Computime Announces FY2018 Annual Results

Continuing Growth in Top Line Revenue
Net Profit Increased by Over 10% When Excluding Non-core Business

Financial Highlights
Revenue increased by 5.0% to HK$3,867.5 million, driven by new key customers as well as growth of certain existing customers
Consolidated net profit remained flat at HK$126.4 million, while net profit excluding non-core brand distribution business rose by 10.3%
Basic earnings per share of 15.1 HK cents
Final dividend of 7.5 HK cents, translating to a full year payout ratio of 49.8%
Gross profit margin fell slightly from 14.7% to 14.5%, while operating expenses as a percentage of revenue improved from 10.6% to 10.2%

HONG KONG, 27 June 2018 – Computime Group Limited (“Computime” or the “Company”; stock code: 0320) today announces its audited consolidated results for the year ended 31 March 2018 (“FY2018”, or the “Year”).

During FY2018, Computime recorded revenue of HK$3,867.5 million, a year-on-year increase of 5.0%, driven by new key customers as well as growth of certain existing customers. Gross profit for the Year amounted to HK$562.7 million, an increase of 4.2% compared to FY2017, while gross profit margin fell slightly from 14.7% in FY2017 to 14.5% in FY2018 as benefits of sales and operational improvement were offset by a significant rise in the prices of certain raw material commodities. Total operating expenses rose by 1.7% to HK$395.4 million, mainly attributable to office expansion, marketing and sales initiatives, and research and development (“R&D”) related to the Company’s own line of branded products, SALUS, in Europe and North America. Total operating expenses as a percentage of total revenue improved from 10.6% to 10.2%.

Net profit of the Company was largely in line with FY2017 at HK$126.4 million, with basic earnings per share of 15.1 HK cents. However, excluding the non-core brand distribution business, net profit increased by 10.3% in FY2018, continuing the growth momentum experienced in the past five fiscal years. As announced earlier in the Year, the Company has begun deemphasizing its non-core business in brand distribution to better focus its attention and resources in the highly lucrative Internet-of-Things (“IoT”) and smart devices sectors. The Board has proposed a final dividend of 7.5 HK cents per share, equivalent to a payout ratio of 49.8%.

Business Review
The Company has been growing the more profitable segments of the business, with a 9.9% year-on-year revenue growth for the combined Commercial and Industrial Controls (“CIC”) and Building and Home Controls (“BHC”) segments. The lower margin Appliance Controls (“APC”) segment recorded a 1.8% reduction in revenue, as the Company deliberately diverted resources away from low margin product lines within this segment.

The SALUS business, which is the Company’s own line of proprietary thermostatic controls and home automation products sold in Europe and North America, generated revenue in line with that of the prior year in local currency terms. The UK construction market continued to be mired by Brexit uncertainties, negatively affecting sales of SALUS products in the UK as wholesalers and distributors adopted more conservative purchasing strategies. However, in the rest of the European territories, especially the Nordic regions, SALUS posted healthy sales growth.

The Company expects the growth momentum for its higher margin businesses will continue given the strong demand for its products and services in these areas, but certain macro issues, such as the ongoing global trade disputes and constrained supply of certain critical electronic components, could potentially dominate during FY2019 and affect the Company’s short term overall performance.

Looking forward into the longer term, the Company strongly believes its plans and strategies will deliver exceptional results for its customers and shareholders. Leveraging its solid manufacturing foundation and increasingly sophisticated technical capabilities, the Company has a strong portfolio of innovative IoT-related technologies with increasingly wider applications to serve its Electronic Manufacturing Services (“EMS”) customers. The Company’s EMS business will continue to serve as a foundation of support as it invests in more advanced technologies while expanding the SALUS brand.

Dr. King Owyang, Executive Director and Chief Executive Officer of Computime, said, “I am pleased to say that our growing technical capabilities are increasingly being recognized by the marketplace, opening up new and sizeable market opportunities for us. For example, our SALUS brand recently entered into a strategic alliance in the UK to become the designated provider of smart heating control devices for a large global electronics conglomerate in their participation in utility tenders for smart home projects. We also won orders from both existing and new EMS customers for technologically advanced products, and are in discussions with other customers regarding large-scale white label projects in the IoT area. Despite these encouraging developments, uncertainties in macro factors could overshadow our performance in the short term. We are cautiously optimistic about FY2019, and will strive to manage uncertainties to the best of our abilities to deliver the best possible results. Regardless of the external environment, we will stay focused on our vision of becoming a global technology-driven company. Our change journey is far from over. We are constantly rethinking ourselves and making changes that will provide further benefits to our stakeholders. I am confident that, as we stay on this transformation trajectory, we will emerge as a winner in this digital age.”


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