Company Overview - Fountain Set Group is one of the world's largest fabric manufacturers, producing knitted fabric and garments through vertically integrated operations[1]. - The company has 7 production facilities located in the PRC, Sri Lanka, and Indonesia, with a global workforce of nearly 5,900 employees[2]. - Chinatex Corporation Limited has been the largest shareholder of Fountain Set since 2012, indicating strong backing from a state-owned enterprise[3]. - Fountain Set operates marketing and representative offices in 4 countries, enhancing its global reach[2]. Financial Performance - Revenue for 2022 decreased to HK6,751.3 million in 2021[4]. - The company reported a loss attributable to owners of HK241.3 million in 2021[4]. - Profit margin turned negative at -1.9%, a decline from 3.6% in the previous year[4]. - Basic and diluted earnings per share were both -9.4 HK cents, down from 19.7 HK cents in 2021[4]. - Proposed final dividend per share was not declared, compared to 16.00 HK cents in 2021, with a dividend payout ratio of 81.2% in the previous year[4]. - Total assets decreased to HK5,748.4 million in 2021[4]. - Net current assets were HK2,248.8 million in 2021[4]. - Total bank borrowings increased to HK327.3 million in 2021[4]. - Return on equity fell to -2.7%, down from 7.2% in the previous year[4]. - Inventory turnover period improved to 62 days from 107 days in 2021[4]. Awards and Recognition - Jiangyin Fuhui Textiles Limited received the "2021 Top 100 Star Enterprise" award from the Jiangyin Municipal Party Committee of Communist Party of China[47]. - Yancheng Fuhui Textiles Limited was awarded the "2021 Technology Innovation Award" by Chinatex Corporation[52]. - Fountain Set (Holdings) Limited achieved the Global Recycled Standard 4.0 certification, enhancing its sustainability credentials[44]. - The company holds multiple Oeko-Tex Standard 100 Certificates, ensuring product safety and environmental standards[54]. - Jiangyin Fuhui Textiles Limited was recognized as an "Outstanding Enterprise of Foreign Investment" in 2021, reflecting its strong performance in attracting foreign capital[50]. - The company has been acknowledged as a "Charitable Enterprise" in 2021, highlighting its commitment to social responsibility[50]. - Fountain Set (Holdings) Limited is a certified bluesign system partner, indicating its dedication to sustainable textile production[44]. - The company has received the "Best Quick Response Award" from ANTA Sports Products Limited, showcasing its operational efficiency[59]. - Jiangyin Fuhui Textiles Limited was recognized for its "Outstanding Contribution Award for High-quality Development" in 2021, emphasizing its role in regional economic growth[47]. - The company has been awarded the ISO 50001 Energy Management System Certificate, demonstrating its commitment to energy efficiency[50]. Market Conditions and Challenges - The net loss attributable to the owners of the Company for the year ended December 31, 2022, was primarily due to reduced consumer purchasing momentum, purchasing power decline, overstocking by retail clients, and a one-off redundancy compensation of approximately HK$127 million[72]. - The adverse market conditions were influenced by global inflation and the ongoing war in Ukraine, impacting consumer behavior and demand[72]. - Global growth is projected to decelerate sharply, with a decline to 1.7% in 2023 from 3.0% expected six months prior, indicating a broad-based deterioration across regions[81]. - By the end of 2024, GDP levels in emerging market and developing economies (EMDEs) are expected to be about 6% below pre-pandemic levels[81]. - The escalation of geopolitical conflicts and sanctions has driven up global commodity prices, significantly increasing manufacturing costs[103]. Sustainability Initiatives - The Group has established a "Sustainability Development and Enhancement Committee" to drive sustainability objectives and goals across its operations[82]. - The centralized heat supply project has reduced 28 coal-fired heaters, contributing to cleaner air by lowering nitrogen oxide and sulfur dioxide emissions[83]. - The first phase of the project was completed in 2018, and the second phase began in 2019, with two new natural gas boilers operational in January and August 2021[83]. - The Group is committed to investing in advanced technologies and pollution reduction measures, including periodic training for staff on environmental protection[88][92]. - The establishment of a "Sustainability and Improvement Committee" in 2016 aims to enhance management's perspective on sustainable development and set ambitious goals[85]. - The Group's commitment to green development is expected to improve the ecological environment and overall social benefits in the region[86]. Operational Strategies - The Group anticipates a turnaround in financial performance by enhancing operational efficiency and exploring market opportunities[90][97]. - The Group is actively promoting the Yancheng Fuhui Expansion Project to enhance digitalization, intelligence, and eco-friendliness in operations[115]. - The future supply chain will focus on regionalization, localization, and diversification, leading to more flexible global supply chains[110]. - The Group aims to optimize operations by boosting domestic sales, shortening inventory turnover days, and reducing inventory levels[111]. - Fountain Set Group actively adjusted its sales strategy in response to a challenging business environment in 2022, maintaining stable domestic sales orders despite a slowdown in economic growth[119]. - The export sales team focused on reducing the loss of quarterly intended orders and securing unconfirmed orders from major customers in the United States, while increasing the supply of high-value products[120]. - The Group emphasized product development and quality improvement, enhancing R&D capabilities to meet market demands and improve product quality[122]. - A tracking mechanism for new product production was strengthened, effectively addressing recurring quality issues such as dyeing defects and wear marks[123]. - Inventory management was optimized to mitigate operating risks, with a focus on reducing raw material and finished goods backlog to improve capital turnover[124]. - Centralized procurement management was deepened, leading to significant reductions in procurement costs through optimized supplier catalogs and online supervision[128]. - Production management measures were implemented to control costs, including segmented production and optimizing employment structure[129]. - Lean management initiatives helped reduce product defection and repair rates, improving overall product quality and reducing manufacturing costs[130]. - Staff reduction and efficiency increase measures were taken to enhance per-capita efficiency and ensure stable business development[131]. - The salt city expansion project is a key initiative for the Group's transformation, focusing on smart manufacturing and sustainable development in the textile industry[117]. Economic Outlook - The International Monetary Fund projected global economic growth to decline from 3.4% in 2022 to 2.9% in 2023[200]. - The United Nations forecasted world economic growth to fall from approximately 3% in 2022 to 1.9% in 2023[200]. - The World Bank projected a slowdown in global economic growth to 1.7% in 2023, indicating a significant risk of recession[200]. - Average per-capita incomes in fragile and conflict-affected areas are expected to decline by 2024, indicating stalled income convergence[89]. Corporate Governance - Corporate governance policies are being improved to enhance shareholder value, with the formation of various committees at the Board level[96][98]. - The Group has complied with all covenant ratios and undertakings for the years ended December 31, 2022, and 2021[188].
福田实业(00420) - 2022 - 年度财报