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TSE SUI LUEN JEWELLERY (HOLDINGS) LIMITED
謝瑞麟珠買(集團)有限公司
(Cont'd)
ANNOUNCEMENT
following favourable factors. First, the strength of the Yen has directly contributed to increased sales in Japan. Secondly, the absence of protectionist measures for jewellery products in the United States has allowed us to increase our market share in that country. Thirdly, in order to consolidate our overseas markets, an experienced agent was appointed in France to market the Group's products there and sales offices were established in New York and Singapore both supported by experienced and well-organised sales teams. The Directors are currrently reviewing the Group's investment in Champion Jewelry Inc. because of disagreement with minority shareholders. However, this will not have any material adverse effect on our export performance.
The expansion in production capacity in early 1987 has positioned the Group to take advantage of the growth opportuni- ties in the jewellery business during this year. The Directors believe that with its existing production capacity, the Group is well equipped to achieve furthur progress in the following year.
Optical
The Group has presently six optical retail shops. However, since the flotation of the Company in June 1987, most man- agement resources have been allocated to the jewellery operation, resulting in a higher growth rate for that operation than for the optical operation. The optical business accounted for less than 2 per cent of the Group's turnover for the year ended 29th February, 1988. In the coming year, the Company will allocate more resources for the expansion of the optical retail network in the local market.
Property Investment
The Directors believe that the continued strength of the Hong Kong economy and property market will result in higher rentals for prime shopping locations. Accordingly, the Group's investment in properties will not only provide shop space for the Group's expanding jewellery business but will also provide a hedge against rapidly rising rentals. Therefore, the Directors believe that the Group's investment in this field will be of long term economic benefit to the Group. In line with this policy, the Group has acquired a 20 per cent interest in Very Sound Investments Limited (“Very Sound”), which has agreed to purchase a site in Wanchai, particulars of which transaction were set out in the circular to shareholders dated 10th June, 1988. I have granted free of charge to the Company an option to acquire from me on or before 21st October, 1988 up to my entire interest (being 50 per cent) in Very Sound at cost, which is $17,630,000 for my entire interest in Very Sound. After consultation with Citicorp International Limited, the financial adviser of the Company, the Directors have decided that the Company will not exercise the option to acquire the 50 per cent interest in Very Sound from me unless such acquisition would result in an immediate profit being made by the Company by the disposal of the property or the 50 per cent interest in Very Sound to a third party. PROSPECTS
In addition to the continued growth of the major export markets for the Group's products, principally the United States, Japan and Europe, the Group has also benefitted from strong sales of jewellery to both the tourist and domestic markets in Hong Kong as a result of increasing affluence of the local population and higher tourist arrivals and consumption. To take advantage of these opportunities, steps have been taken to enlarge the Group's network of retail jewellery outlets which presently comprise one showroom and nine shops. In the ensuing year, five additional shops will be opened respectively in Causeway Bay, Tsuen Wan, Kwun Tong, Tokwawan and Mongkok and one in Chung Ying Street, Shataukok across the border between Hong Kong and China. In addition, a showroom comprising 15,700 square feet is to be opened in Aberdeen, a very popular tourist destination.
Also, in order to respond to the increasing demand for the Group's products, the Directors intend to establish manufacturing facilities in China, where labour is readily available and production costs are lower.
The Directors will continue to review the Group's export operation. After the sales office in New York develops to a more mature stage, the Group will consider opening offices in Japan and Europe.
Barring unforseen circumstances, I am confident that the Group's performance in 1988/89 will be satisfactory. MANAGEMENT AND FINANCE
Additional resources have been assigned to management development in order to cope with the growth of the Group. The management information systems have been improved through upgrading the computer system, resulting in more efficient and effec- tive management of the Group. Furthur, the placement of 10 per cent of new shares in September, 1987 has strengthened the financial position of the Group.
APPRECIATION
I take this chance to express my sincere thanks to my fellow Directors for their valuable guidance and to the Group's employees for their efforts and dedication during the year under review.
Hong Kong, 23rd June, 1988.
By Order of the Board
Tse Sui Luen
Chairman