned coil centre in

Tianjin with an initial capacity of 60,000 MT per

annum and commenced production

OCT 2003

Secured a HK$250 million three-year revolving

credit and term loan facility from a syndicate of 9

international and local banks

MAR 2004

Further expanded the service centre network by

partnering with Shinsho Corporation of Japan to

operate a coil centre in Guangzhou

Page 4Corporate Information

DIRECTORSExecutive DirectorsMr. Yao Cho Fai, Andrew, Chairman & CEOMs. Yao Che Li, MiriamMr. Ho Sai Hou, JohnsonMr. Dong Sai Ming, Fernando

Non-executive DirectorDr. Shao You Bao

Independent Non-executive DirectorsDr. Chow Yei ChingMr. Ting Woo Shou, KennethMr. Harold Richard Kahler

COMPANY SECRETARYMs. Tse Sau Wai, FCS FCIS

(Appointed on 1st June 2004)

QUALIFIED ACCOUNTANTMr. Ho Sai Hou, Johnson, AHKSA FCCA

AUDITORSPricewaterhouseCoopersCertified Public Accountants

SOLICITORSBaker & McKenzie (on Hong Kong Laws)Conyers Dill & Pearman (on Bermuda Laws)

PRINCIPAL BANKERSBank of China (Hong Kong) LimitedBNP Paribas, Hong Kong BranchChina Construction Bank, Hong Kong BranchDBS Bank (Hong Kong) LimitedHang Seng Bank LimitedHSH Nordbank, Hong Kong BranchIndustrial and Commercial Bank of China

(Asia) LimitedKBC Bank N.V., Hong Kong BranchLiu Chong Hing Bank LimitedMizuho Corporate Bank, Limited, Hong Kong

BranchShanghai Commercial Bank LimitedThe Bank of East Asia, LimitedThe Bank of Tokyo-Mitsubishi, Limited, Hong

Kong BranchThe Hongkong and Shanghai Banking

Corporation LimitedUFJ Bank Limited, Hong Kong Branch

SHARE REGISTRARS AND TRANSFEROFFICES

Principal RegistrarButterfield Fund Services (Bermuda) LimitedRosebank Centre11 Bermudiana RoadPembrokeBermuda

Page 5Corporate Information

Hong Kong RegistrarComputershare Hong Kong Investor

Services LimitedShops 1712-1716, 17th FloorHopewell Centre183 Queen’s Road EastWanchai, Hong Kong

REGISTERED OFFICEClarendon HouseChurch StreetHamilton HM11Bermuda

HEAD OFFICE AND PRINCIPAL PLACE OFBUSINESS

Rooms 4902-8, Hopewell Centre183 Queen’s Road EastWanchai, Hong Kong

Website: http://www.vschk.comhttp://www.isteelasia.com

E-mail Address: [email protected]

Listed on The Stock Exchange of Hong KongLimited

Stock Code:1001 (shares)561 (warrants)8080 (shares of iSteelAsia Holdings Limited)8356 (warrants of iSteelAsia Holdings Limited)

Page 6Financial Highlights

2003 2004 % ChangeHK$ millionTurnover 2,756 3,549 +29%Gross profit 219 234 +7%Operating profit 77 110 +43%Profit attributable to shareholders 60 81 +35%Total assets 1,419 2,021 +42%Shareholders’ equity 520 661 +27%In MillionNumber of shares 312 368 +18%

Per Share DataHK centsBasic earnings 17.4 24.6 +41%Diluted earnings 17.3 23.6 +36%Total cash dividends 5.8 5.9 +2%HK$Shareholders’ equity 1.667 1.796 +8%

Financial RatiosGross profit margin (%) 7.95 6.60 -17%Net profit margin (%) 2.18 2.28 +5%Current ratio 1.39 1.42 +2%Quick ratio 0.95 0.86 -9%Gearing ratio 1.17 1.29 +10%Interest cover 6.91 8.23 +19%Cash dividend payout (%) 29.98 26.13 -13%

Definitions

Basic earnings per shareProfit attributable to shareholders

Weighted average number of shares

Diluted earnings per shareProfit attributable to shareholders

Diluted weighted average number of shares

Shareholders’ equity per shareShareholders’ equity

Number of shares as at year end

Gross profit margin (%)Gross profit

x 100%Turnover

Net profit margin (%)Profit attributable to shareholders

x 100%Turnover

Current ratioCurrent assets

Current liabilities

Quick ratioCurrent assets excluding inventories

Current liabilities

Gearing ratioInterest bearing short-term borrowings and long-term bank loan

Shareholders’ equity

Interest coverOperating profitFinance costs

Cash dividend payout (%)Total cash dividends proposed for the year

x 100%Profit attributable to shareholders

Page 7Financial Highlights

Operating Profitfor the years ended 31st March

Shareholders’ Equity per Shareas at 31st March

HK$ million

Turnoverfor the years ended 31st March

HK$ million

Profit Attributable to Shareholdersfor the years ended 31st March

3,549

0

50

100

150

200

250

300

81

95 96 97 98 99 00 01 02 03 04

HK$

0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

95 96 97 98 99 00 01 02 03 04

1.8

HK$ million

95 96 97 98 99 00 01 02 03 04

110

(Note 2)

(Note 2)

0

50

100

150

200

250

300

350

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

95 96 97 98 99 00 01 02 03 04

Notes:

1. Certain prior years’ figures have been reclassified to conform with the current year’s presentation.2. For the year ended 31st March 2001, there was a gain of approximately HK$282 million resulting from distribution in specie of shares in

iSteelAsia Holdings Limited.

Page 8Ten Years Financial Summary

The following is a summary of the audited consolidated accounts of Van Shung Chong Holdings Limited

(the “Company” or “VSC”) and its subsidiaries (together the “VSC Group”) for the respective years as

hereunder stated.

CONSOLIDATED PROFIT AND LOSS ACCOUNTS

Years ended 31st March

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Turnover 1,927,537 1,846,543 2,002,479 2,150,961 1,842,262 1,900,945 2,376,451 2,137,845 2,755,769 3,549,110

Operating profit 81,112 101,158 111,525 103,516 96,807 91,714 311,953 19,888 77,049 109,792

Finance costs (19,453 ) (23,933 ) (23,281 ) (25,467 ) (15,358 ) (14,907 ) (11,732 ) (7,908 ) (11,144 ) (13,337 )

Share of (loss) profit of associates 432 1,564 1,555 (615 ) (1,980 ) 2 89 (88 ) — —

Profit before taxation 62,091 78,789 89,799 77,434 79,469 76,809 300,310 11,892 65,905 96,455

Taxation (7,160 ) (9,719 ) (11,188 ) (10,800 ) (13,610 ) (19,294 ) (15,533 ) (760 ) (2,164 ) (11,061 )

Profit before minority interests 54,931 69,070 78,611 66,634 65,859 57,515 284,777 11,132 63,741 85,394

Minority interests (555 ) (2,573 ) 73 (1,238 ) 1,121 (2,150 ) 1,059 (1,022 ) (3,329 ) (4,331 )

Profit attributable to shareholders 54,376 66,497 78,684 65,396 66,980 55,365 285,836 10,110 60,412 81,063

Dividends (Note 2) 14,800 19,487 21,323 21,387 21,387 29,930 400,391 9,230 18,111 21,180

Notes:

1. Certain prior years’ figures have been reclassified to conform with the current year’s presentation.

2. For the year ended 31st March 1996 and for the year ended 31st March 2000, there were bonus issues ofwarrant in the ratio of one warrant for every five shares in addition to the cash dividends. Such warrantswere expired on 16th September 1998 and 16th February 2002, respectively. For the year ended 31st March2001, dividend in specie of shares in iSteelAsia Holdings Limited (“iSteelAsia”) of approximately HK$308million was distributed on the basis of 1,562 shares of iSteelAsia for VSC’s shareholders holding 2,000shares in VSC in addition to the cash dividends. For the year ended 31st March 2002, there was also abonus issue of warrant in the ratio of one warrant for every ten shares in addition to the cash dividends.Such warrants will be expired on 18th November 2004. All other dividends were settled in cash.

Page 9Ten Years Financial Summary

CONSOLIDATED BALANCE SHEETS

As at 31st March

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004


Fixed assets 14,792 30,674 45,840 92,620 94,940 130,985 86,296 123,248 125,789 159,366

Investment properties 21,500 17,500 17,500 41,840 38,480 36,800 31,340 32,500 31,000 36,448

Development properties 17,946 30,293 31,346 — — — — — — —

Website development cost — — — — — 3,762 — — — —

Investment in associates 1,821 3,053 6,573 30,840 22,282 18,561 90 2 2 2

Long-term investments — — — 5,519 5,519 12,700 87,431 32,561 45,711 60,012

Goodwill — — — — — 24,877 — 6,474 4,624 8,290

Deferred tax assets — — — — — — — — — 447

Current assets 603,762 787,194 873,979 779,691 636,057 1,016,311 716,257 791,401 1,211,578 1,756,709

Current liabilities (433,314) (537,705) (589,135) (527,672 ) (335,023) (619,227) (259,665) (458,053) (871,073) (1,239,224)

Long-term bank loan,

non-current portion (6,587) (4,447) (2,317) (178 ) — — — — (20,475) (97,222)

Deferred tax liabilities (611) (611) (465) (128 ) (863) (1,497) (2,070) (250) (250) (104)

Net assets 219,309 325,951 383,321 422,532 461,392 623,272 659,679 527,883 526,906 684,724

Representing:

Share capital 24,668 29,580 29,616 29,704 29,704 34,088 35,529 35,498 31,226 36,778

Reserves 177,974 282,637 340,679 388,174 429,259 584,895 621,229 487,812 489,178 623,780

Shareholders’ equity 202,642 312,217 370,295 417,878 458,963 618,983 656,758 523,310 520,404 660,558

Minority interests 16,667 13,734 13,026 4,654 2,429 4,289 2,921 4,573 6,502 24,166

219,309 325,951 383,321 422,532 461,392 623,272 659,679 527,883 526,906 684,724

Chairman’s Statement

Page 10

CHAIRMAN’SSTATEMENT

Page 11Chairman’s Statement

Dear Shareholders,

Our vision is to become “the best total solution provider

of materials in China through global supply chain

management and value-added processing”. During the

last decade, VSC has successfully revolutionised itself

to a China focused industrial steel service provider

from a purely Hong Kong based steel trader. Adhering

to our vision through determination and integrity, we

managed to weather the hardships in 1997, when the

Hong Kong property market slumped, the Asian

financial crisis in 1998 and the global economic

recession in 2000. Armed with our faith and flexibility,

VSC has become a solid growth company ready to

capture the world’s fastest developing economy -

China.

I am glad to report another strong financial performance

year for VSC. Leveraging on our strong global supplier

network and mutually beneficial customer relationships,

our consolidated turnover grew 29% over the previous

year to reach over HK$3.5 billion. Profit attributable to

shareholders also rose 34% to HK$81 million.

THINK GLOBAL, ACT LOCAL

China is the world’s largest steel importer, consumer

and producer accounting for one-fifth of the world’s

total steel sales. Shanghai is the centre for information,

capital, human resources and steel usage. As such,

the VSC Group has chosen Shanghai as our China

headquarters in May 2003.

SYNERGISTIC BUSINESS MODEL

Our business model comprises of two main business

divisions: China Advanced Materials Processing

(“CAMP”) and Construction Materials Group (“CMG”).

CAMP

The CAMP business provides value-added, quality and

efficient steel processing service targeting high growth

industries, namely information technology, home

appl iance and automobi le par ts . CAMP is a

downstream, solution provider for customers, working

closely and directly with OEM manufacturers and has

built a strong end user network where demand is

recurrent, more forecastable and expanding.

Our chain of steel service centres are strategically

located throughout industrial hubs of China where there

are thousands of production plants set up by both

local and international manufacturers. For example, the

Kelon Group has fully taken advantage of our service

centre network by sourcing from our Tianjin and

Guangdong operations, demonstrating our flexibility in

addressing the needs of their different manufacturing

facilities. Our proximity to our customers in different

locations also allows them to enjoy economies of scale.

Furthermore, having worked with Huawei Technologies

Co., Ltd. for three years, we have proudly elevated to

one of its top three largest suppliers of steel enclosure

system.

To further strengthen our service network and market

position, we entered into a joint venture with Shinsho

Corporation, the trading arm of a major Japanese steel

producer, Kobe Steel, in March 2004, at Huangpu of

Guangzhou. It is the sixth steel service centre that we

have invested in China. Al l the aforementioned

developments require technological commitment,

network connectivity of an enterprise approach and

product expertise which few steel service centres in

China are able to offer.


Page 12

CMG

CMG is an intricate division within the VSC Group as it

is the material manager in the upstream raw materials

procurement part in the supply chain. Our long

established and sound relationships with steel mills

worldwide guarantee us supply of many kinds of quality

steel, which is crucial in times of shortage. CMG has

also set up a team of engineering experts to provide

professional consultancy service and brought into China

advanced construction technologies. In July 2003, for

instance, VSC introduced a leading environmentally

friendly piling technology from Japan for a hospital

project in a residential area in Shanghai. Seminars and

workshops were held to raise awareness environmental

and social responsibilities, thus in the long run, raising

the living standards of people there.

As a leading construction materials distributor in Hong

Kong, CMG has further expanded its coverage to

southern China market and Shanghai, capturing the

flourishing infrastructure and construction markets

there.

OUR SOLUTIONS STRENGTHEN CUSTOMER

RELATIONSHIPS

Both CAMP and CMG are direct or indirect suppliers

to manufacturers of the world. VSC prides our

knowledge and experience in the PRC. The VSC Group

has focused on high value customers and engineered

solutions. CAMP and CMG, together, position the VSC

Group in the significant part in the supply chain bridging

the end users and the steel producers through global

network, integrated supply chain management, just-

in-t ime del ivery, va lue-added processing and

consultancy service.

As the PRC is a vast country, different parts of the

country bear significantly different characteristics. For

example, customer demands in southern China are

export oriented, thus extremely sensitive to on-time

delivery, supply chain management and quality;

whereas eastern China houses many multi-nationals

which focus on technological and the growing domestic

PRC market; while northern China is home to many

State-owned enterprises, where established personal

and corporate relationships take precedent. Due to

the diversity of customer base, it is imperative to

maintain flexibil it ies in adapting the VSC Group’s

network to our advantage which will enhance our value

proposition to the customer well beyond a simple

supplier level.

PROSPECTS

In the coming year, one of our major tasks is to

maximise the synergetic effects brought by the VSC

Group’s two complementary business divisions to

provide integrated service along the value chain and

supply chain. Such vertical integration has greatly

strengthened our position and maintained the VSC

Group’s profit margin.

STRENGTHEN VERTICALLY INTEGRATED VALUE-

ADDED SERVICE

We believe that product quality and service are the

key criter ia of customers’ choice. VSC can be

differentiated from other steel service providers in the

PRC through the provision of comprehensive and

integrated value-added service and scalable operation.

In addition to procurement aspects of supply chain

management, we will continue to play a more important

role in the value chain by extending our services by

providing more comprehensive, efficient processing

service to add value to our customers.


PEOPLEIS OURRESOURCES


Page 14

REINFORCE OPERATION STRUCTURE

VSC aims to expand its service centre network by

increasing one centre a year by way of either through

mergers and acquisitions or building a greenfield facility.

This year, we have already added T ianj in and

Guangzhou coil centres serving our well-known

consumer electronics and automotive brands. Eastern

China will be our next target. Our focus is to strengthen

the established operations and maximise capacity

through enterprise approach. We will also continue to

explore other growth opportunities to enlarge market

share in the burgeoning economy.

GOING FORWARD

In 2003, the PRC achieved an impressive economic

growth of 9.1%. The trend went up further and reached

9.7% in the first quarter of 2004. The robust economy

boosted corporate investment and consumer spending

triggering the demand for basic raw materials such as

iron, steel, aluminium, etc. All raw material prices went

up vigorously to nearly historical high and attracted

opportunist ic speculators who threatened the

fundamental development of those industries and also

the PRC economy as a whole.

China consumed approximately 220 million metric

tonnes of steel in 2003. A further increase of 11% to

245 million metric tonnes is forecasted for 2004. China

is the largest steel producer, consumer and importer

in the world, maintaining its role as the factory of the

world and source of many large scale, infrastructure

projects. According to a report of China Steel Industry

Association（中國鋼鐵工業協會）issued in September

2003, the six largest steel consumption industries in

China in 2002 were construction (53.70%), machinery

(14.03%), automobile (4.64%), railway (1.53%), oil and

gas (1.48%) and home appliance (2.32%), accounted

for an aggregate of about 80% of total consumption.


Van Shung ChongHoldings Limited

CoilCentres

EnclosureSystem

Manufacturing

Plastics &Machinery

China AdvancedMaterials Processing

(“CAMP”)

14% 66.7% 10%70%

NanshaBaosteel

JingchangJoint Venture

GuangzhouTianjinDongguan

BuildingProducts

SteelDistribution

ConstructionMaterials Group

(”CMG”)

Shanghai BaoShun Chang

BeijingPPGIJoint

Venture

Hong KongSteel

Stockholding

ChinaDistribution/

iSteelAsia

In view of the recent rampant capital spending, the

PRC central government has taken mit igat ing

measures, such as raising interest rate and tightening

credit policy, to prevent the economy from being over-

heated. Though we see raw material prices came down

recently which hurts the business profitability of many

players in other parts of the value chain, VSC is least

affected due to its high value-added processing

capabilities and mutually beneficial relationship with

its portfol io of rel iable end-user customers and

suppliers. In conclusion, VSC welcomes and holds a

positive view on the policy as over capacity is harmful

in the long run. Such policy helps to raise entry barrier

and stabilises the industry’s long-term development

that will benefit the existing players. With reference to

the current economic development and market

mechanism, we are confident that the China market

will be able to maintain the current pricing structure

and continue to be a long-term and positive playing

field for the VSC Group.

APPRECIATION

I would like to take this opportunity to express my

deepest appreciation to all employees, Board of

Directors, shareholders, customers, business partners

and suppliers for their continuous support and

guidance. I look forward to sharing with you another

good year.

Yao Cho Fai, Andrew

Chairman & Chief Executive Officer

1st June 2004

Page 16Management Discussion and AnalysisMANAGEMENTDISCUSSIONAND ANALYSIS

INFOCUS

Page 17Management Discussion and Analysis

Fiscal 2003/04 was an exceptional year for the VSC

Group. Not only was it the 10th anniversary of VSC’s

listing on the Main Board of The Stock Exchange of

Hong Kong Limited (the “Stock Exchange”) since 1994,

it was also a year when the VSC Group thrived, both

operationally and financially, with the successful

introduction of new businesses, operations, locations

and capital to establish a solid foundation for further

growth. Turnover increased by 29% to a record high

of HK$3,549 mi l l ion and prof i t attr ibutable to

shareholders improved by 34% to HK$81 million. Such

development was achieved under a turbulent operating

environment, particularly during the SARS outbreak in

Hong Kong and Mainland China in the early 2003/04

and the global soaring steel price throughout the rest

of the year. These encouraging results are driven by

the VSC Group’s focus and concerted efforts on the

following key parameters in the execution of its

corporate strategies:

1) Tap the Strongest Growing Economy, China

The VSC Group is committed to the China

market, the world’s fastest growing and

emerging market. Turnover generated from its

China operations amounted to HK$2,378 million

in fiscal 2003/04, representing 67% of the total

turnover as compared to 54% or HK$1,477

million in fiscal 2002/03. New businesses and

operations were set up or acquired in Shanghai,

Tianjin, Beijing, Shenzhen and Guangzhou to

capture the booming business opportunities in

these regions due to robust economic growth

of China.

2) Target the Strongest Growing Sectors

The four target industries on which the VSC

Group focuses to serve continue to fuel strong

demand on its steel products. These four target

sectors, namely information technology and

te lecommunicat ions, home appl iances,

construction and automobile parts are all fast

growing and consume high proportion of all

kinds of steel in its f inished products. We

carefully select reputable and reliable high-

volume users in each target industry as long-

term key customers and provide them with the

best services to meet their ever-rising demand.

3) Select and Invest in Loyal Customers

The China market is a very large market, but it

can also be quite volatile. The VSC Group has

taken a long-term view of its businesses in

China. As such, the VSC Group’s strategy is

not to adopt any short-term approach to fast

and significant growth, such as entering into a

large market and to capture massive market

share through aggressive means (e.g. price wars

and undercutting other competitors). Instead,

the VSC Group is willing to exercise discipline

to “invest” in its customers, focus on individual

market sectors both geographically and in terms

of products offerings. The VSC Group wil l

“prune” its customer base to a very selected

few that will appreciate the VSC Group’s value

propositions. Securing business dealings with

these customers often take time and effort but

such investment is justified as these customers

are more sizable, more professional, covering a

more diversif ied global market, hence, wil l

provide the VSC Group with a more stable

business environment and room for sustainable

growth.

4) Offer High Value-added Processing Services

The VSC Group strives to expand and enrich

its product offering and value-added processing


services to offer a total solut ion for the

customers. Our value proposition embraces

processing services of cutting, slitting, punching,

bending, s tamping, coat ing, assembly,

machining, technical advisory and quality control

for both construction and industrial steel

applications, offering through both internal

production facilities and outsourcing to external

parties to maximise the processing efficiency

and capability for our customers.

5) Enhance Distribution Network and Supply

Chain

The VSC Group has strategically developed

services centres and sales outlets in a host of

major cities throughout China to form a strong

distribution network. A regional headquarters

was set up in Shanghai during the year to

oversee the China operation and further enhance

our coverage in the northern and northeastern

China. Global supply chain management remains

our core competence, having developed

excel lent relat ionship with overseas and

domestic steel mills, this enabled us to support

the expanding distribution network with secured

supply of quality steel even under a “supplier-

centric” market, in which steel price soared

during the year.

Along such theme, both the operational groups

of the VSC Group, CAMP and CMG, with their

respective focus on steel processing and steel

distribution, have collaboratively developed and

refined the businesses and contributed to the

encouraging growth of the VSC Group as a

whole for the financial year under review.

China Advanced Materials Processing

(“CAMP”)

The VSC Group’s CAMP operations consist of

three business units: 1) coil centre operations

in Dongguan, Tianjin, Guangzhou and Nansha,

which provide rolled steel processing services

to OEM manufacturers of white goods, electrical

appliances, computers and automobile parts in

the respective regions; 2) manufacturing of

customised enclosure systems in Shenzhen,

which carries out a variety of precision metal

process ing and assembly serv ices for

telecommunication, automobile and other

industries; 3) distribution of engineering plastic

resins and injection moulding machines to

indust r ia l manufacturers o f househo ld

app l i ances , aud io / v ideo equ ipmen ts ,

telecommunication applications and computers

located in China.

The CAMP division or “Service Centre” as it is

known in the western industrial countries, is

predominantly engaged in high value-added

physical processing in factories that yields higher

profit margin. China, at times referred to as the

“factory of the world”, continues to lead the

world with the largest tonnages in steel

production, consumption and import (industry

reports have said that for 2003 the total

consumption of steel in China was well in excess

of 200 million metric tonnes which put the China

market multipled in size as compared to other

more developed western industrial countries).

This translates into huge demand of high value

processing services for flat steel products,

especially from the VSC Group’s four target


Beijing Tianjin

Shanghai(Headquarters)

Dongguan

Shenzhen

Nansha

Guangzhou

Hong Kong(Headquarters)

CAMPService Centres


CAMPEngages in high profit margin, value-added physicalprocessing, serving information technology andtelecommunications, home appl iances andautomobile parts industries in China


CHINAADVANCEDMATERIALSPROCESSING


sectors. When comparing to western developed

countries, the market for steel service centre in

China is sti l l at its infancy with a very low

penetration rate. The VSC Group’s knowledge

base and early inroad into these sectors has

given it an “early mover” advantage with

relatively few competitions addressing a vast

potent ia l market. As a result, the CAMP

operations have thus gradually become a more

prominent profit engine of the VSC Group and

will be the focus of the VSC Group’s future

business development. Turnover and segment

results generated from the CAMP operations

have increased by approximately 43% and 18%,

respectively, over that in 2002/03 and accounted

for approximately 19% and 51%, respectively,

of the VSC Group’s total turnover and segment

results.

Coil Centre Operations

In a nutshell, a coil centre operation is an

important step in the steel consumption value

chain between steel makers (i.e. steel mills) and

finished product producers (i.e. end product

manufacturers or OEM manufacturers). A typical

operation buys finished steel in the form of large

steel coils, processes the coils (through slitting,

cutting and leveling into smaller steel coils or

flat sheets) to the exact shape, size and quantity

as specified by the customers and delivers at

the exact t ime the customers requ i re .

Traditionally, such operations constitute the

front-end raw material processing for most steel

consumption manufacturers, but as these

manufacturers mature towards higher value

production, they begin to sub-contract these

operations to rel iable local vendors. Such

progression is a necessary step as these

manufacturers mature, whether they are OEM

or inhouse manufacturing, and can be seen as

part of the manufacturing maturing process as

experienced by most of the more developed

industrial countries like the US or Europe. Value

propositions to customers include, inter alia,

— less inventory through just-in-time (JIT)

delivery with a 24 to 48 hours’ order lead

time;

— rel iable supply chain management

through work ing c lose ly wi th the

supp l ie rs , log is t ics vendors and

customers;

— lowering in production costs via reduction

in raw material scrap and materials

handling costs;

— savings in investment of machinery and

factory space;

— ensured qual ity of steel in terms of

surface treatment, thickness and other

technical requirements; and

— flexible and reliable supply of product

range from different sources/grades of

steel mills.

The coil centre operations of the VSC Group

currently consist of three main subsidiary

factories in Dongguan, Tianjin and Guangzhou

as well as its 14% investment in the joint venture

company in Nansha. During the year, the VSC

Group expanded the capacity of its Dongguan

factory (completed in July 2003), bui l t a


COILCENTRE


“greenfield” factory in Tianjin (commenced

operation in July 2003) and acquired an existing

factory in Guangzhou (completed by end of

March 2004), resulting in close to tripling of its

processing capacity as compared to last

financial year.

With the addition of an automated slitt ing

machine in the first quarter and the dedicated

team’s effort to develop high-volume key

customers, the Dongguan coil centre (DGCC),

managed to achieve an increase in turnover of

about 27% to a record high of approximately

HK$353 mill ion. As compared to last year,

profitability was however adversely affected by

the SARS epidemic in the early 2003/04 and

the volatility in the steel price throughout the

rest of the year. During the SARS outbreak,

orders were delayed or cancelled since the

overseas end customers of the OEM vendors

or manufacturers of international brand names

we served refrained from traveling to Mainland

China. Throughout the year, the steel price was

driven upwards by the rising raw material costs

such as iron ore, coal, electricity and freight

charges. Coupled with the blazing demand of

steel underpinned by robust economic growth

in Mainland China and the inability to produce

adequate quantity of quality flat steel products

domestically, the price for imported steel has

seen an unprecedented sharp rise within a short

period and remained buoyant for much of the

period under review. Such persistent high costs

placed an intense pressure on our profit margin

as the VSC Group’s core strategy is to be

“customer centr ic” in the long run whi le

leveraging on its relationship with steel mills to

maintain its competitiveness in the current

“supplier centric” market environment. As such,

the VSC Group has decided to “invest” in its

customers, and has not passed on the entire

steel price rises to certain customers selectively

which resulted in the gross margin being eroded

to 18% from 25%. Nevertheless, such pricing

strategy has enabled DGCC to pave the way

for businesses with more high-volume reliable

long-term customers. The key customers

portfolio has healthily expanded with a wider

dispersion of major customers as reflected by

the sales contribution of the top 10 customers

changing from over 50% to about 36%.

Reflective of its continuous efforts to improve

production capacity and efficiency, DGCC was

awarded the status of New and High Technology

Enterpr ise in June 2003 and Advanced

Technology Enterprise in December 2003 as

recognition of its high productivity and technical

innovation. Monthly output tonnages are on the

rising trend and reached new high of over 8,000

metric tonnes in March 2004. For the year under

review, DGCC has against such di ff icult

backdrop ach ieved segment resu l ts o f

approximately HK$52 million, a slight 11% drop

from last year record high figure of HK$58

million. As mentioned above, the profit margin

was adversely affected in the short term

because the VSC Group has taken a more long-

term strategy to absorb some of these sharp

rises in steel prices to “invest” in the loyalty of

its customers which the VSC Group believe will

go along way to differentiate the VSC Group

positively from the future more competitive

landscape.

The “greenfield” Tianjin coil centre (TJCC) is

the VSC Group’s first inroad of steel service


centre to the northern China market, strategically

located to service the industrial manufacturers

in Tianjin, Beijing, Shandong, Liaoning and Hebei

which const i tute a very di fferent market

demography. Since production commenced in

July 2003, very encouraging progress in terms

of customer development and production

improvement has been made. Large customers

such as Kelon, a domestic manufacturer with

multiple factories in several provinces, and LG,

a large Korean manufacturer have been secured.

Unlike its Dongguan sister plant, whose clients

are mainly OEM vendors with their end products

exported to the US and European markets,

TJCC’s t a rge t cus tomers a re mos t l y

manufacturers of household appl iances,

electronics equipments, transformer, lift and

automobile parts having their finished goods

distributed in the China market. Other than

importing steel from overseas, toll processing

and domestic sourcing of steel would also be

required to serve some of these local customers.

By transferring the knowledge base and several

staff from Dongguan to fill key positions of this

new facility, production run has been speedily

set up and continuously improved to attain a

current monthly output of about 40% of DGCC.

It is also planned to further streamline the

operation process and launch a series of training

programmes to increase the production tonnage

and obtain ISO accreditation within 2004. For

its first 9-month operation in 2003/04, turnover

g e n e r a t e d f ro m T J C C a m o u n t e d t o

approximately HK$38 million. Although segment

results made an operating loss of approximately

HK$0.7 million after one-off absorption of the

pre-commencement expenses of HK$0.5 million,

TJCC has a l ready at ta ined operat iona l

breakeven and is expected to be a profit

contributor to the VSC Group in coming years.

Consistent with its stated mission to establish

a chain of professionally managed steel service

centres in various strategic locations in China

using an “enterprise” management approach,

the VSC Group acquired a 70% stake in an

existing plant located at Huangpu of Guangzhou

in late March 2004. The Guangzhou coil centre

(GZCC) is the third similar coil centre that the

VSC Group is responsible for operations and

managemen ts . Ou r pa r t ne r, Sh i nsho

Corporation, is the trading arm of a large Japan

steel manufacturer — Kobe Steel Group.

Through such strategic alliance, the VSC Group

expects to secure a new source of stable and

high quality supply of steel for its entire coil

centre operations. The VSC Group can also

embark on the established Japanese clientele

in both automobile and home appliance sectors

of the exist ing GZCC. GZCC has been in

operation since 1996. It is equipped with

advanced Japanese machineries and the

capacity is similar to DGCC of approximately

100,000 metric tonnes per annum, which at the

time of VSC’s acquisition was only operating at

20~30% capacity utilisation rate. Guangzhou is

now developing into a major automobile and

home appliance manufacturing hub in southern

China wi th vast demand and bus iness

opportunities for the VSC Group to exploit. We

are now rat ional is ing the resources and

undergoing necessary restructuring of sales,

marketing and production functions of this

acquired operation to increase its business and

improve profitability.


ENCLOSURESYSTEMSMANUFACTURING


The VSC Group’s 14% owned Baosteel

Jingchang joint venture in Nansha continued

to pose another strong year of growth in its

fifth year of operation. 2003/04 turnover of the

joint venture surged by 149% to over RMB495

million. Annual volume also exceeded 95,000

metric tonnes in tonnage for the year 2003.

Benefiting from the substantial increase in output

in absorbing the fixed costs, profitability also

improved impressively. Net profit for the financial

year under review amounted to approximately

RMB13.3 million. Dividend received during the

year was about RMB0.4 million and dividend

declared after year end based on distributable

profit amounted to about RMB1.3 million. The

Nansha joint venture continued to grow and

expand, leveraging on the strong support from

its shareholders, Shanghai Baosteel Group and

Japan Mitsui Group, in supplying of steel and

working capital. Ongoing improvements were

made in adapting the latest technology and

modern management tools such as balance

scorecard to set specific measurable targets on

areas of financials, customers, internal operation

and tra in ing and development. Phase 2

expansion was almost completed by year end

of 2003 and in order to grasp the booming

business of automobile parts in the region, a

plan for Phase 3 expansion is also being

considered to buy land for the new production

facilities. As in Phase 2, the Nansha joint venture

will use its own internal resources and own bank

borrowing to f inance the requisite capital

expenditure for Phase 3.

Enclosure Systems Manufacturing

After 15 months of operat ion, the VJY

enclosure systems manufacturing (VJY) is in

its second full year of production and has

accomplished encouraging performance by

making 2003/04 its first profit-making year.

Turnover surpassed the RMB100 million mark

and has increased by 174% to about HK$109

million. Segment results achieved an operating

profit in the amount of about HK$9 million, as

compared to a loss of HK$6 mil l ion in the

previous year. Such achievement testifies to the

effectiveness in implementing the VSC Group’s

strategic decision in investing substantial

resources and efforts to move downstream to

provide precision metal processing services for

fast growth industry of telecommunication and

automobile.

Currently, VJY has secured its position as one

of a selected few core vendors of customised

enclosure systems to the two leading domestic

PRC telecommunication equipment providers/

manufacturers, Huawei and Zhongxing.

Telecommunication industry in China thus far is

characterised by its high-growth potential, with

d o u b l e - d i g i t a n n u a l g ro w t h r a t e o f

telecommunication investment and Internet

users. VJY’s top customer, Huawei, enjoys a

leading position in the 3G technology and is

exporting extensively its products to markets

outside of Mainland China, for example, to the

Hong Kong mobile phone network provider —

Sunday. Using key account management and

closely monitoring the telecommunication market

trend, VJY has maintained a strong foothold in

the Mainland China telecommunication industry

to well serve its key customers’ needs in both

domestic and overseas markets. Businesses

with other major customers such as Emerson,

the renowned U.S. power supply equipment


PLASTICS &MACHINERY


provider and Japan Isuzu’s Guangzhou plant for

supply of passenger bus parts were also

developed with encouraging progress.

VJY will continue to strengthen and develop its

technical capability as a core competence to

enhance competitiveness. Production flow and

processes were redesigned and refined with an

update of product mix through Total Cycle Time

methodology and Oracle ERP application to

raise output capacity and planning achievement

rate while production lead time, work in progress

and rework are to be optimised. Outsourcing of

certain less stringent and demanding production

processes was being implemented from time to

time to provide production flexibility and to

enhance capacity. VJY’s profit margin was

affected by the high raw mater ia l costs

especially during the second half of financial

year 2003/04 and in particular the metal costs

such as steel and copper reached historic highs.

However, capitalising on its excellent steel

supply chain management and relationship with

the major steel mil ls the VSC Group have

lessened such impact to VJY’s raw material

costs. Special efforts will be placed to further

focus on cost reduct ion measures and

mechanism to lower materials costs and

manufacturing expenses. The VSC Group

reckons the need and is committed to build

manufacturing excellence in VJY to turn it into

an efficient and low cost operator to meet the

tremendous sales growth opportunity in future.

Plastics and Machinery Distribution

For the year under review, the plastics and

machinery distribution recorded a 11%

increase in turnover to approximately HK$172

million and a 21% growth of segment results of

approximately HK$10 million. For the plastics

d i v i s ion , sa les vo lume g rew by 34%,

representing the team’s effort in promoting the

engineering plastic resins of Samsung Atofina,

Samsung Cheil, Mitsubishi and GE Plastics. The

team rendered value-added technical advice to

customers in their new products development

and coordinate with the suppliers in testing the

applications. In light of the rising living standards

and higher product quality in Mainland China

as well as the lowering of import duty on resins

with Mainland China’s concession into the WTO,

demand for high quality imported resins by the

domestic manufacturers has been increasing.

During the year, the division formed a local sales

team in Shenzhen to exploit the local market. A

wholly owned trading company in Shenzhen will

be set up in mid 2004 to target this market

with ful l force. A sales team wil l also be

established in Guangzhou with its office locating

in GZCC to explore cross-selling opportunities

to its existing customers and expand the

coverage to Guangzhou, Shunde, Zhongshan

and Zhuhai. On the other hand, the machinery

division was affected by strong competition and

poor sentiment for new capital investment,

especially for the division’s costly high-end

Japanese in ject ion moulding machinery.

Commission from new machineries sold was

much reduced. The division aims to improve its

revenue by promoting more maintenance

programmes and also developing the second

hand machinery market.


PRODUCTIONPROCESS

We provide high

value-added

services to and

work closely with

home appliance,

telecommunication,

information

technology and

automobile parts

manufacturers

Coil


Metal Parts End Products


CMGDominating a niche part of the market, namely thedistribution of selected construction steel and buildingproducts to reputable dealers and end users inaffluent cities including Shanghai and Shenzhen


CONSTRUCTIONMATERIALSGROUP


CONSTRUCTION MATERIALS GROUP

(“CMG”)

As stated in last year’s annual report, the VSC

Group has expanded its CMG coverage from

Hong Kong to a few selected major cities in

Mainland China (e.g. Shenzhen and Shanghai)

to capture the booming market potential for

construction materials in those regions. In China,

unl ike most more industr ia l ised western

countries, the PRC construction industry is the

top steel-consuming sector, accounting for

about 54% of total annual steel consumption in

the country. It was estimated by PRC’s domestic

experts that steel consumption by construction

industry in 2005 would amount to 139 million

metric tonnes per annum, which is larger than

most i ndus t r i a l na t i ons ’ to ta l annua l

consumptions. Such demand is driven by

flourishing construction activities in relation to

modernisation in major cit ies and towns,

urban isat ion o f ru ra l a reas as we l l as

infrastructure development of highways, railways

and utilities facilities. Capitalising on its global

supply chain management capability and well

established distribution networks in various parts

of China, CMG is able to identify a niche part of

the market, namely the distribution of selected

construction steel and building products to

reputable dealers and end users in certain major

cit ies including Shanghai and Shenzhen.

Consisting of a team of highly seasoned and

experienced steel professionals who are well

versed in the price trend and demand and

supply of steel, CMG has successfully developed

new businesses of imported structural steel,

sheet piling, plate, rebars and galvanised steel

(GI) in those major cities, which to a large extent

accounted for the increase in turnover of CMG

during the year. Turnover and segment results

of CMG in 2003/04 have increased by 26% and

3% to approximately HK$2,873 mill ion and

HK$68 million, respectively, and accounted for

approximately 81% and 49% of the total

turnover and segment results, respectively, of

the VSC Group.

Steel Distribution

Predominantly the revenue model of VSC

Group’s CMG operation is steel distribution,

which embody stockholding business of

construct ion stee l in Hong Kong, stee l

distribution in Mainland China together with its

18.9% investment in the iSteelAsia Group,

distribution of mainly domestic steel products

in eastern China by its 66.7% owned joint

venture, Shanghai Bao Shun Chang (“BSC”), and

supply of GI to and distribution of pre-painted

galvanised steel (PPGI) for its 10% owned joint

venture with the Beijing Shougang Group. With

the added emphasis in the Mainland China

market, sales revenue from distribution of steel

in Mainland China increased from 47% in 2002/

03 to 61% of the total steel distribution turnover

in 2003/04.

Steel distribution in Hong Kong was subject to

a very challenging operating environment for the

year 2003/04. The continuous setback in the

property market spread to the construction and

building products industr ies and reduced

number of construction contracts, notably in the

private sector. While outbreak of SARS further

hit the economy of Hong Kong to the bottom,

in the second half of financial year 2003/04,


STEEL


the market sentiment improved dramatically after

the PRC central government rolled out a series

of measures including Closer Economic

Partnership Arrangement (CEPA) and relaxation

of individual travel visa to Mainland Chinese of

a number of cities to bolster and revitalise Hong

Kong economy. During the second half of the

year under review, Hong Kong staged a strong

recovery in the tourism and retail sectors. The

real estate market also started to turn more

positive and active with the resumption of land

auct ions by the Hong Kong government

announced by late 2003. These are good signs

for the Hong Kong construction industry and

hence the demand for steel, leading to the

anticipation that recovery was on the verge

which if sustainable will be beneficial to the VSC

Group in the coming years.

Under such a difficult business environment, the

Hong Kong steel stockholding department

(which consists of rebars, structural steel, soil

nails and couplers) finished the year 2003/04

with a slight increase in turnover of 2% and a

5% decrease in gross profit. In terms of tonnage,

this department turned about 444,000 metric

tonnes of steel, which is a decrease of 24%

from the same period last year. Performance of

the major unit, rebars stockholding business, is

satisfactory. Sales improved by 7% to about

HK$950 million and gross profit mildly dropped

2% to HK$52 million. As for the structural steel

businesses, turnover decreased by 19% to

about HK$188 million but gross margin has been

slightly improved to 7.3% as compared with

6.8% over the same period last year. The

engineering products business, coupler and soil

nail, continued to grow steadily by 17% to about

HK$15 million. As the first player engaged in

the rebars stockholding business in Hong Kong

since 1961, the department has built a very

solid foundation and loyal relationship with many

major property developers and contractors. The

department continued to utilise key account

management and centralised project database

in its sales and marketing endeavours. Diligent

efforts were also applied to rationalise resources,

e.g. controlling operating costs, streamlining

operation efficiency and strengthening supply

chain management. Currently, the department’s

contracts-on-hand total about HK$760 million

extending to year 2006. Highlight of some major

projects included International Exhibition Centre

at Chek Lap Kok, Phase 7 Development for The

H o n g K o n g P o l y t e c h n i c U n i v e r s i t y,

Superstructure Works at Phase 6 at Planning

Area 19 in Tung Chung, Student Hostels Phase

3 Development at City University, Sands Macau

Hotel and Wynn Resorts Macau. Although it is

believed that the worst is over for Hong Kong

economy and local construction sector, the

department remains cautious in adjusting its

business strategy. With the recovery of rebar

price driven up by the supply and demand of

the world and the shortage of iron ore, the

department aims to maintain a sustainable profit

contribution to the VSC Group.

As mentioned before, keenly aware of the strong

demand underp inned by the booming

construction industry in Mainland China, the

VSC Group is able to develop a niche market

of distr ibuting selected high qual ity steel

products in several major cities where a lot of


building and infrastructure projects are carried

out by foreign investors. The most significant

progress made by CMG during the year was to

develop the business of imported structural

steel, mainly H-beams and sheet piles, into

Shanghai. Taking advantage of import relaxation

and reduced custom duty for H-beams due to

China’s accession into WTO, the VSC Group

grasped the opportunity to successful ly

introduce high quality imported structural steel

to Shanghai. As compared to the traditional

approach of foundation work using rebars and

concrete, use of H-beams saves construction

time, offers flexibility in structural design and

increases saleable area with less columns, which

are all very well received by developers in the

booming Shanghai property market. The VSC

Group further enhanced the application and

popularity of sheet piles by introducing the

“Silent Pil ing” technology to the Shanghai

market. This advanced method highlights the

product’s strength in environmental friendliness

(less dust and noise), which is especial ly

important in densely populated cit ies l ike

Shanghai. With the operation headquarters

opened in Shanghai in May 2003, the VSC

Group is strongly positioned in promoting this

new imported H-beams and sheet piles business

which unlike rebars, the PRC is sti l l a net

importer of these H-beams and sheet piles.

Turnover arising from such distribution for 2003/

04 exceeded HK$330 million as compared to

zero in the last financial year. Coupled with other

steel products distribution to distributors and

end users in southern China, CMG achieved an

aggregate turnover of about HK$654 million for

steel distribution in Mainland China, a 2-fold

increase from last financial year. The ongoing

purchasing arrangement with the iSteelAsia

Group also gave rise to sales of steel products

of approximately HK$156 million. Given such

sizeable volume of steel distribution, the VSC

Group has benefited much in its supply chain

management to obtain bulk purchase discount

and flexible shipment delivery from the major

international steel mills, which helps both CMG

and CAMP to raise its competitiveness over

other players.

BSC is a 66.7% joint venture company formed

in 1993 with the Shanghai Baosteel Group.

Leverag ing on the st rong support and

connection with the Baosteel Group, this first

venture of the VSC Group to steel distribution

in Mainland China has persistently delivered

good performance and yield to the VSC Group

in the past decade. For 2003/04, turnover

further jumped 55% to approximately HK$772

million and net profit contribution before minority

interests rose 27% to about HK$13 million.

Another high growth potential business for the

VSC Group on steel distribution in China would

stem from its investment of 10% in the Beijing

Shougang Group’s manufacturing of pre-painted

colour-coated steel sheets or PPGI. By its 10%

investment of US$4 million, with the principal

recoverable by a put option to the Shougang

Group in Hong Kong, the VSC Group is entitled

to supplying the raw materials, GI to and

exclusively distributing at least 50% of finished

goods, PPGI at a pre-determined discounted

cost from this new factory. The factory had

commenced production since late 2003 and the

VSC Group had already provided it with the


BUILDINGPRODUCTS


requisite GI and assisted in distributing some of

its first few test-run batches of PPGI. The VSC

Group has installed the distribution network

infrastructure in preparation for the full scale

production, including establishment of sales

office and trading company in Beijing and Tianjin

as well as comprehensive marketing plan to

capture the booming demand arising from

construction of infrastructures, stadiums,

exhibition centres and hotels for the upcoming

2008 Bei j ing Olympic Games and large

automobile manufacturing facilities in Beijing,

Shanghai and Tianjin.

Building Products

Building products department achieved

turnaround for its operation and improved its

performance by having an operating profit as

segment results of HK$5 million in the year, as

compared to the operating loss of HK$2 million

in last year. Although the overal l turnover

remained at similar level as in the prior year at

HK$139 million, the contribution by various

product lines and business units to turnover has

been material ly changed. As stated in our

previous announcement, the kitchen cabinets

division has been restructured to abolish large

long-term projects in view of the inherent high

risks and low return. Thus, turnover from the

kitchen installation business has been dropped

substantially as the division is now focusing on

small but high end individual projects, which

yield much higher profit margin and demand

less human resources. Shrinkage of business in

kitchen cabinets was however compensated by

increase of turnover in project sales of sanitary

wares, Rover ti les and the retail business,

Leisure Plus as well as the new distribution of

TOTO sanitary wares in Shanghai, which all

recorded encouraging progress in business

development. The department currently has

contracts-on-hand worth around HK$33 million.

Major outstanding projects include the supply

of bathroom sanitary wares and tiles for Bellagio

Sham Tseng, Ma Wan Is land Phase 3

Oceanfront, Disney’s Hollywood Hotel, Hong

Kong Disneyland Hotel, Island Shangri-la Hotel

renovation and Cityplaza renovation.

The project sales division has managed to raise

sales revenue of its sanitary wares, TOTO,

Laufen, Hansgrohe and Rover ti les, by an

increase of 40% under the weak construction

market. Such achievement marked the hard

work and effort made by the sales team as

motivated by an effective sales commission

scheme as well as the extensive marketing effort

in promoting our product brands to target

customers. The division also successful ly

diversified its distribution network to Macau to

secure more businesses. Leisure Plus, the retail

outlet and showroom in Wanchai continued to

attract more shoppers after extension to ground

floor of the same building and opening on

Sunday. As SARS has raised in the community

a consciousness of higher quality sanitary

products for hygiene, the high end image built

by Leisure Plus in these products offering has

been very well received, resulting in more than

2-fold increase in turnover and positive profit

contribution from the previous loss making

position.


1. Republican Unitary Enterprise2. Gerdau S.A.3. Beijing Shougang Flourish Coil

Coating Ltd4. Benxi Iron & Steel (Group) Co. Ltd5. Guangzhou Iron & Steel Co. Ltd6. Guangzhou Shuangling Iron & Steel

United Co. Ltd7. Jinan Iron & Steel Co. Ltd8. Laiwu Steel Corporation

STEEL MILL

17. Jindal Stainless Ltd18. Shah Alloys Ltd19. Pt the Master Steel Mfg Co.20. JFE Steel Corporation21. Kobe Steel Ltd22. Koyei Steel Ltd23. Nippon Metal Industry Co. Ltd24. Nisshin Steel Co. Ltd25. NKK Bars and Shapes Co. Ltd26. Sumitomo Metal Industries, Ltd

9. Lian Yuan Iron & Steel Group Co. Ltd10. Maanshan Iron & Steel Co. Ltd11. Pingxiang Iron & Steel Co. Ltd12. Shanghai Baosteel Corporation13. Shuicheng Iron and Steel (Group)

Co. Ltd14. Sichuang Desheng Group

Chuxiong Steel Co. Ltd15. Wuhan Iron & Steel (Group) Co. Ltd16. Trinecke Zelezamy, A.S.

BRAZIL(2)

BELARUS(1)

CZECH(16)

SPAIN(41)

USA(51)

Our Sourcing Network


27. Dongbu Steel Co. Ltd28. Donghsin Special Steel Co. Ltd29. Dongkuk Steel Mill Co. Ltd30. Doowon Steel, Korea31. Hyundai Hysco32. INI Steel Co. Ltd33. Pohang Coated Steel Co. Ltd34. Pohang Iron & Steel Co. Ltd35. Union Steel Mfg Co. Ltd36. Liepajas Metalurgs

46. Yieh Phui Enterprises Co. Ltd47. Thai Coated Steel Sheet Co. Ltd48. Thai Cold Rolled Steel Sheet

Public Co. Ltd49. ICDAS Celik Enerji Tersance

Ve Ulasim Sanayi A.S.50. Krivorozhstal51. North American Stainless

37. West Siberian Steel Works38. Natsteel Ltd39. Columbus Stainless (Pty) Ltd40. Scaw Metals41. Acerinox S.A.42. China Steel Corporation43. Great Fortune Steel Co. Ltd44. Hai Kwang Enterprise Corporation45. Tung Ho Enterprise Corporation

CHINA(3,4,5,6,7,8,9,1011,12,13,14,15)

INDONESIA(19)

INDIA(17,18)

JAPAN(20,21,22

23,24,25,26)

KOREA(27,28,29,30

31,32,33,34,35)

LATVIA(36)

RUSSIA(37)

SINGAPORE(38)

SOUTH AFRICA(39,40)

TAIWAN(42,43,44

45,46)THAILAND(47,48)

TURKEY(49)

UKRAINE(50)


During the reporting year, the VSC Group has

obtained distribution right of TOTO sanitary

wares in Shanghai. A wholly owned trading

company, Leisure Plus Shanghai, has been set

up to handle wholesale and project sales of

TOTO in Shanghai. In the year under review,

Leisure Plus Shanghai generated a total turnover

of approximately HK$31 million, an amount of

simi lar magnitude to the annual turnover

achieved in the Hong Kong market. Although

the new operation was still not mature enough

to absorb its pre-operating expenses and fixed

overhead for a profitable situation, with the

booming property market in Shanghai and

expected rising demand as stimulated by the

2010 World Expo in Shanghai, the VSC Group

is optimistic with the Shanghai market potential

for the building products department to thrive.

Other Investment

During the year, the VSC Group’s equity interest

in iSteelAsia Holdings Limited (“iSteelAsia”)

was diluted from 19.2% to 18.9%, as caused

by a subscription of 31.2 million new shares of

iSteelAsia by the McKinsey group in settlement

of an outstanding consulting fee of US$400,000.

iSteelAsia and its subsidiaries (together the

“iSteelAsia Group”) continues to harvest from

its investment into the development of sales

infrastructure with deep market coverage in

exploiting the huge potential of the China steel

market. For the nine-month period ended 31st

December 2003, the iSteelAsia Group’s turnover

soared 117% to approximately HK$1,123 million

and in fact its first 6-month turnover had already

exceeded the total annual turnover of about

HK$811 million last year, reflecting its impressive

business growth. Profitability of the iSteelAsia

Group has however been severely affected by

the unexpected epidemics of SARS. Gross

margin was eroded as extra delivery costs and

inventory stock-up costs were incurred to

maintain the inventory turnover rate and liquidity.

Additional initial set up cost has also been

expensed to diversify the existing customer

bases to second tier cities such as Wuxi and

Shunde (Le Chong) to enhance the ability to

grow market shares. As such, a net loss of

approximately HK$6.4 million for the nine-month

period ended 31st December 2003 has been

recorded.

The VSC Group is mindful about the iSteelAsia

Group’s ability to tap the massive businesses

as generated by the robust economic growth of

China and to restore profitability with iSteelAsia’s

focusing its effort in certain cities and certain

products with the goal to optimise its resources

from economy of scale to achieve business

growth. The VSC Group wil l, as previously

agreed, continue to source and supply steel to

the iSteelAsia Group to facilitate its expansion

of steel trading operations and obtain bulk

purchase benefit by aggregating demand of the

two groups. The VSC Group will continue to

monitor this investment proactively for better

business synergy to both groups to solicit

business, share resources and enhance

business efficiency.

KEY ELEMENTS OF GROWTH

The VSC Group has undergone substant ia l

transformation and achieved tremendous growth in the

past decade. Initially as a Hong Kong based trader of


HK$0.4 billion sales to a China focused processor and

distributor achieving HK$3.5 billion turnover, the VSC

Group has flourished upon two pivotal elements —

human and capital resources.

1) Human resources

On human resources (HR) side, the VSC Group

has always advocated the principle that its staffs

are i ts most valuable capita l . Our value

propositions for total solution services could only

be delivered with the presence of outstanding

employees who are of h igh cal iber and

commit ted to meet the chal lenges and

accomplish the goals. Our transformation from

a trading business to a niche processing

operat ion with geographical ly extended

coverage of Mainland China demands dramatic

cultural and mentality changes of our people.

This requires them to adapt flexibly and loyally

to the new requirements and environment.

Ongo ing bus iness reeng inee r ing w i th

widespread application of Total Cycle Time

methodology has been instrumental in helping

our staff changing from flexible opportunist

traders to disciplined manufacturer focusing on

details for continuous improvements. With the

development of new businesses and expansion

through mergers and acquisit ions, our HR

system and corporate structure have been

cons t an t l y mod i f i ed and evo l ved t o

accommodate staff with diverse background and

to help them to become coherent members of

the VSC team. The VSC Group’s HR strategy

for its approach into the China market is to

encourage every employee to explore his/her

career development together with the corporate

business growth in China. Various job rotation

or relocation opportunities are provided to

several senior managers in some of the business

units or branch companies located in different

areas of China. Meanwhile the VSC Group is

str iv ing hard to adopt a h igh degree of

localisation. Most of the senior executives

including head of the CAMP operations, HR

director and general managers of various

business units are professionals recruited locally

with western education and/or multi-national

corporation working background who possess

thorough understanding of business practices

in Mainland China as well as the professionalism

o f moder n management m indse t and

experiences. With the operation headquarters

set up in Shangha i , the VSC Group is

determined to recruit the best local talents and

build a strong local management team rooted

in China.

Under the above-mentioned directives, the VSC

Group continued to grow rapidly in headcounts.

As of May 2004, the VSC Group employed a

total of 1,241 staff, a 41% increase over last

year. The increase in number of employees is

mainly due to the expansion of VJY, the new

GZCC and the new Shanghai operations of steel

and building products.

Headcount Headcount

Department May 2004 June 2003

CAMP

— Coil Centres 303 142

— Enclosure Systems 731 580

— Plastics & Machinery 21 14

CMG

— Steel 44 43

— Building Products 25 27

— Shanghai Offices 59 22

Corporate Support 58 51

Total: 1,241 879


The VSC Group recognises the importance of

aligning individual staff’s interest to the corporate

goa l . Based on core competence and

achievement assessment related performance

management system, tailor-made incentive

schemes for bonuses and commission with

measurable targets in achieving key success

factors are designed with bottom-up approach

for respective business units and corporate

support functions. The VSC Group also believes

in investing in its own people to provide the

best human capital for supporting its high

growth and improving profitabil ity. The HR

department launches many on-the-job trainings

plus training subsidy to employees to enhance

their knowledge and skills. It is planned to run

a one-year comprehensive training programme

jointly held by a renowned business school in

China for some high-potential managers to

develop them for further progression. The VSC

Group also stresses the need to foster good

and timely communication with staff. Annual

mission day is held to communicate the

corporate mission and goals with all staff.

Periodical staff forums are organised to collect

staff opinion and feedback on company policy.

Regular newsletters in electronic format are

published to provide staff with report of the

latest corporate development and recreational

activities. Total staff costs including contribution

to retirement benefit schemes incurred during

2003/04 amounted to approximately HK$69

million. During the year under review, options to

subscribe 20,045,000 shares have been offered

and granted to participants under the new share

option scheme adopted since 12th November

2001.

2) Capital resources

On f inanc ing s ide, the VSC Group has

continuously refined its capital structure with the

objective to secure the necessary funding at

optimal cost of capital to finance its pursuit of

business development.

In terms of equity, number of issued shares

increased from 247 million in 1994 to 368 million

in 2004. Shareholders’ equity stood at about

HK$661 million as at 31st March 2004. During

the past 10 years, the VSC Group has from the

capital market received equity money of over

HK$570 mill ion through different exercises

including initial public offer, spin-off listing, share

placements, bonus warrants and stock options.

As stated in the Company’s announcement

dated 18th November 2003, the most recent

share placement was done on 17th November

2003 by exercising the general mandate as

authorised to the Board of the Company in the

2002/03 Annual General Meeting for 33 million

new ordinary shares at HK$1.8 per share,

representing a discount of 6.25% to the closing

pr ice of the Company’s shares on 14th

November 2003 (being the last trading date of

the shares on the Stock Exchange prior to the

date of the placing agreement) at HK$1.92 per

share, bringing in net proceeds of about

HK$54.7 million for financing the continuous

development of the VSC Group’s CAMP

operations in the PRC. The said placement was

done through Celestial Capital Limited to

independent third parties and represented

approximately 9.36% of the Company’s total

issued share capital on a fully diluted basis.

During the period under review, approximately


HK$30.5 million was utilised to acquire the 70%

stake in GZCC. The balance of the proceeds

was used as working capital of the VSC Group.

Another share placement involving placement

of 31.2 million existing old shares at HK$1.25

per share to institutional investors was also

completed in July 2003. These exercises could

not only inject the required capital but also

improve our shareholders’ base with reputable

institutional investors and funds, who should in

turn help to enhance shareholders’ value by

improving market awareness of the Company

with a strong shareholder base.

In terms of bank borrowings, the VSC Group as

a steel distributor and processor requires

significant short-term banking lines to finance

its working capital need for inventory and

accounts receivable. Throughout the years, the

VSC Group has deve loped exce l l en t

relat ionships with a number of local and

international banks in Hong Kong and continues

to expand its banking profile. Aggregate banking

facilities in short-term trade lines surge from

HK$0.8 billion in 1994 to over HK$1.4 billion in

2004 with number of principal banks increasing

from five to fifteen, including local, Chinese,

Japanese and European banks. Such trade lines

offered consist of letter of credit and trust receipt

loans. Interest costs are levied on inter-banks

borrowing rates plus very competitive margin.

As the VSC Group establishes more presence

and operations in China, the need for RMB

financing also emerges to satisfy payments of

local operat ing expenses and domest ic

purchases. RMB revolving loans and bi l l

exchange facilities have been obtained from

domestic and foreign banks in the amount of

RMB110 million. With the VSC Group’s adding

investment in service centres, longer-term

borrowings for better cash flow management

are preferred in funding capital expenditures of

land, plant and machinery. In October 2003,

the VSC Group successfully secured a HK$250

million three-year revolving credit and term loan

facility from a syndicate of nine of its existing

bankers, reflecting a vote of confidence and

support from the banking sector. The facility

together with its other short-term trade lines

could further strengthen the financial position

and enable the VSC Group to gain more

flexibility in capturing market opportunities and

pursue business growth in China.

CORPORATE GOVERNANCE

The VSC Group is committed to ensuring high

standards of corporate governance in the interests of

its shareholders. As a company celebrating its 10-

year anniversary of listing in the Stock Exchange, the

VSC Group has continued to evolve and reform its

corporate practices and structure in response to the

increasing demand and expectation for better corporate

governance to enhance shareholders’ value. The Listing

Rules in Hong Kong have recently been amended with

major changes and new rules relating to corporate

governance issue. The VSC Group will comply with all

these new mandatory requirements and minimum

standards. It will also closely keep abreast of the

progress of the drafting of new code in this area and

strive to adopt the recommended best practices upon

its finalisation. Efforts and principles adopted by the

VSC Group in promoting its corporate governance are

as follows:


1) The Board and senior management —

Currently, the Board consists of four executive

directors and four non-executive directors (of

whom three are independent). The executive

directors are responsible for managing the

overall business and implementing corporate

strategies. The non-executive directors are all

well experienced senior business executives who

advise the executive directors and management

on business strategies and development. The

executive directors have regular meetings with

the head of CAMP or CMG, general managers

of respective business units and key staff of

support units to discuss major business plans

and review operation and financial performance.

Special review meeting or brainstorming

sessions are also held from time to t ime.

Seasoned independent advisers with diversified

industry expertise and experience are invited to

join these meetings whenever necessary. All

executive directors and senior management are

required to declare in an annual management

compliance statement his/her full compliance in

conducting the business activities in a legal and

ethical manner.

2) Audit committee and internal control — The

audit committee has been set up s ince

December 1998 and consists of three non-

executive directors with Mr. Ting Woo Shou,

Kenneth as Chairman and Dr. Chow Yei Ching

and Dr. Shao You Bao as members (of whom

two, including the chairman of the audit

committee, are independent non-executive

directors). Following the amendment of the

Listing Rules, the VSC Group will aim to ensure

at least one of the members of the audit

committee is an independent non-executive

d i rector w i th appropr ia te pro fess iona l

qualifications or accounting or related financial

management expertise as required. The Chief

Financial Officer was appointed as the qualified

accountant of the Company on 31st March 2004

in compliance with the Listing Rules. The audit

committee meets formally twice a year to review

and discuss the various internal control and

audit issues as reported by the external auditors

and internal audit team. It also reviews the

interim and final financials and recommends to

the Board for approval. During the year, various

internal audit review and investigation have been

conducted in respect of payrol l, payment

approval, sales and purchase cycle for different

business units. Through this mechanism, the


VSC Group aims to maintain a proper internal

control environment and accounting system,

which can safeguard the company assets and

provide reliable financial reports. These audited

consolidated accounts for the year ended 31st

March 2004 of VSC now reported on have been

reviewed by the audit committee.

3) Code of best practice — The Company has

complied with the Code of Best Practice (the

“Code”) as set out in Appendix 14 of the Listing

Rules throughout the accounting year covered

by the annual report, except that the non-

executive directors are not appointed for specific

terms. However, the non-executive directors are

subject to retirement by rotation and re-election

at annual general meeting in accordance with

the Company’s Bye-laws. In the opinion of the

Directors, this meets the objective of the Code.

A draft to revise the Code (which has been

renamed the Code on Corporate Governance

Practices) has been issued by the Stock

Exchange for public consultation. The draft

contains 2 t iers of recommended board

prac t i ces — min imum s tandards and

recommended best practices. As stated before,

the VSC Group will ensure full compliance on

the minimum requirements and endeavour to

adopt the recommended best practices.

4) Directors’ securities transactions — The

Company adopted on 31st March 2004

“Appendix 10 — Model Code for Securities

Transactions by Directors of Listed Issuers” as

the required standard against which Directors

must measure the i r conduct regard ing

transactions in securit ies of the Company

according to Appendix 10.1 of the Listing Rules.

5) Investor relationship and communication —

The VSC Group is committed to promote

t r anspa rency and ma in t a i n e f f ec t i v e

communication with investors, analysts and the

public press. The management periodically

meets with existing and potential investors to

make corporate presentations. Regular plant

visits to our various manufacturing facilities are

arranged for various interested fund managers,

research analysts and bankers. The investors

section and highlight of most updated news on

home page of our website provides the investor

community and the public with easy access of

the VSC Group’s corporate information, financial

information, announcements and interim/annual

reports. The VSC Group continues to maintain

high level of transparency in information

disclosures. Again as in prior two years, its 2003

annual report has been mentioned several times

by the Judges’ Report of the HKMA Best Annual

Report Awards and was referred to as one of

the five companies, which deserved special

mention in the provision of understandable

annual reports.

Amid the increased complexity and operational

scale, the VSC Group also continues to improve

the t ime l iness and promptness o f the

dissemination of its financial information such

as the timing of results announcement to let its

shareholders and public investors be aware of

the most updated status at the earliest time.

Page 2 / 3Mission Statement & Contents

RAILWAYStrengthencommunication with anefficient transportationnetwork

PIPELINEDeliver energy topower our living

AUTOMOBILEA milestone in humanhistory by providingmobility to our dailylives

CONSTRUCTIONThe fundamental ofinfrastructures andconstructions

APPLICATION

HOME APPLIANCESEnlighten our livesmaking them morecomfortable, colorfuland convenient

CONTAINERHold our resourcesin perfect condition

MACHINERYLead economicdevelopment throughcommercialisationand industrialisation

VESSELBring us all ourneeds in goodshape around theworld

Page 50Directors’ Profile

EXECUTIVE DIRECTORS (As at 31st March 2004)

MR. ANDREW YAO CHO FAI

aged 38, is the chairman and chief executive officer of

the Company. Mr. Yao graduated from the University

of California, Berkeley and Harvard Graduate School

of Business. He is responsible for the VSC Group’s

overall corporate strategy and objectives. He serves

as a member of Hong Kong Housing

Society and the chairman of the

construction material for Federation

of Hong Kong Industries. He also sits

on the Shanghai People’s Political

Consultative Conference, deputy

cha i rman o f Shangha i Youths

Federation, deputy chairman of the

H o n g K o n g U n i t e d Yo u t h

Association Limited and director of

t h e S h a n g h a i F u d a n

University. Mr. Yao is also

t h e c h a i r m a n o f

iS t ee lAs i a Ho ld i ngs

L i m i t e d w h i c h i s a

company listed on GEM. He is the brother of Ms.

Miriam Yao Che Li.

MS. MIRIAM YAO CHE LI

aged 39, is the deputy chairman of the

Company. Ms. Yao received her Bachelor

of Science degree in Accounting from the

University of Southern California. She

worked for a major international

accounting firm and an international

investment bank prior to joining the

VSC Group in 1991. Ms. Yao is also

a Certified Public Accountant in the

Un i ted S ta tes (US ) . She i s

responsible for the overall sourcing

and purchasing functions of the VSC Group. Ms. Yao

is also the deputy chairman of iSteelAsia Holdings

Limited which is a company listed on GEM. She is the

sister of Mr. Andrew Yao Cho Fai.

MR. JOHNSON HO SAI HOU

aged 37, is an executive director, the chief

financial officer and qualified accountant of

the Company. Mr. Ho obtained his

Bachelor of Social Sciences degree in

Accounting from The University of

Hong Kong. Prior to joining the VSC

Group in 1993, Mr. Ho worked for

a major international accounting

firm for more than six years. Mr.

Ho is an associate member of the

Hong Kong Society of Accountants and a fellow

member of the Association of Chartered Certified

Accountants. He is responsible for the overal l

accounting and finance functions of the VSC Group.

MR. FERNANDO DONG SAI MING

aged 42, is an executive director of the Company

responsible for general administration. He has over

seventeen years’ experience in international trading.

Mr. Dong is extensively involved in warehouse

management, property investment and the

China operations of the VSC Group. He has

also been assisting the VSC Group to

establish new manufacturing facilities in

both Hong Kong and Mainland China. Mr.

Dong joined the VSC Group in 1987.

Page 51Directors’ Profile

NON-EXECUTIVE DIRECTOR (As at 31st March

2004)

DR. SHAO YOU BAO

aged 83, is the chairman of Van Yu Trading Co., Ltd.

and Van Fung Co., Ltd. and a director of a number of

other companies including Kincheng-Tokyo Finance

Co., Ltd. and Toyoda (H.K.) Co., Ltd. Dr.

Shao is also a non-executive director of

Jusco Stores (Hong Kong) Co., Limited.

Dr. Shao has approximately 50 years’

experience in banking and finance and

was a committee member of the

Consultative Committee on the Hong

Kong New Airport and Related

Projects. He was also appointed as

a member o f the Pre l im ina ry

Committee of the Hong Kong Special Administrative

Region. In October 1998, he was awarded the Silver

Bauhinia Star (SBS) Medal in recognit ion of his

distinguished public service in Hong Kong and of his

valuable contribution to the preparatory work for the

establishment of the Hong Kong Special Administrative

Region. Dr. Shao graduated from Kobe University,

Japan with a Masters degree in Economics in 1943

and holds an Honorary Doctorate degree in Law from

Ohio University in the US.

INDEPENDENT NON-EXECUTIVE DIRECTORS (As

at 31st March 2004)

DR. CHOW YEI CHING

aged 68, is the founder and chairman of Chevalier

Group that comprises two public listed companies in

Hong Kong. He is a non-executive director of Shaw

Brothers (Hong Kong) L imited and Telev is ion

Broadcasts Limited. Dr. Chow is the Honorary Consul

of The Kingdom of Bahrain in Hong Kong

and a standing committee member of the

Chinese People’s Political Consultative

Conference, Shanghai. Dr. Chow holds

an Honorary Degree of Doctor of

Laws from The University of Hong

Kong and an Honorary Degree of

D o c t o r o f B u s i n e s s

Administration from The Hong

Kong Polytechnic University. He also serves in a

number of positions in various educational, charitable

and trade organisations.

MR. KENNETH TING WOO SHOU, JP

aged 61, is the managing director of Kader

Holdings Co. Limited, a listed company in Hong

Kong. Mr. Ting graduated from the University of

Illinois with a Bachelor of Science degree in

Mechanical Engineering. He is a non-executive

director of New lsland Printing Holdings

Limited and a director of a number of

private companies in Hong Kong. He

is a lso the representat ive of

F e d e r a t i o n o f H o n g K o n g

Industries in the Legislative Council.

He has extensive experience in property development,

industrial and investment businesses.

MR. HAROLD RICHARD KAHLER

aged 56, is a business consultant, specialised in

supporting companies that are expanding their

presence in the greater China region. Mr. Kahler

graduated from George Washington University with a

Masters Degree in Economics and received his Juris

Doctor from Georgetown University. Mr. Kahler has

extensive Asia experience. From 1990 to mid-2002,

he served Caterpillar Inc., in Asia - first as managing

director of P.T. Natra Raya, a manufacturing and

assembly operation in lndonesia; then as

president of Caterpillar China, where he was

responsible for establishing a new business

subsidiary to manage Caterpi l lar ’s

growing interests and investments in the

region. Other ass ignments wi th

Caterpillar and the US Government

have p rov i ded Mr. Kah l e r

experience with Japan, Vietnam

and other Asian economies. In

2002, Mr. Kah ler served as

cha i rman o f the Amer ican

Chamber of Commerce in Hong

Kong.

Page 52Financial Review

THE FOLLOWING MANAGEMENT DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH

CONSOLIDATED ACCOUNTS AND NOTES THERETO INCLUDED ELSEWHERE HEREIN.

(Note: The financial years ended 31st March 2003 and 2004 are referred to herein as FY2003 and FY2004,respectively. Certain comparative figures in FY2003 have been reclassified to conform with the presentationin FY2004.)

(1) Consolidated Profit and Loss Account

FY2004 FY2003 % Change

Ref HK$’000 HK$’000

1.1 Turnover 3,549,110 2,755,769 +29%

Cost of sales (3,314,790) (2,536,655) +31%

1.1 Gross profit 234,320 219,114 +7%

Other revenue

— Interest income 6,310 4,887 +29%

— Dividend income from a long-term

investment 374 188 +99%

— Return from a joint venture 4,344 6,615 -34%

1.2 Selling and distribution expenses (21,352) (17,107) +25%

1.2 General and administrative expenses (119,498) (135,148) -12%

Surplus/(Deficit) on revaluation of

investment properties 2,818 (1,500) N/A

Gain on disposal of an investment property 2,476 — N/A

Operating profit 109,792 77,049 +42%

1.3 Finance costs (13,337) (11,144) +20%

Profit before taxation and minority interests 96,455 65,905 +46%

1.4 Taxation (11,061) (2,164) +411%

Minority interests (4,331) (3,329) +30%

1.5 Profit attributable to shareholders 81,063 60,412 +34%

1.6 Dividends per share HK5.9 cents HK5.8 cents +2%

1.7 Earnings per share

— Basic HK24.6 cents HK17.4 cents +41%

— Diluted HK23.6 cents HK17.3 cents +36%


Consolidated results

1.1 Turnover and gross profit

In line with the VSC Group’s earlier stated intention to expand in

the fast growing China market, the 29% increase in turnover

was mainly attributable to the increase in turnover from steel

processing and distribution in Mainland China. Total turnover

from Mainland China accounted for approximately 67% of total

turnover as compared to 54% in FY2003. However, in light of

the substantial monetary resources involved and credit standing

of potential customers, the VSC Group adopts a very prudent

approach in developing the steel distribution business in Mainland

China whereby transactions are generally done on indent (similar

to back-to-back) and cash on delivery (COD) basis, resulting in

a relatively lower margin for the VSC Group. As such, overall

gross margin of the VSC Group decreased from 8.0% to 6.6%.

1.2 Operating expenses

Selling and distribution expenses were in line with the growth in turnover but increased by a lesser

degree of 25%. This was due to the lower storage and transportation fee associated with the increase

in indent sales. With the VSC Group’s continuous efforts in cost saving, general and administrative

expenses were reduced by approximately HK$16 million or a decrease of 12% from FY2003. Savings

mainly stem from the reduction in office rental costs and professional fees. Since majority of the

purchase contracts were in US dollar, the VSC Group benefited from the weak US dollar in the

second half of FY2004 by hedging with exchange rate forward contracts at favourable rates. A net

exchange gain of approximately HK$3.6 million was recorded whereby the net exchange loss for

FY2003 was approximately HK$0.4 million.

1.3 Finance costs

The increase was the result of increase in trade thus more fully

utilising the trade lines. In addition, during FY2004, the VSC

Group had arranged a term loan for the VSC Group to expand

businesses through investment. Interest charges of this HK$250

million three-year syndication loan and increase in borrowings

in RMB loans for its investments and operations in Mainland

China were levied at higher rates than the normal short-term

trade line trust receipts loans available to the VSC Group in

Hong Kong. Such increases in finance costs were however

alleviated by conversion of most of the trust receipts loans from

US dollar to Hong Kong dollar to enjoy the lower interest rate

on HIBOR instead of LIBOR as a result of the weak US dollar.

Interest cover (operating profit divided by finance costs) improved

to about 8.23 (FY2003: 6.91) as a result of the improvement in

operating profit. The VSC Group will closely monitor the trend of

interest rate and will utilise, if necessary, appropriate financial

instruments to hedge against any significant fluctuation.

1.4 Taxation

The substantial 411% increase in taxation was mainly attributable to the write-back of taxation

provision of HK$5 million in FY2003 and partly attributable to the increase of Hong Kong profits tax

Turnover by Geographical Segmentfor the years ended 31st March%

0

20

40

60

80

100

02 03 04

33

67

Mainland China

46

54

51

49 Hong Kong

Interest Coverfor the years ended 31st Marchmultiple

0

1

2

3

4

5

6

7

8

9

10

02 03 04

8.23

6.91

2.51


rate from 16% to 17.5%. Excluding such write-back, the increase in taxation was only 52% and was

in line with the 46% growth in profit before taxation. Most of the CAMP operations including VJY,

TJCC and GZCC are currently still under tax holidays and are exempted from Mainland China enterprise

income tax. During the year, DGCC was awarded the status of New and High Technology Enterprise

as well as Advanced Technology Enterprise and could thus enjoy further reduction in PRC income tax

rate in coming years.

1.5 Profit attributable to shareholders

Profit attributable to shareholders increased by 34% to HK$81 million. Net

profit margin (profit attributable to shareholders divided by turnover)

improved from 2.2% in FY2003 to 2.3% in FY2004. Return on equity

(profit attributable to shareholders divided by shareholders’ equity) improved

to 12.3% (FY2003: 11.6%) while return to total assets (profit attributable

to shareholders divided by total assets) slightly decreased to 4.0% (FY2003:

4.3%).

1.6 Dividend

Cash dividend payout (total cash dividends proposed for the year divided

by profit attributable to shareholders X 100%) decreased to around 26%

(FY2003: 30%). It is the VSC Group’s policy to try to pay dividends to

reward its shareholders. Taken into account its stated strategy for further

expansion, especially in the CAMP operations, the management will balance

the goal to achieve an attractive yield return for its shareholders while

maximising the VSC Group’s shareholders’ value in the medium to longer

term. The total cash dividends per share for FY2004 were HK5.9 cents

(FY2003: HK5.8 cents).

1.7 Earnings per share

Basic earnings per share increased by 41% to HK24.6 cents due to increase

in profit attributable to shareholders coupled with the reduction in weighted

average number of shares in issue during FY2004. The reduction in weighted

average number of shares was attributable to the VSC Group’s voluntary

share repurchase exercise of approximately 53 million shares in January

2003, which was partially offset by the new issuance of approximately of

57 million new shares through placement and the exercises of warrants

and share options throughout FY2004. Diluted earnings per share increased

by 36% to HK23.6 cents.

Return on Equityas at 31st March%

0

2

4

6

8

10

12

14

02 03 04

12.3

11.6

1.9

Cash Dividend Payout/Cash Dividends Per Sharefor the years ended 31st March% HK cents

Cash Dividend Payout

Cash Dividends Per Share0

10

20

30

40

50

60

70

80

90

100

02 03 04

26%30%

91%

0

1

2

3

4

5

6

7

8

9

10

2.6

5.8 5.9

Basic Earnings Per Sharefor the years ended 31st MarchHK cents

0

5

10

15

20

25

30

02 03 04

24.6

17.4

2.8


Segment results

Turnover Segment results

FY2004 FY2003 % Change FY2004 FY2003 % Change

HK$’000 HK$’000 HK$’000 HK$’000

CAMP

— Coil centres 392,513 277,302 +42% 51,544 56,840 -9%

— Enclosure systems 109,463 39,986 +174% 8,848 (5,505) N/A

— Plastics and machinery 172,265 155,063 +11% 9,542 7,916 +21%

CAMP total 674,241 472,351 +43% 69,934 59,251 +18%

CMG

— Steel distribution 2,734,287 2,138,344 +28% 62,994 67,722 -7%

— Building products 138,737 141,258 -2% 4,704 (2,078) N/A

CMG total 2,873,024 2,279,602 +26% 67,698 65,644 +3%

Other operations 1,845 3,816 -52% (644) 329 N/A

3,549,110 2,755,769 +29% 136,988 125,224 +9%

Turnover by Product/Operationfor the years ended 31st March%

04 03

Coil centres11.06 10.06

Enclosure systems3.08 1.45

Plastics and machinery4.86 5.63

Steel distribution77.04 77.59

Building products3.91 5.13

Other operations0.05 0.14

Segment Results by Product/Operationfor the year ended 31st March 2004%(Note 1)

Coil centres37.45

Enclosure systems6.43

Plastics and machinery6.93

Steel distribution45.77

Building products3.42

Note:

1. Other operations and comparative % figures for FY 2003 were excluded as certain of the respective segment results were lossfigures.


Turnover/Segment Results by Business Segmentfor the year ended 31st March 2004(Note 1)

Turnover Segment Results

CMG

81%

49%

CAMP

19%

51%

81%

49%

19%

51%

Turnover/Segment Results by Business Segmentfor the year ended 31st March 2003(Note 1)

Turnover Segment Results

CMG

83%

53%

CAMP

17%

47%

17%

47%

83%

53%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

02 03 04

Turnover by Business Segmentfor the years ended 31st MarchHK$ million

2,873

674

2,280

472

1,748

383 CAMP

CMG

0

20

40

60

80

100

120

140

160

02 03 04

Segment Results by Business Segmentfor the years ended 31st MarchHK$ million

68

70

CAMP

66

59

29

37

CMG

0

20

40

60

80

100

02 03 04

Turnover of CAMP by Geographical Segmentfor the years ended 31st March%

100100100

Hong Kong

Mainland China

Hong Kong

Mainland China0

20

40

60

80

100

02 03 04

59

41

37

63

44

56

Turnover of CMG by Geographical Segmentfor the years ended 31st March%

Note:

1. Other operations were excluded in the presentation.


a) China Advanced Materials Processing (“CAMP”)

CAMP operations became more significant within the VSC Group. Turnover was up 43% to

approximately HK$674 million and was entirely derived from Mainland China. While accounting for

only 19% (FY2003: 17%) of the VSC Group’s total turnover, CAMP contributed 51% (FY2003: 47%)

towards the VSC Group’s segment results. Major profit contribution was still derived from the coil

centre operations despite its decrease in segment results. With improved contribution from both VJY

and plastics and machinery, CAMP finished FY2004 with 18% increase in segment results to

approximately HK$70 million.

Coil centre operations had faced a very volatile operating environment during FY2004. First, the SARS

epidemic had stagnated sales activities in the first half of the financial year. Then the soaring steel

price for imported quality flat steel products eroded the profit margin. DGCC handled the two challenges

relatively well. Sales boosted after SARS and turnover for FY2004 increased 27% to approximately

HK$353 million. The increase in steel price was also managed by DGCC as an opportunity rather than

a threat. By absorbing part of the increase in price, DGCC had formed a stronger bond with its

customers. Average gross margin was down from 25% in FY2003 to 18% in FY2004 but was restored

to a better level of over 20% towards the end of FY2004. TJCC commenced production in July 2003

and achieved breakeven in September 2003. Result was satisfactory and turnover reached

approximately HK$38 million for the 9-month period in FY2004. Its segment results made an operating

loss of about HK$0.7 million out of which HK$0.5 million was pre-operating cost. GZCC was only

acquired in late March 2004 and thus had immaterial contribution to the results of FY2004. GZCC is

however a well-established coil centre with production capacity similar to DGCC. Both TJCC and

GZCC are therefore expected to contribute profit to the VSC Group in the future.

VJY was able to turnaround by harvesting from its earlier efforts on developing products and customers.

With broadened customer base, turnover increased by 174% to approximately HK$109 million. Higher

production volume and better production planning not only helped reduce materials procurement cost

but also allowed VJY to utilise materials effectively. Thus, gross margin was improved significantly. In

line with the growth in turnover, selling and distribution expenses increased 197% whereas general

and administrative expenses increased by 20% which was mainly due to the increase in depreciation.

Plastics and machinery division finished FY2004 with 11% increase in turnover and 21% increase in

segment results. Sales volume grew by 34%. During FY2004, the division had set up a sales team in

Shenzhen. Another sales team will be set up in Guangzhou in mid 2004 to capture the domestic

market for plastic resins.

b) Construction Materials Group (“CMG”)

CMG operations had successfully extended its presence in Mainland China with most of its growth

steming from steel distribution in Mainland China. Turnover was 26% up to approximately HK$2,873

million and was 59% (FY2003: 44%) derived from Mainland China. While accounting for a majority of

81% (FY2003: 83%) of the VSC Group’s turnover, CMG contributed only 49% (FY2003: 53%) towards

the VSC Group’s segment results.


In terms of turnover, steel distribution division is the largest division of the VSC Group. Steel distribution

in Hong Kong, which consists of stockholding of rebars, structural steel, and soil nails and couplers,

remained stable with a mild 2% increase in turnover and a 5% decrease in gross profit. Sales of

rebars improved by 7% to approximately HK$950 million while gross profit dropped by 2% to

approximately HK$52 million. Structural steel business, however, recorded a drop in both turnover

and gross profit by 19% and 14%, respectively. Soil nails and couplers business had a 17% growth in

turnover.

The VSC Group continues to establish its presence in the PRC market. This can be seen as steel

distribution in Mainland China experienced a more rapid growth. The VSC Group had achieved a

rapid and deep penetration in the Shanghai market. The “Silent Piling” technology introduced during

FY2004 was well received by the Shanghai construction market. The related demand for H-beams

and sheet piles was strong and turnover for distribution of these two products exceeded HK$330

million. Together with distribution of other steel products in southern China, turnover for steel distribution

in Mainland China totaled approximately HK$654 million. Ongoing purchasing arrangement with the

iSteelAsia Group further brought in sales of approximately HK$156 million. The 66.7% owned joint

venture, BSC, also had a remarkable year. Turnover jumped 55% to approximately HK$772 million

and profit before minority interests increased by 27% from approximately HK$10 million to HK$13

million.

For FY2004, turnover generated from the building products division decreased by 2% to approximately

HK$139 million. Segment results achieved a profit of approximately HK$5 million as compared to a

loss of approximately HK$2 million in FY2003. The VSC Group decided to scale down the estate

project based sizeable kitchen installation business after consideration of the uncertainties in future

prospects, risks inherent and low profitability with such projects. As a result, turnover of the kitchen

installation business dropped by 59% to approximately HK$41 million. However, the shrinkage was

compensated by the increase in turnover of the project sales business and the retail business. Project

sales of sanitary wares and tiles were up by 40% from FY2003 with improved gross margin, thanks to

effort by the sales team and extensive marketing to increase awareness of the products through the

retail showroom, Leisure Plus. Leisure Plus offered quality sanitary wares and kitchen cabinets to

retail customers. Number of new customers increased substantially through referral from existing

customers and promotion in home journals. Turnover increased by 238% to approximately HK$15

million and a turnaround from the loss position in FY2003 to become profitable was also achieved.

During FY2004, building products division had ventured into the Mainland China market. The division

had obtained distribution right of TOTO sanitary wares in Shanghai. Result was encouraging with

turnover amounted to approximately HK$31 million.


(2) Consolidated Balance SheetAs at 31st March

2004 2003 % ChangeRef HK$’000 HK$’000 HK$’000 HK$’000

2.1 Fixed assets 159,366 125,789 +27%Investment properties 36,448 31,000 +18%Investment in associates 2 2 0%

2.2 Long-term investments 60,012 45,711 +31%2.3 Goodwill 8,290 4,624 +79%

Deferred tax assets 447 — N/A

Current assets: 1,756,709 1,211,578 +45%2.4 Inventories 695,941 381,477 +82%2.5 Due from customers on

installation contract work 11,450 19,034 -40%Prepayments, deposits and

other receivables 88,231 79,520 +11%2.6 Accounts and bills receivable 836,357 655,025 +28%

Loans receivable 6,891 6,891 0%3.1 Pledged bank deposits 8,374 7,957 +5%3.1 Cash and other bank deposits 109,465 61,674 +77%

Current liabilities: (1,239,224) (871,073) +42%3.1 Short-term borrowings (798,610) (590,667) +35%

Accounts and bills payable (350,629) (212,020) +65%2.5 Due to customers on

installation contract work (157) (4,590) -97%Receipts in advance (34,168) (29,782) +15%

2.7 Accrued liabilities andother payables (46,157) (27,938) +65%

Taxation payable (9,503) (6,076) +56%

3.1 Long-term bank loan,non-current portion (97,222) (20,475) +375%

Deferred tax liabilities (104) (250) -58%

Net assets 684,724 526,906 +30%

2.8 Capital and reserves:Share capital 36,778 31,226 +18%Reserves 444,953 356,222 +25%Retained profit 168,529 114,845 +47%Proposed dividends 10,298 18,111 -43%

3.1 Shareholders’ equity 660,558 520,404 +27%Minority interests 24,166 6,502 +272%

684,724 526,906 +30%


As a whole, the VSC Group significantly increased its scale of operation with inflation of both assets and

liabilities. Current assets and current liabilities increased by 45% and 42% respectively, as a result of the

expanded scale of steel processing and distribution businesses, which geared up the inventories and accounts

and bills receivable as well as the corresponding bank borrowings, accounts and bills payable.

2.1 Fixed assets

Net book value of fixed assets has increased by approximately HK$34 million. Total fixed assets

additions during FY2004 amounted to approximately HK$21 million which included mainly capital

investment in TJCC. Additions attributable to the acquisition of GZCC amounted to approximately

HK$31 million. The increase was offset by annual depreciation charge of approximately HK$17 million

and disposal of fixed assets with net book value of approximately HK$1 million.

2.2 Long-term investments

Long-term investments increased by approximately HK$14 million. In FY2004, the VSC Group invested

approximately HK$8 million to additionally increase the stake of its investment in the joint venture with

Beijing Shougang Group from 7.5% to 10%. The investments in iSteelAsia had been restated from

approximately HK$15 million to approximately HK$22 million with reference to market share price at

year-end. The increase of approximately HK$6.5 million was transferred to the investment revaluation

reserve.

2.3 Goodwill

Goodwill increased by approximately HK$4 million. In late March 2004, the VSC Group acquired 70%

beneficial interest in a coil centre in Guangzhou — GZCC. Goodwill arising from this acquisition

amounted to approximately HK$4 million. Goodwill for the earlier acquisition of VJY was adjusted up

by approximately HK$2 million as a result of an adjustment made to the consideration paid for the

acquisition of the business. Amortisation of goodwill for FY2004 amounted to approximately HK$2

million.

2.4 Inventories

Steel price soared substantially during FY2004 reaching historical high over the past decade. Coupled

with the addition of new businesses as well as the expansion of scales in existing operations,

inventories increased by 82% to approximately HK$696 million from last year’s level of approximately

HK$381 million. Increase in inventories of approximately HK$314 million is shared among CAMP

(HK$126 million) and CMG (HK$188 million). For CAMP, the majority of increase of approximately

HK$97 million arose from coil centre operations with the expanded DGCC and the new TJCC plus

GZCC. For CMG, the major addition came from the Hong Kong stockholding business with

approximately HK$95 million of rebars and the balance mainly related to the new steel distribution

business in Shanghai which are mostly goods in transit. All the rebars for Hong Kong business have

been covered under fixed price contracts with local developers and contractors, and such increase in

stock position was inflated by the rise in steel price (increase of average unit cost was about 33%) as

the increase in terms of tonnage was only 13% against the 49% increase in dollar value. As a result of

such substantial increase in year-end inventories, overall inventory turnover (average inventories divided

by cost of sales X 365 days) increased to about 59 days (FY2003: 43 days). The overall exposure was

closely monitored by centralising the steel purchasing function for the entire operations, which was

carried out by a team of experienced professionals who are well versed in the price trend and

demand and supply of steel.


2.5 Due from/to customers on installation contract work

This amount represents the outstanding contract sum due from/to customers for kitchen cabinets

installation contract work completed less any progress billings received and receivable as at year-end

and any foreseeable losses. The major contract in progress at year-end was Parc Palais, King’s Park.

As the VSC Group completed most of its large kitchen cabinets projects, the gross amount due from/

to customers for kitchen cabinets installation contract work at year-end decreased to approximately

HK$11 million and HK$0.2 million, respectively.

2.6 Accounts and bills receivable (AR)

AR, net of provision for bad and doubtful debts, surged by 28% or approximately HK$181 million. The

increase was basically in line with the increase in overall consolidated turnover of 29% and was

mainly attributable to increased coil centre operations and expansion in VJY’s turnover as well as

BSC (which had a 55% increase in turnover).

The VSC Group has been very careful in its AR management and is always very cautious in developing

business and expanding the customer portfolio. For steel distribution in Mainland China such as H-

beams in Shanghai, which involved substantial dollar amount per transaction, only cash on delivery

basis would be adopted. For other businesses like CAMP, credit would only be granted to reputable

and financially strong domestic customers such as Huawei, Zhongxing and Kelon, or those large

Hong Kong-based or Taiwan-based OEM manufacturers. The VSC Group’s centralised internal credit

control department closely monitored performance of each account with computerised system

comparing real-time production or sales orders against pre-set credit criteria. The effectiveness of the

AR management could be reflected by the very low provision for/write-off of bad and doubtful debts

of only HK$0.6 million (FY2003: HK$2.8 million), which accounts for only 0.017% of the annual

turnover of HK$3.5 billion. Overall AR turnover (average AR divided by turnover X 365 days) was

approximately 77 days (2002: 75 days).

During the normal course of its businesses, the VSC Group offered credit terms ranging from 30 to 90

days. An ageing analysis of AR based on delivery date was as follows:

As at As at

31st March 2004 31st March 2003

HK$ million HK$ million

0 to 60 days 489.8 416.8

61 to 120 days 120.4 151.0

121 to 180 days 41.9 42.3

181 to 365 days 135.3 43.2

Over 365 days 61.7 16.3

849.1 669.6

Less: Provision for bad and doubtful debts (12.8) (14.6)

836.3 655.0


The substantial increases of aged AR in both bands of over 181 days to 365 days and over 365 days

were related to the due from the iSteelAsia Group. As disclosed previously, the VSC Group has

arranged to source and supply steel to the iSteelAsia Group to facilitate its expansion of business,

resulting in bulk purchase benefit by aggregating demands of the two groups. The steel so supplied

was transacted under normal commercial credit term of the VSC Group and interest of approximately

HK$5,672,000 was charged at commercial lending rates for overdue balances. The amount due from

the iSteelAsia Group was approximately HK$206 million as at 31st March 2004 (2003: HK$210

million), in which approximately HK$105 million and HK$50 million falling under the ageing of over 181

days and over 365 days, respectively. The iSteelAsia Group has been expanding very fast with its first

9-month turnover in the current fiscal year, surging 117% to approximately HK$1,123 million (FY2003:

HK$811 million). As a newly established group with limited financial banking facilities pursuing a fast

growth in turnover, the iSteelAsia Group has, as compared to last year, occasionally delayed in its

repayment of the balance due to the VSC Group in order to promptly capture market opportunity

arising from time to time, such as securing some competitive domestic purchase of steel in Mainland

China. The VSC Group maintained close communication with the iSteelAsia Group and was satisfied

on its management’s ability to conduct its businesses in a healthy financial manner. Subsequent to

31st March 2004 and upto 31st May 2004, amount of approximately HK$68 million has been repaid

by the iSteelAsia Group, which fully covered the overdue of over 365 days. The VSC Group would

continue to proactively monitor its investment in the iSteelAsia Group for better business synergy and

mitigate the risk of exposure prudently.

2.7 Accrued liabilities and other payables

Accrued liabilities and other payables increased by 65% or approximately HK$18 million. The main

reason was the increase in value added tax payable of approximately HK$9 million associated with

the increasing domestic sales in Mainland China. Other increases were derived from additional accrued

expenses in proportion to the expanded operations.

2.8 Capital and reserves

Increase in nominal value of share capital of about HK$6 million was mainly attributable to the issue of

shares upon placement as well as exercise of warrants and share options. Increase in reserves of

about HK$135 million was mainly attributable to (i) approximately HK$76 million increase due to

issuance of shares (ii) approximately HK$7 million surplus on revaluation of long-term investments and

(iii) approximately HK$81 million profit of FY2004, which was offset by approximately HK$29 million

dividend paid during FY2004.


(3) Financial Resources and Liquidity

3.1 Liquidity and financing

As shown in the consolidated cash flow statement, the VSC Group’s cash and cash equivalents had

increased from approximately HK$62 million to HK$109 million as at 31st March 2004. In FY2004, the

VSC Group acquired the new GZCC and expanded businesses of existing operations in Mainland

China. As shown in note 32(a) to the accompanying accounts, coupled with an increasing steel price,

inventories and AR increased (excluding increases attributable to acquisition of GZCC which were

separately shown in note 32(b) to the accompanying accounts) by approximately HK$281 million and

HK$153 million, respectively. Such substantial growth in businesses and current assets had led to net

cash outflow absorbed by operations of approximately HK$189 million, nevertheless, the VSC Group

is still able to achieve an improvement by decreasing from a net cash outflow amount of approximately

HK$236 million in FY2003. The sources of financing such increased demand in cash flow were mainly

from bank loans, trust receipts bank loans and share placement. Net cash inflow generated from

these financing activities was approximately HK$293 million.

The VSC Group’s shareholders’ equity increased by 27% to approximately HK$661 million as at 31st

March 2004 as compared to approximately HK$520 million at the end of last financial year.

As at 31st March 2004, the VSC Group’s cash and bank deposits totaled approximately HK$118

million (2003: HK$70 million) of which about 31.4% were denominated in HK dollar, 40.8% in US

dollar, 27.0% in Renminbi(RMB) and 0.8% in other currencies.

As at 31st March 2004, the VSC Group’s total borrowings amounted to approximately HK$896 million

of which interest bearing borrowings totaled approximately HK$851 million (2003: HK$611 million).

Net interest bearing borrowings, after deducting cash and bank deposits of approximately HK$118

million, amounted to approximately HK$733 million. The increase in borrowings was attributable to 1)

expansion in business scale in both CAMP and CMG operations; 2) substantial increase in steel price;

and 3) long-term syndicated bank loan drawn to cover various capital expenditures incurred before

and during FY2004.


Gearing ratio at 31st March 2004, calculated on the basis of

total interest bearing borrowings to shareholders’ funds

increased from 1.17 to 1.29 and current ratio was sl ightly

improved from 1.39 to 1.42 as compared to 31st March 2003.

The VSC Group is comfortable with these financial ratios at

the i r current leve l . Th is is ar r ived at a f ter tak ing due

consideration of the VSC Group’s current business operations

while assessing the risk on overall exposure against industry

norm. For FY2004, the VSC Group’s business operations were

f inanced by cash generated from its business act iv i t ies,

banking facil it ies and share placement. During FY2004, the

VSC Group successfully secured a HK$250 million three-year

revolving credit and term loan facility from a syndicate of nine

reputable international and local banks. A share placement

was also completed in November 2003 for 33 mil l ion new

shares at HK$1.8 per share, br ing ing in proceeds of

approx imate ly HK$55 mi l l ion. The VSC Group is a lso

negotiating with banks in Hong Kong and China for additional

f inancing to support its business development. As at 31st

March 2004, letter of credit and trust receipts loans facilities

available were approximately HK$1.4 billion and HK$1.2 billion,

respectively. Bank loans and bi l l acceptance faci l i t ies of

approximately RMB110 mil l ion were obtained to mit igate

exposure on its Mainland China operation. The VSC Group

also had an outstanding warrant exercisable on or before 18th

November 2004, which i f ful ly subscribed could bring in

proceeds in the amount of approximately HK$32 million.

The maturity profile of the VSC Group’s gross interest bearing borrowings was set out as follows:

31st March 2004 31st March 2003

HK$ million HK$ million

Repayable:

Within one year 754 591

After one year but within two years 55 12

After two years but within three years 42 8

Total interest bearing borrowings 851 611

Cash and bank deposits (118) (70)

Net interest bearing debts 733 541

The VSC Group’s major current assets are inventories and AR. They are all very liquid and turn a few

times a year. With substantial committed banking facilities in place and continuous cash inflow from

business activities, the VSC Group is in a strong liquidity position and has sufficient financial resources

to satisfy its capital commitments and ongoing working capital requirements for future expansion.

Current Ratioas at 31st Marchmultiple

0

0.5

1.0

1.5

2.0

1.42

02 0403

1.39

1.73

Gearing Ratioas at 31st Marchmultiple

0

0.5

1.0

1.5

2.0

1.29

02 0403

1.17

0.50


3.2 Treasury management and policies

All the VSC Group’s financing and treasury activities are centrally managed and controlled at the

corporate level. The VSC Group’s overall treasury and funding policies focus on managing financial

risks, including interest rate and foreign exchange risks, while providing cost efficient funding to the

VSC Group and its group companies.

The VSC Group’s businesses were primarily transacted in Hong Kong dollar, US dollar, RMB and Euro

dollar. Majority of the VSC Group’s inventory purchases were made in US dollar whereas majority of

sales were denominated in HK dollar and RMB. The current peg system in Hong Kong had minimised

the VSC Group’s exposure in US dollar. Whereas in China, the VSC Group’s various investments and

assets totaling approximately HK$151 million were subject to foreign exchange exposure which was

mitigated by RMB bank loans and bill acceptance facilities of approximately HK$104 million. The VSC

Group will also continue to match RMB payments with RMB receipts to minimise exchange exposure.

Transaction values involving Euro in Building Products department were relatively insignificant.

As at 31st March 2004, about 88.5% of the VSC Group’s interest bearing borrowings were denominated

in HK dollar, 3.5% in US dollar, 7.7%in RMB and 0.3% in other currencies. Forward foreign currency

contracts are entered into when suitable opportunities arise and when considered appropriate, to

hedge against major non-HK dollar currency exposures. As at 31st March 2004, the total outstanding

derivative instruments of the VSC Group represented forward foreign currency contracts, which were

used to hedge principal repayment of future US dollars debts under letter of credit and Euro trust

receipt loans in the amount of approximately HK$358 million.

Maturity profile of such off-balance sheet financial instruments as at 31st March 2004 was set out as

below:

HK$ million

By maturity:

Within one year 292

After one year but within two years 66

358

The majority of the VSC Group’s borrowings were subject to floating rate basis in view of the present

low interest rate environment. The use of financial derivative instruments is strictly controlled and

solely for management of the interest rate and foreign currency exchange rate exposures in connection

with the borrowings. It is the VSC Group’s policy not to enter into derivative transactions for speculative

purposes.

3.3 Contingent liabilities

As at 31st March 2004, the VSC Group had outstanding performance bonds for its kitchen cabinet

installation and sanitary wares supply projects amounting to approximately HK$16 million (2003:

HK$14 million) and a guarantee for a bank loan granted to an associate — Baosteel Jingchang —

amounting to approximately HK$2 million (2003: HK$2 million)

3.4 Charges on assets

As at 31st March 2004, the VSC Group had certain charges on assets which included (i) bank

deposits of approximately HK$8 million pledged for RMB bank facilities; (ii) inventories of approximately

HK$15 million pledged for a RMB bank loan; (iii) land and buildings of approximately HK$9 million

pledged for a RMB bank loan; and (iv) inventories held under short-term trust receipts bank loan

arrangements in Hong Kong.

Report of the Directors

Page 66

The Directors are pleased to present their annual report together with the audited accounts of Van Shung Chong

Holdings Limited (“VSC”) and its subsidiaries (together the “VSC Group”) for the year ended 31st March 2004.

PRINCIPAL ACTIVITIES

VSC is an investment holding company and its subsidiaries are principally engaged in (i) China Advanced Materials

Processing including manufacturing of industrial products such as rolled flat steel products and enclosure systems

and trading of industrial products such as engineering plastic resins and injection moulding machines, and (ii)

Construction Materials Group including trading and stockholding of construction materials such as steel products,

sanitary ware and kitchen cabinets and the installation work of kitchen cabinets.

Details of the VSC Group’s turnover and segment results by business segment and geographical segment are set

out in Note 33 to the accompanying accounts.

MAJOR CUSTOMERS AND SUPPLIERS

For the year ended 31st March 2004, the five largest customers of the VSC Group accounted for less than 30% of

the VSC Group’s total turnover, while the five largest suppliers of the VSC Group accounted for approximately 30%

of the VSC Group’s total purchases. In addition, the largest supplier of the VSC Group accounted for approximately

9% of the VSC Group’s total purchases.

None of the directors, their associates, or any shareholders (which to the knowledge of VSC’s Directors owned

more than 5% of VSC’s share capital) had a beneficial interest in the five largest suppliers of the VSC Group.

RESULTS AND APPROPRIATIONS

Details of the VSC Group’s results for the year ended 31st March 2004 are set out in the consolidated profit and

loss account on page 81 of this annual report.

An interim cash dividend of HK3.1 cents per share was declared and paid during the year and the Directors

recommend the payment of a final cash dividend of HK2.8 cents per share. Total cash dividend paid and payable

for the year ended 31st March 2004 will amount to HK5.9 cents or approximately HK$21,180,000 (2003:

HK$18,111,000).

SHARE CAPITAL, WARRANTS AND SHARE OPTIONS

Details of share capital, warrants and share options of VSC are set out in Notes 28, 29 and 30, respectively, to the

accompanying accounts.

RESERVES AND RETAINED PROFIT

Movements in reserves and retained profit of the VSC Group and VSC during the year are set out in Note 31 to the

accompanying accounts.

As at 31st March 2004, approximately HK$53,986,000 (2003: HK$53,986,000) of VSC’s reserves and approximately

HK$21,530,000 (2003: HK$7,786,000) of VSC’s retained profit were available for distribution to its shareholders.

Page 67Report of the Directors

PURCHASE, SALE OR REDEMPTION OF SHARES AND WARRANTS

During the year, VSC repurchased certain of its own shares through The Stock Exchange of Hong Kong Limited

(the “Stock Exchange”), details of which are set out in Note 28 to the accompanying accounts.

The repurchases set out in Note 28 were made for the enhancement of the net asset value per share and earnings

per share of VSC.

Details of movements during the year in the share capital of VSC are set out in Note 28 to the accompanying

accounts.

PRE-EMPTIVE RIGHTS

There are no provisions for pre-emptive rights under VSC’s Bye-laws and the laws of Bermuda.

FIXED ASSETS AND INVESTMENT PROPERTIES

Details of movements of fixed assets and investment properties during the year are set out in Notes 13 and 14,

respectively, to the accompanying accounts.

SUBSIDIARIES AND ASSOCIATES

Particulars of VSC’s subsidiaries and associates are set out in Notes 15 and 16, respectively, to the accompanying

accounts.

BANK LOANS

Particulars of bank loans as at 31st March 2004 are set out in Notes 24 and 26 to the accompanying accounts.

PENSION SCHEMES

Details of the pension schemes are set out in Note 36 to the accompanying accounts.

CHARITABLE DONATIONS

During the year, the VSC Group made charitable donations of approximately HK$6,000 (2003: HK$520,000).

DIRECTORS AND DIRECTORS’ SERVICE CONTRACTS

The directors who held office during the year and up to the date of this report were:

Executive directors

Mr. Yao Cho Fai, Andrew, Chairman and CEO

Ms. Yao Che Li, Miriam, Deputy Chairman

Mr. Ho Sai Hou, Johnson

Mr. Dong Sai Ming, Fernando

Non-executive director

Dr. Shao You Bao


Page 68

DIRECTORS AND DIRECTORS’ SERVICE CONTRACTS (Cont’d)

Independent Non-executive directors

Dr. Chow Yei Ching

Mr. Ting Woo Shou, Kenneth

Mr. Harold Richard Kahler

In accordance with VSC’s Bye-law 87(1), Ms. Yao Che Li, Miriam and Dr. Chow Yei Ching will retire. Ms. Yao Che Li,

Miriam will not offer herself for re-election, whereas Dr. Chow Yei Ching being eligible, offer himself for re-election at

the forthcoming annual general meeting.

None of the directors has a service contract with the VSC Group which is not determinable by the VSC Group

within one year without payment of compensation other than statutory compensation.

DIRECTORS’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As at 31st March 2004, the interests or short positions of the directors of VSC (“Directors”) and chief executives of

VSC in the shares of HK$0.10 each in the capital of VSC (“Shares”) and underlying shares of VSC or any of its

associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the “SFO”)) which

were notified to VSC and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including

interests or short positions which they are taken or deemed to have under such provisions of the SFO), or which

were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which were

required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, to be notified

to VSC and the Stock Exchange, were as follows:

(i) Long positions in Shares, Warrants and options

Attributable Number of Shares

interest and approximate % Number of Number of Aggregate

Name Type of interest to the Director of shareholding Warrants options interest

(Note a) (Note d)

Mr. Yao Cho Fai, — Corporate deemed 173,424,000 (47.15% ) — — 173,424,000

Andrew interest held interest

by Huge Top (indirectly)

(Note b)

— Personal 100% 6,900,000 (1.88% ) — — 6,900,000

interest (directly)

180,324,000 (49.03% ) — — 180,324,000

Ms. Yao Che Li, — Corporate deemed 173,424,000 (47.15% ) — — 173,424,000

Miriam interest held interest

by Huge Top (indirectly)

(Note b)

— Personal 100% 2,000,000 (0.55% ) — 1,000,000 3,000,000

interest (directly)

175,424,000 (47.70% ) — 1,000,000 176,424,000



(Cont’d)

(i) Long positions in Shares, Warrants and options (Cont’d)

Attributable Number of Shares

interest and approximate % Number of Number of Aggregate

Name Type of interest to the Director of shareholding Warrants options interest

(Note a) (Note d)

Mr. Dong Sai Ming, — Personal 100% 342,000 (0.09% ) 14,200 300,000 656,200

Fernando interest (directly)

Mr. Ho Sai Hou, — Personal 100% 949,894 (0.26% ) 46,640 1,000,000 1,996,534

Johnson interest (directly)

Dr. Shao You Bao — Family interest deemed — (— ) 60,000 — 60,000

(Note c) interest

(indirectly)

Mr. Ting Woo Shou, — Personal 100% 2,402,000 (0.65% ) 240,200 — 2,642,200

Kenneth interest (directly)

Mr. Harold Richard — Personal 100% 66,000 (0.02% ) — — 66,000

Kahler interest (directly)

Notes:

a. The warrants (“Warrants”) of VSC conferred rights to subscribe in cash for Shares, on the basis of a subscription

price of HK$1.18 per Share (subject to adjustment) during the period from 19th November 2001 to 18th November

2004 (both dates inclusive).

b. As at 31st March 2004, Huge Top Industrial Ltd. (“Huge Top”) held 173,424,000 Shares. The board of directors of

Huge Top only comprises Mr. Yao Cho Fai, Andrew and Ms. Yao Che Li, Miriam, who are also VSC’s Directors. Mr.

Yao Cho Fai, Andrew directly and indirectly through Perfect Capital International Corp. (“Perfect Capital”) owned

more than one-third of the issued shares of Huge Top and is entitled to exercise more than one-third of the voting

power at general meetings of Huge Top. Mr. Yao Cho Fai, Andrew owns the entire issued share capital of Perfect

Capital.

c. Ms. Hsu Chi Kung, wife of Dr. Shao You Bao, held 60,000 Warrants.

d. The interests of the directors in the share options of VSC are separately disclosed in the section headed “Share

Option Scheme” below.


Page 70


(Cont’d)

(ii) Long positions in associated corporation — Huge Top

Number of shares

Attributable interest and approximate %

Name Type of interest to the Director of shareholding

Mr. Yao Cho Fai, Andrew — Corporate interest deemed interest 36 (42.86%)

(Refer to Note b in (i) above) held by Perfect (indirectly)

Capital

— Personal interest 100% (directly) 10 (11.90%)

46 (54.76%)

Ms. Yao Che Li, Miriam — Personal interest 100% (directly) 5 (5.95%)

Mr. Dong Sai Ming, Fernando — Personal interest 100% (directly) 5 (5.95%)

Save as disclosed above, as at 31st March 2004, none of the Directors, chief executives of VSC and their

associates had any personal, family, corporate or other interests or short positions in the shares, underlying shares

or debentures of VSC or any of its associated corporations (within the meaning of Part XV of the SFO) which would

have to be notified to VSC and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including

interests or short positions which they are taken or deemed to have under such provisions of the SFO), or which

were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which were

required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, to be notified

to VSC and the Stock Exchange.

Apart from the foregoing, at no time during the year was VSC or any of its subsidiaries a party to any arrangements

to enable the Directors or any of their spouses or children under the 18 years of age to acquire benefits by means

of the acquisition of shares in or debentures of VSC or any other body corporate, and no Directors or chief

executives or their respective spouses or children under 18 years of age had been granted any right to subscribe

for equity or debt securities of VSC nor exercised any such right.

DIRECTOR’S INTEREST IN CONTRACTS

Save as disclosed in Note 2 to the accompanying accounts, no contracts of significance in relation to the VSC

Group’s business to which VSC or any of its subsidiaries was a party and in which any of VSC’s Directors of

members of its management had a material interest, whether directly or indirectly, subsisted at the end of the year

or at any time during the year.


INTERESTS DISCLOSEABLE UNDER THE SFO AND SUBSTANTIAL SHAREHOLDERS

Other than interests disclosed in the section headed “Directors’ Interests and Short Positions in Shares, Underlying

Shares and Debentures” above, as at 31st March 2004, according to the register of interests kept by VSC under

section 336 of the SFO, the following entity has interests or short positions in the shares of VSC which fall to be

disclosed under Divisions 2 and 3 of Part XV of the SFO:

Number of Number of Approximate %

Name Warrants issued Shares of shareholding

Huge Top — 173,424,000 47.15%

Save as disclosed above, as at 31st March 2004, the Directors are not aware of any other persons who have

interests or short positions in the shares, underlying shares or debentures of VSC or any associated corporations

(within the meaning of Part XV of the SFO) which would fall to be disclosed to VSC under Divisions 2 and 3 of Part

XV of the SFO.

SHARE OPTION SCHEME

A new share option scheme has been adopted by VSC since 12th November 2001 (the “New Share Option

Scheme”) to replace a share option scheme which had been adopted on 22nd January 1994 (the “Old Share

Option Scheme”) to comply with the current statutory requirements. VSC may grant options to the participants as

set out in the New Share Option Scheme. All outstanding options granted by the Old Share Option Scheme had

already been lapsed with effect from 23rd January 2004. Summary of the Old Share Option Scheme and the New

Share Option Scheme was as follows:

Old Share Option Scheme New Share Option Scheme

1. Purpose of the Old and New

Share Option Schemes

2. Participants of the Old and New

Share Option Schemes

As an incentive to employees.

Directors and/or executives and/ or

employees of VSC or its subsidiaries.

To provide incentives to participants

to contribute to the VSC Group and/

or to enable the VSC Group to recruit

and/or to re ta in h igh-ca l ib re

employees and at t ract human

resources that are valuable to the

VSC Group.

Employee/agent/consu l tant or

representa t i ve , inc lud ing any

executive or non-executive director,

of any member of the VSC Group or

any other person who satisfies the

selection criteria as set out in the

New Share Option Scheme.


Page 72

SHARE OPTION SCHEME (Cont’d)


3. Total number of Shares available

for issue under the Old and New

Share Opt ion Schemes and

percentage of issued share

capital as at the date of the

annual report

4. Maximum entitlement of each

participant under the Old and

New Share Option Schemes

No outstanding options unexercised

as at the date of the annual report.

The maximum number of Shares in

respect of which options may be

granted ( together with opt ions

exe rc i sed and op t i ons t hen

outstanding) under the Old Share

Opt ion Scheme and any other

scheme involving the issue or grant

of options over Shares or other

securities of VSC may not exceed

such number of Shares as shall

represent 10% of the issued shares

capital of VSC from time to time,

excluding for this purpose Shares

issued upon the exercise of options

granted pursuant to the Old Share

Option Scheme.

25% of the aggregate number of

Shares for the time being issued and

issuable under the Old Share Option

Scheme.

VSC may init ia l ly grant options

representing 35,497,818 Shares

under the New Share Opt ion

Scheme (i.e. approximately 10% of

the issued share capital of VSC as

at the date of the approval of the

New Share Option Scheme and

approximately 9.7% of the issued

share capital of VSC as at the date

of the annual report).

The maximum number of Shares

which may be issued upon exercise

of all outstanding options granted

and yet to be exercised under the

New Share Option Scheme and any

other schemes of VSC and/or its

subsidiary (including the Old Share

Option Scheme) must not exceed

30% of the Shares in issue from time

to time. No options may be granted

under any schemes of VSC or its

subsidiary if this would result in the

30% limit being exceeded.

The total number of Shares issued

and to be issued upon exercise of

the opt ions g ran ted to each

participant ( including exercised,

cancelled and outstanding options)

within any twelve-month period

under the New Share Opt ion

Scheme and any other share option

scheme(s ) o f VSC and/or any

subsidiary must not exceed 1% of

the number of Shares in issue.




5. The period within which the

Shares must be taken up under

an option

6. The minimum period for which an

option must be held before it can

be exercised

7. T h e a m o u n t p a y a b l e o n

application or acceptance of the

option and the period within

which payments or calls must or

may be made or loans for such

purposes must be paid

8. The basis of determining the

exercise price

At any time during a period to be

determined and noti f ied by the

D i rec to rs , wh ich per iod may

commence on the date of grant of

an option but shall end in any event

not later then ten years from the date

of adoption of the Old Share Option

Scheme.

No such minimum period specified

under the Old Share Option Scheme

but the Directors can grant options

at terms and conditions as they may

think fit to offer.

HK$10 is to be paid as consideration

for the grant of option and the option

shall be accepted within 28 days

from the date of grant or such longer

or shorter periods as the Directors

may determine.

The exercise price is determined by

the Directors and being not less than

the higher of:

a. 80% of the average closing price

of the Shares quoted on the

Stock Exchange on the f ive

t r ad i ng days immed ia te l y

preceding the date of grant of an

option, and

Must not be more than ten years

from the date of offer of grant of the

option.

No such minimum period specified

and an option may be exercised in

accordance with the terms of the

New Share Option Scheme at any

time during a period to be notified

by the Board of Directors to each

grantee.

The acceptance of an option, i f

accepted, must be made within 28

days from the date on which the

offer is made with a non-refundable

payment of HK$10 from the grantee

to VSC.

The exercise price of an option will

be at least the highest of:

a. the closing price of the Shares

a s s t a t e d i n t h e S t o c k

Exchange’s dai ly quotat ions

sheet on the date of offer of the

grant of the option, which must

be a business day,


Page 74



b. the nominal value of the Shares.

The Old Share Option Scheme was

adopted on 22nd January 1994 and

was originally effective until 22nd

January 2004. On 12th November

2001, the Old Share Option Scheme

was resolved by the shareholders of

VSC to have been terminated

thereon.

b. the average closing price of the

Shares as stated in the Stock

Exchange’s dai ly quotat ions

sheets for the five business days

immediately preceding the date

of offer of the grant of the option,

and

c. the nominal value of the Shares.

The New Share Option Scheme shall

be valid and effective for a period of

ten years commencing on the

adoption date i.e. 12th November

2001.

9. The remaining life of the Old and

New Share Option Schemes



The Old Share Option Scheme was terminated on 12th November 2001. Upon termination of the Old Share Option

Scheme, no further options will be granted thereunder but in all other respects, the provisions of the Old Share

Option Scheme had remained in force and all options granted prior to such termination shall continue to be valid

and exercisable in accordance therewith. All outstanding options granted by the Old Share Option Scheme had

already been lapsed with effect from 23rd January 2004. The employee share options outstanding under the Old

Share Option Scheme and the New Share Option Scheme during the year were as follows:

Old Share Option Scheme

Weightedaverage

closing priceof the Shares

Number of share options immediately

Exercise Exercised Lapsed before theName or category Date of Exercise price Beginning during during End of date ofof participant grant period per Share of year the year the year year exercise

’000 ’000 ’000 ’000

Directors:—Mr. Yao Cho Fai, 17th December 1994 15th January 1997 to HK$1.1344 2,000 (2,000 ) — —

Andrew 15th January 200418th January 1996 15th January 1997 to HK$1.2528 2,000 (2,000 ) — —｝HK$1.80

15th January 200418th March 1996 1st May 1998 to HK$1.3840 2,900 (2,900 ) — —

22nd January 2004Ms. Yao Che Li, 17th December 1994 15th January 1997 to HK$1.1344 2,000 (2,000 ) — — HK$1.42

Miriam 15th January 2004Mr. Ho Sai Hou, 17th December 1994 15th January 1997 to HK$1.1344 500 (500 ) — —

Johnson 15th January 2004 ｝HK$1.4518th March 1996 1st May 1998 to HK$1.3840 400 (400 ) — —

22nd January 2004

Sub-total 9,800 (9,800 ) — —

Employees:—In aggregate 17th December 1994 15th January 1997 to HK$1.1344 2,000 (2,000 ) — —

15th January 2004In aggregate 18th January 1996 15th January 1997 to HK$1.2528 2,000 — (2,000 ) —｝HK$1.97

15th January 2004In aggregate 10th January 2000 1st February 2002 to HK$1.6880 900 (400 ) (500 ) —

22nd January 2004

Sub-total 4,900 (2,400 ) (2,500 ) —

Total of Old ShareOption Scheme 14,700 (12,200 ) (2,500 ) —


Page 76


New Share Option Scheme

Weighted

average

closing price

of the Shares

Closing Number of share options immediately

Exercise price Granted Exercised Lapsed before the

Name or category Date of Exercise price before Beginning during during during End of date of

of participant grant period per Share grant of year the year the year the year year exercise

(Note 2) ’000 ’000 ’000 ’000 ’000

Directors:—

Ms. Yao Che Li, 19th September 2003 19th September 2005 to HK$1.418 HK$1.42 — 1,000 — — 1,000 N/A

Miriam 18th September 2013

Mr. Dong Sai Ming, 19th September 2003 19th September 2005 to HK$1.418 HK$1.42 — 300 — — 300 N/A

Fernando 18th September 2013

Mr. Ho Sai Hou, 19th September 2003 19th September 2005 to HK$1.418 HK$1.42 — 1,000 — — 1,000 N/A

Johnson 18th September 2013

Sub-total — 2,300 — — 2,300

Employees:—

In aggregate 2nd May 2003 2nd May 2003 to HK$0.98 HK$0.95 — 1,150 (900 ) — 250

1st May 2013 ｝In aggregate 7th May 2003 7th May 2005 to HK$0.97 HK$0.98 — 7,595 — (1,150 ) 6,445 HK$1.59

6th May 2013

(Note 3)

Sub-total — 8,745 (900 ) (1,150 ) 6,695

Others:—

In aggregate 2nd May 2003 2nd May 2003 to HK$0.98 HK$0.95 — 9,000 (2,000 ) — 7,000 HK$1.87

1st May 2013

Sub-total — 9,000 (2,000 ) — 7,000

Total of New Share

Option Scheme — 20,045 (2,900 ) (1,150 ) 15,995

Notes:

1. For the Old Share Option Scheme and the New Share Option Scheme, the vesting period of the share options is from the

date of the grant until the commencement of the exercise period.

2. The closing price of the Shares on the Stock Exchange of the trading date immediately before the grant of the options.

3. The options to subscribe for Shares at a price of HK$0.97 per Share are to be exercisable in whole or in part in the

following manner:—

(i) During the period starting from 7th May 2005 to 6th May 2006, the option may be exercised up to 30% of such

Shares.


SHARE OPTION SCHEME (Cont’d)Notes: (Cont’d)

3. (Cont’d)

(ii) During the period starting from 7th May 2006 to 6th May 2007, the option may (to the extent not exercised in

accordance with (i) above) be exercised up to 70% of such Shares.

(iii) During the period starting from 7th May 2007 to 6th May 2013, the option may (to the extent not exercised in

accordance with (i) and (ii) above) be exercised in full.

Save as disclosed above, no share options were granted, exercised, lapsed or cancelled during the year.

Under the present capital structure of VSC, the exercise of the share options under the Old Share Option Scheme

and the New Share Option Scheme during the year had resulted in the issue of 15,100,000 additional ordinary

shares of VSC and additional share capital of HK$1,510,000 and share premium of HK$16,453,600 (before issuance

expenses).

The Directors consider that it is not appropriate to state the value of the share options granted pursuant to the New

Share Option Scheme during the year to the employees. The Directors believe that any statement regarding the

value of the options will not be meaningful to the shareholders, taking into account the diversified nature of the

businesses of the VSC Group (i.e., ranging from (i) China Advanced Materials Processing including manufacturing

of industrial products such as rolled flat steel products and enclosure systems and trading of industrial products

such as engineering plastic resins and injection moulding machines, and (ii) Construction Materials Group including

trading and stockholding of construction materials such as steel products, sanitary ware and kitchen cabinets and

the installation work of kitchen cabinets) and the fact that comparable data required for calculation of the value of

the options and the weighing of each of such data may not be representative of the diversified nature of the

businesses of the VSC Group.

SPECIFIC PERFORMANCE OBLIGATIONS ON CONTROLLING SHAREHOLDER

Reference was made to the HK$250 million term loan facility agreement dated 27th October 2003 (the “Facility

Agreement”) with a final maturity in October 2006. The Facility Agreement contains a requirement that Mr. Andrew

Cho Fai Yao (“Mr. Yao”) and his direct related family members (i.e. Mr. Yao, Ms. Miriam Che Li Yao and Mrs. Yao Lin

Shiu Mei, their spouses and their children) shall continue to remain as the single largest shareholder of VSC with at

least 30% shareholding of the issued share capital of VSC and Mr. Yao shall maintain the position of Chairman and

management control of the VSC Group. The abovementioned obligations have been complied with.

AUDITORS

Arthur Andersen & Co were auditors of VSC for the year ended 31st March 2002. PricewaterhouseCoopers were

auditors of VSC for the year ended 31st March 2003 and 2004.

The accompanying accounts were audited by PricewaterhouseCoopers. A resolution for their re-appointment as

VSC’s auditors for the ensuing year is to be proposed at the forthcoming annual general meeting.

On behalf of the Board of Directors

Yao Cho Fai, Andrew

Chairman & Chief Executive Officer

Hong Kong, 1st June 2004

CONTENTS

Auditors’ Report 79Consolidated Profit and Loss Account 81Balance Sheets 82Consolidated Cash Flow Statement 84Consolidated Statement of Changes in Equity 86Notes to the Accounts 871 Principal accounting policies 872 Related party transactions 973 Turnover and revenue 994 Other income/(expense) 1005 Operating profit 1006 Finance costs 1017 Staff costs (including directors’ emoluments) 1018 Directors’ and senior executives’ emoluments 1019 Taxation 10310 Profit attributable to shareholders 10511 Dividends 10512 Earnings per share 10513 Fixed assets 10614 Investment properties 10715 Investment in subsidiaries 10816 Investment in associates 11317 Long-term investments 11418 Goodwill 11519 Inventories 11520 Due from/to customers on installation contract work 11621 Accounts and bills receivable 11722 Loans receivable 11723 Cash and bank deposits 11824 Short-term borrowings 11825 Accounts and bills payable 11926 Long-term bank loan 11927 Deferred taxation 12028 Share capital 12129 Warrants 12230 Share options 12331 Reserves 12532 Notes to consolidated cash flow statement 12933 Segment information 13334 Commitments 13635 Contingent liabilities 13736 Pension schemes 13737 Banking facilities and pledge of assets 13838 Approval of accounts 138

核數師報告綜合損益表資產負債表綜合現金流量表綜合股東權益變動報表賬目附註1 主要會計政策2 與關連人士之交易3 營業額及收入4 其他收益／（支出）5 經營溢利6 財務費用7 員工成本（包括董事酬金）8 董事及高級行政人員酬金9 稅項10 股東應佔溢利11 股息12 每股盈利13 固定資產14 投資物業15 於附屬公司之投資16 於聯營公司之投資17 長期投資18 商譽19 存貨20 應收／應付客戶安裝合約工程21 應收賬款及票據22 應收貸款23 現金及銀行存款24 短期借貸25 應付賬款及票據26 長期銀行貸款27 遞延稅項28 股本29 認股權證30 購股權31 儲備32 綜合現金流量表附註33 分類資料34 承擔35 或然負債36 退休金計劃37 銀行融資及資產抵押38 賬目批准

目錄

Auditors’ Report核數師報告

Page 79

羅兵咸永道會計師事務所 PricewaterhouseCoopers22/F, Prince’s BuildingCentral, Hong KongTelephone (852) 2289 8888Facsimile (852) 2810 9888www.pwchk.com

AUDITORS’ REPORT TO THE SHAREHOLDERS OF

VAN SHUNG CHONG HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

We have audited the accounts on pages 81 to 138 which

have been prepared in accordance with accounting principles

generally accepted in Hong Kong.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND

AUDITORS

The company’s directors are responsible for the preparation

of accounts which give a true and fair view. In preparing

accounts which give a true and fair view it is fundamental

that appropriate accounting policies are selected and applied

consistently.

It is our responsibility to form an independent opinion, based

on our audit, on those accounts and to report our opinion

solely to you, as a body, in accordance with Section 90 of

the Companies Act 1981 of Bermuda, and for no other

purpose. We do not assume responsibility towards or accept

liability to any other person for the contents of this report.

BASIS OF OPINION

We conducted our audit in accordance with Statements of

Auditing Standards issued by the Hong Kong Society of

Accountants. An audit includes examination, on a test basis,

of evidence relevant to the amounts and disclosures in the

accounts. It also includes an assessment of the significant

estimates and judgements made by the directors in the

preparation of the accounts, and of whether the accounting

policies are appropriate to the circumstances of the company

and of the group, consistently applied and adequately

disclosed.

致萬順昌集團有限公司全體股東之核數師報告（於百慕達註冊成立之有限公司）

本核數師已完成審核刊載於第81頁至第

138頁按照香港普遍採納之會計原則編

製的賬目。

董事及核數師的責任

貴公司的董事須負責編製真實與公平的

賬目。在編製該等真實與公平的賬目

時，董事必須選擇及貫徹地採用合適的

會計政策。

本核數師的責任是根據審核工作之結

果，對該等賬目作出獨立意見，並按照

百慕達1981年《公司法》第90條僅向整體

股東報告，除此之外本報告別無其他目

的。本核數師不會就本報告的內容向任

何其他人士負上或承擔任何責任。

意見的基礎本核數師已按照香港會計師公司會頒佈

的核數準則進行審核工作。審核範圍包

括以抽查方式查核與賬目所載數額及披

露事項有關的憑證，亦包括評估董事於

編製該等賬目時所作之重大估計和判

斷，所採用之會計政策是否適合貴公

司與貴集團之具體情況，及有否貫徹

應用並足夠披露該等會計政策。

Page 80

Auditors’ Report核數師報告

We planned and performed our audit so as to obtain all the

information and explanations which we considered necessary

in order to provide us with sufficient evidence to give

reasonable assurance as to whether the accounts are free

from material misstatement. In forming our opinion we also

evaluated the overall adequacy of the presentation of

information in the accounts. We believe that our audit provides

a reasonable basis for our opinion.

OPINION

In our opinion the accounts give a true and fair view of the

state of affairs of the company and of the group as at 31st

March 2004 and of the group’s profit and cash flows for the

year then ended, and have been properly prepared in

accordance with the disclosure requirements of the Hong Kong

Companies Ordinance.

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, 1st June 2004

本核數師在策劃和進行審核工作時，均

以取得所有本核數師認為必需之資料及

解釋為目標，以便獲得充份憑證，就該

等賬目是否存有重要錯誤陳述，作出合

理之確定。在作出意見時，本核數師已

評估該等賬目所載之資料在整體上是否

足夠。本核數師相信我們之審核工作已

為下列意見建立合理之基礎。

意見本核數師認為，上述之賬目足以真實兼

公平地顯示貴公司與貴集團於二零

零四年三月三十一日結算時之財務狀況

及貴集團截至該日止年度之溢利及現

金流量，並根據香港公司條例之披露規

定妥為編製。

羅兵咸永道會計師事務所

執業會計師

香港，二零零四年六月一日

Consolidated Profit and Loss Account綜合損益表For the year ended 31st March 2004 截至二零零四年三月三十一日止年度

Page 81

二零零四年二零零三年2004 2003

附註千港元千港元Note HK$’000 HK$’000

營業額 Turnover 3 3,549,110 2,755,769銷售成本 Cost of sales (3,314,790) (2,536,655)

毛利 Gross profit 234,320 219,114

其他收入 Other revenue 3 11,028 11,690

銷售及分銷支出 Selling and distribution expenses (21,352) (17,107)一般及行政支出 General and administrative expenses (119,498) (135,148)其他收益／（支出） Other income/(expense) 4 5,294 (1,500)

經營溢利 Operating profit 5 109,792 77,049

財務費用 Finance costs 6 (13,337) (11,144)

除稅前溢利 Profit before taxation 96,455 65,905

稅項 Taxation 9 (11,061) (2,164)

除稅後但未計少數 Profit after taxation but before股東權益前溢利 minority interests 85,394 63,741

少數股東權益 Minority interests (4,331) (3,329)

股東應佔溢利 Profit attributable to shareholders 10 81,063 60,412

股息 Dividends 11 21,180 18,111

港仙港仙HKcents HKcents

每股盈利 Earnings per share 12－基本 — Basic 24.6 17.4

－攤薄 — Diluted 23.6 17.3

Page 82

Balance Sheets資產負債表As at 31st March 2004 於二零零四年三月三十一日

綜合本公司Consolidated Company

二零零四年二零零三年二零零四年二零零三年2004 2003 2004 2003

附註千港元千港元千港元千港元Note HK$’000 HK$’000 HK$’000 HK$’000

非流動資產 Non-current assets固定資產 Fixed assets 13 159,366 125,789 — —投資物業 Investment properties 14 36,448 31,000 — —於附屬公司之投資 Investment in subsidiaries 15 — — 500,412 352,146於聯營公司之投資 Investment in associates 16 2 2 — —長期投資 Long-term investments 17 60,012 45,711 — —商譽 Goodwill 18 8,290 4,624 — —遞延稅項資產 Deferred tax assets 27 447 — — —

非流動資產總額 Total non-current assets 264,565 207,126 500,412 352,146

流動資產 Current assets存貨 Inventories 19 695,941 381,477 — —應收客戶安裝 Due from customers on合約工程 installation contract work 20 11,450 19,034 — —

預付款項、按金及 Prepayments, deposits and其他應收賬款 other receivables 88,231 79,520 50 —

應收賬款及票據 Accounts and billsreceivable 2 & 21 836,357 655,025 — —

應收貸款 Loans receivable 22 6,891 6,891 — —一間附屬公司之 Due from a subsidiary欠款 15 — — 12,000 72,000

有抵押銀行存款 Pledged bank deposits 23 8,374 7,957 — —現金及其他 Cash and other bank銀行存款 deposits 23 109,465 61,674 75 164

流動資產總額 Total current assets 1,756,709 1,211,578 12,125 72,164

流動負債 Current liabilities短期借貸 Short-term borrowings 24 798,610 590,667 — —應付賬款及票據 Accounts and bills payable 25 350,629 212,020 — —應付客戶安裝合約 Due to customers on工程 installation contract work 20 157 4,590 — —

預收款項 Receipts in advance 34,168 29,782 — —應計負債及 Accrued liabilities and其他應付款項 other payables 46,157 27,938 30 381

應繳稅項 Taxation payable 9,503 6,076 — —

流動負債總額 Total current liabilities 1,239,224 871,073 30 381

流動資產淨額 Net current assets 517,485 340,505 12,095 71,783

總資產減流動負債 Total assets less currentliabilities 782,050 547,631 512,507 423,929

Balance Sheets資產負債表As at 31st March 2004 於二零零四年三月三十一日

Page 83


二零零四年二零零三年二零零四年二零零三年2004 2003 2004 2003

附註千港元千港元千港元千港元Note HK$’000 HK$’000 HK$’000 HK$’000

非流動負債 Non-current liabilities長期銀行貸款、 Long-term bank loan,　非當期部份 non-current portion 26 97,222 20,475 — —遞延稅項負債 Deferred tax liabilities 27 104 250 — —

總非流動負債 Total non-current liabilities 97,326 20,725 — —

資產淨額 Net assets 684,724 526,906 512,507 423,929

包括： Representing:

股本 Share capital 28 36,778 31,226 36,778 31,226

儲備 Reserves 31 623,780 489,178 475,729 392,703

股東權益 Shareholders’ equity 660,558 520,404 512,507 423,929

少數股東權益 Minority interests 24,166 6,502 — —

684,724 526,906 512,507 423,929

主席執行董事姚祖輝姚潔莉

Yao Cho Fai, Andrew Yao Che Li, MiriamChairman Executive Director

Page 84

Consolidated Cash Flow Statement綜合現金流量表For the year ended 31st March 2004 截至二零零四年三月三十一日止年度



經營活動 Operating activities　經營產生之現金 Net cash outflow absorbed by　　流出淨額 operations 32(a) (189,427) (236,404)　已收利息 Interest received 6,310 4,887已付利息 Interest paid (13,337) (11,144)

　已付香港利得稅 Hong Kong profits tax paid (4,875) (2,801)　已退回香港利得稅 Hong Kong profits tax refunded — 10,097　已付中國企業所得稅 Mainland China enterprise income

tax paid (3,352) (844)

　經營活動之現金 Net cash outflow from operating activities流出淨額 (204,681) (236,209)

投資活動 Investing activities　添置固定資產 Acquisition of fixed assets (20,768) (23,359)出售固定資產 Proceeds from disposal of fixed assets 1,019 529所得款項

添置投資物業 Acquisition of investment properties (7,430) —支付添置一項投資 Payment of deposit for acquisition of物業按金 an investment property (14,150) —

出售一項投資物業 Proceeds from disposal of an所得款項 investment property 7,276 —

收購一間附屬公司 Acquisition of a subsidiary 32(b) (6,987) —收購一間附屬公司之 Acquisition of additional interests in額外權益 a subsidiary — (1,890)

出售一間附屬公司 Proceeds from disposal of a subsidiary所得款項 — 470

　收購一項長期投資 Acquisition of a long-term investment (7,800) (24,960)　收取一間合營公司之 Receipt of return from a joint venture

回報 4,344 6,615　已收一項長期投資之 Dividend received from a long-term

股息 investment 374 188　已抵押銀行存款 Decrease/(Increase) in pledged bank deposits

之減少／（增加） 4,007 (7,957)　㶅兌調整 Translation adjustments (96) 30

投資活動之現金 Net cash outflow from investing activities流出淨額 (40,211) (50,334)

融資活動前之 Net cash outflow before financing activities現金流出淨額 (244,892) (286,543)

Consolidated Cash Flow Statement綜合現金流量表For the year ended 31st March 2004 截至二零零四年三月三十一日止年度

Page 85



融資活動 Financing activities 32(c)發行普通股 Issue of ordinary shares 87,326 4,135股份發行支出 Share issue expenses (4,679) —回購普通股 Repurchase of ordinary shares (968) (53,117)新增銀行貸款 New bank loans 156,175 47,025償還銀行貸款 Repayment of bank loans (48,433) (2,362)信託收據銀行 Net increase in trust receipts bank loans貸款之淨增加 170,280 265,697

新增其他短期貸款 New other short-term loans — 37,800償還其他短期貸款 Repayment of other short-term loans (37,800) —一間附屬公司之少數 Capital contribution by minority股東之資本投入 shareholders of a subsidiary — 3,583

已付一間附屬公司之 Dividends paid to a minority shareholder一位少數股東 of a subsidiary之股息 (225) (258)已付股東之股息 Dividends paid to shareholders (28,993) (2,840)

融資活動之現金 Net cash inflow from financing activities流入淨額 292,683 299,663

現金及現金等值 Increase in cash and項目之增加 cash equivalents 47,791 13,120

年初之現金及現金 Cash and cash equivalents, beginning等值項目 of year 61,674 48,554

年終之現金及現金 Cash and cash equivalents,等值項目 end of year 32(d) 109,465 61,674

Page 86

Consolidated Statement of Changes in Equity綜合股東權益變動報表For the year ended 31st March 2004 截至二零零四年三月三十一日止年度



年初之結餘 Balance as at beginning of year 520,404 523,310

股東應佔溢利 Profit attributable to shareholders 31 81,063 60,412

長期投資公平 Change in fair value of long-term價值變動 investments 31 6,501 (12,089)

㶅兌調整 Translation adjustments 31 (96) 30

當出售一項長期 Release of investment revaluation投資所釋放之 reserve upon disposal of a投資重估儲備 long-term investment 31 — 563

發行普通股所得， Proceeds from issue of ordinary shares,扣除股份發行費用 net of share issue expenses 28 & 31 82,647 4,135

回購普通股 Repurchase of ordinary shares 28 & 31 (968) (53,117)

派發股東之股息 Payment of dividends to shareholders 31 (28,993) (2,840)

年終之結餘 Balance as at end of year 660,558 520,404

Notes to the Accounts賬目附註

Page 87

1. PRINCIPAL ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these

accounts are set out below:

(a) Basis of preparation

The accounts have been prepared in accordance with accounting

principles generally accepted in Hong Kong and comply with

accounting standards issued by the Hong Kong Society of

Accountants (“HKSA”). They are prepared under the historical

cost convention except that, as disclosed in the accounting

policies below, investment properties and long-term investments

are stated at fair value.

Commencing from 1st April 2003, Van Shung Chong Holdings

Limited (“VSC”) and its subsidiaries (together the “VSC Group”)

have adopted the revised Statement of Standard Accounting

Practice (“SSAP”) 12 “Income taxes” issued by the HKSA, under

which deferred taxation is provided in ful l on temporary

differences arising between the tax bases of assets and liabilities

and their carrying amounts in the accounts. In prior year, deferred

taxation was provided in respect of significant timing differences

between profit as computed for taxation purposes and profit as

stated in the accounts to the extent that a liability or an asset

was expected to be payable or recoverable in the foreseeable

future. The adoption of the revised SSAP 12 represents a change

in accounting policy, which has no significant effect on the VSC

Group’s results for the prior accounting periods.

(b) Basis of consolidation

The consolidated accounts include the accounts of VSC and its

subsidiaries, together with the VSC Group’s share of post-

acquisition results and reserves of its associates under the equity

method of accounting. The results of subsidiaries and associates

acquired or disposed of during the year are included in the

consolidated profit and loss account from the effective date of

acquisition or up to the effective date of disposal, as appropriate.

Any significant intercompany transactions and balances within

the VSC Group are eliminated on consolidation.

The gain or loss on disposal of a subsidiary represents the

difference between the proceeds of the disposal and the VSC

Group’s share of its net assets together with any unamortised

goodwill or negative goodwill and any related cumulative foreign

currency translation adjustments.

Minority interests represent the interests of outside shareholders

in the operating results and net assets of subsidiaries.

1. 主要會計政策

編製本賬目時所採納的主要會計政策如下所

述：

(a) 編製基準

本賬目乃根據香港公認會計原則及香

港會計師公會（「公會」）頒佈之會計實

務標準編製。賬目乃按照歷史成本會

計法編製，惟以下所披露之會計政

策，投資物業及長期投資按公平價值

列賬。

由二零零三年四月一日起，萬順昌集

團有限公司（「萬順昌」）及其附屬公司

（合稱「萬順昌集團」）已採用公會頒佈

之經修訂會計實務準則（「會計準則」）

第十二號「利得稅」。根據會計實務準

則第十二號，此項遞延稅項乃就資產

與負債之稅基及其賬面值之暫時差異

作全數撥備。往年度，遞延稅項乃因

應就課稅而計算之溢利與賬目所示之

溢利二者間之重大時差，根據預期於

可預見將來支付或可收回之負債及資

產而計算。採納經修訂會計準則第十

二號（經修訂）構成會計政策之變動對

萬順昌集團過往會計期間之業績並無

重大影響。

(b) 綜合基準

綜合賬目包括萬順昌及其附屬公司之

賬目，並以權益法計算萬順昌集團所

佔其聯營公司之收購後業績及儲備。

於本年度購入或出售之附屬公司及聯

營公司，分別由收購的生效日期起或

截至出售的生效日期止包括在綜合損

益表。

萬順昌集團所有公司間重大交易及結

餘均於綜合賬目時註銷。

出售一間附屬公司所產生的損益，乃

指出售所得款項與萬順昌集團所佔資

產淨值兩者間之差額，連同任何未攤

銷商譽或負商譽，以及任何相關累計

外幣㶅兌調整。

少數股東權益指外界股東所佔附屬公

司經營業績及淨資產之權益。

Page 88


1. PRINCIPAL ACCOUNTING POLICIES (Cont’d)

(c) Goodwill

Goodwil l represents the excess of the fair value of the

consideration of an acquisition over the VSC Group’s share of

the aggregate fair values of the identifiable net assets acquired.

Goodwill is recognised as an intangible asset in the balance

sheet and is amortised on a straight-line basis over its estimated

economic l ife. The carrying value of goodwill is assessed

periodically or when factors indicating an impairment are present.

Any impairment of goodwill is charged to the profit and loss

account in the period in which the impairment occurs.

(d) Subsidiaries

Subsidiaries are those entities in which VSC, directly or indirectly,

controls more than one half of the voting power; has the power

to govern the financial and operating policies, to appoint or

remove the majority of the members of the board of directors,

or to cast majority votes at the meetings of the board of directors.

In VSC’s balance sheet, investment in subsidiaries is stated at

cost less accumulated impairment losses. The results of

subsidiaries are accounted for by VSC on the basis of dividends

received and receivable.

(e) Associates

An associate is a company over which the VSC Group has

significant influence, but not control or joint control, over its

financial and operating policy decisions.

In the consolidated accounts, investment in associates is

accounted for under the equity method of accounting, whereby

the investment is initially recorded at cost and is adjusted

thereafter to recognise the VSC Group’s share of the post-

acquisition results of associates, distributions received from

associates, other necessary alterations in the VSC Group’s

proportionate interest in associates arising from changes in the

equity of associates that have not been included in the profit

and loss account of associates, amortisation of the difference

between the cost of investment and the VSC Group’s share of

the aggregate fair value of the identifiable net assets acquired

at the date of acquisition (goodwill), and any impairment loss.

The VSC Group’s share of post-acquisition results of associates

is included in the consolidated profit and loss account. Equity

accounting is discontinued when the carrying amount of the

investment in an associate reaches zero, unless the VSC Group

has incurred obligations or guaranteed obligations in respect of

the associate.

1. 主要會計政策（續）

(c) 商譽

商譽指所付代價的公平價值與萬順昌

集團佔購入可識別淨資產的公平價值

總額兩者之間之差額。商譽於資產負

債表內確認為一項無形資產及按其預

計經濟年期以直線法攤銷。商譽之賬

面值會定期或於出現減值之因素時獲

評估。任何商譽減值於減值期間內於

損益表扣除。

(d) 附屬公司

附屬公司乃該等由萬順昌直接或間接

控制其半數以上投票權，控制其財務

及營運政策監管權，委任或罷免董事

會的大多數席位，或於董事會會議上

佔大多數投票權的實體。

於萬順昌之資產負債表內，於附屬公

司的投資乃以成本扣除累計減值虧損

列賬。萬順昌將附屬公司之業績按已

收及應收股息之基準入賬。

(e) 聯營公司

聯營公司乃萬順昌集團能夠對其行使

重大影響力之公司，惟對其財務及營

運政策並無控制權或共同控制權。

在綜合賬目內，於聯營公司的投資乃

按權益法入賬，據此，該項投資最初

按成本記錄，並於其後就萬順昌集團

所佔聯營公司購入後的業績、收取聯

營公司的分派、因尚未計入因聯營公

司損益表內之聯營公司股權變動而產

生之萬順昌集團所佔聯營公司權益比

例的其他必需改變、投資成本值與萬

順昌集團所佔於收購日期收購的可資

識別資產淨值之總公平價值的差額

（商譽）的攤銷，以及任何減值虧損作

出調整。萬順昌集團所佔聯營公司收

購後業績已計入綜合損益表內。當在

聯營公司之投資賬面值全數撇銷，便

不再採用權益會計法，除非萬順昌集

團就該聯營公司已產生承擔或有擔保

之承擔。


Page 89


(f) Contractual joint ventures

A contractual joint venture is an entity established between the

VSC Group and one or more other parties for a pre-determined

period of time, with the rights and obligations of the joint venture

partners being governed by a contract. If the VSC Group is able

to govern and control the financial and operating policies of the

contractual joint venture so as to obtain benefits from its

activit ies, such joint venture is considered as a de facto

subsidiary and is accounted for as a subsidiary. If the VSC

Group can only exercise significant influence over the contractual

joint venture, such joint venture is accounted for as an associate.

(g) Fixed assets and depreciation

Fixed assets, other than investment properties, are stated at

cost less accumulated depreciation and accumulated impairment

losses. Major expenditures on modifications and betterments of

fixed assets which will increase their future economic benefits

are capitalised, while expenditures on maintenance and repairs

are expensed when incurred.

Leasehold land is depreciated over the period of the lease,

while other fixed assets are depreciated on a straight-line basis

at rates sufficient to write off their cost less accumulated

impairment losses over their estimated useful lives. The principal

annual rates of depreciation are as follows:

Land 2% (lease terms)

Buildings 2.5% to 4%

Leasehold improvements 20% to 33%

(lease terms)

Furniture and equipment 15% to 33%

Machinery 10% to 25%

Motor vehicles 20%

The depreciation methods and useful l ives are reviewed

periodically to ensure that the methods and rates of depreciation

are consistent with the expected pattern of economic benefits

from fixed assets.

The gain or loss on disposal of a f ixed asset, other than

investment properties, is the difference between the net disposal

proceeds and the then carrying amount of the relevant asset,

and are recognised in the profit and loss account.


(f) 合約合營企業

合約合營企業為萬順昌集團與一個或

以上其他訂約方成立而預定經營期之

實體，並享有及承擔受合約管制之合

營企業夥伴之權利及義務。倘萬順昌

集團有能力控制及管治該合約合營企

業之財務及營運政策，並從其業務中

獲取利益，則該合營企業被視為實際

附屬公司及當作附屬公司形式入賬。

如萬順昌集團僅能對合約合營企業行

使重大影響力，該合營企業會以聯營

公司形式入賬。

(g) 固定資產與折舊

除投資物業外，固定資產按成本值減

累計折舊及累計減值虧損入賬。因修

整及改善固定資產而可增加其未來經

濟利益之開支轉撥資本，而保養及維

修開支則於產生時作為開支。

租賃土地按其租約期計算折舊，而其

他固定資產按直線法於估計可用年期

內撇銷其成本值減累計減值虧損計算

折舊。折舊之年率如下：

土地 2%（租約年期）

樓宇 2.5%至4%

租賃物業裝修 20%至33%

（租約年期）

傢俬及設備 15%至33%

機器 10%至25%

汽車 20%

折舊方法及可使用年期定期被檢訂以

確保折舊方法及折舊率與固定資產之

預期經濟利益模式保持一致。

出售一項固定資產（投資物業除外）之

盈虧乃出售所得款項淨額減有關資產

當時之賬面值之基準之差額於損益表

內予以確認。

Page 90



(h) Investment properties

Investment properties are leasehold interests in land and

buildings in respect of which construction and development work

have been completed and which are held for their long-term

investment potential, any rental income being negotiated at arm’s

length.

Investment properties are included in the balance sheet at their

open market value on the basis of an annual valuation by

independent qualif ied valuers. All changes in the value of

investment properties are dealt with in the investment property

revaluation reserve unless the balance of this reserve is

insufficient to cover a deficit on a portfolio basis, in which case

the net deficit is charged to the profit and loss account. When

an investment property is disposed of, the relevant portion of

previously recognised revaluation surpluses are reversed and

the gain or loss on disposal reported in the profit and loss

account is determined based on the net disposal proceeds less

the original cost.

No depreciation is provided for investment properties unless the

unexpired lease term is 20 years or less, in which case

depreciation is provided on the then carrying value over the

unexpired lease term.

(i) Long-term investments

Long-term investments, which are held for non-trading purpose,

are stated at fair value at the balance sheet date. Changes in

the fair value of individual investments are credited or debited

to the investment revaluation reserve until the investments are

sold or otherwise disposed of or until the investments are

determined to be impaired. Upon disposal, the cumulative gain

or loss, representing the difference between the net disposal

proceeds and the carrying amount of the relevant investments,

together with any surplus/deficit transferred from the investment

revaluation reserve, is dealt with in the profit and loss account.

When there is objective evidence that individual investments are

impaired, the cumulative loss recorded in the investment

revaluation reserve is taken to the profit and loss account.


(h) 投資物業

投資物業指具有長期投資潛質（而任

何租金收入按公平交易商討釐定）之

已完成建築工程及發展之契約土地及

樓宇之權益。

投資物業均按獨立合資格估值師每年

進行之估值所得之公開市值列入資產

負債表。投資物業價值之所有變動乃

於投資物業重估儲備中處理，除非該

儲備之結餘不足彌補按投資組合計算

之虧絀，在此情況下，則將虧絀淨額

撥入損益表。投資物業出售時，其以

往確認之重估盈餘會被撥回，而於損

益表內申報之出售盈虧乃根據出售所

得款項淨額減原有成本計算。

除非投資物業之剩餘租約年期為二十

年或以下，否則無需計算折舊，惟剩

餘租約年期為二十年或以下之投資物

業則須於剩餘租約年期內就當時之賬

面值作出折舊準備。

(i) 長期投資

持有作非買賣用途之長期投資按其公

平價值於資產負債表中列賬。個別投

資公平價值之變動均於投資重估儲備

中計入或扣除，直至有關投資出售或

被摒棄或有關投資被釐定出現減值為

止。於出售時，累計盈虧乃指出售所

得款項淨額及有關投資之賬面值之差

額，連同任何轉撥自投資重估儲備之

盈餘／虧絀於損益表中處理。倘有客

觀證明顯示個別投資出現減值，於投

資重估儲備之累計虧損乃計入損益表

中。


Page 91


(j) Inventories

Inventories are stated at the lower of cost and net realisable

value. Cost, calculated on the first-in, first-out basis, comprises

materials, direct labour and an appropriate proportion of all

production overhead expenditure. Net realisable value is

determined on the basis of anticipated sales proceeds less

estimated selling expenses.

(k) Installation contracts

When the outcome of an instal lation contract cannot be

estimated reliably, contract revenue is recognised only to the

extent of contract costs incurred that it is probable will be

recoverable. Contract costs are recognised when incurred.

When the outcome of an installation contract can be estimated

reliably, contract revenue and contract costs are recognised

over the period of the contract, respectively, as revenues and

expenses. The VSC Group uses the percentage-of-completion

method to determine the appropriate amount of revenue and

costs to be recognised in a given period. When it is probable

that total contract costs will exceed total contract revenue, the

expected loss is recognised as an expense immediately.

The aggregate of the costs incurred and the profit/ loss

recognised on each contract is compared against the progress

billings up to the year-end. Where costs incurred and recognised

profits (less recognised losses) exceed progress billings, the

balance is shown as due from customers on installation contract

work under current assets. Where progress billings exceed costs

incurred plus recognised profits (less recognised losses), the

balance is shown as due to customers on installation contract

work under current liabilities.

(l) Accounts receivable

Provision is made against accounts receivable to the extent

they are considered to be doubtful. Accounts receivable in the

balance sheet are stated net of such provision.


(j) 存貨

存貨按成本值與可變現淨值兩者中之

較低者入賬。成本值以先入先出法計

算之原材料、直接勞工工資及適當比

例之所有生產費用。可變現淨值乃按

預計銷售所得款項扣除估計銷售支出

計算。

(k) 安裝合約

倘安裝合約之結果未能可靠地估計，

則僅入賬確認大有可能收回之已產生

合約成本為合約收入，合約成本於產

生期間確認。

倘安裝合約之結果可以可靠地估計，

則合約收入及合約成本會按其合約期

間，分別入賬確認為收入及開支。萬

順昌集團採用完成百份比計算法按適

當收入及成本金額在指定期間確認入

賬。倘合約成本總額大有可能超逾合

約收入總額，則其預算虧損即時入賬

確認為開支。

每份合約產生之成本與已確認之損益

總額，與截至年終為止之進度款項作

一比較。當已發生成本與已確認之溢

利（減已確認之虧損）超過進度款項之

款額，有關差額將列作流動資產下之

應收客戶安裝合約工程。當進度款項

之款額超過已發生成本加已確認之溢

利（減已確認之虧損），差額將列作流

動負債下之應付客戶安裝合約工程。

(l) 應收賬款

應收賬款按呆賬情況計提撥備。資產

負債表內的應收賬款乃扣除有關撥備

後列賬。

Page 92



(m) Impairment of assets

Assets are reviewed for impairment whenever events or changes

in circumstances indicate that the carrying amount of one of

these assets may not be recoverable. Whenever the carrying

amount of an asset exceeds its recoverable amount, an

impairment loss representing the difference between the carrying

amount and the recoverable amount of an asset is recognised

in the profit and loss account. The recoverable amount is the

higher of an asset’s net selling price and value in use. The net

selling price is the amount obtainable from the sale of an asset

in an arm’s length transaction less the costs of the disposal,

while value in use is the present value of estimated future cash

flows expected to arise from the continuing use of an asset and

from its disposal at the end of its useful life.

Reversal of an impairment loss of an asset recognised in prior

years is recorded when there is an indication that the impairment

loss recognised for the asset no longer exists or has decreased.

The reversal is recorded in the profit and loss account.

(n) Contingent liabilities and contingent assets

A contingent liability is a possible obligation that arises from

past events and whose existence will only be confirmed by the

occurrence or non-occurrence of one or more uncertain future

events not wholly within the control of the VSC Group. It can

also be a present obligation arising from past events that is not

recognised because it is not probable that outflow of economic

resources will be required or the amount of obligation cannot

be measured reliably. A contingent liability is not recognised but

is disclosed in the notes to accounts. When a change in the

probability of an outflow occurs so that outflow is probable,

they will then be recognised as a provision.

A contingent asset is a possible asset that arises from past

events and whose existence will be confirmed only by the

occurrence or non-occurrence of one or more uncertain events

not wholly within the control of the VSC Group. Contingent

assets are not recognised but are disclosed in the notes to the

accounts when an inflow of economic benefits is probable. When

inflow is virtually certain, an asset is recognised.


(m) 資產減值

資產於事件發生或情況變動顯示或許

未能收回該等資產其中一項之賬面值

時，則會進行減值檢討。倘資產之賬

面值超逾可收回數額，則將相等於資

產賬面值與可收回數額之差額計入損

益表為減值虧損。可收回數額指資產

之淨售價與使用價值之較高者。淨售

價為以公平交易出售資產時所得數額

減出售成本，而使用價值則為在持續

使用資產及於其可使用年期終止時出

售而預期所得之估計未來現金流量之

現值。

倘有跡象顯示資產不再出現減值虧損

或減值虧損已減少，則會將資產於過

往年度確認之減值虧損撥回計入損益

表。

(n) 或然負債及或然資產

或然負債乃指因過往事件而可能產生

之負債，或然負債存在與否僅由出現

或並無出現一項或多項萬順昌集團未

能全力控制之不明朗未來事件而決

定。或然負債亦可以是由過往事件產

生而未予確認之現有債務，有關債務

未予確認之原因為不大可能需要經濟

資源流出或須承擔之款項未能可靠地

計算。或然負債並不予以確認惟已於

賬目附註中作出披露。倘資源流出之

可能性出現變動因此大有可能導致經

濟資源流出，其時或然負債將確認為

撥備。

或然資產乃指因過往事件而可能產生

之資產，或然資產存在與否僅由出現

或並無出現一項或多項萬順昌集團未

能全力控制之不明朗未來事件而決

定。倘大有可能出現經濟效益流入，

或然資產將不予確認，惟於賬目附註

中作出披露。倘事實上可肯定會出現

經濟效益流入，則有關資產須予以確

認。


Page 93


(o) Provisions

Provisions are recognised when the VSC Group has a present

obligation, legal or constructive, as a result of past events and

it is probable that an outflow of resources will be required to

settle the obligation, and a reliable estimate can be made of the

amount of the obligation. Provisions are reviewed regularly and

adjusted to reflect the current best estimate. Where the effect

of the time value of money is material, the amount of a provision

is the present value of the expenditure expected to be required

to settle the obligation. Where the VSC Group expects a provision

to be reimbursed, the reimbursement is recognised as a separate

asset only when the reimbursement is virtually certain.

(p) Deferred taxation

Deferred taxation is provided in full, using the liability method,

on temporary differences arising between the tax bases of assets

and liabilities and their carrying amounts in the accounts. Taxation

rates enacted or substantively enacted by the balance sheet

date are used to determine deferred taxation.

Deferred tax assets are recognised to the extent that it is

probable that future taxable profit will be available against which

the temporary differences can be utilised.

Deferred taxation is provided on temporary differences arising

on investments in subsidiaries, associates and joint ventures,

except where the timing of the reversal of the temporary

difference can be controlled and it is probable that the temporary

difference will not reverse in the foreseeable future.

(q) Revenue recognition

Revenue is recognised when the outcome of a transaction can

be measured reliably and when it is probable that the economic

benefits associated with the transaction will flow to the VSC

Group. Revenue is recognised on the following bases:

(i) Sales revenue

Revenue from sales of goods is recognised on the transfer

of r isks and rewards of ownership, which generally

coincides with the time when the goods are delivered to

customers and title has passed.


(o) 撥備

當萬順昌集團因以往事件而承擔現有

法律或引申責任，且大有可能因承擔

該等責任而導致資源外流，並能可靠

估計有關承擔之數額時，將會作出撥

備。撥備會定期檢討及調整，以反映

現時之最佳估值。倘貨幣之價值會隨

時間出現重大變化，則撥備數額將為

預計履行承擔所需開支之現值。倘萬

順昌集團預期撥備得以撥回，則只於

有關撥回可在事實上可肯定時確認為

獨立資產。

(p) 遞延稅項

遞延稅項乃利用負債法就資產與負債

之稅基與他們在賬目之賬面值兩者之

短暫時差作全數撥備。於結算日所制

訂或大致制訂之稅率用以釐定遞延稅

項。

遞延稅項資產乃就大有可能將未來應

課稅溢利與可動用之短暫時差抵銷而

確認。

遞延稅項會就有關在附屬公司、聯營

公司及合營企業之投資所產生之短暫

時差而撥備，但假若可以控制短暫時

差撥回之時間，並大有可能在可預見

未來不會撥回該短暫時差則除外。

(q) 收入確認

收入於交易結果得以可靠地衡量而該

交易的經濟利益大有可能流入萬順昌

集團時確認。收入按以下基準確認：

(i) 營業收入

銷售貨品收入於風險及擁有權

移交時確認，通常亦即為貨品

付運往客戶和所有權轉讓時。

Page 94



(q) Revenue recognition (Cont’d)

(ii) Revenue from installation contracts

Revenue from each individual installation contract is

recognised using the percentage-of-completion method

by reference to the stage of completion of the contract

activity, primarily based on the proportion of contract costs

incurred for work performed to date to estimated total

contract costs (see Note 1(k)).

(iii) Rental income

Rental income is recognised on a straight-line basis over

the period of the relevant leases.

(iv) Dividend income

Dividend income is recognised when the right to receive

payment is established.

(v) Interest income

Interest income is recognised on a time proportion basis,

taking into account the principal amounts outstanding and

the interest rates applicable.

Advance payments received from customers prior to delivery of

goods or before commencement of installation contract work

are recorded as receipts in advance.

(r) Employee benefits

(i) Employee leave entitlements

Employee entitlements to annual leave are recognised

when they accrue to employees. A provision is made for

the estimated liability for annual leave as a result of services

rendered by employees up to the balance sheet date.

Employee entitlements to sick leave and maternity leave

are not recognised until the time of the leave.

(ii) Pension obligations

The VSC Group’s contributions to defined contribution

retirement schemes are expensed as incurred.

(s) Borrowing costs

Borrowing costs that are directly attributable to the acquisitions,

construction or production of an asset that takes a substantial

period of time to get ready for its intended use or sale are

capitalised as part of the cost of that asset. All other borrowing

costs are charged to the profit and loss account in the period in

which they are incurred.


(q) 收入確認（續）

(ii) 安裝合約之收入

每份個別安裝合約之收入會參

照合約活動之完成階段然後以

完成百分比計算法予以確認。

完成百分比主要按照已執行工

作之合約成本對比預期總合約

成本之比例（見附註1.k）。

(iii) 租金收入

租金收入於有關租約期內以直

線法予以確認。

(iv) 股息收入

股息收入乃於確定有權收取股

息支付時予以確認。

(v) 利息收入

利息收入以未償還本金按適用

息率以時間比例作基準予以確

認。

於付運貨品或安裝合約工程展開前預

先向客戶收取之款項均列作預收款項

入賬。

(r) 員工福利

(i) 僱員應享假期

僱員的應享年假乃於應計予僱

員時確認。僱員因提供服務產

生的應享年假乃按截至資產負

債表結算日的年假估計負債計

算撥備。僱員應享病假及分娩

假期僅於支取時才確認。

(ii) 退休金責任

萬順昌集團向界定供款退休金

計劃作出的供款乃於產生時列

作支出。

(s) 借貸成本

需以長時間準備作計劃用途或出售之

資產收購、建造或生產直接應計之借

貸成本撥為該資產之部份成本。所有

其他借貸成本乃於其產生之期間於損

益表扣除。


Page 95


(t) Operating leases

Leases where substantially all the risks and rewards of ownership

of assets remain with the leasing company are accounted for as

operating leases. Payments made under operating leases are

charged to the profit and loss account on a straight-line basis

over the period of the relevant leases.

(u) Foreign currency translation

Individual companies within the VSC Group maintain their books

and records in the primary currencies of their respective

operations (“functional currencies”). In the accounts of the

individual companies, transactions in other currencies during

the year are translated into the functional currencies at the

applicable rates of exchange prevail ing at the time of the

transaction; monetary assets and liabilities denominated in other

currencies are translated into the respective functional currencies

at the applicable rates of exchange in effect at the balance

sheet date. Exchange gains and losses are dealt with in the

profit and loss account of the individual companies.

The VSC Group prepares consolidated accounts in Hong Kong

dollars. For the purpose of consolidation, all the assets and

liabilities of subsidiaries with functional currencies other than

Hong Kong dollars are translated into Hong Kong dollars at the

applicable rates of exchange in effect at the balance sheet date;

all income and expense items are translated at the applicable

average exchange rates during the year. Exchange differences

arising from such translation are dealt with as movements of

cumulative foreign currency translation adjustments.

(v) Forward foreign currency contracts

Forward foreign currency contracts are entered into to hedge

against fluctuation in currency exchange rates. When the forward

foreign currency contract is used as a hedge of a net monetary

asset or liability, the gain or loss on the contract and the discount

and premium are taken into the profit and loss account. Where

the forward foreign currency contract is used as a hedge of a

firm commitment, no gain or loss is recognised during the

commitment period; at the end of that period, any gain or loss

and the discount or premium are added to, or deducted from,

the amount of the relevant transaction.


(t) 營業租約

凡資產擁有權之絕大部份風險及回報

仍屬出租公司之租約均列為營業租

約。營業租約之支出均於有關租約年

期以直線法自損益表中扣除。

(u) 外幣換算

萬順昌集團屬下個別公司之賬目及記

錄乃以本身營運所在地之主要貨幣

（「功能貨幣」）為單位。在個別公司之

賬目中，於本年度以其他貨幣進行之

交易乃按個別功能貨幣於交易時之適

用㶅率㶅兌，以其他貨幣為單位之貨

幣資產及負債乃按功能貨幣於資產負

債表結算日之適用㶅率㶅兌。㶅兌盈

虧均於個別公司之損益表內處理。

萬順昌集團編製之綜合賬目乃以港元

為單位。就綜合賬目而言，所有以港

元以外作為功能貨幣之附屬公司之所

有資產及負債乃按資產負債表結算日

之適用㶅率㶅兌為港元，所有收支項

目均按本年度適用之平均㶅率換算。

因換算該等交易而出現之㶅兌差額列

作累積外幣㶅兌調整變動處理。

(v) 遠期外㶅貨幣合約

遠期外㶅貨幣合約用以對沖外幣㶅率

之波動。當遠期外㶅貨幣合約用作對

沖其淨貨幣資產或負債，合約之盈

虧，以及貼現及溢價乃計入損益表

中。倘遠期外㶅貨幣合約用作對沖其

肯定承擔，於承擔期間盈虧不予確

認；於承擔期末時，任何盈虧、貼現

或溢價乃於其有關交易金額中加進或

減少。

Page 96



(w) Segment reporting

In accordance with the VSC Group’s internal financial reporting,

the VSC Group has determined that business segments be

presented as the primary reporting format and geographical

segments as the secondary reporting format.

Unallocated costs represent corporate expenses. Segment

assets consist primarily of fixed assets, inventories, receivables

and other operating assets. Segment liabilities consist primarily

of all of the VSC Group’s operating liabilities. Capital expenditure

comprises additions to fixed assets, investment properties,

investment in associates and long-term investments, including

those arising from acquisition of subsidiaries.

In respect of geographical segment reporting, turnover is based

on the destination of delivery of goods or the location for the

provision of services. Total assets and capital expenditure are

classified where the assets are located.

(x) Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at

cost. For the purpose of the cash flow statement, cash and

cash equivalents comprise cash on hand, deposits held at call

with banks, cash investments with a maturity of three months

or less from date of investment and bank overdrafts.


(w) 分類資料

根據萬順昌集團的內部財務報告，萬

順昌集團決定以業務分類作為主要申

報格式，而地區分類則為次要申報格

式。

未分配成本指企業支出。分類資產主

要包括固定資產、存貨、應收賬款及

其他經營資產，而分類負債則主要包

括萬順昌集團所有經營負債。資本支

出包括添置固定資產，投資物業，於

聯營公司之投資及長期投資，當中包

括因收購附屬公司而添置之資產。

就地區分類申報而言，營業額乃根據

貨品付運目的地及提供服務之地點而

釐定。總資產及資本支出，以有關資

產所在地分類。

(x) 現金及現金等值

現金及現金等值按成本值於資產負債

表列賬。就現金流量表而言，現金及

現金等值包括手頭現金、存於銀行之

通知存款、現金投資（到期日為投資

日期起計三個月或以內）及銀行透

支。


Page 97

2. RELATED PARTY TRANSACTIONS

Parties are considered to be related if one party has the ability, directly

or indirectly, to control the other party or exercise significant influence

over the other party in making financial and operating decisions. Parties

are also considered to be related if they are subject to common control

or common significant influence.

(a) Details of significant transactions with related parties were:

Name of related party/Nature of transaction

二零零四年二零零三年2004 2003千港元千港元

HK$’000 HK$’000

金屬物流管理有限公司 (i) Metal Logistics Company Limited (i)— 萬順昌集團所達成之銷售 — Sales made by the VSC Group 155,716 287,413— 萬順昌集團收取之 — Administrative service fees

行政服務費 earned by the VSC Group 180 180— 萬順昌集團收取之利息 — Interest earned by the VSC Group 5,672 4,616— 萬順昌集團支付／ — Commission for procurement

應付之採購服務 services paid/payable by佣金 the VSC Group 1,894 1,552

亞洲鋼鐵電子交易所 iSteelAsia (Hong Kong) Limited (i)（香港）有限公司 (i)— 萬順昌集團收取之租金 — Rental earned by the VSC Group 198 600— 萬順昌集團收取之 — Administrative service fees

行政服務費 earned by the VSC Group 180 180

易達投資集團有限公司 (ii) EC Investment Services Limited (ii)— 萬順昌集團收取之租金 — Rental earned by the VSC Group — 383

Notes:

(i) Metal Logistics Company Limited and iSteelAsia (Hong Kong)

Limited are wholly owned by iSteelAsia Holdings Limited, a

company in which the VSC Group had a 18.9% equity interest as

at 31st March 2004 (2003: 19.2%).

(ii) EC Investment Services Limited is beneficially owned by Mr. Tsang

Kwok Tai, Moses, a former non-executive director of VSC, who

resigned on 17th August 2002, and the amount of transactions

with EC Investment Services Limited was disclosed up to that

date.

2. 與關連人士之交易

關連人士乃指其中一方可直接或間接控制另

一方或對別一方之財務及營運決策行使重大

影響力。受共同控制或受共同重大影響之人

士亦被視為關連人士。

(a) 與關連人士之重大交易詳情如下：

關連人士名稱／交易性質

註：

(i) 金屬物流管理有限公司及亞洲鋼鐵

電子交易所（香港）有限公司均由亞

鋼集團有限公司全資擁有。於二零

零四年三月三十一日萬順昌集團擁

有該公司18.9%股權（二零零三年：

19.2%）。

(ii) 易達投資集團有限公司由萬順昌前

非執行董事曾國泰先生實益擁有。

曾國泰先生於二零零二年八月十七

日辭任其非執行董事一職，而與易

達投資集團有限公司之交易金額亦

披露至該日期為止。

Page 98


2. RELATED PARTY TRANSACTIONS (Cont’d)

(b) The amount due from a related company arising from the

transactions described in Note 2(a) was included in accounts

and bills receivable. Details of such balances are as follows:

2. 與關連人士之交易（續）

(b) 附註2(a)所述交易產生之應收一間關

連公司款項列作應收賬款及票據。有

關結餘詳情如下：

Note:

(i) The balance, arising mainly from purchases of steel, is unsecured,

repayable according to the VSC Group’s normal credit term for

trading transactions and bore interest at commercial lending rates

for overdue balances.

於年內最高結餘Maximum

balanceoutstanding

二零零四年二零零三年 during the關連公司名稱 Name of related party 2004 2003 year

千港元千港元千港元HK$’000 HK$’000 HK$’000

金屬物流管理有限 Metal Logistics Company公司 (i) Limited (i) 205,611 210,202 249,125

註：

(i) 該結餘主要來自鋼材採購，並無抵

押，按萬順昌集團貿易交易之正常

信貸條款償還，且過期結餘按商業

利率計算利息。


Page 99

3. TURNOVER AND REVENUE

Revenues recognised are as follows:


HK$’000 HK$’000

製造工業產品 Manufacturing of industrial products— 板材產品加工 — Processing of rolled flat steel

products 392,513 277,302— 系統設備外殼 — Enclosure systems 109,463 39,986

買賣工業產品 Trading of industrial products— 工程塑膠樹脂及 — Engineering plastic resins and

注塑機 injection moulding machines 172,265 155,063存銷與買賣建築材料 Stockholding and trading of

construction materials— 鋼材產品 — 鋼筋、 — Steel products — steel rebars,

結構鋼及板材產品 structural steel and flat steelproducts 2,734,287 2,138,344

— 潔具及廚櫃 — Sanitary ware and kitchen cabinets 97,350 41,463— 安裝廚櫃之收入 — Revenue from installation work

of kitchen cabinets 41,387 99,795租金收入 Rental income 1,845 3,816

總營業額 Total turnover 3,549,110 2,755,769

利息收入 Interest income 6,310 4,887一項長期投資之股息收入 Dividend income from a long-term

investment 374 188一間合營公司之回報 (i) Return from a joint venture (i) 4,344 6,615

11,028 11,690

總收入 Total revenue 3,560,138 2,767,459

3. 營業額及收入

收入按以下確認：

Note:

(i) During the year ended 31st March 2004, the VSC Group received a

return of approximately HK$4,344,000 (2003: HK$6,615,000) from a joint

venture, which was written off in prior years.

註：

(i) 截至二零零四年三月三十一日止年度內，

萬順昌集團收取一間合營公司之回報約

4,344,000港元（二零零三年：6,615,000港

元），該投資已於過往數年撇銷。

Page 100


4. OTHER INCOME/(EXPENSE)4. 其他收益／（支出）


HK$’000 HK$’000

投資物業之重估盈餘／ Surplus/(Deficit) on revaluation（虧絀） of investment properties 2,818 (1,500)出售一項投資物業之收益 Gain on disposal of an investment

property 2,476 —

5,294 (1,500)


HK$’000 HK$’000

已扣除： After charging:

員工成本（包括董事酬金） Staff costs (including directors’（見附註7） emoluments) (see Note 7) 68,681 65,593物業之營業租約租金 Operating lease rentals of premises 7,610 11,804呆壞應收賬款撥備／撇銷 Provision for/Write-off of bad and

doubtful accounts receivable 609 2,839存貨撥備及撇銷 Provision for and write-off of inventories 3,116 2,963固定資產之折舊 Depreciation of fixed assets 16,791 20,132出售固定資產之虧損淨額 Net loss on disposal of fixed assets 5 —商譽攤銷 Amortisation of goodwill 2,359 1,850出售一項長期投資 Loss on disposal of a之虧損 long-term investment — 284

外㶅兌換虧損淨額 Net exchange loss — 393核數師酬金 Auditors’ remuneration 880 788

已計入： After crediting:

來自下列項目之租金收入 Rental income from— 關連公司（見附註2(a)） — related companies (see Note 2(a)) 198 983— 第三者 — third parties 1,647 2,833

出售固定資產之收益淨額 Net gain on disposal of fixed assets — 51外㶅兌換收益淨額 Net exchange gain 3,583 —來自下列項目之利息收入 Interest income from— 銀行存款 — bank deposits 406 203— 其他存款 — other deposits — 1— 到期應收賬款 — overdue accounts receivable 232 67— 應收一間關連公司款項 — amounts due from a related（見附註2(a)） company (see Note 2(a)) 5,672 4,616

一項長期投資之股息收入 Dividend income from a long-terminvestment 374 188

5. OPERATING PROFIT

Operating profit is determined after charging or crediting the following

items:

5. 經營溢利

經營溢利已扣除或計入下列各項：


Page 101

6. FINANCE COSTS6. 財務費用


HK$’000 HK$’000

利息支出於 Interest expense on— 須於五年內全數償還 — bank loans wholly repayable

之銀行貸款 within five years 11,832 10,263— 須於五年內全數償還之 — other short-term loans wholly

其他短期借貸 repayable within five years 1,505 881

13,337 11,144

7. STAFF COSTS (INCLUDING DIRECTORS’ EMOLUMENTS)


HK$’000 HK$’000

薪金及津貼 Salaries and allowances 60,357 57,519花紅 Bonuses 6,494 6,000退休金成本 Pension costs— 界定供款計劃 — defined contribution schemes（見附註36） (see Note 36) 2,535 2,489

— 沒收供款 — forfeited contributions (705) (415)

68,681 65,593

7. 員工成本（包括董事酬金）

8. DIRECTORS’ AND SENIOR EXECUTIVES’ EMOLUMENTS

(a) Directors’ emoluments

8. 董事及高級行政人員酬金

(a) 董事酬金


HK$’000 HK$’000

非執行董事之董事袍金 Fees for non-executive directors 80 519獨立非執行董事之董事 Fees for independent non-executive袍金 directors 347 —

執行董事之其他酬金 Other emoluments for executivedirectors

— 薪金及津貼 — Salaries and allowances 3,213 3,658— 酌情花紅 (i) — Discretionary bonuses (i) 2,100 2,500— 退休金供款 — Retirement contributions 77 72

5,817 6,749

Page 102


8. DIRECTORS’ AND SENIOR EXECUTIVES’ EMOLUMENTS (Cont’d)

(a) Directors’ emoluments (Cont’d)

Note:

(i) The executive directors were entitled to discretionary bonuses

which were determined with reference to the financial performance

of the VSC Group.

In addition to the above-mentioned emoluments, the VSC Group

provided a residential apartment (included in land and buildings)

to an executive director for his residence, and the annual rateable

value of the apartment amounted to approximately HK$931,000

(2003: HK$1,038,000).

No director waived any emolument during the year. No incentive

payment for joining the VSC Group or compensation for loss of

office was paid/payable to any directors during the year.

Analysis of directors’ emoluments (including the rateable value

of the apartment used as a director’s residence) by number of

directors and emolument ranges is as follows:

8. 董事及高級行政人員酬金（續）

(a) 董事酬金（續）

註：

(i) 執行董事可享有酌情花紅，此乃參

照萬順昌集團之財務表現而釐定。

除上述酬金外，萬順昌集團為一位執

行董事提供一間住宅單位（包括於土

地及樓宇內）作其寓所，該單位於本

年度之應課差餉租值約為931,000港

元（二零零三年：1,038,000港元）。

本年度內，並無董事放棄任何酬金。

本年度內，並無支付／應付任何酬金

予董事以作為鼓勵加入萬順昌集團或

離職補償。

董事酬金（包括用作董事寓所之單位

之應課差餉租值）按董事人數及酬金

範圍之分析如下：


執行董事 Executive directors— 無至1,000,000港元 — Nil to HK$1,000,000 1 4— 1,000,001港元至 — HK$1,000,001 to

1,500,000港元 HK$1,500,000 — 1— 1,500,001港元至 — HK$1,500,001 to

2,000,000港元 HK$2,000,000 2 1— 2,500,001港元至 — HK$2,500,001 to

3,000,000港元 HK$3,000,000 — 1— 3,000,001港元至 — HK$3,000,001 to

3,500,000港元 HK$3,500,000 1 —

4 7非執行董事 Non-executive directors— 無至1,000,000港元 — Nil to HK$1,000,000 1 1

獨立非執行董事 Independent non-executivedirectors

— 無至1,000,000港元 — Nil to HK$1,000,000 3 4

8 12


Page 103

8. 董事及高級行政人員酬金（續）

(b) 五名最高薪人士（續）

於年內，萬順昌集團中五位最高薪人

士其中三位（二零零三年：三位）為董

事，彼等之酬金分析已載於上文附註

8.a。其餘二位（二零零三年：二位）人

士之已付／應付酬金詳情為：

8. DIRECTORS’ AND SENIOR EXECUTIVES’ EMOLUMENTS (Cont’d)

(b) Five highest paid individuals (Cont’d)

The five individuals whose emoluments were the highest in the

VSC Group for the year include three (2003: three) directors

whose emoluments are reflected in the analysis presented in

Note 8(a) above. The emoluments paid/payable to the remaining

two (2003: two) individuals were as follows:


HK$’000 HK$’000

薪金及津貼 Salaries and allowances 2,474 2,339退休金供款 Retirement contributions 56 63

2,530 2,402


酬金按組別分析如下： The emolument fell within thefollowing band:

— 無至1,000,000港元 — Nil to HK$1,000,000 — 1— 1,000,001港元至 — HK$1,000,001 to

1,500,000港元 HK$1,500,000 2 1

2 2

9. TAXATION

VSC is exempt from taxation in Bermuda until 2016.

Hong Kong profits tax has been provided at the rate of 17.5% (2003:

16%) on the estimated assessable profit arising in or derived from

Hong Kong.

The subsidiaries established in Mainland China are subject to Mainland

China enterprise income tax at rates ranging from 7.5% to 33% (2003:

15% to 33%). However, subsidiaries engaging in manufacturing are

exempt from Mainland China enterprise income tax for two years

starting from the first year of profitable operations after offsetting prior

years’ tax losses, followed by a 50% reduction for the next three

years.

9. 稅項

萬順昌獲豁免繳納百慕達稅項直至二零一六

年。

香港利得稅乃根據來自或賺取自香港之估計

應課稅溢利按稅率 17.5%（二零零三年：

16%）作出撥備。

於中國內地成立之附屬公司按稅率7.5%至

33%（二零零三年：15%至33%）繳付中國企

業所得稅。此外，從事製造業之附屬公司自

首個獲利年度（經抵銷過往年度虧損）起計兩

年內可豁免繳付中國企業所得稅，隨後三年

則獲50%減免。

Page 104


9. TAXATION (Cont’d)

The amount of taxation charged to the consolidated profit and loss

account represents:

9. 稅項（續）於綜合損益表中扣除之稅項包括：


HK$’000 HK$’000萬順昌及附屬公司 — VSC and subsidiaries —當期稅項 Current taxation香港利得稅 Hong Kong profits tax— 本年度 — Current year 5,165 4,080— 過往數個年度之低估／ — Under/(Over) provision（高估）撥備 in prior years 25 (5,097)

中國企業所得稅 Mainland China enterpriseincome tax 6,464 3,181

短暫差異產生及撥回之 Deferred taxation relating to遞延稅項 the origination and reversal

of temporary differences (593) —

11,061 2,164

The taxation on the VSC Group’s profit before taxation differs from the

theoretical amount that would arise using the profits tax rate of Hong

Kong, the home country of the VSC Group, and the reconciliation was

as follows:


HK$’000 HK$’000

除稅前溢利 Profit before taxation 96,455 65,905

按香港利得稅稅率17.5% Calculated at Hong Kong profits tax（二零零三年：16%）計算 rate of 17.5% (2003: 16%) 16,880 10,545影響 Effect of— 其他司法權區不同稅率 — different tax rates in other

jurisdictions (2,639) (3,348)— 無須課稅之收入 — income not subject to taxation (458) (482)— 不可扣稅之支出 — expenses not deductible

for income tax purposes 175 401— 未確認之遞延稅項資產 — deferred tax assets not recognised 85 676— 撥回以前未確認之遞延 — reversal of previously

稅項資產 unrecognised deferred tax assets (3,007) (531)— 過往年度之低估／（高估）撥備 — Under/(over) provision of taxation

in prior years 25 (5,097)

扣除之稅項 Taxation charge 11,061 2,164

萬順昌集團之除稅前溢利與按照於萬順昌集

團所在國家之香港利得稅稅率計算之理論金

額有所差異及對賬如下：


Page 105

10. PROFIT ATTRIBUTABLE TO SHAREHOLDERS

The consolidated profit attributable to shareholders includes a profit

of approximately HK$35,892,000 (2003: HK$71,912,000) dealt with in

the accounts of VSC.

11. DIVIDENDS

10. 股東應佔溢利

股東應佔綜合溢利包括撥入萬順昌賬目之溢

利約 35,892,000港元（二零零三年：

71,912,000港元）。

11. 股息


HK$’000 HK$’000

中期股息每股普通股 Interim dividend of HK3.1 cents3.1港仙 (2003: Nil) per ordinary share（二零零三年：無） 10,882 —建議末期股息每股普通股 Proposed final dividend of

2.8港仙（二零零三年： HK2.8 cents (2003: HK5.8 cents)5.8港仙） per ordinary share 10,298 18,111

21,180 18,111

12. EARNINGS PER SHARE

The calculation of basic earnings per share for the year ended 31st

March 2004 is based on the consolidated profit attributable to

shareholders of approximately HK$81,063,000 (2003: HK$60,412,000)

and the weighted average number of approximately 329,088,000

ordinary shares (2003: 347,859,000 ordinary shares) in issue during

the year.

The calculation of diluted earnings per share for the year ended 31st

March 2004 is based on the consolidated profit attributable to

shareholders of approximately HK$81,063,000 (2003: HK$60,412,000)

and the di luted weighted average number of approximately

344,131,000 ordinary shares (2003: 348,324,000 ordinary shares) in

issue after adjusting for the potential dilutive effect in respect of

outstanding warrants and share options.

12. 每股盈利

截至二零零四年三月三十一日止年度之每股

基本盈利乃根據股東應佔綜合溢利約

81,063,000港元（二零零三年：60,412,000

港元）及年內已發行股份之加權平均數約

329,088 ,000普通股（二零零三年：

347,859,000普通股）計算。

截至二零零四年三月三十一日止年度之每股

攤薄後盈利乃根據股東應佔綜合溢利約

81,063,000港元（二零零三年：60,412,000

港元）及已發行股份之攤薄後加權平均數約

344,131 ,000普通股（二零零三年：

348,324,000普通股）計算，並已就具潛在攤

薄作用之尚未行使的認股權證及購股權作出

調整。

Page 106


13. FIXED ASSETS

Movements were:

綜合Consolidated

二零零四年2004

租賃物業裝修、傢俬及設備Leasehold

improvements,土地及樓宇 furniture 汽車在建工程

Land and and 機器 Motor Construction- 總額buildings equipment Machinery vehicles in-progress Total千港元千港元千港元千港元千港元千港元

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

成本 Cost

年初 Beginning of year 73,773 47,907 53,511 6,481 6,152 187,824添置 Additions 124 11,123 7,200 796 1,525 20,768收購附屬公司而產生 Attributable to

acquisition ofsubsidiaries 21,133 140 9,089 262 — 30,624

出售 Disposals (813 ) (11,094 ) (1,471 ) (499 ) — (13,877 )轉撥 Transfer 7,677 — — — (7,677 ) —

年終 End of year 101,894 48,076 68,329 7,040 — 225,339-------------------------------------------------------------------------------------------------------------------

累計折舊 Accumulated depreciation

年初 Beginning of year 13,213 26,585 19,366 2,871 — 62,035本年度折舊 Charge for the year 2,949 8,047 4,659 1,136 — 16,791出售 Disposals (50 ) (11,051 ) (1,471 ) (281 ) — (12,853 )

年終 End of year 16,112 23,581 22,554 3,726 — 65,973-------------------------------------------------------------------------------------------------------------------

賬面淨值 Net book value年終 End of year 85,782 24,495 45,775 3,314 — 159,366

年初 Beginning of year 60,560 21,322 34,145 3,610 6,152 125,789

13. 固定資產

變動為：


Page 107

13. FIXED ASSETS (Cont’d)

Details of the geographical locations and tenure of land and buildings

were:

13. 固定資產（續）

土地及樓宇之地理位置及業權租賃期詳情

為：

綜合Consolidated


HK$’000 HK$’000

香港 Hong Kong— 10至50年租約 — leases of between

10 to 50 years 15,477 15,845— 超逾50年租約 — leases of over 50 years 28,153 29,162

中國內地 Mainland China— 10至50年之土地 — land use right of between

使用權 10 to 50 years 42,152 15,553

85,782 60,560

At 31st March 2004, land and buildings with net book value of

approximately HK$8,523,000 (2003: Nil) were pledged as collateral

for certain of the VSC Group’s short-term bank loans (see Note 37).

14. INVESTMENT PROPERTIES

Movements were:

於二零零四年三月三十一日，作為萬順昌集

團短期銀行貸款抵押品之土地及樓宇賬面淨

值合共約8,523,000港元（二零零三年：無）

（見附註37）。

14. 投資物業

變動為：

綜合Consolidated


HK$’000 HK$’000

年初 Beginning of year 31,000 32,500添置投資物業 Purchase of investment properties 7,430 —出售一項投資物業 Disposal of an investment property (4,800) —重估盈餘／（虧絀） Surplus/(Deficit) on revaluation 2,818 (1,500)

年終 End of year 36,448 31,000

Details of the geographical locations and tenure of investment

properties were:

綜合Consolidated


HK$’000 HK$’000

香港 Hong Kong— 10至50年租約 — leases of between 10 to

50 years 18,500 15,500— 超逾50年租約 — leases of over 50 years 11,900 10,700

中國內地 Mainland China— 10至50年之土地使用權 — land use right over 50 years 6,048 4,800

36,448 31,000

投資物業之地理位置及業權租賃期詳情為：

Page 108


14. INVESTMENT PROPERTIES (Cont’d)

Investment properties of approximately HK$30,400,000 were stated

at open market value as at 31st March 2004 as determined by Jointgoal

Surveyors Limited, independent qualified valuers, while the remaining

balance of approximately HK$6,048,000 was stated at the amount of

disposal in April 2004.

The VSC Group leases out certain investment properties under

operating leases, for an initial period of one to two years, with an

option to renew on renegotiated terms. None of the leases includes

contingent rentals. During the year ended 31st March 2004, the gross

rental income from investment properties amounted to approximately

HK$1,433,000 (2003: HK$2,143,000). As at 31st March 2004, the

VSC Group’s future rental income under non-cancellable operating

leases was as follows:

14. 投資物業（續）

投資物業約30,400,000港元按獨立合資格估

值師晉高測量師有限公司所釐定於二零零四

年三月三十一日之公開市值列賬。惟剩餘結

餘約6,048,000港元以二零零四年四月出售

之金額列賬。

萬順昌集團訂立營運租約租出若干投資物

業，初步訂立為期1至2年，並有選擇權於再

協商下續約。並無租約為或然租約。截至二

零零四年三月三十一日止年度內，由投資物

業帶來之租金收入總額約為1,433,000港元

（二零零三年：2,143,000港元）。於二零零

四年三月三十一日，萬順昌集團訂立不可撤

回之營運租約之未來租金收入如下：

綜合Consolidated


HK$’000 HK$’000

未逾1年 Not later than one year 834 1,347逾1年及未逾5年 Later than one year and not later

than five years 1,208 48

2,042 1,395

15. INVESTMENT IN SUBSIDIARIES

本公司Company


HK$’000 HK$’000

非上市股份，按成本值 Unlisted shares, at cost 71,746 71,746應收附屬公司 Due from subsidiaries 428,666 280,400

500,412 352,146

15. 於附屬公司之投資

Approximately HK$428,666,000 (2003: HK$280,400,000) of the

amounts due from subsidiaries are unsecured and non-interest bearing.

The amounts due from a subsidiary of HK$12,000,000 (2003:

HK$72,000,000), classified under current assets, is unsecured, non-

interest bearing and has no pre-determined repayment terms.

應收附屬公司之款項約428,666,000港元（二

零零三年：280,400,000港元）並無抵押及不

計利息。流動資產中的應收附屬公司之款項

12,000,000港元（二零零三年：72,000,000

港元）並無抵押，不計利息及無特定償還條

款。


Page 109

15. INVESTMENT IN SUBSIDIARIES (Cont’d)

Details of the principal subsidiaries as at 31st March 2004 were:

15. 於附屬公司之投資（續）

於二零零四年三月三十一日主要附屬公司之

詳情為：

萬順昌集團應佔之

已發行及繳足股本股本權益百分比 (i)

註冊成立及經營地點／註冊資本 Percentage ofPlace of Issued and fully paid equity interest 主要業務

名稱 incorporation share capital/ attributable to the PrincipalName and operations registered capital VSC Group (i) activities

東莞萬順昌鋼鐵制品有限公司 (iii) 中國內地 23,000,000港元 100% 板材產品加工

Dongguan Van Shung Mainland China HK$23,000,000 Processing ofChong Steel Products rolled flat steelCo., Ltd. (iii) products

利尚派國際貿易（上海）中國內地 200,000美元 100% 買賣潔具

有限公司 (iii) Mainland China US$200,000 Trading of sanitaryLeisure Plus ware

International Trading(Shanghai) Co., Ltd. (iii)

Pulsar Enterprises Ltd. 英屬處女群島／香港 2美元 100% 持有物業

British Virgin Islands/ US$2 Property holdingHong Kong

先滿發展有限公司香港 380港元普通股 100% 持有物業

Senior Rich Hong Kong 10,000港元 Property holding

Development Limited 無投票權遞延股 (ii)

HK$380 ordinaryHK$10,000non-votingdeferred (ii)

上海寶順昌國際貿易有限公司 (iii) 中國內地 600,000美元 66.7% 買賣及存銷鋼材

Shanghai Bao Shun Mainland China US$600,000 Trading andChang International stockholdingTrading Co., Ltd. (iii) of steel

Shun Bao International 英屬處女群島／香港 2美元 100% 持有物業

Enterprise Limited British Virgin Islands/ US$2 Property holdingHong Kong

廣州蜆華實業有限公司 (iii) 中國內地 34,875,798港元 70% 板材產品加工

SMC Industries Ltd. (iii) Mainland China HK$34,875,798 Processing ofrolled flat steelproducts

天津萬順昌金屬制品有限公司 (iii) 中國內地 11,700,000港元 100% 板材產品加工

Tianjin Van Shung Mainland China HK$11,700,000 Processing ofChong Metal Products rolled flat steelCo., Ltd (iii) products

Page 110


15. INVESTMENT IN SUBSIDIARIES (Cont’d)15. 於附屬公司之投資（續）





東誠企業（香港）有限公司香港 10,000港元 100% 財務業務

Tomahawk Capital Hong Kong HK$10,000 Finance businessLimited

Van Shung Chong 英屬處女群島 6美元 100% 投資控股

(B.V.I.) Limited British Virgin Islands US$6 Investment holding

萬順昌行有限公司香港 2,000港元普通股 100% 買賣鋼材與及提供

Van Shung Chong Hong Hong Kong 10,000,000港元管理服務

Limited 無投票權遞延股 (ii) Trading of steel andHK$2,000 ordinary provision of

HK$10,000,000 managementnon-voting servicesdeferred (ii)

順發貨倉有限公司香港 200,000港元 100% 提供倉庫服務

Vantage Godown Hong Kong HK$200,000 Provision ofCompany Limited warehousing

services

萬嘉源通訊設備（深圳）中國內地 15,000,000港元 100% 製造系統設備外殼

有限公司 (iii) Mainland China HK$15,000,000 Manufacture ofVJY Telecommunication enclosure

Equipment (Shenzhen) systemsCompany Limited (iii)

VSC (Beijing) Investment Ltd. 英屬處女群島 2美元 100% 投資控股

British Virgin Islands US$2 Investment holding

萬順昌建築材料有限公司香港 2港元 100% 買賣潔具及廚櫃與及

VSC Building Products Hong Kong HK$2 安裝廚櫃

Company Limited Trading of sanitaryware and kitchencabinets andkitchen cabinetinstallation

萬順昌塑膠有限公司香港 2港元 100% 買賣塑膠

VSC Plastics Company Hong Kong HK$2 及注塑機

Limited Trading of plasticsand injectionmouldingmachines


Page 111

15. 於附屬公司之投資（續） 15. INVESTMENT IN SUBSIDIARIES (Cont’d)





萬順昌神商有限公司香港 9,646,200美元 70% 買賣加工板材產品

（前稱蜆殼－神商有限公司） Hong Kong US$9,646,200 Trading of processedVSC Shinsho Company rolled flat steel

Limited (formerly productsknown as Shell &Shinsho CompanyLimited)

萬順昌鋼鐵有限公司香港 38,000港元普通股 100% 買賣及存銷鋼材

VSC Steel Company Hong Kong 20,000,000港元 Trading and

Limited 無投票權遞延股 (ii) stockholdingHK$38,000 ordinary of steel

HK$20,000,000non-votingdeferred (ii)

萬順昌鋼鐵制品有限公司香港 2港元 100% 買賣加工板材產品

VSC Steel Products Hong Kong HK$2 Trading ofCompany Limited processed

rolled flat steelproducts

亞萬鋼國際貿易（上海）有限公司中國內地 200,000美元 100% 買賣及存銷鋼材

VSC Steel (Shanghai) Co., Ltd. (iii) Mainland China US$200,000 Trading andstockholdingof steel

Notes:

(i) The shares of Van Shung Chong (B.V.I.) Limited are held directly by VSC.

The shares of other subsidiaries are held indirectly.

(ii) These non-voting deferred shares are owned by the VSC Group. The

non-voting deferred shares have no voting rights, are not entitled to any

distributions upon winding up unless a sum of HK$2,000,000,000 per

share has been distributed to the holders of ordinary shares for Van

Shung Chong Hong Limited or a sum of HK$100,000,000,000,000 has

been distributed to the holders of ordinary shares for VSC Steel Company

Limited and Senior Rich Development Limited.

註：

(i) Van Shung Chong (B.V.I) Limited之股份由

萬順昌直接持有。其他附屬公司之股份則

屬間接持有。

(ii) 此等無投票權遞延股份由萬順昌集團擁

有。無投票權遞延股份並無投票權，亦無

權於清盆時分享股息及除非萬順昌行有限

公司普通股持有人已獲分派每股普通股

2,000,000,000港元之款額或萬順昌鋼鐵有

限公司及先滿發展有限公司之普通股持有

人已獲分派100,000,000,000,000港元之款

額外。

Page 112


15. INVESTMENT IN SUBSIDIARIES (Cont’d)

Notes: (Cont’d)

(iii) Dongguan Van Shung Chong Steel Products Co., Ltd. is a contractual

joint venture established in Mainland China with an operating period of

12 years to 2007. Leisure Plus International Trading (Shanghai) Co., Ltd.

and VSC Steel (Shanghai) Co., Ltd. are wholly foreign owned enterprises

established in Mainland China with an operating period of 20 years to

2023. Shanghai Bao Shun Chang International Trading Co., Ltd. is an

equity joint venture established in Mainland China with an operating

period of 20 years to 2014. SMC Industries Ltd. is a co-operative joint

venture established in Mainland China with an operating period of 50

years to 2043. Tianjin Van Shung Chong Metal Products Co., Ltd. is a

wholly foreign owned enterprise established in Mainland China with an

operating period of 50 years to 2052. VJY Telecommunication Equipment

(Shenzhen) Company Limited is a wholly foreign owned enterprise

established in Mainland China with an operating period of 15 years to

2016.

The above summary lists the principal subsidiaries which principally

affected the results or formed a substantial portion of the net assets

of the VSC Group. To give details of other subsidiaries would, in the

opinion of VSC’s Directors and the VSC Group’s management, result

in particulars of excessive length.

None of the subsidiaries had any loan capital in issue at any time

during the year ended 31st March 2004.

15. 於附屬公司之投資（續）註：（續）

(iii) 東莞萬順昌鋼鐵制品有限公司乃一間於中

國內地成立之中外合營企業，經營期為12

年，至二零零七年止。利尚派國際貿易（上

海）有限公司及亞萬鋼國際貿易（上海）有限

公司乃於中國內地成立之外資企業，經營

期為20年，至二零二三年止。上海寶順昌

國際貿易有限公司乃一間於中國內地成立

之合資合營企業，經營期為20年，至二零

一四年止。廣州蜆華實業有限公司乃一間

於中國內地成立之中外合作企業，經營期

為50年，至二零四三年止。天津萬順昌金

屬制品有限公司乃一間於中國內地成立之

外資企業，經營期為50年，至二零五二年

止。萬嘉源通訊設備（深圳）有限公司乃一

間於中國內地成立之外資企業，經營期為

15年，至二零一六年止。

上述概要列出主要影響萬順昌集團之業績或

組成萬順昌集團資產淨值之大部份主要附屬

公司。萬順昌之董事及萬順昌集團之管理層

認為提供其他附屬公司之詳情將使篇幅過於

冗長。

於截至二零零四年三月三十一日止年度之任

何時間內，各附屬公司概無任何已發行借貸

資本。


Page 113

16. INVESTMENT IN ASSOCIATES

綜合Consolidated


HK$’000 HK$’000

借予一間聯營公司之墊款 Advance to an associate 12,534 12,534減：應收呆賬撥備 Less: Provision for doubtful

receivables (12,532) (12,532)

2 2

The advance to an associate is unsecured and non-interest bearing.

Details of the associates as at 31st March 2004 were:

註冊成立及已發行及間接持有股本經營地點繳足股本權益百分比Place of Issued and Percentage of

名稱 incorporation fully paid equity interest 主要業務Name and operations share capital held indirectly Principal activity

東莞聯通港口中國內地 20,418,128港元 30% 提供碼頭服務碼頭有限公司 (i) Mainland China HK$20,418,128 Provision of pier

Dongguan Luen servicesTung Harbour &Dock Co., Ltd. (i)

廣順聯合有限公司英屬處女群島／ 100美元 30% 提供碼頭服務Steel Supreme 中國內地 US$100 Provision of pier

Limited British Virgin servicesIslands/Mainland China

16. 於聯營公司之投資

借予一間聯營公司之墊款並無抵押及不計利

息。

於二零零四年三月三十一日聯營公司之詳情

為：

Note:

(i) Dongguan Luen Tung Harbour & Dock Co., Ltd. is a contractual joint

venture established in Mainland China with an operating period of 20

years to 2015.

註：

(i) 東莞聯通港口碼頭有限公司乃一間於中國

內地成立之合約合營企業，合營期至二零

一五年止，為期20年。

Page 114


17. LONG-TERM INVESTMENTS

綜合Consolidated


HK$’000 HK$’000

於香港上市股份之投資 Investment in shares listedin Hong Kong

　按成本值 At cost 42,438 42,438　公平價值變動 Change in fair value (20,705) (27,206)

21,733 15,232

非上市投資 Unlisted investments　按成本值 At cost 38,376 30,576　累計減值虧損 Accumulated impairment loss (97) (97)

38,279 30,479

60,012 45,711

17. 長期投資

As at 31st March 2004, the investment in shares listed in Hong Kong

represents approximately 18.9% (2003: 19.2%) equity interests in

iSteelAsia Holdings Limited, a company incorporated in Bermuda and

whose shares are listed on the Growth Enterprise Market of The Stock

Exchange of Hong Kong Limited. This investment was stated in the

balance sheet at its quoted market value as at 31st March 2004.

於二零零四年三月三十一日，於香港上市股

份之投資代表亞鋼集團有限公司約18.9%

（二零零三年：19.2%）股權（該公司乃於百

慕達註冊成立及其股份於香港聯合交易所有

限公司創業板上市）。該項投資以其於二零

零四年三月三十一日之所述市值於資產負債

表列賬。


Page 115

18. 商譽

變動為：

綜合Consolidated


HK$’000 HK$’000

成本 Cost

　年初 Beginning of year 67,454 67,454　收購附屬公司 Acquisition of subsidiaries（見附註32(b)） (see Note 32(b)) 3,979 —

　調整以往年度收購 Adjustment to purchase一項業務之代價 consideration for a business

acquired in prior year 2,046 —

　年終 End of year 73,479 67,454

累計攤銷 Accumulated amortisation

　年初 Beginning of year 62,830 60,980　年度內攤銷 Amortisation for the year 2,359 1,850

　年終 End of year 65,189 62,830

賬面淨值 Net book value

　年終 End of year 8,290 4,624

　年初 Beginning of year 4,624 6,474

18. GOODWILL

Movements were:

19. INVENTORIES

Inventories consisted of steel rebars, H-piles, sheet piles, rolled flat

steel products, enclosure systems, sanitary ware, kitchen cabinets,

engineering plastic resins and machinery spare parts for trading

purposes.

19. 存貨

存貨包括作貿易用途之鋼筋、工字鋼、水閘

板、板材產品、系統設備外殼、潔具、廚

櫃、工程塑膠樹脂及機器零件。

綜合Consolidated


HK$’000 HK$’000

存貨總值 Gross inventories 701,071 385,466減：陳舊及滯銷存貨撥備 Less: Provision for obsolete and

slow-moving inventories (5,130) (3,989)

695,941 381,477

Page 116


19. INVENTORIES (Cont’d)

As at 31st March 2004, inventories of approximately HK$15,399,000

(2003: HK$58,486,000) were stated at net realisable value.

As at 31st March 2004, inventories of a subsidiary amounting to

approximately HK$14,950,000 (2003: HK$14,950,000) were pledged

as collaterals for certain of the VSC Group’s short-term bank loans

and certain inventories were held under trust receipts bank loan

arrangements (see Note 37).

20. DUE FROM/TO CUSTOMERS ON INSTALLATION CONTRACT

WORK

Due from customers on installation contract work consisted of:

19. 存貨（續）

於二零零四年三月三十一日，約15,399,000

港元（二零零三年：58,486,000港元）之存貨

以可變現淨值列賬。

於二零零四年三月三十一日，一間附屬公司

約 1 4 , 9 5 0 , 0 0 0港元（二零零三年：

14,950,000港元）之存貨作萬順昌集團短期

銀行貸款之抵押用途及若干存貨根據信託收

據銀行貸款安排而持有（見附註37）。

20. 應收／應付客戶安裝合約工程

應收客戶安裝合約工程包括：

綜合Consolidated


HK$’000 HK$’000

成本加已確認之溢利 Costs plus recognised profits less減可預見虧損 foreseeable losses 144,701 98,010

減：已收及應收之進度款項 Less: Progress billings receivedand receivable (133,251) (78,976)

11,450 19,034

應付客戶安裝合約工程包括： Due to customers on installation contract work consisted of:

綜合Consolidated


HK$’000 HK$’000

成本加已確認之溢利 Costs plus recognised profits less減可預見虧損 foreseeable losses 15,328 21,539

減：已收及應收之進度款項 Less: Progress billings receivedand receivable (15,485) (26,129)

(157) (4,590)


Page 117

綜合Consolidated


HK$’000 HK$’000

成本 Cost 6,891 32,939減：應收貸款呆賬撥備 Less: Provision for doubtful

loans receivable — (26,048)

6,891 6,891

21. ACCOUNTS AND BILLS RECEIVABLE

A major portion of the VSC Group’s turnover are transacted on an

open account basis, with credit periods generally ranging from 30 to

90 days.

Ageing analysis of accounts and bills receivable was as follows:

綜合Consolidated


HK$’000 HK$’000

0至60日 0 to 60 days 489,809 416,75361至120日 61 to 120 days 120,418 151,048121至180日 121 to 180 days 41,907 42,336181至365日 181 to 365 days 135,342 43,175超過365日 Over 365 days 61,656 16,289

849,132 669,601減：呆壞賬撥備 Less: Provision for bad and

doubtful receivables (12,775) (14,576)

836,357 655,025

21. 應收賬款及票據

萬順昌集團之營業額大多以記賬方式進行，

信貸期一般介乎30至90日不等。

應收賬款及票據之賬齡分析如下：

Included in accounts and bills receivable as at 31st March 2004 were

retent ions from instal lat ion contract work of approximately

HK$5,355,000 (2003: HK$5,265,000), which were not receivable until

satisfaction of the conditions specified in the underlying contracts.

22. LOANS RECEIVABLE

於二零零四年三月三十一日，包括在應收賬

款及票據內約5,355,000港元（二零零三年：

5,265,000港元）為安裝合約工程之保留金，

該等款項將直至達成合約所指明之條款後才

可收回。

22. 應收貸款

Page 118


23. CASH AND BANK DEPOSITS

As at 31st March 2004, bank deposits of approximately HK$8,374,000

(2003: HK$7,957,000) were pledged as collateral for the VSC Group’s

banking facilities (see Note 37).

As at 31st March 2004, cash and bank deposits of approximately

HK$31,799,000 (2003: HK$32,423,000) were denominated in Chinese

Renminbi, which is not a freely convertible currency in the international

market and its exchange rate is determined by the People’s Bank of

China.

24. SHORT-TERM BORROWINGS

綜合Consolidated


HK$’000 HK$’000

銀行貸款 Bank loans　— 信託收據銀行貸款 — Trust receipts bank loans 661,159 490,879　— 短期銀行貸款 — Short-term bank loans 65,205 59,063　— 長期銀行貸款、 — Long-term bank loan,

當期部份（見附註26） current portion (see Note 26) 27,778 2,925

754,142 552,867

其他貸款 Other loans　— 一間附屬公司之一位 — A minority shareholder of

少數股東　 a subsidiary 11,700 37,800— 其他 — Others 32,768 —

798,610 590,667

23. 現金及銀行存款

於二零零四年三月三十一日，作為萬順昌集

團銀行信貸抵押品之銀行存款約8,374,000

港元（二零零三年：7,957,000港元）（見附註

37）。

於二零零四年三月三十一日，萬順昌集團之

現金及銀行存款約31,799,000港元（二零零

三年：32,423,000港元）為中國人民幣，該

貨幣不能在國際市場自由兌換之貨幣，其㶅

率由中國人民銀行釐定。

24. 短期借貸

Details of the VSC Group’s banking facilities are set out in Note 37.

Other loans are unsecured and non-interest bearing (2003: bore interest

at 5.0% to 5.5% per annum).

萬順昌集團銀行融資之詳情已載列於附註

37。

其他貸款無抵押及不計利息（二零零三年：

須付年息為5.0%至5.5%）。


Page 119

25. ACCOUNTS AND BILLS PAYABLE

Ageing analysis of accounts and bills payable was as follows:

綜合Consolidated


HK$’000 HK$’000

0至60日 0 to 60 days 312,090 196,72261至120日 61 to 120 days 22,712 6,042121至180日 121 to 180 days 11,342 2,235181至365日 181 to 365 days 2,986 1,982超過365日 Over 365 days 1,499 5,039

350,629 212,020

25. 應付賬款及票據

應付賬款及票據之賬齡分析如下：

Included in accounts and bills payable as at 31st March 2004 was an

amount due to a minority shareholder of a subsidiary of approximately

HK$30,902,000 (2003: Nil) arising from trading activities, which is

unsecured, repayable according to normal credit terms and bore

interest at commercial lending rates.

26. LONG-TERM BANK LOAN

於二零零四年三月三十一日，包括在應付賬

款及票據內約 30,902,000港元（二零零三

年：無）為貿易活動而產生之應付一間附屬

公司之一位少數股東之金額，該款項屬無抵

押、按正常信貸條款償還，且按商業利率計

算利息。

26. 長期銀行貸款

綜合Consolidated


HK$’000 HK$’000

償還數額 Amounts repayable　— 1年內 — within one year 27,778 2,925　— 第2年 — in the second year 55,556 11,700　— 第3年至第5年 — in the third to fifth year 41,666 8,775

125,000 23,400

減：於流動負債內需1年內 Less: Amount due within one year償還數額（見附註24） included under current

liabilities (see Note 24) (27,778) (2,925)

97,222 20,475

Details of the VSC Group’s banking facilities are set out in Note 37.萬順昌集團銀行融資詳情已載列於附註37。

Page 120


27. DEFERRED TAXATION

Deferred taxation are calculated in full on temporary differences under

the liability method using a principal taxation rate of 17.5% (2003:

16%).

The movement on the deferred tax assets/(liabilities) is as follows:

綜合Consolidated

遞延稅項遞延稅項遞延資產負債稅項淨額

Deferred tax Deferred tax Net deferredassets liabilities taxation千港元千港元千港元

HK$’000 HK$’000 HK$’000

於二零零二年及 At 1st April 2002二零零三年四月一日 and 2003 — (250) (250)

於損益表計入之遞延稅項 Deferred taxationcredited to profitand loss account 447 146 593

於二零零四年三月三十一日 At 31st March 2004 447 (104) 343

As at 31st March 2004, the VSC Group had an unprovided deferred

tax assets of approximately HK$5,133,000 (2003: HK$8,416,000),

primarily representing the tax effect of cumulative tax losses (subject

to agreement by relevant tax authorities) which can be carried forward

indefinitely.

The movement in deferred tax assets/(liabilities) prior to offsetting of

balances within the same entity and same taxation jurisdiction is as

follows:

27. 遞延稅項

遞延稅項乃利用負債法按主要稅率17.5%

（二零零三年：16%）之負債法就短暫時差作

全數撥備。

遞延稅項資產／（負債）之變動如下：

於二零零四年三月三十一日，萬順昌集團有

未撥備之遞延稅項資產約5,133,000港元（二

零零三年：8,416,000港元），主要來自累計

稅項虧損（須受有關稅務機構同意）之稅項影

響，該金額可以無限期結轉後期。

遞延稅項資產／（負債）之變動（與同一實體

及徵稅地區之結餘抵銷前）如下：

綜合Consolidated

存貨累計加速遞延撥備稅項虧損折舊稅項淨額

Provision for Cumulative Accelerated Net deferredinventories tax losses depreciation taxation

千港元千港元千港元千港元HK$’000 HK$’000 HK$’000 HK$’000

於二零零二年及 At 1st April 2002二零零三年四日一日 and 2003 — — (250 ) (250 )

於損益表計入／（扣除） Credited/(Charged)to profit andloss account 318 870 (595 ) 593

於二零零四年三月三十一日 At 31st March 2004 318 870 (845 ) 343


Page 121

28. SHARE CAPITAL


股份數目面值股份數目面值Number of Nominal Number of Nominal

shares value shares value千股千港元千股千港元’000 HK$’000 ’000 HK$’000

法定（每股面值 Authorised (Ordinary0.10港元之 shares of普通股） HK$0.10 each) 1,000,000 100,000 1,000,000 100,000

已發行及繳足 Issued and fully paid（每股面值0.10 (Ordinary shares港元之普通股）： of HK$0.10 each):

年初 Beginning of year 312,257 31,226 354,979 35,498透過配售發行 Issue of shares股份 (i) through

placement (i) 33,000 3,300 — —因行使認股權證 Issue of shares而發行股份 upon exercise（見附註29） of warrants

(see Note 29) 8,443 844 — —因行使購股權 Issue of shares upon而發行股份 exercise of（見附註30） share options

(see Note 30) 15,100 1,510 10,500 1,050回購股份 (ii) Repurchase of

shares (ii) (1,016) (102) (53,222) (5,322)

年終 End of year 367,784 36,778 312,257 31,226

28. 股本

Page 122


28. SHARE CAPITAL (Cont’d)

Notes:

(i) In November 2003, 33,000,000 ordinary shares of HK$0.10 each were

issued at HK$1.80 each through a placement.

(ii) During the year ended 31st March 2004, VSC repurchased 1,016,000

shares (2003: 53,222,263 shares) for an aggregate consideration of

approximately HK$968,000 (2003: HK$53,117,000), including transaction

costs. These shares were subsequently cancelled. The aggregate cost

for the repurchase of shares was transferred from retained profit to capital

redemption reserve. Details of such repurchases during the year ended

31st March 2004 were as follows:

每股價格回購股份數目 Price per share 已付價格

回購月份 Number of shares 最高最低 AmountMonth of repurchase repurchased Highest Lowest paid

千股港元港元千港元’000 HK$ HK$ HK$’000

二零零三年四月

April 2003 1,016 0.95 0.93 968

28. 股本（續）註：

(i) 於二零零三年十一月，以每股1.8港元透過

配售發行33,000,000每股面值0.10港元之

普通股。

(ii) 於截至二零零四年三月三十一日止年度

內，萬順昌以總代價約968,000港元（二零

零三年：53,117,000港元）（包括交易成本）

回購 1,016,000股股份（二零零三年：

53,222,263股股份）。此等股份乃於其後註

銷。回購股份之總代價乃自保留溢利轉撥

至資本贖回儲備。該等於截至二零零四年

三月三十一日止年度內回購之詳情如下：

29. WARRANTS

Movements were:

29. 認股權證

變動為：

認股權證數目

Number of warrants

每股行使價Subscription 年初

發行日期行使期 price per Beginning 行使 (i) 年終Date of issue Exercise period share of year Exercised (i) End of year

港元千份千份千份HK$ ’000 ’000 ’000

二零零一年二零零一年十一月十九日至十一月十二日二零零四年十一月十八日

12th November 2001 19th November 2001 to18th November 2004 1.18 35,497 (8,443 ) 27,054


Page 123

29. WARRANTS (Cont’d)29. 認股權證（續）

於截至二零零四年三月三十一日止年度內，

約8,443,000份認股權證（二零零三年：120

份認股權證）已獲行使以認購萬順昌約

8,443,000股股份（二零零三年： 120股股

份），代價約為 9,962,000港元（二零零三

年：142港元）。

30. 購股權

根據萬順昌之購股權計劃（「新購股權計

劃」），萬順昌可授予萬順昌集團之任何僱

員、代理人、顧問或代表（包括任何執行董

事及非執行董事）以認購萬順昌之股份，而

不得超過不時已發行萬順昌股份面值之30%

（行使購股權所發行股份除外）。行使價將由

萬順昌董事會釐定及最少將按以下列中最高

者為準； (i)萬順昌股份於提出授予購股權當

日香港聯合交易所有限公司所列之收市價；

(ii)萬順昌股份於緊接提出授予購股權日期前

五個交易日在香港聯合交易所有限公司所列

之平均收市價；及 (iii)萬順昌股份面值每股

0.10港元。新購股權計劃已採納以取替一項

舊購股權計劃，而所有舊購股權計劃授予之

購股權可按舊有條款而行使。

During the year ended 31st March 2004, approximately 8,443,000

warrants (2003: 120 warrants) were exercised to subscribe for

approximately 8,443,000 shares (2003: 120 shares) of VSC at a

consideration of approximately HK$9,962,000 (2003: HK$142).

30. SHARE OPTIONS

VSC has a share option scheme (the “New Share Option Scheme”),

under which it may grant options to any person being an employee,

agent, consultant or representative (including executive directors and

non-executive directors) of the VSC Group to subscribe for shares in

VSC, subject to a maximum of 30% of the nominal value of the issued

share capital of VSC from time to time, excluding for this purpose

shares issued on the exercise of options. The exercise price will be

determined by VSC’s board of directors and shall be the highest of (i)

the closing price of VSC’s shares quoted on The Stock Exchange of

Hong Kong Limited on the date of grant of the options, (ii) the average

closing prices of VSC’s shares quoted on The Stock Exchange of

Hong Kong Limited on the five trading days immediately preceding

the date of grant of the options, and (iii) the nominal value of VSC’s

shares of HK$0.10 each. This New Share Option Scheme was adopted

to replace an old share option scheme, with all options granted under

the old share option scheme continue to be exercisable in accordance

with the old terms.

Page 124


30. SHARE OPTIONS (Cont’d)

Movements of share options were:

30. 購股權（續）

購股權變動如下：

每股行使價Subscription 年初行使 (i) 年終

授予日期行使期 price Beginning 授予 Exercised 失效 End ofDate of grant Exercise period per share of year Granted (i) Lapsed year

港元千份千份千份千份千份HK$ ’000 ’000 ’000 ’000 ’000

舊購股權計劃Old Share Option Scheme

一九九四年十二月十七日一九九七年一月十五日至17th December 1994 二零零四年一月十五日

15th January 1997 to15th January 2004 1.1344 6,500 — (6,500 ) — —

一九九六年一月十八日一九九七年一月十五日至18th January 1996 二零零四年一月十五日

15th January 1997 to15th January 2004 1.2528 4,000 — (2,000 ) (2,000 ) —

一九九六年三月十八日一九九八年五月一日至18th March 1996 二零零四年一月二十二日

1st May 1998 to22nd January 2004 1.3840 3,300 — (3,300 ) — —

二零零零年一月十日二零零二年二月一日至10th January 2000 二零零四年一月二十二日

1st February 2002 to22nd January 2004 1.6880 900 — (400 ) (500 ) —

新購股權計劃New Share Option Scheme

二零零三年九月十九日二零零五年九月十九日至19th September 2003 二零一三年九月十八日

19th September 2005 to18th September 2013 1.4180 — 2,300 — — 2,300

二零零三年五月二日二零零三年五月二日至2nd May 2003 二零一三年五月一日

2nd May 2003 to1st May 2013 0.9800 — 10,150 (2,900 ) — 7,250

二零零三年五月七日二零零五年五月七日至7th May 2003 二零一三年五月六日

7th May 2005 to6th May 2013 0.9700 — 7,595 — (1,150 ) 6,445

14,700 20,045 (15,100 ) (3,650 ) 15,995

Note:

(i) The fair value of the shares issued upon exercise of these share options

ranges from HK$1.40 to HK$1.98 each.

註：

(i) 因行使該購股權而發行股份之公平價值由

每股1.40港元至1.98港元。


Page 125

31. RESERVES

綜合Consolidated

累計外幣㶅兌調整

資本贖回投資重估 Cumulative儲備法定資本儲備 foreign

股份溢價 Capital 儲備 (i) 儲備 Investment 其他儲備 currency 保留溢利建議股息Share redemption Statutory Capital revaluation Other translation Retained Proposed 總額

Premium reserve reserves (i) reserve reserve reserves adjustments profit dividends Total千港元千港元千港元千港元千港元千港元千港元千港元千港元千港元


於二零零二年四月一日 As at 1st April 2002 281,295 23,118 — 58,355 (1,072 ) 301 (2,686 ) 125,661 2,840 487,812

股東應佔溢利 Profit attributableto shareholders — — — — — — — 60,412 — 60,412

因發行股份所產生之溢價 Premium arising行使購股權（見附註30） from issue

of shares uponexercise ofshare options(see Note 30) 3,085 — — — — — — — — 3,085

回購股份（見附註28） Repurchase ofshares(see Note 28) (47,795 ) 53,117 — — — — — (53,117 ) — (47,795 )

長期投資公平價值變動 Change in fair valueof long-terminvestments — — — — (12,089 ) — — — — (12,089 )

出售一項長期投資 Release upon disposalof a long-terminvestment — — — — 563 — — — — 563

已付股息 Dividends paid — — — — — — — — (2,840 ) (2,840 )建議末期股息 Proposed final dividend — — — — — — — (18,111 ) 18,111 —㶅兌調整 Translation adjustments — — — — — — 30 — — 30

於二零零三年三月三十一日 As at 31st March 2003 236,585 76,235 — 58,355 (12,598 ) 301 (2,656 ) 114,845 18,111 489,178

31. 儲備

Page 126


31 RESERVES (Cont’d)

綜合Consolidated

累計外幣㶅兌調整

資本贖回投資重估 Cumulative儲備法定資本儲備 foreign

股份溢價 Capital 儲備 (i) 儲備 Investment 其他儲備 currency 保留溢利建議股息Share redemption Statutory Capital revaluation Other translation Retained Proposed 總額

Premium reserve reserves (i) reserve reserve reserves adjustments profit dividends Total千港元千港元千港元千港元千港元千港元千港元千港元千港元千港元


於二零零三年四月一日 As at 1st April 2003 236,585 76,235 — 58,355 (12,598 ) 301 (2,656 ) 114,845 18,111 489,178

股東應佔溢利 Profit attributableto shareholders — — — — — — — 81,063 — 81,063

轉撥至保留溢利 Transfer fromretained profit — — 5,231 — — — — (5,231 ) — —

因發行股份所產生之溢價 Premium arising fromissue of shares upon

— 配售（見附註28） — placement(see Note 28) 56,100 — — — — — — — — 56,100

— 行使認股權證（見附註29） — exercise ofwarrants(see Note 29) 9,118 — — — — — — — — 9,118

— 行使購股權（見附註30） — exercise ofshare options(see Note 30) 16,454 — — — — — — — — 16,454

配售之股份發行支出 Share issue expensesfor placement (4,679 ) — — — — — — — — (4,679 )

回購股份（見附註28） Repurchase of shares(see Note 28) (866 ) 968 — — — — — (968 ) — (866 )

長期投資公平價值變動 Change in fair value oflong-term investments — — — — 6,501 — — — — 6,501

建議股息 Proposed dividends — — — — — — — (21,180 ) 21,180 —已付股息 Dividends paid — — — — — — — — (28,993 ) (28,993 )㶅兌調整 Translation adjustments — — — — — — (96 ) — — (96 )

於二零零四年三月三十一日 As at 31st March 2004 312,712 77,203 5,231 58,355 (6,097 ) 301 (2,752 ) 168,529 10,298 623,780

31. 儲備（續）


Page 127

31. RESERVES (Cont’d)

本公司Company

資本贖回儲備

股份溢價 Capital 繳入盈餘 (ii) 保留溢利建議股息Share redemption Contributed Retained Proposed 總額

premium reserve surplus (ii) profit dividends Total千港元千港元千港元千港元千港元千港元

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

於二零零二年四月一日 As at 1st April 2002 281,295 23,118 53,986 7,102 2,840 368,341

年度溢利 Profit for the year — — — 71,912 — 71,912因發行股份所產生之溢價 Premium arising from行使購股權 issue of shares upon（見附註30） exercise of

share options(see Note 30) 3,085 — — — — 3,085

回購股份 Repurchase of shares（見附註28） (see Note 28) (47,795 ) 53,117 — (53,117 ) — (47,795 )已付股息 Dividends paid — — — — (2,840 ) (2,840 )建議末期股息 Proposed final dividend — — — (18,111 ) 18,111 —

於二零零三年三月三十一日 As at 31st March 2003 236,585 76,235 53,986 7,786 18,111 392,703

於二零零三年四月一日 As at 1st April 2003 236,585 76,235 53,986 7,786 18,111 392,703

年度溢利 Profit for the year — — — 35,892 — 35,892因發行股份所產生 Premium arising from之溢價 issue of shares upon— 配售（見附註28） — placement

(see Note 28) 56,100 — — — — 56,100— 行使認股權證 — exercise of（見附註29） warrants

(see Note 29) 9,118 — — — — 9,118— 行使購股權 — exercise of（見附註30） share options

(see Note 30) 16,454 — — — — 16,454配售之股份發行支出 Share issue expenses

for placement (4,679 ) — — — — (4,679 )回購股份（見附註28） Repurchase of shares

(see Note 28) (866 ) 968 — (968 ) — (866 )建議股息 Proposed dividends — — — (21,180 ) 21,180 —已付股息 Dividends paid — — — — (28,993 ) (28,993 )

於二零零四年三月三十一日 As at 31st March 2004 312,712 77,203 53,986 21,530 10,298 475,729

31. 儲備（續）

Page 128


31. RESERVES (Cont’d)

Retained profit consisted of:

綜合Consolidated


HK$’000 HK$’000

萬順昌 VSC 21,530 7,786附屬公司 Subsidiaries 148,475 108,535聯營公司 Associates (1,476) (1,476)

168,529 114,845

31. 儲備（續）

保留溢利包括：

Notes:

(i) Statutory reserves represent enterprise expansion reserve fund and

general reserve fund set up by certain subsidiaries in Mainland China. As

stipulated by regulations in Mainland China, the subsidiaries established

and operated in Mainland China are required to appropriate a portion of

their after-tax profit (after offsetting prior years losses) to the enterprise

expansion reserve fund and general reserve fund, at rates determined by

their respective boards of directors. The general reserve fund may be

used for making up losses and increasing capital while the enterprise

expansion reserve fund may be used for increasing capital.

(ii) Under the Companies Act 1981 of Bermuda, contributed surplus is

distributable to shareholders subject to the condition that VSC cannot

declare or pay a dividend, or make a distribution out of contributed

surplus if (i) it is, or would after the payment be, unable to pay its

liabilities as they become due, or (ii) the realisable value of its assets

would thereby be less than the aggregate of its liabilities and its issued

share capital and share premium account.

註：

(i) 法定儲備乃按中國內地若干附屬公司之企

業發展儲備基金及一般儲備基金所設立。

按照中國內地法規訂明，於中國內地成立

及經營之附屬公司須於其除稅後溢利（經抵

銷過往年度虧損）中撥出部份至企業發展儲

備基金及一般儲備基金，比率乃由各自董

事會釐定。一般儲備基金可用作抵銷虧損

及增加股本，而企業發展儲備基金可用作

增加股本。

(ii) 根據百慕達一九八一年公司法，繳入盈餘

可分派予股東，惟倘萬順昌在宣派或支付

股息或從繳入盈餘作出分派後、(i)萬順昌不

能或在作出支付後將不能支付到期債項，

或 (ii)其資產之可變現價值將會因而少於其

債項及其已發行股本及股份溢價賬目的合

計總額，則萬順昌不可作出上述的宣派、

支付或分派。


Page 129

32. NOTES TO CONSOLIDATED CASH FLOW STATEMENT

(a) Reconciliation of profit before taxation to net cash outflow

absorbed by operations was as follows:


HK$’000 HK$’000

除稅前溢利 Profit before taxation 96,455 65,905利息收入 Interest income (6,310) (4,887)利息支出 Interest expense 13,337 11,144一項長期投資之 Dividend income from a long-term股息收入 investment (374) (188)

一間合營公司之回報 Return from a joint venture (4,344) (6,615)固定資產之折舊 Depreciation of fixed assets 16,791 20,132出售固定資產淨虧損／（收益） Net loss/(gain) on disposal of fixed assets 5 (51)出售一項投資物業 Net gain on disposal of an之淨收益 investment property (2,476) —

出售一項長期 Loss on disposal of a long-term投資虧損 investment — 284

商譽攤銷 Amortisation of goodwill 2,359 1,850投資物業之重估 (Surplus)/Deficit on revaluation（盈餘）／虧絀 of investment properties (2,818) 1,500

營運資金變動前之 Operating profit before working經營溢利 capital changes 112,625 89,074

存貨增加 Increase in inventories (280,650) (164,778)應收客戶安裝合約 Decrease/(Increase) in due from工程減少／（增加） customers on installation

contract work 7,584 (17,143)預付款項、按金及其他 Decrease/(Increase) in prepayments,應收賬款減少／（增加） deposits and other receivables 7,077 (42,949)

應收賬款及票據增加 Increase in accountsand bills receivable (152,999) (186,362)

應收貸款減少 Decrease in loans receivable — 3,952應付賬款及票據增加 Increase in accounts and bills payable 101,793 59,547預收款項增加 Increase in receipts in advance 3,919 23,707應計負債及其他應付 Increase/(Decrease) in accrued款項增加／（減少） liabilities and other payables 15,657 (6,042)

應付客戶安裝合約工程 (Decrease)/Increase in due（減少）／增加 to customers on installation

contract work (4,433) 4,590

經營產生之現金 Net cash outflow absorbed流出淨額 by operations (189,427) (236,404)

32. 綜合現金流量表附註

(a) 除稅前溢利與經營產生之現金流出淨

額對賬如下：

Page 130


32. NOTES TO CONSOLIDATED CASH FLOW STATEMENT (Cont’d)

(b) During the year ended 31st March 2004, the VSC Group acquired

several subsidiaries for a consideration of approximately

HK$30,507,000. Details of the net assets of the subsidiaries as

at the date of acquisition were:

千港元HK$’000

固定資產 Fixed assets 30,624存貨 Inventories 33,814預付款項、按金 Prepayments, deposits及其他 and other應收賬款 receivables 1,638

應收賬款 Accounts receivable 30,379已抵押銀行存款 Pledged bank deposits 4,424現金及其他銀行存款 Cash and other bank deposits 22,287短期借貸 Short-term borrowings (44,468)應付賬款及票據 Accounts and bills payable (36,816)預收款項 Receipts in advance (467)應計負債及其他 Accrued liabilities and應付款項 other payables (1,329)

少數股東權益 Minority interest (13,558)

所收購之淨資產 Net assets acquired 26,528商譽 Goodwill 3,979

收購之作價 Consideration for the acquisition 30,507

32. 綜合現金流量表附註（續）

(b) 於截至二零零四年三月三十一日止年

度，萬順昌集團收購若干附屬公司之

權益，作價約為30,507,000港元。於

收購日附屬公司之淨資產詳情為：

Analysis of net cash outflow in respect of acquisition of the subsidiaries

was as follows:

千港元HK$’000

收購之作價 Consideration for the acquisition 30,507減： Less:於二零零四年三月三十一日 Consideration payable as之應付作價 at 31st March 2004 (1,233)

所收購之現金及其他 Cash and other bank deposits acquired (22,287)銀行存款

現金流出淨額 Net cash outflow 6,987

因應收購附屬公司之現金流出淨額分析如

下：


Page 131


The subsidiaries acquired during the year contributed approximately

HK$3,260,000 cash inflow from operating activities, approximately

HK$136,000 cash outflow from investing activities and approximately

HK$4,000 cash inflow from financing activities.

(c) Analysis of changes in financing:

股本及

股份溢價其他

Share 信託收據短期貸款少數

capital 銀行貸款 Other 股東權益

and share Trust receipts 銀行貸款 short-term Minority

premium bank loans Bank loans loans interests

千港元千港元千港元千港元千港元

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

於二零零二年四一日 As at 1st April 2002 316,793 225,182 37,800 — 4,573

發行股份 Issue of shares

一購股權 — share options (see Note 30)

（見附註30） 4,135 — — — —

回購股份 Repurchase of shares (53,117 ) — — — —

信託收據銀行貸款 Net increase in trust

之淨增加 receipts bank loans — 265,697 — — —

新增貸款 New loans — — 47,025 37,800 —

償還貸款 Repayment of loans — — (2,362 ) — —

附屬公司之少數 Share of profit by minority

股東所佔溢利 shareholders of subsidiaries — — — — 3,329

已付一間附屬公司之 Dividends paid to a minority

一名少數股東股息 shareholder of a subsidiary — — — — (258 )

一間附屬公司之 Capital contribution by

少數股東之 minority shareholders

資本投入 of a subsidiary — — — — 3,583

收購一間附屬公司 Acquisition of additional

之額外權益 interests in a subsidiary — — — — (1,890 )

出售一間附屬公司 Disposal of a subsidiary — — — — (2,835 )

於二零零三年三月 As at 31st March 2003

三十一日 267,811 490,879 82,463 37,800 6,502


於年內所收購附屬公司於經營活動之現金流

入約為3,260,000港元，投資活動之現金流

出約為136,000港元及融資活動之現金流入

約為4,000港元。

(c) 融資變動分析為：

Page 132



(c) Analysis of changes in financing: (Cont’d)

股本及

股份溢價其他

Share 信託收據短期貸款少數

capital 銀行貸款 Other 股東權益

and share Trust receipts 銀行貸款 short-term Minority

premium bank loans Bank loans loans interests

千港元千港元千港元千港元千港元

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

於二零零三年四月一日 As at 1st April 2003 267,811 490,879 82,463 37,800 6,502

發行股份 Issue of shares

一配售（見附註28） — placement (see Note 28) 59,400 — — — —

一認股權證 — warrants (see Note 29)

（見附註29） 9,962 — — — —

一購股權（見附註30） — share options (see Note 30) 17,964 — — — —

發行股份支出 Share issue expenses (4,679 ) — — — —

回購股份 Repurchase of shares (968 ) — — — —

信託收據銀行貸款 Net increase in trust

之增加淨額 receipts bank loans — 170,280 — — —

新增貸款 New loans — — 156,175 — —

償還貸款 Repayment of loans — — (48,433 ) (37,800 ) —

附屬公司之少數 Share of profit by minority

股東所佔溢利 shareholders of subsidiaries — — — — 4,331

已付一間附屬公司 Dividends paid to a

之一名少數 minority shareholder

股東股息 of a subsidiary — — — — (225 )

收購附屬公司 Acquisition of subsidiaries — — — 44,468 13,558

於二零零四年

三月三十一日 As at 31st March 2004 349,490 661,159 190,205 44,468 24,166


(c) 融資變動分析為：（續）

(d) Analysis of cash and cash equivalents:

Cash and cash equivalents represent cash and other bank

deposits of approximately HK$109,465,000 as at 31st March

2004 (2003: HK$61,674,000).

(d) 現金及現金等值項目之分析：

於二零零四年三月三十一日，現金及

現金等值項目代表現金及其他銀行存

款約109,465,000港元（二零零三年：

61,674,000港元）。


Page 133

33. 分類資料

萬順昌集團主要於香港和中國內地經營兩個

業務— (i)中國先進材料加工包括製造工業產

品例如板材產品及系統設備外殼與及買賣工

業產品例如工程塑膠樹脂及注塑機，及(ii)建

築材料包括買賣與存銷建築材料例如鋼材產

品、潔具及廚櫃與及廚櫃安裝。

(a) 主要分類

萬順昌集團之業績按業務分類之分析

如下：

33. SEGMENT INFORMATION

The VSC Group operates predominantly in Hong Kong and Mainland

China and in two business segments — (i) China Advanced Materials

Processing including manufacturing of industrial products such as rolled

flat steel products and enclosure systems, and trading of industrial

products such as engineering plastic resins and injection moulding

machines, and (ii) Construction Materials Group including trading and

stockholding of construction materials such as steel products, sanitary

ware and kitchen cabinets and the installation work of kitchen cabinets.

(a) Primary segment

Analysis of the VSC Group’s results by business segment was

as follows:

二零零四年2004

中國先進

材料加工

China 建築材料Advanced Construction 其他業務Materials Materials Other 總額

Processing Group operations Total

千港元千港元千港元千港元

HK$’000 HK$’000 HK$’000 HK$’000

營業額 — 對外 Turnover — sales to客戶銷售 external customers 674,241 2,873,024 1,845 3,549,110

分類業績 Segment results 69,934 67,698 (644) 136,988

其他收入 Other revenue 516 456 10,056 11,028其他收益 Other income — — 5,294 5,294未分配企業 Unallocated corporate開支 expenses (43,518)

經營溢利 Operating profit 109,792

財務費用 Finance costs (13,337)稅項 Taxation (11,061)

除稅後但未 Profit after taxation but計少數股東 before minority interests權益前溢利 85,394

資產 Assets 615,719 1,271,260 134,295 2,021,274

負債 Liabilities 181,620 1,025,569 129,361 1,336,550

資本支出 Capital expenditure 44,869 6,201 15,552 66,622

折舊及攤銷 Depreciation andamortisation 10,494 7,681 975 19,150

Page 134


33. SEGMENT INFORMATION (Cont’d)

(a) Primary segment (Cont’d)

二零零三年2003

中國先進

材料加工

China 建築材料Advanced Construction 其他業務Materials Materials Other 總額

Processing Group operations Total

千港元千港元千港元千港元

HK$’000 HK$’000 HK$’000 HK$’000

營業額 — 對外 Turnover — sales to客戶銷售 external customers 472,351 2,279,602 3,816 2,755,769

分類業績 Segment results 59,251 65,644 329 125,224

其他收入 Other revenue 384 90 11,216 11,690其他支出 Other expense — — (1,500) (1,500)未分配企業 Unallocated corporate開支 expenses (58,365)


財務費用 Finance costs (11,144)稅項 Taxation (2,164)

除稅後但 Profit after taxation but未計少數 before minority interests股東權益前溢利 63,741

資產 Assets 426,479 890,340 101,885 1,418,704

負債 Liabilities 60,067 826,273 5,458 891,798

資本支出 Capital expenditure 18,288 5,053 24,978 48,319

折舊及攤銷 Depreciation andamortisation 6,359 14,655 968 21,982

33. 分類資料（續）

(a) 主要分類（續）


Page 135

33. SEGMENT INFORMATION (Cont’d)

(b) Secondary segment

Analysis of the VSC Group’s results by geographical segment

was as follows:

二零零四年2004中國內地

香港 Mainland 總額Hong Kong China Total


營業額 — 對外 Turnover — sales to客戶銷售 external customers 1,171,303 2,377,807 3,549,110

分類業績 Segment results 43,641 93,347 136,988

其他收入 Other revenue 5,724 5,304 11,028其他收益 Other income — 5,294 5,294未分配企業 Unallocated corporate開支 expenses (43,518)


資產 Assets 982,069 1,039,205 2,021,274

資本支出 Capital expenditure 10,609 56,013 66,622

33. 分類資料（續）

(b) 次要分類

萬順昌集團之業績按地區分類之分析

如下：

二零零三年2003中國內地

香港 Mainland 總額Hong Kong China Total


營業額 — 對外 Turnover — sales to客戶銷售 external customers 1,278,915 1,476,854 2,755,769

分類業績 Segment results 52,270 72,954 125,224

其他收入 Other revenue 4,610 7,080 11,690其他支出 Other expense (1,500) — (1,500)未分配企業 Unallocated corporate開支 expenses (58,365)


資產 Assets 564,458 854,246 1,418,704

資本支出 Capital expenditure 4,553 43,766 48,319

Page 136


34. COMMITMENTS

(a) Commitments under operating lease

Total commitments payable under various non-cancellable

operating lease agreements in respect of rented premises was

analysed as follows:

綜合Consolidated


HK$’000 HK$’000

未逾1年 Not later than one year 6,059 5,980逾1年及未逾5年 Later than one year and

not later than five years 3,651 6,024

9,710 12,004

34. 承擔

(a) 營業租約承擔

根據租用物業之若干不可撤銷營業租

約應付之承擔總額分析如下：

(b) Commitments under forward foreign currency contracts

As at 31st March 2004, the VSC Group had outstanding forward

foreign currency contracts to purchase approximately

US$45,509,000 and approx imate ly Euro620,000 for

approximately HK$357,536,000 (2003: Nil), for the purpose of

hedging against the VSC Group’s commitments arising from its

trading activities.

(b) 遠期外㶅貨幣合約承擔

於二零零四年三月三十一日，萬順昌

集團尚有未行使之遠期外㶅貨幣合約

約為357,536,000港元（二零零三年：

無）用作約 45,509,000美元及約

620,000歐元之採購，目標為萬順昌

集團於貿易活動有關之承諾作出對

沖。


Page 137

35. CONTINGENT LIABILITIES

Contingent liabilities not provided for in the accounts were:


二零零四年二零零三年二零零四年二零零三年2004 2003 2004 2003千港元千港元千港元千港元

HK$’000 HK$’000 HK$’000 HK$’000

就一項物業之 Guarantee in lieu租金按金而 of rental deposit提供之擔保 of a premise — 2,744 — —

履約擔保書 Performance bonds 16,283 13,630 — —就一間投資之 Guarantee relating公司所獲一項 to a bank loan銀行貸款而 granted to an提供之擔保 investee company 2,340 2,340 — —

萬順昌就其 Guarantees provided by附屬公司所獲 VSC in respect of銀行融資而 banking facilities of提供之擔保 its subsidiaries（見附註37） (see Note 37) — — 1,569,529 1,454,131

18,623 18,714 1,569,529 1,454,131

35. 或然負債

未有於賬目撥備之或然負債為：

The VSC’s Directors and the VSC Group’s management anticipate

that no material liabilities will arise from the above banks and other

guarantees which arose in the ordinary course of business.

36. PENSION SCHEMES

The VSC Group has arranged for its Hong Kong employees to join the

Mandatory Provident Fund Scheme (the “MPF Scheme”), a defined

contribution scheme managed by an independent trustee. Under the

MPF Scheme, each of the VSC Group and its employees make monthly

contributions to the scheme generally at 5% of the employees’ earnings

as defined under the Mandatory Provident Fund legislation.

As stipulated by rules and regulations in Mainland China, the VSC

Group contributes to state-sponsored retirement plans for employees

of its subsidiaries established in Mainland China. The employees

contribute up to 8% of their basic salaries, while the VSC Group

contributes approximately 14% to 20% of such salaries and has no

further obligations for the actual payment of pensions or post-retirement

benefits beyond these contributions. The state-sponsored retirement

plans are responsible for the entire pension obligations payable to

retired employees.

During the year ended 31st March 2004, the aggregate amount of the

VSC Group’s contributions to the aforementioned pension schemes

was approximately HK$2,535,000 (2003: HK$2,489,000).

萬順昌之董事及萬順昌集團之管理層預期不

會因上述銀行及其他擔保（來自日常業務）而

產生重大負債。

36. 退休金計劃

萬順昌集團安排其香港僱員參與一項由獨立

受託人管理之強制性公積金計劃（「強積金計

劃」），該計劃為一項界定供款計劃。根據強

積金計劃，萬順昌集團及其僱員各自每月按

僱員薪酬（定義見強制性公積金條例）之一般

為5%供款。

根據中國內地法規，萬順昌集團須為其設立

於中國內地之附屬公司之僱員對國家資助退

休計劃供款。僱員供款最高達其基本薪金之

8%，萬順昌集團按該等薪金約14%至20%

供款，除每年供款外，毋須支付任何實際退

休金或退休後福利。該等國家資助退休計劃

須負責向退休僱員支付全部退休金。

於截至二零零四年三月三十一日止年度，萬

順昌集團對上述退休金計劃之供款總額約為

2,535,000港元（二零零三年：2,489,000港

元）。

Page 138


37. BANKING FACILITIES AND PLEDGE OF ASSETS

As at 31st March 2004, the VSC Group had aggregate banking facilities

of approximately HK$1,837,879,000 (2003: HK$1,533,416,000) for

overdrafts, loans, and trade financing. These facilities were secured

by:

(i) pledge of the VSC Group’s bank deposits of approximately

HK$8,374,000 (2003: HK$7,957,000) (see Note 23);

(ii) pledge of inventories of a subsidiary of the VSC Group amounting

to approximately HK$14,950,000 (2003: HK$14,950,000) and

the VSC Group’s inventories held under trust receipts bank loan

arrangements (see Note 19);

(iii) pledge of land and buildings of the VSC Group of approximately

HK$8,523,000 (2003: Nil) (see Note 13); and

(iv) guarantees provided by VSC (see Note 35).

38. APPROVAL OF ACCOUNTS

The accounts were approved by the board of directors on 1st June

2004.

37. 銀行融資及資產抵押

於二零零四年三月三十一日，萬順昌集團取

得合共約1,837,879,000港元（二零零三年：

1,533,416,000港元）之銀行融資，包括透

支、貸款及貿易融資。此等授信額度以下列

方式作抵押：

(i) 萬順昌集團之已抵押銀行存款約

8,374 ,000港元（二零零三年：

7,957,000港元）（見附註23）；

(ii) 一間萬順昌集團附屬公司之存貨約

14,950,000港元（二零零三年：

14,950,000港元）及萬順昌集團根據信

託收據銀行貸款安排持有之存貨（見

附註19）；

(iii) 萬順昌集團已抵押土地及樓宇約

8,523,000港元（二零零三年：無）（見

附註13）；及

(iv) 由萬順昌提供之擔保（見附註35）。

38. 賬目批准

賬目於二零零四年六月一日獲董事會批准。

Documents

Page 2 Mission Statement & Contents€¦ · Directors’ Profile 50 Financial Review 52 Report of the Directors 66. ... machines NOV 1993 Formed a joint venture — Shanghai Bao Shun