[FOR
IMMEDIATE RELEASE]
CEC Announces
2004/2005 Annual Results
* * * *
Focus
on Core Coils Manufacturing Business Pays Off
Profit
Attributable to Shareholders up 23.2% to
HK$19,530,000
(Hong Kong, 15 August 2005)
— CEC International Holdings Limited (“CEC” or together with its
subsidiaries, the “Group”) (Stock Code: 759), a manufacturer of
electronic components such as coils, capacitors, etc, today
announced its annual results for the year ended 30 April
2005.
The Group recorded a
turnover of HK$554,291,000, an increase of approximately 12.7%
against HK$491,663,000 in the previous year. Gross profit increased
to HK$125,136,000 as compared with HK$123,647,000 last year,
representing an increase of 1.2%. The persistent high raw materials
prices and increase in labour cost slightly reduced the Group’s
gross profit margin to 22.6% (2004: 25.1%). Nonetheless, the Group
implemented vigorous internal control to improve efficiency, and was
dedicated to controlling sales and distribution, and its general and
administrative expenses, resulting in an increase in profit
attributable to shareholders of 23.2% to HK$19,530,000 (2004:
HK$15,857,000).
Earnings per share were
HK2.82 cents (2004: HK2.29 cents). The Board of Directors
recommended the payment of a final dividend of HK0.7 cent per share
(2004: HK0.5 cent) for the year ended 30 April 2005 to shareholders
whose names appear on the register of members of the Company on 23
September 2005. In addition, the Board has resolved to revise the
dividend policy. The dividend payout ratio will not exceed 30% of
the Group’s profit attributable to the shareholders for each of the
relevant financial year commencing from the next financial year to
reward shareholders for their continued
support.
Mr. Coils Lam, Chairman of
CEC, said,
“I am pleased to see the continuous growth in both profit
attributable to shareholders and turnover during the year, which
have corroborated the effectiveness of our focusing efforts on core
electronic components manufacturing business. Although the
persistent high raw materials prices and increase in wages of staff
posed pressure on our gross profit margin, we were still able to
maintain satisfactory growth in overall results riding on our
management’s proactive cost control measures.”
During the year under
review, the turnover of the core electronic components manufacturing
business reached HK$549,928,000, an increase of 19.8% as compared
with HK$459,040,000 last year, accounting for 99.2 % of the Group’s
turnover (2004: 93.4%). The gross profit of the business rose to
HK$123,471,000 (2004: HK$119,929,000), 3% higher than last year.
Gross profit margin decreased to 22.5 % (2004: 26.1%) as a result of
increased raw material prices and labour
costs.
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The Group produces a full
range of electronic components for various electronic consumer
products and provides tailor-made coil solutions to customers. The
global electronic industry is feeling the boost of the generally
favourable economic environment, and various electronic consumer
products have achieved desirable growth, which in turn spurred the
increase in overall demand for electronic components. Meanwhile, the
Group expects the trend of manufacturers’ outsourcing electronic
components manufacturing and their seeking of lower production cost
to prevail. As an electric coil sub-contracting manufacturer, CEC is
capable of providing competitive coil sub-contracting manufacturing
services to its customers and major business
partners.
In
terms of market distribution, as more and more overseas customers
opt to source electronic components from suppliers in Mainland
China, the Group’s sales to all major overseas regions has grown.
During the year under review, turnover from Mainland China rose by
66.4% to HK$182,972,000 (2004: HK$109,976,000). Turnover from other
regions also increased to HK$34,542,000 (2004:
HK$15,267,000).
Going forward, competition
in the electronic component industry will remain fierce. To cope
with it, the Group plans to position itself as a highly competitive
electronic components provider and steadily evolve into an electric
coil sub-contracting manufacturer with competitiveness and
expansibility. CEC’s development focus will be on improving and
streamlining its cost structure. The Group will continue to strictly
control the head count of each production unit and actively look for
regions with lower labour costs for establishing production
facilities. In addition, the Group also intends to identify some
cost-effective processing contractors to outsource part of its
production processes. It will gradually restructure under-performing coil
product production units and materials and parts production
units.
Regarding the persistent high prices
of raw materials, the Group will also negotiate with its major
suppliers for more competitive payment terms in return for support
in price, discount and delivery date from the suppliers. The Group
will also continue to improve production flow and know-how to reduce
material wastage. Although this strategy will shorten the turnover
of the Group’s trade payables, it will allow the Group to secure
more competitive supplies, and ultimately bring mutual benefits to
both sides.
In
view of the development in sales and marketing promotion, the Group
is forming sales and customer service teams comprising more high
calibre staff to further extend its customer network. By
establishing a diversified customer portfolio – with customers from
different industries in different regions producing different
products, the Group can protect itself from being hit by
fluctuations in a single market.
Environmental protection has always
been one of our prime focuses. In the year under review, the Group
obtained the ISO 14001 Management System Certificate, which
signifies the turning of a new stage for the Group’s systemization
of its environmental protection management. In addition, the Group
has also established an "Environment Management Promotion Committee"
to review the environmental management standards for its Zhongshan
plant and to supervise the implementation of those standards. And
the Group’s products are already on par with the standards
stipulated in the directive of the Restriction of Hazardous
Substances in Electrical and Electronic Equipment (RoHS), which will
be fully implemented in Europe in July 2006. CEC will put more
resources into improving its environmental protection system and
provide training for relevant qualified system personnel, so as to
keep the Group abreast of international environmental protection
development.
Mr. Lam concluded, “CEC will continue
the relatively effective management model in adopting localized
Chinese style, which comprises major functional management centers
with manufacturing, sales, finance, purchase, warehouse and quality
assurance. The initiative will allow us to re-structure our
China-based operational model and accelerate the integration of the
Group’s management personnel resources. Moreover, we will continue
our stringent control in credit management to assure that a low
level of bad debt can be maintained in future and reasonable
operating cash flow can be controlled. The Group will actively
explore opportunities to establish closed partnership with leading
enterprises in China, which we believe will enable us to ensure
stable growth in the future. The management will strive to bring
better returns to our shareholders.”
About
CEC International:
CEC
International was listed on The Stock Exchange of Hong Kong Limited
on 15 November 1999. It is a reputable electronic components
manufacturer, engaged in the design, development, manufacture and
sale of a wide range of coils, inductors, transformers, capacitors,
and other electronic components. CEC’s products are commonly
found in IT products, telecommunication products, home appliances
and audio-visual products.
Accredited with ISO 9001 & ISO14001 certification in 1995
and 2005 respectively, the Company also has more than 400 engineers
and quality control staff ensuring its product quality.
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