WILLAS-ARRAY ELECTRONICS (HOLDINGS) LIMITED
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MANAGEMENT DISCUSSION AND ANALYSIS
Other gains and losses
Other losses in FY2016 included an exchange loss of HK$14.3 million mainly arising from the
depreciation of the Chinese renminbi against the United States dollars, offset by a reversal of allowance
for doubtful trade receivables of HK$8.5 million. Other losses of HK$1.2 million in FY2015 were mainly
due to an exchange loss offset by a reversal of allowance for doubtful trade receivables.
Finance costs
Finance costs increased by HK$4.0 million, or 23.3%, from HK$16.9 million in FY2015 to HK$20.9 million
in FY2016. This was mainly attributable to an increase in bank borrowings.
Share of loss of associates/Impairment loss on interests in associates
Share of loss of associates increased by HK$31.8 million from HK$6.5 million in FY2015 to HK$38.3
million in FY2016. The loss was mainly due to doubtful debts provision for debtors of memory products.
In September 2015, the Group’s associated company, GW Electronics Company Limited (including its
subsidiaries located in mainland China, collectively “GW Electronics”) received notices from Toshiba
Electronics Asia, Ltd. (“Toshiba Asia”) and Toshiba Electronics (China) Co., Ltd. to terminate its authorised
distributorship agreements. In March 2016, GW Electronics has been served with a winding-up
petition issued by Toshiba Asia in connection with an alleged outstanding amount of approximately
US$15.3 million which Toshiba Asia alleged was due and payable by GW Electronics. GW Electronics
has in May 2016 filed affirmations to oppose and apply to strike out the winding-up petition, or in the
alternative, for the court to order that the winding-up petition be stayed for arbitration.
As GW Electronics is a limited liability corporation, the Group’s maximum potential exposure to any
legal claim by Toshiba Asia against GW Electronics, including as a result of the winding-up petition, will
be limited to the Group’s equity interest in GW Electronics. As a result thereof, an impairment loss of
HK$70.1 million was made in FY2016.
LIQUIDITY AND FINANCIAL RESOURCES
Financial Position
Compared to the previous year ended March 31, 2015, the increase in trust receipt loans by HK$83.0
million was due to the increase in purchasing activity during the current financial period. Trade and bills
receivables increased by HK$7.5 million when compared to the year ended March 31, 2015 due to
increase in trade receivables towards the end of the period under review. The debtors turnover days
decrease from 2.1 months to 1.9 months this year.
As at March 31, 2016, the Group’s current ratio (current assets/current liabilities) was 1.25 (March 31,
2015: 1.30).
