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Unaudited interim condensed consolidated financial statements for 31 December 2021

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INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME – UNAUDITED


For the six months ended 31 December 2021









INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION









REVIEW OF PERFORMANCE

PROFIT AND LOSS

Consolidated revenue of the Group for the six months ended 31 December 2021 increased by HK$105.7 million or 10.7% to HK$1,090.3 million from HK$984.6 million for the corresponding period last year

Revenue from our Components Distribution (“CD”) segment decreased by HK$4.0 million or 1.3%, from HK$299.8 million for the six months ended 31 December 2020 to HK$295.8 million for the six months ended 31 December 2021. The decrease was due to the lower demand for certain electronic components mainly as a result of the continuing global outbreak of COVID-19 pandemic during the period under review.

Revenue from our Information Technology Infrastructure (“IT Infrastructure”) segment increased by HK$36.6 million or 6.1%, from HK$601.5 million for the six months ended 31 December 2020 to HK$638.1 million for the six months ended 31 December 2021. The increase in demand for electronic communication was mostly due to the continuing travel or movement restrictions engendered by the global outbreak of the COVID-19 pandemic which in turn led to a stronger demand for network security products, cloud solutions as well as data management solutions and services during the period under review.

Revenue from our Consumer Electronics Products (“CEP”) segment increased by HK$73.1 million or 87.8%, from HK$83.3 million for the six months ended 31 December 2020 to HK$156.4 million for the six months ended 31 December 2021. The increase was mainly due to the release of certain new CEP coincided with the consumption voucher scheme launched by the HKSAR Government.

Gross profit increased by HK$20.5 million or 31.0%, from HK$66.2 million for the six months ended 31 December 2020 to HK$86.7 million for the six months ended 31 December 2021. The increase in gross profit was largely due to (1) higher revenue recorded for the period under review as explained above; (2) lower in provision of inventories of HK$2.1 million as a result of increased sales after the Hong Kong coronavirus situation improved in the middle of 2021.

The net other income and gains decreased by approximately HK$6.2 million or 59.3%, from HK$10.5 million for the six months ended 31 December 2020 to HK$4.3 million for the six months ended 31 December 2021. The decrease was mainly due to the absence of HK$8.6 million subsidies received from the Government of the Hong Kong Special Administrative Region as part of the “Employment Support Scheme” under the “Anti-epidemic Fund” in last period offset by (1) write back of other payable over seven years of HK$1.6 million; (2) HK$0.4 million gain on disposal of properties in Shanghai; and (3) a reversal of impairment of trade receivables of HK$0.4 million in the current period.

Selling and distribution costs were maintained at similar level at HK$34.2 million for the six months ended 31 December 2020 compared to HK$34.9 million for the six months ended 31 December 2021.

Administrative expenses increased by approximately HK$9.0 million or 27.4%, from HK$32.9 million for the six months ended 31 December 2020 to HK$41.9 million for the six months ended 31 December 2021. The increase was mainly due to (1) increase in depreciation of right-of-use asset of HK$3.0 million as a result of the leasing new office premises; (2) increase in depreciation of leasehold improvement in relation to the renovation of the new office premises of HK$1.5 million ; and (3) small increase in various items such as staff salaries and bonus, building management fee and Recruitment expenses.

Net other expenses decreased by approximately HK$0.6 million or 49.8%, from HK$1.2 million for the six months ended 31 December 2020 to HK$0.6 million for the six months ended 31 December 2021. The decrease was mainly due to (1) reversal of impairment of trade receivables of HK$0.4 million in the current period, as opposed to an impairment of trade receivables of HK$1.2 million in last period; offset by exchange losses of HK$0.6 million recorded for the current period.

Finance costs increased by approximately HK$0.8 million or 150.4%, from HK$0.5 million for the six months ended 31 December 2020 to HK$1.3 million for the six months ended 31 December 2021. The increase was mainly due to increase in bank borrowings in order to finance the purchase of goods to meet the increased demand for the period under review.

Net profit attributable to owners of the Company increased by HK$2.6 million or 38.1%, from HK$6.7 million for the six months ended 31 December 2020 to HK$9.2 million for the six months ended 31 December 2021. The increase was mainly attributable to increase in gross profit of HK$20.5 million offset by (1) decrease in Other income and gains of HK$6.2 million; and (2) increase in administrative expenses of HK$9.0 million, as explained above.

Non-controlling interests represented the non-controlling shareholders’ share of profit/(loss) in our non-wholly owned subsidiaries.

STATEMENT OF FINANCIAL POSITION

As at 31 December 2021, non-current assets comprised goodwill of HK$2.1 million; investment properties, office equipment, leasehold land and buildings and motor vehicles totaling HK$77.5 million; right-of-use assets HK$19.6 million; investment in an associate of HK$4.0 million; prepayment of HK$14.9 million and deferred tax assets of HK$7.7 million. Total non-current assets amounted to HK$125.9 million, representing approximately 10.6% of the total assets. There was an increase in non-current assets amounted to approximately HK$18.7 million.

As at 31 December 2021, current assets amounted to approximately HK$1,063.4 million, an increase of HK$90.4 million compared to the immediately preceding financial year end as at 30 June 2021. The increase was mainly due to (1) increase in trade and bill receivables by HK$47.7 million as a result of higher billings towards end of the period under review; (2) increase in cash and cash equivalent by HK$39.0 million and (3) increase in inventories by HK$5.8 million.

As at 31 December 2021, current liabilities amounted to approximately HK$719.0 million, an increase of HK$112.7 million compared to the immediately preceding financial year end as at 30 June 2021. The increase was mainly due to (1) increase in interest-bearing bank and other borrowings by HK$97.0 million; (2) increase in trade and bills payables by HK$24.1 million; (3) increase in lease liabilities by HK$6.8 million; and offset by (4) decrease in other payables and accruals by HK$14.0 million; and (5) decrease in liabilities held for sales by HK$2.4 million.

Non-current liabilities amounted to HK$28.2 million, representing 3.8% of our total liabilities as at 31 December 2021. The amount mainly pertains to other payables of HK$15.8 million arising from warranty service income received in advance which was classified as contract liabilities.

As at 31 December 2021, cash and cash equivalents amounted to approximately HK$112.7 million. Total interest-bearing bank and other borrowings as at 31 December 2021 were HK$230.9 million. The gearing ratio, which is defined as total interest-bearing bank and other borrowings to shareholders’ funds, is 0.52 times (30 June 2021: 0.29 times).

COMMENTARY

Given the diversified nature of the Group’s businesses across segments and multiple product lines, the Group is expected to weather adverse performances in individual businesses units. Some parts of the businesses are expected to continue be affected by supply disruptions. The Group has signed up several new product lines recently, and together with a smooth rolling out at our current projects, we remain cautiously hopeful on the performance of the Group in the next reporting period and the next 12 months.

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