Bossini International Holdings Limited 堡 獅 龍 國 隊 集 團 有 限 公 司 Interim Report 2020/21 中期報告 Global distribution network 球分銷網絡 8 | --- | --- | |--------------------------------------------------------------------------|---------------------------| | | | | Hong Kong and Macau 香港及澳門 Mainland China 中圆大陸 Sinqapore 新加坡 | 37 (38) 136 (154) 17 (17) | | Bangladesh 孟加拉 Brunei 汶莱 | 1 (1) | | Czech Republic | 1 (1) | | 提克共和圆 Dominican Republic | 2 (2) | | 多明尼加共和國 | 4 (4) | | India 印度 Indonesia 印尼 | 234 (230) 0 (8) | Vietn ...

Financial Performance - For the year ended June 30, 2020, the company reported revenue of HK$1,092 million, a 27% increase from HK$767 million in the previous year[7]. - Group revenue for the year ended June 30, 2020, was HK$1,092 million, a decrease of 27% from HK$1,488 million in 2019[35]. - Revenue from Hong Kong and Macau accounted for 66% of total revenue, while Mainland China contributed 27%[10]. - Revenue in Hong Kong and Macau, including retail and export franchising, was HK$716 million, representing a 32% decline from HK$1.052 billion in 2019[65]. - Revenue in mainland China decreased by 11% to HK$296 million (2019: HK$332 million) with same-store sales dropping 8%[71]. - Singapore's revenue dropped by 23% to HK$80 million (2019: HK$104 million) with same-store sales registering an 11% decline[72]. - The Group's top- and bottom-line performance substantially deteriorated in the second half of the financial year due to declining tourism and consumer spending[21]. - Loss attributable to owners of the Company was HK$368 million, an increase of 164% from HK$139 million in 2019[35]. - Loss attributable to the company's owners increased by 164%, with a net profit margin of -34%, up 25 percentage points from -9% in 2019[51]. Operational Efficiency - The gross profit margin decreased to 49% from 52%, reflecting a 3 percentage point decline[7]. - Gross profit decreased by 30% to HK$534 million, with a gross margin of 49%, down from 52% in 2019[41]. - Total operating expenses increased to 81% of sales, up from 62% in 2019[42]. - Operating loss rose by 209% to HK$319 million, compared to HK$103 million in 2019[42]. - The company is currently reviewing expenses and adjusting inventory levels to improve operational efficiency[35]. - The Group is examining expenditure with a focus on reducing costs and increasing operational efficiency[22]. - The Group is continuously reviewing its shop portfolio and exiting specific loss-making sectors[22]. Store Management - Directly managed stores in Mainland China decreased to 154 from 175, a reduction of 21 stores[7]. - The total number of directly managed stores globally decreased to 209 from 286, a decline of 77 stores[7]. - Same-store sales declined by 14%, while same-store gross profit fell by 21%[35]. - Same-store sales for directly managed stores fell by 19%, while same-store gross profit declined by 27%[65]. - The total number of stores operated in the export franchising business was 773, a slight decrease from 775 in 2019, with operations across 25 countries[66]. Liquidity and Financial Position - The current ratio fell to 1.49 from 3.42, indicating a decline in liquidity[9]. - The company’s net cash position decreased to HK$116 million from HK$132 million[9]. - As of June 30, 2020, the Group had cash and bank balances of HK$176 million (2019: HK$162 million) and net cash of HK$116 million (2019: HK$132 million)[73]. - Bank borrowings increased to HK$60 million (2019: HK$30 million) with a gearing ratio of 21% (2019: 4%) as of June 30, 2020[73]. - The return on equity was reported at -75%, a decrease of 57 percentage points from -18% in the previous year[9]. Market Conditions - The COVID-19 outbreak and its classification as a pandemic have intensified the already difficult operating environment in core markets[20]. - The economic environment in core markets has been adversely affected by trade tensions, local incidents, and the COVID-19 pandemic, leading to slower growth or contraction in retail sales[100]. - Visitor arrivals in Hong Kong and Macau slumped over 80% according to local travel industry data[21]. - The Group anticipates continued strong headwinds and does not expect a solid rebound in overall performance due to ongoing challenges[23]. - Major banks continue to tighten credit facilities, making it difficult to predict future banking sector measures[23]. Corporate Governance - The company has adopted the Corporate Governance Code as stated in the Listing Rules of The Stock Exchange of Hong Kong Limited, ensuring compliance with the Code Provisions[109]. - The Board currently comprises 9 Directors, including 4 Executive Directors, 2 Non-executive Directors, and 3 Independent Non-executive Directors, reflecting a balance of skills and experience[124]. - The company has complied with the Code Provisions in the Corporate Governance Code, with the exception of the Chairman not being subject to retirement by rotation, which is deemed crucial for business stability[110]. - Independent Non-executive Directors are appointed for specific terms, either 1 year or 3 years, and are subject to retirement by rotation at annual general meetings[143]. - The company has received written annual confirmations from each Independent Non-executive Director regarding their independence, in compliance with the Listing Rules[135]. Management and Board Activities - The management provides monthly management accounts and updates to the Directors to ensure informed decision-making[113]. - The Company has established 4 Board committees to enhance governance and oversight[129]. - The overall management of the company's business is vested in the Board, which is collectively responsible for promoting the business and directing the Group's affairs[112]. - The Board of Directors held 13 meetings during the year ended June 30, 2020, to review and approve the audited annual results for the year ended June 30, 2019, and the unaudited results for the six months ended December 31, 2019[156]. - The Company has established a Nomination Committee to oversee the appointment of new Directors, considering their background, experience, and independence requirements[146]. Remuneration and Employee Management - The Remuneration Committee held 4 meetings during the year and recommended adjustments to the remuneration of Executive Directors and performance bonuses[194]. - For the year ended June 30, 2020, the remuneration of senior management was categorized as follows: 5 individuals earned below HK$1,500,000, and 3 individuals earned between HK$1,500,001 and HK$2,000,000[195]. - The Company aims to provide fair market remuneration to attract and retain high-quality staff, adhering to the Corporate Governance Code[197]. - As of June 30, 2020, the Group employed 1,500 full-time equivalent employees, down from 1,900 in 2019[94].

Financial Performance - Revenue for the six months ended December 31, 2019, was HK$699 million, a decrease of 20% compared to HK$875 million in the same period of 2018[7]. - Loss from operating activities increased to HK$82 million, compared to a loss of HK$24 million in the previous year, representing a 243% increase[7]. - Gross profit margin decreased to 51% from 52%, a decline of 1 percentage point[7]. - Basic loss per share was HK$5.71, compared to HK$1.57 in the previous year, marking a 264% increase in loss[7]. - Gross profit decreased by 22% to HK$356 million, down from HK$457 million, resulting in a gross margin of 51%[12]. - Operating loss increased to HK$82 million, compared to a loss of HK$24 million in the previous year, reflecting a 243% change[12]. - Loss attributable to owners for the period was HK$94 million, a significant increase of 264% from HK$26 million in the prior period[12]. - The Group's overall revenue decreased by 20% to HK$699 million, down from HK$875 million in the previous year[39]. - The Group's loss attributable to owners was HK$94 million, with a basic loss per share of HK$5.71 cents[41]. Store Operations - The total number of directly managed stores increased to 287, with 799 export franchised stores, totaling 1,086 stores across approximately 30 countries and regions[8]. - Directly managed stores in Mainland China increased by 5 to a total of 180 stores, while Taiwan saw a decrease of 6 stores to 51[19]. - The total number of stores reached 1,086 as of December 31, 2019, an increase from 1,061 on June 30, 2019[58]. - The number of stores in Taiwan decreased to 51 from 57 as of June 30, 2019[61]. - The number of stores in Singapore increased to 17 from 15 as of June 30, 2019[61]. Inventory and Cash Management - Inventory turnover days increased to 142 days from 119 days, an increase of 23 days[7]. - Cash and bank balances rose by 62% to HK$262 million, up from HK$162 million[15]. - The Group's cash and bank balances stood at HK$262 million, down from HK$306 million in the previous year[42]. - The current ratio decreased to 1.66 from 3.42, a decline of 51%[7]. - The current ratio decreased to 1.66 from 3.41 in 2018, and the total debt to equity ratio rose to 110% from 35%[109]. Market Conditions and Challenges - The outbreak of COVID-19 is expected to adversely impact economic growth in mainland China and Hong Kong[136][137]. - The business environment for retail trade has become increasingly difficult due to political turmoil and the pandemic[137]. - The complex socio-economic environment presents unprecedented challenges, with international tensions impacting market sentiment and economic growth[141]. Strategic Initiatives - The Group maintains a cautious approach to market development, focusing on sustainable growth drivers and adhering to prudent financial management principles[142]. - The export franchising business remains a key focus, with plans to optimize the distribution network and enhance brand awareness[143]. - The Group aims to implement strategies for sustainable business development, including reinventing products to reflect the Urban Athleisure brand identity[147]. - The Group is leveraging its established click-and-mortar retail network to expand O2O business and enhance consumer engagement[151]. - The "4D" strategy (Digitisation, Digitalisation, Digital Transformation, and Data Intelligence) is being implemented to enhance processes and customer experiences[153]. Governance and Management - The company has a strong board with members holding significant qualifications, including CPA and MBA degrees[173][174]. - The executive directors have extensive management experience, with Ms. Tsin Man Kuen Bess having over 18 years in management roles[177]. - The company is committed to maintaining compliance with the Securities and Futures Ordinance and the Model Code for Securities Transactions[177]. - The company has a structured governance framework with various committees including Audit, Remuneration, and Nomination[168][173]. - The executive team is focused on strategic planning and overall management of the group[167].

Financial Performance - Revenue for the year ended June 30, 2019, was HK$1,641 million, a decrease of 16% from HK$1,958 million in 2018[17]. - Gross profit for the same period was HK$846 million, down from HK$1,036 million, representing a decline of 18%[17]. - The company reported a loss from operating activities of HK$135 million, compared to a loss of HK$21 million in the previous year, marking a significant increase of 526%[17]. - The net margin for the year was -8%, a decrease of 7 percentage points from the previous year[17]. - The loss attributable to owners for the year was HK$139 million, resulting in a basic loss per share of HK8.48 cents[32]. - Operating loss was HK$33 million, a significant decline from a profit of HK$24 million in 2018[111]. - Operating loss in Hong Kong and Macau was HK$33 million (2018: profit of HK$24 million), resulting in an operating margin of negative 3%[115]. - Operating loss in mainland China was HK$58 million (2018: HK$30 million), leading to an operating margin of negative 17%[122]. - Operating loss for Singapore operations was HK$13 million (2018: HK$3 million) with an operating margin of negative 13% (2018: negative 2%)[129]. Sales and Store Performance - Same-store sales growth decreased by 9% overall, with Hong Kong and Macau experiencing a decline of 10%[15]. - Same-store sales and same-store gross profit declined by 9% and 11% respectively, while inventory turnover days increased from 80 days in 2018 to 119 days[32]. - Same-store sales in Hong Kong and Macau declined by 10%, while mainland China and Taiwan saw declines of 6% and 8%, respectively[80]. - The total number of directly managed stores increased to 286, up from 284 in the previous year, while export franchised stores rose to 775 from 654[17]. - The total number of stores increased to 1,061, with 121 new stores added in the export franchising business across 27 countries[92][94]. - The number of directly managed stores in mainland China rose to 175, up from 164 in 2018[95]. - Same-store gross profit in Hong Kong and Macau decreased by 12% (2018: 2% growth) and in Taiwan by 10% (2018: 6% growth)[115][124]. Inventory and Cash Management - The inventory turnover period increased to 119 days, up from 80 days, indicating a decline in inventory management efficiency[17]. - Cash and bank balances decreased to HK$162 million, down from HK$341 million in 2018[73]. - As of June 30, 2019, the Group's net cash totaled HK$132 million, and it held an investment fund of HK$232 million[32]. - The current ratio improved to 3.42 times (2018: 3.10 times) while the total liabilities to equity ratio increased to 34% (2018: 29%)[129]. - The Group held an investment fund with an aggregate principal amount of HK$232 million (2018: HK$230 million) and recognized interest income of HK$7 million (2018: HK$7 million)[132]. Market and Economic Conditions - The economic outlook remains cautious due to trade tensions and social unrest in Hong Kong, impacting consumer confidence and spending[46]. - The economic growth in Mainland China in Q2 2019 was the slowest in nearly 27 years, with domestic demand becoming a major driver[62]. - The Group acknowledges the challenges posed by the ongoing trade tensions and economic uncertainties impacting consumer sentiment[63]. - The economic environment presents complexity and uncertainty, but the Group remains confident in long-term growth through effective strategy execution[157]. Strategic Initiatives and Future Plans - The Group aims to develop new markets in Southeast Asia and expand its online-to-offline business[50]. - The Group plans to enhance operational efficiencies by adhering to the 80/20 rule and leveraging big data for business value creation[50]. - The Group is focused on nurturing existing markets and revitalizing the business growth momentum in Mainland China[50]. - The Group recognizes the importance of adapting to changing consumer preferences and spending patterns to maintain competitiveness[55]. - The Group's strategy includes reinventing products to reflect a consistent brand identity and developing a global visual merchandising execution[50]. - The export franchising business is a main focus, with plans to optimize the distribution network in emerging markets and strengthen brand presence[148]. Corporate Governance - The Company has adopted the Corporate Governance Code as stated in the Listing Rules and has complied with the Code Provisions, except for the Chairman not being subject to retirement by rotation[164]. - The Board currently comprises 6 Directors, including 3 Executive Directors and 3 Independent Non-executive Directors, ensuring a balance of skills and experience[179]. - The Company has established 4 Board committees to enhance governance and oversight, with specific roles assigned to each Director[182]. - All Independent Non-executive Directors have confirmed their independence in accordance with the Listing Rules, ensuring checks and balances for shareholder interests[188]. - The roles of Chairman and Chief Executive Officer are separated to maintain independence and balance in decision-making[193].

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |-------|-------|----------|-------|-------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | INTEERIM | | | | | | | | Bossini International Holdings Limited 堡 獅 龍 國 隊 集 團 有 限 公 司 Global distribution network 全球分銷網絡 Mainland China 中國大陸 Mainland China Hong Kong and Macau Singapore Taiwan Bangladesh Brunei Dominican Republic India Indonesia Kenya Malaysia Middle Eas ...