Financial Performance - For the fiscal year ending March 31, 2024, the company reported revenue of HKD 571,391,000, a decrease of 8.4% from HKD 623,433,000 in the previous year[6]. - Gross profit for the same period was HKD 91,377,000, with a gross margin of 16.1%, down from 17.2% the previous year[6]. - Operating profit fell to HKD 7,442,000 from HKD 22,028,000, indicating a significant decline in profitability[6]. - The company experienced a net loss of HKD 18,360,000 compared to a profit of HKD 19,927,000 in the prior year, reflecting a substantial downturn[6]. - Revenue for the fiscal year ending March 31, 2024, was approximately HKD 571,391,000, an 8.4% decrease from HKD 623,433,000 in the previous year, reflecting a slowdown in growth after a strong 67.9% compound sales growth over the past two years[13]. - The gross profit margin for the year was 16.1%, down from 17.2% in the previous year, indicating a decline in profitability[21]. Customer and Sales Dynamics - Sales from the company's largest customer decreased by approximately 6.9% to about HKD 445,890,000, impacting overall revenue[8]. - The company is optimistic about a rebound in sales from its largest customer based on current orders and seasonal forecasts[8]. - The company is focusing on diversifying its customer base to mitigate risks associated with reliance on a few key clients[9]. - The company’s revenue breakdown by product category showed a decline across all categories, with outerwear revenue at HKD 243,226,000, down from HKD 245,423,000, and bottom wear revenue at HKD 208,864,000, down from HKD 269,453,000[17]. - The majority of the company’s revenue, approximately 99.4%, came from the United States, totaling HKD 567,791,000, while revenue from Italy dropped to zero from HKD 7,624,000[19]. - The largest customer accounted for 78.0% of the total sales revenue for the year[176]. - The top five customers contributed 93.7% of the total sales revenue for the year[176]. Financial Position and Liquidity - The total assets increased to HKD 321,480,000 from HKD 301,574,000, showing growth in the asset base despite the operational challenges[6]. - The company’s cash and bank balances improved to HKD 26,965,000 from HKD 20,851,000, indicating better liquidity management[6]. - The interest coverage ratio dropped to 0.6 times, down from 3.2 times, highlighting increased financial strain[6]. - Financing costs increased by approximately 44.8% to HKD 16,226,000 from HKD 11,205,000, attributed to rising interest rates[26]. - The company reported a significant increase in bank borrowings, rising by approximately 29.5% to HKD 188,550,000 from HKD 145,593,000, mainly due to increased trust receipt loans and additional credit facilities obtained[28]. - The company’s cash and cash equivalents increased to HKD 26,965,000 from HKD 20,851,000 in the previous year, primarily due to funds received from bank loans[28]. - The group’s current assets and current liabilities were approximately HKD 218,952,000 and HKD 280,584,000, respectively, compared to HKD 194,354,000 and HKD 241,907,000 in the previous year[33]. - Bank borrowings as of March 31, 2024, amounted to approximately HKD 188,550,000, up from HKD 145,593,000 as of March 31, 2023[34]. - The group’s debt-to-equity ratio was approximately 487.0% as of March 31, 2024, compared to 309.75% in the previous year, reflecting an increase in bank borrowings[36]. Employee and Operational Insights - The group employed approximately 1,290 full-time employees as of March 31, 2024, down from approximately 1,444 employees a year earlier[37]. - The group has not encountered any significant difficulties or disruptions in operations due to labor disputes during the reporting period[37]. - The company has established a mandatory provident fund plan in Hong Kong, with contributions of 5% of employee income, capped at HKD 1,500 per month[172]. Corporate Governance and Board Structure - The company has a diverse board with members holding qualifications in accounting, finance, and business management, enhancing its strategic decision-making capabilities[54][58]. - The company is committed to maintaining high standards of corporate governance through its independent non-executive directors who provide independent opinions on strategy and resource allocation[54][55]. - The board of directors is committed to maintaining robust corporate governance and effective internal control systems, which are crucial for enhancing corporate value and accountability[62]. - The company has established three board committees: the audit committee, the remuneration committee, and the nomination committee, to enhance governance[78]. - The board believes that the current composition of directors brings valuable experience and expertise to the company[78]. - The company has implemented a policy for directors and senior management training and continuous professional development[81]. - The board has achieved a gender diversity ratio of 25% at the board level and 75% at the overall employee level as of March 31, 2024[96]. Risk Management and Compliance - The company assesses credit risk by evaluating customers' financial conditions before extending credit[130]. - The group continues to monitor and assess specific risks related to financial, operational, and compliance activities[115]. - The group monitors and maintains sufficient levels of cash and cash equivalents to mitigate cash flow volatility[133]. - The group is exposed to foreign currency risk due to foreign currency transactions and borrowings, and actively manages this risk[135]. - The group's cash flow interest rate risk is primarily related to floating-rate bank deposits and borrowings, with management monitoring this risk[137]. - The company has implemented a policy for handling insider information, ensuring timely and fair disclosure[119]. Dividend Policy - The company does not recommend declaring a final dividend for the year ending March 31, 2024, consistent with the previous year[30]. - The board has adopted a dividend policy effective from January 1, 2019, continuing through the fiscal year ending March 31, 2024, aiming to maintain sufficient reserves for future development while providing returns to shareholders[109]. - The board will consider various factors, including the group's actual and expected financial performance, general economic conditions, and operational strategies when deciding on dividend declarations[110]. - There is no predetermined dividend payout ratio, and the declaration and payment of dividends are at the board's discretion, with no guarantee of dividends in any period[111]. - The group reported no dividends for the fiscal year ending March 31, 2024[126]. Lease Agreements and Transactions - Sterling Apparel entered into new lease agreements with Win 18 and Win 19 for office spaces in Hong Kong, each with a monthly rent of HKD 130,000, effective from February 1, 2024, to January 31, 2025[181][182]. - The total revised annual cap for rental payments for the properties is HKD 5,720,000, with HKD 3,120,000 for the 18th floor and HKD 2,600,000 for the 19th floor[185]. - The rental agreements were negotiated based on fair market rent principles and are considered continuing connected transactions under the listing rules[184][186]. - The independent non-executive directors have confirmed that the continuing connected transactions were conducted in the ordinary course of business and on normal commercial terms[186].
STERLING GP(01825) - 2024 - 年度财报