鸿福堂(01446) - 2024 - 中期财报

Company Information This section provides fundamental corporate information for Hung Fook Tong Group Holdings Limited, including details on the Board of Directors, committees, company secretary, auditor, registered office, principal place of business, share registrar, and principal bankers Company Overview This chapter provides fundamental corporate information for Hung Fook Tong Group Holdings Limited, including details on the Board of Directors, committees, company secretary, auditor, registered office, principal place of business, share registrar, and principal bankers - The company's Chairman of the Board is Mr. Tse Po Tat, and the Chief Executive Officer is Dr. Szeto Wing Fu[4] - The company's auditor is PricewaterhouseCoopers[4] Management Discussion and Analysis This section reviews the Group's operational and financial performance in the first half of 2024, detailing revenue decline due to market challenges, successful loss reduction through cost control, and strategies for its retail and wholesale segments Business Review In the first half of 2024, the Group's total revenue decreased by 7.1% to HKD 308 million, but effective cost control and improved production efficiency led to a slight increase in gross profit margin to 58.9% and a 17.9% reduction in loss attributable to owners, despite challenges in both retail and wholesale segments Business Performance Summary | Indicator | 2024 First Half (Thousand HKD) | 2023 First Half (Thousand HKD) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Total Revenue | 308,000 | 331,700 | -7.1% | | Gross Profit | 181,500 | 193,900 | -6.4% | | Gross Profit Margin | 58.9% | 58.5% | +0.4pp | | Loss Attributable to Owners | (7,900) | (9,600) | -17.9% | - Hong Kong retail business, as the primary revenue source, accounted for 76.7% of total revenue, with segment revenue decreasing by 6.1% to HKD 236 million year-on-year due to market conditions, yet segment profit increased by 39.6% to HKD 5.3 million due to improved gross margin and reduced administrative expenses[9] - Wholesale business revenue decreased by 10.4% to HKD 71.7 million, with the Hong Kong market declining by 7.6% and the Mainland China market by 24.1% due to low consumer confidence[12][13][14] - The Group actively responded to challenges by launching new products like hemp seed latte and vegetarian ginger vinegar, utilizing social media platforms such as Xiaohongshu and Douyin for promotion, and enhancing member experience, with its "Jia Club" membership exceeding 1.398 million[9][11] Outlook Looking ahead, the Group anticipates continued challenging operating environments in Hong Kong and Mainland China for the second half of 2024, thus adopting prudent financial strategies focused on cost optimization, maintaining robust cash flow, and actively exploring new revenue streams, including product diversification, brand collaborations, and opportunities in the Greater Bay Area and overseas markets - Hong Kong retail strategy includes launching more diversified products such as post-natal tonic foods and ambient temperature gifts, continuously reviewing the store network, and strictly controlling costs[18] - Wholesale business strategy in Hong Kong involves exploring more brand collaborations and introducing sugar-free or low-sugar beverages, while the Mainland China market will see more sugar-free and ginseng products[19] - Overall strategy prioritizes prudent financial management, optimizing cost and capital structure, while actively developing new revenue streams and strengthening market expansion to sustain growth momentum[17] Financial Review This section details the Group's first-half financial performance, noting a 7.1% revenue decline due to market weakness, but an 8.2% decrease in cost of sales and effective control over staff and rental expenses led to a slight gross margin increase and a narrowing of loss attributable to owners from HKD 9.6 million to HKD 7.9 million, maintaining a stable financial position Key Financial Indicators | Financial Indicator | 2024 First Half (Thousand HKD) | 2023 First Half (Thousand HKD) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 308,000 | 331,700 | -7.1% | | Cost of Sales | 126,500 | 137,800 | -8.2% | | Staff Costs | 93,700 | 104,800 | -10.6% | | Rental Expenses | 50,800 | 51,700 | -1.7% | | Loss Attributable to Owners | (7,900) | (9,600) | -17.9% | | Loss Per Share (HK cents) | (1.21) | (1.47) | -17.7% | - Gross profit margin increased by 0.4 percentage points from 58.5% to 58.9% compared to the same period last year, primarily due to the integration of production capacities in Hong Kong and Mainland China[24] - As of June 30, 2024, the Group held bank deposits and cash balances of HKD 79.4 million, with unutilized bank credit facilities totaling HKD 30.2 million, and a capital gearing ratio of 0.70, maintaining a stable financial position[8][32] - The Group had a net current liability of HKD 139.8 million, primarily due to HKD 142 million in prepaid vouchers and points received in advance, which are not expected to be settled in cash; excluding this, the Group would have a net current asset of HKD 2.2 million[32] Awards and Environmental, Social and Governance (ESG) This section highlights the Group's achievements in corporate social responsibility and sustainability, including various awards and its significant progress in environmental protection, social contributions, and governance practices Awards and Accolades In the first half of 2024, the Group continued its social responsibility efforts and received multiple accolades, including consecutive "Caring Company" logos, the PARKnSHOP Outstanding Brand Award, and the GS1 "Caring Company Scheme" 10-Year+ Award, demonstrating broad recognition for its social contributions, brand strength, and employee care - Awarded the "15 Years Plus Caring Company Logo 2006-2024" by The Hong Kong Council of Social Service[39] - Awarded the "GS1 'Caring Company Scheme' 10-Year+ Award" by GS1 Hong Kong[39] Environmental, Social and Governance (ESG) Practices The Group made significant progress in ESG, actively promoting sustainable development through eco-friendly practices like using rPET materials and recycling food waste, while also contributing to society by supporting charitable activities, providing extensive employee training, and fostering a pet-friendly work environment - Environmental Protection: - Eliminated plastic tableware across all stores, transitioning to eco-friendly alternatives - Recycled approximately 155 kg of plastic bottles and expanded the use of rPET materials for bottle production, totaling 12 metric tons, reducing approximately 38 metric tons of carbon emissions - Achieved zero food waste disposal to landfills, recovering approximately 186.3 metric tons of food waste - Solar panels at Hong Kong and Kaiping factories generated a total of 1,404 MWh of renewable energy[41][43] - Social Contribution: - Continuously sponsored Community Chest activities for 15 years, helping to raise nearly HKD 1 million - Provided over 2,000 hours of training for 796 employees - Organized volunteer activities and promoted a pet-friendly work environment, caring for community and employee well-being[44] Interim Financial Information This section presents the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2024, including the statement of comprehensive income, statement of financial position, statement of changes in equity, and statement of cash flows, accompanied by detailed notes, comprehensively disclosing the Group's financial position and operating results Condensed Consolidated Interim Statement of Comprehensive Income For the six months ended June 30, 2024, the Group recorded revenue of HKD 308 million, a 7.1% year-on-year decrease, with operating loss narrowing to HKD 5.9 million and loss attributable to owners improving to HKD 7.93 million, resulting in a basic and diluted loss per share of 1.21 HK cents Condensed Consolidated Interim Statement of Comprehensive Income | Item (Thousand HKD) | 2024 First Half (Unaudited) | 2023 First Half (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) | | Basic Loss Per Share (HK cents) | (1.21) | (1.47) | Condensed Consolidated Interim Statement of Financial Position As of June 30, 2024, the Group's total assets were HKD 676 million, a decrease from HKD 714 million at the end of 2023, with total liabilities at HKD 435 million and total equity at HKD 241 million, notably recording a net current liability of HKD 140 million as current liabilities exceeded current assets Condensed Consolidated Interim Statement of Financial Position | Item (Thousand HKD) | As at June 30, 2024 (Unaudited) | As at December 31, 2023 (Audited) | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 463,099 | 485,324 | | Current Assets | 212,713 | 228,439 | | Total Assets | 675,812 | 713,763 | | Equity and Liabilities | | | | Total Equity | 240,722 | 255,876 | | Non-current Liabilities | 82,528 | 88,492 | | Current Liabilities | 352,562 | 369,395 | | Total Liabilities | 435,090 | 457,887 | | Total Equity and Liabilities | 675,812 | 713,763 | Condensed Consolidated Interim Statement of Cash Flows For the six months ended June 30, 2024, the Group generated net cash from operating activities of HKD 48.52 million, used net cash in investing activities of HKD 5.09 million, and used net cash in financing activities of HKD 51.99 million, resulting in a net decrease in cash and cash equivalents of HKD 8.56 million for the period, with an ending balance of HKD 79.38 million Condensed Consolidated Interim Statement of Cash Flows | Item (Thousand HKD) | 2024 First Half (Unaudited) | 2023 First Half (Unaudited) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 48,517 | 48,020 | | Net Cash Used in Investing Activities | (5,092) | (7,120) | | Net Cash Used in Financing Activities | (51,987) | (53,146) | | Net Decrease in Cash and Cash Equivalents | (8,562) | (12,246) | | Cash and Cash Equivalents at End of Period | 79,381 | 90,866 | Notes to the Condensed Consolidated Interim Financial Information The financial notes provide detailed explanations of the financial statements, highlighting that the report is prepared on a going concern basis despite a net current liability, business is segmented into Hong Kong retail and wholesale with retail contributing the majority of revenue, the Board resolved not to declare an interim dividend, and the share option scheme expired on June 10, 2024 - Despite the Group's current liabilities exceeding current assets by HKD 139.8 million as of June 30, 2024, the Directors believe the Group has sufficient working capital, thus the financial information is prepared on a going concern basis[57] Segment Information | Segment | Revenue (Thousand HKD) | Segment Results (Thousand HKD) | | :--- | :--- | :--- | | Hong Kong Retail | 236,346 | 5,339 | | Wholesale | 71,686 | 8,780 | - The Board of Directors resolved not to declare any interim dividend for the six months ended June 30, 2024[85] - The company's share option scheme expired on June 10, 2024, with no share options granted or unexercised during the period[92] Other Information This section provides additional statutory and compliance information, including dividend policy, shareholding details of directors and major shareholders, the expiry of the share option scheme, corporate governance compliance, and review of interim financial information Other Statutory and Compliance Information This section discloses other statutory information, including the Board's decision not to declare an interim dividend, details on directors' and major shareholders' equity interests, the expiry of the share option scheme, the company's compliance with corporate governance code and maintenance of public float, and the review of interim financial information by the audit committee and external auditor - The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2024[107] - Controlling shareholders Ms. Wong Pui Chu, Mr. Tse Po Tat, and the late Mr. Kwan Wang Yung are parties acting in concert, deemed to collectively hold approximately 61.59% of the company's share interests[104][108][109] - The company's share option scheme expired on June 10, 2024, with no share options granted, exercised, cancelled, or lapsed during the period[115] - The Audit Committee has reviewed the Group's unaudited interim financial information for the six months ended June 30, 2024, which was also reviewed by the external auditor, PricewaterhouseCoopers[122]