Financial Performance - Other income for 2023 was HKD 30,477,000, a decrease of 10.5% from HKD 33,729,000 in 2022[3] - Bank interest income increased significantly to HKD 4,789,000 in 2023 from HKD 656,000 in 2022[3] - The group's pre-tax profit was impacted by a tax refund of HKD 32,300,000 received from the Japanese tax authority, which was not present in 2022[6] - Revenue for the year ended March 31, 2023, was HKD 4,150,886 thousand, a decrease of 12.2% from HKD 4,729,976 thousand in 2022[37] - Gross profit for the same period was HKD 879,314 thousand, down from HKD 937,558 thousand, reflecting a gross margin of approximately 21.2%[37] - Net profit for the year was HKD 43,358 thousand, significantly up from HKD 19,812 thousand in the previous year, representing a year-over-year increase of 118.5%[38] - Basic and diluted earnings per share attributable to ordinary equity holders was HKD 10.6 cents, compared to HKD 3.3 cents in the prior year[37] - The company reported a net comprehensive loss of HKD 28,541 thousand for the year, contrasting with a comprehensive income of HKD 40,966 thousand in 2022[46] - Other comprehensive loss for the year, after tax, was HKD 71,899 thousand, compared to a gain of HKD 21,154 thousand in the previous year[70] - The company experienced a foreign exchange loss of HKD 68,692 thousand related to overseas operations, compared to a gain of HKD 25,003 thousand in the previous year[39] Revenue Breakdown - Revenue from the Japan region for 2023 was HKD 1,569,018,000, a decline of 19.8% from HKD 1,956,089,000 in 2022[19] - Revenue from the Hong Kong market was HKD 1,831,336,000 in 2023, slightly down from HKD 1,843,958,000 in 2022, accounting for 44% of total revenue[134] - Revenue from mainland China decreased to HKD 750,532,000 in 2023 from HKD 929,929,000 in 2022, reflecting a decline of approximately 19.2%[113] - Revenue from Japan was HKD 1,569,018,000 in 2023, down from HKD 1,956,089,000 in 2022, indicating a decrease of about 19.8%[113] Assets and Liabilities - Non-current liabilities decreased to HKD 187,102 thousand from HKD 347,463 thousand, indicating a reduction of 46.1%[50] - The net asset value of the company as of March 31, 2023, was HKD 1,304,882 thousand, down from HKD 1,370,689 thousand in 2022[50] - Non-current assets decreased from HKD 1,407,100,000 in 2022 to HKD 1,308,900,000 in 2023, representing a decline of approximately 7%[73] - Current assets decreased from HKD 1,945,141,000 in 2022 to HKD 1,752,086,000 in 2023, a reduction of about 10%[73] - Total equity attributable to owners decreased from HKD 1,370,689,000 in 2022 to HKD 1,304,882,000 in 2023, a decrease of about 5%[74] - The company’s total liabilities increased from HKD 1,634,089,000 in 2022 to HKD 1,935,170,000 in 2023, an increase of approximately 18%[73] - The company’s net current assets decreased from HKD 311,052,000 in 2022 to HKD 183,084,000 in 2023, a decline of about 41%[73] Operational Strategy - The group plans to expand its market presence in mainland China, leveraging its advantages and actively developing its own brand[28] - The group operates 17 factories in Hong Kong and mainland China, focusing on a one-stop production and sales strategy to maintain its industry leadership[34] - The group has adopted a dual online and offline business strategy to enhance sales and increase market share in mainland China[24] - The group anticipates long-term growth potential in the mainland market, with GDP growth expected to reach 5%[28] - The company plans to continue focusing on market expansion and new product development to drive future growth[62] Cost Management - The company faced rising operational costs due to inflation and interest rate hikes, impacting profit margins throughout the year[131] - The company plans to adjust product prices to counteract increased sales costs, which have risen as a percentage of revenue[133] - The group plans to adjust product prices to offset rising costs due to inflation while continuing to control production, sales, and administrative costs[169] Corporate Actions - The company declared an interim dividend of HKD 3.0 per share, consistent with the previous year, totaling HKD 11,528[96] - The group has proposed a final dividend of HKD 0.065 per share, maintaining the total dividend for the fiscal year at HKD 0.095 per share[155] - In January 2023, the company repurchased 6,000 shares at a maximum price of HKD 2.42, totaling HKD 14,000[193] - In February 2023, the company repurchased 30,000 shares at a maximum price of HKD 2.60, totaling HKD 78,000[193] - All repurchased shares have been cancelled, reducing the issued share capital accordingly[193] Market Expansion and Product Development - The group has fully acquired the Japanese snack and candy distributor, Miyata Co., Ltd., to enhance business expansion and synergy[158] - The group aims to maintain its market leadership in Hong Kong's food agency and retail sectors while increasing market share by introducing more Japanese products[143] - The group plans to leverage its extensive distribution network to strengthen cross-brand and sales channel synergies[143] - The group will continue to introduce more products from Miyata to meet customer demands in Hong Kong and mainland China[158] - The group has diversified its food agency business by introducing products such as Japanese eggs, milk, tofu, and rice, which have received positive market feedback[164] - The group has developed a new ice cream product under the "Miyata" brand, which has been well-received in the Hong Kong market, showcasing the synergy from the acquisition of Miyata[164] - The group is the largest importer of ice cream products from Japan to Hong Kong, significantly benefiting its food agency business in the region[164] - The company aims to source more Japanese food products through Miyata's procurement network for the Hong Kong and mainland markets, supporting long-term development[191] Employee and Community Engagement - The group operates approximately 2,800 employees, with salaries reviewed annually based on performance and market conditions[173] - The group has committed to corporate social responsibility initiatives, focusing on community development and youth affairs during the pandemic[142] - The group has received multiple awards for outstanding sales performance, including recognition from 7-Eleven and the Hong Kong Council of Social Service[188] Acknowledgments - The audit committee consists of three independent non-executive directors, overseeing accounting policies and financial reporting matters[197] - The company expresses gratitude to shareholders and business partners for their continuous support throughout the reporting year[200]

Financial Performance - Revenue for the six months ended September 30, 2022, was HK$2,112,609, a decrease of 10.2% compared to HK$2,353,839 in 2021[4] - Gross profit for the same period was HK$489,242, representing a slight increase of 0.4% from HK$487,165 in 2021[4] - Profit before tax increased to HK$46,592, up 29.4% from HK$36,018 in the previous year[4] - Profit for the period was HK$60,673, significantly higher than HK$23,435 in 2021, marking a year-on-year increase of 158.5%[5] - Earnings per share attributable to ordinary equity holders rose to HK15.2 cents, compared to HK4.0 cents in the previous year[4] - Total comprehensive loss for the period was HK$50,109, contrasting with a total comprehensive income of HK$37,961 in the previous year[5] - Profit before tax for the six months ended September 30, 2022, was HK$46,592,000, an increase from HK$36,018,000 in the same period of 2021, representing a growth of 29.0%[17] - Net cash flows from operating activities rose to HK$146,440,000 for the six months ended September 30, 2022, compared to HK$121,054,000 in the prior year, an increase of 21.0%[17] - Total comprehensive loss for the period was HK$51,166,000, compared to a total comprehensive income in the previous period[11] Assets and Liabilities - Total non-current assets decreased to HK$1,277,525 from HK$1,407,100 as of March 31, 2022[7] - Current assets totaled HK$1,913,755, a slight decrease from HK$1,945,141 as of March 31, 2022[7] - Total current liabilities increased to HK$1,684,404,000 as of September 30, 2022, compared to HK$1,634,089,000 on March 31, 2022, reflecting a rise of 3.5%[9] - Net current assets decreased to HK$229,351,000 from HK$311,052,000, indicating a decline of 26.3%[9] - Total equity attributable to equity holders of the Company decreased to HK$1,266,140,000 as of September 30, 2022, down from HK$1,342,283,000, a reduction of 5.7%[9] - Total liabilities as of September 30, 2022, were HK$1,895,677,000, an increase from HK$1,981,552,000 as of March 31, 2022[49] Cash Flow and Financing - Cash and cash equivalents increased to HK$656,581 from HK$611,220, reflecting improved liquidity[7] - Net cash flows used in financing activities amounted to HK$50,183,000, a significant increase from HK$24,682,000 in the previous year, representing a rise of approximately 103.5%[19] - Cash and cash equivalents at the end of the period reached HK$656,581,000, compared to HK$638,708,000 at the end of the previous year, showing a growth of about 2.9%[19] - Cash and bank balances decreased to HK$490,532,000 from HK$578,559,000, reflecting a decline of approximately 15.2%[19] - The total non-current liabilities decreased to HK$211,273,000 from HK$347,463,000, a significant reduction of 39.2%[9] Segment Performance - Total revenue for the six months ended September 30, 2022, was HK$2,112,609,000, with segment revenues from Hong Kong, Mainland China, and Japan being HK$949,571,000, HK$534,307,000, and HK$804,919,000 respectively[41] - The Hong Kong segment reported a profit before tax of HK$59,329,000, while the Mainland China and Japan segments reported profits of HK$5,692,000 and HK$1,681,000 respectively, totaling HK$66,702,000[41] - Revenue from Hong Kong increased slightly to HK$928,500,000, up from HK$921,312,000, while revenue from Mainland China decreased to HK$420,386,000 from HK$474,068,000[51] - Revenue from Japan decreased to HK$763,723,000 from HK$958,459,000, reflecting a decline of 20.4%[51] Corporate Governance and Compliance - The Company has maintained high standards of corporate governance and complied with the Corporate Governance Code during the review period[192] - The Audit Committee reviewed the unaudited condensed consolidated interim financial statements for the six months ended 30 September 2022[196] - The Company confirmed that all directors complied with the trading standards set out in the code of conduct for the six months ended September 30, 2022[198] - The Company published its interim results announcement for the six months ended September 30, 2022, on the Hong Kong Exchanges and Clearing Limited website and its own website[197] Strategic Initiatives - The Group aims to expand its market share in mainland China and Japan, laying a foundation for long-term development[129] - The Group plans to promote international food e-commerce in Mainland China through platforms like Taobao and Tmall, targeting growth in the Japanese food market[140] - The acquisition of Miyata has enhanced synergies and laid a foundation for business expansion, particularly in sourcing Japanese essential food products[117] - The Group launched Miyata Ice Cream in the Hong Kong market, which has gained a larger market share in the ice cream sector[117] Employee and Shareholder Information - The total number of employees as of September 30, 2022, was approximately 2,800, with remuneration packages structured based on market terms and individual qualifications[164] - As of September 30, 2022, Tai Tak Fung, Stephen held a long position of 259,478,000 shares, representing 67.52% of the Company’s total issued shares[168] - The Company had no outstanding share options at the beginning and end of the review period, and no share options were granted during the period[192]

Financial Performance - The Group's consolidated revenue for the year ended March 31, 2022, was HK$4,729,976,000, an increase of 3.3% from HK$4,579,837,000 in 2021[19]. - Profit attributable to equity holders for the year was HK$12,634,000, down 58.1% from HK$30,127,000 in 2021[19]. - The Group's total revenue for the year ended March 31, 2022, was HKD 4,729,976,000, an increase from HKD 4,579,837,000 in the previous year[21]. - Profit attributable to equity owners was HKD 12,634,000, down from HKD 30,127,000 in the previous year[21]. - Gross profit increased to HK$937,558,000, up 6.7% from HK$878,504,000, with a gross profit margin of 19.8%[83]. - EBITDA for the year was HK$157,496,000, an increase of 3.8% from HK$151,798,000 in the previous year[83]. - The Group's profit for the year ended March 31, 2022, is detailed in the financial statements, with a recommendation for a final dividend of HK6.5 cents per ordinary share[140]. Sales Performance by Region - Sales from the Hong Kong segment amounted to HK$1,843,958,000, accounting for 39% of total sales, up from HK$1,729,182,000 in 2021[19]. - Sales in Mainland China reached HK$929,929,000, representing 20% of total sales, an increase from HK$863,114,000 in 2021[19]. - Sales in Japan were HK$1,956,089,000, accounting for 41% of total sales, slightly down from HK$1,987,541,000 in 2021[19]. - Revenue from Hong Kong was HKD 1,843,958,000, accounting for 39% of total revenue, compared to HKD 1,729,182,000 in the previous year[21]. - Revenue from Mainland China was HKD 929,929,000, representing 20% of total revenue, up from HKD 863,114,000 in the previous year[21]. - Revenue from Japan was HKD 1,956,089,000, making up 41% of total revenue, slightly down from HKD 1,987,541,000 in the previous year[21]. Product Development and Innovation - The acquisition of Miyata Co., Ltd. contributed to the Group's ability to expand its product offerings and strengthen its brand[10]. - The Group introduced a variety of new products, including ice cream and Japanese food items, to enhance consumer experience in Hong Kong[11]. - The Group's food manufacturing business has seen increased demand due to more citizens choosing to eat at home during the pandemic[39]. - The Group is focusing on expanding its market share in Hong Kong by introducing more varieties of Japanese food, enhancing its retail and distribution leadership[58]. - The Group plans to leverage its competitive advantages in Mainland China, including a hybrid sales model that combines traditional retail with e-commerce platforms like Taobao and Tmall[60]. - The Group is committed to promoting healthy living by featuring products such as tofu, milk, and Japanese eggs in its offerings[59]. - The Group's strategy includes expanding its brand through self-owned factories and various marketing channels in Mainland China[60]. Community Engagement and Corporate Social Responsibility - The Group has engaged in community services, including a charity event to raise food for vulnerable families during the pandemic[50]. - The Group has received multiple awards for social responsibility, including the "Outstanding Social Caring Organisation Award" and "Manpower Developer 2013-2021" recognition[72]. - The Group is actively engaged in community services and supports various charitable activities, enhancing its brand image[128]. Awards and Recognition - The Group has received multiple quality certifications, including HACCP and ISO standards, ensuring high food safety and quality[37]. - The Group has received multiple awards this year, including the Grand Bauhinia Medal and the Gold Bauhinia Star, recognizing its contributions and leadership in the industry[70]. - The Group's brand "Okashi Land" was named the "Most Popular Hong Kong and Macau Brand," highlighting its strong market presence[72]. - The company was awarded the "Best All-round MPF Employer" for 7 consecutive years, showcasing its commitment to employee benefits and retirement planning[72]. Market Strategy and Future Outlook - The Group aims to maintain its leading position in the local market while exploring opportunities in Mainland China, Japan, and other regions[52]. - Three positive factors for future growth include reduced import costs due to a weak yen, high consumer demand for Japanese food, and a subdued pandemic environment[53]. - The Group anticipates continued growth driven by favorable market conditions and strategic expansion efforts[56]. - The company has set a revenue target of $500 million for the upcoming fiscal year, representing a 10% growth forecast[195]. - Investment in new technology for production is projected to increase output capacity by 30% over the next two years[195]. - The management team emphasized a commitment to sustainability, aiming to reduce carbon emissions by 20% by 2025[195]. Financial Position and Risk Management - As of March 31, 2022, the Group held cash and cash equivalents of HK$611,220,000 and had banking facilities of HK$2,837,689,000, with 37% utilized[102]. - The Group's gearing ratio was 78% as of March 31, 2022, indicating a significant level of debt relative to equity[102]. - The Group has ongoing transactional currency exposures mainly from sales and purchases in Japanese yen and Renminbi, which could impact operating results[102]. - The Group's financial risk management objectives and policies are outlined in note 41 of the financial statements[131]. Leadership and Management - Executive Director Hu Yongbiao has over 30 years of experience in the food and candy industry, responsible for establishing close ties with suppliers in mainland China and overseas[200]. - Executive Director Huang Fuheng has extensive experience in market development and strategy, having joined the group in 2014[200]. - The company emphasizes strong leadership with a diverse background in sales, marketing, and procurement among its executives[200].

Financial Performance - Revenue for the six months ended September 30, 2021, was HK$2,353,839,000, representing an increase of 7.7% compared to HK$2,185,079,000 for the same period in 2020[5]. - Gross profit for the period was HK$487,165,000, slightly down by 0.3% from HK$489,728,000 in the previous year[5]. - Profit for the period decreased to HK$23,435,000, a decline of 25.0% from HK$31,180,000 in the prior year[5]. - Earnings per share attributable to ordinary equity holders was HK4.0 cents, down from HK7.8 cents in the previous year, reflecting a decrease of 48.7%[5]. - Total comprehensive income for the period was HK$37,961,000, down 43.7% from HK$67,414,000 in the same period last year[8]. - Profit before tax for the six months ended 30 September 2021 was HK$36,018,000, a decrease of 16.5% compared to HK$42,883,000 in 2020[19]. - Net cash flows from operating activities amounted to HK$121,054,000, down from HK$141,702,000 in the previous year, reflecting a decline of 14.6%[19]. - Total cash generated from operations was HK$132,039,000, compared to HK$151,952,000 in 2020, indicating a decrease of 13.1%[19]. - Other income and gains for the six months ended September 30, 2021, totaled HK$19,166,000, compared to HK$15,807,000 in 2020, representing a 21.5% increase[63]. - Finance costs for the six months ended September 30, 2021, were HK$12,426,000, a decrease from HK$14,519,000 in 2020[66]. - Total tax charge for the period increased to HK$12,583,000 in 2021 from HK$11,703,000 in 2020, representing a growth of 7.5%[75]. - Profit attributable to ordinary equity holders decreased to HK$15,376,000 in 2021 from HK$30,016,000 in 2020, a decline of 48.7%[88]. Assets and Liabilities - Non-current assets totaled HK$1,482,194,000 as of September 30, 2021, a decrease from HK$1,544,803,000 as of March 31, 2021[10]. - Current assets increased to HK$2,109,213,000 from HK$2,016,036,000, indicating a growth of 4.6%[10]. - Total current liabilities increased to HK$1,795,282,000 as of September 30, 2021, compared to HK$1,708,413,000 on March 31, 2021, reflecting a rise of approximately 5.1%[12]. - Total non-current liabilities decreased to HK$405,958,000 as of September 30, 2021, down from HK$474,643,000 on March 31, 2021, indicating a reduction of about 14.5%[12]. - Net assets increased to HK$1,390,167,000 as of September 30, 2021, compared to HK$1,377,783,000 on March 31, 2021, marking a growth of approximately 0.9%[12]. - The total liabilities of the company stood at HK$2,201,240,000, with segment liabilities from Hong Kong, Mainland China, and Japan being HK$553,004,000, HK$355,559,000, and HK$392,805,000 respectively[49]. Cash Flow and Financing - Cash and cash equivalents amounted to HK$638,708,000, compared to HK$577,227,000, showing an increase of 10.6%[10]. - New bank and trust receipt loans totaled HK$579,904,000, while repayments amounted to HK$509,332,000, resulting in a net cash inflow from financing activities[20]. - Cash and cash equivalents at the end of the period were HK$638,708,000, down from HK$717,807,000 in the previous year, representing a decrease of 11%[20]. - The Group's banking facilities totaled HK$2,858,582,000, with 43% utilized as of September 30, 2021[166]. - The gearing ratio was 89% as of September 30, 2021, indicating the total bank borrowings to equity attributable to equity holders[166]. Segment Performance - Sales to external customers in Hong Kong amounted to HK$921,312,000, while Mainland China and Japan contributed HK$474,068,000 and HK$958,459,000 respectively, indicating strong performance across all regions[41]. - Segment results showed a profit before tax of HK$36,018,000, compared to HK$42,883,000 in the previous period, reflecting a decrease of approximately 16.5%[41]. - Total segment assets were reported at HK$3,071,110,000, with Hong Kong contributing HK$1,358,718,000, Mainland China HK$1,035,781,000, and Japan HK$676,611,000[49]. - Sales from the Hong Kong segment amounted to HK$921,312,000, accounting for 39% of total sales, slightly up from HK$919,113,000 in 2020[128]. - Sales in Mainland China reached HK$474,068,000, representing a 8.7% increase from HK$436,184,000 in 2020, accounting for 20% of total sales[128]. - Sales in Japan increased to HK$958,459,000, up from HK$829,782,000 in 2020, marking a growth of approximately 15.5%[128]. Operational Highlights - The Group's operating segments include Hong Kong, Mainland China, and Japan, focusing on the manufacturing and trading of snack foods, confectionery, and beverages[38]. - The Group's management monitors the results of the operating segments separately for resource allocation and performance assessment[38]. - The Group successfully consolidated Miyata Co., Ltd., enhancing product exports to Hong Kong and Mainland China, and expanded its product offerings to include Japanese eggs, rice, and tofu[133]. - The introduction of new products such as Japanese eggs, rice, and tofu was well received in the market, contributing to the Group's business growth and profitability[133]. - The Group aims to continue identifying renowned brands and introducing exceptional new products to consumers[138]. - The Group has achieved numerous international certifications including "HACCP", "ISO 9001", "ISO 22000", and "GMP", ensuring high standards in food safety and quality[142][144]. Shareholder Information - As of September 30, 2021, Tai Tak Fung, Stephen holds 259,478,000 ordinary shares, representing approximately 67.52% of the Company's total issued shares[190]. - Wu Mei Yung, Quinly also holds 259,478,000 ordinary shares, representing approximately 67.52% of the Company's total issued shares, through interests of spouse and controlled corporations[190]. - Careful Guide Limited, wholly owned by Tai Tak Fung, holds 70,000,000 shares, approximately 18.22% of the Company's total issued shares[190]. - Special Access Limited, wholly owned by Tai Tak Fung and Wu Mei Yung, holds 74,250,000 shares, approximately 19.32% of the Company's total issued shares[195]. - Capital Season Investments Limited, wholly owned by Advance Finance Investments Limited, holds 115,228,000 shares, approximately 29.98% of the Company's total issued shares[195]. - As of September 30, 2021, no other directors or chief executives had interests or short positions in the shares of the Company or any associated corporation[197].

團 有 限 公 司 %A 集 四 Four Seas Mercantile Holdings Limited Stock Code 股份代號 : 374 2021 年報 Annual Report 0 D D | --- | --- | |----------------------------------------------------------------|--------| | | | | | | | | | | | | | Contents 目錄 | | | Corporate Information 公司資料 | 2-3 | | Chairman's Statement 主席報告 | 4-13 | | Major Awards of the Year 年度主要獎項 | 14-16 | | Management Discussion and Analysis 管理層討論及分析 | 17-26 | | Report of the Directors 董事會報告 | 27-42 | | Corporate Governance Report 企業管治報告 | 43-65 | | Independen ...

[Condensed Consolidated Statement of Profit or Loss](index=2&type=section&id=1.0%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended September 30, 2020, the Group achieved significant revenue growth, with increased profit for the period and earnings per share, primarily due to effective cost of sales control and higher profit contributions from associates Condensed Consolidated Statement of Profit or Loss (HKD Thousands) | Indicator | 2020 (HKD Thousands) | 2019 (HKD Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 2,185,079 | 1,505,607 | +45.14% | | Cost of Sales | (1,695,351) | (1,055,679) | +60.59% | | Gross Profit | 489,728 | 449,928 | +8.85% | | Profit Before Tax | 42,883 | 41,940 | +2.25% | | Profit for the Period | 31,180 | 27,557 | +13.15% | | Profit Attributable to Owners of the Company | 30,016 | 18,885 | +59.00% | | Earnings Per Share (Basic and Diluted) | HKD 7.8 cents | HKD 4.9 cents | +59.18% | [Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=2.0%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended September 30, 2020, the Group's total comprehensive income significantly shifted from a loss to a profit, primarily driven by a positive change in exchange differences on translation of overseas operations Condensed Consolidated Statement of Comprehensive Income (HKD Thousands) | Indicator | 2020 (HKD Thousands) | 2019 (HKD Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Profit for the Period | 31,180 | 27,557 | +13.15% | | Exchange Differences on Translation of Overseas Operations | 31,422 | (54,033) | Shift from Loss to Profit | | Share of Other Comprehensive Income/(Loss) of Associates | 1,728 | (2,090) | Shift from Loss to Profit | | Other Comprehensive Income/(Loss) for the Period, Net of Tax | 36,234 | (56,123) | Shift from Loss to Profit | | Total Comprehensive Income/(Loss) for the Period | 67,414 | (28,566) | Shift from Loss to Profit | | Total Comprehensive Income/(Loss) Attributable to Owners of the Company | 64,705 | (35,921) | Shift from Loss to Profit | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=3.0%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of September 30, 2020, the Group's total assets and liabilities significantly increased, with substantial growth in both non-current and current assets, alongside a rise in current liabilities, leading to a decrease in net current assets Condensed Consolidated Statement of Financial Position (HKD Thousands) | Indicator | Sep 30, 2020 (HKD Thousands) | Mar 31, 2020 (HKD Thousands) | Change | | :--- | :--- | :--- | :--- | | Total Non-current Assets | 1,624,447 | 1,225,052 | +32.60% | | Total Current Assets | 2,197,925 | 1,668,724 | +31.71% | | Total Current Liabilities | 1,771,526 | 1,170,432 | +51.36% | | Net Current Assets | 426,399 | 498,292 | -14.43% | | Total Non-current Liabilities | 695,448 | 378,146 | +83.91% | | Net Assets | 1,355,398 | 1,345,198 | +0.76% | | Total Equity | 1,355,398 | 1,345,198 | +0.76% | [Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=4.0%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended September 30, 2020, the Group's total equity slightly increased, primarily due to the contribution from total comprehensive income for the period, despite a reduction in non-controlling interests Condensed Consolidated Statement of Changes in Equity (HKD Thousands) | Indicator | Sep 30, 2020 (HKD Thousands) | Apr 1, 2020 (HKD Thousands) | Change | | :--- | :--- | :--- | :--- | | Equity Attributable to Owners of the Company | 1,345,704 | 1,307,329 | +2.93% | | Non-controlling Interests | 9,694 | 37,869 | -74.39% | | Total Equity | 1,355,398 | 1,345,198 | +0.76% | - Total comprehensive income for the period was **HKD 64,705 thousand**, positively contributing to equity growth[17](index=17&type=chunk) - Non-controlling interests significantly decreased due to the acquisition of non-controlling interests and subsidiaries[17](index=17&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=7&type=section&id=5.0%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended September 30, 2020, the Group's net cash inflow from operating activities significantly increased, investment activities shifted from outflow to substantial inflow, while net cash outflow from financing activities also rose considerably, ultimately leading to a net increase in cash and cash equivalents Condensed Consolidated Statement of Cash Flows (HKD Thousands) | Indicator | 2020 (HKD Thousands) | 2019 (HKD Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Inflow from Operating Activities | 141,702 | 87,599 | +61.75% | | Net Cash Inflow/(Outflow) from Investing Activities | 211,441 | (17,372) | Shift from Outflow to Inflow | | Net Cash Outflow from Financing Activities | (147,321) | (74,407) | Outflow Increased | | Net Increase/(Decrease) in Cash and Cash Equivalents | 205,822 | (4,180) | Shift from Decrease to Increase | | Cash and Cash Equivalents at End of Period | 717,807 | 577,567 | +24.28% | - The significant increase in net cash inflow from investing activities was primarily driven by **net cash inflow of HKD 250,174 thousand from acquisition of subsidiaries**[20](index=20&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=6.0%20Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [Accounting Policies](index=9&type=section&id=6.1%20Accounting%20Policies) These interim financial statements are prepared in accordance with HKAS 34, with the initial application of certain revised HKFRSs, which had no significant financial impact on the statements - The Group initially applied certain revised Hong Kong Financial Reporting Standards (HKFRSs) and Interpretations issued by the HKICPA, including HKFRS 3 (Definition of a Business), HKFRS 9, HKAS 39 and HKFRS 7 (Interest Rate Benchmark Reform), and HKAS 1 and HKAS 8 (Definition of Material)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - The adoption of these amendments had no significant financial impact on the condensed consolidated financial statements[28](index=28&type=chunk)[32](index=32&type=chunk) [Operating Segment Information](index=10&type=section&id=6.2%20Operating%20Segment%20Information) The Group is organized into three reportable operating segments based on geographical areas: Hong Kong, Mainland China, and Japan, with each segment's performance independently monitored for resource allocation and performance assessment - The Group operates in three reportable segments: Hong Kong (manufacturing and sales of snacks, confectionery, beverages, frozen food, ham, and noodles, retail and catering services), Mainland China (manufacturing and sales of snacks, confectionery, beverages, frozen food, ham, and noodles, restaurant operations), and Japan (wholesale and distribution of snacks and confectionery)[34](index=34&type=chunk)[37](index=37&type=chunk) Segment Revenue (Sales to External Customers) - For the six months ended September 30, 2020 (HKD Thousands) | Segment | 2020 (HKD Thousands) | 2019 (HKD Thousands) | YoY Change | 2020 Total Sales Share | | :--- | :--- | :--- | :--- | :--- | | Hong Kong | 919,113 | 976,182 | -5.85% | 42% | | Mainland China | 436,184 | 529,425 | -17.61% | 20% | | Japan | 829,782 | – | Newly Added | 38% | | **Total** | **2,185,079** | **1,505,607** | **+45.14%** | **100%** | Segment Results - For the six months ended September 30, 2020 (HKD Thousands) | Segment | 2020 (HKD Thousands) | 2019 (HKD Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Hong Kong | 59,239 | 42,127 | +40.62% | | Mainland China | 23,041 | 17,033 | +35.27% | | Japan | (10,600) | – | Newly Added Loss | | **Total** | **71,680** | **59,160** | **+21.16%** | - The Japan segment generated **new revenue of HKD 829,782 thousand** in 2020, accounting for **38% of the Group's total sales**, but incurred a **loss of HKD 10,600 thousand**[46](index=46&type=chunk)[133](index=133&type=chunk) [Revenue, Other Income and Gains/(Losses), Net](index=15&type=section&id=6.3%20Revenue,%20Other%20Income%20and%20Gains/(Losses),%20Net) For the six months ended September 30, 2020, the Group's revenue primarily derived from contracts with customers, with some revenue recognized from contract liabilities at the beginning of the period, and net other income and gains increased, mainly due to government grants Revenue from Contracts with Customers - For the six months ended September 30, 2020 (HKD Thousands) | Region | 2020 (HKD Thousands) | 2019 (HKD Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Hong Kong | 919,113 | 976,182 | -5.85% | | Mainland China | 436,184 | 529,425 | -17.61% | | Japan | 829,782 | – | Newly Added | | **Total** | **2,185,079** | **1,505,607** | **+45.14%** | Other Income and Gains/(Losses), Net - For the six months ended September 30, 2020 (HKD Thousands) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Bank Interest Income | 1,347 | 3,376 | -60.09% | | Government Grants | 6,469 | – | Newly Added | | Dividend Income | 2,001 | 4,678 | -57.23% | | Rental Income from Investment Properties under Operating Leases | 1,351 | 736 | +83.56% | | Others | 4,639 | 2,700 | +71.81% | | Fair Value Loss on Investment Properties, Net | (145) | – | Newly Added Loss | | Fair Value Loss on Financial Assets at Fair Value Through Profit or Loss, Net | (5,793) | (4,500) | +28.73% | | **Total** | **9,869** | **6,990** | **+41.19%** | - Newly added government grants of **HKD 6,469 thousand** in 2020 positively contributed to other income[68](index=68&type=chunk) - Performance obligations for goods sold are satisfied upon delivery, with payment terms typically one to three months, extendable to four to five months for major customers[64](index=64&type=chunk) [Finance Costs](index=17&type=section&id=6.4%20Finance%20Costs) For the six months ended September 30, 2020, the Group's finance costs slightly increased, primarily comprising interest on bank loans, trust receipt loans, and lease liabilities Finance Costs - For the six months ended September 30, 2020 (HKD Thousands) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Interest on Bank Loans and Trust Receipt Loans | 9,141 | 8,546 | +6.96% | | Interest on Lease Liabilities | 5,378 | 5,664 | -5.05% | | **Total** | **14,519** | **14,210** | **+2.17%** | [Profit Before Tax](index=18&type=section&id=6.5%20Profit%20Before%20Tax) For the six months ended September 30, 2020, the Group's profit before tax slightly increased, primarily benefiting from the inclusion of government grants, which partially offset the rise in depreciation and amortization expenses Components of Profit Before Tax - For the six months ended September 30, 2020 (HKD Thousands) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Cost of Inventories Sold | 1,693,854 | 1,055,679 | +60.44% | | Government Grants | (32,398) | – | Newly Added | | Depreciation of Property, Plant and Equipment Items | 34,668 | 31,134 | +11.35% | | Depreciation of Right-of-use Assets | 76,440 | 65,149 | +17.33% | | Amortization of Other Intangible Assets | 2,029 | 109 | +1761.47% | - Government grants, totaling **HKD 32,398 thousand**, primarily from the Hong Kong Government's Employment Support Scheme, were recognized in cost of sales, selling and distribution expenses, and administrative expenses[72](index=72&type=chunk)[74](index=74&type=chunk) [Income Tax](index=19&type=section&id=6.6%20Income%20Tax) For the six months ended September 30, 2020, the Group's income tax expense decreased, with the Hong Kong profits tax rate remaining at 16.5%, while the share of tax from associates increased Income Tax Expense - For the six months ended September 30, 2020 (HKD Thousands) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Current – Hong Kong | 8,664 | 9,611 | -9.75% | | Current – Other Regions | 2,850 | 4,794 | -40.55% | | Underprovision in Prior Years | 95 | 58 | +63.79% | | Deferred | 94 | (80) | Shift from Negative to Positive | | **Total Tax Expense for the Period** | **11,703** | **14,383** | **-18.63%** | - The Hong Kong profits tax rate remained at **16.5%**[77](index=77&type=chunk) - Share of tax from associates was **HKD 1,754 thousand**, an increase from **HKD 999 thousand** in the prior period[79](index=79&type=chunk)[80](index=80&type=chunk) [Dividend](index=20&type=section&id=6.7%20Dividend) For the six months ended September 30, 2020, the Board resolved to declare an interim dividend of HKD 3.0 cents per ordinary share, consistent with the prior year, and the final dividend paid during the period also remained unchanged Dividend Information - For the six months ended September 30, 2020 (HKD Thousands) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Interim Dividend Declared (HKD 3.0 cents per ordinary share) | 11,528 | 11,528 | 0% | | Final Dividend Approved and Paid (HKD 6.5 cents per ordinary share) | 24,977 | 24,977 | 0% | - The interim dividend was calculated based on **384,257,640 ordinary shares** in issue at the end of the reporting period[85](index=85&type=chunk) [Earnings Per Share](index=21&type=section&id=6.8%20Earnings%20Per%20Share) For the six months ended September 30, 2020, the Group's basic and diluted earnings per share were HKD 7.8 cents, a significant increase from the prior period, with no dilutive potential ordinary shares outstanding Earnings Per Share Information - For the six months ended September 30, 2020 | Indicator | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Profit Attributable to Ordinary Equity Holders of the Company (HKD Thousands) | 30,016 | 18,885 | +59.00% | | Weighted Average Number of Ordinary Shares in Issue | 384,257,640 | 384,257,640 | 0% | | Basic and Diluted Earnings Per Share | HKD 7.8 cents | HKD 4.9 cents | +59.18% | - For the six months ended September 30, 2020 and 2019, the Group had no dilutive potential ordinary shares in issue, thus basic and diluted earnings per share were identical[91](index=91&type=chunk) [Property, Plant and Equipment](index=22&type=section&id=6.9%20Property,%20Plant%20and%20Equipment) For the six months ended September 30, 2020, the Group's additions to property, plant and equipment significantly increased, while some assets were disposed of, resulting in a net loss Movements in Property, Plant and Equipment - For the six months ended September 30, 2020 (HKD Thousands) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Additions at Cost | 37,696 | 24,476 | +54.01% | | Net Book Value of Disposals | 316 | 1,570 | -79.87% | | Net Loss on Disposals | 295 | 517 | -42.94% | [Trade Receivables](index=22&type=section&id=6.10%20Trade%20Receivables) As of September 30, 2020, the Group's total trade receivables significantly increased, with the most notable growth in amounts due within one month, reflecting higher sales Ageing Analysis of Trade Receivables (Net of Impairment Provisions) - As of September 30, 2020 (HKD Thousands) | Ageing | Sep 30, 2020 (HKD Thousands) | Mar 31, 2020 (HKD Thousands) | Change | | :--- | :--- | :--- | :--- | | Within 1 month | 358,065 | 180,692 | +98.17% | | 1 to 2 months | 233,099 | 98,978 | +135.52% | | 2 to 3 months | 89,228 | 84,474 | +5.63% | | Over 3 months | 156,519 | 164,238 | -4.70% | | **Total** | **836,911** | **528,382** | **+58.39%** | - The Group's trade terms with customers are primarily credit-based, typically one to three months, extendable to four to five months for major customers, while new customers usually require upfront payment[95](index=95&type=chunk)[96](index=96&type=chunk) [Trade Payables, Other Payables and Accruals](index=23&type=section&id=6.11%20Trade%20Payables,%20Other%20Payables%20and%20Accruals) As of September 30, 2020, the Group's total trade payables significantly increased, with notable growth in amounts due within one month, reflecting increased purchasing activities Ageing Analysis of Trade Payables - As of September 30, 2020 (HKD Thousands) | Ageing | Sep 30, 2020 (HKD Thousands) | Mar 31, 2020 (HKD Thousands) | Change | | :--- | :--- | :--- | :--- | | Within 1 month | 252,735 | 146,416 | +72.61% | | 1 to 2 months | 81,013 | 16,873 | +380.14% | | 2 to 3 months | 24,999 | 7,919 | +215.68% | | Over 3 months | 35,787 | 7,011 | +410.44% | | **Total** | **394,534** | **178,219** | **+121.38%** | - Trade payables are interest-free and generally settled within **30 to 60 days**[101](index=101&type=chunk) - Trade payables include amounts due to associates of **HKD 41,751 thousand** and amounts due to a subsidiary of a substantial shareholder of **HKD 36 thousand**[100](index=100&type=chunk) [Commitments](index=23&type=section&id=6.12%20Commitments) As of September 30, 2020, the Group's capital commitments for property, plant and equipment significantly increased, reflecting future investment plans Capital Commitments (Property, Plant and Equipment) - As of September 30, 2020 (HKD Thousands) | Item | Amount (HKD Thousands) | | :--- | :--- | | Contracted but Not Provided For | 9,127 | [Related Party Transactions](index=24&type=section&id=6.13%20Related%20Party%20Transactions) For the six months ended September 30, 2020, significant related party transactions included purchases of goods from associates, sales of goods, reimbursement of promotion expenses from associates, and rental income, with purchases from associates being the largest and increasing in value Significant Related Party Transactions - For the six months ended September 30, 2020 (HKD Thousands) | Transaction Type | 2020 (HKD Thousands) | 2019 (HKD Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Associates: Purchases of Goods | 200,403 | 196,063 | +2.21% | | Associates: Sales of Goods | 1,056 | 950 | +11.16% | | Associates: Reimbursement of Promotion Expenses | 16,841 | 15,541 | +8.37% | | Associates: Rental Income | 720 | 736 | -2.20% | | Subsidiary of a Substantial Shareholder: Sales of Goods | 783 | 1,414 | -44.62% | - Purchase costs from associates are determined at pre-agreed prices, while sales prices are determined by reference to similar prices and conditions offered to other major customers[109](index=109&type=chunk)[111](index=111&type=chunk) [Business Combination](index=25&type=section&id=6.14%20Business%20Combination) On April 16, 2020, the Group acquired an additional 55% equity interest in Miyata Holding Co., Ltd., making it a subsidiary, aiming to expand its confectionery distribution and product development business in Japan and create synergies, resulting in provisional goodwill of HKD 85,744 thousand - On **April 16, 2020**, the Group acquired an **additional 55% equity interest** in Miyata Holding Co., Ltd., increasing its stake from **15% to 70%**, making Miyata a subsidiary of the Group[120](index=120&type=chunk)[121](index=121&type=chunk) - The acquisition aims to expand the Group's confectionery distribution and product development business in Japan and create synergies with other Group businesses[120](index=120&type=chunk)[121](index=121&type=chunk) - The acquisition resulted in **provisional goodwill of HKD 85,744 thousand**, primarily attributable to the integration of MYC's products with the Group, MYC's network, and the resulting synergies[126](index=126&type=chunk)[129](index=129&type=chunk) - Since the acquisition, Miyata contributed approximately **HKD 829,782 thousand in revenue** to the Group but resulted in a **consolidated profit loss of HKD 7,405 thousand**[127](index=127&type=chunk)[130](index=130&type=chunk) [Management Discussion and Analysis](index=28&type=section&id=7.0%20Management%20Discussion%20and%20Analysis) [Interim Dividend](index=28&type=section&id=7.1%20Interim%20Dividend) The Board resolved to declare an interim dividend of HKD 3.0 cents per ordinary share for the six months ended September 30, 2020, consistent with the prior year, to be paid on January 18, 2021 - The Board resolved to declare an interim dividend of **HKD 3.0 cents per ordinary share** for the six months ended September 30, 2020 (2019: HKD 3.0 cents)[132](index=132&type=chunk)[134](index=134&type=chunk) - The dividend will be paid on **Monday, January 18, 2021**[132](index=132&type=chunk)[134](index=134&type=chunk) [Closure of Register of Members](index=28&type=section&id=7.2%20Closure%20of%20Register%20of%20Members) To qualify for the interim dividend, the company will suspend share transfer registration from December 16 to December 18, 2020, requiring shareholders to submit transfer documents by 4:30 p.m. on December 15, 2020 - The register of members will be closed from **Wednesday, December 16, 2020, to Friday, December 18, 2020**[133](index=133&type=chunk) - Shareholders must submit all transfer documents with the relevant share certificates by **4:30 p.m. on Tuesday, December 15, 2020**, to qualify for the interim dividend[133](index=133&type=chunk) [Results](index=28&type=section&id=7.3%20Results) For the six months ended September 30, 2020, the Group's consolidated turnover significantly increased, and profit attributable to owners of the company substantially improved, primarily due to new revenue contributions from Japan, despite sales declines in Hong Kong and Mainland China Group Performance Overview - For the six months ended September 30, 2020 (HKD Thousands) | Indicator | 2020 (HKD Thousands) | 2019 (HKD Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Consolidated Turnover | 2,185,079 | 1,505,607 | +45.14% | | Profit Attributable to Owners of the Company | 30,016 | 18,885 | +59.00% | Sales by Region (HKD Thousands) | Region | 2020 (HKD Thousands) | 2019 (HKD Thousands) | 2020 Total Sales Share | | :--- | :--- | :--- | :--- | | Hong Kong | 919,113 | 976,182 | 42% | | Mainland China | 436,184 | 529,425 | 20% | | Japan | 829,782 | – | 38% | [Business Review](index=29&type=section&id=7.4%20Business%20Review) Despite COVID-19 challenges, the Group maintained steady business growth through diversified strategies and sales promotions, with robust food agency and manufacturing, new growth from Japan ice cream and CHOYA plum wine, and high standards and innovation in retail and catering - The Group successfully withstood COVID-19 challenges, maintaining steady business development, with robust food agency and manufacturing businesses[137](index=137&type=chunk) - The Group actively promoted its Japan ice cream business, introducing several renowned brands, expanding sales channels to convenience stores and supermarkets, achieving ideal sales[138](index=138&type=chunk)[139](index=139&type=chunk) - The Group secured the Hong Kong distribution rights for the renowned Japanese brand **CHOYA Umeshu**, expected to bring new contributions[142](index=142&type=chunk)[143](index=143&type=chunk) [Distribution Business](index=30&type=section&id=7.4.1%20Distribution%20Business) As a core business, the food distribution segment performed well during the pandemic due to increased home consumption, leveraging an extensive network and continuous introduction of global quality foods, further strengthened by the acquisition of Miyata Co., Ltd. in Japan - The food distribution business performed ideally during the pandemic, boasting an extensive distribution network covering department stores, supermarkets, convenience stores, fast-food restaurants, and hotels[141](index=141&type=chunk)[143](index=143&type=chunk) - The Group distributes various renowned quality food products from over **20 countries and regions**, including ice cream, snacks, milk powder, health foods, soy sauce, ham, and sausages[142](index=142&type=chunk)[143](index=143&type=chunk) - The acquisition of an **additional 55% equity interest** in Miyata Co., Ltd., a renowned Japanese snack and confectionery distributor, strengthens the Group's sales and distribution network and broad customer base[145](index=145&type=chunk)[148](index=148&type=chunk) [Manufacturing Business](index=31&type=section&id=7.4.2%20Manufacturing%20Business) The Group's food manufacturing business ensures products meet international standards and certifications through stringent quality control and scientific management, operating 18 factories in Hong Kong and Mainland China, with the expanded Calbee Four Seas factory enhancing efficiency and benefiting from increased home cooking demand during the pandemic - The Group's food manufacturing business strictly monitors quality, adhering to international standards and obtaining certifications such as **HACCP, ISO 9001, ISO 22000, GMP**, and the **Hong Kong Q-Mark license**[146](index=146&type=chunk)[149](index=149&type=chunk) - The Group operates **18 factories** in Hong Kong and Mainland China, with the expanded Calbee Four Seas factory in Tseung Kwan O Industrial Estate significantly improving production efficiency and output[147](index=147&type=chunk)[149](index=149&type=chunk) - The food manufacturing business benefited from the increased demand for home cooking during the pandemic[147](index=147&type=chunk)[149](index=149&type=chunk) [Retail and Catering Businesses](index=32&type=section&id=7.4.3%20Retail%20and%20Catering%20Businesses) Despite negative impacts from the pandemic, the Group's retail and catering businesses maintained high standards and pursued innovation, with its Chinese and Japanese restaurants gaining acclaim and Michelin honors in Guangdong and Hong Kong, while 'Okashi Land' and 'YOKU MOKU' bakeries remained popular and expanded Japan ice cream counters - Retail and catering businesses were affected by the pandemic but maintained high standards and innovation[151](index=151&type=chunk)[153](index=153&type=chunk) - The Group's 'Kung Tak Lam' Shanghai Vegetarian Cuisine in Causeway Bay received a **Michelin Plate honor**, and 'Sushiyoshi' Hong Kong branch was rated a **two-Michelin-star restaurant** from Osaka[151](index=151&type=chunk)[153](index=153&type=chunk) - 'Okashi Land' Japanese snack specialty stores and 'YOKU MOKU' cookie stores remained popular among consumers, with new Japan ice cream counters added in 'Okashi Land' and convenience stores[152](index=152&type=chunk)[153](index=153&type=chunk) [Brand Development](index=33&type=section&id=7.4.4%20Brand%20Development) Four Seas Group, approaching its 50th anniversary, has become a household name in Hong Kong with diversified businesses, upholding its commitment to food safety and quality, and the recent acquisition of Miyata aims to combine strengths for cross-brand and sales synergies, establishing a food sales platform spanning Mainland China, Hong Kong, and Japan - The Group is approaching its **50th anniversary**, having become a household name in Hong Kong with diversified businesses covering food distribution, manufacturing, retail, and catering[154](index=154&type=chunk)[156](index=156&type=chunk) - Upholding the principle of 'Eat with Confidence, Eat with Joy,' the Group maintains strict requirements for food hygiene, safety, and quality, with a comprehensive monitoring system in place[154](index=154&type=chunk)[156](index=156&type=chunk) - The acquisition of an **additional 55% equity interest** in Miyata Holding Co., Ltd., a renowned Japanese snack and confectionery distributor, aims to combine the strengths and advantages of both parties, creating cross-brand and sales synergies[155](index=155&type=chunk)[157](index=157&type=chunk) - The goal is to establish a unique food sales platform spanning Mainland China, Hong Kong, and Japan[155](index=155&type=chunk)[157](index=157&type=chunk) [Corporate Social Responsibility](index=34&type=section&id=7.5%20Corporate%20Social%20Responsibility) The Group actively fulfills its corporate social responsibility by participating in Hong Kong community welfare activities, earning multiple accolades including the 'Manpower Developer' title and various brand awards, demonstrating its achievements in human resource development and brand building - The Group actively promotes and participates in Hong Kong community welfare activities, earning the prestigious titles of **'Manpower Developer 2013-2021'** and **'Manpower Developer 2011-2021'**[159](index=159&type=chunk)[161](index=161&type=chunk) - 'Okashi Land' was awarded the **'Hong Kong Top Brand Mark'**, and 'Calbee' received multiple accolades including the **'2019 Most Loved Convenience Brand Award'** and **'ParknShop Super Brand Award 2019'**[160](index=160&type=chunk) - The Group was recognized by Mediazone as **'Asia's Leading Snack Foods Innovator'** and for **'Excellence in Manufacturing Quality Hygiene Measure and Customer Services'**[160](index=160&type=chunk) [Prospects and Growth](index=35&type=section&id=7.6%20Prospects%20and%20Growth) Despite global economic uncertainties, the Group remains confident in the Hong Kong food market, pursuing a 'Rooted in Hong Kong, Facing Mainland China, Going Global' strategy by introducing new quality foods and establishing a food platform across Mainland China, Hong Kong, and Japan - The Group remains confident in the Hong Kong food market and will establish a food platform spanning Mainland China, Hong Kong, and Japan[163](index=163&type=chunk)[167](index=167&type=chunk) - The business development strategy is 'Rooted in Hong Kong, Facing Mainland China, Going Global'[163](index=163&type=chunk)[167](index=167&type=chunk) [Hong Kong Business](index=35&type=section&id=7.6.1%20Hong%20Kong%20Business) Leveraging its leading position and extensive experience in the Hong Kong food market, the Group will utilize its capital, management resources, retail distribution expertise, and Mainland China manufacturing and distribution network through the Miyata Co., Ltd. acquisition to introduce more global fine foods, create cross-brand and sales synergies, and enter the Japanese consumer market - The Group holds a leading position, extensive sales network, and **49 years of experience** in the Hong Kong food market[164](index=164&type=chunk)[168](index=168&type=chunk) - Through the equity acquisition of Miyata Co., Ltd. in Japan, the Group will leverage its capital, management resources, experience in Hong Kong's food retail and distribution industry, and domestic manufacturing capabilities and distribution network to introduce more exquisite global food products[164](index=164&type=chunk)[168](index=168&type=chunk) - The objective is to create a unique food sales platform encompassing Mainland China, Hong Kong, and Japan[164](index=164&type=chunk)[168](index=168&type=chunk) [Mainland China Business](index=35&type=section&id=7.6.2%20Mainland%20China%20Business) The Group's Mainland China business is steadily growing, with popular products sold on major e-commerce platforms, benefiting from the pandemic's recovery and economic rebound, successfully stimulating sales through online and offline channels, and will remain a development focus with plans to expand Mainland Chinese foods overseas - The Group's business in the Mainland China market is steadily rising, with popular products sold on major e-commerce platforms such as **Taobao, Tmall, Tmall Global, and JD.com**[165](index=165&type=chunk)[169](index=169&type=chunk) - Benefiting from the rapid recovery from the pandemic and the domestic economic rebound, the Group successfully stimulated sales and increased market share through online and offline channel expansion[166](index=166&type=chunk)[169](index=169&type=chunk) - The Mainland China market will continue to be one of the Group's future development focuses, with plans to bring Mainland Chinese food products overseas through aggressive market strategies[166](index=166&type=chunk)[169](index=169&type=chunk) [Japan Business](index=36&type=section&id=7.6.3%20Japan%20Business) Japan's vast consumer market offers new development opportunities for the Group, which will strengthen its expansion in the Japanese market through the Miyata acquisition, consolidate Miyata's existing business, and leverage China's production capabilities to introduce Four Seas branded products, enhancing its confectionery market presence in Japan - The vast Japanese consumer market presents development opportunities for the Group[171](index=171&type=chunk)[173](index=173&type=chunk) - Following the acquisition of Miyata, the Group will strengthen its expansion in the Japanese market through Miyata's sales network and consolidate Miyata's existing business[171](index=171&type=chunk)[173](index=173&type=chunk) - The Group will leverage its production capabilities in China to provide Four Seas branded quality products to Japanese customers, thereby strengthening its presence in the Japanese confectionery market[171](index=171&type=chunk)[173](index=173&type=chunk) [Liquidity and Financial Resources](index=36&type=section&id=7.7%20Liquidity%20and%20Financial%20Resources) As of September 30, 2020, the Group maintained ample liquidity with cash and cash equivalents of HKD 717,807 thousand, sufficient bank credit facilities with moderate utilization, a debt-to-equity ratio of 104%, and bank borrowings primarily denominated in HKD, JPY, and RMB Liquidity and Financial Resources Overview - As of September 30, 2020 (HKD Thousands) | Indicator | Amount (HKD Thousands) | | :--- | :--- | | Cash and Cash Equivalents | 717,807 | | Total Bank Credit Facilities | 2,952,575 | | Bank Credit Facility Utilization Rate | 47% | | Debt-to-Equity Ratio | 104% | - Bank borrowings are denominated in **HKD, JPY, and RMB**, primarily comprising trust receipt loans and bank loans, bearing interest at prevailing market rates[172](index=172&type=chunk)[174](index=174&type=chunk) - Bank borrowings classified as current liabilities are repayable on demand or within one year, while non-current bank borrowings are repayable within the second to third year[172](index=172&type=chunk)[174](index=174&type=chunk) [Key Financial Ratios](index=37&type=section&id=7.8%20Key%20Financial%20Ratios) For the six months ended September 30, 2020, the Group's gross profit margin decreased, but net profit margin slightly increased, while inventory turnover days and trade receivables turnover days shortened, and trade payables turnover days remained stable Key Financial Ratios - For the six months ended September 30, 2020 | Indicator | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Gross Profit Margin | 22.4% | 29.9% | -7.5 percentage points | | Net Profit Margin | 1.4% | 1.3% | +0.1 percentage point | | Inventory Turnover Days | 42 | 62 | -20 days | | Trade Receivables Turnover Days | 57 | 69 | -12 days | | Trade Payables Turnover Days | 31 | 32 | -1 day | - Net profit margin is calculated as profit attributable to owners of the company divided by revenue[178](index=178&type=chunk)[179](index=179&type=chunk) - Inventory and trade payables turnover days are calculated by dividing the average of opening and closing balances by cost of sales and multiplying by the number of days in the period[178](index=178&type=chunk)[179](index=179&type=chunk) - Trade receivables turnover days are calculated by dividing the average of opening and closing balances by revenue and multiplying by the number of days in the period[178](index=178&type=chunk)[180](index=180&type=chunk) [Charges on Assets](index=38&type=section&id=7.9%20Charges%20on%20Assets) As of September 30, 2020, the Group had pledged approximately HKD 116,614 thousand in land and buildings and HKD 23,005 thousand in investment properties to secure bank facilities Pledged Assets - As of September 30, 2020 (HKD Thousands) | Asset Type | Amount (HKD Thousands) | | :--- | :--- | | Land and Buildings | 116,614 | | Investment Properties | 23,005 | [Capital Commitments](index=38&type=section&id=7.10%20Capital%20Commitments) As of September 30, 2020, the Group's capital commitments for property, plant and equipment, contracted but not provided for in the financial statements, amounted to HKD 9,127 thousand Capital Commitments (Property, Plant and Equipment) - As of September 30, 2020 (HKD Thousands) | Item | Amount (HKD Thousands) | | :--- | :--- | | Contracted but Not Provided For | 9,127 | [Foreign Currency Exposure](index=38&type=section&id=7.11%20Foreign%20Currency%20Exposure) The Group primarily faces currency risks from JPY and RMB transactions and continuously monitors foreign exchange conditions to minimize adverse fluctuations, but currently does not maintain a foreign currency hedging policy - The Group's transactional currency risk primarily arises from buying and selling transactions denominated in **Japanese Yen (JPY)** and **Renminbi (RMB)**[184](index=184&type=chunk)[189](index=189&type=chunk) - The Group continuously monitors foreign exchange conditions to minimize the impact of adverse foreign currency fluctuations but currently does not maintain a foreign currency hedging policy[185](index=185&type=chunk)[190](index=190&type=chunk) [Staff Employment and Remuneration Policies](index=38&type=section&id=7.12%20Staff%20Employment%20and%20Remuneration%20Policies) As of September 30, 2020, the Group employed approximately 3,100 staff, with remuneration packages determined by market terms and individual qualifications, and salaries and wages typically reviewed annually based on performance assessments and other relevant factors - As of September 30, 2020, the Group employed approximately **3,100 staff**[186](index=186&type=chunk)[191](index=191&type=chunk) - Remuneration packages are determined by reference to market terms and individual qualifications, with salaries and wages typically reviewed annually based on performance assessments and other relevant factors[186](index=186&type=chunk)[191](index=191&type=chunk) [Directors' and Chief Executive's Interests and/or Short Positions in the Shares and Underlying Shares of the Company or Any Associated Corporation](index=39&type=section&id=8.0%20Directors'%20and%20Chief%20Executive's%20Interests%20and/or%20Short%20Positions%20in%20the%20Shares%20and%20Underlying%20Shares%20of%20the%20Company%20or%20Any%20Associated%20Corporation) As of September 30, 2020, Mr. Tai Tak Fung and his spouse, Ms. Wu Mei Yung, held the vast majority of long positions in the Company's ordinary shares through controlled corporate interests, representing 67.52% of the total issued shares Directors' Long Positions in the Company's Ordinary Shares - As of September 30, 2020 | Director's Name | Capacity | Number of Ordinary Shares Held/Owned | Approximate Percentage of Total Issued Shares | | :--- | :--- | :--- | :--- | | Tai Tak Fung, Stephen | Interest in Controlled Corporation | 259,478,000 | 67.52% | | Wu Mei Yung, Quinly | Spouse's Interest and Interest in Controlled Corporation | 259,478,000 | 67.52% | - Mr. Tai Tak Fung's interests include **70,000,000 shares** held by Careful Guide Limited (CGL), which he wholly owns, and **74,250,000 shares** held by Special Access Limited (SAL), which he and his spouse wholly own[195](index=195&type=chunk)[197](index=197&type=chunk) - Mr. Tai Tak Fung and his spouse, Ms. Wu Mei Yung, are also deemed to be interested in **115,228,000 shares** held by Capital Season Investments Limited (CSI) through their interests in Hong Kong Food Investment Holdings Limited (HKFH)[197](index=197&type=chunk) [Directors' Rights to Acquire Shares or Debentures](index=41&type=section&id=9.0%20Directors'%20Rights%20to%20Acquire%20Shares%20or%20Debentures) For the six months ended September 30, 2020, the Company neither granted any rights to its directors, their spouses, or minor children to acquire shares or debentures, nor were any such rights exercised - During the period, the Company did not grant any rights to its directors or their respective spouses or minor children to acquire shares or debentures of the Company, nor were any such rights exercised[202](index=202&type=chunk)[205](index=205&type=chunk) [Substantial Shareholders' Interests and/or Short Positions in the Shares and Underlying Shares of the Company](index=42&type=section&id=10.0%20Substantial%20Shareholders'%20Interests%20and/or%20Short%20Positions%20in%20the%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) As of September 30, 2020, besides the directors, Special Access Limited (SAL), Careful Guide Limited (CGL), and Capital Season Investments Limited (CSI) were substantial shareholders, holding 19.32%, 18.22%, and 29.98% of the issued shares, respectively Substantial Shareholders' Long Positions in the Company's Ordinary Shares - As of September 30, 2020 | Name of Substantial Shareholder | Capacity | Number of Ordinary Shares Held/Owned | Approximate Percentage of Total Issued Shares | | :--- | :--- | :--- | :--- | | SAL (Special Access Limited) | Beneficial Owner | 74,250,000 | 19.32% | | CGL (Careful Guide Limited) | Beneficial Owner | 70,000,000 | 18.22% | | CSI (Capital Season Investments Limited) | Beneficial Owner | 115,228,000 | 29.98% | | AFI (Advance Finance Investments Limited) | Interest in Controlled Corporation | 115,228,000 | 29.98% | | HKFH (Hong Kong Food Investment Holdings Limited) | Interest in Controlled Corporation | 115,228,000 | 29.98% | - AFI holds the entire issued share capital of CSI, and AFI is wholly owned by HKFH; thus, AFI and HKFH are both deemed to have an equal interest in the **115,228,000 shares** of the Company held by CSI[208](index=208&type=chunk) [Share Option Scheme](index=43&type=section&id=11.0%20Share%20Option%20Scheme) For the six months ended September 30, 2020, the Company had no outstanding share options at the beginning or end of the period, granted no share options, and experienced no changes to the terms of its share option scheme - The Company had no unexercised share options at the beginning or end of the review period[214](index=214&type=chunk)[218](index=218&type=chunk) - During the review period, the Company did not grant any share options under the share option scheme adopted on **August 28, 2012**, and there were no changes to the terms of the scheme[214](index=214&type=chunk)[218](index=218&type=chunk) [Purchase, Sale or Redemption of Listed Securities of the Company](index=43&type=section&id=12.0%20Purchase,%20Sale%20or%20Redemption%20of%20Listed%20Securities%20of%20the%20Company) For the six months ended September 30, 2020, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the six months ended September 30, 2020[215](index=215&type=chunk)[219](index=219&type=chunk) [Corporate Governance](index=43&type=section&id=13.0%20Corporate%20Governance) For the six months ended September 30, 2020, the Board believed it complied with the Corporate Governance Code, with two deviations: non-executive directors lacked specific appointment terms, and directors filling casual vacancies were not elected at the first general meeting, which the Board deemed immaterial - The Company's directors believe they have complied with the Corporate Governance Code set out in Appendix 14 of the Listing Rules, with two deviations[216](index=216&type=chunk)[220](index=220&type=chunk) - Deviations include: non-executive directors do not have specific terms of appointment (but are subject to retirement by rotation and re-election), and directors appointed to fill casual vacancies were not elected at the first general meeting (though the Board considers this immaterial)[217](index=217&type=chunk)[220](index=220&type=chunk)[222](index=222&type=chunk) - The Company has adopted the Model Code for Securities Transactions by Directors as its code of conduct for directors and established a code for employees' securities transactions, with no non-compliance during the period[224](index=224&type=chunk)[225](index=225&type=chunk)[228](index=228&type=chunk) [Update of Directors' Information Under Rule 13.51B(1) of the Listing Rules](index=44&type=section&id=14.0%20Update%20of%20Directors'%20Information%20Under%20Rule%2013.51B(1)%20of%20the%20Listing%20Rules) The annual director's fee for Independent Non-executive Director Mr. Kijima Tsunawo will be adjusted starting April 1, 2021 - The annual director's fee for Independent Non-executive Director Mr. Kijima Tsunawo will be adjusted from **HKD 341,000 to HKD 428,000**, effective **April 1, 2021**[226](index=226&type=chunk)[229](index=229&type=chunk) [Audit Committee](index=45&type=section&id=15.0%20Audit%20Committee) The Audit Committee, comprising three independent non-executive directors, reviewed the unaudited condensed consolidated interim financial report for the six months ended September 30, 2020, and discussed accounting principles, risk management, internal controls, and financial reporting matters with management - The Audit Committee comprises three independent non-executive directors: Ms. Leung Mei Yin (Chairperson), Mr. Chan Yuk Sang, and Mr. Kijima Tsunawo[231](index=231&type=chunk)[235](index=235&type=chunk) - The Audit Committee reviewed the unaudited condensed consolidated interim financial report for the six months ended September 30, 2020, and discussed accounting principles, risk management, internal controls, and financial reporting matters with management[231](index=231&type=chunk)[235](index=235&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=45&type=section&id=16.0%20Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) The Company's 2020 interim results announcement has been published on the HKEX and company websites, and the interim report will be dispatched to shareholders and posted on the websites in due course - The Company's 2020 interim results announcement has been published on the websites of **Hong Kong Exchanges and Clearing Limited** and the Company[232](index=232&type=chunk)[236](index=236&type=chunk) - The interim report for the six months ended September 30, 2020, will be dispatched to shareholders and posted on the aforementioned websites[232](index=232&type=chunk)[236](index=236&type=chunk) [Appreciation](index=45&type=section&id=17.0%20Appreciation) The Board extends its sincere gratitude to shareholders, business partners, and employees for their continued support of the Group - The Board expresses its sincere gratitude to the Group's shareholders, business partners, and employees for their continued support[233](index=233&type=chunk)[237](index=237&type=chunk) [The Board](index=45&type=section&id=18.0%20The%20Board) As of the reporting date, the Company's Board of Directors comprised six executive directors, including Mr. Tai Tak Fung and Ms. Wu Mei Yung, and three independent non-executive directors, including Ms. Leung Mei Yin - As of the reporting date, the Company's Board of Directors comprised **six executive directors** and **three independent non-executive directors**[234](index=234&type=chunk)[238](index=238&type=chunk) - The Chairman is **Mr. Tai Tak Fung**[234](index=234&type=chunk)[239](index=239&type=chunk)

四 洲 集 團 有 限 公 司 Four Seas Mercantile Holdings Limited Annual Report 年報 Stock Code 股份代號 374 Contents 目錄 | --- | --- | |-------------------------------------------------------------------|--------| | | | | Corporate Information 公司資料 | 2-3 | | Chairman's Statement 主席報告 | 4-13 | | Major Awards of the Year 年度主要獎項 | 14-16 | | Management Discussion and Analysis 管理層討論及分析 | 17-22 | | Report of the Directors 董事會報告 | 23-36 | | Environmental, Social and Governance Report 環境、社會及管治報告 | 37-51 | | Corporate Governance Repo ...

| --- | --- | |-------|-----------------------------------------------------------------------------------------------| | | | | | | | | | | | | | | | | | | | | 四 洲 集 團 有 限 公 司 Four Seas Mercantile Holdings Limited Interim Report 中期報告 2019-20 | | | Stock Code 股份代號 | | | 374 | The board of directors (the "Board") of Four Seas Mercantile Holdings Limited (the "Company") presents the unaudited condensed consolidated statement of financial position as at 30 September 2019 of the Company and its subsidiaries (the ...

Financial Performance - The Group's consolidated revenue for the year ended March 31, 2019, increased to HK$3,028,987,000, up from HK$3,002,437,000 in 2018, representing a growth of approximately 0.9%[20]. - Profit attributable to equity holders of the Company for the year was HK$30,161,000, a significant decrease from HK$347,703,000 in 2018, reflecting a decline of about 91.3%[20]. - Revenue for the year ended March 31, 2019, was HK$3,028,987,000, representing a 0.9% increase from HK$3,002,437,000 in 2018[82]. - Gross profit increased to HK$972,784,000, up 1.0% from HK$962,698,000 in the previous year, maintaining a gross profit margin of 32.1%[82]. - EBITDA for the year was HK$151,326,000, a significant decrease of 67.1% compared to HK$460,309,000 in 2018[82]. - The decline in profit for the year was attributed to the absence of a one-off gain from property disposal recorded in the previous year[20]. Sales and Market Segments - Sales from the Hong Kong segment amounted to HK$2,045,230,000, accounting for 67.5% of total sales, while sales from the Mainland China segment were HK$983,757,000, representing 32.5% of total sales[20]. - Sales revenue from snack items increased by 2.4% to HK$1,301,811,000, continuing to be the major revenue source for the Group[88]. - Confectionery sales revenue rose by 2.3% to HK$582,269,000, driven by a diverse range of products offered[89]. - Sales revenue from ham and sausage items increased by 1.2% to HK$369,125,000, reflecting strong consumer reception[90]. - Beverage and dairy products saw a decline in sales revenue by 15.6% to HK$223,010,000 due to weak market demand[91]. - Food materials/ingredients sales revenue grew by 5.7% to HK$235,048,000, with continued supply to major customers in the food industry[92]. Business Development and Strategy - The Group has been actively promoting Japanese ice-cream, which has been well received by consumers, contributing to maintaining competitiveness and market share[19]. - The Group's food distribution business has been developing steadily, sourcing unique and high-quality products from over 20 countries[29]. - The Group aims to bring pleasant surprises to food lovers in Hong Kong through its multifaceted businesses, including food distribution, manufacturing, and retailing[27]. - The Group is actively developing the Mainland China market while also introducing overseas cuisines to the region[49]. - The Group plans to promote Mainland snacks in overseas markets, recognizing the potential for growth and business opportunities[62]. - The Group's strategy focuses on sourcing global snacks to attract more consumers and enhance its leading market position[60]. Operational Highlights - The Group operates various specialty stores in Hong Kong, including "Okashi Land" for Japanese snacks and "YOKU MOKU" for cookies[28]. - The Group has expanded its factory premises in Tseung Kwan O Industrial Estate by an additional 10,000 square feet to enhance production capacity for products like "Jagabee" fries[36]. - The Group operates 18 processing plants in Hong Kong and Mainland China, producing a diverse range of food products to meet different customer needs[35]. - The Group's strong distribution network covers department stores, supermarkets, convenience stores, and restaurants, enhancing its market presence[28]. - The Group has established a "Japan Ice-cream House" in Tsim Sha Tsui, promoting various renowned Japanese ice-cream brands, which is expected to generate new revenue[34]. Awards and Recognition - The Group has received multiple international accreditations, including "HACCP", "ISO 9001", and "ISO 22000", ensuring high standards in food safety and quality[35]. - The Group has been recognized with multiple awards, including "Meritorious Family-friendly Employers - Special Mention (Gold)" and "Kid's Favourite Brands Award" from Wellcome Supermarket[54]. - The company received multiple awards this year, including the Grand Bauhinia Medal and the Gold Bauhinia Star from the Hong Kong SAR Government[70]. - The company was recognized as a "Caring Company" for over 15 years by the Hong Kong Council of Social Service[73]. - The company was awarded the "Most Influential Listed Company Leader" at the China Securities Golden Bauhinia Awards[70]. Corporate Governance and Compliance - The Group emphasizes customer satisfaction and aims to source new products and produce quality food products for consumers in Hong Kong and Mainland China[124]. - Compliance procedures are in place to ensure adherence to relevant laws and regulations impacting the Group's business operations[113]. - The Group recognizes human resources as important capital and focuses on staff retention and development through performance-based incentives and training programs[115]. - The directors' remuneration is determined based on their duties, responsibilities, performance, and the group's results[155]. - The company has arranged appropriate directors' and officers' liability insurance coverage for its directors and officers[156]. Financial Position and Risk Management - As of March 31, 2019, the Group held cash and cash equivalents of HK$590,979,000 and had banking facilities of HK$2,414,176,000, with 29% utilized[97]. - The Group's gearing ratio was 49% as of March 31, 2019, indicating the proportion of bank borrowings to equity attributable to equity holders[97]. - The Group had capital commitments of HK$2,218,000 for property, plant, and equipment as of March 31, 2019[99]. - The Group does not maintain a foreign currency hedging policy, exposing it to transactional currency risks primarily from sales and purchases in Japanese yen and Renminbi[101]. - The financial risk management objectives and policies are detailed in note 38 of the financial statements, indicating a structured approach to managing financial risks[139].