Revenue Performance - Revenue for the first half of fiscal year 2025 was approximately HKD 8,305.373 million, a decrease of 7.1% year-on-year[9] - Revenue from the Chinese market decreased by 16.8% to approximately HKD 5,047.547 million, with sofa sales volume down 9.9% and average selling price down 4.0%[10] - North American sales volume increased by 18%, but average selling price decreased by 10.2%, resulting in a 5.7% increase in revenue to approximately HKD 2,153.816 million[11] - Revenue from Europe and other overseas markets grew by 37.7% to approximately HKD 732.697 million[11] - China market sales revenue decreased by 17.2% YoY to approximately 4,975,209 thousand HKD, with a RMB-denominated decrease of 16.8%[22] - North America sales revenue increased by 5.7% YoY to approximately 2,153,816 thousand HKD, despite a 10.2% decrease in average selling price[25] - Europe and other overseas markets (excluding Home Group) revenue grew by 37.7% YoY to approximately 732,697 thousand HKD[25] - Home Group revenue increased by 24.5% YoY to approximately 371,313 thousand HKD, driven by European market demand[25] - Total revenue and other income decreased by 7.4% YoY to approximately 8,471,446 thousand HKD, with an overall gross margin of 39.5%[26] - Sofa and matching products revenue decreased by 5.8% YoY to approximately 5,816,974 thousand HKD, with a 15.6% decline in China market revenue[34] - Bedding and matching products revenue dropped by 18.9% YoY to approximately 1,208,846 thousand HKD, mainly due to consumer downgrading in China[29] - Other products revenue decreased by 7.8% YoY to approximately 835,902 thousand HKD, primarily due to lower sales of iron frames and smart furniture in China[30] - Other business revenue increased by 12.1% YoY to approximately 72,338 thousand HKD, driven by higher property rental income[32] - Revenue for the period 3.2.2021-2.2.2024 is $2,000 million[159] - Revenue for the period 3.2.2024-2.2.2026 is $19.78 billion[161] - Revenue for the period 16.2.2022-15.2.2024 is $11.1 billion[178] - Revenue for the period 16.2.2024-15.2.2026 is $13,600 million[180] - Revenue for the period 16.2.2022-15.2.2025 is $13,600 million[189] - Revenue for the period 16.2.2026-15.2.2028 is $11.1 billion[194] - Revenue for the period 16.2.2022-15.2.2026 is $13,200 million[196] - Revenue for the period 3.2.2021-2.2.2025 is $1,200 million[169] - Revenue for the period 16.2.2025-15.2.2027 is $11.1 billion[185] - Revenue for the period 3.2.2025-2.2.2027 is $5.06 billion[168] Profitability and Margins - Gross profit margin increased by 0.4 percentage points to approximately 39.5%, and net profit margin increased by 1 percentage point to approximately 13.7%[9] - Profit attributable to equity holders of the company was approximately HKD 1,138.925 million, a slight increase of 0.3%[9] - Net profit attributable to equity holders increased by 0.3% to approximately HKD 1,138,925 thousand in the first half of fiscal year 2025, with a net profit margin of 13.7%[70] Market Performance - The company added 280 new stores, bringing the total number of stores to 7,516 by the end of the reporting period[10] - The company's store closure rate remained low at 4.8%[10] - The company plans to continue expanding overseas markets, particularly in North America and Europe, while focusing on domestic market recovery through initiatives like "trade-in" and "upgrade your home" campaigns[17] - The company continues to focus on expanding its global market presence, particularly in North America and Europe, leveraging its production capacity and cost advantages[83] - The company's smart home products are expected to gain further traction in the Chinese market as consumer preferences shift towards quality, brand, and value-for-money products[84] Expenses and Costs - Sales and distribution expenses decreased by 5.6% to approximately HKD 1,513,891 thousand in the first half of fiscal year 2025, with the percentage of revenue increasing from 17.9% to 18.2%[63] - Administrative and other expenses decreased by 30.8% to approximately HKD 311,617 thousand in the first half of fiscal year 2025, mainly due to the settlement of a lawsuit with a former supplier[66] - Financial costs decreased by 25.6% to approximately HKD 73,114 thousand in the first half of fiscal year 2025, primarily due to lower loan interest expenses[68] - Income tax expenses increased by 6.6% to approximately HKD 244,796 thousand in the first half of fiscal year 2025, with the tax rate increasing from 16.2% to 17.0%[69] - Net loss from other items decreased to approximately HKD 109,203 thousand in the first half of fiscal year 2025, compared to HKD 142,290 thousand in the same period last year, primarily due to credit loss provisions for other receivables[62] Dividends and Shareholder Information - The company maintained a dividend payout ratio of around 50%, declaring an interim dividend of 15 HK cents per share, with a payout ratio of 51.1%[12] - The company declared an interim dividend of HK$0.15 per share, unchanged from the previous year[86] - The company's Chairman, Mr. Wong Man Li, holds a 62.30% stake in the company through controlled corporation interests[88] - The company's issued share capital as of September 30, 2024, was 3,877,745,600 shares[90] - Man Wah Holdings Limited's issued share capital as of September 30, 2024, is 3,877,745,600 shares[99] - Man Wah Investment Limited holds 2,415,782,400 shares, representing 62.30% of the company's issued share capital[96] - Mr. Wong Man Li holds 800 shares in Man Wah Investment Limited, representing 80% of the associated company's equity[92] - Ms. Hui Hui Qing holds 200 shares in Man Wah Investment Limited, representing 20% of the associated company's equity[92] - No further share options were granted under the 2010 and 2020 Share Option Plans after their expiration/termination[102] - The company adopted a Share Award Plan on June 24, 2024, but no awards were granted during the review period[102] - 23,600 share options granted on January 17, 2020, remain unexercised with an exercise price of HKD 6.53[102] - 18,400 share options granted on January 17, 2020, remain unexercised with an exercise price of HKD 6.53[102] - 39,200 share options granted on January 17, 2020, remain unexercised with an exercise price of HKD 6.53[102] - 22,400 share options granted on January 28, 2019, remain unexercised with an exercise price of HKD 3.91[122] Legal and Financial Settlements - The company settled a lawsuit with a former supplier, paying a compensation of USD 8,250 thousand (approximately HKD 64,420 thousand) and reversing a provision of USD 10,693 thousand (approximately HKD 83,826 thousand)[76] Investments and Acquisitions - The company did not make any significant investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures in the first half of fiscal year 2025, but continues to seek opportunities for acquisitions in the furniture industry[80] Employee Information - The company had 27,246 employees as of September 30, 2024, a decrease from 29,837 employees on March 31, 2024[81] - Total employee costs for the first half of fiscal year 2025 were approximately HK$1,490,404 thousand, compared to HK$1,479,784 thousand in the same period of fiscal year 2024[81] Product Development and Market Trends - The company's "Zero Wall, Zero Gravity" functional sofa product underwent its second technical iteration in 2024, enhancing its position in the smart home market[83] - The functional sofa penetration rate in the Chinese market increased from 7.2% in 2023 to 9.7% in 2024, with Euromonitor predicting it could exceed 13% within five years[84] Cash and Financial Position - Cash and bank balances (excluding restricted bank balances) stood at approximately HKD 4,283,927 thousand as of September 30, 2024, with good working capital turnover[71] - Short-term and long-term bank borrowings were approximately HKD 4,614,287 thousand and HKD 917 thousand, respectively, as of September 30, 2024, with weighted average interest rates of 5.07% for floating rates and 2.46% for fixed rates[73] Share Transactions - The company did not engage in any purchase, sale, or redemption of its listed securities during the review period[87]

Financial Performance - Total revenue for the six months ended September 30, 2024, was HKD 8,471,446, a decrease of 7.4% compared to HKD 9,151,563 for the same period in 2023[4] - Gross profit for the period was HKD 3,280,649, down 6.0% from HKD 3,491,920 in the previous year[4] - Operating profit increased slightly to HKD 1,512,011, compared to HKD 1,509,417 in the prior year, reflecting a marginal growth of 0.1%[4] - Net profit for the period was HKD 1,194,555, a slight increase of 0.9% from HKD 1,184,579 in the same period last year[6] - Basic earnings per share for the period was HKD 29.37, up from HKD 29.05 in the previous year, indicating a growth of 1.1%[7] - Total revenue for the six months ended September 30, 2023, was HKD 8,937,569, a decrease from HKD 8,305,373 in the same period of 2022[25] - The company reported a net profit before tax of HKD 1,414,295 for the six months ended September 30, 2023[25] - Profit attributable to equity holders increased by approximately 0.3% from about 1,136,042 thousand HKD to about 1,138,925 thousand HKD, with a net profit margin of approximately 13.7%[81] Revenue Breakdown - Total revenue for the six months ended September 30, 2024, was HKD 8,305,373,000, with external sales from the sofa and related products segment amounting to HKD 5,816,974,000[23] - The segment performance for the sofa and related products generated a profit of HKD 1,187,298,000, while the bedding and related products segment contributed HKD 252,847,000[23] - Revenue from the China market (including Hong Kong and Macau) was HKD 6,069,863, representing a decline of 16.2% compared to HKD 5,047,547 in the previous period[30] - North America revenue increased to HKD 2,037,448, up 5.4% from HKD 2,153,816 in the previous period[30] - The company plans to expand its market presence in Europe, with revenue from this region increasing to HKD 548,199, up 38.8% from HKD 761,361[30] - Sales revenue in the Chinese market was approximately HKD 4,975,209 thousand, a decrease of about 17.2% year-on-year[52] - Sofa and related products generated revenue of approximately HKD 5,816,974, a decrease of about 5.8% from HKD 6,176,703 in the same period last year[59] - Bedding and related products revenue fell by approximately 18.9% to HKD 1,208,846, down from HKD 1,491,422 due to significant consumer downgrade in the Chinese market[61] - Home Group business revenue increased by approximately 24.5% to HKD 371,313, up from HKD 298,214, driven by increased demand in the European market[63] Assets and Liabilities - Non-current assets increased to HKD 12,116,697 from HKD 11,702,909, representing a growth of 3.5%[8] - Current assets rose to HKD 8,917,619, an increase of 10.0% compared to HKD 8,104,611 as of March 31, 2024[8] - Total assets reached HKD 21,034,316, up 6.1% from HKD 19,807,520[8] - The company reported a significant increase in cash and bank balances to HKD 4,283,927, compared to HKD 3,273,830, reflecting a growth of 31.0%[8] - The company’s total equity increased to HKD 13,772,744 from HKD 13,075,669, marking a growth of 5.3%[11] - Trade receivables and notes receivable net amount as of September 30, 2024, is HKD 1,896,227, an increase from HKD 1,746,892 as of March 31, 2024[40] - Total accounts payable and notes payable as of September 30, 2024, is HKD 811,624, up from HKD 710,214 as of March 31, 2024[43] Expenses and Costs - The cost of goods sold decreased by approximately 7.7% to HKD 5,024,724, down from HKD 5,445,649, with raw material costs declining more than revenue[67] - Sales and distribution expenses decreased by approximately 5.6% from about 1,604,156 thousand HKD in the first half of fiscal year 2024 to about 1,513,891 thousand HKD in the first half of fiscal year 2025, accounting for approximately 18.2% of revenue[74] - Advertising, marketing, and brand building expenses decreased by approximately 33.1% from about 308,418 thousand HKD to about 206,422 thousand HKD, representing about 2.5% of revenue, mainly due to reduced consumer spending in the Chinese market[74] - Administrative and other expenses decreased by approximately 30.8% from about 450,051 thousand HKD to about 311,617 thousand HKD, with administrative expenses accounting for about 3.8% of revenue[77] - Financial costs decreased by approximately 25.6% from about 98,266 thousand HKD to about 73,114 thousand HKD, primarily related to loan interest expenses[79] Legal and Tax Matters - The company has a provision for legal claims amounting to HKD 174,037 as of March 31, 2024, related to a lawsuit from a former supplier[43] - The company settled a legal claim with a former supplier for USD 8,250, equivalent to HKD 64,420, and reversed a provision of USD 10,693, equivalent to HKD 83,826[44] - The effective corporate tax rate in the U.S. is 21% as of September 30, 2023, with state income tax estimated between 0% to 9%[34] - The Macau subsidiary is subject to a 12% income tax on taxable income as of September 30, 2023[34] - The Hong Kong subsidiary is subject to a 16.5% profits tax on taxable income as of September 30, 2023[34] - Income tax expenses increased by approximately 6.6% from about 229,716 thousand HKD to about 244,796 thousand HKD, with the tax rate increasing from approximately 16.2% to 17.0% of profit before tax[80] Corporate Governance and Structure - The company has adhered to the corporate governance code, with a review of its governance practices conducted regularly[109] - The roles of the chairman and CEO are held by the same individual, which the board believes does not impair the balance of power and accountability[111] - The company has adopted the standard code of conduct for directors' securities transactions and confirmed compliance for the six-month period ending September 30, 2024[112] Employee and Market Strategy - The group had 27,246 employees as of September 30, 2024, down from 29,837 employees on March 31, 2024[93] - The group emphasizes the importance of employee training and development, maintaining a competitive compensation structure to motivate staff[93] - The group aims to enhance its market share in the domestic market as it recovers from a consumption downturn, focusing on brand and product competitiveness[99] - The group is focusing on R&D and technological innovation, having launched a "zero wall, zero gravity" sofa product, with a second technical iteration planned for 2024[96] - The penetration rate of functional sofas in the Chinese market increased from 7.2% to 9.7% year-on-year, with a forecast to exceed 13% within five years[98] - The North American market remains the primary consumer market for functional sofas, with continued order growth and significant expansion opportunities in Europe and other export markets[97] Dividends and Shareholder Matters - The company declared an interim dividend of HKD 0.15 per share for the six months ended September 30, 2024, compared to HKD 0.15 per share for the same period in 2023[38] - The board has declared an interim dividend of HKD 0.15 per share, payable on December 13, 2024[100] - The company will suspend share transfer registration from December 12 to December 13, 2024, for shareholders eligible to receive the interim dividend[105] Miscellaneous - The company has not made any significant investments or acquisitions in the first half of the fiscal year 2025 but continues to seek opportunities to acquire furniture companies[92] - There were no purchases, sales, or redemptions of the company's listed securities during the review period[101] - The audit committee consists of four independent non-executive directors, and the interim financial information has been reviewed by the auditors[102] - No significant events have been disclosed after the review period[103]

Summary of the Conference Call for Minhua Holdings Company Overview - The conference call was organized by China International Capital Corporation (CICC) to discuss the recent operational status of Minhua Holdings, a leading company in the home furnishings sector [11][12]. Key Points Discussed Industry and Market Conditions - The home furnishings industry is currently facing demand pressure, particularly in the domestic market, with a notable decline in sales since March 2024 [14][15]. - Despite a strong performance in February, domestic sales have shown a downward trend, with expectations for June to improve slightly due to seasonal promotions like the 618 shopping festival [14][15]. - The impact of real estate policies on demand has been limited, as the correlation between Minhua's revenue and the real estate market has weakened compared to previous years [15][16]. - Consumer behavior has shifted from "consumption downgrade" to "postponed consumption," indicating a more cautious spending approach due to economic uncertainties [16][22]. Sales Performance - Domestic sales have been weak, with a significant drop in demand for durable goods as consumers prioritize savings amid economic uncertainty [16][22]. - Export orders have remained strong, but shipping capacity issues have affected actual shipments, particularly in May [17][18]. - The company has reported a stable order volume, with expectations for continued growth in exports despite logistical challenges [18][27]. Strategic Responses - Minhua Holdings is focusing on enhancing product quality and cost management to maintain competitive margins in a challenging market [26][75]. - The company is implementing strategies such as "trade-in" programs to encourage consumers to replace old furniture, which has shown positive results [23][24]. - The management emphasized the importance of maintaining a strong brand presence and product innovation to attract consumers in a competitive landscape [24][25]. Financial Performance and Outlook - The company anticipates a modest growth rate of 10% to 15% in exports for the upcoming fiscal year, contingent on stable economic conditions [36][40]. - The management highlighted that while the current economic environment poses challenges, the long-term outlook remains positive, with expectations for a return to normal consumption patterns as economic conditions improve [76][89]. Consumer Trends - The shift in consumer spending habits has led to a decrease in average selling prices (ASP), with a structural change in the product mix reflecting a more price-sensitive market [62][67]. - The management noted that the ASP decline is not solely due to discounting but reflects a broader change in consumer preferences and purchasing power [67][70]. Future Strategies - Minhua Holdings plans to continue focusing on the replacement market rather than expanding into new product categories, aligning with current consumer needs [51][53]. - The company is exploring new retail strategies, including opening stores in shopping malls to capture foot traffic and enhance brand visibility [83][84]. Additional Insights - The management expressed confidence in the company's ability to navigate the current market challenges through prudent financial management and strategic marketing initiatives [75][76]. - The call concluded with a focus on the importance of adapting to changing consumer behaviors and maintaining operational efficiency to sustain profitability in a competitive environment [91][92].

Summary of Conference Call Company Overview - The conference call featured Minhua Holdings, with the company’s board secretary, Yang Xueli, providing insights and updates on the company's performance and strategies [1]. Key Points and Arguments - Minhua Holdings has recently released its financial results, indicating a positive trajectory in its operations and market position [1]. Additional Important Content - The call emphasized the importance of ongoing communication with stakeholders and the commitment of the management team to transparency and growth [1].

Company Information - The company's registered office is located at Victoria Place, 5th Floor, 31 Victoria Street, Hamilton HM 10, Bermuda[2][3] - The company's primary place of business in Hong Kong is at 10-14 Kwai Cheong Road, Kwai Chung, New Territories, Hong Kong[3] - The company's major banks include Hang Seng Bank, HSBC, Citibank, China Construction Bank, Agricultural Bank of China, Bank of China, and Industrial and Commercial Bank of China[3] - The company's website is www.manwahholdings.com[3] - The company's stock code is 1999[3] - The company's auditor is PricewaterhouseCoopers, located at 22/F, Prince's Building, Central, Hong Kong[2] - The company's share registrar and transfer agent in Bermuda is Ocorian Service (Bermuda) Limited[2] - The company's share registrar in Hong Kong is Hong Kong Central Securities Registration Company Limited[3] - The company's investor relations consultant is Strategic Financial Relations Limited[3] - The company's legal advisors are Deacons and Ocorian Law (Bermuda) Limited[3] Financial Performance - Total revenue for the fiscal year 2024 reached 18,798,633 thousand HKD, showing growth compared to previous years[15] - Gross profit margin improved to 39.4% in FY2024, up from 38.5% in FY2023[15] - Net profit attributable to equity holders increased to 2,302,366 thousand HKD, with a net profit margin of 12.5%[15] - Inventory turnover days decreased significantly to 49.1 days in FY2024 from 70.9 days in FY2023[15] - Accounts receivable turnover days improved to 33.2 days in FY2024, down from 40.4 days in FY2023[15] - Total assets grew to 19,807,520 thousand HKD in FY2024, up from 19,640,488 thousand HKD in FY2023[15] - Return on equity (ROE) increased to 19.1% in FY2024, compared to 16.6% in FY2023[15] - Cash and bank balances stood at 3,273,830 thousand HKD in FY2024, slightly lower than 3,738,234 thousand HKD in FY2023[15] - Earnings per share (basic) rose to 59.09 HK cents in FY2024, up from 48.80 HK cents in FY2023[15] - Dividend payout ratio remained stable at 50.7% in FY2024, compared to 51.2% in FY2023[15] - Revenue for the fiscal year reached HKD 18.41 billion, a year-on-year increase of 6.1%, with net profit attributable to the parent company at HKD 2.3 billion, up 20.2%[20] - Gross margin increased by 0.9 percentage points to 39.4%, and net margin rose by 1.5 percentage points to 12.5%[20] - Mainland China revenue grew by 8.1% to HKD 11.99 billion, with RMB-denominated growth of 12.8%[21] - North America market revenue increased by 2.3% to HKD 4.28 billion, while Europe and other overseas markets revenue grew by 2.9% to HKD 1.2 billion[22] - The company added 765 new stores in China, bringing the total number of brand specialty stores to 7,236[25] - Functional sofa penetration rate in China increased from 7.2% in 2022 to 9.7% in 2023, with a projected rise to 13% within five years[24] - The company maintained a dividend payout ratio of around 50%, with a dividend per share of HKD 0.15[22] - Home Group revenue increased by approximately 10.0% to HKD 674.1 million[26] - The company repurchased ordinary shares worth approximately HKD 230 million during the fiscal year[22] - Dealer rebates and incentives in China amounted to nearly HKD 100 million[21] - Total revenue and other income increased by 5.7% to approximately HKD 18,798,633 thousand (FY2023: HKD 17,788,864 thousand), with a gross profit margin of 39.4% (FY2023: 38.5%)[27] - Sofa and matching products revenue grew by 2.9% to HKD 12,658,825 thousand, with China market revenue increasing by 3.1% to HKD 7,781,477 thousand due to recovery from pandemic impacts[29] - North America market revenue for sofa and matching products increased by 1.1% to HKD 4,025,465 thousand, driven by the end of the inventory destocking cycle[30] - Bedding and matching products revenue rose by 9.6% to HKD 2,987,854 thousand, primarily due to recovery from pandemic impacts[32] - Other products revenue surged by 28.4% to HKD 1,819,602 thousand, driven by increased sales of iron frames and smart furniture[33] - Home Group business revenue increased by 10.0% to HKD 674,136 thousand, as the market gradually recovered from the impact of the Ukraine war[34] - Other income decreased by 11.5% to HKD 387,436 thousand, mainly due to a reduction in government subsidies[36] - Cost of goods sold increased by 4.6% to HKD 11,163,170 thousand, with raw material costs rising by 2.6% and employee costs by 15.5%[37] - Net profit attributable to equity holders grew by 20.2% to HKD 2,302,366 thousand, with a net profit margin increasing from 11.0% to 12.5%[44] - The company declared a final dividend of 15 HK cents per share for the 2024 fiscal year, with a total dividend payout representing approximately 50.7% of the profit attributable to equity holders[45] - As of March 31, 2024, the company's cash and bank balances amounted to approximately 3,273,830 thousand HKD, with significant portions held in RMB, EUR, and USD[46] - The company's short-term borrowings were approximately 4,113,203 thousand HKD, and long-term borrowings were 1,015 thousand HKD as of March 31, 2024, with weighted average annual interest rates of 5.78% for floating-rate loans and 2.56% for fixed-rate loans[48] - The company's capital-to-debt ratio was approximately 34.0% as of March 31, 2024, compared to 36.1% in the previous year[48] - The company reversed inventory impairment provisions of approximately 5,577 thousand HKD in the 2024 fiscal year, compared to a provision of 12,441 thousand HKD in the previous year[50] - The company recorded impairment losses on receivables and notes of approximately 38,752 thousand HKD in the 2024 fiscal year, compared to 14,578 thousand HKD in the previous year[50] - The company sold its 45% stake in a joint venture for approximately 50,677 thousand HKD, with no gain or loss recorded in the comprehensive income statement[55] Operational Performance - The company has 29,837 employees as of March 31, 2024, an increase from 25,832 in the previous year, with total employee costs amounting to approximately 3,193,022 thousand HKD[57] - The company's restricted bank balances were approximately 3,786 thousand HKD as of March 31, 2024, down from 7,394 thousand HKD in the previous year[51] - The company has no significant investment or capital asset plans for the upcoming year[56] - The company plans to conduct a second technical iteration of its "zero-wall" feature in 2024, aiming to enhance the comfort and fashion of its smart home products[58] - The company holds 1,433 core patents, with 406 new patents added in the 2024 fiscal year[58] - The company has been ranked as the global leader in functional sofa sales for six consecutive years, as certified by Euromonitor International[58] - The North American market remains the primary consumer market for functional sofas, with demand recovering rapidly after high inventory pressures eased[58] - The company is leveraging its scale production capacity, product quality, and cost advantages to expand its export market share[58] - The Chinese functional sofa and smart home market is characterized by low penetration and high growth potential[59] - The company aims to increase its market share in China's large existing market by leveraging its long-standing product, brand, and channel advantages[59] ESG and Sustainability - The company has established a comprehensive ESG governance structure, including a decision-making layer led by the board, a management layer composed of an ESG management team, and an execution layer composed of an ESG execution team[66] - The company has identified 19 material issues across environmental, social, and governance (ESG) domains, based on its business model and sustainability context[69] - The company's management is responsible for the final review of material issues and their prioritization, ensuring that identified issues are actionable and effective[70] - The company has established a comprehensive risk management system with the Board of Directors and Audit Committee as the highest decision-making bodies, ensuring stable operations and effective risk control[78] - The company conducted 2 cases of non-state employee bribery and 1 case of dealer fraud during the reporting period, with all parties involved subjected to criminal enforcement measures[79] - The company achieved a 100% signing rate for anti-corruption clauses with suppliers during the reporting period[80] - A total of 1,197 employees participated in anti-corruption training, accumulating 6.5 hours per person[81][82] - The company organized anti-corruption education activities for senior management, focusing on the importance of integrity and anti-fraud risk management[83] - The company implemented a whistleblower protection system to ensure confidentiality and fair handling of reported cases[83] - The company integrated green and low-carbon concepts into its operations, aligning with domestic and international environmental regulations and the "dual carbon" goals[84] - The company emphasized compliance, integrity, and anti-corruption, requiring suppliers to adhere to anti-bribery laws and regulations[80] - The company conducted regular internal audits and provided at least four professional training sessions annually for audit staff to enhance their capabilities[78] - The company actively engaged in rural revitalization and public welfare initiatives, contributing to community development[74] - The company used 17.4 million kWh of photovoltaic power generation, saving 5,246.10 tons of standard coal and reducing greenhouse gas emissions by 11,423.53 tons of CO2 equivalent compared to thermal power generation[86] - Total greenhouse gas emissions (Scope 1 + Scope 2) for the fiscal year 2024 were 68,443.40 tons of CO2 equivalent, with an emission density of 2.29 tons of CO2 equivalent per person[91] - Scope 1 greenhouse gas emissions were 17,720.94 tons of CO2 equivalent, while Scope 2 emissions were 50,722.46 tons of CO2 equivalent[91] - The company has obtained the Guangdong-Hong Kong Cleaner Production Partnership (Manufacturing) Label Certificate and China Environmental Label Product Certification, demonstrating recognition for its green initiatives[88][89] - The company has implemented a three-level environmental management system and obtained ISO14001 certification, integrating environmental management with production management[94] - The company conducted a joint fire safety evacuation drill and training with the Daya Bay Fire Rescue Brigade in March 2024, enhancing employee safety awareness and skills[97] - The company has established a "Water and Electricity Energy Conservation and Environmental Protection Management System" to optimize resource utilization and improve efficiency[99] - The company has not experienced any major environmental pollution incidents during the reporting period, maintaining strict environmental compliance[92] - Total water consumption in FY2024 was 1,137,295.90 tons, with a per capita water intensity of 38.12 tons/person[101] - The company used approximately 33,161.39 tons of various packaging materials in FY2024[101] - Energy consumption in FY2024 included 2,508,968.28 cubic meters of natural gas, 5,437,387.12 liters of diesel, and 88,939,965.24 kWh of purchased electricity[102] - Nitrogen oxide emissions in FY2024 were 0.60 tons, sulfur oxide emissions were 0.26 tons, particulate matter (PM) emissions were 5.89 tons, and volatile organic compounds (VOCs) emissions were 2.84 tons[107] - Non-hazardous waste generation in FY2024 was 18,819.74 tons, with a density of 0.63 tons/person[113] - Hazardous waste generation in FY2024 was 134.98 tons, with a density of 0.005 kg/person[113] Innovation and Intellectual Property - The company has a total of 1,433 patents as of FY2024, with 406 new patents added during the fiscal year. Among these, there are 7 invention patents, 93 utility model patents, and 1,333 design patents[118] - The company launched the 28910 Zero-Wall Patent in 2024, featuring a single motor design that allows the sofa backrest to achieve a complete zero-wall fit, with a backrest depth of 910mm and seat depth of 600mm[119] - Approximately 80% of the improvement and innovation proposals submitted by employees were proven effective after testing, covering areas such as management, processes, materials, and 6S improvements[120] - The company has obtained three management system certifications: ISO 9001 Quality Management System Certification, Shenzhen Quality Standard System Certification, and Customs Advanced Enterprise Certification (valid for 5 years)[121] - The company sources premium raw materials globally, including top-grain leather from Europe and America, FSC-certified wood from South America, and high-density, high-resilience foam developed in-house[125] - The company employs advanced manufacturing techniques, such as European leather cutting equipment and Italian CNC automated cutting systems, to improve production efficiency and reduce costs[127] - The company has established a digital traceability system to ensure the quality and safety of its products, with all materials meeting quality and environmental standards in Europe, America, Southeast Asia, and China[124] - The company conducts multiple quality inspections and tests throughout the manufacturing process, including third-party testing for raw materials, new product samples, and finished products[127] - The company has a dedicated IPR (Intellectual Property Rights) manager to oversee the entire IP management network, from R&D to market, ensuring comprehensive coverage of IP protection[117] - The company actively combats trademark and patent infringements, investing significant resources in personnel and funds to protect its intellectual property rights[118] Safety and Quality - Product recall rate for FY2024 was 0%[128] - Conducted 20 emergency drills and 396 safety inspections in FY2024[132] - Safety training conducted 395 times with 39,670 employee participations in FY2024[132] - Work-related injury loss days ratio was 0.08% with 56,333.62 hours lost in FY2024[132] - Company has 21 certified safety management personnel as of the reporting period[135] - No major safety incidents occurred during the reporting period[135] - Company has 2,126 suppliers in FY2024, including 1,906 from China (including Hong Kong) and 220 overseas[143] - Company passed ISO 27001 information security management system certification and conducted regular information security training[139] - No customer privacy violation complaints were received during the reporting period[139] - Company requires suppliers to comply with amfori BSCI code of conduct, focusing on environmental protection, intellectual property, and human rights[147] Employee and Workforce Management - Total number of employees as of March 31, 2024, is 29,837, with 66% being male and 34% female[153] - 86% of employees are on permanent contracts, while 14% are on fixed-term contracts[152] - 61% of employees are aged between 30 and 50 years, 31% are under 30, and 8% are over 50[153] - The company has a comprehensive salary and benefits system, including monthly and annual bonuses, performance bonuses, and stock options for managerial staff[154] - The company provides various non-monetary benefits such as 5A-grade office environments, gyms, basketball courts, and public-funded travel[155] - The company has a "Smart Weighing Line" in the employee cafeteria to improve lunch efficiency and ensure food safety[162] - The company conducts monthly "Employee Care Day" interviews to address employee concerns, with a 100% resolution rate for reported issues[163] - The "Books Have Golden Houses" project has provided 636 grants totaling 11,275 thousand HKD to 626 employees' children for educational support[164] - The company has established a comprehensive employee development system, including skill training, vocational skill level certification, and skill competitions, to enhance employee capabilities[167] - In 2023/2024, the company provided a total of 731,520 hours of training, with an average of 485.64 hours per employee[168] - 85% of male employees and 15% of female employees participated in training, with 89% of management and professional technical personnel and 11% of frontline workers receiving training[168] - The company conducted a one-week training program for reserve cadres in July 2023, combining professional lectures, field visits, and interactive exchanges[169] - The company has supported employee academic advancement for over a decade, offering incentives and creating a "work while learning" environment[170] - The company has implemented a 180-day rotation training program for new employees, including military training, onboarding, and practical experience in production bases and departments[171] - The company has a five-year career development plan for new hires, focusing on both management and professional growth, divided into four stages: integration, skill development, management entry, and management enhancement[172] - The company has obtained ISO45001 certification for occupational health management and has implemented various measures to ensure employee health and safety, including mandatory health check-ups and the establishment of personal health monitoring files[173] - The company has developed a psychological stress relief program for employees and regularly conducts mental health training[174] - The company actively participates in social welfare activities, including rural revitalization, education support, and disability assistance, and has received multiple awards for its charitable contributions[176] - The company donated HKD 32.65 million for the planning and construction of the Daya Bay Pingshan River Technology Innovation

Financial Data and Key Metrics Changes - The company achieved a revenue of HKD 18.4 billion, representing a year-on-year growth of 6.1% [1] - Net profit attributable to the parent company was HKD 2.3 billion, up 20.2% year-on-year [1] - Gross margin improved by 0.9 percentage points to 39.4%, while net margin increased by 1.5 percentage points to 12.5% [1] - EBITDA reached HKD 1.97 billion, growing by 1.2% [1] - Basic earnings per share were HKD 0.5909, a year-on-year increase of 21.1% [1] Business Line Data and Key Metrics Changes - Revenue from the China region was HKD 11.98 billion, up 8.1% year-on-year [1] - North America revenue was HKD 4.28 billion, growing by 2.3% [1] - Revenue from Europe and other overseas regions was HKD 1.2 billion, increasing by 2.9% [1] - Home Group revenue was HKD 674 million, a growth of 10% [2] - Other revenue declined by 8.5% to HKD 70 million [2] Market Data and Key Metrics Changes - The Chinese market accounted for 65% of total revenue, while the local market contributed 23.3% [2] - The gross margin for the overall market business was 40.4%, with North America at 37.1% and Europe at 30.3% [2] - Inventory turnover days decreased from 71 to 49 days, and accounts receivable turnover days fell from 40 to 33 days [3] Company Strategy and Development Direction - The company is focusing on enhancing brand marketing and product innovation to adapt to changing consumer preferences [4][5] - Plans to increase market penetration in lower-tier cities and expand e-commerce channels are in place [11][14] - The company aims to maintain a dividend payout ratio of around 50% and has a share buyback strategy [1][9] Management's Comments on Operating Environment and Future Outlook - Management noted that the demand for functional sofas remains strong despite a decline in new housing completions [7][8] - The company anticipates a shift towards the stock housing market and is responding to government policies promoting "old-for-new" exchanges [22] - Management expressed optimism about maintaining stable material prices and controlling shipping costs despite macroeconomic pressures [6][5] Other Important Information - The company plans to open approximately 700 to 800 new stores in the upcoming fiscal year [12][16] - The company is exploring new materials and product innovations to meet evolving consumer demands [21] - The company has established production bases in key regions to support future market growth [18] Q&A Session Summary Question: What new strategies are in place for category and channel management in the current market? - The company will enhance brand marketing and collaborate with major media to strengthen brand presence [4] Question: What is the outlook for overseas market growth? - The company expects to accelerate growth in the overseas market through product innovation and deep partnerships with key clients [5] Question: How will material prices fluctuate? - Material prices are expected to remain stable due to market conditions and geopolitical factors [6] Question: How does the company plan to support dealers and expand e-commerce? - The company will increase personnel for e-commerce collaboration and enhance marketing efforts across various platforms [11] Question: What are the plans for new store openings? - The company plans to open around 700 to 800 new stores, focusing on tiered city distribution [12][16] Question: How will the company maintain competitiveness in the functional sofa market? - The company will invest in R&D and leverage its technology patents to enhance product competitiveness [13][14] Question: What is the company's approach to share buybacks and dividends? - The company will consider share buybacks and dividends based on cash flow and investment opportunities [9] Question: How does the company view the impact of the real estate market on growth? - The company acknowledges challenges from the real estate market but sees potential in the functional sofa segment [8][18]

Financial Data and Key Metrics Changes - The company achieved a revenue of HKD 18.4 billion, representing a year-on-year growth of 6.1% [1] - Net profit attributable to the parent company was HKD 2.3 billion, up 20.2% year-on-year [1] - Gross margin improved by 0.9 percentage points to 39.4%, while net margin increased by 1.5 percentage points to 12.5% [1] - EBITDA reached HKD 1.97 billion, growing by 1.2% [1] - Basic earnings per share were HKD 0.5909, a year-on-year increase of 21.1% [1] Business Line Data and Key Metrics Changes - Revenue from the China region was HKD 11.98 billion, up 8.1% year-on-year [1] - North America revenue was HKD 4.28 billion, growing by 2.3% [1] - Revenue from Europe and other overseas regions was HKD 1.2 billion, increasing by 2.9% [1] - Home Group revenue was HKD 674 million, up 10% [2] - Other revenue declined by 8.5% to HKD 70 million [2] Market Data and Key Metrics Changes - The Chinese market accounted for 65% of total revenue, while the local market contributed 23.3% [2] - The overall market business gross margin was 40.4%, with North America at 37.1% and Europe at 30.3% [2] - Sofa sales reached 1.12 million units, with a 25.7% growth in China and a 28% increase in export sales [3] Company Strategy and Development Direction - The company is focusing on brand marketing and enhancing product offerings to adapt to changing consumer preferences [4] - Plans to increase marketing efforts targeting younger consumers who prefer functional sofas [7] - The company aims to expand its market share in the functional sofa segment, which is currently underpenetrated [8] - Emphasis on maintaining a stable gross margin despite market pressures and competition [18] Management's Comments on Operating Environment and Future Outlook - Management noted that the decline in new housing completions has shifted consumer focus towards home improvement rather than real estate investment [7] - The company expects stable material prices despite geopolitical tensions [6] - Management is optimistic about the demand for functional sofas, anticipating significant growth potential in this segment [8] Other Important Information - The company maintains a dividend payout ratio of approximately 50%, with a total dividend expenditure of HKD 1.167 billion [3] - The company plans to open 700-800 new stores in the upcoming fiscal year [12][16] - The company is exploring new markets for brand expansion, particularly in developing countries [15] Q&A Session Summary Question: What new strategies are being implemented for inventory and sales recovery? - The company plans to enhance brand marketing and collaborate with major media to improve brand visibility [4] Question: What is the outlook for overseas market growth? - The company is optimistic about product innovation and collaboration with retailers to drive sales [5] Question: How will material prices be affected? - Material prices are expected to remain stable due to market conditions and geopolitical factors [6] Question: How does the company plan to support dealers? - The company will increase personnel and enhance e-commerce collaboration to improve customer acquisition [11] Question: What are the plans for new store openings? - The company plans to open approximately 700-800 stores, focusing on various city tiers [12][16] Question: How will average price declines affect gross margins? - The company aims to maintain gross margins by targeting different consumer segments with varied pricing strategies [12] Question: What is the strategy for functional sofas and market competition? - The company will invest in R&D and maintain cost advantages to stay competitive in the functional sofa market [13][14]

Financial Performance - Total revenue for the fiscal year ending March 31, 2024, was HKD 18,798,633, an increase of 5.7% from HKD 17,788,864 in the previous year[5] - Gross profit for the fiscal year was HKD 7,248,027, representing a gross margin of 38.5%, compared to HKD 6,678,267 and a margin of 37.5% in the previous year[5] - Net profit for the year was HKD 2,396,002, up 29% from HKD 1,858,178 in the previous year[5] - Earnings per share (EPS) increased to HKD 59.09 from HKD 48.80, reflecting a growth of 21%[7] - Total revenue for the year ended March 31, 2024, was HKD 18,411,197,000, with external sales from sofas and related products contributing HKD 12,658,825,000[22] - The total profit before tax was HKD 2,864,475,000, reflecting the overall operational efficiency of the company[22] - Profit attributable to equity holders of the company was HKD 2,302,366 thousand, an increase of 20.2% compared to the previous year[40] - The company's operating profit before tax was HKD 2,354,872,000, showing a robust performance despite various financial costs[24] Assets and Equity - Total assets as of March 31, 2024, amounted to HKD 19,807,520, a slight increase from HKD 19,640,488 in the previous year[10] - Total equity rose to HKD 13,075,669, compared to HKD 12,527,770 in the previous year, indicating a growth of 4.4%[10] Expenses and Costs - The company reported a decrease in administrative expenses to HKD 956,000 from HKD 1,046,952, a reduction of approximately 8.7%[5] - Financial costs totaled HKD 200,500,000, and goodwill impairment was recorded at HKD 12,268,000[22] - Depreciation and amortization expenses totaled HKD 684,515,000, which is a critical factor in assessing the company's operational efficiency[26] - Employee costs rose by 15.5% from approximately HKD 1,779,759 thousand in FY2023 to HKD 2,055,123 thousand in FY2024[60] - Selling and distribution expenses decreased by 0.1% to approximately HKD 3,314,346 thousand in FY2024, accounting for about 18.0% of revenue[62] - Administrative and other expenses decreased by 8.7% to approximately HKD 956,000 thousand in FY2024, representing about 5.2% of revenue[63] Market Performance - Revenue from external sales in the China market (including Hong Kong and Macau) reached HKD 12,257,665,000, up from HKD 11,388,618,000 in the previous year, indicating a growth of approximately 7.6%[28] - The North American revenue was HKD 4,284,307,000, slightly increasing from HKD 4,188,848,000, reflecting a growth of about 2.3%[28] - Sales from the Chinese market accounted for over 65% of total revenue, with main business income reaching HKD 11,986,885 thousand, an increase of 8.1% year-on-year[41] - The company has seen a significant increase in the penetration rate of functional sofas in the Chinese market, rising from 7.2% to 9.7%[41] Dividends and Shareholder Returns - The company plans to declare a final dividend of HKD 0.15 per share, totaling approximately HKD 581,631 thousand, subject to shareholder approval[34] - The board proposed a final dividend of HKD 0.15 per share, with total dividends for FY2024 accounting for approximately 50.7% of profit attributable to equity holders[66] Strategic Initiatives - The company plans to continue expanding its market presence and investing in new product development to drive future growth[12] - The company aims to leverage its long-term accumulated product, brand, and channel advantages to achieve continuous market share growth in China's stock market[88] - The company continues to seek acquisition opportunities in the furniture sector to accelerate its development[81] Corporate Governance - The company emphasizes the importance of effective corporate governance to enhance group performance and protect shareholder interests[92] - The audit committee consists of four independent non-executive directors, ensuring compliance with professional qualifications and financial management expertise[97] Share Repurchase - The company repurchased a total of 44,842,800 ordinary shares at a total cost of approximately HKD 228,565,371 during the fiscal year 2024[89] - In May 2023, the company repurchased 15,000,000 shares at a price range of HKD 5.26 to HKD 5.59, totaling HKD 80,911,500[89] - In December 2023, the company repurchased 15,842,800 shares at a price range of HKD 4.99 to HKD 5.23, totaling HKD 80,938,111[89] - In January 2024, the company repurchased 14,000,000 shares at a price range of HKD 4.50 to HKD 4.97, totaling HKD 66,715,760[89] Compliance and Audit - The financial statements for the year ending March 31, 2024, have been audited by PwC, confirming the accuracy of the reported figures[101] - The company is currently evaluating the potential impact of new accounting standards and amendments that will be mandatory from April 1, 2024[19] - The company has adopted several revised standards effective from April 1, 2023, which did not have a significant financial impact on the consolidated financial statements[16]

Financial Performance - For the first half of the fiscal year 2024, the company recorded revenue of approximately HKD 8,937,569,000, a year-on-year decrease of about 3.8% (approximately 1.6% increase in RMB terms) [7] - The profit attributable to equity holders was approximately HKD 1,136,042,000, representing a year-on-year increase of about 4.0% (approximately 9.8% increase in RMB terms) [7] - The company's total revenue for the review period was approximately HKD 9,151,563, a decrease of about 4.0% compared to HKD 9,533,349 in the same period last year [23] - The gross profit margin for the review period was approximately 39.1%, compared to 38.8% in the same period last year [23] - Operating profit increased to HKD 1,509,417, up 6.3% from HKD 1,419,517 in the previous year [88] - Net profit for the period was HKD 1,184,579, representing a 10.9% increase compared to HKD 1,068,176 in the prior year [90] - Basic earnings per share for the period was HKD 29.05, up from HKD 27.80, indicating a growth of 4.5% [90] - The company reported a net other comprehensive loss of HKD 765,704, an improvement from a loss of HKD 1,322,386 in the previous year [88] - The company’s total comprehensive income for the period was HKD 418,875, compared to a loss of HKD 254,210 in the same period last year [90] Revenue Breakdown - In the domestic market, the main revenue was approximately HKD 6,005,321,000, with a year-on-year growth of about 5.1% (approximately 11% increase in RMB terms) [8] - Revenue from the China market reached approximately HKD 6,069,863, with a main business revenue of about HKD 6,005,321, reflecting a growth of approximately 5.1% year-on-year [17] - The North American market recorded revenue of approximately HKD 2,037,448,000, with a year-on-year decrease of about 5.4% [9] - Revenue from the North American market decreased to HKD 2,037,448, down 20.5% from HKD 2,564,090 in the previous year [125] - Revenue from the bedding and related products business grew by approximately 7.3% to about HKD 1,491,422, compared to HKD 1,389,690 last year [27] - Revenue from other products reached approximately HKD 906,688, an increase of about 6.7% compared to HKD 849,916 last year [28] - Revenue from the sofa and related products segment was HKD 6,176,703, accounting for approximately 69% of total revenue [127] Market Expansion and Strategy - The company aims to enhance its market share in the soft furniture sector, which currently has a low single-digit market penetration [11] - The company plans to leverage its production capacity and cost advantages to expand its market share in Europe and North America [15] - The company anticipates continued growth in market share in the smart home segment, driven by increasing consumer preference for functional furniture [19] - The company is actively pursuing strategic acquisitions to strengthen its market position and diversify its product offerings [102] - The company has plans for market expansion and new product development, particularly in the smart furniture segment, to enhance its competitive edge [102] Shareholder Actions - The company declared an interim dividend of HKD 0.15 per share, maintaining a payout ratio of around 50% [7] - The board declared an interim dividend of HKD 0.15 per share, consistent with the previous year's interim dividend [60] - The interim dividend is expected to be paid on or before January 2, 2024, to shareholders listed on December 1, 2023 [77] - The group repurchased and canceled 15 million shares at a total purchase price of HKD 80,911,500 during the review period [7] - The group repurchased 15,000,000 shares in May 2023 for a total consideration of HKD 80,911,500, which were subsequently canceled [61] Cost Management and Expenses - Financial costs rose by approximately 60.9% to HKD 98,266,000, mainly due to increased loan interest expenses [42] - Administrative and other expenses decreased by approximately 20.3% to HKD 450,051,000, with the percentage of revenue dropping from about 6.1% to 5.0% [40] - Advertising and marketing expenses rose by approximately 24.4% to HKD 308,418,000, with the percentage of revenue increasing from about 2.7% to 3.5% [39] - Other income decreased by approximately 12.4% to about HKD 213,994,000 in the first half of the fiscal year 2024, primarily due to a decline in government subsidies [34] Employee and Operational Metrics - The group has 27,170 employees as of September 30, 2023, an increase from 25,832 employees on March 31, 2023 [56] - Total employee costs for the first half of the fiscal year 2024 were approximately HKD 1,479,784,000, compared to HKD 1,459,841,000 in the same period of the previous fiscal year [56] - The company opened 417 new stores during the first half of the fiscal year 2024, maintaining a closure rate of approximately 7.3% [8] - The company opened a net increase of 417 brand specialty stores in China, totaling 6,888 stores, with a store closure rate of approximately 7.3% [19] Financial Position and Assets - As of September 30, 2023, total assets amounted to HKD 19,967,725 thousand, an increase from HKD 19,640,488 thousand as of March 31, 2023, reflecting a growth of approximately 1.67% [93] - Current assets increased to HKD 8,878,770 thousand from HKD 8,414,634 thousand, representing a rise of about 5.49% [93] - Non-current assets totaled HKD 11,088,955 thousand, down from HKD 11,225,854 thousand, indicating a decrease of approximately 1.22% [93] - Total liabilities rose to HKD 7,493,205 thousand from HKD 7,112,718 thousand, marking an increase of around 5.35% [94] - The company's equity attributable to owners decreased slightly to HKD 11,510,039 thousand from HKD 11,556,777 thousand, a decline of approximately 0.40% [96] Risk Management and Compliance - The group faces various financial risks including market risk, credit risk, and liquidity risk, with no significant changes in risk management policies since March 31, 2023 [115] - The company confirmed compliance with the corporate governance code, except for the separation of the roles of Chairman and CEO [80] - The board consists of four independent non-executive directors, ensuring a balance of power and independent opinions [80] - The company has adopted the standard code of conduct for securities transactions by directors, confirming compliance for the six-month period [81] Share Options and Ownership - The company reported a total of 3,906,702,800 shares issued as of September 30, 2023, with a major shareholder, Min Wah Investment Limited, holding approximately 61.84% of the issued share capital [69] - The stock options plan adopted on March 5, 2010, and the one on July 3, 2020, have seen various stock options granted, with a total of 40,400 options unexercised by Mr. Huang Minli as of September 30, 2023 [72] - The company has a total of 2,418,872,400 shares held by Mr. Huang Minli, which includes shares deemed beneficially owned by Ms. Xu [68] - The number of unexercised share options as of September 30, 2023, is 14,244,400 after accounting for cancellations and exercises [74] Future Outlook - The group aims to enhance product quality and innovation, focusing on upgraded sofa features such as compactness and aesthetics [58] - The group plans to increase investment in smart manufacturing and digital management to improve production efficiency and reduce labor costs [58] - The company continues to explore market expansion opportunities and new product development strategies to enhance future growth [128]

Revenue Performance - Total revenue for the six months ended September 30, 2023, was HK$9,151.56 million, a decrease of 4% compared to HK$9,533.35 million in the same period last year[2] - Total revenue for the six months ended September 30, 2023, was HKD 8,937.6 million[16] - Total revenue for the six months ended September 30, 2023, was HK$8,937,569 thousand, a decrease from HK$9,289,026 thousand in the same period in 2022[17] - Total revenue for the company was approximately 8,937,569 thousand HKD, a year-on-year decrease of 3.8%[36] - Total revenue decreased by 4.0% to approximately HKD 9,151,563 thousand in the current period compared to HKD 9,533,349 thousand in the same period last year[41][42] Profitability - Gross profit for the period was HK$3,491.92 million, down 3.2% from HK$3,608.08 million in the previous year[2] - Operating profit increased by 6.3% to HK$1,509.42 million, compared to HK$1,419.52 million in the prior year[2] - Net profit attributable to equity holders of the company was HK$1,136.04 million, up 4% from HK$1,092.13 million in the same period last year[3] - The company's total comprehensive income for the period was HK$418.88 million, compared to a loss of HK$254.21 million in the previous year[2] - Net profit attributable to equity holders was approximately 1,136,042 thousand HKD, a year-on-year increase of 4.0%[36] - Profit attributable to equity holders of the company increased by 4.0% to HKD 1,136,042 thousand in the first half of fiscal year 2024 from HKD 1,092,131 thousand in the same period last year[61] - The company's net profit margin improved to 12.7% in the first half of fiscal year 2024, up from 11.8% in the same period last year[61] Segment Performance - Revenue from sofa and matching products reached HKD 6,176.7 million, accounting for 69.1% of total revenue[16] - Revenue from bed and matching products was HKD 1,491.4 million, representing 16.7% of total revenue[16] - Revenue from other products amounted to HKD 906.7 million, contributing 10.1% to total revenue[16] - Revenue from Home Group business was HKD 298.2 million, making up 3.3% of total revenue[16] - Segment profit for sofa and matching products was HKD 1,154.2 million, accounting for 71.4% of total segment profit[16] - Segment profit for bed and matching products was HKD 373.9 million, representing 23.1% of total segment profit[16] - Segment profit for other products was HKD 67.9 million, contributing 4.2% to total segment profit[16] - Segment profit for Home Group business was HKD 1.1 million, making up 0.1% of total segment profit[16] - Total segment profit for the six months ended September 30, 2023, was HKD 1,615.7 million[16] - Revenue from sofa and matching products decreased to HK$6,176,703 thousand in 2023 from HK$6,707,868 thousand in 2022[17][19] - Revenue from bed and matching products increased to HK$1,491,422 thousand in 2023 from HK$1,389,690 thousand in 2022[17][19] - Sofa and related products revenue decreased by 7.9% to HKD 6,176,703 thousand, while bed and related products revenue increased by 7.3% to HKD 1,491,422 thousand[41][43][44] - Other product sales revenue grew by 6.7% to HKD 906,688 thousand[41][45] - Total sofa product sales increased by 17.0% to approximately 882 thousand sets, with domestic sales in China growing by 27.6% and export sales increasing by 3.7%[42] Regional Performance - Revenue from China (including Hong Kong and Macau) increased to HK$6,069,863 thousand in 2023 from HK$5,775,388 thousand in 2022[17][19] - Revenue from North America decreased to HK$2,037,448 thousand in 2023 from HK$2,564,090 thousand in 2022[17][19] - Revenue from Europe remained relatively stable at HK$548,199 thousand in 2023 compared to HK$546,829 thousand in 2022[17][19] - China market revenue reached approximately 6,069,863 thousand HKD, with main business revenue of 6,005,321 thousand HKD, a year-on-year increase of 5.1%[37] - North America market revenue declined by 20.5% to HKD 2,037,448 thousand, but excluding the impact of shipping surcharges, the decline was 5.4%[39] - Europe and other overseas markets (excluding Home Group) revenue decreased by 20.6% to HKD 532,044 thousand, with sofa sales dropping by 8.8% to HKD 376,967 thousand[40] - Home Group revenue increased by 6.7% to HKD 298,214 thousand[40][46] Financial Position - Total assets as of September 30, 2023, were HK$19,967.73 million, a slight increase from HK$19,640.49 million as of March 31, 2023[5] - Cash and bank balances increased by 15.2% to HK$4,306.97 million as of September 30, 2023, compared to HK$3,738.23 million at the end of March 2023[5] - Total equity attributable to equity holders of the company was HK$12,474.52 million, a slight decrease from HK$12,527.77 million as of March 31, 2023[7] - Total liabilities increased by 5.3% to HK$7,493.21 million as of September 30, 2023, compared to HK$7,112.72 million at the end of March 2023[7] - The company's net accounts receivable and notes receivable as of September 30, 2023, were HK$1,659,768 thousand, compared to HK$1,598,310 thousand as of March 31, 2023[25] - The company's trade and other payables and accrued expenses as of September 30, 2023, were HK$837,445 thousand, compared to HK$950,941 thousand as of March 31, 2023[28] - The company's bank borrowings as of September 30, 2023, were HK$4,709,037 thousand, compared to HK$4,176,429 thousand as of March 31, 2023[30] - The company's capital gearing ratio increased to 40.9% as of September 30, 2023, compared to 36.1% as of March 31, 2023[63] Earnings and Dividends - Basic earnings per share increased to 29.05 HK cents, up from 27.80 HK cents in the same period last year[4] - The company's basic earnings per share for the six months ended September 30, 2023, were HK$0.2905, compared to HK$0.2780 for the same period in 2022[23] - The company's diluted earnings per share for the six months ended September 30, 2023, were HK$0.2904, compared to HK$0.2778 for the same period in 2022[23] - The company declared an interim dividend of HK$0.15 per share for the six months ended September 30, 2023, the same as the previous year[24] - The company declared an interim dividend of HKD 0.15 per share, unchanged from the previous year[70] Costs and Expenses - Direct costs decreased by 4.1% to HKD 5,445,649 thousand, with raw material costs dropping by 6.7% and employee costs rising by 7.6%[49] - Other income declined by 12.4% to HKD 213,994 thousand, primarily due to a reduction in government subsidies[48][52] - Sales and distribution expenses decreased by 13.0% to HKD 1,604,156 thousand in the first half of fiscal year 2024 from HKD 1,843,264 thousand in the same period last year[55] - Advertising, marketing, and brand building expenses increased by 24.4% to HKD 308,418 thousand in the first half of fiscal year 2024 from HKD 248,017 thousand in the same period last year[56] - Administrative and other expenses decreased by 20.3% to HKD 450,051 thousand in the first half of fiscal year 2024 from HKD 564,496 thousand in the same period last year[57] - Total employee costs for the first half of the 2024 fiscal year were approximately HKD 1,479.784 million, compared to HKD 1,459.841 million in the same period of the previous fiscal year[68] Other Financial Metrics - Other income for the period was HK$244,323 thousand[17] - The company's share of profits from joint ventures was HK$1,788 thousand[17] - Net exchange gains amounted to HK$57,194 thousand[17] - Income tax expenses decreased to HK$229,716 thousand in 2023 from HK$292,061 thousand in 2022[21] - Sales of waste materials increased by 35.5% to HKD 21,191 thousand in the first half of fiscal year 2024 compared to HKD 15,641 thousand in the same period last year[53] - Government subsidies decreased by 37.9% to HKD 105,414 thousand in the first half of fiscal year 2024 from HKD 169,871 thousand in the same period last year[53] - Interest income rose by 54.8% to HKD 83,344 thousand in the first half of fiscal year 2024 compared to HKD 53,841 thousand in the same period last year[53] - Other losses net amounted to HKD 142,290 thousand in the first half of fiscal year 2024, a significant increase from HKD 25,121 thousand in the same period last year[54] Corporate Governance and Compliance - The company complied with the Corporate Governance Code of the Stock Exchange Listing Rules, except for a deviation from Code Provision C.2.1 regarding the separation of Chairman and CEO roles[76] - The Board of Directors confirmed that all directors adhered to the Standard Code of Conduct for Securities Transactions during the six months ended September 30, 2023[77] - The company appointed PricewaterhouseCoopers as its auditor to review the interim financial information for the six months ended September 30, 2023, in accordance with International Standard on Review Engagements 2410[73] - No significant events occurred after the reporting period that required disclosure[74] Operational Highlights - The company's China brand sales accounted for over 67% of the group's revenue during the review period[36] - Sofa sales volume in China increased by 27.6%, from approximately 419,000 units to 535,000 units[37] - The company's total number of brand专卖店 in China reached 6,888, with a net increase of 417 stores during the review period[37] - The company's store closure rate in China remained at a healthy level of approximately 7.3%[37] - The company employs 27,170 staff as of September 30, 2023, an increase from 25,832 staff as of March 31, 2023[68] - The company repurchased 15,000,000 ordinary shares in May 2023 at a total cost of HKD 80.9115 million, with the repurchased shares subsequently canceled[71][72] - The company plans to continue seeking acquisition opportunities in the furniture sector to accelerate its development[67] - The company is focusing on product innovation, including the development of upgraded functional sofas and smart iron frames with global sales leadership[69] - The company is investing in intelligent manufacturing, digital management, and brand influence to enhance long-term competitiveness[69] Tax and Legal Matters - The company's US corporate tax expense includes federal income tax at a rate of 21% and state income tax ranging from 0% to 9% based on estimated taxable profits[22] - The company's Macau subsidiary is subject to a supplementary income tax rate of 12% on taxable income[22] - The company has a legal claim provision of $18.943 million (equivalent to HKD 148.267 million) classified as current liabilities due to a lawsuit from a former supplier[65] Shareholder and Dividend Information - The company will suspend share transfer registration from November 30, 2023, to December 1, 2023, for the distribution of interim dividends, with payment expected by December 21, 2023[75] Capital and Investments - The company's capital commitments for property, plant, and equipment acquisition and construction were 817,980 thousand HKD as of September 30, 2023[32] - The company's bank loans are denominated in HKD and RMB, with fixed interest rates ranging from 1.35% to 3.50% and floating rates based on HIBOR or EURIBOR plus a spread[31]