BUSINESS REVIEW
The Group’s turnover for the year 2022 was HK$4.6 billion, reflecting a decrease of approximately 15% compared to 2021. The Group’s profit attributable to shareholders for the year was HK$71.8 million as compared to the profit attributable to shareholders of HK$72 million for last year.

Trading and Distribution Division (WKK Distribution)
After the record sales in 2021, the turnover of the Group’s Industrial Products Trading and Distribution Division for 2022 was HK$2.4 billion, representing a decrease of approximately 21% compared to 2021. This was generally attributable to the prevailing shortage and higher price of components and logistical bottlenecks which adversely affected the ability of the Division’s customers to manufacture their products, as well as a reduction in demand for many of the industrial products distributed by the Group. At the same time, these difficulties caused the Division’s suppliers to delay their deliveries to the Group. However, the Division’s operating profit was HK$207.3 million, reflecting an increase of approximately 8% compared to last year as a result of the excellent performance of a subsidiary in Taiwan which increased its operating profit to an extent which more than offset the shortfall in operating profits incurred by other operations. This was because the Taiwanese subsidiary is a distributor of particular products which enjoyed strong demand in Taiwan.

OEM Manufacturing Division (WKK Technology)
The turnover of the Group’s OEM Manufacturing Division decreased by approximately 6% to HK$2.1 billion compared to last year. This was mainly due to disruption of the global supply chain, logistical bottlenecks, extended border closures and heightened geopolitical tensions. The division’s operating loss was HK$61.1 million as compared to an operating loss of HK$54.3 million for 2021.

FINANCE
As at 31 December 2022, the Group had committed bank and other facilities totalling HK$2,669.5 million, of which HK$967.3 million was drawn down. As at 31 December 2022, the Group’s consolidated net borrowings amounted to HK$175.3 million and total equity amounted to HK$1,853.1million, resulting in a net gearing ratio of 9.5%.

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

HUMAN RESOURCES
As at 31 December 2022, the Group had a total of 3,779 employees, of whom 218 were based in Hong Kong, 3,031 in the PRC and 530 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 QC80000 hazardous substance process management system, as well as an ISO500001 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 engages actively in social activities, helping and nurturing those in need although some of these activities were curtailed during the pandemic. 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, 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 COMPLIANCE
The Group complies with all relevant laws and regulations that have a significant impact on the operations of the Group.

PROSPECTS
Although the global restriction measures from Covid-19 have now been lifted globally and boarders have been reopened, the downward pressure on the global economy is compounded by the effects of heightened geopolitical tensions, protectionism and worldwide inflationary pressure. The Directors do not expect an increase in the demand for the industrial products distributed by the Trading and Distribution in the early part of this year.

The Group is now in a position to fully develop its manufacturing facilities in Mexico, Queretaro, which were delayed by the pandemic. These facilities will enable the Group to better serve its global customers, especially those in North and South America, and cope with future demands. However, as any economic recovery is at an early and delicate stage, it is anticipated that any growth in the OEM manufacturing business can only begin in the second half of this 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, 28 March 2023