FAIRWOOD HOLD(00052)2024-07-30 09:07Financial Performance - Profit for the year increased by 12.9% to HK$50.7 million (2023: HK$44.9 million), with a significant increase of HK$46.0 million when excluding government subsidies[36] - Revenue for the year increased by 3.7% to HK$3.1369 billion (2023: HK$3.0242 billion)[60] - Gross profit margin improved to 8.6% (2023: 8.5%)[60] - Basic earnings per share rose to HK39.10 cents (2023: HK34.64 cents), an increase of 12.9%[37] - Revenue increased by 3.7% year-on-year to HK$3,136.9 million (2023: HK$3,024.2 million)[62][70] - Profit attributable to equity shareholders rose by 12.9% to HK$50.7 million (2023: HK$44.9 million)[62] - Gross profit margin increased to 8.6% (2023: 8.5%)[62] - Basic earnings per share amounted to HK39.10 cents (2023: HK34.64 cents)[62] - Return on average equity increased to 7.6% in 2024 from 6.4% in 2023[157] Financial Position - The Group maintained a strong financial position with bank deposits and cash equivalents of HK$641.0 million as of 31 March 2024 (2023: HK$646.8 million)[36] - The Group had no bank borrowings and a nil gearing ratio as of 31 March 2024[49] - The Group's net assets stood at HK$777.8 million as of 31 March 2024, showing a steady increase over the past five years[59] - The Group maintained a healthy financial position with bank deposits, cash, and cash equivalents of HK$641.0 million as of 31 March 2024[71] - The company has no bank loans and a gearing ratio of zero as of March 31, 2024, with unutilized banking facilities of HK$231.3 million (2023: HK$260.0 million)[130][133] - Total assets of the company decreased to HK$2,247.8 million in 2024 from HK$2,302.5 million in 2023, with net current liabilities increasing to HK$61.9 million from HK$24.8 million[132] - The company's cash and cash equivalents decreased by 0.9% to HK$641.0 million in 2024 from HK$646.8 million in 2023, with most holdings in Hong Kong dollars, US dollars, and Renminbi[150][154] - Net book value of properties pledged as security for banking facilities decreased to HK$0.7 million in 2024 from HK$0.8 million in 2023[161] - The Group's maximum contingent liabilities for banking facilities guaranteed to subsidiaries were HK$877 million in 2024, slightly down from HK$889 million in 2023[182] Dividends - A final dividend of HK30.0 cents per share was proposed, resulting in a total dividend per share for the year of HK41.0 cents and a payout ratio of approximately 105%[51] - The total dividend for the year ended 31 March 2024 amounts to HK41.0 cents per share, representing a total distribution of approximately 105% of the Group's profit for the year[64] - The Group's full-year dividend for the fiscal year ending March 31, 2024, is HK$0.41 per share, representing a total payout of approximately 105% of the Group's annual profit[99] Store Operations and Expansion - Same Store Sales Growth (SSSG) for Fairwood's fast food restaurants rose by approximately 2% year on year[86] - The Group opened 11 new stores (7 in Hong Kong and 4 in mainland China) and closed 8 underperforming stores (6 in Hong Kong and 2 in mainland China), resulting in a total of 182 stores as of 31 March 2024[93] - The Group opened 11 new stores (7 in Hong Kong and 4 in Mainland China) and closed 8 underperforming stores (6 in Hong Kong and 2 in Mainland China), resulting in a total of 182 stores by March 31, 2024[116] - Mainland China same-store sales growth (SSSG) increased by approximately 16% year-on-year, driven by effective strategies and new product offerings[102] Membership and Digital Initiatives - The "Fairwood Care for the Elderly Card" membership exceeded 470,000 by the end of the year, with an increase of over 30,000 members since the interim report[93] - Membership of the Care for Seniors Card program reached over 470,000 by year-end, an increase of more than 30,000 since the interim report six months earlier[117] - The Fairwood App membership grew to over 730,000 by year-end, up from 660,000 six months prior, and successfully drove store visits through three major promotions[108][109] - The Group's digitalization initiatives, including the Kitchen Management System and mobile ordering, have reduced manual tasks and optimized staff deployment, despite high capital investment requirements[112][113] Sustainability Efforts - The Group reduced over 1 million pieces of single-use plastic cutlery and donated over 35,000 meals through its sustainability initiatives[96] - The company has reduced the use of over 1 million single-use plastic utensils and donated more than 35,000 meal boxes as part of its sustainability initiatives[139] - The Group's sustainability efforts, such as the coffee grounds and lemon peel reuse program, reduced food waste by approximately 210 tons in the 2023/24 fiscal year[118] - Solar panels installed at the central food processing plant generated over 36,000 kWh of electricity since August 2023, supporting the Group's carbon reduction goals[119] - Solar panels installed at the central food processing center have generated over 36,000 kWh of electricity since August 2023, supporting clean energy initiatives[139] Economic and Market Conditions - Hong Kong and the Greater Bay Area (GBA) are experiencing an economic downturn, leading to reduced consumer spending, with challenges from the "Shenzhen factor" where Hong Kong residents travel to Shenzhen for leisure, weakening local consumption[121][123] - The company expects the Mainland business environment to remain challenging in the coming year due to economic uncertainties, but believes profitability will improve with economies of scale and continued expansion in the GBA[122][125] - The company expects rental cost reductions due to the economic downturn, which may improve profitability for up to one-third of its stores through upcoming lease negotiations[124][142] Capital Expenditure and Costs - Capital expenditure (excluding right-of-use assets) rose to HK$131.5 million in 2024 from HK$104.7 million in 2023, primarily due to increased renovation works for existing shops[178] - Outstanding capital commitments at 31 March 2024 were HK$24.3 million, up from HK$10.3 million in 2023[180] - Finance costs increased to HK$33.4 million in 2024 from HK$31.7 million in 2023, mainly due to interest expenses on lease liabilities[174] - Depreciation charges for right-of-use assets increased by HK$17.2 million to HK$406.7 million in 2024, driven by new shop additions and lease modifications[173] - The company's depreciation of other property, plant, and equipment increased by HK$4.6 million to HK$93.7 million due to more renovation activities during the year[134] Employee and Staff Costs - Total number of employees grew to approximately 5,700 in 2024 from 5,600 in 2023, with staff costs rising to HK$1,100.4 million from HK$1,020.5 million[185] Business Overview and Reporting - The company's main business is investment holding, with the group primarily operating fast food restaurants and property investments[199] - The company's annual report and audited consolidated financial statements for the year ending March 31, 2024, are presented by the Board of Directors[198] - The company's business review and outlook, including major risks and uncertainties, are detailed in the annual report on pages 9 to 16 and the risk management policy on pages 58 to 63[200]