Ngai Lik Industrial Holdings Limited - Announced 2004 Interim Results

(July 12, 2004 - 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 annual results for the year ended March 31, 2004.

During the year, the Group's turnover totaled HK$3,299,447,000, representing a year-on-year increase of 7.3%. The satisfactory turnover growth was attributable to the continuous increase in export sales of home audio products. Profit attributable to shareholders also increased by 10.4% to approximately HK$245,168,000.

The Board of Directors resolved to recommend the payment of HK 8.5 cents per share as the final dividend for the year ended March 31, 2004. Together with the interim dividend of HK 7 cents and special dividend of HK 8 cents for the disposal of the motorcycle business, the total dividend per share for the year amounted to HK 23.5 cents, an increase of 67.9% as compared with that of last year.

Commenting on the Group's performance in the Electronic Manufacturing Services ("EMS") division, Mr. Lam Man Chan, Chairman of Ngai Lik, said, "Despite the difficult business conditions and global economic downturn brought forth by the SARS outbreak, we have managed to achieve an encouraging growth in turnover, thanks to the rapid market recovery and the improving consumption sentiment upon the recession of SARS. In addition, we also continue to diversify our product portfolio and enhanced our production capacity and production facilities with a view to capture the arising opportunity, maintaining our market leadership and expanding our customer base."

Amidst the backdrop of keen market competition, the Group's EMS business recorded a turnover of approximately HK$3,272,000,000, representing a year-on-year increase of 14%. Home audio products remained as the Group's major profit contributor. The Group continued to increase its market share through the launch of a series of new, quality and cost-competitive products with popular designs and features while establishing a strong foothold in the digital products market. A wide range of digital related products were also introduced and are well received by the market, including 3-CD changers, MP3 discman, stand-alone DVD players, DVD combos and home theatre systems.

During the year under review, US continued to be the Group's major market. Sales from the US market reached HK$2,037,978,000, accounting for 62% of the Group's total turnover. As for the European market, sales amounted to HK$813,495,000, representing a year-on-year increase of 22%. The remarkable increase in sales was driven by higher purchasing power of the European customers resulting from the stronger Euro currency.

Ngai Lik has fully embraced the benefit of vertical integration in attaining high operational efficiency and implementing stringent cost control measures to further propel its future growth. During the year, the Group expanded its plastic injection capacity by acquiring 110 sets of plastic injection machines and enhanced its production capacity by acquiring plant and machinery. In addition, Ngai Lik's Qingyuan Industrial Estate has added 17 assembly lines, which increased the production capacity by 25%.

Due to the unsatisfactory performance of the non-core Motorcycle division and the unfavorable operating environment, the Group has disposed of the Motorcycle business in September 2003, for a consideration of approximately HK$63,900,000, resulting in an insignificant loss of HK$67,000 on disposal. Upon the disposal of the Motorcycle division, the Group has become a pure EMS player in the industry, focusing on retaining and deploying resources for the development of core EMS business.

Looking ahead, Ngai Lik will continue to develop the audio product mass market, which is the major source of the Group's profit. The sustainable growth of the global consumer market for audio products and the high fidelity digital formats of MP3, DVD and enhanced CD technologies will become the momentum for future market growth. By developing new products and upholding stringent quality control measures, Ngai Lik is well poised to secure more order placements and capture any business potentials.

Currently, the Dongguan Plant has been fully utilized. As the Qingyuan Plant commenced operations, not only will the production capacity of the Group significantly increase by approximately 25%, but also impressive synergies will be generated from the economies of scale of the two plants.

For the Group's future development strategy, Mr. Lam said, "Despite the rising material prices, the implementation of the austerity measures as well as the possible increase in interest rate, we are confident of achieving prominent result in the future. We will emphasize investing in product development, technology, design and marketing while proactively expanding the production capacity and broadening our customer base. Coupled with the expansion of vertically integrated operations and further implementation of automation in the new Qingyuan Industrial Plant, Ngai Lik is committed to strengthening our leading market position, increasing our market share and most importantly, generating fruitful returns to our shareholders and customers."

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Company's 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 68 production lines in its first production plant located in Dongguan, 17 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:

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