RESULTS

The Group's turnover for the period under review was HK$536,718,000, a decrease of HK$48,978,000 from the turnover figure recorded in the same period last year.

The Group's unaudited profit attributable to shareholders for the six months ended 30th September 1999 amounted to HK$95,520,000, an increase of HK$2,911,000 over the same period last year.

Extracts of the unaudited consolidated profit and loss account of the Group for the six months, together with the comparative figures for the six months ended 30th September 1998, are given below:-

	For the six months ended 30th September
	1999	1998
	HK$'000	HK$'000
Turnover	536,718	585,696
Operating profit	109,752	104,102
Share of profits less losses of Jointly controlled entities	(623)	(1,949)
Associated companies	(829)	1,954
Profit before taxation	108,300	104,107
Taxation (Note 1) Company and subsidiary companies Hong Kong profits tax	(12,487)	(13,593)
Overseas taxation	(92 )
Jointly controlled entities Overseas taxation	(70)	(34)
Associated companies Hong Kong profits tax	37	(363)
Profit after taxation	95,688	90,117
Minority interests	(1680)	2,492
Profit attributable to shareholders	95,520	92,609
Dividend	(21,413)	(7,762)
Profit retained	74,107	84,847
Earnings per share(Note 2)Basic	8.9 cent	11.8 cent
Dividend per share Interim	2 cent	1 cent
Final		3.5 cent

Notes:

1. Hong Kong profits tax has been provided at the rate of 16% (1998: 16%) on the estimated assessable profits for the period.
Taxation assessable on profits generated outside Hong Kong has been provided at the rates of taxation prevailing in the countries in which those profits arose.

2. The calculation of the basic earnings per share is based on profit attributable to shareholders of HK$95,520,000 (1998: HK$92,609,000) and the weighted average number of 1,070,343,000 shares (1998: 784,002,000 shares). The earnings per share for the six months ended 30th September 1998 has been adjusted after taking into account of the effect of rights issue on 2nd February 1999. The diluted earnings per share for the six months ended 30th September 1999 is not disclosed as the exercise of the share options outstanding as at 30th September 1999 would have no dilutive effect. The diluted earnings per share for the six months ended 30th September 1998 is not disclosed as there is no dilutive effect after the redemption of the HK$306 million 4% convertible note on 30th March 1999.

DIVIDEND

The Board of Directors has resolved to pay an interim dividend of 2 cents per fully paid ordinary share, totalling HK$21,413,000 for the six months ended 30th September 1999 to shareholders whose names appear on the register of members of the Company at the close of business on 9th December 1999. The Board has also resolved that such dividend should take the form of a scrip dividend with shareholders being given the option of receiving cash in place of part or all of the scrip dividend. (1998: An interim dividend of 1 cent per fully paid ordinary share, totalling HK$7,762,000 was paid for the six months ended 30th September 1998.) A circular containing details of the scrip dividend will be sent to shareholders of the Company in due course.

CLOSE OF REGISTER

The register of members will be closed from 7th December 1999 to 9th December 1999, both days inclusive, during which period no transfers of shares will be effected. In order to qualify for the dividend, shareholders must ensure that all transfers together with the relevant share certificates are lodged with the Company's Registrars, Central Registration Hong Kong Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong for registration no later than 4:00 p.m. on 6th December 1999.

REVIEW

Results Comparison

During the period, the overall financial results were similar to that of the corresponding period last year. Business in Hong Kong remained steady while business in Mainland China recorded further improvements.

Business in Hong Kong

With keener competitive market environment continued particularly in the precast concrete pipe industry, the overall performance of the Hong Kong operation remained steady as compared with that of the corresponding period last year.

In Hong Kong, as part of the efforts to maintain your group as the leader in the concrete pipe industry, the construction of a second concrete pipe plant in Shenzhen has been completed and production commenced in November 1999.

Business in Mainland

In Guangzhou, although the operating environment awaits further improvement, the construction materials business remains active. Your Group is pleased to announce that Guangzhou K. Wah Nanfang Cement Limited, in which your Group has a 50% interest and has assumed the position of General Manager of the joint venture company in December 1998, has recorded profit in the first half of 1999. In addition, your Group's subsidiary K. Wah (Huangpi) Quarry Company Limited, Guangzhou also recorded profit.

In Shanghai, your Group's business has been slightly affected by the general liquidity shortage in the market. In August 1999, your Group has obtained the ISO 9001 certificate issued by China Certification committee for quality mark - Quality Certification Centre. Your Group is the first ready-mixed concrete producer issued with the ISO 9001 certificate in Shanghai.

OUTLOOK

In Hong Kong with the sign of the gradual recovery of the Asian economies including Hong Kong and the Hong Kong SAR Government reaching agreement with Walt Disney for a Disneyland in Hong Kong and the WTO agreement between China and USA, prospects of the construction materials business should remain steady amid keener competition. It is anticipated that the market in Mainland China will remain stable. Your Group is targeting for increased contribution from the operation in Mainland China including Guangzhou K. Wah Nanfang Cement Limited and K. Wah (Huangpi) Quarry Company Limited, Guangzhou. Your Groups financial position remains strong and overall business prospects remain cautiously optimistic.

SHARE CAPITAL

The Company has not redeemed any of its shares during the six months ended 30th September 1999. Neither the Company nor any of its subsidiary companies have purchased or sold any of the Company's shares during the six months ended 30th September 1999.

DIRECTORS' INTERESTS

As at 30th September 1999, the beneficial interest of each director in the share capital of the Company and the share capital and warrants of its listed ultimate holding company, K. Wah International Holdings Limited, and the details of any right to subscribe for shares in the Company and K. Wah International Holdings Limited and of the exercise of such rights, as recorded in the register kept under section 29 of the Securities (Disclosure of Interests) Ordinance (SDI Ordinance*) or as otherwise notified to the Company pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, were as follows:-

(a) Ordinary Shares of the Company:

	Personal	Family	Corporate	Other
	Interests	Interests	Interests	Interests	Total
Lui Che Woo	5,531,008	1,069,958	53,120,175(1)	719,819,894(2)	779,541,035
Francis Lui Yiu Tung	2,494			719,819,894(2)	719,822,388
Chan Nai Keong	49,769				49,769
Paddy Tang Lui Wai Yu	1,861,906			719,819,894 (2)	721,681,800
Edwin Yu Kwok Kam
Yip Hing Chung	133,333				133,333
Charles Cheung Wai Bun	1,810				1,810
Moses Cheng Mo Chi

(b) Share Options of the Company:

	Share Options
	Number	Number Exercised
	Outstanding	during the period
Lui Che Woo	1,500,000
Francis Lui Yiu Tung	1,000,000
Chan Nai Keong	700,000
Joseph Lai Ming
Paddy Tang Lui Wai Yu	600,000
Edwin Yu Kwok Kam	500,000
Yip Hing Chung
Charles Cheung Wai Bun
Moses Cheng Mo Chi

(c) Ordinary Shares of K. Wah International Holdings Limited:

	Personal	Family	Corporate	Other
	Interests	Interests	Interests	Interests	Total
Lui Che Woo	1,341,485	3,718,209	188,005,245(3)	450,000,000(2)	643,064,939
Francis Lui Yiu Tung	379,804			450,000,000(2)	450,379,804
Chan Nai Keong	157,609				157,609
Joseph Lai Ming
Paddy Tang Lui Wai Yu	2,984,724			450,000,000(2)	452,984,724
Edwin Yu Kwok Kam
Yip Hing Chung
Charles Cheung Wai Bun	7,239				7,239
Moses Cheng Mo Chi

(d) Share Options and 2001 Warrants of K. Wah International Holdings Limited:

	Share Options		2001 Warrants
	Number Exercised
	Number	during	Number
	Outstanding	the period	Outstanding
Lui Che Woo	3,200,000		14,930,283
Francis Lui Yiu Tung	2,200,000		624
Chan Nai Keong	300,000		12,442
Joseph Lai Ming	400,000
Paddy Tang Lui Wai Yu	1,300,000		465,476
Edwin Yu Kwok Kam	168,000
Yip Hing Chung			33,333
Charles Cheung Wai Bun			452
Moses Cheng Mo Chi

Notes:

• (1) 97,053 shares, 51,751,402 shares, 681,643 shares and 590,077 shares in the Company were held by Best Chance Investments Ltd., Houston Investment Limited, Lui Jip (Nominees) Limited and High Status Company Limited respectively, which were all controlled by Mr. Lui Che Woo.
• (2) K. Wah International Holdings Limited was interested in 719,819,894 shares in the Company representing more than one-third of its issued share capital were held by a wholly owned subsidiary of K. Wah International Holdings Limited. 450,000,000 shares in K. Wah International Holdings Limited representing more than one-third of its issued share capital were held by a discretionary trust. Mr. Lui Che Woo, Mr. Francis Lui Yiu Tung and Mrs. Paddy Tang Lui Wai Yu, as discretionary beneficiaries interested in the trust, are deemed to be interested in those shares in K. Wah International Holdings Limited held by the trust and in those shares in the Company in which K. Wah International Holdings Limited was interested as aforesaid.
• (3) 8,458,411 shares, 178,847,516 shares and 699,318 shares in K. Wah International Holdings Limited were held by Best Chance Investments Ltd., Houston Investment Limited and Lui Jip (Nominees) Limited respectively, which were all controlled by Mr. Lui Che Woo.

SUBSTANTIAL SHAREHOLDERS

As at 30th September 1999, the interest of every person (not being a director or chief executive of the Company) having an interest in 10 per cent or more of the issued share capital of the Company as recorded in the register kept under section 16(1) of the SDI Ordinance were as follows:

Note:

K. Wah International Holdings Limited is deemed to be interested in the 719,819,894 shares in the Company held by Sutimar Enterprises Limited since it owned all of the issued share capital of Sutimar Enterprises Limited.

There was duplication of interest of:

• (i) 719,819,894 shares in the Company between Mr. Lui Che Woo, Mr. Francis Lui Yiu Tung, Mrs. Paddy Tang Lui Wai Yu, Sutimar Enterprises Limited and K. Wah International Holdings Limited; and
• (ii) 450,000,000 shares in K. Wah International Holdings Limited between Mr. Lui Che Woo, Mr. Francis Lui Yiu Tung and Mrs. Paddy Tang Lui Wai Yu.

YEAR 2000

Required systems upgrade and Year 2000 fix/test for all business-critical systems and automated equipment used by the Group was completed. It is anticipated that there will not be any significant operational problems for the Group when the century rolls over.

In addition, required contingency plans to deal with any unpredictable Year 2000 induced problems have been developed and tested.

The total cost of the Year 2000 project is about HK$1.3 million, mainly for replacement of computer hardware and system software upgrade and most of which have been capitalized in the accounts and no further material spendings are expected.

CODE OF BEST PRACTICE

For the six months ended 30th September 1999, the Company has been acting in full compliance with the Code of Best Practice issued by The Stock Exchange of Hong Kong Limited save and except that non-executive directors are being appointed subject to retirement by rotation and re-election at the annual general meeting of the Company in accordance with the Company's Articles of Association.

By Order of the Board
Steven Tong Kui Nam
Company Secretary

Hong Kong, 22nd November 1999

Registered Office:
29th Floor, K. Wah Centre
191 Java Road
North Point
Hong Kong