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Unaudited interim condensed consolidated financial statements for 31 December 2024

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

For the six months ended 31 December 2024





INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION - UNAUDITED

31 December 2024





REVIEW OF PERFORMANCE

PROFIT AND LOSS

Consolidated revenue of the Group for the six months ended 31 December 2024 decreased by HK$124.1 million or 10.6% to HK$1,045.3 million from HK$1,169.4 million for the corresponding period last year.

Revenue from our Components Distribution (“CD”) segment decreased by HK$3.7 million or 2.0%, from HK$185.5 million for the six months ended 31 December 2023 to HK$181.8 million for the six months ended 31 December 2024. The decrease was mostly due to poor economic sentiment in the PRC. However, increasing the focus on new components with higher margins helped to improve the profitability of the segment.

Revenue from our Information Technology Infrastructure (“IT Infrastructure”) segment decreased by HK$87.3 million or 10.2%, from HK$859.9 million for the six months ended 31 December 2023 to HK$772.6 million for the six months ended 31 December 2024. The decrease was mainly due to fewer new mega projects secured during the period under review.

Revenue from our Consumer Electronics Products (“CEP”) segment decreased by HK$33.0 million or 26.6%, from HK$123.9 million for the six months ended 31 December 2023 to HK$90.9 million for the six months ended 31 December 2024. The consumer spending sentiment remained weak in Hong Kong. Despite the drop in revenue in this segment, our cost controls measures applied had helped to improve the profitability during the period under review.

Gross profit increased by HK$2.9 million or 3.1%, from HK$92.9 million for the six months ended 31 December 2023 to HK$95.8 million for the six months ended 31 December 2024. The increase in gross profit was mainly due to (1) a HK$1.3 million decrease in write-down of inventories; and (2) our ability to achieve a higher margin on certain deals.

Net other income and gains increased by approximately HK$0.8 million or 48.8%, from HK$1.7 million for the six months ended 31 December 2023 to HK$2.5 million for the six months ended 31 December 2024. The increase was mainly due to increase in bank interest income as a result of increased in bank deposit interest rates offered by banks during the period under review.

Selling and distribution costs decreased by HK$0.1 million or 0.2%, from HK$38.1 million for the six months ended 31 December 2023 to HK$38.0 million for the six months ended 31 December 2024.

Administrative expenses decreased by approximately HK$2.5 million or 6.6%, from HK$38.0 million for the six months ended 31 December 2023 to HK$35.5 million for the six months ended 31 December 2024. The decrease was mainly due to decrease in depreciation of property, plant and equipment of HK$2.2 million as a result of depreciation for renovation costs for the Hong Kong office was fully depreciated by August 2024.

Other net expenses increased by approximately HK$3.4 million or 149.4%, from HK$2.2 million for the six months ended 31 December 2023 to HK$5.6 million for the six months ended 31 December 2024. The increase is mainly due to (1) impairment of amount due from an associate of HK$2.7 million during the period; (2) increase in foreign exchange loss of HK$1.6 million during the current period as a result of depreciation in RMB; (3) HK$0.3 million increase in impairment of trade receivables based on expected credit loss computation; and offset by loss on disposal of property, plant and equipment of HK$1.7 million in relation to the Beijing property in last year which was not a recurring event.

Finance costs decreased by approximately HK$1.8 million or 32.4%, from HK$5.6 million for the six months ended 31 December 2023 to HK$3.8 million for the six months ended 31 December 2024. The decrease was mainly due to decrease in bank borrowing interest rates during the current period.

Net profit increased by HK0.8 million or 7.5%, from HK$10.7 million for the six months ended 31 December 2023 to HK$11.5 million for the six months ended 31 December 2024. The increase was mainly attributable to (1) HK$2.9 million increase in gross profit; (2) HK$2.5 million decrease in administrative expenses; (3) HK$1.8 million decrease in finance costs; offset by (a) HK$3.4 million increase in other net expenses; and (b) HK$1.9 million increase in income tax expenses; and (c) HK$2.0 million decrease in share of profit of an associate.

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 2024, non-current assets amounted to HK$61.8 million, representing approximately 5.7% of the total assets. Non-current assets decreased by HK$8.1 million or 11.6% to HK$61.8 million as at 31 December 2024 from HK$69.9 million as at 30 June 2024.

The decrease was mainly due to the disposal of an associate of HK$7.4 million during the current period.

Increase in Right-of -use assets was due to renewal of the Hong Kong office tenancy agreement for a three year period during the period under review.

Decrease in Prepayments and other assets was mainly due to the classification of such assets into their current portion (and presented as current assets).

As at 31 December 2024, current assets amounted to approximately HK$1,025.0 million, a decrease of HK$74.0 million compared to the immediately preceding financial year end as at 30 June 2024. The decrease was mainly due to (1) decrease in trade and bill receivables by HK$41.2 million which was in-line with decrease in revenue; (2) decrease in prepayment, other receivables and other assets by HK$27.2 million was due to a substantial amount of current portion of long-term contracts being completed during the period under review and (3) decrease in cash and cash equivalents by HK$21.6 million as analysed in the condensed consolidated statement of cash flows.

As at 31 December 2024, current liabilities amounted to approximately HK$638.6 million, an decrease of HK$83.6 million compared to the immediately preceding financial year end as at 30 June 2024. The decrease was mainly due to the decrease in trade and bills payables by HK$82.7 million as a result of settlement of a major trade payable during the current period.

Non-current liabilities amounted to HK$44.7 million, representing 6.5% of total liabilities as at 31 December 2024. The amount pertains mainly to (1) other payables of HK$25.3 million arising from warranty service income received in advance which was classified as contract liabilities; and (2) recognition of lease liabilities of HK$11.9 million due to the renewal of tenancy agreement of the Hong Kong office during the current period.

As at 31 December 2024, cash and cash equivalents amounted to approximately HK$105.6 million. Total interest-bearing bank and other borrowings as at 31 December 2024 were HK$108.6 million. The gearing ratio, which is defined as total interest-bearing bank and other borrowings to shareholders’ funds, is 0.27 times (30 June 2024: 0.26 times).

COMMENTARY

The Group projects that the next 12 months will continue to be difficult for businesses due to geopolitical tensions that have created more uncertainty in the world’s commercial environment. Against this backdrop, the Group believes that operating conditions in the PRC will remain challenging across all industries. In Hong Kong, the Group expects intense volatility to continue as the local government grapples with a large budget deficit that is likely to reduce public spending.

Given the anticipated decrease in interest rates as well as inflationary pressures, the Group will concentrate on cost controls and on increasing operational efficiency in order to protect margins and maintain agility in capturing growth possibilities.

The Group believes that the global acceleration in AI and digital transformation will continue to offer growth prospects, while demand for electronic products may be impacted by potential US tariffs and the resulting effect on goods exposed to the US market.

The Group is vigilantly monitoring the impact of geopolitical and trade tensions on business and consumer sentiment. It will continue to focus its resource planning and allocation on growth sectors. It will also implement the necessary cost cutting initiatives as well as rationalizing labour costs across its operations to protect its profitability. At the same time, the Group will continue to strengthen and expand a comprehensive portfolio of products and solutions across our segments to capture business demands, and explore geographical expansion into new markets as a medium-term strategy.

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