Financial Performance - The Group's total revenue decreased by approximately 22.4% from approximately RMB169.4 million for the year ended December 31, 2022, to approximately RMB131.4 million for the year ended December 31, 2023[14]. - The Group's net loss increased from approximately RMB76.7 million for FY2022 to a net loss of approximately RMB98.3 million for FY2023, primarily due to an increase in net impairment losses on trade and other receivables[63]. - Gross profit decreased from approximately RMB 28.3 million in 2022 to about RMB 15.0 million in 2023, a reduction of approximately 47%[37]. - Gross margin fell from approximately 16.7% in 2022 to about 11.4% in 2023, a decline of approximately 5.3%[37]. - Selling expenses increased by approximately 80.3% from approximately RMB0.9 million for FY2022 to approximately RMB1.6 million for FY2023, mainly due to increased freight and marketing expenses[63]. - Administrative expenses significantly decreased by approximately 53.9% from approximately RMB76.1 million in FY2022 to approximately RMB35.1 million in FY2023, due to the absence of share-based payment recognition[63]. - Net impairment losses on trade and other receivables increased significantly from approximately RMB24 million for FY2022 to approximately RMB40.7 million for FY2023, representing an increase of approximately 69.6%[64]. - Taxation expenses increased by approximately RMB12.3 million, from a credit of approximately RMB5.4 million in FY2022 to an expense of approximately RMB6.9 million in FY2023[64]. Market Trends - China's toy exports amounted to USD40.57 billion in 2023, down 12.2% year on year, marking negative growth for eight consecutive months[10]. - The overall consumption in the toy market was sluggish despite vibrant sales during the Christmas season in Europe and America[10]. - Traditional toys generated no revenue in 2023, a decline from RMB 88.94 million in 2022, due to a sluggish domestic retail market[32]. Business Strategy - The Group adjusted its business strategy by outsourcing production for most orders, reducing fixed staff costs and machinery maintenance costs, while increasing production management manpower[10]. - The Group actively explored emerging markets and reduced reliance on long-term customers from European and American markets[11]. - The Group adjusted its sales strategy to focus on emerging markets and lower profit margin products to diversify its customer base[31]. - The Group aims to improve talent team building in product development and production to enhance core competitiveness[11]. - The Group aims to enhance its core competitiveness through optimization in market expansion, brand building, and R&D innovation, focusing on smart toy vehicles and interactive toys[51]. - The Group plans to explore the domestic toy retail market and emerging countries along the "Belt and Road Initiative" to leverage stable domestic consumption[61]. Production and Inventory Management - Certain stockpiled raw materials and electronic parts were sold at low gross profit to speed up inventory turnover and reduce the risk of overstocking[14]. - The average inventory turnover period increased to approximately 55.5 days in FY2023 from approximately 44.1 days in FY2022[41]. - The majority of smart toy vehicles sold were under the "kidztech" brand and included co-branded products with renowned automobile manufacturers[31]. - The group suspended production and sales of traditional toys until market conditions improve due to low gross profit margins[32]. - The Group intends to expand its production capacity by outsourcing part of the production process to suppliers and subcontractors to improve efficiency[84]. Financial Position - As of December 31, 2023, the Group's cash and cash equivalents amounted to approximately RMB 48.9 million, up from approximately RMB 6.2 million as of December 31, 2022[41]. - Trade receivables decreased from approximately RMB 327.5 million as of December 31, 2022, to approximately RMB 247.4 million as of December 31, 2023, with average turnover days increasing from approximately 273.2 days to approximately 332.0 days[41]. - Trade and other payables decreased by approximately RMB 32.1 million or approximately 19.0% from approximately RMB 168.8 million as of December 31, 2022, to approximately RMB 136.7 million as of December 31, 2023[41]. - Bank and other borrowings amounted to approximately RMB 143.7 million as of December 31, 2023, compared to approximately RMB 139.8 million as of December 31, 2022, with fixed interest rates ranging from 2.25% to 18.00%[43]. - The Group's gearing ratio was approximately 42.7%, up from 35.1% on 31 December 2022, with total borrowings of approximately RMB143.7 million[64]. - The current ratio was approximately 1.5 as at 31 December 2023, compared to approximately 1.6 as at 31 December 2022[64]. Corporate Governance - The Group has complied with all applicable code provisions of the Corporate Governance Code, with ongoing reviews to enhance governance standards[86]. - The Board is committed to sound corporate governance, ensuring accountability and transparency to protect shareholder interests[112]. - The Board believes that the current structure, where the chairman and CEO roles are held by the same individual, allows for swift decision-making and effective business direction[113]. - The Company has adopted the Model Code for Securities Transactions by Directors, confirming compliance by all Directors during FY2023[125]. - The Audit Committee is composed of independent members, ensuring transparency and accountability in financial reporting[131]. - The Company has established three Board Committees: Audit, Remuneration, and Nomination, to oversee specific matters[130]. - The Company has received annual confirmations of independence from each independent non-executive Director, ensuring compliance with the Listing Rules[137]. Employee Management - As of December 31, 2023, the Group had 27 full-time employees, a significant decrease from 95 in 2022, mainly due to outsourcing part of the production process[80]. - The Group has implemented training programs for employees to enhance productivity, contributing to overall business performance[82]. - The Group's contributions to the Mandatory Provident Fund Scheme in Hong Kong are 5% of employees' earnings, capped at HK$1,500 monthly[83]. - Bonuses for employees are discretionary, based on individual performance and the overall performance of the Group[82]. - As of December 31, 2023, 38% of the Group's employees are female, reflecting its commitment to diversity and inclusion[93]. Risk Management - The Group's financial risk management is overseen by the treasury department, maintaining a healthy financial condition through cash generated from operations and bank borrowings[103]. - The Group's operating subsidiaries in Hong Kong primarily transact in USD, while those in China operate in RMB, with no significant foreign exchange risk identified[104]. - The company emphasizes risk management and financial control within its operations[192]. Future Outlook - The geopolitical landscape and global inflation are expected to adversely impact economic recovery, while the Group anticipates stable domestic consumption[61]. - The Group plans to diversify its product offerings through continuous development of new products and a global licensing strategy[84].
奇士达(06918) - 2023 - 年度业绩