恒基发展(00097) - 2024 - 中期业绩

Chairman's Report The report details the group's interim financial performance, business segment reviews, and strategic outlook amidst challenging retail conditions Interim Results and Dividends The Group recorded a loss attributable to shareholders of HKD 69 million in H1 2024, significantly wider than the HKD 18 million loss in the prior year, primarily due to reduced retail sales from outbound tourism and cross-border consumption, leading to no interim dividend declaration Key Performance Indicators for H1 2024 | Indicator | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Loss Attributable to Shareholders (HKD Million) | 69 | 18 | | Loss Per Share (HKD Cents) | 2.3 | 0.6 | | Interim Dividend | None | None | - The primary reason for the loss was a decrease in the Group's retail sales due to the surge in outbound tourism and cross-border shopping[1] Business Review Hong Kong's retail sector faced pressure in H1 2024, with a 6.6% year-on-year decline in total retail sales value, primarily due to increased outbound tourism and cross-border consumption, impacting both the Citistore and Unicorn (APITA/UNY) business segments - Hong Kong's retail sector faced pressure, with a 6.6% year-on-year decline in total retail sales value in H1 2024, primarily due to increased outbound tourism and cross-border consumption[2] Citistore Citistore's business was significantly impacted by unfavorable market conditions, with total sales declining by 13% year-on-year, self-operated goods sales revenue decreasing by 10%, and gross profit margin falling to 31%, resulting in a post-tax loss of HKD 11 million compared to a profit in the prior year Citistore Total Sales (Six Months Ended June 30) | Sales Type | 2024 (HKD Million) | 2023 (HKD Million) | Change | | :--- | :--- | :--- | :--- | | Self-operated Goods | 146 | 162 | -10% | | Consignment Counters | 347 | 394 | -12% | | Licensed Counters | 189 | 225 | -16% | | Total | 682 | 781 | -13% | Citistore Self-operated Goods Sales Performance | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Revenue (HKD Million) | 146 | 162 | | Gross Profit (HKD Million) | 45 | 54 | | Gross Profit Margin | 31% | 33% | - Citistore recorded a post-tax loss of HKD 11 million during the period, compared to a post-tax profit of HKD 41 million in the prior year[9] Unicorn (APITA/UNY) Despite unfavorable market conditions, Unicorn's total sales remained largely flat at HKD 587 million, primarily due to a sales rebound at the renovated APITA Taikoo Shing store, with a 5% increase in self-operated goods sales offset by an 11% decline in consignment counter sales, resulting in a post-tax loss of HKD 53 million, similar to the prior year Unicorn Total Sales (Six Months Ended June 30) | Sales Type | 2024 (HKD Million) | 2023 (HKD Million) | Change | | :--- | :--- | :--- | :--- | | Self-operated Goods | 433 | 413 | +5% | | Consignment Counters | 154 | 173 | -11% | | Total | 587 | 586 | Flat | - The sales rebound at the APITA Taikoo Shing store, following its major renovation completed in late 2023, was the primary reason for Unicorn's stable total sales[11] - Unicorn recorded a post-tax loss of HKD 53 million during the period, comparable to the HKD 54 million loss in the prior year[13] Consolidated Results and Group Financials Overall, the Group's main revenues (self-operated goods sales and commissions) declined, with the combined post-tax loss for Citistore and Unicorn expanding to HKD 64 million, while the Group held HKD 73 million in net cash and bank balances with no bank borrowings as of June 30, 2024 Group's Major Revenue Components (Six Months Ended June 30) | Revenue Type | 2024 (HKD Million) | 2023 (HKD Million) | | :--- | :--- | :--- | | Sales Revenue from Self-operated Goods | 579 | 575 | | Commission Income from Consignment Counters | 136 | 156 | | Commission Income from Licensed Counters | 52 | 59 | - As of June 30, 2024, the Group had no bank borrowings and net cash and bank balances of HKD 73 million (end of 2023: HKD 85 million)[15] Outlook The Hong Kong retail operating environment is expected to remain challenging, prompting the Group to review and streamline its store network for efficiency, and a key strategy involves integrating its CU APP membership program with the holding company's H•COINS by end-2024 to expand the member base and boost store turnover and footfall through enhanced reward programs - The Group is thoroughly reviewing store performance and plans to streamline its store network structure to enhance operational efficiency[16] - The Group plans to integrate its CU APP loyalty program with Henderson Land Development's H•COINS by the end of 2024 to expand its member base and promote consumption[16] Financial Statements This section presents the Group's consolidated financial performance, including income and financial position, for the reporting period Consolidated Statement of Profit or Loss For the six months ended June 30, 2024, the Group's revenue was HKD 772 million, a slight year-on-year decrease, with operating loss expanding from HKD 5 million to HKD 61 million due to increased direct costs and other expenses, resulting in a loss attributable to shareholders of HKD 69 million and a loss per share of HKD 2.3 cents Consolidated Statement of Profit or Loss Summary (Six Months Ended June 30) | Item | 2024 (HKD Million) | 2023 (HKD Million) | | :--- | :--- | :--- | | Revenue | 772 | 796 | | Operating Loss | (61) | (5) | | Loss Before Tax | (82) | (21) | | Loss Attributable to Shareholders | (69) | (18) | | Loss Per Share (HKD Cents) | (2.3) | (0.6) | Consolidated Statement of Financial Position As of June 30, 2024, the Group's total assets were HKD 2,378 million, total liabilities HKD 1,272 million, and net assets HKD 1,106 million, a decrease from HKD 1,173 million at year-end 2023, with non-current assets primarily comprising goodwill (HKD 1,072 million) and right-of-use assets (HKD 756 million), and a net current liability of HKD 358 million Consolidated Statement of Financial Position Summary | Item | June 30, 2024 (HKD Million) | December 31, 2023 (HKD Million) | | :--- | :--- | :--- | | Non-current Assets | 2,137 | 2,280 | | Current Assets | 241 | 255 | | Current Liabilities | 599 | 669 | | Non-current Liabilities | 673 | 693 | | Net Assets (Total Equity) | 1,106 | 1,173 | - Goodwill (HKD 1,072 million) and right-of-use assets (HKD 756 million) constitute the majority of the Group's non-current assets[19] Notes to the Financial Statements This section provides detailed explanations and breakdowns of key financial statement items, including revenue recognition and goodwill valuation Note 4 Revenue The Group's total revenue was HKD 772 million, primarily composed of sales revenue (HKD 579 million), consignment counter commission income (HKD 136 million), and licensed counter commission income (HKD 52 million), with all revenue types decreasing compared to the prior year Revenue Classification (Six Months Ended June 30) | Revenue Type | 2024 (HKD Million) | 2023 (HKD Million) | | :--- | :--- | :--- | | Sales Revenue | 579 | 575 | | Commission Income from Consignment Counters | 136 | 156 | | Commission Income from Licensed Counters | 52 | 59 | | Others | 5 | 6 | | Total | 772 | 796 | Note 13 Goodwill As of June 30, 2024, the Group's goodwill carrying amount was HKD 1,072 million, comprising HKD 810 million for Citistore and HKD 262 million for Unicorn, with management concluding no impairment loss at the reporting date based on five-year cash flow forecasts and sensitivity analysis of key assumptions like sales growth, gross profit margin, and discount rates - The Group's total goodwill amounts to HKD 1,072 million, comprising HKD 810 million for Citistore and HKD 262 million for Unicorn[41] - Management's impairment test for Citistore assumes an average total sales revenue growth of 7.5% over the next five years, using a post-tax discount rate of 12%[42][43] - Impairment testing for Unicorn indicates a potential impairment loss of approximately HKD 10 million if budgeted total sales revenue decreases by 3% annually over the next five years, and an estimated HKD 85 million loss if the budgeted gross profit margin decreases by 1.5% annually[48] Financial Review This section reviews the Group's operating results, financial resources, liquidity, and human capital management during the reporting period Operating Performance and Lease Impact The Group's loss attributable to shareholders for the first half was HKD 69 million, with significant lease impacts under HKFRS 16, including HKD 130 million in right-of-use asset depreciation and HKD 20 million in lease liability finance costs recognized, primarily within direct costs - In accordance with HKFRS 16, the Group recognized HKD 130 million in depreciation expense for right-of-use assets and HKD 20 million in finance costs on lease liabilities in the statement of profit or loss[60] Financial Resources and Liquidity As of June 30, 2024, the Group had no bank borrowings but recognized lease liabilities of HKD 795 million under accounting standards, with cash and bank balances of HKD 73 million, and management believes the Group possesses sufficient financial resources for daily operations, considering operating cash flow, available credit facilities, and intercompany borrowings - At the end of the reporting period, the Group had no bank borrowings and cash and bank balances of HKD 73 million[62] - The Group possesses ample financial resources, including operating cash flow, available bank financing facilities, and unsecured, interest-free borrowings from fellow subsidiaries[62] Employees and Remuneration Policy As of June 30, 2024, the Group had 905 full-time and 105 part-time employees, a decrease from year-end, with total staff costs for H1 at HKD 134 million, a year-on-year decrease, and remuneration policies linked to market levels, offering benefits like medical insurance and retirement plans Employee Statistics | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Full-time Employees | 905 | 962 | | Part-time Employees | 105 | 115 | - Total staff costs for the six months ended June 30, 2024, amounted to HKD 134 million, compared to HKD 139 million in the prior year[67] Other Information This section provides additional disclosures, including details on the Group's adherence to corporate governance principles Corporate Governance The company complied with applicable Corporate Governance Code provisions during the reporting period, with one deviation: the roles of Chairman and Chief Executive Officer are not separated, both held by Dr. Lee Ka-kit, an arrangement the company believes is in its best interest, ensuring collective consultation on all major decisions and preventing excessive power concentration - The company has one deviation from the Corporate Governance Code, where the roles of Chairman and Chief Executive Officer are not separated, both held by Dr. Lee Ka-kit[71]