[Performance Highlights](index=1&type=section&id=Performance%20Highlights) [Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) Hung Fook Tong Group faced market challenges in H1 2024, with total revenue decreasing by 7.1% to HKD 308 million; despite the revenue decline, effective cost control narrowed the loss attributable to owners of the Company from HKD 9.6 million to HKD 7.9 million, with gross profit margin slightly increasing to 58.9% Key Performance Indicators for H1 2024 | Indicator | H1 2024 | H1 2023 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 308.0 Million HKD | 331.7 Million HKD | -7.1% | | - Hong Kong Retail Business | 236.3 Million HKD | 251.7 Million HKD | -6.1% | | - Wholesale Business | 71.7 Million HKD | 80.0 Million HKD | -10.4% | | Gross Profit | 181.5 Million HKD | 193.9 Million HKD | -6.4% | | Gross Profit Margin | 58.9% | 58.5% | +0.4 pp | | Loss Attributable to Owners of the Company | (7.9) Million HKD | (9.6) Million HKD | Loss narrowed by 17.7% | | Loss Per Share | 1.21 HK cents | 1.47 HK cents | -17.7% | [Condensed Consolidated Interim Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Interim%20Financial%20Statements) [Statement of Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Comprehensive%20Income) In H1 2024, the company's revenue was HKD 308 million, a 7.1% year-on-year decrease; despite reductions in selling, administrative, and finance expenses, the loss for the period narrowed to HKD 10.77 million from HKD 13.90 million in the prior year, with loss attributable to owners of the Company at HKD 7.93 million Summary of Condensed Consolidated Interim Statement of Comprehensive Income (HKD Thousand) | Item | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 308,032 | 331,678 | | Gross Profit | 181,529 | 193,907 | | Operating Loss | (5,896) | (10,580) | | Loss Before Income Tax | (10,827) | (13,745) | | Loss for the Period | (10,765) | (13,904) | | Loss Attributable to Owners of the Company | (7,925) | (9,649) | [Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Financial%20Position) As of June 30, 2024, the Group's total assets were HKD 676 million, a 5.3% decrease from end-2023; total liabilities were HKD 435 million, and total equity was HKD 241 million, notably with net current liabilities of HKD 140 million primarily due to HKD 142 million in advances received Summary of Statement of Financial Position (HKD Thousand) | Item | As of June 30, 2024 (Unaudited) | As of December 31, 2023 (Audited) | | :--- | :--- | :--- | | Total Assets | 675,812 | 713,763 | | Total Liabilities | 435,090 | 457,887 | | Total Equity | 240,722 | 255,876 | | Current Assets | 212,713 | 228,439 | | Current Liabilities | 352,562 | 369,395 | | Net Current Liabilities | (139,849) | (140,956) | [Notes to the Financial Statements](index=6&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Information) [Segment Information](index=8&type=section&id=3%20Segment%20Information) The Group's operations are divided into Hong Kong retail and wholesale segments; Hong Kong retail business, despite revenue decline, saw segment results increase from HKD 3.82 million to HKD 5.34 million, indicating improved profitability, while the wholesale business faced challenges with both revenue and segment results decreasing Summary of Segment Results (HKD Thousand) | Segment | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | | **Hong Kong Retail** | Revenue from External Customers | 236,346 | 251,683 | | | Segment Results | 5,339 | 3,824 | | **Wholesale** | Revenue from External Customers | 71,686 | 79,995 | | | Segment Results | 8,780 | 9,444 | [Management Discussion and Analysis](index=15&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=15&type=section&id=Business%20Review) In H1 2024, the Group faced a challenging operating environment due to a sluggish Hong Kong economy, high interest rates, and cross-border consumption trends, leading to a 7.1% decline in total revenue; however, effective cost control and improved production efficiency resulted in a 0.4 percentage point increase in gross profit margin and a 17.9% reduction in loss attributable to owners of the Company, maintaining a solid financial position with ample cash and unutilized bank facilities - The macroeconomic environment poses challenges to the retail sector, particularly outbound travel and residents' cross-border consumption trends, which pressure the Group's catering business[28](index=28&type=chunk) - Despite the revenue decline, the Group successfully narrowed the loss attributable to owners of the Company by **17.9%** to **HKD 7.9 million** through cost control and enhanced production efficiency[28](index=28&type=chunk) [Hong Kong Retail Business](index=15&type=section&id=Hong%20Kong%20Retail) As the primary revenue source, Hong Kong retail business revenue fell 6.1% year-on-year to HKD 236 million, accounting for 76.7% of total revenue, mainly due to Hong Kong residents' cross-border consumption and incomplete recovery of inbound tourism; despite this, segment profit grew 39.6% to HKD 5.3 million, driven by improved gross profit margin and reduced administrative expenses, with the Group optimizing product mix, expanding sales networks, and enhancing member engagement (over 1.398 million 自家CLUB members) to address challenges Hong Kong Retail Business Performance | Indicator | H1 2024 | H1 2023 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Segment Revenue | 236.3 Million HKD | 251.7 Million HKD | -6.1% | | Segment Profit | 5.3 Million HKD | 3.8 Million HKD | +39.6% | - As of June 30, 2024, the Group operated **108 self-operated stores** in Hong Kong and actively enhanced customer loyalty and expanded customer base through social media platforms (Xiaohongshu, Douyin) and membership programs (自家CLUB members exceeding **1,398,000**)[29](index=29&type=chunk)[30](index=30&type=chunk) [Wholesale Business](index=16&type=section&id=Wholesale) Wholesale business revenue decreased by 10.4% to HKD 71.7 million, and segment profit fell by 7.0% to HKD 8.8 million, primarily reflecting the continued sluggish consumer sentiment in Hong Kong and mainland China; Hong Kong wholesale revenue declined by 7.6%, while mainland China wholesale business revenue dropped by 24.1% due to uncertain economic outlook and intense competition, with the Group responding by launching new products and expanding online and offline sales network coverage Wholesale Business Performance | Indicator | H1 2024 | H1 2023 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Segment Revenue | 71.7 Million HKD | 80.0 Million HKD | -10.4% | | Segment Profit | 8.8 Million HKD | 9.4 Million HKD | -7.0% | - By region, Hong Kong wholesale revenue decreased by **7.6%** to **HKD 61.5 million**, and mainland China wholesale revenue decreased by **24.1%** to **HKD 10.2 million**[32](index=32&type=chunk)[33](index=33&type=chunk) [Outlook](index=17&type=section&id=Outlook) For H2 2024, the Group anticipates continued challenging operating environments in Hong Kong and mainland China, thus adopting prudent financial management strategies focused on optimizing cost structures and maintaining robust cash flow, while actively exploring new revenue streams, including expanding product categories, broadening sales channels, seeking brand collaborations, and identifying new opportunities in the Greater Bay Area and overseas markets - Key strategies include: - **Prudent Financial Management**: Optimizing cost and capital structures, maintaining robust cash flow - **Revenue Expansion**: Expanding product categories (e.g., postpartum tonics, ambient products), broadening sales channels, seeking brand collaborations - **Market Expansion**: Exploring new opportunities in mainland China (especially the Greater Bay Area) and overseas markets[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) [Financial Review](index=19&type=section&id=Financial%20Review) The period's financial performance reflects macroeconomic challenges and the company's effective cost control; revenue declined by 7.1% due to changing consumption patterns, but a 8.2% decrease in cost of sales improved gross profit margin from 58.5% to 58.9%, while staff costs and depreciation expenses also fell by 10.6% and 10.0% respectively, effectively offsetting some revenue decline and ultimately narrowing the loss attributable to owners of the Company Key Financial Item Changes | Item | H1 2024 | H1 2023 | Y-o-Y Change | Ratio to Revenue (H1 2024 vs H1 2023) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 308 Million HKD | 331.7 Million HKD | -7.1% | N/A | | Gross Profit Margin | 58.9% | 58.5% | +0.4pp | N/A | | Staff Costs | 93.7 Million HKD | 104.8 Million HKD | -10.6% | 30.4% vs 31.6% | | Rental Expenses | 50.8 Million HKD | 51.7 Million HKD | -1.7% | 21.5% vs 20.5% | | Loss Attributable to Owners of the Company | 7.9 Million HKD | 9.6 Million HKD | -17.7% | N/A | [Liquidity and Financial Resources](index=20&type=section&id=Liquidity%20and%20Financial%20Resources%20Review) As of June 30, 2024, the Group held cash and bank balances of HKD 79.4 million with a gearing ratio of 0.70, indicating a sound financial position; despite net current liabilities of HKD 140 million, HKD 142 million of this comprises advances received for prepaid vouchers and points, which are not expected to be settled in cash, resulting in net current assets of HKD 2.2 million if excluded Liquidity and Financial Resources Indicators | Indicator | As of June 30, 2024 | As of December 31, 2023 | | :--- | :--- | :--- | | Bank Deposits and Cash Balances | 79.4 Million HKD | 88.5 Million HKD | | Gearing Ratio | 0.70 | 0.69 | | Net Current Liabilities | (139.8 Million HKD) | (141.0 Million HKD) | - Net current liabilities primarily consist of **HKD 142 million** in advances received from prepaid voucher sales, which are expected to be settled through customer redemption of products rather than cash payments in the normal course of business[49](index=49&type=chunk) [Other Information](index=22&type=section&id=Other%20Information) [Dividend Policy](index=22&type=section&id=Dividend) The Board resolved not to declare any interim dividend for the six months ended June 30, 2024, consistent with the policy for the same period last year - The Board decided not to declare an interim dividend for the six months ended June 30, 2024[52](index=52&type=chunk) [Corporate Governance](index=22&type=section&id=Corporate%20Governance) During the reporting period, the company complied with the Corporate Governance Code set out in the Listing Rules; the company's Audit Committee reviewed the interim financial information, which was also reviewed by external auditor PricewaterhouseCoopers - The Company has complied with the code provisions of the Corporate Governance Code[52](index=52&type=chunk) - The Audit Committee, comprising three independent non-executive directors, has reviewed the interim financial information, and the external auditor has also completed its review[54](index=54&type=chunk)

Business Operations - The company operates 111 self-operated stores in Hong Kong, maintaining its position as the largest herbal product retailer in the region[19] - The company has expanded its wholesale business in mainland China, with products available in over 13,000 convenience stores and various supermarkets across 13 provinces[21] - The company has successfully entered the Mexican market, expanding its overseas wholesale business despite global economic challenges[21] - The company continues to enhance its retail network and innovate to meet the diverse needs of its customers[19] - The company plans to maintain 100 to 110 retail stores in 2024, focusing on cost control and operational efficiency[25] - The company plans to open approximately two new retail stores in 2024 while closing underperforming locations[46] - The company aims to expand its wholesale network in the Guangdong-Hong Kong-Macao Greater Bay Area to enhance brand value[25] - The company continues to expand its overseas wholesale business to mitigate the impacts of fluctuating economic conditions in mainland China and Hong Kong[110] Financial Performance - Total revenue decreased by 2.0% to HKD 672.7 million, down from HKD 686.7 million in the previous year[30] - Gross profit fell by 3.0% to HKD 393.5 million, with a gross margin of 58.5%, down from 59.1%[30] - The Hong Kong retail segment generated revenue of HKD 503.8 million, a decline of 2.6% year-on-year, accounting for 74.9% of total revenue[32] - The company recorded a loss attributable to shareholders of HKD 34.6 million, compared to a profit of HKD 5.3 million in the previous year[30] - Wholesale revenue for the year was HKD 168,900,000, a slight decrease from HKD 169,300,000 in the previous year, accounting for 25.1% of total revenue[37] - Hong Kong wholesale revenue grew by 1.1% to HKD 144,500,000, up from HKD 142,900,000 in the previous year[40] - Revenue from the mainland China wholesale business decreased by 7.7% to HKD 24,400,000, down from HKD 26,400,000 in the previous year[41] - For the fiscal year ending December 31, 2023, the company recorded revenue of HKD 672.7 million, a decrease of 2.0% compared to HKD 686.7 million in 2022[54] - The retail business in Hong Kong generated revenue of HKD 503.8 million, down 2.6% from HKD 517.4 million in 2022[54] Product Development - The company introduced new product lines, including gourmet coffee, vegetarian options, and various baked goods, catering to health-conscious consumers[19] - New product offerings include convenient options for popular items, such as new packaging for ginger vinegar and instant herbal drinks[30] - The company will continue to develop new products targeting the health and wellness market, including food therapy sets for pregnant women and postpartum care[35] - New product launches in 2024 will include festive series and postpartum care products, along with more natural ingredient baked goods[46] - The company is focused on launching more flavors to meet the evolving preferences of high-end consumers in mainland China and Hong Kong[108] - New product development includes the launch of a herbal beverage line, expected to contribute an additional $50 million in revenue[88] Sustainability and Social Responsibility - The company has reduced carbon emissions by approximately 38 tons by using rPET recycled bottles for its iced lemon tea[13] - Despite a challenging business environment, the company remains committed to sustainable development and business growth[19] - The company has eliminated plastic utensils across 111 stores, resulting in a reduction of 39 tons of disposable plastic, a 92% year-on-year decrease[75] - In 2023, the company recycled approximately 960 tons of food waste, equivalent to a reduction of about 205 tons of CO2 emissions[76] - The company generated around 1,368 MWh of renewable energy from solar panels installed on the rooftop of its Kaiping factory in 2023[76] - The company has implemented a member reward program encouraging the use of reusable containers, promoting environmental sustainability[75] - The company donated over 5,600 boxes of emergency supplies to Turkish earthquake victims in February 2023[79] - The company sponsored over 17,000 food vouchers, raising more than HKD 1.1 million for the needy through community initiatives[80] - The company has received multiple awards for its commitment to social responsibility and environmental sustainability, including the "Green Office 5+" label[83] Membership and Customer Engagement - Membership in the "HFT Club" has surpassed 1,300,000, reflecting a significant increase in brand loyalty and new member acquisition[20] - The number of "自家CLUB" members exceeded 1,300,000, with an increase of approximately 99,500 members during the year[36] - The mobile app download increased by 17% year-on-year, with over 40% of members completing transactions through the app[36] - The company is enhancing its digital marketing efforts to encourage app downloads and usage, while offering exclusive discounts to "self-owned CLUB" members[25] - The company is actively promoting its mobile application to enhance customer engagement and encourage electronic transactions[108] - The company promotes the use of its mobile application to enhance shopping convenience for its "self-owned CLUB" members[115] Corporate Governance - The board of directors is committed to maintaining the highest standards of corporate governance to enhance and protect shareholder interests[170] - The company has adopted the corporate governance code as per the listing rules, emphasizing effective internal controls and risk management systems[170] - The board consists of six members, including three executive directors and three independent non-executive directors, ensuring a balanced skill set and experience[176] - The company has established a remuneration committee to formulate the remuneration policy for directors, which must be approved by shareholders[158] - The independent non-executive directors have confirmed compliance with the non-competition agreements during the year ended December 31, 2023[160] - The company has established a code of conduct for directors regarding securities trading, ensuring compliance with relevant regulations[145] Employee Welfare and Training - Employee costs increased by 6.6% to HKD 212.2 million, compared to HKD 199.1 million in 2022, resulting in an employee cost to revenue ratio of 31.5%[59] - The company has conducted over 8,000 hours of training for more than 700 employees, enhancing their skills and sense of belonging[79] - The company has a strong emphasis on employee welfare, training, and development, particularly in the context of ensuring a safe working environment post-COVID-19[114] - Employee training programs have been enhanced, with a budget increase of 20% to improve service quality and operational efficiency[95] Future Outlook - The management anticipates a challenging business environment in 2024 due to high interest rates and geopolitical tensions[45] - The company has set a future outlook with a revenue guidance of $500 million for the next fiscal year, reflecting a 10% growth target[89] - The company is investing in new technology for supply chain optimization, which is expected to reduce costs by 15%[96] - A strategic acquisition of a local competitor is in progress, projected to enhance operational efficiency and increase customer base by 30%[88] - The company has maintained a cautious approach to development while ensuring growth momentum in its retail business[110]

Financial Performance - Revenue for the year ended December 31, 2023, was HKD 672.7 million, a decrease of 2.0% from HKD 686.7 million for the year ended December 31, 2022[4]. - Retail business revenue decreased by 2.6% to HKD 503.8 million, with a total of 111 retail stores operating in Hong Kong as of December 31, 2023[4]. - Gross profit for 2023 was HKD 393.5 million, down 3.0% from HKD 405.6 million in 2022, resulting in a gross margin of 58.5%, a decline of 0.6 percentage points from 59.1%[4]. - The company reported a loss attributable to shareholders of HKD 34.6 million for 2023, compared to a profit of HKD 5.3 million in 2022[4]. - Basic and diluted loss per share for 2023 was HKD 5.28, compared to earnings of HKD 0.80 per share in 2022[6]. - The group recorded a loss of HKD 42,616,000 for the year ended December 31, 2023, compared to a loss of HKD 4,128,000 in 2022[14]. - The company reported a net loss of HKD 42,616,000 for the year, compared to a loss of HKD 4,128,000 in the previous year, indicating a significant decline in profitability[24]. - The group reported a loss attributable to owners of HKD 34,600,000 for the year ended December 31, 2023, compared to a profit of HKD 5,300,000 in 2022, resulting in a loss per share of HKD 0.0528[74]. Assets and Liabilities - Total assets as of December 31, 2023, were HKD 713.8 million, down from HKD 759.8 million in 2022[8]. - Total liabilities increased slightly to HKD 457.9 million in 2023 from HKD 453.1 million in 2022[9]. - As of December 31, 2023, the group's current liabilities exceeded current assets by HKD 140,956,000, compared to HKD 107,100,000 as of December 31, 2022[14]. - The group's current liabilities exceeded current assets by HKD 141,000,000 as of December 31, 2023, compared to HKD 107,100,000 in 2022, with a current ratio of 1.04 down from 1.28 in 2022[77]. - Cash and cash equivalents decreased to HKD 88.5 million in 2023 from HKD 103.9 million in 2022[8]. - The total trade receivables as of December 31, 2023, were HKD 56,776, down from HKD 59,324 in 2022, reflecting a decrease of 4.2%[43]. - Trade payables decreased to HKD 37.9 million in 2023 from HKD 41.1 million in 2022[13]. Accounting and Financial Policies - The group adopted several new accounting standards effective from January 1, 2023, but these did not have a significant impact on its performance or financial position[15]. - The group adjusted its accounting policy regarding long service payments due to changes in local legislation, impacting the recognition of past service costs[21]. - The adjustments for the year ended December 31, 2022, included a reclassification of costs, resulting in a revised net loss of HKD 4,128,000[21]. - The total liabilities included an increase in employee benefit obligations of HKD 3,348,000 due to the revised accounting policy[21]. - The group reported a decrease in reserves by HKD 1,943,000 as a result of the accounting policy change[21]. - The group’s deferred tax assets increased by HKD 435,000 following the adjustments made[21]. - The deferred tax assets increased to HKD 8,589,000 as of December 31, 2023, from HKD 7,645,000 in the previous year[25]. Operational Highlights - The company plans to continue focusing on retail and wholesale distribution of bottled beverages and herbal products in Hong Kong and mainland China[10]. - The company launched new product lines targeting pregnant women and postpartum recovery, including various health food sets[52]. - The company has optimized its store network by closing underperforming locations, maintaining 111 self-operated stores in Hong Kong[52]. - The company plans to open approximately two new retail stores in 2024 while closing underperforming locations[62]. - The company aims to enhance its product offerings by launching new products, including a festive series and postpartum care products in 2024[63]. - The company will continue to adopt rPET materials for packaging to fulfill its environmental commitments[64]. - The company is focusing on expanding its online sales and leveraging social media for product promotion[65]. Cost Management - Employee benefits expenses, including director remuneration, increased to HKD 212,192 in 2023, up 6.4% from HKD 199,060 in 2022[33]. - The group's total sales cost for the year ended December 31, 2023, was HKD 279,200,000, a decrease of 0.7% from HKD 281,100,000 in 2022, with the sales cost as a percentage of revenue rising to 41.5% from 40.9% due to increased raw material costs, wages, and utilities[69]. - Employee costs increased by 6.6% to HKD 212,200,000 for the year ended December 31, 2023, compared to HKD 199,100,000 in 2022, with the employee cost to revenue ratio rising to 31.5% from 29.0%[71]. - Rental expenses for the group's Hong Kong retail stores increased by 7.6% to HKD 104,700,000 for the year ended December 31, 2023, compared to HKD 97,300,000 in 2022, with the rental expense to revenue ratio at 20.8% versus 18.8% in 2022[72]. Future Outlook - The management emphasizes a cautious approach due to the uncertain business environment, aiming to optimize costs and maintain stable cash flow[61]. - The company has begun evaluating the impact of upcoming accounting standard revisions, which are not expected to have a significant effect on the group in the foreseeable future[17]. - The auditor, PwC, confirmed that the preliminary performance announcement aligns with the audited consolidated financial statements for the year ending December 31, 2023[91]. - The annual report containing all relevant information as per listing rules will be published on the designated websites at an appropriate time[92].

Financial Performance - The company's revenue for the first half of 2023 was HKD 331.7 million, a decrease of 2.4% compared to HKD 340 million in the same period of 2022[9]. - Gross profit fell by 4.1% to HKD 193.9 million, with a gross margin of 58.5%, down from 59.5% in the previous year[10]. - The retail segment in Hong Kong generated revenue of HKD 251.7 million, a decline of 4.3% year-on-year, accounting for 75.9% of total revenue[11]. - The company recorded a loss attributable to shareholders of HKD 9.6 million for the first half of 2023, compared to a profit of HKD 8.1 million in the same period of 2022[10]. - Revenue for the six months ended June 30, 2023, was HKD 331,678,000, a decrease of 2.4% from HKD 339,998,000 in 2022[59]. - Operating loss for the six months was HKD 10,580,000 compared to an operating profit of HKD 6,022,000 in 2022[59]. - Net loss attributable to the owners of the company was HKD 9,649,000, a significant decline from a profit of HKD 8,074,000 in the previous year[61]. - Total comprehensive loss for the period was HKD 17,963,000, compared to a loss of HKD 6,738,000 in 2022[61]. - The company reported a basic and diluted loss per share of HKD 1.47, compared to earnings of HKD 1.23 per share in 2022[61]. Revenue Segmentation - For the six months ended June 30, 2023, the total revenue from external customers was HKD 331,678,000, with HKD 251,683,000 from retail in Hong Kong and HKD 79,995,000 from wholesale[104]. - The wholesale business in Hong Kong recorded revenue of HKD 80,000,000, an increase of 3.8% from HKD 77,100,000 in the previous year, driven by new product launches[31]. Cost and Expenses - The gross profit for the first half of 2023 was HKD 193,900,000, a decrease of 4.1% from HKD 202,200,000 in the first half of 2022[33]. - Employee costs increased by 5.7% to HKD 104,800,000, with the employee cost ratio rising to 31.6% from 29.2% in the previous year[34]. - Rental expenses for Hong Kong retail stores increased by 4.1% to HKD 51,700,000, with the rental expense ratio rising to 20.5%[35]. - The company’s administrative and operating expenses for the six months ended June 30, 2023, were HKD 182,070,000, compared to HKD 170,240,000 in the previous period[89]. Cash Flow and Liquidity - As of June 30, 2023, the company's bank deposits and cash balance stood at HKD 90,900,000, a decrease from HKD 103,900,000 as of December 31, 2022[42]. - The company's current liabilities exceeded its current assets by HKD 123,200,000 as of June 30, 2023, compared to HKD 107,100,000 as of December 31, 2022[43]. - The company reported a net cash inflow from operating activities of HKD 48,020,000 for the six months ended June 30, 2023, compared to HKD 54,754,000 in the same period of 2022, representing a decrease of approximately 12.5%[68]. - The company’s operating cash flow was impacted by a decrease in operating income, which was HKD 41,500,000 for the six months ended June 30, 2023, down from HKD 57,207,000 in the previous year, a decline of approximately 27.5%[68]. Capital Expenditures - Capital expenditures for the first half of 2023 amounted to HKD 6,600,000, down from HKD 15,900,000 in the first half of 2022, primarily for renovating existing retail stores and purchasing production equipment[41]. - The company has committed capital expenditures of HKD 13,308,000 for property, plant, and equipment as of June 30, 2023, compared to HKD 13,017,000 as of December 31, 2022[153]. Shareholder Information - The company’s major shareholder, Ms. Wong Pui Chu, holds 404,052,600 shares, representing 61.59% of the total issued shares[157]. - Dr. Siu Wing Fu holds 26,554,600 shares, which accounts for 4.04% of the total issued shares[157]. - The company has a stock option plan that allows for the issuance of up to 63,200,000 shares, which is approximately 9.63% of the total issued share capital as of June 30, 2023[168]. Environmental and Social Responsibility - The company recycled approximately 391.9 tons of food waste in the first half of 2023, a decrease from 515.9 tons in the same period of 2022, resulting in a reduction of about 83.5 tons of CO2 equivalent greenhouse gas emissions[53]. - The company generated approximately 87 MWh of renewable energy from solar panels installed on its Hong Kong factory rooftop in the first half of 2023[54]. - The company received multiple awards for its contributions to the industry and society, including recognition as a "Green Organization" by the Environmental Campaign Committee[51]. Corporate Governance - The company adhered to the Corporate Governance Code as outlined in Appendix 14 of the listing rules for the six months ending June 30, 2023[173]. - The Audit Committee, composed of three independent non-executive directors, reviewed the unaudited interim financial information for the six months ending June 30, 2023[175].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部分內容而產生或因倚 賴該等內容而引致的任何損失承擔任何責任。 HUNG FOOK TONG GROUP HOLDINGS LIMITED 鴻 福 堂 集 團 控 股 有 限 公 司 （於開曼群島註冊成立的有限公司） （股份代號：1446） 截至二零二三年六月三十日止六個月的 中期業績公告 摘要 • 截至二零二三年六月三十日止六個月（「二零二三年上半年」）的收益較截至 二零二二年六月三十日止六個月（「二零二二年上半年」）的340,000,000港 元減少2.4%至331,700,000港元。 － 來自香港零售業務的收益減少4.3%至251,700,000港元（二零二二年上 半年：262,900,000港元）。於二零二三年六月三十日，本集團於香港 共經營119間自營零售店。 － 來自批發業務的收益增加3.8%至80,000,000港元（二零二二年上半 年：77,100,000港元）。 ...

Membership and Revenue - The company has over 1,258,000 CLUB members, contributing 75.3% to total revenue, with an average transaction value per member increasing by 13% year-on-year[13] - Membership in the "自家CLUB" increased by approximately 99,000, surpassing 1,258,000 members as of December 31, 2022, with a 42% year-on-year increase in app downloads[34] - The average transaction value for "自家CLUB" members increased by 13% compared to 2021, driven by enhanced marketing efforts and new product launches[31] - The group's revenue for the fiscal year ended December 31, 2022, was HKD 686.7 million, a decrease of 1.3% compared to HKD 696 million in 2021[28] - The group's profit attributable to shareholders decreased by 9.1% to HKD 7.5 million, down from HKD 8.2 million in the previous year[28] - The Hong Kong retail business generated revenue of HKD 517.4 million, a decline of 1.5% year-on-year, accounting for 75.3% of total revenue[30] Product Development and Marketing - New product offerings such as the sugar-free herbal tea series and chicken essence series have been well received by customers[13] - The company has implemented effective marketing strategies and member rewards, successfully increasing the average transaction value of CLUB members[20] - Collaborations with partners like ParknShop and Tan Zai Yunnan Rice Noodles have led to the launch of several co-branded beverages and additional sales points[20] - The company has introduced more product options in its café concept stores, including baked goods and specialty coffee, targeting health-conscious younger consumers[20] - The company has launched a special edition beverage called "This is Art" to enhance product visibility and appeal[14] Financial Performance and Costs - The gross profit margin fell to 59.2%, down from 60.0% in 2021, primarily due to decreased revenue and rising raw material costs[28] - Wholesale revenue decreased by 0.9% to HKD 169.3 million, with a segment profit decline of 13.1% to HKD 20.6 million due to rising production costs and lower sales in mainland China[37] - In Hong Kong, wholesale revenue grew by 5.8% to HKD 142.9 million, driven by new product launches and significant commercial orders[38] - Revenue from mainland China dropped by 26.3% to HKD 26.4 million, impacted by strict pandemic control measures and the absence of one-time financial income recorded in the previous year[39] - The company faced challenges due to a deteriorating business environment and rising costs, impacting profitability[20] Retail Expansion and Strategy - The retail network consists of 120 stores, including 10 "HFT Life" café concept stores, maintaining the company's position as the largest herbal product retailer in Hong Kong[20] - The group opened seven new stores during the fiscal year, including three "HFT Life" concept stores targeting younger customers[31] - The group plans to expand its retail network and explore brand collaborations to promote health-conscious products[24] - The company plans to open approximately eight new stores in 2023 to strengthen its retail network[46] Sustainability and Corporate Responsibility - The group is implementing sustainable practices, including the use of recycled plastic for beverage bottles and plans to phase out plastic utensils in favor of wooden or paper alternatives[42] - The group achieved a zero food waste disposal goal in landfills, recovering approximately 957 tons of food waste, which reduced greenhouse gas emissions by about 204 tons of CO2 equivalent[73] - The installation of solar panels at the Tai Po factory generated approximately 195 MWh of renewable energy, while new installations at the Kaiping factory are expected to produce about 3,100 MWh annually[74] - The company is committed to corporate social responsibility, engaging in various community and environmental initiatives[109] - The group made charitable donations amounting to HKD 199,000 for the year ended December 31, 2022[129] Governance and Management - The company has a strong governance structure with independent non-executive directors overseeing key committees[85][86] - The company has adopted the corporate governance code as per listing rules, emphasizing effective internal controls and risk management systems[165] - The company has established a remuneration committee to formulate the remuneration policy for directors, which requires shareholder approval at the annual general meeting[153] - The company’s board of directors includes three independent non-executive directors who have confirmed their independence according to the listing rules[132] - The company has a clear division of responsibilities between the chairman and the CEO to ensure a balance of power[171] Future Outlook and Strategic Initiatives - The management remains cautious about the retail outlook for the first half of 2023, considering geopolitical tensions and rising costs[43] - The group aims to expand market share and explore new revenue sources by developing new products and enhancing sales channels[43] - The company is investing in new technology development, allocating $C million towards R&D to enhance product offerings and operational efficiency[88] - Market expansion plans include entering D new regions, aiming to capture an additional E% market share by the end of the fiscal year[88] - The company is considering strategic acquisitions to bolster its market position, with potential targets identified in the F sector[88]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或因倚 賴該等內容而引致的任何損失承擔任何責任。 HUNG FOOK TONG GROUP HOLDINGS LIMITED 鴻 福 堂 集 團 控 股 有 限 公 司 （於開曼群島註冊成立的有限公司） （股份代號：1446） 截至二零二二年十二月三十一日止年度之 全年業績公告 摘要 • 截至二零二二年十二月三十一日止年度（「二零二二年」）的收益為 686,700,000港元，較截至二零二一年十二月三十一日止年度（「二零二一 年」）的696,000,000港元減少1.3%。 － 來自零售業務的收益減少1.5%至517,400,000港元，於二零二二年十二 月三十一日於香港經營共120間零售店。 － 來自批發業務的收益減少0.9%至169,300,000港元。 ...

Financial Performance - Total revenue for the first half of 2022 was HKD 340 million, a decrease of 1.8% compared to HKD 346.3 million in the same period of 2021[10]. - Gross profit decreased by 3.6% to HKD 202.8 million, with a gross margin of 59.6%, down from 60.8% in the previous year[10]. - Profit attributable to owners increased by 39.8% to HKD 10.2 million, primarily due to government subsidies totaling HKD 12.3 million received during the period[10]. - Revenue for the six months ended June 30, 2022, was HKD 339,998,000, a decrease of 1.1% compared to HKD 346,286,000 in the same period of 2021[57]. - Net profit for the period was HKD 5,019,000, down from HKD 6,862,000, indicating a decrease of approximately 26.8%[57]. - The company reported a net profit of HKD 7,272,000 for the period, down from HKD 6,862,000, reflecting a decrease of 5.9%[68]. - The net profit attributable to the company's owners was HKD 10,165,000, an increase of 39.0% from HKD 7,272,000 in 2021[127]. - Basic and diluted earnings per share for the period were HKD 1.55, compared to HKD 1.11 in the same period of 2021, reflecting an increase of approximately 39.6%[59]. Revenue Breakdown - Hong Kong retail business generated revenue of HKD 262.9 million, a decline of 2.8% year-on-year, accounting for 77.3% of total revenue[11]. - The group's wholesale revenue increased slightly by 1.8% year-on-year to HKD 77.1 million, with a profit rise of 1.1% to HKD 8 million despite rising raw material costs[16]. - In Hong Kong, wholesale revenue grew by 6.2% to HKD 64.2 million, attributed to strong relationships with major clients and the introduction of non-beverage products[17]. - Revenue from the mainland China wholesale business decreased by 15.5% to HKD 12.9 million due to pandemic-related restrictions, but the group strengthened connections with major clients in southern China[21]. Operational Developments - The company opened six new stores during the first half of 2022, bringing the total to 124 self-operated retail stores[12]. - The group plans to open one to two new stores in Hong Kong in the second half of the year, including a "HFT Life" store on a university campus[24]. - The group will enhance online sales and promotions through platforms like JD.com and Taobao, focusing on expanding its presence in Guangdong province[27]. - The group aims to maintain its leadership in the pre-packaged soup market by developing more products and participating in various exhibitions and online sales events[26]. - The group continued to expand its local retail network while promoting new products to stimulate customer spending[12]. Cost Management - Adjustments to product pricing were made to offset rising production costs during the first half of 2022[14]. - The cost of sales for the first half of 2022 was HKD 137,200,000, representing an increase of 1.0% from HKD 135,800,000 in the previous year, with the cost of sales as a percentage of revenue rising to 40.4% from 39.2%[33]. - Employee costs were HKD 96,700,000, down 5.7% from HKD 102,500,000, with the employee cost ratio to revenue improving to 28.4% from 29.6%[35]. Sustainability Initiatives - The company achieved a zero food waste disposal target, recycling approximately 515.9 tons of food waste, which reduced greenhouse gas emissions by about 109.9 tons CO2 equivalent[53]. - The company collected and recycled over 330,000 plastic bottles or aluminum cans through recycling machines during the review period[53]. - The company installed solar panels at its Tai Po factory, contributing approximately 90 MWh of renewable energy to the grid in the first half of 2022[54]. - The group will introduce new products, including a special edition bottled drink that uses 100% recycled plastic, to reduce plastic waste and carbon emissions[27]. Financial Position - Total assets as of June 30, 2022, were HKD 773,044,000, a decrease from HKD 814,066,000 as of December 31, 2021[63]. - Total liabilities decreased to HKD 447,191,000 from HKD 479,105,000, indicating a reduction of approximately 6.7%[65]. - Cash and cash equivalents at the end of the period were HKD 99,187,000, compared to HKD 128,509,000 at the end of the previous year, representing a decrease of 22.8%[72]. - The company incurred a loss of HKD 11,800,000 from investing activities, compared to a loss of HKD 17,489,000 in the previous year, showing an improvement of 32.5%[72]. - The company plans to maintain sufficient working capital to meet its financial obligations over the next twelve months[79]. Shareholder Information - As of June 30, 2022, Ms. Huang Peizhu and Mr. Xie Baoda each hold 404,052,600 shares, representing 61.59% of the total issued shares[171]. - The company has a significant concentration of ownership, with major shareholders holding over 61% of the total shares[176]. - The company has not disclosed any other individuals or entities holding significant stakes outside of the mentioned shareholders as of June 30, 2022[181]. - The company’s governance structure requires all major shareholders to maintain a consistent voting direction[173]. Corporate Governance - The audit committee consists of all three independent non-executive directors and is responsible for reviewing the financial procedures and risk management of the group[197]. - The company has complied with the Corporate Governance Code as set out in Appendix 14 of the listing rules during the six-month period ended June 30, 2022[195]. - No directors or key executives have disclosed interests in competing businesses as of June 30, 2022[184].

Revenue and Profitability - The retail business remains the primary revenue source, accounting for 75.4% of total revenue[18] - Revenue for the fiscal year decreased by 0.9% to HKD 696 million, down from HKD 702.5 million in the previous year[34] - Gross profit fell by 6.8% to HKD 417.3 million, with a gross profit margin of 60.0%, down from 63.7%[34] - Profit attributable to shareholders dropped by 86.8% to HKD 8.2 million, compared to HKD 62.5 million in the previous year[35] - Hong Kong retail business recorded revenue of HKD 525.1 million, a decrease of 4.3% year-on-year, contributing 75.4% to total group revenue[36] - Retail profit fell by 71.7% to HKD 31.1 million, impacted by significant discounts, rising costs, and reduced government subsidies[36] Business Expansion and Innovation - The company opened 122 retail stores in Hong Kong, including 7 new HFT Life concept stores[18] - The company launched a new online shopping platform "自家 ON！" to strengthen online sales capabilities[18] - The group launched a new online shopping platform "self-owned ON!" to capture the growing e-commerce market[27] - The group plans to open more "HFT Life" café concept stores to attract younger customers and expand its customer base[31] - The group is exploring new markets, including shipping to the UK and negotiating with potential distributors in Singapore[50] - New product launches included "Wild Cordyceps Organic Chicken Essence" and a series of herbal drinks in collaboration with KFC[13][21] Membership and Customer Engagement - The number of self-owned CLUB members exceeded 1,159,000, enhancing customer engagement[18] - Membership for the "self-owned CLUB" surpassed 1,159,000 by the end of 2021, reflecting successful promotional activities[27] - Membership increased to over 1,159,000, with over 17% of transactions completed using the "Self-Pay" electronic membership card via the app[40] Cost Management and Financial Strategy - The group will focus on cost control measures to address rising costs of raw materials, labor, and rent[31] - The group's cost of sales for the year was HKD 278.7 million, up 9.5% from HKD 254.7 million in 2020, with the cost representing 40.0% of revenue compared to 36.3% in the previous year[64] - Employee costs rose to HKD 208.9 million, a 19.1% increase from HKD 175.5 million in 2020, with employee costs accounting for 30.0% of revenue compared to 25.0% in the previous year[66] Corporate Social Responsibility and Community Engagement - The group donated and sponsored cash, products, and coupons valued at over HKD 1.9 million, supporting over 100 NGOs, schools, and associations[89] - The group actively engaged in community service, including donating rice cakes to underprivileged communities and supporting environmental cleanup efforts[89] - The group has been recognized for its commitment to corporate social responsibility, receiving accolades such as the "Caring Company" logo for 15 years from 2006 to 2021[92] Governance and Management - The executive team includes experienced professionals with over 35 years in the herbal beverage industry, contributing to strategic management and operational decisions[94][95][96] - The company appointed independent non-executive directors with extensive experience in retail, banking, and finance, enhancing governance and oversight[99][100][101] - The board consists of six members, including three executive directors and three independent non-executive directors, with a term of three years[192] - The audit committee is composed entirely of independent non-executive directors and is responsible for reviewing the company's financial statements and monitoring the financial reporting system[200] Future Outlook and Strategic Planning - The company is positioned for future growth through strategic planning and market expansion initiatives[106] - The company aims to enhance its online sales and delivery services to adapt to the new normal of "working from home" and "staying home during the pandemic"[115] - The company aims to expand its wholesale business in Taiwan and overseas markets to mitigate the impacts of economic fluctuations in mainland China and Hong Kong[119] Environmental Initiatives - The group generated approximately 288.5 MWh of green electricity from solar panels installed at its Tai Po factory[85] - The group collected over 560,000 plastic bottles and aluminum cans through recycling initiatives in 2021[86]

Financial Performance - Total revenue for the first half of 2021 increased by 0.3% to HKD 346.3 million compared to HKD 345.2 million in the first half of 2020[12] - Gross profit decreased by 5.4% to HKD 210.5 million, with a gross margin of 60.8%, down from 64.4% in the previous year[12] - Profit attributable to owners dropped by 68.4% to HKD 7.3 million, compared to HKD 23 million in the first half of 2020[13] - Operating profit significantly dropped to HKD 11,040,000 compared to HKD 32,421,000 in the previous year[65] - The group reported a profit of HKD 6,862,000 for the period, compared to HKD 23,326,000 in the previous year, indicating a significant decrease in profitability[124] - Basic earnings per share for the six months ended June 30, 2021, were HKD 1.11, down from HKD 3.51 in the same period of 2020[141] Revenue Breakdown - Retail business in Hong Kong generated revenue of HKD 270.6 million, a decline of 2.3% year-on-year, accounting for 78.1% of total revenue[14] - Revenue from wholesale business increased by 10.9% to HKD 75.7 million in the first half of 2021, compared to HKD 68.2 million in the same period of 2020[19] - Revenue from the wholesale business in mainland China rose by 102.1% to HKD 15.2 million, compared to HKD 7.5 million in the same period of 2020[24] - The performance from the Hong Kong retail segment generated revenue of HKD 270,616,000, while the wholesale segment contributed HKD 75,670,000[122] Cash Flow and Liquidity - Operating cash flow remains stable, with cash and cash equivalents totaling approximately HKD 128.5 million as of June 30, 2021[13] - Cash and cash equivalents as of June 30, 2021, were HKD 128,509,000, a decrease from HKD 134,905,000 at the end of 2020[71] - Operating cash flow generated was HKD 72,779,000 for the six months ended June 30, 2021, compared to HKD 84,964,000 for the same period in 2020, showing a decline of about 14.4%[81] - Current liabilities net amount improved from HKD (136,801,000) to HKD (132,669,000), indicating a positive trend in liquidity[84] Capital Expenditure and Investments - Capital expenditure for the first half of 2021 was HKD 13.6 million, compared to HKD 11.8 million in the same period of 2020[49] - Capital expenditures for the six months ended June 30, 2021, totaled HKD 13,618,000, up from HKD 11,839,000 in the same period of 2020[122] - The company has installed solar panels at its Tai Po factory, generating over 143 MWh of green energy in the first half of 2021[26] Membership and Customer Engagement - The number of CLUB members exceeded 1,080,000 as of June 30, 2021, with an increase of over 60,000 members in the first half of 2021[17] - The average transaction volume through the mobile app accounted for approximately 22% of total member transactions in the first half of 2021, up from 17% in the same period of 2020[17] - The company plans to launch a member referral program in the second half of 2021 to attract potential new members[30] Product Development and Market Expansion - The company expanded its retail network to 121 stores, including five new café concept stores "HFT Life"[14] - The "HFT Life" brand was launched in February 2021, offering a blend of Eastern and Western culinary experiences[16] - The company introduced more large-pack frozen foods and self-made snacks in response to the pandemic and changing consumer habits[16] - The organic chicken essence product line was expanded in January 2021 with the introduction of "Wild Cordyceps Organic Chicken Essence"[16] - The group aims to expand its business into new markets including Singapore, South Korea, Thailand, and the UK[35] Government Support and Subsidies - Government subsidies for the retail and licensed food sectors significantly decreased to HKD 1.4 million from HKD 9.6 million in the previous year[13] - Government subsidies recognized during the period amounted to HKD 1,400,000, significantly down from HKD 9,600,000 in the previous year[132] Environmental and Social Responsibility - The company collected and recycled over 116,000 plastic bottles through recycling machines in the first half of 2021[63] - The company recycled approximately 706.2 tons of food waste, reducing greenhouse gas emissions by over 150.4 tons CO2 equivalent[63] - The company has maintained a commitment to corporate social responsibility, raising over HKD 1.3 million for community support in 2021[62] Financial Position and Liabilities - The company’s total assets amounted to HKD 828,592,000, slightly down from HKD 834,527,000 at the end of 2020[71] - Total liabilities decreased from HKD 499,919,000 as of December 31, 2020, to HKD 482,034,000 as of June 30, 2021, representing a reduction of approximately 3.6%[74] - The company’s bank borrowings decreased from HKD 8,213,000 to HKD 5,720,000, a reduction of approximately 30.5%[74] - The company’s lease liabilities increased slightly from HKD 94,705,000 to HKD 96,244,000, reflecting a growth of about 1.6%[74] Shareholder Information - The company’s major shareholders collectively hold approximately 60.76% of the issued share capital[186] - Major shareholders include Baoshih and Think Expert, each holding 398,552,600 shares, representing 60.76% of the total issued shares[191] - Baoshih directly owns 13.89% equity, equivalent to 91,086,000 shares[198]