大快活集团(00052) - 2022 - 中期财报

Financial Statements and Notes Consolidated Statement of Profit or Loss The Group's revenue grew 16.4% to HK$1.5 billion, but profit attributable to equity holders declined 19.2% to HK$52.49 million due to reduced government grants Consolidated Statement of Profit or Loss Summary (For the six months ended September 30) | Indicator | 2021 (HKD thousands) | 2020 (HKD thousands) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 1,498,604 | 1,286,985 | +16.4% | | Gross Profit | 157,282 | 171,281 | -8.2% | | Operating Profit | 81,950 | 73,673 | +11.2% | | Profit Before Tax | 65,906 | 54,378 | +21.2% | | Profit Attributable to Equity Holders | 52,493 | 64,951 | -19.2% | | Basic Earnings Per Share (HK cents) | 40.52 | 50.14 | -19.2% | - The primary reason for the period's profit decline was a significant reduction in government grants[18] - Other income (primarily government grants) for the current period was HK$5.66 million, compared to HK$23.46 million in the prior period[18][48] - Staff costs in the prior period were significantly reduced due to HK$122 million received from the 'Employment Support Scheme' subsidy[51] Consolidated Statement of Financial Position As of September 30, 2021, the Group reported total assets of HK$2.427 billion and net assets of HK$754 million, with a net current liability of HK$2.35 million offset by HK$723 million in cash Consolidated Statement of Financial Position Summary | Indicator | As of September 30, 2021 (HKD thousands) | As of March 31, 2021 (HKD thousands) | | :--- | :--- | :--- | | Non-current Assets | 1,524,598 | 1,645,746 | | Current Assets | 902,259 | 802,293 | | Current Liabilities | 904,608 | 811,902 | | Net Current Liabilities | (2,349) | (9,609) | | Non-current Liabilities | 768,056 | 858,301 | | Net Assets | 754,193 | 777,836 | - Despite net current liabilities, the directors believe the Group's expected cash flows from operations will strengthen its financial position, enabling it to meet financial obligations over the next twelve months, thus the financial statements are prepared on a going concern basis[36] Condensed Consolidated Statement of Cash Flows The Group generated HK$358 million in net cash from operations, with net outflows from investing (HK$49.11 million) and financing (HK$232 million) activities, resulting in period-end cash of HK$693 million Condensed Consolidated Statement of Cash Flows Summary (For the six months ended September 30) | Item | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 358,089 | 342,947 | | Net Cash Used in Investing Activities | (49,105) | (73,026) | | Net Cash Used in Financing Activities | (231,507) | (229,221) | | Net Increase in Cash and Cash Equivalents | 77,477 | 40,700 | | Cash and Cash Equivalents at Period-End | 693,304 | 552,021 | Notes to the Financial Statements Financial notes detail accounting policies, segment performance, asset impairment, dividends, and related party transactions, with Hong Kong as the main revenue and profit source Segment Reporting The Hong Kong segment generated HK$1.427 billion in revenue and HK$78.65 million in profit, while Mainland China contributed HK$70.01 million in revenue but incurred a HK$7.08 million loss Segment Performance Summary (For the six months ended September 30) | Segment | Revenue (HKD thousands) | Profit/(Loss) (HKD thousands) | | :--- | :--- | :--- | | Hong Kong Restaurants | 1,427,194 | 78,653 | | Mainland China Restaurants | 70,013 | (7,083) | Dividends The Board declared an interim dividend of 25.0 HK cents per share, lower than the prior year, and paid a final dividend of 60.0 HK cents per share for the previous fiscal year - Interim dividend declared at 25.0 HK cents per share, totaling approximately HK$32.39 million[56] - Final dividend paid for FY2021 was 60.0 HK cents per share, totaling approximately HK$77.73 million[57] Asset Impairment The Group recognized asset impairment losses of HK$3.94 million for right-of-use assets and HK$2.40 million for other property, plant, and equipment due to underperforming branches, a significant decrease from the prior year Asset Impairment Losses (For the six months ended September 30) | Asset Category | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Right-of-use Assets | 3,939 | 29,259 | | Other Property, Plant and Equipment | 2,401 | 18,260 | Related Party Transactions Significant related party transactions involve property leases from companies beneficially owned by the Executive Chairman and his family, incurring approximately HK$3.26 million in related depreciation and interest expenses - The Group leases properties from companies beneficially owned by Executive Chairman Mr. Lo Hoi Keung and his family (Sun Jet International, Hing Lap Company Limited)[87][88] Management Discussion and Analysis Overall Performance The Group's revenue grew 16.4%, and despite a 19.2% decline in reported profit due to reduced government grants, core profit turned positive to HK$54.9 million, indicating healthy underlying business growth - Revenue increased by 16.4% to HK$1.4986 billion, but profit attributable to equity holders decreased by 19.2% to HK$52.5 million[95] - Excluding the impact of government grants and asset impairment, the period's profit was HK$54.9 million, compared to a loss of HK$30.3 million in the prior period, achieving a turnaround[95] Business Review The Group achieved stable business growth with sales and customer traffic recovering to pre-pandemic levels, driven by menu optimization, digital platforms, delivery partnerships, and social media marketing, with Hong Kong performing steadily and Mainland China poised for growth Hong Kong Operations Hong Kong operations showed steady performance with sales and customer traffic recovering to pre-pandemic levels, driven by menu optimization, baking production line acquisition, new branch openings, and strong takeaway sales from specialty restaurants - Total sales and customer traffic significantly increased year-on-year, recovering to pre-pandemic levels[96] - Acquired a baking production line, enabling in-house production of most baked goods and enhancing product quality[99] - The 'Fairwood Care for the Elderly' community service program's membership continued to grow, reaching 280,000 members during the period[103] Mainland China Operations Mainland China operations recovered slower due to reduced cross-border traffic and Guangzhou's lockdown, but business restructuring and management localization are complete, with one new store opened and plans for six to seven more - Mainland operations experienced slower recovery, impacted by reduced cross-border traffic and the Guangzhou lockdown[104] - Business restructuring and management localization are complete, with a new POS system integrated with local online platforms and a new membership program launched[104] Digitalization and Marketing The Group advanced digitalization with rapid growth of its 'Click-and-Collect' platform, attracting over 100,000 members, expanded foodpanda delivery, and successfully engaged new customers through innovative social media marketing - The 'Click-and-Collect' online ordering platform's membership program attracted over 100,000 members within one month of launch[99] - Strengthened partnership with foodpanda, expanding delivery services to most areas of Hong Kong[99] - First social media marketing campaign saw promotional videos garner 650,000 views and 100,000 interactions in two weeks, successfully attracting new customers[100] Store Network As of September 30, 2021, the Group operated 155 stores in Hong Kong (143 fast-food, 12 specialty) and 17 stores in Mainland China, totaling 172 outlets Store Network Distribution (As of September 30, 2021) | Region | Store Type | Quantity | | :--- | :--- | :--- | | Hong Kong | Fast-food Restaurants | 143 | | Hong Kong | Specialty Restaurants | 12 | | Hong Kong Total | | 155 | | Mainland China | Fast-food Restaurants | 17 | | Group Total | | 172 | Outlook Facing rising food costs and labor shortages, the Group plans to mitigate risks by optimizing operations, expanding its store network with four to five new outlets by early 2022, and investing in digital marketing and new store designs - Key future challenges include rising food costs and labor shortages[107] - Plans to open four to five new stores in Hong Kong by early 2022[107] - Will increase digital channel marketing and prepare to launch new store designs to enhance dining experience[107] - Mainland China market, especially the Greater Bay Area, holds significant growth potential[109] Financial Review The Group maintains a robust financial position with HK$723 million in cash, no bank loans, a 0.0% debt-to-equity ratio, HK$275 million in unused credit, and an annualized average return on equity of 13.7% Key Financial Indicators | Indicator | As of September 30, 2021 | As of March 31, 2021 | | :--- | :--- | :--- | | Bank Deposits and Cash | HK$723.4 million | HK$622.1 million | | Bank Loans | None | None | | Debt-to-Equity Ratio | 0.0% | 0.0% | | Unused Bank Standby Credit | HK$275.3 million | HK$269.7 million | - Annualized average return on equity was 13.7% (20.5% for the year ended March 31, 2021)[113] Other Information Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures Executive Chairman Mr. Lo Hoi Keung and CEO Mr. Lo Fai Shing are deemed to hold approximately 42-44% of the company's shares via family trusts, with HSBC International Trustee Limited holding about 42.79% as trustee - Executive Chairman Mr. Lo Hoi Keung and CEO Mr. Lo Fai Shing are deemed to hold significant company equity through trusts, with interests of approximately 42.87% and 43.62% respectively[123] - HSBC International Trustee Limited, as trustee for various trusts, is deemed to hold approximately 42.79% of the company's share interests[136] Share Option Scheme The 2011 share option scheme expired and a new one was adopted on September 9, 2021, with previously granted options remaining valid, and the report details unexercised options held by directors and employees - The 2011 Share Option Scheme expired on September 6, 2021, and a new 2021 Share Option Scheme has been adopted[129] - During the period, 20,000 share options were exercised[77] - As of period-end, directors and employees still hold a significant number of unexercised share options granted under the 2011 scheme[132] Dividend Policy The Board declared an interim dividend of 25.0 HK cents per share, representing approximately 62% of profit attributable to shareholders, payable by December 31, 2021 - Interim dividend declared at 25.0 HK cents per share, a decrease from 30.0 HK cents in the prior period[139] - The interim dividend payout represents approximately 62% of the profit attributable to equity holders of the Group for the period[139] Corporate Governance The company largely complied with the Corporate Governance Code, with a deviation regarding the non-rotation of the Chairman and CEO, which the Board believes ensures leadership continuity and strategic implementation, and the Audit Committee reviewed the interim results - The company complied with the Listing Rules' Corporate Governance Code, with one deviation regarding the rotation of directors[142] - The deviation is that the Chairman and Managing Director (CEO) are not subject to rotation, which the Board believes is in the company's best interest to ensure leadership stability and strategic continuity[142][144]