Ngai Lik Industrial Holdings Limited - Announced 2004 Interim Results

(December 1, 2003 - Hong Kong) - Ngai Lik Industrial Holdings Limited ("Ngai Lik" or "the Group"; stock code: 332), a leading player in the electronics manufacturing services industry, announced its interim results for the six months ended September 30, 2003.

During the period under review, the Group's turnover totaled HK$1,652,369,000, representing a slight decrease of 4% over the same period last year due to the disposal and discontinuance of the Motorcycle business. Profit attributable to shareholders amounted to HK$120,636,000, a decrease of 3% from the previous year. Excluding the Motorcycle business, turnover for the period recorded HK$1,624,765,000, a slight increase of 0.19% as compared to HK$1,621,642,000 of the corresponding period last year. Profit after tax recorded HK$128,994,000, or 4% higher than the corresponding period of last year.

The Board of Directors recommended the payment of an interim dividend of 7 HK cents. In addition, a special dividend of 8 HK cents has been paid as a result of the disposal of the motorcycle business in October 2003. Total dividend of the period was 15 HK cents, a 150% surge from the same period last year.

Commenting on the Group's performance in EMS division, Mr Lam Man Chan, Chairman of Ngai Lik, said, "During the first quarter of the year, the overall business environment was affected by the SARS outbreak as well as the US-Iraq war. Therefore, the performance of our EMS division was inevitably affected. Nevertheless, as the market showed signs of recovery and customers regained their confidence in the second quarter, demands for our home audio products picked up quickly and boosted the overall sales. In addition, we have also strengthened the production of higher-margin products as an effort to minimize the adverse impact to the least. We are glad to see that Ngai Lik has been able to sustain its satisfactory sales growth and maintain its market leadership despite such challenging operating conditions."

Under the intense market competition, the EMS division was able to achieve a total turnover of HK$1,624,765,000, representing a slight increase of 0.19% from the same period of last year. Home audio products remained as the Group's core business although the Group has successfully extended its reach to digital products market. A series of digital products, from MP3s and DVD players to the high-end DVD combos and home theater systems, have been launched to the market and received tremendous market popularity.

During the period under review, US continued to be the Group's major market. Sales to the US market recorded HK$996,971,000, accounting for 60% of the Group's total turnover. Sales to the European market continued to grow satisfactorily to reach HK$389,854,000 and accounted for 24% of total turnover. With the relentless efforts of the sales and marketing team, the Group successfully attracted several new customers spanning across the US, Brazil, Australia.

Vertical integration has been the Group's key to maintaining high efficiency and high profit margins. During the period, the Group continued to maintain its vertically integrated operations and acquired 85 sets of plastic machines to expand the plastic injection capacity and enhancing the operations of electroplating and the manufacture of springs and speakers.

Due to the weak performance of the Motorcycle division and its relatively gloomy outlook in the coming few years, the Group has disposed the Motorcycle business for a consideration of HK$63.8 million, and resulted in an insignificant loss on disposal of HK$67,000. As of June 30, 2003, the Motorcycle division's sales declined to HK$27,604,000, together with the losses from the first quarter of the financial year. The disposal is believed to bring about both immediate and long-term benefits for Ngai Lik's future development. First, it can immediately prevent future losses attributable to the Motorcycle Business. Second, the Group can terminate any cash outflow support to maintain the non-profit generating Motorcycle Business. Third, it allows Ngai Lik to retain or re-deploy its existing financial and human resources for the development of its core EMS business.

Looking ahead, Ngai Lik will fully concentrate on its EMS business whose prospect is deemed to be very promising. As the production of the Dongguan Plant has been optimized, 10 production lines in the 1st phase of the Qingyuan Plant have commenced operations. To cope with the growing customer demands, the Group plans to add 20 production lines in the Qingyuan Plant in 2004 to a total of 92 production lines and increase the production capacity by approximately 30%.

Mr. Lam is confident that the Group will achieve better results in the coming year. He concluded, "Ngai Lik has always pledged itself to serve for the best interests of the Group and its valuable shareholders. From now on, we will fully concentrate on our EMS business. We aim to increase our sales and market share by developing and launching new and higher-valued products. Moreover, we have set a target to attract at least one new quality client each year to broaden our customer base. We strongly believe that with the recoveries of the US market and the overall business environment, coupled with efficient operations, upgraded production and quality products, the Group will continue to generate impressive returns to its shareholders and customers."

-End-

Company Background
Ngai Lik is principally engaged in the manufacture and sales of a wide variety of home audio, digital and multimedia products mainly sold to the US and Europe. With 62 production lines in its first production plant located in Dongguan, ten production lines at the Group's second production plant in Qingyuan has commenced partial operation in the second half of 2003. The Group has been listed on the Stock Exchange of Hong Kong Limited since 1992.

For further information, please contact:

iPR Asia Limited
Antonia Au/ Hon Fung/ Callis Lau
Tel : 2136 6176/ 2136 6956/ 2136 6952
Fax : 2136 6068/ 2136 6951
E-mail : antoniaau@iprasia.com.hk, funghon@iprasia.com.hk
Website : www.iprasia.com