Recently, Weichuangli announced the following financial performance for the first fiscal quarter ending on June 30, 2005:
As of June 30, 2005, the net sales for the first quarter were 3.9 billion yuan, an increase of 17 million yuan compared to the same quarter last year.
After deducting intangible amortization, restructuring, and other expenses, the net income for the first quarter increased by 27% to 99.6 million yuan, or 17 points of diluted net income per share. Compared to the same quarter last year, the net income was only 78.3 million yuan, or 14 points of diluted net income per share. After tax amortization, restructuring, and other expenses for the quarter amounted to 41 million yuan, compared to 4 million yuan in the same period last year. Therefore, the net income calculated based on generally accepted accounting principles in the first quarter decreased by RMB 15.6 million to RMB 58.7 million, or diluted net income per share of 10 cents, compared to RMB 74.3 million or diluted net income per share of 13 cents calculated based on generally accepted accounting principles in the same quarter last year.
Quarterly return on tangible assets (ROITC) as of June 2005 Increasing to 25%, the tangible asset return rate for the same period last year was 18%; And as of June 2005, the quarterly return on invested capital (ROIC) It is 9%, and the return on investment for the same period last year was 8%. The company's capital turnover cycle for this quarter is 20 days. Excluding restructuring expenses, the operating gross profit continued to increase for the seventh consecutive quarter, reaching 3.4%.
The company's cash at the end of the quarter was 830 million yuan, an increase of 165 million yuan compared to June 30, 2004, while its debt decreased by 217 million yuan during the same period. This indicates that the company's net debt has decreased by 382 million yuan in the past 12 months.
Regarding the financial report for the quarter ending in June, Weichuangli CEO Mike Mark said& ldquo; We continue to achieve a 15% return on investment for the company by continuously improving profitability, asset utilization, and cash flow. We are very pleased to have been able to increase our gross profit for seven consecutive quarters. This is the result of our vertically integrated provision of EMS products and services, as well as our continuous efforts to control business costs. Our world-class working capital management combined with continuously decreasing capital expenditures will continue to drive continuous improvement in cash flow& rdquo;
Referring to previous announcements, Weichuangli has signed an agreement with Telavie, a company wholly owned by the Nordic private equity firm Altor 2003 Fund, to merge Weichuangli's network services division. Weichuangli will receive front-end cash payments, deferred and contingent payments, and retain a 30% ownership stake in the merged company. Weichuangli also signed a separate agreement to sell its semiconductor division to Amis Holdings, which is the parent company of AMI Semiconductor. These two spin off investments are proceeding as planned and are expected to end in the quarter ending September 2005. Weichuangli expects to receive approximately RMB 550 million in cash payments for the above-mentioned spin off investment in the quarter.
The management of the company plans to disclose its specific impact on the company's balance sheet and income statement when releasing the quarterly financial report for the period ending September 2005. Mark said& ldquo; We expect to use available cash to fund various growth opportunities in the core EMS business, or to use cash to restructure the company's capital structure. When the spin off investment is completed, the use of the proceeds will ultimately be fully determined, taking into account current market conditions and comprehensive analysis of our various opportunities, in order to maximize the company's profits and seek long-term benefits for shareholders.