*Extracted from Annual Report 2019

Dear Shareholders,

The financial year ended March 31, 2019 ("FY2019") was best remembered as the year that global trade took a back seat to the trading of verbal barbs and increasingly high tariffs took centre-stage in the escalating tensions between the US and China. With no near-term resolution in sight, its effect on commercial and consumer sentiments and its impact on businesses particularly those in the electronics industry, was devastating.

Willas-Array Electronics (Holdings) Limited ("Willas-Array" and together with its subsidiaries, the Group) was not spared from this adverse operating environment, which saw drastic declines in both export and Chinese domestic demand for electronics. While we were able to mitigate some impact through ongoing efforts to develop value-added services to customers in our key growth Automotive, Industrial and Home Appliance segments, our top and bottom lines took a hit and in FY2019, the Group suffered a loss attributable to owners of the Company of HK$19.0 million on the back of revenue, which declined 19.1% year-on-year ("YOY") to HK$3,687.8 million.

For Willas-Array, the impact of the ongoing US-China trade dispute on our performance was even more distressing because it was straight after the record year we had in the preceding 12 months ("FY2018") when our sales and earnings reached an all-time high since our listing on the Main Board of Singapore Exchange Securities Trading Limited in 2001.

However as Chairman of the Group that has seen both bull and bear economic cycles over a history spanning more than 35 years, I believe that we have built a strong foundation and established a nimble strategy that can respond quickly to all situations and withstand the test of time.

Over the past decade, Willas-Array has shifted its emphasis more and more towards higher margins and better returns. To differentiate ourselves, we have invested a lot in engineering resources and into our sales network so we can get to market faster and offer value-added services to support our product portfolio as well as cater to customer needs. The benefit of this is evident from our gross profit margin, which slightly increased from 8.7% in FY2018 to 8.9% in FY2019 despite the 17.2% YOY fall in gross profit to HK$327.5 million.

Looking ahead, I believe our approach remains sound and we will continue to pursue opportunities in our key growth segments of Automotive, Industrial and Home Appliance, while keeping a close eye on developments in other segments.


I will say with absolute certainty that the industry outlook over the next 12 months is uncertain. We are neither able to predict whether the US-China trade dispute will improve or worsen, nor are we able to control the outcome that results from it.

We will keep a close eye on the situation but I believe the best response is for us to remain resolute in keeping our focus on what we do best. We will continue to closely monitor industry trends and to drive sales by responding nimbly to them through the allocation of our resources in the right places, being prudent in our costs and expenditure, differentiating ourselves by investing in value-added services to our clients and helping our staff to stay on top of their game through skills upgrade.

With the ongoing US-China trade dispute, the Chinese government has been pushing away from export-led growth to focus more heavily on domestic consumption by stepping up efforts to increase credit and spur its economy through cutting taxes and the level of reserves that banks are required to hold as well as speeding up infrastructure projects.1

We believe that such measures will continue to support demand for electronic products for which according to an IBISWorld report, China is the world's largest manufacturing centre, including household items such as televisions, computers, handsets and DVD players.2 More consumers are also demanding energy saving features, which will make use of even more electronic componentry.

According to a trade article by Electronic Specifier3, the advent of the 5G network is also expected to span new applications that are likely to positively benefit the components industry, including autonomous vehicles, smart factories, sensors in smart cities and systems for the backhauling of aggregated data. The design, manufacture and deployment of the 5G infrastructure together with increased demand from smart-car applications is going to drive growth for the industry.

I believe the combination of such factors is a silver lining against an otherwise gloomy operating climate. We will seize every opportunity that they bring, while continuing to manage our operations efficiently and sustaining a healthy liquidity position in order to support long-term growth.


Despite our weaker performance in FY2019, we are optimistic of being able to leverage our track record and longstanding relationships in the industry as well as our experience in navigating market challenges. We remain firm believers in the longer term prospects of our industry and in the sustainability of our business due. As a reflection of this, the Board of Directors has recommended a final dividend of Hong Kong 20.0 cents per ordinary share, which is payable on August 26, 2019 subject to approval by shareholders at the Company's upcoming annual general meeting to be held on July 26, 2019.


In closing, I would like to thank the management and staff of Willas-Array, who did not allow the external circumstances to beat them down but who continued to work so hard during a very challenging year.

My utmost appreciation to our suppliers and customers for the support you have given the Group over the years and your willingness to partner with us in order to achieve mutually beneficial outcomes even in difficult times.

Special thanks to my fellow Directors on the Board, for your contribution and guidance in steering the ship to calmer waters and to our shareholders for standing by us through thick and thin.

I am encouraged by everyone's support and I hope to work hand-in-hand with all stakeholders to grow the business from strength to strength and to achieve many more bountiful years to come.

Leung Chun Wah

May 29, 2019

1 "China economy: First quarter growth beats expectations at 6.4%", BBC News, 17 April 2019
2"Electronic Component Manufacturing Industry in China", Industry Market Research Report (March 2019),
3"Solid growth continues in the electronic components markets" by Lanna Cooper for Electronic Specifier, 10 September 2018
(https://www.electronicspecifier.com/around-the-industry/solid-growth-continues-in-the-electro nic-components-markets)