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Chairman Statement

Since 2014, the growth of economy in the PRC has slowed down and entered a new stage with new characteristic and so does the growth of Chinese tobacco industry, without exception. The rapid growth of China's tobacco industry in two digits were gone. A steady growth, from "big step" to "small step", is basically established in this industry.

Performance
In 2017, the overall sales of cigarette in China was only slightly increased by0 0.82%. The Group is facing not only to the keen competition among the cigarette packaging material suppliers but also the increase in prices of raw materials and wages. Under these double pressure, both revenue and profit before taxation for the year ended 31 March 2018 decreased to approximately HK$209 million and HK$40 million respectively. In this difficult business environment, we insist on strict control over quality of our products and upgrade our technology to maintain high quality products and success rate of our output in order to reduce the wastage of raw materials and costs of production. On the other hand, we will actively contact other potential customers to seek for new business opportunities so as to expand our market share.

Opportunities
According to the report released by the Central Environmental Inspection Group, up to today, the overall sewage treatment in Lianjiang Basin of Guangdong Province is far behind the standard. In the future, all the relevant cities, towns and counties governments will increase resources for the sewage treatment of Lianjiang. The Group has experience in the sewage treatment project in the Xia Shan Da Xi (a branch of Lianjiang) with satisfactory outcome with the appreciations from relevant authorities. The Group has a strong and experienced team and is back up by a top scientific research organization in the PRC. We have confidence to win the bid in the rehabilitation projects. The Group will follow our long term strategies and policies to expand our space to develop and seek for investment opportunities in environmental treatment business. I am confidence to implement the new business in the Group. I would like to express my sincere gratitude to the trust and support of our shareholders and stakeholders, and also to the board of directors (the "Board") and our employees for their dedication, sacrifices and professionalism.

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