Financial Performance - The group's revenue for the year was HKD 979.2 million, a decrease of 11.0% compared to HKD 1,100.4 million for the year ended December 31, 2022[12]. - The profit for the year was HKD 48.2 million, down 17.3% from HKD 58.3 million for the previous year[12]. - The gross profit margin improved during the year due to the depreciation of the taka against the HKD and improved product margin costs[11]. - The group's gross profit was HKD 233.2 million, down 9.3% from HKD 257.1 million, with a gross margin increase of 0.4 percentage points[26]. - The profit recorded was HKD 48.2 million, down 17.3% from the previous year, with a slight increase in gross margin to 23.8%[19]. - The revenue from hair extension products and lace wig products saw a slowdown due to weak consumer purchasing power[11]. - The sales of high-end human hair extension products dropped significantly by 56.4%, from HKD 184.5 million to HKD 80.4 million, due to weakened consumer purchasing power[23]. - The revenue from Halloween products decreased by 15.9%, from HKD 43.5 million to HKD 36.6 million, attributed to soft consumer purchasing power and conservative order placements[23]. - The cost of goods sold decreased by 11.5% to HKD 746.0 million, primarily due to streamlined production processes and reduced raw material costs[24]. - Other income increased by 33.9% to HKD 7.3 million, mainly due to higher warehouse rental and bank interest income[29]. - The group's net profit for the current year was HKD 48.2 million, a decrease of 17.3% from HKD 58.3 million for the year ended December 31, 2022, attributed to weak consumer purchasing power and a shift in product sales mix[37]. Dividend and Payout - The proposed final dividend is HKD 0.029 per share, totaling approximately HKD 19.0 million, with a total dividend of HKD 0.071 per share for the year[15]. - The dividend payout ratio for the year is approximately 99.2%, compared to 63.5% in 2022[15]. - The board will periodically review the dividend policy to ensure its effectiveness[154]. - The company plans to distribute at least 20% of its distributable net profit as dividends each fiscal year[153]. Operational Strategy - The company plans to open more online stores on several well-known cross-border e-commerce platforms to expand sales channels and customer base[13]. - The company aims to integrate production lines in its Bangladesh factory to achieve a balanced and diversified product portfolio[10]. - The company will continue to focus on inventory control and cost optimization measures to enhance financial performance[13]. - The company aims to improve its bank loan portfolio and optimize production costs to enhance profitability and liquidity in the near future[56]. - The company plans to expand its market presence in Southeast Asia, targeting a 25% increase in market share within the next two years[82]. - A strategic acquisition of a local competitor is under consideration, which could potentially increase the company's customer base by 30%[82]. - The company aims to improve operational efficiency by implementing new technologies, expecting a cost reduction of approximately 5% in the next fiscal year[82]. Market and Sales Performance - The revenue from wigs, wig accessories, and others accounted for 88.1% of total revenue, up from 79.3% in the previous year[22]. - The revenue contribution from the Bangladesh factory rose to 98.7% of total revenue, compared to 97.9% in the previous year[22]. - The U.S. market remained the primary market, contributing 90.1% of total revenue, an increase from 87.6% in the previous year[22]. - Revenue from sales outside of China represented 98.7% of total revenue, with sales from the United States alone accounting for 90.1%[161]. Financial Position and Ratios - The asset-liability ratio increased from 61.9% as of December 31, 2022, to 72.8%[11]. - The capital debt ratio increased to 72.8% as of December 31, 2023, compared to 61.9% as of December 31, 2022, due to increased bank borrowings[39]. - Cash and bank balances increased by 8.0% from HKD 170.5 million as of December 31, 2022, to HKD 184.2 million as of December 31, 2023, mainly due to bank borrowings used to pay accounts payable[38]. - The total bank borrowings and overdrafts amounted to HKD 603.7 million, up from HKD 540.2 million in 2022, with HKD 568.6 million due within one year[165]. Governance and Compliance - The company is committed to maintaining compliance with the Securities and Futures Ordinance, ensuring transparency in its shareholdings and related interests[67]. - The board includes members with extensive backgrounds in finance and law, contributing to informed decision-making processes[75]. - The company has established a robust governance structure with various committees to oversee its operations and strategic initiatives[73]. - The board has established three committees: the audit committee, the remuneration committee, and the nomination committee to oversee specific aspects of the company's affairs[102]. - The audit committee has reviewed the company's corporate governance policies and compliance with the corporate governance code during the year[98]. - The company has established a policy for handling and disclosing inside information to ensure compliance with legal and regulatory requirements[129]. Risks and Challenges - The company faces significant risks related to labor supply and cost increases, which are critical for maintaining product quality[156]. - The company is exposed to intense competition from manufacturers in low-cost countries, which may adopt more aggressive pricing strategies[157]. - The group may face significant costs and operational challenges due to compliance with frequently changing regulations in emerging markets like Bangladesh[167]. - The majority of the group's borrowings are floating-rate loans, exposing it to interest rate risk, which the group plans to monitor closely[169]. Employee and Management - The group employed 25,371 employees in Bangladesh as of December 31, 2023, compared to 25,199 employees in the previous year, reflecting an increase of 0.68%[48]. - As of December 31, 2023, the total employee expenditure was HKD 308.7 million, down from HKD 385.6 million for the year ended December 31, 2022, indicating a decrease of approximately 20%[48]. - The total number of senior management personnel categorized by salary range includes 7 individuals earning between HKD 1 and 500,000, 2 individuals earning between HKD 500,001 and 1,500,000, and 1 individual earning between HKD 3,000,001 and 4,000,000[111]. Shareholder Information - As of December 31, 2023, the company’s major shareholder, Mr. Zhang Youchang, holds 343,369,803 shares, representing approximately 52.37% of the issued share capital[199]. - The company’s governance structure includes trusts established by Mr. Zhang Youchang, which hold substantial shares in multiple entities[200]. - The report indicates a strong alignment of interests between the management and shareholders due to significant shareholdings by key executives[199]. - The company has a diversified ownership structure with multiple trusts and affiliated entities under Mr. Zhang Youchang's control[200].
训修实业(01962) - 2023 - 年度财报