Non-Operating Income – Non-operating income for the six months ended March 31, 2023 was $1,737,000, as compared to non-operating income of $2,020,000 in the corresponding period in fiscal 2022. This was primarily due to a decrease of $698,000 in rental income, offsetting increases of $354,000 in fair value of the marketable securities held for sale, and $41,000 from realized gain on the sale of marketable securities during the six months ended March 31, 2023, as compared to the same period of the prior fiscal year.
Income Taxes – Income tax for the six months ended March 31, 2023 represented a current tax expense of $47,000 and a deferred tax benefit of $82,000, as compared to a current tax expense of $195,000 and a deferred tax benefit of $533,000 in the corresponding six months of the prior fiscal year.
On a segment basis, there was a current tax expense of $28,000 and a deferred tax benefit of $61,000 in the plastic segment for the six months ended March 31, 2023, as compared to a current tax expense of $41,000 and a deferred tax benefit of $274,000 during the year-ago six months. In the electronic segment, there was a current tax expense of $19,000 and a deferred tax benefit of $21,000 for the six months ended March 31, 2023, as compared to a current tax expense of $154,000 and a deferred tax benefit of $259,000 for the corresponding six months of fiscal 2022.
Net Income – The Company had net income of $2,619,000 for the six months ended March 31, 2023, as compared to net income of $4,062,000 for the six months ended March 31, 2022. The decrease in net income for the second half of fiscal 2023 was mainly attributable to decreases in sales revenues as described above.
Net income for the plastic segment for the six months ended March 31, 2023 totaled $1,074,000, as compared to net income of $2,009,000 for the corresponding six months in fiscal 2022. The decreased net income in the second six months of fiscal 2023 for the plastic segment was mainly the result of decreases in sales revenues and non-operating income, as well as an increase in SG&A expense as a percentage of sales as described above.
Net income for the electronic segment for the six months ended March 31, 2023 was $2,340,000, compared to net income of $2,870,000 for the corresponding six months of fiscal 2022. The decrease in net income in the second half of fiscal 2023 for the electronic segment was mainly attributable to decreases in sales revenues and other income as described above.
Net Sales - The Company's net sales for the year ended March 31, 2023 were $77,543,000, a decrease of $8,437,000 or 9.8% as compared to $85,980,000 in the corresponding period in fiscal 2022. The decrease was related to decreases in sales revenues of $7,522,000 in our plastic segment, and of $915,000 in our electronic segment, as compared with respective net sales from these segments in the corresponding period of the prior fiscal year.
The revenue decrease in the plastic segment was mainly due to decreases in orders of $4,129,000 for robotic mops and vacuum cleaners for automatic floor cleaning stations from an existing customer, $1,967,000 for telephone equipment, and $1,529,000 for plastic and gardening tool boxes, and other gardening tool accessories, as well as a decrease of $874,000 for tooling products from other existing customers.
The revenue decrease in the electronic segment was mainly due to a decrease in orders of $5,824,000 for home entertainment products, despite an increase in orders of $4,992,000 for professional digital audio workstations and loud speakers from other existing customers.
Gross Profit - Gross profit for the year ended March 31, 2023 was $12,839,000, representing a gross profit margin of 16.6%. This is compared with the overall gross profit and gross profit margin of $13,952,000 or 16.3% for the year ended March 31, 2022.
Gross profit in the plastic segment decreased by $1,112,000 to $2,433,000 or 15.4% of net sales for the year ended March 31, 2023, as compared to $3,545,000 or 15.5% of net sales for the same period in the prior fiscal year. The decrease in gross profit for the plastic segment was mainly due to the decreases in sales revenues from major clients as a result of the decrease in demand from customers for certain products.
Gross profit in the electronic segment decreased by $1,000 to $10,406,000 or 16.9% of net sales for the year ended March 31, 2023, as compared to $10,407,000 or 16.6% of net sales in the prior fiscal year. The slight increase in gross margin is attributable to relatively lower labor costs as a result of continuous cost control measures taken, when compared with last fiscal year.
Selling, General and Administrative Expenses - SG&A expenses for the year ended March 31, 2023 slightly decreased by $301,000 to $10,966,000 or 14.1% of total net sales, as compared to $11,267,000 or 13.2% of total net sales for the year ended March 31, 2022.
Corporate expenses slightly increased by $17,000 to $1,412,000 for the year ended March 31, 2023, as compared to $1,395,000 for the year ended March 31, 2022, related to a slight increase in professional fees.
SG&A expenses in the plastic segment decreased by $234,000 to $4,068,000 or 25.7% of net sales for the year ended March 31, 2023, compared to $4,302,000 or 18.4% of net sales for fiscal 2022. The decrease in total SG&A expenses was primarily related to decreases of $258,000 in administrative staff costs, $40,000 in local government taxes and charges, $19,000 in office repair and maintenance costs and $59,000 in selling expense, offsetting an increase of $194,000 in utility expense, as compared with the same period in the prior fiscal year. The SG&A expense as a percentage of total sales revenues was relatively higher due to lower sales revenues during fiscal 2023 as compared with fiscal 2022.
SG&A expenses in the electronic segment decreased by $84,000 to $5,486,000 or 8.9% of net sales for the year ended March 31, 2023, compared to $5,570,000 or 8.9% of net sales for fiscal 2022. The decrease in total SG&A expense was mainly due to a decrease of $123,000 in local government taxes and charges, offsetting increases of $19,000 in selling expenses and $16,000 in amortization expenses when compared to the prior fiscal year. However, SG&A expense as a percentage of total sales revenues during fiscal 2023 remained relatively consistent as compared to the same period of fiscal 2022.
Other Income, Net - Other income was $1,014,000 for the year ended March 31, 2023, as compared to other income of $74,000 in the prior fiscal year.
On a segment basis, other expenses attributable to the plastic segment for the year ended March 31, 2023 were $285,000, as compared to other income of $15,000 for the prior fiscal year. Other income was lower in fiscal 2023 mainly due to an exchange loss of $570,000, offsetting a reversal of $199,000 of provisions for doubtful receivables, and a gain of $85,000 on sales of materials during fiscal 2023, as compared to a reversal of $148,000 of provisions for doubtful receivables, and a gain of $57,000 on sales of materials, offsetting an exchange loss of $165,000 in fiscal 2022.
Other income attributable to the electronic segment for the year ended March 31, 2023 was $1,299,000, as compared with other income of $59,000 for the prior fiscal year. The increase in other income was mainly due to increases of $501,000 in exchange gain and of $764,000 in other gain during the year ended March 31, 2023, as compared to the fiscal 2022.
Operating Income - Operating income was $2,887,000 for the year ended March 31, 2023, as compared to operating income of $2,759,000 in the prior fiscal year.
Corporate expenses of $1,412,000 and $1,395,000 were incurred during the fiscal year of 2023 and 2022, respectively.
On a segment basis, the operating loss in the plastic segment was $1,920,000 in the year ended March 31, 2023, as compared to operating loss of $742,000 in fiscal 2022. The decrease in operating income in the plastic segment was mainly due to reduced sales revenues as a result of the decrease in demand from customers for certain products.
The electronic segment reported operating income of $6,219,000 in the year ended March 31, 2023, compared to operating income of $4,896,000 in fiscal 2022. The increase in operating income was mainly due to the increase in other income, as described above.
Non-Operating Income (Expense) – Non-operating expense for the year ended March 31, 2023 was $573,000, as compared to a non-operating income of $5,308,000 in last fiscal year. The decrease in non-operating income was primarily due to decreases of $4,845,000 in fair value of marketable securities held, $879,000 in rental income, and $493,000 in realized loss on sale of marketable securities, offsetting increases of $118,000 in dividend income from securities investments, and $182,000 from other income during the fiscal year ended March 31, 2023, as compared to fiscal 2022.
Income Taxes – Current tax expense for the year ended March 31, 2023 was $409,000. The Company had a deferred tax benefit of $154,000. This is compared to a current tax expense of $402,000 and a deferred tax benefit of $567,000 in the last fiscal year.
On a segment basis, there was a deferred tax benefit of $133,000 in the plastic segment for the year ended March 31, 2023, as compared to a current tax expense of $69,000 and a deferred tax benefit of $308,000 during the last fiscal year. In the electronic segment, there was a current tax expense of $409,000 and a deferred tax benefit of $21,000 for the year ended March 31, 2023, as compared to current tax expense of $333,000 and a deferred tax benefit of $259,000 in fiscal 2022.
Net Income – The Company had net income of $2,059,000 for the year ended March 31, 2023, as compared to net income of $8,232,000 for the year ended March 31, 2022. The decrease in net income was mainly due to the decrease in non-operating income, as described above.
Net loss for the plastic segment for the year ended March 31, 2023 was $2,290,000, as compared to net income of $5,453,000 for fiscal 2022. The decrease in net income in the plastic segment was mainly due to decreases in sales revenues and non-operating income as described above.
Net income for the electronic segment for the year ended March 31, 2023 was $5,761,000, as compared to net income of $4,174,000 for fiscal 2022. The increase in net income in the electronic segment was mainly attributable to an increase in other income as described above.
Liquidity and Capital Resources
The Company relies primarily upon internally generated funds to finance its operations and investments.
As of March 31, 2023, the Company had working capital of $60,914,000, as compared to $63,848,000 at March 31, 2022. The Company has generated sufficient funds from its operating activities to finance its operations and there is little need for external financing. The Company had no short or long-term borrowings as of March 31, 2023.
As of March 31, 2023, the Company had cash and cash equivalents of $22,160,000, as compared to $13,465,000 at March 31, 2022. During the year ended March 31, 2023, net cash provided by operating activities was $12,998,000. Net cash used in investing activities was $1,115,000, which is mainly accounted for by cash used in the purchases of fixed assets of $792,000 and of marketable securities of $3,469,000, as well as increases of $2,076,000 in fixed deposits maturing over twelve months, offsetting proceeds of $3,854,000 from the sale of marketable securities and $67,000 from the disposal of fixed assets, and the release of $1,301,000 from time deposits maturing over three months during the year ended March 31, 2023. Net cash used in financing activities was comprised mainly of $3,188,000 in dividend payments in the year ended March 31, 2023.
As of March 31, 2023, the Company had no general banking facilities. The Company expects that working capital requirements and capital additions will be funded through internally generated funds.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized.
