IR Home
Group Profile
Chairman and CEO Statement
Milestone
Board Of Directors
Competitive Strengths
Future Plans
Policies
Financials
Financial Highlights
Annual Report
Factsheet
Shareholdings
Presentations
Financial Calendar
Stock
Stock Fundamentals
Financial Ratios
Substantial Trade
Investment Calculator
Announcements
Streaming Video
Presentation Slides
Investors Registration
IR Contact
All Downloads
Email This Print This

Full Year Financial Statements And Dividend Announcement for the Year Ended 30 June 2017

Financials Archive

Get Adobe Reader Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.

Full Year Financial Statements And Dividend Announcement for the Year Ended 30 June 2017

Group Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2017

Balance Sheet

Review of Performance

Profit and Loss

Revenue

Consolidated revenue of the Group decreased by approximately HK$370.0 million or 16.5% from HK$2,237.9 million for the year ended 30 June 2016 to HK$1,867.9 million for the year ended 30 June 2017.

Revenue from our Components Distribution ("CD") segment decreased by HK$22.4 million or 2.5%, from HK$865.8 million for the year ended 30 June 2016 to HK$843.4 million for the year under review. The decrease was mostly due to slow down in demand for certain electronic components for smart phones and postponement of certain industrial materials and instrumentation related infrastructure projects during the year under review.

Revenue from our Information Technology Infrastructure ("IT Infrastructure") segment increased by HK$28.9 million or 3.2%, from HK$915.4 million for the year ended 30 June 2016 to HK$944.3 million for the current year. The increase was mainly due to demand for network security products, enterprise software and hardware products remaining strong during the year under review.

Revenue from our Consumer Electronics Products ("CEP") segment decreased by HK$376.5 million or 82.4%, from HK$456.8 million for the year ended 30 June 2016 to HK$80.3 million for the current year. This is due to the disposing of the Group's retail stores on 30 June 2016. As a result, revenue from our CEP segment decreased substantially during the year under review.

Gross profit

Gross profit decreased by HK$14.1 million or 7.9%, from HK$179.8 million for the year ended 30 June 2016 to HK$165.7 million for the year ended 30 June 2017. The decrease in gross profit was mostly due to the corresponding decrease in revenue as well as depreciation of Renminbi exchange rate against United States Dollars. However, gross profit margin increased by 0.84% from 8.03% for the year ended 30 June 2016 to 8.87% for the year under review. The increase was mainly due to the disposal of the low margin retail stores on 30 June 2016.

Other income and gains, net

Other income and gains, net increased by HK$1.7 million or 29.9%, from HK$5.8 million for the year ended 30 June 2016 to HK$7.5 million for the year ended 30 June 2017. The increase was mostly due to fair value gain on investment properties in Shanghai of HK$1.4 million.

Selling and distribution costs

Selling and distribution costs decreased by HK$4.0 million or 6.3%, from HK$64.4 million for the year ended 30 June 2016 to HK$60.4 million for the year ended 30 June 2017. The decrease was mainly due to (1) decrease in rent and rates of HK$7.4 million due to no retail shop rental for the year; (2) decrease in bank charge of HK$0.9 million due to decrease in sales during the current year and offset by increase in salary, bonus and commission totalling HK$5.7 million to strengthen the sales team.

Administrative expenses

Administrative expenses increased by HK$0.6 million or 0.6%, from HK$93.4 million for the year ended 30 June 2016 to HK$94.0 million for the year ended 30 June 2017. The increase was mainly due to increase in depreciation of HK$6.7 million as a result of the revaluation gain on leasehold land and buildings in last year; and offset by (1) decrease in rent and rates of HK$1.2 million due to the disposal of retail arm as mentioned above; and (2) decrease in PRC value added tax paid of HK$0.2 million.

Other expenses, net

Other expenses, net decreased by HK$3.0 million, from HK$6.0 million for the year ended 30 June 2016 to HK$3.0 million for the year ended 30 June 2017. The decrease was mainly due to (1) loss on disposal of a subsidiary of HK$1.8 million recorded last year which did not recur this year; (2) decrease in exchange losses of HK$1.5 million and offset by increase in bad debt provision of HK$0.9 million.

Finance costs

Finance costs increased by HK$0.4 million or 18.3%, from HK$2.3 million for the year ended 30 June 2016 to HK$2.7 million. The increase was mainly due to the utilizing of banking facilities in the PRC to finance local operations.

Income tax expense

Relatively high income tax expense rate at 45.6% (30 June 2016: 44.9%) during the year under review was mostly due to losses in certain subsidiaries that reduced consolidated profit before tax but did not reduce consolidated income tax expense.

Net Profit

Net profit attributable to owners of the Company decreased by HK$5.4 million or 39.3%, from HK$13.7 million for the year ended 30 June 2016 to HK$8.3 million for the year ended 30 June 2017. The decrease was mostly due to decrease in revenue as explained above.

Non-controlling interests

Non-controlling interests represented the non-controlling shareholders' share of profit in our non-wholly owned subsidiaries.

Statement of Financial Position

Non-current assets

Non-current assets comprised goodwill of HK$2.1 million; investment properties, office equipment, leasehold land and buildings and motor vehicles amounting to HK$501.1 million; investment in an associate of HK$1.8 million; prepayment for office renovation of HK$0.3 million; a factored trade receivable of HK$1.9 million; a trade receivable of HK$5.8 million and deferred tax assets of HK$3.7 million. At 30 June 2017, non-current assets amounted to HK$518.4 million, representing approximately 44.5% of the total assets. Increase in non-current assets from last year was mainly due to the increase in office equipment, leasehold land and buildings of HK$11.5 million which was in turn due to fair value gains on revaluation of land and buildings and investment properties.

Current assets

As at 30 June 2017, current assets amounted to HK$645.6 million, a decrease of HK$41.5 million compared to the immediately preceding financial year end at 30 June 2016. The decrease was mostly due to completion of certain projects which led to decrease in both inventories of HK$59.1 million and prepayment of HK$35.0 million and offset by (1) increase in both cash and cash equivalents of HK$22.8 million and financial assets at fair value through profit or loss of HK$9.9 million as a result of improved debt collections; (2) increase in both trade and bills receivables of HK$13.7 million and factored trade receivables of HK$5.6 million as a result of increased both numbers and size of projects during the current year.

Current liabilities

As at 30 June 2017, current liabilities amounted to approximately HK$391.8 million, a decrease of HK$52.7 million compared to the immediately preceding financial year end as at 30 June 2016. The decrease was mainly due to decrease in interest-bearing bank and other borrowings of HK$46.1 million.

Non-current liabilities

Non-current liabilities amounted to HK$83.7 million, representing 17.6% of the total liabilities as at 30 June 2017. The amount mainly comprised of deferred tax liabilities. Deferred tax liabilities were recognised as a result of temporary differences between the carrying amounts and tax bases of our land and buildings and investment properties.

Liquidity and cash flow

As at 30 June 2017, cash and cash equivalents amounted to HK$57.0 million. Total interest bearing loans and borrowings as at 30 June 2017 were HK$98.8 million and the gearing ratio which is defined as total borrowings and finance leases to shareholders' funds, is 0.14 times (30 June 2016: 0.21 times).

Commentary

Demand for certain electronic components for smart phones has been increasing since June 2017 and the momentum is expected to continue through out the next 12 months. Certain postponed infrastructure projects in the first half of the year under review are expected to roll out gradually in the months to come.

Data security continues to be a hot topic globally as security threats continue to involve ahead of the most advance defenses. We therefore foresee demand for our network security products, for both advance and entry level software as well as hardware, will remain strong.

Huge drop in revenue in the CEP segment was due to the disposal of an unprofitable retail stores on 30 June 2016. We have successfully secured distributorships for a few new prestige consumer electronics products since then. We will continue to negotiate for more distributorships.