Winson Announces 2018 Interim Results

During the Period under Review, the environmental hygiene and related services and airline catering support services, two principal businesses of the Group, performed steadily. For the Period under Review, the two businesses generated revenue of approximately HK$264.7 million in total, representing a period-on-period increase of approximately 6.6%. Gross profit increased modestly to approximately HK$38.2 million, while profit declined to approximately HK$9.7 million (for the six months ended 30 September 2017: approximately HK$11.7 million), primarily due to a rise in labour and operating costs. The Group continues to be in a healthy financial position, with cash and cash equivalents of approximately HK$41.7 million as at 30 September 2018.

The Group has won new tenders and extended contracts with its trusted clients by capitalising on its experience, know-how and stature in environmental hygiene and related services and airline catering support services. As at 30 September 2018, the total value of renewed contracts held by the Group amounted to approximately HK$254.4 million, while the total value of new contracts awarded was approximately HK$60.9 million, representing increases of approximately 69.7% and 202.2% respectively over the same period last year.

Business Review

Environmental Hygiene and Related ServicesThe environmental hygiene and related services segment continued to underpin the Group's revenue growth. Despite keen market competition, the business contributed revenue of approximately HK$244.3 million (for the six months ended 30 September 2017: approximately HK$228.0 million), accounting for approximately 92.3% of the Group's total revenue (for the six months ended 30 September 2017: approximately 91.9%). Gross profit rose modestly to approximately HK$35.9 million (for the six months ended 30 September 2017: approximately HK$35.1 million), while gross profit margin slipped to approximately 14.7% (for the six months ended 30 September 2017: approximately 15.4%), a reflection of the gradual increase in cost of services.

As at 30 September 2018, the total value of contracts held by the Group pertaining to environmental hygiene and related services was approximately HK$1.04 billion, of which approximately HK$646.5 million was ongoing contracts. The Group won six new contracts during the Period under Review, valued at approximately HK$60.9 million in total. Among the contracts that have commenced, including the Shatin Racecourse and Penfold Park (began in September 2018), and various MTR administration buildings in Hong Kong (began in August 2018).

Airline Catering Support ServicesThe airline catering support services business continued to provide a stable source of supplemental income to the Group. For the six months ended 30 September 2018, this business segment generated approximately HK$20.3 million in revenue (for the six months ended 30 September 2017: approximately HK$20.2 million), thereby accounting for approximately 7.7% of total revenue (for the six months ended 30 September 2017: approximately 8.1%). Despite an ongoing shortage of labour that has driven associated costs upwards, the Group has been able to effectively manage its workforce through appealing remuneration and recruitment campaigns as well as cost control measures. As a consequence, both gross profit and gross profit margin have remained relatively stable at approximately HK$2.3 million and 11.2% respectively (for the six months ended 30 September 2017: approximately HK$2.3 million and 11.4%).

Prospects

Despite the global economy has been affected by the rising trade tensions between China and the United States of America, the momentum for environmental hygiene and related services and airline catering support services is expected to remain stable in the near future. At the same time, the rising cost of labour will continue to be of concern to all companies that are highly reliant on skilled labour. This trend is expected to persist as the working population further declines in the coming years, falling to 54.6% by 2064 according to findings by the Census and Statistics Department. To meet this challenge, the Group will continue to strengthen and examine the strategies on remuneration and recruitment programmes to retain skilled workers while attracting new talent to the fold. Furthermore, it will adopt technologies that can help increase efficiency and improve the working conditions of staff.

Madam Ng Sing Mui, Chairperson and Executive Director of Winson, said, "To maintain revenue growth, the Group will continue to nurture ties with its trusted and long-time customers in both the environmental hygiene and related services and airline catering support services segments. It will also explore opportunities to work with clients, existing and new, in areas outside of the Group's core businesses and which can lead to mutually beneficial outcomes. In this way, the Group will not only be able to enhance its business performance, but also strengthen its stature over the long term."

About Winson Holdings Hong Kong Limited (Stock code: 8421)Winson Holdings Hong Kong Limited is a Hong Kong-based service provider specialising in environmental hygiene and related services and airline catering support services in Hong Kong. The Group started off as an environmental hygiene and related service provider in 1983 via the incorporation of Winson Cleaning. In 1993, the Group set up Winson Pest Control as a separate pest management service provider. To diversify the Group's business, the Group has commenced the provision of airline catering support services since 2013.

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Website: www.sprg.com.hk^[4]

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References

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