Chairman's Statement The Chairman's report details severe external challenges in FY2022, including pandemic-related disruptions and inflation, which significantly impacted profitability, leading to a cautious outlook and strategic diversification through the "DongYiQuan" acquisition - The company's business was severely impacted by multiple adverse macroeconomic factors, including lockdowns and production halts in mainland China, global inflation, and labor shortages, leading to pressure on profitability202123 - To address challenges and reduce business concentration risk, the Group is actively seeking diversified investment opportunities, having completed the acquisition of the "DongYiQuan" project earlier this year to develop stable revenue streams beyond toy design and production2223 Management Discussion and Analysis This chapter reviews the Group's FY2022 performance, highlighting a slight revenue increase driven by proprietary licensed toys despite ODM sales decline, a gross margin reduction due to rising costs, and a stable financial position, further diversified by a post-period acquisition in smart healthcare Business Review In FY2022, the Group experienced mixed segment performance, with a significant 19.6% decline in ODM toy sales offset by strong growth in distributed imported and proprietary licensed toy businesses, which grew by 13.5% and 76.6% respectively Business Segment Revenue | Business Segment | FY2022 Revenue (HK$) | FY2021 Revenue (HK$) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | ODM Toy Sales | 107,749,000 | 134,054,000 | -19.6% | | Distributed Imported Toys | 50,264,000 | 44,297,000 | +13.5% | | Proprietary Licensed Toys | 58,472,000 | 33,116,000 | +76.6% | - The profit margin of the ODM toy business decreased from 14.9% in the previous year to 11.1%, primarily due to suppliers passing on increased labor and raw material costs to the Group2730 Financial Analysis In FY2022, total revenue grew 2.4% to HK$216 million, driven by proprietary and distribution businesses, but gross profit declined 8.1% to HK$34.87 million due to rising costs, with gross margin falling to 16.1%, and net other income decreased 29.8% due to the absence of prior-year government subsidies Key Financial Indicators | Financial Indicator | FY2022 (HK$ thousand) | FY2021 (HK$ thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Total Revenue | 216,485 | 211,467 | +2.4% | | Cost of Sales | 181,612 | 173,503 | +4.7% | | Gross Profit | 34,873 | 37,964 | -8.1% | | Gross Margin | 16.1% | 18.0% | -1.9pp | | Selling Expenses | 8,200 | 5,649 | +45.2% | | Administrative Expenses | 27,068 | 25,975 | +4.2% | | Income Tax Expense | 1,451 | 3,694 | -60.7% | - Net other income decreased by 29.8% year-on-year, primarily because the Group received COVID-19 related government subsidies in the prior year, which ceased in the current year4347 Liquidity and Capital Resources The Group maintains a robust financial position with a stable 0.02x debt-to-equity ratio as of March 31, 2022, while staff costs increased with a slight rise in headcount, no dividend was declared, and a 30% joint venture in protective products was established - The debt-to-equity ratio (total borrowings/total equity) was approximately 0.02x as of March 31, 2022, consistent with the same period in 2021, indicating a robust financial position for the Group6365 - As of March 31, 2022, the Group had 41 employees in Hong Kong (2021: 39 employees), with total annual staff costs of approximately HK$15.852 million (2021: HK$14.301 million)7074 - The Board does not recommend the payment of any dividend for the year ended March 31, 20227175 Use of Proceeds The approximately HK$57.9 million net proceeds from the 2018 GEM listing have been fully utilized for expanding proprietary licensed toy products, enhancing human resources, improving overseas distribution, and upgrading IT systems Use of Proceeds from GEM Listing | Purpose | Planned Amount (HK$ thousand) | Amount Utilized as of March 31, 2022 (HK$ thousand) | | :--- | :--- | :--- | | Expand Proprietary Licensed Toy Product Portfolio | 46,200 | 46,200 | | Enhance Overseas Distribution Network | 3,600 | 3,600 | | Further Enhance Human Resources | 6,000 | 6,000 | | Improve IT Systems and Warehouse Renovation | 2,100 | 2,100 | | Total | 57,900 | 57,900 | Events After Reporting Period Post-reporting period, the Group acquired a 30% equity stake in DongYiQuan Network Technology Co., Ltd. on May 5, 2022, for HK$10 million, paid by issuing approximately 192 million new shares, expanding into smart healthcare and increasing total share capital to 1.192 billion shares - The company signed an agreement on April 25, 2022, to acquire a 30% stake in DongYiQuan, a high-tech enterprise specializing in smart healthcare industry solutions808687 - The acquisition was completed on May 5, 2022, with a consideration of HK$10 million paid by issuing 192,307,692 new shares (issue price HK$0.052/share), representing approximately 16.13% of the enlarged share capital8890 Directors and Senior Management Profile This section provides detailed biographies of the company's directors and senior management, outlining their professional backgrounds and experience, with Mr. Li Wai Keung, the Group's founder, serving as Chairman and CEO, overseeing overall business development and strategic planning - Mr. Li Wai Keung, the Group's founder, Chairman, and Chief Executive Officer, possesses over 16 years of experience in the ACG toy industry and is responsible for the Group's overall business development, financial, and strategic planning96100 - Mr. Du Haibin, Executive Director and Company Secretary, has over 21 years of experience in accounting and financial management, overseeing financial reporting, financial planning, and company secretarial matters98101 - During and after the reporting period, there were changes in the Board of Directors, including Mr. Yu Tsz Yat's resignation as Non-Executive Director on June 9, 2021, and the appointment of several new Non-Executive and Independent Non-Executive Directors in the second half of 20211214116 Corporate Governance Report This report details the company's compliance with the GEM Listing Rules' Corporate Governance Code for FY2022, noting adherence to most provisions, with the combined Chairman and CEO roles being the only deviation, and outlines the Board's structure, committee functions, risk management, internal controls, and shareholder communication Board and Committees The Board, composed of three executive, three non-executive, and four independent non-executive directors, oversees strategy, finance, and risk, supported by independent-led Audit, Remuneration, and Nomination Committees, which held regular meetings during the reporting period - The company complied with most provisions of the Corporate Governance Code, with one deviation: the roles of Chairman and Chief Executive Officer are combined and held by Mr. Li Wai Keung, which the Board believes is beneficial for the Group's management and business development165168 - The Audit Committee, Remuneration Committee, and Nomination Committee are all composed of three independent non-executive directors, ensuring the independence of their operations186191196 Risk Management and Internal Control The Board directly oversees the Group's risk management and internal control systems, which were reviewed by an external consultant in FY2022 and deemed adequate and effective, along with sufficient resources and qualified staff for accounting and financial reporting functions - The Board is directly responsible for the Group's risk management and internal control systems, and in 2022, it engaged an external independent consultant to review their effectiveness and adequacy202206 - Following its review, the Board concluded that the Group's risk management, internal control systems, and the resources and staff qualifications for accounting and financial reporting functions were all adequate and effective for the current year203207 Shareholders' Rights and Communication The company is committed to transparent investor relations and safeguarding shareholder rights, outlining procedures for convening extraordinary general meetings and providing contact for inquiries, while ensuring timely communication of financial information and corporate updates via its website and annual general meetings - The company ensures shareholder rights, stipulating that shareholders holding 10% or more of the total share capital have the right to request the Board in writing to convene an extraordinary general meeting223226 - The company is committed to maintaining open and effective communication with shareholders and the investment community through various channels, including its corporate website, regular meetings, and annual general meetings211214217 Report of the Directors This report summarizes the company's FY2022 activities, business review, financial performance, and dividend policy, noting no significant change in core toy-related operations, high customer concentration, and confirming compliance with public float requirements and non-competition undertakings Business Operations Overview The company's core business of toy design, sales, and distribution, primarily through investment holding, saw no significant changes in FY2022, with no dividend recommended, and notable high concentrations in both customer (top five at 71.2% of revenue) and supplier (top five at 65.5% of purchases) bases - The Board does not recommend the payment of any dividend for the current year236242 - High customer concentration: The top five customers accounted for 71.2% of total revenue, with the largest customer accounting for 65.8% High supplier concentration: The top five suppliers accounted for 65.5% of total purchases, with the largest supplier accounting for 24.2%257 Share Capital and Shareholders As of March 31, 2022, the company's issued share capital was HK$10 million, comprising 1 billion shares, with Chairman Mr. Li Wai Keung holding 18.08% through Infinite Force Holdings Ltd., and the company maintained sufficient public float throughout the year - As of March 31, 2022, Mr. Li Wai Keung, the company's Chairman and Executive Director, was deemed to hold 180,800,000 shares, representing 18.08% of the issued share capital300303 - The company confirmed that it maintained a sufficient public float as required by the GEM Listing Rules throughout the financial year and up to the reporting date259262 Directors' Interests and Compliance This section details directors' service contracts, remuneration, and interests in significant contracts, confirming no material interests held by directors in Group transactions, receipt of independence confirmations from all independent non-executive directors, and compliance with the non-competition undertaking by the controlling shareholder - During the reporting period, neither the directors nor their associated entities had any significant interests in the Group's material transactions, arrangements, or contracts278283 - The controlling shareholder confirmed compliance with the non-competition undertaking, which was reviewed and confirmed by the independent non-executive directors316319 Independent Auditor's Report The independent auditor, Grant Thornton Hong Kong Limited, issued an unmodified opinion on the consolidated financial statements for the year ended March 31, 2022, confirming a true and fair view and compliance with accounting standards, while highlighting revenue recognition timing and impairment assessment of receivables as key audit matters - The auditor issued an unmodified audit opinion, affirming that the financial statements present a true and fair view of the Group's financial position and operating results329331 - Key Audit Matters include: - Timing of revenue recognition: There is a risk of incorrect revenue recognition timing due to varying terms in different sales contracts334341 - Impairment assessment of trade and bills receivables: Determining the provision for expected credit losses involves significant management judgment345352 Consolidated Financial Statements This section presents the Group's core financial statements for the year ended March 31, 2022, showing a slight revenue increase but profit decline, stable asset and net asset growth, strong operating cash flow, net cash inflow from investing activities due to a subsidiary disposal, and net cash outflow from financing activities Consolidated Statement of Profit or Loss and Other Comprehensive Income In FY2022, Group revenue increased 2.4% to HK$216 million, but gross profit declined 8.1% to HK$34.87 million due to rising costs, and profit for the year significantly dropped 82.9% to HK$1.481 million, resulting in basic earnings per share of HK$0.15 cents Consolidated Statement of Profit or Loss and Other Comprehensive Income Highlights | Indicator | FY2022 (HK$ thousand) | FY2021 (HK$ thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 216,485 | 211,467 | +2.4% | | Gross Profit | 34,873 | 37,964 | -8.1% | | Operating Profit | 3,225 | 12,567 | -74.3% | | Profit for the Year | 1,481 | 8,677 | -82.9% | | Basic Earnings Per Share (HK cents) | 0.15 | 0.87 | -82.8% | Consolidated Statement of Financial Position As of March 31, 2022, total assets were HK$225 million and total liabilities HK$44.6 million; non-current assets significantly decreased to HK$17.28 million due to investment property disposal, while current assets increased to HK$208 million, and net assets (total equity) slightly grew 0.8% to HK$180 million Consolidated Statement of Financial Position Highlights | Indicator | March 31, 2022 (HK$ thousand) | March 31, 2021 (HK$ thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Non-Current Assets | 17,280 | 56,196 | -69.3% | | Current Assets | 207,666 | 165,174 | +25.7% | | Total Assets | 224,946 | 221,370 | +1.6% | | Current Liabilities | 44,333 | 41,363 | +7.2% | | Non-Current Liabilities | 261 | 1,136 | -77.0% | | Total Liabilities | 44,594 | 42,499 | +4.9% | | Net Assets (Total Equity) | 180,352 | 178,871 | +0.8% | Consolidated Statement of Changes in Equity As of March 31, 2022, the Group's total equity increased by HK$1.481 million to HK$180 million, solely due to the profit recorded for the year, with no other equity changes during the period Consolidated Statement of Changes in Equity Highlights | Indicator | March 31, 2022 (HK$ thousand) | March 31, 2021 (HK$ thousand) | | :--- | :--- | :--- | | Total Equity at Beginning of Period | 178,871 | 170,194 | | Profit for the Year | 1,481 | 8,677 | | Total Equity at End of Period | 180,352 | 178,871 | Consolidated Statement of Cash Flows In FY2022, the Group's net cash and cash equivalents increased by HK$79.6 million, driven by strong operating cash flow of HK$38.51 million and HK$44.62 million from investing activities (including HK$34 million from a subsidiary disposal), with a HK$3.53 million net outflow from financing activities, ending with HK$152 million in cash Consolidated Statement of Cash Flows Highlights | Indicator | FY2022 (HK$ thousand) | FY2021 (HK$ thousand) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 38,505 | 14,817 | | Net Cash Generated from/(Used in) Investing Activities | 44,620 | (44,277) | | Net Cash Used in Financing Activities | (3,528) | (3,599) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 79,597 | (33,059) | | Cash and Cash Equivalents at Beginning of Year | 72,043 | 105,102 | | Cash and Cash Equivalents at End of Year | 151,640 | 72,043 | Notes to the Consolidated Financial Statements This section provides detailed notes to the financial statements, offering in-depth analysis of accounting policies, key estimates, and statement items, including revenue segmentation, asset changes, related party transactions, financial risk management, and significant post-reporting date events, all crucial for understanding the company's financial position and operating results Note 4: Revenue and Segment Reporting This note details revenue composition, showing ODM toys, distributed imported toys, and proprietary licensed toys contributing 49.8%, 23.2%, and 27.0% respectively, with Japan as the largest market at 51.3%, and high customer concentration where the top three clients contributed 34.4%, 16.9%, and 14.5% of total revenue Revenue by Geographical Region | Region | FY2022 Revenue (HK$ thousand) | Percentage of Total Revenue | | :--- | :--- | :--- | | Japan | 111,073 | 51.3% | | United States | 32,732 | 15.1% | | Hong Kong | 26,992 | 12.5% | | China | 20,217 | 9.3% | | Taiwan | 11,648 | 5.4% | | Other | 13,823 | 6.4% | | Total | 216,485 | 100.0% | Note 11: Investment Properties and Property, Plant and Equipment This note details changes in PP&E and investment properties, with PP&E's net book value decreasing to HK$16.74 million as of March 31, 2022, and all HK$32 million of investment properties fully disposed of during the year through a subsidiary sale - The Group disposed of all investment properties with a book value of HK$32 million during the current year through the sale of a subsidiary (D4 Toys Oversea)665781 - As of March 31, 2022, buildings with a total book value of HK$6.069 million (used as directors' quarters) were pledged to banks to secure financing665666 Note 15 & 16: Receivables As of March 31, 2022, net trade and bills receivables decreased to HK$7.584 million from HK$105 million, with approximately 88% of trade receivables aged within 60 days, and trade deposits forming the majority of other receivables at HK$32.8 million Trade Receivables Aging Analysis | Trade Receivables Aging | March 31, 2022 (HK$ thousand) | Percentage | | :--- | :--- | :--- | | Less than 30 days | 3,576 | 61.5% | | 31 to 60 days | 1,526 | 26.2% | | 61 to 90 days | 414 | 7.1% | | Over 90 days | 297 | 5.1% | | Total | 5,813 | 100.0% | Note 25: Disposal of a Subsidiary On January 28, 2022, the Group disposed of its wholly-owned subsidiary, D4 Toys Oversea, to an executive director for HK$34 million cash, generating a HK$2.123 million gain and HK$34 million net cash inflow, with the subsidiary's main asset being HK$32 million in investment property Summary of Disposal of a Subsidiary | Item | Amount (HK$ thousand) | | :--- | :--- | | Disposal Consideration | 34,000 | | Net Assets Disposed Of | (31,877) | | Gain on Disposal | 2,123 | | Net Cash Inflow | 34,000 | Note 26: Financial Risk Management This note outlines the Group's main financial risks, including credit risk concentrated in trade receivables (top five customers at 93%), liquidity risk managed by cash reserves, and foreign currency risk from USD, EUR, JPY, and RMB transactions, for which sensitivity analysis is performed - The Group faces significant customer credit concentration risk, with the top five customers accounting for 93% (2021: 95%) of total trade receivables as of the reporting period end790794 Net Exposure to Foreign Currency Risk | Currency | Net Exposure as of March 31, 2022 (HK$ thousand) | | :--- | :--- | | USD | 78,411 | | EUR | 149 | | JPY | 4,264 | | RMB | 10,691 | Note 30: Events After the Reporting Date A significant acquisition occurred post-reporting period, with the company completing the purchase of a 30% equity stake in Guangzhou DongYiQuan Network Technology Co., Ltd. on May 5, 2022, for HK$10 million, paid by issuing approximately 192 million new shares, to expand into smart healthcare - The company completed the acquisition of a 30% equity stake in Guangzhou DongYiQuan Network Technology Co., Ltd. on May 5, 2022, for a consideration of HK$10 million, paid by issuing new shares859860862 Financial Summary This section summarizes the Group's key financial data for FY2018-2022, showing continuous revenue growth from HK$132 million to HK$216 million, but a fluctuating decline in profit for the year from a 2019 peak of HK$20.77 million to HK$1.481 million in 2022, while net assets steadily grew to HK$180 million Five-Year Financial Summary | Indicator (HK$ thousand) | 2022 | 2021 | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 216,485 | 211,467 | 206,965 | 182,583 | 132,025 | | Gross Profit | 34,873 | 37,964 | 42,182 | 45,160 | 36,292 | | Profit for the Year | 1,481 | 8,677 | 7,450 | 15,121 | 16,910 | | Net Assets | 180,352 | 178,871 | 170,194 | 162,770 | 70,632 |
佰悦集团(08545) - 2022 - 年度财报