(Hong Kong, 19 August 2010) – SIM Technology Group Limited (“SIM Technology” or the “Group”; SEHK stock code: 2000), achieved remarkable growth in handset and wireless module segments, driving the growth of its revenue and net profit as well as all levels of profit margin for the first six months ended 30 June 2010 (“1H 2010”). In the past 12 months, the Group took a major step forward in building a powerful and flexible engine for growth.

In 1H 2010, the Group’s revenue increased by 77.0% year-on-year to HK$2.02 billion, which was attributable to the increase in the sales of mobile handset solutions and wireless modules.  Gross profit also rose dramatically by 142.5% to HK$243 million, while the gross profit margin improved to 12.1% from 8.8% in the same period last year.  Profit attributable to shareholders surged by 247.9% year-on-year to HK$108 million.  Basic earnings per share rose by 250% to HK7.0 cents.

The Group maintained a strong and healthy financial position.  As at 30 June 2010, it retained net cash balances amounting to 441 million (at 31 December 2009: HK$590 million).  In view of the healthy cash flow, the Board of Directors recommended payment of an interim dividend of HK2.5 cents (1H 2009: HK0.8 cent) per share for 1H 2010, representing a payout ratio of 35.7%.

Mr. Cho-Tung Wong, Executive Director of SIM Technology, said, “I am pleased to share with you that our business has returned to a solid path of growth after facing perhaps the worst economic environment for the communication industry during the first half of 2009.  Also, we have returned to a double digit gross profit percentage of 12.1%, achieving the target we set at the beginning of the year.  Many achievements that we had accomplished during the review period demonstrated our exceptional strengths in technical capability, flexible and efficient manufacturing, high quality customer services, and most important of all, adapting to new competitive environment for sustainable growth.“

SIM Technology attained a number of milestones during the period.  A few key achievements are highlighted as follows:
· Launched 18 3G handset solutions covering EVDO, TD-SCDMA, WCDMA network
· Won the China Telecom EVDO PCBA tender
· Began ODM partnership with two more major handset OEMs
· Launched a new family of smaller and more powerful wireless modules
· Completed Phase One of Shen Yang factory with more than 30% production capacity added

The handset industry has been changing.  Customers are demanding for more fashionable style and more innovative design driving more new models launched but fewer units sold per model.  To combat the trend and to stay ahead, the Group’s cooperation with the largest Japan handset customer in the past two years built a strong foundation for ODM business.  It now has the capabilities to meet other customers’ demand for high-end handset ODM projects, building higher margin product mix.  As a result, revenue for mobile handset solutions increased by 131.6% year-on-year to HK$1.58 billion, among which 3G solutions revenue achieved growth of 301%.  Gross profit margin surged to 10.7% from 3.1%.  During 1H 2010, the Group has launched 100 handset models and 46 handset platforms.

The Group’s wireless communication modules business continued to capture a growing share in the industry.  Its revenue increased by 10.8% year-on-year to HK$365 million and gross profit maintained at HK$68 million.

Internet of things and M2M applications are the catalysts for wireless module industry growth.  While SIM Technology is the second largest wireless module supplier worldwide based on unit shipment, its SIMCom® brand is widely recognized for quality, innovation, and value.  In 1H 2010, the Group launched a new family of wireless modules, SIM900.

Apart from the usual EU and Asia certifications, SIM900 is the Group’s first module to pass AT&T certification process, opening up the North America M2M market for further growth.

LCD modules remained as a strategic component to the Group’s handset customers to ensure time to market under a constrained market supply environment.  During 1H 2010, the LCD modules industry capacity was abundant to meet the demand.  As a result, both revenue and gross profit decreased to HK$67 million and to HK$6 million respectively.

In order to achieve the vision of becoming a “world class communication company”, SIM Technology is determined to continue its improvement in ODM capability.  It has begun the Phase Two of its Shen Yang factory expansion, and is adding various state-of-the-art equipment to ensure better control of product quality and shorten delivery time.  Its current plan is to further increase its overall production capacity by 100% within the next 12 months.

Mr. Wong said, “For the past 12 months, we have initiated a couple of programs to further streamline our operation and to ramp up our manufacturing capacity. We have established a permanent business process reengineering department with the mission to continuously improve our business process, and we also focused on empowering and developing our staff.  All in all, we took a major step forward in building a powerful and flexible engine to drive business advancement. We believe that our strategy and execution will help us leap ahead of our competition.”