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| FINANCIAL REVIEW |
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The Board announces that for the year ended 30 June 2011 (the ：year under review；), total turnover of Solartech
International Holdings Limited (the ：Company；) and its subsidiaries (the ：Group；) was approximately HK$707,535,000,
a decrease of 6.5% over turnover from continuing operations of approximately HK$756,444,000 for the corresponding
period last year. During the year under review, the Company recorded a profit attributable to owners of the Company of
approximately HK$358,224,000 which is attributable to the significant fair value gain of the derivative component of the
convertible bond,
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as compared to the loss attributable to owners of the Company of approximately HK$138,660,000 for the
corresponding period last year. Earnings per share for the year under review was approximately HK33.12 cents (2009/10:
loss per share HK166.39 cents (restated)). |
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The Directors resolved not to pay any final dividend for the year ended 30 June 2011.
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| BUSINESS REVIEW |
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During the year under review, the Group deployed its resources on the businesses of manufacturing and trading of cables,
wires and copper products, which are based in Mainland China. Moreover, for the mining business, the Group has been
engaging technical advisors to formulate a mining proposal for the development of relevant businesses.
By business segments, the Group・s turnover for the year under review was approximately HK$707,535,000. Turnover for the
cables and wires business was approximately HK$316,551,000, representing a decrease of 18.9% over the corresponding
period last year of approximately HK$390,374,000, and accounted for 44.7% of the Group・s total turnover. Turnover for the
copper rod business was approximately HK$390,984,000, representing an increase of 6.8% over the corresponding period
last year of approximately HK$366,038,000, and accounted for 55.3% of the Group・s total turnover.
By geographical segments, turnover from continuing operations of the business in America increased by 5.3% from
approximately HK$91,806,000 for the corresponding period last year to approximately HK$96,637,000, accounting for
13.7% of the Group・s total turnover. Turnover from continuing operations of the business in the Mainland China and Hong
Kong decreased by 10.9% from approximately HK$610,475,000 for the corresponding period last year to approximately
HK$543,645,000, accounting for 76.8% of the Group・s total turnover. Turnover from continuing operations of business
in other Asian markets increased by 26.6% from approximately HK$24,432,000 for the corresponding period last year to
approximately HK$30,923,000, accounting for 4.4% of the Group・s total turnover. Turnover from continuing operations of
the European business increased by 22.2% from approximately HK$29,731,000 for the corresponding period last year to
approximately HK$36,330,000, accounting for 5.1% of the Group・s total turnover. |
| Cable and Wire |
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The major customers of the Group・s cables and wires business are primarily manufacturers of white domestic appliances.
During the year under review, the Group・s operational pressure was eased with the improvement in the economy and
increase in domestic demands in China. Under the impact of, among others, rising costs of raw material yet decrease in
selling prices of the Group・s products, compounded with further intensified market competition, the Group endeavored to
reduce costs while increasing efficiency, focus on technology integration and transformation, and enhance product quality to
ensure a stable turnover from its cables and wires business during the year under review. |
| Copper Rod Business |
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Copper rod business comprises the manufacturing and trading of copper rods and copper wires related products, which
are primarily used in the production of power cords or cables for the power supply of household appliances, electronic
products and infrastructure facilities. During the year under review, notwithstanding the continuous rising of copper prices
in international markets, the Group has been adopting a more cautious operation model by utilizing the majority of the
production capacity of its Dongguan copper rod business to provide processing services to its customers. As such, the
Group was able to transfer its financing costs and the fluctuations in copper prices to its customers. Such move not only
protected the Group from the material impact of soaring international copper prices, but also enabled the Group to achieve
better utilization of its machinery and equipment, which in turn enhanced its production efficiency.
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| Mining
The Group holds two exploration licences for an aggregate area of 3,111.33 hectares and one mining licence for an area
of 350.98 hectares in Mongolia. During the year under review, the Group continued to engage in exploration activities in
the areas covered by those two exploration licences so as to obtain in depth understanding of the mining area in terms of
hydrogeology, geology and potential resources.
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| PROSPECTS |
| With global economy remains sluggish, the western countries still face various uncertainties. The implementation of the
quantitative easing policies by US has resulted in a volatile financial market, thereby causing soaring prices of industrial
materials and consumer goods and increasing wages, and evoking debt crisis among the members of the European
Union. The overall economy of China has been affected by such difficulties in the western economy, compounded with
labour shortage and increasing labour cost. At this stage, the Group will continue to focus on its PRC-based businesses of
manufacturing and trading of cables and wire and copper products in order to minimize the negative effects brought about
by the economic uncertainties in the relevant countries.
Notwithstanding the unstable global economy, there will be sustained demand worldwide for limited mineral resources in the
long run. The tight supply of copper could well be evidenced by the copper stockpiles in both the London Metal Exchange
and the New York Mercantile Exchange. The Group will further develop its operation in the mineral sector by, building on
the foundation of its existing operations, continuing to identify and explore new mineral business opportunities so as to gain
a niche in this industry. On 5 July 2011, the Group entered into an agreement with an independent third party, pursuant to
which the Group agreed to acquire from the vendor 10% of the issued shares of a target company whose subsidiary holds
an exploration license of a copper mine in Mongolia. To date, the acquisition has not yet been completed.
Looking forward, the Group will continue to take appropriate measures to overcome challenges caused by the negative
factors such as the anticipated appreciation in the value of Renminbi, inflation and ever-rising raw materials and operating
costs as well as the labor shortage in China. |
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By order of the Board
Chau Lai Him
Chairman
Hong Kong SAR, 26 September 2011
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