Financial Information

Latest Results Announcement

FINANCIAL STATEMENT AND DIVIDEND ANNOUNCEMENT FOR THE SECOND QUARTER AND THREE MONTHS ENDED 30 JUNE 2017

Statement of Profit or Loss and other Comprehensive Income for the quarter ended 30June 2017

Balance Sheet

Reviews

Revenue

In Q2 2017, the Group’s overall revenue increased by HK$75.6 million or 31.4%, from HK$240.9 million in Q2 2016 to HK$316.4 million in Q2 2017. A breakdown of the performance by the Group’s 3 business segments is as follows:

Increase/Decrease in revenue by geographical segments for Q2/2017

Gross profit and gross profit margin

In Q2 2017, the Group’s gross profit increased by 105.9% or HK$12.9 million, generating gross profit margin of 7.9% (Q2 2016: 5.1%). The breakdown according to business segments is as follows:

Other Income

The Group’s other income decreased by HK$2.7 million or 42.7%, from HK$6.3 million in Q2 2016 to HK$3.6 million in Q2 2017, mainly due to a decrease of mold engineering income.

Selling and distribution expenses

The Group’s selling and distribution expenses increased by HK$1.5 million or 41.7%, from HK$3.6 million in Q2 2016 to HK$5.1 million in Q2 2017, mainly due to an increase of import & export fees.

Administrative expenses

The Group’s administrative expenses decreased by HK$2.0 million or 10.3%, from HK$19.9 million in Q2 2016 to HK$17.9 million in Q2 2017, mainly due to cost savings as a result of the restructuring in the ODM/OEM segment.

Finance Costs

Finance costs increased by HK$0.2 million or 6.2%, from HK$3.1 million in Q2 2016 to HK$3.3 million in Q2 2017.

Income Tax Expenses

Income tax expense increase of HK$0.03 million or 17.9%, from HK$0.15 million in Q2 2016 to HK$0.18 million in Q2 2017.

Financial position as at 30 June 2017

Non-current assets

The Group’s non-current assets stood at HK$208.7 million, a decrease of 5.7% or HK$12.6 million, from HK$221.2 million. This was due to total HY2017 depreciation expenses being HK$22.0 million, which were partially offset by the increase in capital expenditure on property, plant and equipment of HK$8.9 million.

Current assets

The Group’s current assets stood at HK$918.3 million, a decrease of HK$21.7 million or 2.3%, from HK$940.0 million, mainly due to:

  • a decrease in trade and bills receivables of HK$34.5 million due to revised settlement terms with some core customers;
  • a decrease in current tax assets of HK$5.0 million; and
  • a decrease in inventories of HK$1.8 million mainly due to customers’ delivery schedule.

which were offset by:

  • an increase in bank and cash balances of HK$16.1 million; and
  • an increase in prepayments, deposits and other receivables of HK$3.5 million mainly due to increase on purchase deposit paid for molds.
Current liabilities

The Group’s current liabilities stood at HK$560.4 million decreased by HK$37.0 million or 6.2%, from HK$597.3 million, mainly due to:

  • a decrease in short-term borrowings of HK$60.0 million; and
  • a decrease in current tax liabilities of HK$8.3 million;

which were offset by:

  • an increase in accruals and other payables of HK$22.3 million, mainly due to the payment of molds for the ODM/OEM segment; and
  • an increase in trade and bills payables of HK$9.1 million, mainly due to the increase of materials purchased for the ODM/OEM segment.
Non-current liabilities

There is no change in non-current long-term borrowings.

Statement of Cash Flows for the quarter ended 30 June 2017

As at 30 June 2017, the Group’s cash resources of HK$59.5 million are considered adequate for current operational needs. The net increase in cash and cash equivalents of HK$15.9 million held by the Group for the year comprised:

  • Net cash generated from operating activities of HK$85.5 million that resulted from better management and utilization of working capital;
  • Net cash used in investing activities of HK$8.9 million mainly due to additions of property, plant and equipment only; and
  • Net cash used in financing activities of HK$60.1 million, mainly due to the repayment of trust receipt and import loans.

Commentary

The Company’s higher profitability in 2Q FY2017 is the cumulative result of strategic restructuring in process re-engineering to increase the productivity yield per worker as well as customer-oriented focus for each of our key customers to drive revenue growth and margin improvements. We will continue our concerted efforts to achieve further cost efficiencies.

Our Indonesian plant is scheduled to commence production in Q4 FY2017. As such, we expect to deliver our first shipment by the end of the year.

Concurrently we are also searching and exploring more cost-efficient production opportunities to further our growth.

The Board is confident that the Company is on firm ground to deliver a profitable FY2017.