Sun.King Power Electronics (HKG:0580) says that it expects a remarkable increase in revenue from operations and a substantial decrease in net profit for the year ended 31 December 2011 compared to 2010.

The board considers that the reasons for the decrease in the net profit of the company for the year ended 31 December 2011 are as follows:

As Swiss Franc continued to appreciate in 2011, the cost of purchases of the group increased. To alleviate the situation, the group negotiated with ABB Switzerland Ltd Semiconductors as to the currency used in purchases and has reached consensus that the group may opt for settling the purchase price in Swiss Franc or United States dollars in the event that Swiss Franc continues to appreciate in the near future.

Although the acquisition of 56% equity interest in Jiujiang Jiuzheng Rectifier Co. Ltd. in April 2011 provided synergies to the group in the development of new products and expansion of market share in the Chinese power electronics industry, it led to the increase in the number of employees and the administrative and other expenses.

The operating costs of the group were increased in 2011 due to the substantial inflation as well as increase in the cost of raw material.

The company is strengthening the internal control measures so as to reduce the management costs and accounts receivable.