TUNG Fong Hung (Holdings) has announced a 38.7 per cent increase in profit after tax and minority interests to $22.59 million for the year to July 31, boosted by exceptional items of more than $20 million. Operating profits, before exceptional items, plunged 74 per cent to $3.85 million for the Chinese retailer and distributor. Earnings per share - calculated on the basis that all warrants and convertible bonds were exchanged for stock - stood at 4.55 cents, 35 per cent up from 3.37 cents last year. Turnover dropped 1.53 per cent to $252.71 million from $256.64 million. The exceptional items included gains on disposal of investment and other properties, worth $20.55 million. Last year the company recorded a $6.02 million exceptional. Profit from associated companies for the year was $25,000, against a loss of $182,000 last year. There is no final dividend, for the second year, but there will be a bonus issue of new shares on the basis of one new share for every five existing shares. 'Conditions for retail operations during the year under review were not ideal in Hong Kong, and this is reflected in the group's operation results,' chairman Sam Zuchowski said. 'Rising unemployment and weak consumer demand remains a concern,' he added, while the Chinese medicine and health food business had become more competitive. The group opened four outlets and closed one during the period, bringing to 26 the number in Hong Kong. The group is also expanding in China, while operations in the Vancouver market were said to have made 'a significant contribution to the group's operating profit'. It was also looking at expanding operations in Singapore and Taiwan. In mid-October, Tung Fong Hung withdrew its general offer for Nam Pei Hong (Holdings) after the offer was rejected. Tung Fong Hung's attributable profits dived 57.8 per cent to $4.93 million for the six months ending January 31 compared with the same period last year. Louis Lo, who wholly owns Grandpoint Profits, which acquired Tung Fong Hung last November, said in May that Tung Fong Hung planned to set up a second plant in Zhongshan.