Chairman's Statement

 


BUSINESS REVIEW
The Group’s turnover for the year 2020 was HK$4.7 billion, reflecting a decrease of approximately 10% compared to 2019. However, the Group’s profit attributable to hareholders was HK$101.2 million for 2020 as compared to HK$64.4 million for 2019. This was mainly due to the following factors:

 

(i) a significant increase in sales revenue in the Group’s Industrial Products Trading and Distribution Division for the second half of 2020. This was due to China and Taiwan, where the Division mainly operates, bringing the pandemic under control and sustaining control through to the end of the year. This brought about a recovery in economic activity which resulted in many of the Group’s customers increasing their capacity and orders, in turn resulting in unexpectedly high demand for the Division’s products especially throughout the fourth quarter;

 

(ii) despite COVID-19 challenges, the Group’s OEM Manufacturing Division also recovered in the second half and managed to achieve a profit for the year as a whole; and

 

(iii) receipt of cash subsidies under the Employment Support Scheme under the Anti-epidemic Fund launched by the Hong Kong Special Administrative Region Government in the second half of the year.

Trading and Distribution Division (WKK Distribution)
The turnover of the Group’s Industrial Products Trading and Distribution Division for the year 2020 was HK$2.2 billion, representing an increase of approximately 14% compared to last year. This was mainly due to better than expected demand for the industrial products distributed by the Group as the Division’s customers increased their capacity and orders especially throughout the fourth quarter. The Division’s operating profit was HK$127.7 million as compared to HK$32.4 million last year. The operations in the PRC and a subsidiary in Taiwan contributed the majority of the Division’s operating profit whilst the Singapore operations also recorded an increase in operating profit compared to last year.

OEM Manufacturing Division (WKK Technology)
The turnover of the Group’s OEM Manufacturing Division decreased by approximately 25% to HK$2.5 billion for 2020 compared to last year, mainly attributable to the widespread closure of boarders to control the spread of the coronavirus resulting in all of the Division’s customers outside the PRC being unable to visit the Group’s facilities to develop orders for new projects. However, despite incurring an operating loss of HK$20.8 million in the first half of this year, the division unexpectedly performed better in the second half of this year and recorded an operating profit of HK$20.2 million for the whole year.


FINANCE
As at 31 December 2020, the Group had committed bank and other financing facilities totaling HK$2,664 million, of which HK$579 million was drawn down. As at 31 December 2020, the Group’s consolidated net cash amounted to HK$232 million and total equity amounted to HK$1,796 million, resulting in a nil gearing ratio.

Most of the Group’s sales were conducted in the same currencies as the corresponding purchase transactions. Foreign exchange contracts were used to hedge exposures where necessary


HUMAN RESOURCES
As at 31 December 2020, the Group had a total of 4,607 employees, of whom 234 were based in Hong Kong, 4,053 in the PRC and 320 overseas. The remuneration packages of the Group’s employees are mainly based on their performance and experience, taking into accounts current industry practices. Provident fund scheme, medical allowance and in-house and external training programs are available to employees. Share options and discretionary bonus may be provided to employees according to the performance of the individual and the Group. The remuneration policy and packages of the Group’s employees are regularly reviewed.


ENVIRONMENTAL MANAGEMENT

The Group is committed to making contributions in various areas of sustainable development, including environment protection. The Group has established a green council to lead and organize various environmental protection activities and programs.

The Group has set up various systems, including a sewage treatment plant, solar panels for warming water supplies for workers, LED and solar energy lighting systems, computerized filing systems to limit paper usage, selective flux and soldering systems, an ISO14001 certified environmental management system since 2002, an IECQ QC080000 hazardous substance process management system, as well as an ISO50001 energy management system for the monitoring and improvement of greenhouse gas emissions and energy consumption.

The Group applies environmentally friendly designs and packaging and complies with green procurement policies. Moreover, the supply chain and the entire product life-cycle are in keeping with a clean and green manufacturing policy, thus producing consistently high-quality green products from start to finish. The Group constantly instils an awareness of environmental protection in its employees, the main internal stakeholders, thereby setting a good example to external stakeholders.

 

The Group’s success in the field of environmental protection has earned recognition from the Government, industry, customers and suppliers.


SOCIAL RESPONSIBILITY

Corporate social responsibility is one of the core management philosophies in the Group. The Group has made donations to various charities, and also provided scholarships to eligible students who otherwise cannot afford to further their studies at university.

The Group has been awarded the “15 Years Plus Caring Company” logo by the Hong Kong Council of Social Service.

 

The Group used to engage actively in social activities, helping and nurturing those in need. The Group’s staff have formed a volunteer team who contributed their free time in the service of society by visiting and organizing activities at centers for elderly people. However, due to the Covid-19 pandemic along with social distancing requirements, all social activities were cancelled and as a result, no visiting groups could be arranged in 2020. Also it was not possible for students of secondary schools and universities to tour our PRC factory for the purpose of enhancing their knowledge of green production facilities.


LEGAL AND REGULATORY COMPLIANC
E
The Group complies with all relevant laws and regulations that have a significant impact on the operations of the Groups.


PROSPECTS

After the unexpectedly high demand for the industrial products distributed by the Group in the second half of 2020 as a result of the Group’s customers increasing their capacity and orders, it is expected that the demand for the Group’s industrial products will slow down during the current year.

Although vaccination programmes are being implemented globally, it is uncertain when borders will open to allow foreign customers of the OEM Manufacturing Division to visit the Group’s facilities to develop orders for new projects. Nevertheless, given the current level of orders on hand, it is hoped that, in the absence of unforeseeable circumstances, the Group’s OEM Manufacturing Division will perform better than last year.

 

On behalf of the Board, I wish to thank all employees for their loyalty, support and hard work throughout this difficult pandemic period.


By Order of the Board

Senta Wong
Chairman
Hong Kong, 25 March 2021


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