Q2 Sales up 74%, and Profit for the period up 1,077%
Interim Dividend: 10 HK cents
HONG KONG, July 30 /Xinhua-PRNewswire/ -- Nam Tai Electronic and Electrical Products Limited ("NTEEP" or "the Company") (Stock code: 2633), a leading vertically-integrated manufacturing solutions provider of consumer electronics and communications products and software development, today announced the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the second quarter and the six months ended 30 June 2007.
For the second quarter of 2007, sales of the Group increased by approximately 74.0% from US$43.5 million for the same period last year to US$75.7 million this year. The result was mainly attributable to the increase in sales of mobile phone accessories and home entertainment devices. Gross profit for the second quarter of 2007 increased by approximately 90.7% from US$7.0 million to US$13.4 million as compared with the same period last year. Operating income and profit attributable to the equity holders for the second quarter of 2007 increased by approximately 167.0% and 1,076.6% respectively as compared to the same period last year because of the gain on the disposal of investments in TCL Corporation ("TCL Corp").
For the six months ended 30 June 2007, sales of the Group increased by approximately 65.6% from US$78.7 million to US$130.3 million when compared with the same period last year. For the same reasons as stated above, gross profit increased by approximately 60.9% from US$13.9 million to US$22.3 million as compared with the same period last year. Operating income and profit attributable to the equity holders for the interim period of year 2007 also increased by approximately 105.4% and 417.1% respectively as compared to the same period last year.
The overall market conditions faced by the Group would remain to be challenging. The Group also has to deal with difficulties like appreciation of Renminbi, shortage of electricity supply and increase in overheads due to inflation. Nevertheless, the Group recently began production of a new product, Fly Fusion(TM) Pentop Computer, for a new customer, LF Leapfrog Enterprises, Inc. ("Leapfrog"). Leapfrog is a leading company in designing and developing educational products for children. The Group also worked for another new customer, a leading Japanese company, in manufacturing 1.3 mega pixel CMOS image sensor modules for notebook computers. The Group expected that all these new products would contribute to the results of the Group in the quarters to come.
Generally speaking, the management is more confident of the future prospects and potential growth of the Group. After Zastron Electronic (Shenzhen) Co. Ltd. (its fellow subsidiary) moves out from the factory premises rented from the Group, the Group would have significant additional production capacity to support continuous development and growth in the coming five years.
In the financial year 2006, the Company and its fellow subsidiary, J.I.C. Technology Company Limited ("JIC"), jointly incorporated a company, Nam Tai Solartech, Inc., in the Cayman Islands for the purpose of developing new business of solar cell energy. The shareholding of the Company and JIC in this company were 75% and 25% respectively. However, there were technical problems which could not be resolved and both parties agreed to put aside this project indefinitely and to deregister this company in the second quarter of 2007. The Group will continue to look for opportunities to develop a clean energy business. The Group incurred a loss of US$0.3 million as at 30 June 2007 on this project.
On 20 April 2007 and 23 April 2007, the Group disposed of 39,000,000 and 41,600,173, respectively, A-shares of TCL Corp. through the Shenzhen Stock Exchange. Upon these disposals, the Group no longer owned any shares in TCL Corp. The net sales proceeds from the disposals in aggregate were US$53.9 million (net of commission, expenses and stamp duty), resulting in a gain of US$43.8 million (after taking into account the recognized loss of US$1.9 million arising from the Split Share Structure Reform (the "SSR") of TCL Corp. in 2006 and the unrecognized gain since initial acquisition).
In the financial year 2005, the Group acquired 100% interest in Namtek Group (comprising Namtek Japan Company Limited and Shenzhen Namtek Co., Ltd.) from its ultimate holding company, Nam Tai Electronics, Inc and the then management of Namtek Group. 81,670,588 ordinary shares of HK$0.01 each of the Company were issued at HK$2.55 per share as consideration (amounting to a total of US$26.7 million) for the acquisition and resulted in goodwill of US$24.3 million. The goodwill arising on the acquisition was attributable to the anticipated augmentation of the Group's profitability.
During the six months ended 30 June 2007, the Group recognised a non-cash impairment loss of US$24.3 million as the performance of these businesses was not satisfactory.
In view of the positive performance of the Group, the management's increased confidence in the prospects of the Group's sales and profits, the cancellation of the solar cell energy project (which reduced the demand on the Group's capital investment) and the special gain on the disposal of the shares of TCL Corp. by Namtai Electronic (Shenzhen) Co., Ltd. ("NTSZ"), the Group decided to pay an interim dividend for the six months ended 30 June 2007.
However, most of the Group's cash is locked up in the People's Republic of China (the "PRC") and cannot be remitted to Hong Kong unless the Group would forgo the re-investment tax refund. Furthermore, the investment gain made by NTSZ on the disposal of shares of TCL Corp. cannot be remitted to Hong Kong until the audited accounts of NTSZ for the financial year 2007 have been finalized and issued or the Group is unable to enjoy tax refund on the gain. Therefore, if the Group decides to pay dividend or any other distribution, it can only use cash situated outside the PRC. The Group has in fact reserved some cash in Hong Kong originally intended for use by the solar cell energy business, which can now be used to pay an interim dividend.
In view of the above, the board of the Directors has decided to declare an interim dividend of 1.28 US cents (equivalent to 10 HK cents) (for the six months ended 30 June 2006: Nil) for the six months ended 30 June 2007 to be payable to shareholders whose names appear on the Register of Members of the Company on 15 August 2007. The interim dividend will be paid in Hong Kong dollars on or around 28 August 2007. Furthermore, the Group may consider to pay any further dividend or distribution at the financial year ended 2007, depending on the situation as mentioned above at that time.
About NTEEP
Nam Tai Electronic & Electrical Products Limited ("NTEEP"), a subsidiary of Nam Tai Electronics, Inc. which is listed on the New York Stock Exchange, is a well-established vertically integrated manufacturing solutions provider for some of the world's most reputable brand owners of consumer electronics and communications products including optical devices, home entertainment devices, mobile phone accessories and educational products. NTEEP is also a total solution provider offering a wide range of services on software development, data processing and compression and electronic hardware design and development specializing in digital dictionary and navigation system. NTEEP's largest customers include Sony Ericsson Mobile Communications AB, Texas Instruments Incorporated, Sony Computer Entertainment Europe Ltd. and GN Netcom A/S.
Nam Tai Electronics, Inc. ("NTE") (New York Stock Exchange symbol: NTE) is an electronics design and manufacturing service provider to many of the world's leading original equipment manufacturers, including Hikari Alphax Co., Ltd., GN Netcom, Sanyo Epson Imaging Devices (H.K.) Ltd., Sharp Corporation, Sony Computer Entertainment Europe Ltd., Sony Ericsson Mobile Communications AB, Sumitronics Hong Kong Ltd., Texas Instruments Incorporated, Uniden HK Ltd. It manufactures high-quality telecommunications products, palm-sized PCs, personal digital assistants, linguistic products, calculators and components such as LCD modules, wireless communication terminals and their modules, and CMOS sensor modules.
For more information about NTEEP, please visit its website at http://www.namtaieep.com . For more information about NTE, please visit its website at http://www.namtai.com .
Nam Tai Electronic & Electrical Products Limited
2007 Q2 Results Key Highlights
(In thousands of US Dollars, except as otherwise stated)
Quarterly Results Half-year Results
Q2 2007 Q2 2006 YoY(%) 1H2007 1H2006 YoY(%)
Sales (Revenue) 75,732 43,521 74.0 130,293 78,691 65.6
Gross Profit 13,412 7,034 90.7 22,312 13,864 60.9
% of sales 17.7% 16.2% -- 17.1% 17.6% --
Operating
income(a) 10,133 3,795 167.0 15,631 7,609 105.4
% of sales 13.4% 8.7% -- 12.0% 9.7% --
Per share
(US cent(s)) 1.15 0.43 167.4 1.77 0.86 105.8
Profit for the
period
attributable to
the equity
holders of
the Company (b) 25,602 2,176 1,076.6 32,073 6,203 417.1
% of sales 33.8% 5.0% -- 24.6% 7.9% --
Basic earnings
per share
(US cent(s)) 2.90 0.25 1,060.0 3.64 0.70 420.0
Diluted earnings
per share
(US cent(s)) 2.90 0.25 1,060.0 3.64 0.70 420.0
Weighted average
number
of shares ('000)
Basic 881,671 881,671 -- 881,671 881,671 --
Diluted (c) 881,671 881,671 -- 881,671 881,671 --
Notes:
(a) Operating income = gross profit + other income - other expenses -
selling and distribution costs - administrative expenses - research
and development expenditure.
(b) Included (i) a gain of US$43.8 million in the second quarter of
2007,on disposal of the investment in TCL Corp.; (ii) a non-cash
impairment loss of US$24.3 million in the second quarter of 2007, on
goodwill arising from the Group's acquisition of Namtek Group in
May 2005; and (iii) a loss of US$1.9 million in the second quarter
of 2006, on available-for-sale investment arising from the SSR of
TCL Corp. in 2006.
(c) Excluded outstanding share options of 14,520,000 which had not been
exercised as at 30 June 2007 (as at 30 June 2006: 16,820,000).
For more information, please contact:
Wong Long Kee
Tel: +852-2263-1065
Fax: +852-2263-1223
Email: lkwong@namtai.com.hk
