Hong Kong, January 17, 2003 - China-focused mobile telecommunications company Ezcom Holdings Limited (SEHK: 312) announced a 3.6 times rise in unaudited consolidated turnover for the six months to October 31, 2002 of HK$1.58 billion. In line with the Group's repositioning of its business focus to mobile telecommunications, distribution of mobile handsets accounted for a significant share of about 90% of Group turnover, while contribution from the discontinued office furniture business declined to approximately 10%.
The Group's first-half unaudited net profit was HK$26.6 million, compared with a loss of HK$41.8 million in the previous period. Profit per share amounted to HK0.52 cent, compared to a loss per share of HK1.03 cents in the same period last year. The Group did not declare an interim dividend.
During the period, the Group completed the disposal of its entire interests in the loss-making furniture arm Lamex China Limited ("Lamex China") to Chairman Mr Kok Kin Hok for a consideration of HK$2 million in cash. The transaction also saw an approximate HK$30-million gain realized by the Group on the disposal.
The Group also completed acquisition of a 33.98% interest in Ezze Mobile in November 2002. Established in 2000, Ezze Mobile is a Korea-based mobile telecommunications solutions provider and equipment manufacturer. It posted revenues of 58 billion Korean Won (HK$355 million) and net profits of 3.6 billion Korean won (HK$21.95 million) for the year ended December 2001. Ezze Mobile continues to perform very well in year 2002 and is planning a listing on the stock exchange in South Korea.
"The disposal of Lamex China and acquisition of Ezze Mobile benchmarked completion of our Group's crucial transition into a full-service mobile telecommunications solutions provider, a more promising sector where we have continued to register growth and success. Our distribution network of mobile handsets in China had reached 37 major cities with support from more than 30 distributors and 2,500 retailers. This extensive network contributed to 68% increase in sales volume to approximately 1,430,000 GSM and CDMA handsets during the period," remarked Mr Kok Kin Hok, Chairman, Ezcom Holdings.
Given the highly competitive market environment, the acquisition of interests in Ezze Mobile brings the Group closer to cutting edge developments in the mobile telecommunications industry, including multi-media messaging, mobile high-speed data transmission via GPRS, 3G or other platforms; telecommunications making use of mobile Internet Protocol, and mobile Java technologies. The blending of Ezze Mobile's systems, network and handset design capabilities with Samsung's technology support and China Kejian's (000035.SZ) manufacturing strength will provide the Group with a unique edge over its competitive peers in implementing solutions from conceptualization to completion.
The Group continued to maintain excellent relationship with Samsung Electronics, the world's third largest manufacturer of mobile phones and the largest manufacturer of CDMA mobile handsets. Gross margins were maintained over the healthy 10% level for most of its products because the models the Group exclusively distributed in China belonged to the niche upper brackets.
While GSM mobile handsets continued to be the mainstay of the Group's mobile telecommunication business, parallel effort had also been spared to develop the CDMA market segment. Powered by technology and product innovations from Samsung and the manufacturing capacity and capabilities of China Kejian Corporation, the Group supplied about 300,000 CDMA handsets in China under the Kejian-Samsung co-branded label during the period.
The Group has been identifying opportunities to acquire distribution rights for more high-end models from Samsung, for handsets from other branded manufacturers, and to engage in more mobile telecommunications technology consultancy business. A new model of ladies' phone, Samsung T508, featuring chic outlook design, and a number of new GSM and CDMA models with colour LCDs are in the pipeline for launch in China.
At October 31, 2002, the Group's shareholders' funds were maintained at HK$448.69 million as at October 31, 2002. The gearing ratio as measured by total bank borrowings to capitalization was 9.75% during the period under review.
