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Chairman’s Statement

REVIEW OF OPERATIONS

During the year under review, the profit generated important foundation and source of stable revenue.
from the operation saw a great improvement. The Comprising sound bar systems, amplifiers, Bluetooth
Group registered a revenue growth of more than 12 wireless speakers, DVD players, Blu-ray players and
percent following the successful launch of a series of home theatre systems, among others, they continue
tablets in the markets. Through the stringent quality to satisfy the needs of a wide range of customers.
assurance programs, products’ return rate has been
further reduced. Ensuring that both existing products and products
developed in the future are, and will be, produced
To maintain our competitiveness in the market, we in an efficient manner is our Houjie Town production
have implemented a series of measures to reduce the facility. Now an integral part of our makeup, the
manufacturing costs while improving the production facility enables us to produce sophisticated, high-
efficiency. This focused in the areas of product value products that are the epitome of quality and
engineering, material cost control, man power reliability. And reflecting our ongoing commitment to
review, new production line arrangement and factory product quality and reliability, the Group has invested
overhead control. Despite the wage inflation in China HK$24 million in 3D Automated Optical Inspection
at the beginning of the year, we were able to monitor equipment, 3D Automated X-Ray Inspection
the wages by reducing the headcount from 2,300 equipment and other reliability testing equipment
to 1,700. The introduction of new production lines during the year. Furthermore, we have also further
and the massive investment in automation not only invested HK$27 million in brand new and state-of-
assured the quality requirement but also improving the-art SMT (Surface Mount Technology) assembly
the production efficiency, and the ultimate benefit was lines that are both more efficient and precise than
reflected in the saving of manufacturing overheads. their old counterparts. We are also making headway
in restructuring and simplifying production processes
The gradual economic recovery in the United States so that we can raise efficiency, increase quality, and
has helped to improve consumption sentiment. reduce costs still further.
Capitalizing on this development, ALCO has launched
a series of tablets and personal computing products Besides optimising production, we are also mindful of
catering to first time users. This year, ALCO has the importance of optimising returns for our investors.
further extended the product line-up from screen Taking into account the property market conditions,
sizes of 7-inch, 10-inch and up to 12-inch in Android the Group has disposed three of its properties in
and Windows operating systems. At the moment, Hong Kong during the year and resulted in a gain
the company has good commanding market share of of HK$221 million. The Group has also signed a
entry level personal computing products and tablets in sale and lease back agreement for one of the three
North America. properties sold as its head office for a term of three
years. The rent for the first and second years is HK$1
Aside from the solid performance of our personal per annum respectively. On the third year, the rent is
computing products and infotainment products, the capped at HK$250,000 per month exclusive of rates,
Group’s existing line of AV products has remained an government rent and management fee.

ALCO HOLDINGS LIMITED ANNUAL REPORT 2016 5