Comtec Solar Systems Group Limited — Annual Report 2014

Jun 18, 2014

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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Sun East Technology (Holdings) Limited 日東科技（控股）有限公司 *

(incorporated in Bermuda with limited liability)

(Stock code: 365)

ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2014

ANNUAL RESULTS

The Board of Directors (the “Board”) of Sun East Technology (Holdings) Limited (the “Company”) is pleased to announce the audited consolidated results of the Company and its subsidiaries (collectively the “Group”) for the year ended 31 March 2014 together with the comparative figures of the corresponding last year as follows:

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 31 March 2014

Notes Revenue 4 Cost of sales Gross profit Other income and gains 4 Selling and distribution costs Administrative expenses Other expenses Finance costs 5 Profit before income tax 6 Income tax expense 7 Profit for the year attributable to owners of the Company	2014 HK$’000 787,603 (679,266) 108,337 20,049 (55,749) (53,747) (5,229) (865) 12,796 (3,370) 9,426	2013 HK$’000 565,372 (484,963) 80,409 23,373 (46,805) (44,586) (1,508) (1,492) 9,391 (3,653) 5,738

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (CONT’D)

For the year ended 31 March 2014

Notes Other comprehensive income Surplus on revaluation of properties held for own use Deferred tax relating to revaluation surplus Exchange gain on translation of financial statements of foreign operations Other comprehensive income for the year, net of tax Total comprehensive income for the year attributable to owners of the Company Earnings per share for profit attributable to owners of the Company 8 – Basic – Diluted	2014 HK$’000 9,373 (2,258) 2,682 9,797 19,223 HK1.80 cents N/A	2013 HK$’000 19,499 (4,124) 715 16,090 21,828 HK1.09 cents N/A

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2014

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Prepaid land lease payments Available-for-sale financial assets Current assets Inventories Trade and bills receivables 9 Prepayments, deposits and other receivables Derivative financial instruments Tax reserve certificates Taxes recoverable Pledged deposits Structured bank deposit Cash and bank balances Current liabilities Trade and bills payables 10 Other payables and accruals Bank borrowings Derivative financial instruments Taxes payable Net current assets Total assets less current liabilities Non-current liabilities Deferred tax liabilities Net assets EQUITY Equity attributable to owners of the Company Share capital Reserves Total equity	2014 HK$’000 165,129 9,705 1,262 176,096 119,301 266,671 21,909 451 3,600 191 68,044 – 88,525 568,692 156,382 144,273 60,967 460 33,881 395,963 172,729 348,825 16,920 331,905 52,500 279,405 331,905	2013 HK$’000 159,972 9,788 –
		169,760 85,293 172,173 19,564 – 3,600 191 53,563 14,581 137,946
		486,911 109,490 132,678 48,296 1,343 31,811
		323,618
		163,293
		333,053
		15,121
		317,932
		52,500 265,432
		317,932

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Notes:

1. BASIS OF PREPARATION

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). These financial statements also include the applicable disclosure requirements of the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on the Stock Exchange (“Listing Rules”).

2. ADOPTION OF NEW OR AMENDED HKFRSs

During the year, the Group has adopted all the new and amended HKFRSs which are first effective for the reporting year and relevant to the Group. Except as explained below, the adoption of these new and amended HKFRSs did not result in material changes to the Group’s accounting policies.

Amendments to HKAS 1 (Revised)-Presentation of Items of Other Comprehensive Income

The amendments change the disclosure of items presented in other comprehensive income in the statement of comprehensive income and require entities to separate items presented in other comprehensive income into two groups, based on whether or not they may be recycled to profit or loss in the future. Items that will not be recycled will be presented separately from items that may be recycled in the future. Entities that choose to present other comprehensive income items before tax will be required to show the amount of tax related to the two groups separately. The title used by HKAS 1 for the statement of comprehensive income has been changed to “Statement of profit or loss and other comprehensive income”. The Group has chosen to use this new title.

HKFRS 10 Consolidated Financial Statements

HKFRS 10 introduces a single control model for consolidation of all investee entities. An investor has control when it has power over the investee (whether or not that power is used in practice), exposure or rights to variable returns from the investee and the ability to use the power over the investee to affect those returns. HKFRS 10 contains extensive guidance on the assessment of control. For example, the standard introduces the concept of “de facto” control where an investor can control an investee while holding less than 50% of the investee’s voting rights in circumstances where its voting interest is of sufficiently dominant size relative to the size and dispersion of those of other individual shareholders to give it power over the investee. Potential voting rights are considered in the analysis of control only when these are substantive, i.e. the holder has the practical ability to exercise them. The standard explicitly requires an assessment of whether an investor with decision making rights is acting as principal or agent and also whether other parties with decision making rights are acting as agents of the investor.

An agent is engaged to act on behalf of and for the benefit of another party and therefore does not control the investee when it exercises its decision making authority. The implementation of HKFRS 10 may result in changes in those entities which are regarded as being controlled by the Group and are therefore consolidated in the financial statements. The accounting requirements in the existing HKAS 27 on other consolidation related matters are carried forward unchanged. HKFRS 10 is applied retrospectively subject to certain transitional provisions.

As a result of the adoption of HKFRS 10, the Group has changed its accounting policy with respect to determining whether it has control over an investee. The adoption does not change any of the control conclusions reached by the Group in respect of its involvement with other entities as at 1 April 2013.

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2. ADOPTION OF NEW OR AMENDED HKFRSs (Continued)

HKFRS 13 Fair Value Measurement

HKFRS 13 provides a single source of guidance on how to measure fair value when it is required or permitted by other standards. The standard applies to both financial and non-financial items measured at fair value and introduces a fair value measurement hierarchy. The definitions of the three levels in this measurement hierarchy are generally consistent with HKFRS 7 “Financial Instruments: Disclosures”. HKFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). The standard removes the requirement to use bid and ask prices for financial assets and liabilities quoted in an active market. Rather the price within the bid-ask spread that is most representative of fair value in the circumstances should be used. It also contains extensive disclosure requirements to allow users of the financial statements to assess the methods and inputs used in measuring fair values and the effects of fair value measurements on the financial statements. HKFRS 13 is applied prospectively.

HKFRS 13 did not materially affect any fair value measurements of the Group’s assets and liabilities and therefore has no effect on the Group’s financial position and performance.

Amendments to HKFRS 7 – Disclosures – Offsetting financial assets and financial liabilities

The amendments introduce new disclosures in respect of offsetting financial assets and financial liabilities. Those new disclosures are required for all recognised financial instruments that are set off in accordance with HKAS 32 “Financial instruments: Presentation” and those that are subject to an enforceable master netting arrangement or similar agreement that covers similar financial instruments and transactions, irrespective of whether the financial instruments are set off in accordance with HKAS 32.

The adoption of the amendments does not have an impact on these financial statements because the Group has no offset financial instruments, nor has it entered into master netting arrangement or similar agreement which is subject to the disclosures of HKFRS 7 during the periods presented.

New/amended HKFRSs that have been issued but are not yet effective

At the date of this results announcement, certain new and amended HKFRSs have been published but are not yet effective, and have not been adopted early by the Group.

The Directors anticipate that all of the pronouncements will be adopted in the Group’s accounting policy for the first period beginning after the effective date of the pronouncement. The Directors are currently assessing the impact of the new and amended HKFRSs upon initial application. So far, the Directors have preliminarily concluded that the initial application of these HKFRSs will not result in material financial impact on the consolidated financial statements. Information on new and amended HKFRSs that are expected to have an impact on the Group’s accounting policies is provided below.

HKFRS 9 Financial instruments

Under HKFRS 9, financial assets are classified into financial assets measured at fair value or at amortised cost depending on the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. Fair value gains or losses will be recognised in profit or loss except for those non-trade equity investments, which the entity will have a choice to recognise the gains and losses in other comprehensive income. HKFRS 9 carries forward the recognition, classification and measurement requirements for financial liabilities from HKAS 39, except for financial liabilities that are designated at fair value through profit or loss, where the amount of change in fair value attributable to change in credit risk of that liability is recognised in other comprehensive income unless that would create or enlarge an accounting mismatch. In addition, HKFRS 9 retains the requirements in HKAS 39 for de-recognition of financial assets and financial liabilities.

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3. SEGMENT INFORMATION

The executive directors have identified the Group’s two product lines as reportable segments:

– (i) Production lines and production equipment Design, manufacture and sale of production lines and production equipment.

– (ii) Brand name production equipment

Trading and distribution of brand name production equipment

Segment revenue: Sales to external customers Other revenue – external Reportable segment revenue Reportable segment results Depreciation and amortisation Loss/(Gain) on disposal of property, plant and equipment Provision for impairment of trade and bills receivables Provision for impairment of other receivables Write-down of inventories to net realisable value Write-off of property, plant and equipment Reportable segment assets Capital expenditure Reportable segment liabilities	Production lines and production equipment 2014 2013 HK$’000 HK$’000 442,037 318,854 11,744 16,003 453,781 334,857 10,709 10,500 10,104 9,518 20 (140) 5,161 1,151 – 329 2,859 2,678 68 28 433,757 363,476 3,195 9,872 209,844 184,896	Brand name production equipment 2014 2013 HK$’000 HK$’000 345,566 246,518 – – 345,566 246,518 6,217 1,616 – – – – – – – – – – – – 146,495 81,555 – – 89,148 55,073	Consolidated 2014 2013 HK$’000 HK$’000 787,603 565,372 11,744 16,003 799,347 581,375 16,926 12,116 10,104 9,518 20 (140) 5,161 1,151 – 329 2,859 2,678 68 28 580,252 445,031 3,195 9,872 298,992 239,969

The totals presented for the Group’s operating segments reconcile to the Group’s key financial figures as presented in the financial statements as follows:

Reportable segment results Rental income Interest and other corporate income Corporate expenses Finance costs on bank borrowings Profit before income tax	2014 HK$’000 16,926 14 8,291 (11,570) (865) 12,796	2013 HK$’000 12,116 13 7,357 (8,603) (1,492) 9,391

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3. SEGMENT INFORMATION (Continued)

Segment assets Production lines and production equipment Brand name production equipment Available-for-sale financial assets Derivative financial instruments Tax reserve certificates Taxes recoverable Pledged deposits Structured bank deposit Cash and bank balances Other corporate assets Total assets Segment liabilities Production lines and production equipment Brand name production equipment Bank borrowings Derivative financial instruments Deferred tax liabilities Other corporate liabilities Total liabilities	2014 HK$’000 433,757 146,495 580,252 1,262 451 3,600 191 68,044 – 88,525 2,463 744,788 209,844 89,148 298,992 60,967 460 16,920 35,544 412,883	2013 HK$’000 363,476 81,555
		445,031 – – 3,600 191 53,563 14,581 137,946 1,759
		656,671
		184,896 55,073
		239,969 48,296 1,343 15,121 34,010
		338,739

The Group’s revenue from external customers and segment assets are divided into the following geographical areas:

Mainland China (domicile) Hong Kong Europe (principally Spain and Germany) Others (principally Japan and Singapore)	Revenue from external customers 2014 2013 HK$’000 HK$’000 747,970 518,575 13,308 18,823 19,766 20,600 6,559 7,374 787,603 565,372	Non-current assets (excluded available-for-sale financial assets) 2014 2013 HK$’000 HK$’000 152,139 146,854 22,695 22,906 – – – – 174,834 169,760	Non-current assets (excluded available-for-sale financial assets) 2014 2013 HK$’000 HK$’000 152,139 146,854 22,695 22,906 – – – – 174,834 169,760
			169,760

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3. SEGMENT INFORMATION (Continued)

The geographical location of customers is based on the location at which the goods delivered. The geographical location of non-current assets is based on the physical location of the assets. The Company is an investment holding company where the Group has majority of its operation and workforce in Mainland China, and therefore, Mainland China is considered as the Group’s country of domicile for the purpose of the disclosures as required by HKFRS 8 “Operating Segments”.

4. REVENUE, OTHER INCOME AND GAINS

The Group’s turnover, represents revenue from its principal activities, measured at the net invoiced value of goods sold, after allowances for returns and trade discounts during the year.

An analysis of revenue, other income and gains is as follows:

Revenue – sale of goods Other income: Rental income Bank interest income Impairment loss on trade receivables written back Government grants Sales of scrap Discount received on the settlement of other payables Others Gains: Exchange gain, net Gain on disposal of property, plant and equipment Other income and gains*	2014 HK$’000 787,603 14 3,021 2,893 583 2,648 2,455 2,344 13,958 6,091 – 6,091 20,049	2013 HK$’000 565,372
		13 3,553 10,201 1,852 2,741 – 1,069
		19,429 3,804 140
		3,944
		23,373

• Non-refundable government subsidies were received from the PRC government for subsidising the Group in conducting and launching projects relating to research and development activities. There are no unfulfilled conditions or contingencies relating to these grants.

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5. FINANCE COSTS

Interest on bank borrowings wholly repayable within one year Total interest on financial liabilities stated at amortised cost 6. PROFIT BEFORE INCOME TAX The Group’s profit before income tax is arrived at after charging/(crediting): Cost of inventories sold – including write-down of inventories to net realisable value Depreciation Fair value loss on derivative financial instruments Research and development costs Minimum lease payments under operating leases in respect of leasehold land and buildings Loss/(Gain) on disposal of property, plant and equipment Auditor’s remuneration Staff costs (including directors’ remuneration) – Wages and salaries – Defined contribution scheme Amortisation of prepaid land lease payments Provision for impairment of trade and bills receivables Provision for impairment of other receivables Write-off of property, plant and equipment	2014 HK$’000 865 865 2014 HK$’000 544,599 2,859 9,836 909 5,971 1,504 20 900 122,019 7,754 129,773 268 5,161 – 68	2013 HK$’000 1,492 1,492 2013 HK$’000 388,835 2,678 9,255 130 4,993 1,008 (140) 900 91,598 6,203 97,801 263 1,151 329 28

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7. INCOME TAX EXPENSE

Current tax – Elsewhere – Tax for the year – Over-provision in prior year Deferred tax Income tax expense	2014 HK$’000 4,502 (673) 3,829 (459) 3,370	2013 HK$’000 3,653 –
		3,653 –
		3,653

No Hong Kong profits tax was provided as the Group did not generate any assessable profits arising from its operations in Hong Kong during the current and prior years. Taxes assessable in elsewhere have been calculated at the prevailing rates of tax based on existing legislation, interpretations and practices.

The PRC enterprise income tax for foreign enterprises have been calculated on the estimated assessable profits for the year at 25% except that 日東電子科技（深圳）有限公司 is granted the tax benefit for the National High-Tech Enterprise for three years starting from the year ended 31 December 2011. It is subject to income tax rate of 15%.

8. EARNINGS PER SHARE

The calculation of basic earnings per share is based on the profit for the year of approximately HK$9,426,000 (2013: HK$5,738,000) attributable to owners of the Company, and 525,000,000 (2013: 525,000,000) ordinary shares in issue during the year.

Diluted earnings per share for the year ended 31 March 2014 and 2013 are not presented as there were no potential ordinary shares in issue during the year.

9. TRADE AND BILLS RECEIVABLES

The normal credit period granted by the Group to its customers, each of which has a maximum credit limit, ranges from 30 to 180 days (2013: 30 to 180 days).

Ageing analysis of trade and bills receivables as at the reporting dates, based on the date of revenue recognition and net of provision, is as follows:

Within 90 days 91 to 120 days 121 to 180 days 181 to 360 days Over 360 days	2014 HK$’000 105,868 22,864 26,829 71,006 40,104 266,671	2013 HK$’000 87,846 7,528 19,906 20,799 36,094
		172,173

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10. TRADE AND BILLS PAYABLES

Ageing analysis of trade and bills payables as at the reporting dates, based on invoice date, is as follows:

Within 90 days 91 to 120 days Over 120 days	2014 HK$’000 147,663 1,682 7,037 156,382	2013 HK$’000 84,839 9,324 15,327
		109,490

11. DIVIDEND

(a) Dividends attributable to the year

2014 2013
HK$’000 HK$’000
Proposed final dividend of Nil (2013: HK$0.01) per share – 5,250
Final dividend proposed after the reporting date had not been recognised as a liability at the reporting date, but
reflected as an appropriation of retained earnings for the year ended 31 March 2013 to proposed final dividend
reserve. The proposed final dividend was to be distributed subsequent to the reporting date and was subject to the
approval of the Company’s equity holders in the forthcoming annual general meeting.

(b) Dividend attributable to the previous financial year, approved and paid during the year:

	2014	2013
	HK$’000	HK$’000
Final dividend in respect of the previous financial year, of HK$0.01
(2013: Nil) per share	5,250	–

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12. COMMITMENTS

At the reporting date, the Group had the following outstanding commitments:

(a) Operating lease commitments – as lessee

The Group leases certain of its offices premises under operating lease arrangements. Leases for these assets are negotiated for the terms ranging between one and three years.

At 31 March 2014, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

Within one year In the second to fifth years, inclusive Capital commitments Contracted but not accounted for in respect of acquisition of property, plant and equipment	2014 HK$’000 1,604 384 1,988 2014 HK$’000 169	2013 HK$’000 377 81
		458
		2013 HK$’000 807

(b) Capital commitments

13. CONTINGENT LIABILITIES

There were no material contingent liabilities as at 31 March 2014 and 2013.

14. RELATED PARTY TRANSACTIONS

Key management remuneration

The remuneration of the directors and other members of key management during the year were as follows:

Short term employee benefits Post-employment benefits	2014 HK$’000 10,757 125 10,882	2013 HK$’000 7,285 130
		7,415

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CHAIRMAN STATEMENT

Dear Shareholders,

On behalf of the Board of Directors of Sun East Technology (Holdings) Limited, I am pleased to present the audited annual results of the Company and its subsidiaries (the “Sun East Group”) for the year ended 31 March 2014.

Review

The global economy has still not fully recovered in 2013/14, with the U.S economy still in a recovery state and the China economy growth continuing to slow down, the development of automation in PRC companies provide many business opportunities and challenging to the Group.

The turnover of the Group for the year ended 31 March 2014 amounted to HK$787.6 million, representing an increase of approximately 39% from that of last financial year, which was in line with last year sales target. This was secured by the last year strategy – profit margin small relative to sales quantity and fully utilisation of production capacity. This business growth mainly came from the automated and logistics business and production line equipment business, with a 119% and 28% sales growth respectively. The OEM division kept at equilibrium level.

Aligning the current situation with the Group’s future goals and prospects, on the management level, there were adjustments made on the organizational structure, internal risk control and budgeting policies. The Group had also invested more resources in experienced staff recruitment and restructuring each business division to strengthen the Group’s future development and growth.

Outlook

For Sun East Group has reached a milestone of 30 years, specialized in providing customized intelligent solutions to manufacturing industries. In the foreseeable future, we can see that the Chinese government will invest heavily in Smart City projects, as a result powering the growth in infrastructure and intelligent systems. I believe the Group will be able to capture this potential market, bringing a new growth to the Company.

Later on, the Group will implement lean management. The Group will also synergize resources in marketing, quality, new product development, purchasing and finance in order to increase our competitiveness. This year’s core principle is: ‘actively steers the Group into Intelligent Manufacturing Systems Equipment strategic direction by seizing opportunities, crisis and operations management to continuing being the forefront of the market’.

Appreciation

On behalf of the Board, I would like to extend my heartfelt thanks to the 30 years of support and trust of our shareholders and business partners. I would also like to thank the effort and contribution of the Group’s employees throughout the year. The Group will continue to strive to create better returns for shareholders.

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MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

Sun East Production Line Equipment Business

Due to the development and universal usage of the backlight technology in China and the promotion of LED light by Guangdong government – requires that within three years after May 2012 all new constructed public areas should use the LED light, the demand for SMT machines and semi-conductor surge. But these products are in the mature market with high transparency and competitiveness, the Company cannot set price on its own wish.

During the year, sale of SMT and welding related equipment amounted to approximately HK$507.3 million, representing an increase of 27.2% when compared to approximately HK$398.7 million in last year. The sale price did not increase with the rise in demand, on the contrary it was slimmed by the increased labour cost. The gross profit ratio was decreased from 14.5% to 13.3%.

OEM Industry

With the increase of China’s production costs such as wages and raw materials, the profit of OEM business is slimmed. The sales amount remained steady level. Compared with last year, the sale amount slightly increased from approximately HK$62.8 million to approximately HK$72.3 million, represented increased of 15.1%. Due to direct labour costs increased, there was a big drop in the profit margin.

Because of the market conditions, the increased costs would not directly pass onto the customers. To sustain Group’s competitiveness in the OEM market, the group strategizes to achieve economies of scale, cost reduction, quality control, rework rate reduction and improved operational efficiency with limited wastage.

Automated and Logistic Business

In the past year, turnover and profits of automated and logistic business recorded an outstanding performance. Compared with last year the sale amount increased from approximately HK$103.9 million to approximately HK$208.0 million representing about 100.2% increased. The gross profit ratio remained at around 16%. As previously expected, all enterprises are going to increase the investment in automation and intelligent in order to reduce impact of increased labour cost.

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FINANCIAL REVIEW

Turnover and Gross Profit

Turnover of the Group reached approximately HK$787.6 million and represented an increase of 39.3% when compared with approximately HK$565.4 million in last year. The upturn of sale amount was mainly due to: 1. the marketing strategy – to keep the market share by implementation of profit margin small relative to sales quantity strategy; 2. the increase of investment scale in fixed assets of PRC companies. Entrepreneur in PRC were aware of that the increasing of labour cost and shortage of manpower in PRC would be an irreversible trend so they are now willing to employ more resource to intelligent manufacturing systems and equipment in order to seek effectiveness and profitability. The main driving power of the sale came from Automated and Logistic Business which recorded an increase of 100.2%.

During the year under review, the gross profit ratio (GP ratio) for the year was approximately 13.8%, representing a slightly drop of approximately 0.4%, as compared with last year approximately 14.2%. The decrease of the GP ratio was driven predominantly by the increasing in product cost due to the minimum wage continued to increase in PRC.

Other Income and Gains

During the year, the Group recorded the exchange gains at approximately HK$6.1 million, recovery of trade receivable at approximately HK$2.9 million, bank interest income at approximately at HK$3.0 million and gain on sale of scrap at approximately HK$2.6 million.

Selling and Distribution Costs

During the year, the Group recorded a selling and distribution cost at approximately HK$55.7 million and it represents 7.1% of the turnover but it was 8.3% in last year. The main reason for the decreasing in the percentage is that the selling expenses increased in percentage is not much as the increasing in sale amount. The travelling and entertainment expenses represented 1.8% of the sale amount but it was 2.2% last year.

General and Administrative Expenses

The management of the Group implemented various methods to control its general and administrative expenses including departmental cost budgeting and enhancement of the efficiency by review manpower. During the year, the administrative expenses were approximately HK$53.7 million and it increased approximately HK$9.1 million compared to last year approximately HK$44.6 million. Such increase was mainly due to the increase in the labour cost which was approximately HK$5.1 million.

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Finance Costs

Finance costs for the year under review amounted to approximately HK$0.9 million, representing a decrease of approximately HK$0.6 million, as compare with approximately HK$1.5 million in last year. The decrease mainly came from the drop in the bank borrowing under the hedging arrangement but actually this interest expense will be compensated by HK$1.2 million interest income from pledged deposits under the same hedging arrangement.

Profit for the year

As result of the foregoing, the profit attributable to owners of the Company for the year under review was approximately HK$9.4 million, representing an increase of approximately HK$3.7 million, as compared with approximately HK$5.7 million in corresponding year. The net profit margin was approximately 1.2% for the year under review as compared with approximately 1.0% in year 2013.

EBITDA

The following table illustrates the Group’s EBITDA for the respective years. The Group’s EBITDA margin was 3.0% for the year under review as compared with 3.6% in corresponding year.

Profit for year attributable to owners of the Company Finance cost Income tax expense Depreciation and amortisation EBITDA	Year ended 31 2014 HK$’000 9,426 865 3,370 10,104 23,765	March 2013 HK$’000 5,738 1,492 3,653 9,518
		20,401

Financial Resource, Liquidity and Gearing Ratio

During the year, there was no material change in the Group’s treasury policy. As at 31 March 2014, the Group had sufficient cash and banking facilities from its main bankers to finance ongoing working capital requirements. The Group maintained high value of net current assets at approximately HK$165.7 million and healthy current ratio at 1.5 times (both are adjusted by excluding of pledged deposits HK$68.0 million and bank borrowings HK$61.0 million for hedging purpose). There is no other borrowing for the Company as at 31 March 2014 and 2013.

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Working Capital Management

The Group continued to maintain a healthy financial position. As at 31 March 2014, the Group held approximately HK$88.5 million cash and bank balances, which declined HK$64.0 million from HK$152.5 million at the beginning of the year. The group’s average inventory turnover days was approximately 55 days (2013 approximately 59 days). The Group’s average debtors turnover days was approximately 102 days (2013 approximately 102 days). The Group’s average creditors turnover days was approximately 71 days (2013 approximately 79 days). The Group remains confident that the net cash position will improve further given continuing profitability and management’s continued focus on close working control.

Capital Expenditure on Property, Plant and Equipment

Total capital expenditure for the year was approximately HK$3.2 million, out of which approximately HK$0.8 million was spent on the acquisition of machinery and equipment, HK$1.4 million on acquisition of furniture, fixture and leasehold improvement and HK$1 million on acquisition of motor vehicles.

Charges on Group Assets

As at 31 March 2014, the Group’s banking facilities including its import/export loan, letter of credit documentary credits, and trust receipt and bank borrowings are secured by:

• (i) a first legal charge on certain of the Group’s leasehold land and buildings, which had an aggregate net carrying amount at the reporting date of HK$11.4 million (2013: HK$11.4 million);

• (ii) bank deposits approximately HK$68.0 million (2013: HK$53.6 million);

• (iii) cross guarantee provided by subsidiaries in the Group; and

• (iv) corporate guarantees provided by the Company.

EMPLOYEES AND REMUNERATION POLICIES

As at 31 March 2014, the Group employed approximately 1,465 full time employees in the PRC and approximately 15 were in the Hong Kong office. The Group remunerates its employees based on the industry’s practice. In the PRC, the Group provides staff welfare and bonuses to its employees in accordance with the prevailing labour law. In Hong Kong, the Group provides staff benefits including pension scheme and performance related bonuses.

PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY

Neither the Company, nor any of its subsidiaries purchased, redeemed or sold any of the Company’s listed securities during the year.

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CORPORATE GOVERNANCE PRACTICES

The Company acknowledges the importance of good corporate governance practices and procedures and regards a pre-eminent board of directors, sound internal controls and accountability to all shareholders as the core elements of its corporate governance principles. The Company endeavors to ensure that its businesses are conducted in accordance with rules and regulations, and applicable codes and standards. The Company has adopted the Code Provisions of the Corporate Governance Code (the “Code”) as set out in Appendix 14 to the Listing Rules.

The Board periodically reviews the corporate governance practices of the Company to ensure its continuous compliance with the Code. Save and except as hereinafter mentioned, the Company was in compliance with the Code for the year ended 31 March 2014 except for the derivations from the Code Provision A.4.1 and A.6.7 as set out below.

Code Provision A.4.1

Code Provision A.4.1 stipulates that non-executive directors should be appointed for a specific term and subject to re-election. The Company’s non-executive directors are not appointed for a specific term but are subject to retirement by rotation in accordance with the Company’s Bye-Laws. As such, the Board considers that sufficient measures have been taken to ensure that the Company’s corporate governance practices are comparable with those in the Code 14.

Code Provision A.6.7

Pursuant to the Code Provision A.6.7, all Directors of the Company should attend general meetings. However, two Executive Directors and two Independent Non-Executive Directors were absent from the annual general meeting held on 5 August 2013 due to other business commitments. To ensure compliance with the Code in the future, the Company has arranged and will continue to arrange to furnish all Directors with appropriate information on all general meetings and take all reasonable measures to arrange the schedule in such a cautious way that all Directors can attend the general meetings.

AUDIT COMMITTEE

The Company has an audit committee which was established in accordance with the requirements of the Code for the purpose of reviewing and providing supervision over the Group’s internal controls and financial reporting matters including the review of the annual results for the year ended 31 March 2014. The audit committee comprises the three independent non-executive directors of the Company.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 of the Listing Rules as the code of conduct regarding securities transactions by Directors of the Company. Having made specific enquiry of all Directors, all Directors confirmed that they have complied with the required standard as set out in the Model Code for the year.

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PUBLIC FLOAT

Based on the information that is publicly available to the Company as at the date of this announcement and within the knowledge of the Directors, there was a sufficiency of public float of the Company’s securities as required under the Listing Rules.

PUBLICATION OF FINAL RESULTS AND ANNUAL REPORT

This results announcement is published on the website of The Stock Exchange of Hong Kong Limited (www.hkex.com.hk) and the website of the Company (www.suneasthk.com). The annual report of the Company for the year ended 31 March 2014 containing all the information required by the Listing Rules will be despatched to the Company’s shareholders and available on the above websites in due course.

CAUTION STATEMENT

This announcement contains forward-looking statements regarding the objectives and expectations of the Group with respect to its opportunities and business prospects. Such forward-looking statements do not constitute guarantees of future performance of the Group and are subject to factors that could cause the Company’s actual results, plans and objectives to differ materially from those expressed in the forwardlooking statements. These factors include, but not limited to, general industry and economic conditions, shifts in customer demands, and changes in government policies. The Group undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

List of all Directors of the Company as at the date of this announcement:

Executive Directors: Independent Non-Executive Directors: Mr. But Tin Fu (Chairman) Mr. See Tak Wah Mr. But Tin Hing Prof. Xu Yang Sheng Mr. Leung Cheong Mr. Li Wanshou Mr. Leung Kuen, Ivan

By Order of the Board of Directors Sun East Technology (Holdings) Limited But Tin Fu Chairman

Hong Kong, 18 June 2014

* For identification purpose only

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