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*Extracted from Annual Report 2018


Revenue – Continuing operations

The Group's sales revenue from continuing operations increased by 17.3% from HK$3,883.1 million for the year ended March 31, 2017 ("FY2017") to HK$4,556.4 million for the year ended March 31, 2018 ("FY2018").

The revenue growth was driven by the double-digit increase in sales from the Group's Industrial, Home Appliance and Automotive segments. Although the Telecommunication segment was impacted by the slowdown in demand for smartphones, this was mitigated by the Group's well-balanced business portfolio and strategic investments in growth segments, which together yielded a positive overall outcome and a stellar performance in FY2018.

Turnover by Market Segment Analysis


This segment contributed sales of HK$1,125.0 million in FY2018, which was an 8.0% increase over FY2017. The global smartphone market has plateaued with longer replacement cycles and 4G handsets coming into maturity. Chinese manufacturers are fighting for market share in the mid to high-ended segment by leveraging their manufacturing capability and increasing the efficiency of their operations.

In order to maintain our market share in this segment, we have introduced competitive new products that can enhance both features and functions to improve the performance of the smartphone. In view of the segment's volatility, we are closely monitoring the supply chain and keeping healthy inventory levels to avoid over-supply.


The Group has invested heavily in developing its capabilities in this segment and the investment has started to pay off. This segment has continued on its strong growth trajectory for the past few years and is now very close to becoming the Group's largest revenue generator with year-on-year ("YOY") revenue growth of 26.8% to HK$1,089.6 million in FY2018.

Further industrialization in China has led to a higher demand for power electronics components, to be used for motion control, power management and power saving applications. Our well-developed network and engineering resources enable us to partner with our suppliers to provide the most relevant products to support the development of new designs. This has enabled us to capture new business opportunities to expand our coverage and market share and we will continue to strengthen our position in this area.

Home Appliance

Revenue from this segment increased by 22.4% YOY to HK$619.7 million in FY2018 mainly driven by a rising demand for premium home appliances and higher standard for power saving features.

In recent years, the inverter function has become a quintessential feature of quality home appliances and created huge potential for power devices and advanced electronic components. Our strategy is to establish a strong sales and marketing network in China, and provide engineering support and services for the new application design. In addition, we will source for more new suppliers to enrich our portfolio for the benefit of our customers. We are confident that this will enable us to sustain our strong position in the market and capture this growing segment.


Revenue from this segment continued the double-digit growth that it has achieved in recent years, increasing by 17.0% YOY to HK$507.1 million in FY2018 and affirming our confidence to invest in it in the long term.

Today's cars are more efficient and smarter than ever with increasing computerization that requires a lot more electronic content than before especially in New Energy Cars. Two major technology shifts, electrification and digitalization, are redefining the automotive industry and its supply chain. We expect this trend to continue and more new applications to emerge, which presents tremendous opportunities for electronic components.

We are committed to growing and investing in this segment and to provide engineering services by teaming up with our strong suppliers to offer innovative products to capture the growth opportunities in this business segment.


This segment recorded a 16.1% YOY increase to HK$437.2 million in FY2018 driven by a strong demand in power and discrete components, which is our Group's focus in the market. We will continue to strengthen our partnerships with dedicated dealers to expand our market coverage in order to get good support from our suppliers to secure market share.


This segment registered a 35.0% YOY increase in revenue to HK$271.8 million in FY2018. During the year under review, our major customers were able to secure major projects in the export market and we supported them with an efficiently managed supply chain. Despite its stellar performance, we believe that this segment will remain challenging because of the keen global competition in this market. Our strategy is to provide customers with engineering support and closely monitor the industry's demand projections in order to maintain an optimum level of inventory.

Audio and Video

Revenue from this segment increased by 8.3% YOY to HK$256.5 million in FY2018 driven by higher demand for portable devices and users' demand for better performance of audio appliances. In anticipation of the coming wide deployment of the Internet of Things (“IOT”) and Artificial Intelligence market, we are looking for more new applications in this segment. We are carefully monitoring the trend and potential in this business segment.


Revenue from this segment remained flat YOY with a marginal decrease of 0.2% to HK$122.4 million in FY2018. Looking ahead, we see potential in the commercial lighting market as well as the IOT lighting application. Our existing suppliers carry good products for these applications and we will also source new suppliers to strengthen our product offerings. We intend to allocate adequate engineering resources to support our key customers professional solutions in order to capture the opportunities in the market.


Revenue from this segment rose by 21.1% YOY to HK$127.1 million in FY2018. The increase was mainly attributable to the Group securing a tablet project during the year. We remain bullish about the potential of health care, security and renewable energy applications and will continue to keep a close watch on these areas.

Profit Margin – Continuing operations

The Group's gross profit margin increased from 8.2% in FY2017 to 8.7% in FY2018. This was attributed to the Group's investment in engineering resources and sales network to support higher value segments, like Automotive, Industrial and Home Appliance, which led to better returns and improved margins.

Distribution costs – Continuing operations

Distribution costs increased by HK$9.9 million, or 19.7%, from HK$50.5 million in FY2017 to HK$60.4 million in FY2018. The increase was mainly due to higher sales incentive expense, which was in line with the increase in sales and gross profit.

Administrative expenses – Continuing operations

Administrative expenses increased by HK$21.1 million, or 11.1%, from HK$190.4 million in FY2017 to HK$211.5 million in FY2018. This was mainly due to an increase in staff cost as a result of a higher average headcount as compared to last year.

Other Gains and Losses – Continuing operations

Other gains of HK$37.7 million in FY2018 included an exchange gain of HK$33.4 million, mainly arising from the appreciation of the Chinese renminbi (“RMB”) against the United States dollar (“USD”) and a reversal of allowance for doubtful trade receivables of HK$4.1 million. Other losses of HK$7.2 million in FY2017 included an exchange loss of HK$14.2 million, mainly arising from the depreciation of RMB against USD and partially offset by a reversal of allowance for doubtful trade receivables of HK$7.7 million.

Finance costs – Continuing operations

Finance costs increased by HK$6.4 million, or 25.9%, from HK$24.5 million in FY2017 to HK$30.9 million in FY2018. This was mainly attributable to an increase in trust receipt loans to cope with the increased purchasing activities and the higher interest rate during the year.


Financial Position

As compared to the previous financial year ended March 31, 2017, trust receipt loans increased by HK$149.8 million. Trade and bills payables decreased from HK$418.6 million as at March 31, 2017 to HK$397.5 million as at March 31, 2018. The increase in trust receipt loans was due to the increase in purchasing activities during the year. Trade and bills receivables increased by HK$189.9 million when compared to those as at March 31, 2017, due to an increase in sales revenue towards the end of the year under review. The debtors turnover days slightly increased from 2.4 months to 2.6 months.

As at March 31, 2018, the Group's current ratio (current assets/current liabilities) was 1.31 (March 31, 2017: 1.27).


Inventories increased from HK$591.7 million as at March 31, 2017 to HK$691.0 million as at March 31, 2018. The inventory turnover days decreased from 2.0 months to 1.7 months.

Cash Flow

As at March 31, 2018, the Group had a working capital of HK$470.9 million, which included a cash balance of HK$327.1 million, compared to a working capital of HK$363.0 million, which included a cash balance of HK$331.3 million as at March 31, 2017. The decrease in cash by HK$4.2 million was primarily attributable to the net effect of cash outflows of HK$158.5 million in operating activities and HK$1.8 million in investing activities and inflow of HK$149.6 million from financing activities. About 72.1% of the Group's cash balance was denominated in USD, 14.0% in RMB, 10.9% in Hong Kong dollars (“HKD”) and the remaining in other currencies.

Cash outflow in operating activities was mainly attributable to an increase in trade receivables due to increased sales revenue towards the end of the year and an increase in inventories.

Cash inflow from financing activities was attributable to the net effect of increases in trust receipt loans and bank borrowings as a result of increased purchasing activities and the dividend payment to shareholders.

Borrowings and Banking Facilities

As at March 31, 2018, bank borrowings of HK$170.0 million (March 31, 2017: HK$190.0 million) were unsecured and repayable in quarterly or half-yearly installments ending in the financial year of 2019. The bank borrowings were denominated in HKD.

Unsecured fixed rate bank borrowings bore interest at a weighted average effective rate of 3.50% per annum while secured variable rate bank borrowings bore interest at a weighted average effective rate of 3.26% per annum as at March 31, 2018.

As at March 31, 2018, trust receipt loans were unsecured and repayable within one year and bore an effective interest rate of 2.11% to 3.75% per annum. As at March 31, 2018, the Group had unutilised banking facilities of HK$457.6 million (March 31, 2017: HK$330.0 million).

As at March 31, 2018, the Group's trade receivables amounted to HK$76.5 million (March 31, 2017: HK$24.2 million), which were transferred to banks by discounting those trade receivables on a full recourse basis. As the Group had not transferred the significant risks and rewards relating to these receivables, it continued to recognise the full carrying amount of the receivables and had recognised the cash received on the transfer as a secured borrowing amounting to HK$61.3 million (March 31, 2017: HK$19.4 million).

Foreign Exchange Risk Management

The Group operates in Hong Kong, the PRC and Taiwan. It incurred foreign currency risk mainly on sales and purchases that were denominated in currencies other than its functional currencies. Sales are mainly denominated in USD, RMB, HKD and Taiwan dollars (“TWD”) whereas purchases are mainly denominated in USD, Japanese yen (“JPY”), RMB and HKD. Therefore, the exposure in exchange rate risks mainly arises from fluctuations in foreign currencies against the functional currencies. Given the pegged exchange rate between HKD and USD, the exposure of entities that use HKD as their respective functional currency to the fluctuations in USD is minimal. However, exchange rate fluctuations between RMB and USD, RMB and JPY, HKD and JPY, or TWD and USD could affect the Group's performance and asset value. The Group has a foreign currency hedging policy to monitor and maintain its foreign exchange exposure at an acceptable level.

Net Gearing Ratio

The net gearing ratio as at March 31, 2018 was 101.9% (March 31, 2017: 94.5%). The net gearing ratio was derived by dividing net debts (representing interest-bearing bank borrowings, trust receipt loans and bills payables minus cash and cash equivalents and restricted bank deposits) by shareholders' equity at the end of a given period. The increase was mainly due to an increase in trust receipt loans from HK$668.6 million to HK$818.4 million to finance the increased purchasing activities.

Contingent Liabilities

The Company had given corporate guarantees (unsecured) to its banks in respect of banking facilities granted to its subsidiaries. As at March 31, 2018, the aggregate banking facilities granted to the subsidiaries were HK$1,455.8 million (March 31, 2017: HK$1,190.3 million), of which HK$1,002.1 million (March 31, 2017: HK$863.7 million) was utilised and guaranteed by the Company.

As at March 31, 2018, the Company had also given guarantees to a supplier in relation to the subsidiaries' settlement of the respective payables. The aggregate amount payable to this supplier under guarantee was HK$365.5 million (March 31, 2017: HK$327.1 million).


China's economy grew by 6.9% in 2017, topping both the official target of 6.5% and 2016's growth of 6.7%, on the back of an improving domestic demand, a strong export market and ongoing state infrastructure spending. The Group will focus on growth industries such as the automotive and home appliances segments, which are both expected to have increasing electronic content in tandem with the rising trend for automation, power saving and smart features.

In view of the considerable downside risks and certain headwinds in the macro-environment led by the United States and China trade tensions, the Group will continue to be prudent in managing its operations while maintaining its cautious stance in managing costs and sustaining a healthy liquidity position in order to support long-term growth.


As at March 31, 2018, the Group had a workforce of 454 full-time employees (March 31, 2017: 444), of which 33.0% worked in Hong Kong, 63.2% in the PRC and the remainder in Taiwan.

The Group actively pursues a strategy of recruiting, retaining and developing talented employees by (i) providing them with regular training programmes to ensure that they are kept abreast of the latest information pertaining to the products distributed by the Group, technological developments and market conditions of the electronics industry; (ii) aligning employees' compensation and incentives with their performance; and (iii) providing them with a clear career path with opportunities for taking on additional responsibilities and securing promotions.

While the Group's employees in Hong Kong and Taiwan are required to participate in the mandatory provident fund scheme and a defined contribution pension scheme respectively, the Group makes contributions to various government-sponsored employee-benefit funds, including social insurance fund, housing fund, basic pension insurance fund and unemployment, maternity and work-related insurance funds for its employees in the PRC in accordance with the applicable PRC laws and regulations.

Further, the remuneration committee of the Board reviews and recommends to the Board the remuneration and compensation packages of the directors of the Company (the” Directors”) and senior management of the Group by reference to the salaries paid by comparable companies, their time commitment and responsibilities and the performance of the Group.

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