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Chairman's Statement

During the year under review, the business environment continued to be challenging with soft demand and cautious inventory management of our customers. It has led to the volatile demand globally and hence the decline in sales for this fiscal year. However, it is worth noting that while the US market was slowed down, the market in Europe provided some promising growth during the year.

Sales revenue for the year decreased by 4% to HK$1,126 million  as compared to HK$1,179 million  in the previous year. Nevertheless, the Group took proactive measures to manage the unfavorable market conditions and this proved fruitful with sales revenue starting to improve from the second half of this fiscal year. Average selling price also showed a moderate increase due to a lower proportion of sales in price sensitive products during the year.

Backed by our cost control measures, the gross profit margin for the year remains at 18% in the fiscal year of 2017. We have continued to manage our operations with improvements in productivity and processes to counter the cost pressure under the escalating cost trend in the manufacturing operations. The implementation of our new production planning system has also improved the order planning processes and efficiency in our entire supply chain.

For the year under review, the Group recorded a net profit of HK$6 million as compared to a profit of HK$34 million in previous year.

The Group maintains a similar manufacturing capacity portfolio ratio between its overseas and local plants in China during the year under review. The production from the overseas plants accounted for 63% of our global output and that of the China plants accounted for the remaining 37% during the year. We continued to maintain the production capacity and improve the productivity of the plants during the year.

In February 2017, the Group disposed of an investment property in Hong Kong at a consideration of HK$19 million. We decided to divest it as we see the sale of the property can deliver return to the Group.

Having considered our cash position and the upcoming investment needs, the Board proposed a special dividend of HK$0.05 per share for the fiscal year ended 30 June 2017.

Looking ahead, we believe we have seen the bottom of the challenging business environment. While we expect operating environment challenges and the volatile demand to continue, we do see business generally coming back. We are cautiously optimistic that we are prepared operationally to improve our performance ahead. As such, we take on a prudent approach to invest in necessary machineries for efficiency improvement and capacity expansion in the upcoming fiscal year.

We shall continue to optimize our manufacturing plants’ operational capacity to better serve the business needs and respond to the fluctuating demand in a timely manner. We shall also look for recalibrating our global capacity and expand our China capacity in Long Nan Jiangxi Province in China. Our business strategy will be constantly evaluated to ensure that our operations are cost effective, with an ultimate goal of achieving long term and sustainable growth.

Our first Environmental, Social and Governance report is set to be published in the fourth quarter of calendar year 2017.

On behalf of the Board, I would  like to take this opportunity to thank our employees for their hard work and contributions to the Group, as well as our clients and business associates for their continued support.



Wong Chung Chong

24 August 2017

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