Financial Performance - Revenue in 2022 increased to 1,630.77million,upfrom1,540.61 million in 2021[11] - Net profit attributable to shareholders in 2022 was 118.03million,comparedto89.69 million in 2021[12] - Revenue increased by 5.9% to 1.6308billionin2022,withshipmentvolumerisingby0.428.5 per pair in 2022, driven by changes in customer and product mix[20] - Revenue for 2022 increased to 1,630.77million,upfrom1,540.61 million in 2021, representing a growth of 5.85%[133] - Gross profit rose to 352.13millionin2022,comparedto316.85 million in 2021, an increase of 11.14%[133] - Net profit attributable to owners of the parent company increased to 118.03millionin2022,upfrom89.69 million in 2021, a growth of 31.61%[134] - Total comprehensive income for 2022 was 92.54million,slightlyhigherthan92.24 million in 2021[134] - Earnings per share (basic) increased to 0.1490in2022,upfrom0.1133 in 2021, a rise of 31.51%[134] - The company reported a net profit of 117.2millionfortheyearendedDecember31,2022,comparedto90.8 million in 2021[22] - Net profit for the year was 89,694thousand,contributingtoatotalcomprehensiveincomeof91,314 thousand[138] - Operating cash flow from activities increased to 240,076thousand,upfrom120,256 thousand in the previous year[140] - Cash and cash equivalents at the end of the year stood at 213,303thousand,comparedto135,170 thousand at the beginning of the year[141] - The company's total equity increased to 1,016,721thousandfrom923,839 thousand at the beginning of the year[138] - The company's cash flow from financing activities was a net outflow of 106,412thousand,comparedto22,622 thousand in the previous year[141] Revenue Distribution and Market Performance - The company's revenue distribution was 51.3% from North America and 49.7% from other regions[10] - The company's revenue from China (including Hong Kong) accounted for 24.1% of total revenue[14] - North America and Europe remained the company's largest markets, accounting for 51.3% and 24.1% of total revenue, respectively[22] - Total revenue for 2022 reached 1,630.77million,withmanufacturingcontributing1,620.05 million and retail & wholesale contributing 10.73million[194]−NorthAmericaaccountedforthelargestshareofexternalcustomerrevenueat836.05 million, followed by Europe at 393.77millionandChinaat220.88 million[191] - Revenue from footwear and handbag sales increased to 1,630.77millionin2022,upfrom1,540.61 million in 2021[194][196] - Customer A contributed 563.62millioninrevenuefromthemanufacturingsegment,representingasignificantportionofthecompany′stotalincome[193]ProductionandCapacityExpansion−In2022,thecompanyexpandeditsproductioncapacitybybuildingathirdfactoryinIndonesia[9]−Thecompanyisexpandingitsmanufacturingcapacity,includinganewfactoryinSolo,Indonesia,andincreasingcapacityinBangladesh[17]−ThecompanyplanstoexpandproductioncapacityinIndonesiaandBangladesh,withsignificantcapitalexpenditureexpectedin2023[24]−Capitalexpendituresfortheyeartotaled55.88 million, primarily driven by the manufacturing segment[190] Product Portfolio and Market Entry - The company's product portfolio includes fashion, luxury, sports, and casual footwear for global brands such as Nike, Under Armour, and Prada[5] - Stella Luna brand successfully entered the Hong Kong and US markets through renowned department stores like Lane Crawford[8] - The company operates over 220 Stella Luna retail outlets globally[8] - The company's luxury and high-end fashion customers achieved sales growth despite a challenging macroeconomic environment in Western markets[15] - Revenue from the sports shoe category increased by 14.7% year-on-year, accounting for 42.6% of total manufacturing revenue (2021: 39.4%)[21] - Revenue from the luxury category decreased by 14.4% year-on-year, accounting for 8.3% of total manufacturing revenue (2021: 10.2%)[21] - Revenue from the fashion category increased by 50.3% year-on-year, accounting for 25.5% of total manufacturing revenue (2021: 18%)[22] - Revenue from the leisure category decreased by 22.9% year-on-year, accounting for 23.6% of total manufacturing revenue (2021: 32.4%)[22] Corporate Governance and Board Structure - The company focuses on corporate governance through compliance, risk management, investor relations, and corporate social responsibility (4 Rs)[32] - The Corporate Governance Committee reviewed annual reports, ESG reports, and governance frameworks during the year[33] - The company fully complied with the Corporate Governance Code throughout 2022[33] - The board of directors consists mostly of independent non-executive directors, ensuring strong independent elements and diverse backgrounds[34] - The nomination committee is responsible for reviewing the board's structure, size, and composition, and recommending suitable candidates[35] - Measurable goals for the board diversity policy include increasing functional experience diversity and understanding of target markets and customer groups[36] - Gender diversity on the board is achieved with two female independent non-executive directors, and the company aims to maintain this diversity[36] - The board evaluation process includes reviewing current practices, assessing directors' business knowledge, and identifying areas for improvement[37] - A third-party consultant is engaged to ensure independence and effectiveness in the board evaluation process[38] - The company maintains a formal and transparent process for appointing new directors, with a focus on industry knowledge and established track records[39] - The nomination committee has five members, all of whom are independent non-executive directors[40] - The Nomination Committee reviewed the board's structure, size, and composition, as well as the board diversity policy and succession planning[41] - Newly appointed directors received tailored induction training, including an overview of the company's business and statutory responsibilities[41] - Directors received monthly updates on financial data and business performance, along with market intelligence reports[41] - The company adopted the Model Code for Securities Transactions by Directors of Listed Issuers as per Appendix 10 of the Listing Rules[41] - Directors participated in training courses covering legal, business, and financial topics to stay updated on industry and regulatory changes[43] - The Chairman is responsible for setting broad strategic direction and ensuring effective communication between the board, management, and shareholders[45] - The CEO is responsible for leading management, overseeing the achievement of board-set objectives, and maintaining relationships with stakeholders[45] - The board retains authority over key decisions, including strategy, budget approval, major investments, and significant contracts[46] - The board has established four governance-related committees: Audit, Corporate Governance, Remuneration, and Nomination Committees[47] - The Board of Directors held a total of 8 meetings, with attendance rates for executive directors ranging from 7/8 to 8/8, and independent non-executive directors maintaining high attendance rates of 7/8 to 8/8[48] - The Chairman maintained open dialogue and interaction with independent non-executive directors outside formal board meetings[49] - The company's financial reporting process includes monthly updates to the Board, providing detailed internal financial data, peer comparisons, and market intelligence[51] - The Board ensures compliance with corporate governance codes and facilitates director attendance by scheduling regular meetings in advance[50] - The company secretary plays a crucial role in supporting the Board by ensuring effective information exchange and compliance with policies and procedures[51] - Directors have the right to seek independent legal advice at the company's expense and must declare any conflicts of interest before Board meetings[50] - The Board is responsible for preparing financial statements that fairly reflect the company's affairs, in accordance with relevant laws and accounting standards[51] - Management presents business reviews and financial analyses to the Board for approval of financial performance, with annual business plans and budgets submitted before the new fiscal year[51] - The company's risk management and internal control systems are reviewed annually to ensure effectiveness, covering financial, operational, and compliance controls[52] - The company has a process for handling significant control failures or weaknesses, with monthly reporting to senior management and the audit committee[52] - No significant control failures or weaknesses were identified during the year[52] - The company's internal control system is based on the COSO framework, including five elements: control environment, risk assessment, control activities, information and communication, and monitoring[53] - The internal audit team reports directly to the audit committee and the CEO, with external auditor EY providing a report on internal control matters for the year ended December 31, 2022[54] - The company has established a whistleblowing policy and system for employees and key stakeholders to report concerns anonymously[54] - The audit committee reviewed the financial reporting system, risk management, and internal control systems during the year[55] - The company paid 607,000forauditservicesand120,000 for non-audit services to the external auditor for the year ended December 31, 2022[56] Shareholder Relations and Dividends - The company declared a final dividend of HK0.45pershare,bringingthetotalannualdividendtoHK0.87 per share, with a payout ratio of approximately 75%[15] - The company declared a final dividend of 45 HK cents per share, bringing the total dividend for the year to 87 HK cents per share, with a payout ratio of approximately 75%[24] - The Board proposes a final dividend of 45 HK cents per ordinary share for the year ended December 31, 2022, amounting to approximately 45.5million[77]−Thecompanyaimstoprovidea70440.7 million, compared to 449.2millionin2021[79]−Thecompanydeclaredafinaldividendfor2021of56.65 million and an interim dividend for 2022 of 42.48million[137]−Thecompanypaiddividendstotaling99,130 thousand, a significant increase from 21,409thousandinthepreviousyear[141]ShareOptionsandIncentivePlans−Thecompanygrantedatotalof19,740,000shareoptionsto72grantees,including1,500,000totheCEOand18,195,000to70otheremployees[58]−TheshareoptionsgrantedtotheCEOandemployeesarepartofthe2017ShareOptionPlan,withnoperformancetargetsattached[58]−Atotalof27,970,000shareoptionsweregrantedto107eligibleparticipantsonMarch17,2017,withanexercisepriceofHKD11.48pershare[94]−Theshareoptionshaveavalidityperiodofsixyearsfromthegrantdate,withspecificvestingdatestiedtothecompany′sfiscalyear−endperformanceannouncements[94]−Eachvestingdateallowsfortheexerciseofupto5,594,000shareoptions,contingentonachievingthecompany′snetprofitmarginandrevenuegrowthtargets[95]−Ifeitherthenetprofitmarginorrevenuegrowthtargetisnotmet,only509.10 per share[114] Financial Statements and Auditing - The company's financial statements for the year ended December 31, 2022, were audited by Ernst & Young[122] - The company's financial statements were prepared in accordance with Hong Kong Financial Reporting Standards and comply with the disclosure requirements of the Hong Kong Companies Ordinance[124] - Trade receivables and other receivables amounted to 317.5million,representing25.226 million[127] - Inventory stood at 188.8million,accountingfor15.012.1 million[128] - The company's audit procedures included evaluating the effectiveness of key controls and assumptions used in the expected credit loss model[129] - The audit assessed the company
