The year under review has proved to be one of volatility. While the Group continued to record a modest growth in sales in the first half of this fiscal year, the prudent forecast expressed in our interim report and 3rd quarter operational update were well founded. The cautious consumer spending, softness of business demand as well as tighten in inventory level in the supply chain have all negatively impacted our results in the second half of fiscal 2016. Sales revenue for the year marginally increased to HK$1,179 million as compared to HK$1,170 million in previous year, both the gross profit and after tax earnings declined by 4% and 5% respectively.
The market condition continued to be challenging and the consumer demand remains softened. The cautious inventory management and price competition in the supply chain has added pressure to the gross margin in our operations. Accordingly, the gross profit margin for the year has declined to 18% from 19% in previous year.
During the year we continue to recalibrate our portfolio of manufacturing sites by adding our capacity overseas to ensure we continue to be strategically placed to serve our markets and are managing the escalating cost trend within our operating environments. Towards the end of the fiscal year, the proportion of production from the overseas plants has increased to 60% of our global capacity whilst China accounted for the remaining 40%. In response to the challenging market, we have invested in various projects and systems including new production planning system as well as Product Lifecycle Management (“PLM”) system for optimizing our planning and business processes. These additional tools will further integrate our people, processes and systems, and enable us to be more competitive to face the challenging market in the future.
In the months ahead, with the expected weakness of business demand, and the challenges confronting us, we will continue to evaluate the maintenance of the current production capacity and assess the strategic and cost effectiveness of all our operations and facilities. Our focus will always be on the long term growth and sustainability of our business.
During the year, the Group has started to work on the corporate sustainability development and the first report is expected to complete in next fiscal year.
Having considered our cash position and the coming investment needs, the Board has decided to propose a final dividend of HK$0.05 per share for the year ended 30 June 2016 (2015: HK$0.05 per share)
On behalf of the Board members, I would like to take this opportunity to thank our employees for their hard work and contributions to the Group over the year.
Wong Chung Chong
26 August 2016