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The Group’s development strategies of expanding the retail network have helped it to deliver satisfactory results. Through its professional management standard which has enhanced its operational efficiency together with the rollout of the 4G network which has driven consumer spending in the telecommunications industry, turnover of this segment has increased substantially by 84.4% to HK$42,480,000 (2013: HK$23,040,000). Gross profit was HK$21,454,000 (2013: HK$15,074,000). However, the gross profit margin was dropped from approximately 65% to approximately 51% due to the change of product combinations and increase in sale of products with lower profit margin. The retail sales and management services segment recorded a net profit after tax of approximately HK$3,388,000 (2013: loss after tax of HK$539,000).
To further integrate and expand the retail sales and management services and improve the profitability of this segment, the Group has acquired the entire equity interest in 上海星際通實業有限公司 (Shanghai XingJiTong Shi Ye Company Limited*) (“Shanghai XingJiTong”) during the period. After the completion of the acquisition in September 2014, the Group has added eight direct-sales outlets at prime commercial locations in Shanghai thereby expanding its retail outlet network and enlarging its market share.
Meanwhile, the Group has proposed to acquire the entire equity interest in 上海潤迅君斯通訊科技有限公司 (Shanghai Motion JUNS Communication Technology Company Limited*) (“Shanghai Motion JUNS”), which will become a subsidiary of the Group after the completion of the acquisition. Shanghai Motion JUNS holds 55% of the total share capital issued of 上海新華滙訊通信設備銷售有限公司 Shanghai Xinhua Motion Communication Technology Company Limited (“Shanghai Xinhua Motion”), which would be accounted for as a joint venture of Shanghai Motion JUNS. The Group currently provides telecommunications equipment and management services for a leading national telecommunications operator in China while Shanghai Motion JUNS mainly operates as an outbound call center with 80 phone lines and 110 staff for the same telecommunications operator to handle its business inquires, consultation, business requests processing and customer complaints in Shanghai. Besides, Shanghai Xinhua Motion has been collaborating with another leading national telecommunications operator since its establishment in 2010 and is primarily engaged in retail network operation for this operator, including selling telecommunications and mobile products to end user customers in Shanghai. Shanghai Motion JUNS and Shanghai Xinhua Motion have a well-established business presence in the mobile telecommunications market in Shanghai which can add diversity to the product and service solutions of the Group. This acquisition will also create important synergies such as the sharing of resources through an integrated service platform which could facilitate more in-depth partnerships with the Group’s clients and encourage wider collaboration in the future. The proposed acquisition is subject to approval by shareholders at the special general meeting to be held on 4 December 2014.
In addition, the Group entered into a cooperative agreement with a renowned US audio brand in June this year to become the exclusive distributor of the brand’s popular headphone product series in China. The added diversity of products and services will help the Group expand its end-customer base, as the brand’s headphone products are renowned for their unique timbre and have won wide acclaim from users. The cooperation in the first three months after the agreement have been satisfactory and the headphone distribution business with a higher gross profit is expected to create a new income stream for the Group and improve its gross profit margin.
As at 30 September 2014, the Group managed a total of 27 retail service stores in Shanghai (2013: 21 stores) among which 8 retail service stores were under Shanghai XingJiTong.
For more information about our retail sales and management services, please refer to the following website:
http://www.groundtelecom.com/about.html
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