(Hong Kong, 17 March 2010) – SIM Technology Group Limited (“SIM Technology” or the “Group”; SEHK stock code: 2000), today announced its annual results for the year ended 31 December 2009.  By repositioning its business strategy to emphasise high value handset solutions, the Group showed ncouraging improvement in 2H-2009 with revenue and profit up by over 60% and 200% respectively when compared with 1H-2009, hereby recovering the Group’s overall performance in the financial year of 2009.

The Group’s overall revenue for the year 2009 was approximately HK$2.98 billion (2008: HK$2.99 billion) which was about the same as last year’s total.  Its overall gross margin was down to 9.7% (2008: 12.8%), mainly due to the price pressure on 2G products coupled with a lower revenue base in 1H-2009.  Accordingly, profit attributable to shareholders dropped by 10.3% to HK$129.0 million (2008: HK$143.8 million).  Basic earnings per share were HK8.5 cents (2008: HK9.5 cents).

As at 31 December 2009, SIM Technology continued to maintain a strong and healthy financial position with net cash balances amounting to more than HK$590.3 million (31 December 2008: HK$623.4 million).

The Board of Directors recommended payment of a final dividend of HK2.2 cents (2008: HK1.0 cent) per share for the year ended 31 December 2009.  Together with the interim dividend of HK0.8 cent per share already paid, total dividend for the year will be HK3.0 cents (2008: HK4.0 cents) per share, representing a payout ratio of over 35%.

Mr. Cho-Tung Wong, Executive Director of SIM Technology, said, “After experiencing a very difficult operating condition in 1H-2009, we have successfully re-positioned our business strategies. These efforts have gained the Group a favourable international recognition and a reputation for reliability among customers and in the market.  Thus we have received added orders from several internationally renowned customers and secured new customers for our handset solutions.  These developments have paved the way for our rapid recovery in 2H-2009.”

With the handset market recovering in 2H-2009 and the strategy to focus on the demand for mid-to-high-end mobile handsets demand, mobile handset solutions segment of SIM Technology recorded growth in both unit shipment and revenue during the year.  While the unit shipment rose by 2.3%, revenue for this business segment grew by 6.1% to HK$1,835.0 million (2008: HK$1,728.8 million).  The Group’s full handset solution delivered outstanding performance with the unit shipment and revenue up by more than 200% and 100% year-on-year respectively.  It commenced more than 20 new projects for three major internationally branded customers in Japan and Korea covering handset solutions developed under multiple 3G standards and smart phones which are planned to be launched in 2010.  The Group also recorded growth in unit shipment and revenue of smart phones solutions covering 2G and 3G-based technologies by over 300% and approximately 70% respectively as compared to 2008.

Revenue from the Group’s wireless communication modules and modems reported a 17.0% growth to HK$943.9 million (2008: HK$806.5 million).  This encouraging result was mainly driven by the substantial increase in the sales of wireless modules with a slight rise in its average selling price due to the larger proportion of 3G modules in the product mix.  The LCD modules business was, however, affected by slow market demand dragging its revenue down by 54.9% to HK$204.6 million (2008: HK$453.3 million).   

Benefiting from the recovery of the export business in 2H-2009, the Group’s overall overseas revenue for the full year increased by 29% over 2008, accounting for approximately 28% (2008: 21%) of the Group’s revenue.  Growth of the overseas revenue was primarily driven by higher sales of handset solution products especially the full mobile handsets in emerging markets including India, Vietnam, Mexico, Russia and Eastern Europe.

Looking ahead, the global economy appears to have gradually recovered from the financial crisis, with Mainland China and the Asia Pacific leading the way.  In China, the aggressive network roll-out of domestic telecom operators’ efforts to develop their subscriber bases on top of 3G deployment will drive the growth of the domestic handset market substantially for 2010 and beyond.  With strong R&D capability and full range of handset and wireless module solutions for multiple 3G standards, SIM Technology is in a strong position to leverage accelerating development of 3G business for further growth in the future.

In addition, the Group will further invest resources to strengthen its front-end and back-end handset solutions delivery platforms to capture the rapidly growing ODM handset market.  As smart phones in recent years have been a driving force of the handset industry, the Group will leverage its R&D capability to explore more open-source smart phone operating systems to cater for this new growth driver.  It will also continue its efforts to expand overseas markets with a particular focus on emerging markets for higher profitability.

Mr. Wong said, “With the successful re-positioning of our business strategy of providing high value-added handset solutions to our global customers along with all the positive indicators from the global economy, we are optimistic that SIM Technology can sustain continuous business growth in 2010 and beyond.  This, coupled with our first-class R&D capabilities and healthy financial position, will enable us to achieve robust performance in the coming years.”