佐丹奴国际(00709) - 2020 - 年度财报

Ten-Year Financial and Operation Highlights This chapter presents the Group's key financial and operational data over the past decade, illustrating long-term performance trends, with 2020 showing significant declines in sales, gross profit, operating profit, and profit attributable to shareholders, turning from profit to loss, alongside a decrease in total store count Ten-Year Financial and Operation Highlights This chapter presents the Group's key financial and operational data over the past decade, illustrating long-term performance trends, with 2020 showing significant declines in sales, gross profit, operating profit, and profit attributable to shareholders, turning from profit to loss, alongside a decrease in total store count 2020年与2019年关键业绩指标对比 | 指标 | 2020年 (Million HKD) | 2019年 (Million HKD) | YoY Change | | :--- | :--- | :--- | :--- | | Sales | 3,122 | 4,852 | -35.7% | | Gross Profit | 1,736 | 2,846 | -39.0% | | Operating Profit (Loss) | (105) | 397 | Turned from profit to loss | | Profit (Loss) Attributable to Company Shareholders | (112) | 230 | Turned from profit to loss | | Earnings (Loss) Per Share (HK cents) | (7.10) | 14.60 | Turned from profit to loss | | Dividend Per Share (HK cents) | 10.00 | 14.60 | -31.5% | | Total Global Stores | 2,185 | 2,375 | -8.0% | Corporate Information This chapter details the company's core organizational structure, including board members, committee compositions, legal advisors, auditors, registered office, and principal bankers, with Mr. Lau Kwok Kuen serving as Chairman and CEO Corporate Information This chapter details the company's core organizational structure, including board members, committee compositions, legal advisors, auditors, registered office, and principal bankers, with Mr. Lau Kwok Kuen serving as Chairman and CEO - Company's Board of Directors comprises executive, non-executive, and independent non-executive directors, with several specialized committees including Audit, Remuneration, Nomination, and Management, supporting corporate governance and decision-making[7] - The company's independent auditor is PricewaterhouseCoopers[8] Chairman's Statement Chairman Lau Kwok Kuen reports 2020 as a challenging year with significant sales and profit declines due to COVID-19, noting a net loss in H1 but H2 profitability from cost control and rent concessions, while maintaining a strong cash position and proposing a final dividend, with accelerated digital transformation and increased online sales becoming a strategic focus Chairman's Statement Chairman Lau Kwok Kuen reports 2020 as a challenging year with significant sales and profit declines due to COVID-19, noting a net loss in H1 but H2 profitability from cost control and rent concessions, while maintaining a strong cash position and proposing a final dividend, with accelerated digital transformation and increased online sales becoming a strategic focus 2020年财务业绩概览 | Indicator | Amount (Million HKD) | Notes | | :--- | :--- | :--- | | Sales | 3,122 | Down 35.7% YoY | | Full-Year Net Loss | 112 | H1 loss of 175, H2 profit of 63 | | Year-End Net Cash | 1,104 | - | | Proposed Full-Year Total Dividend | 10.0 HK cents per share | Interim 3.1 HK cents, Final 6.9 HK cents | - The Group's online sales as a percentage of total sales surged from 5.5% in 2019 to 10.5%, with particularly significant growth in regions outside Mainland China, making third-party online platforms a future strategic focus for the company[9] - The pandemic accelerated the company's digitalization, with online training, cross-regional meetings, and video communication with suppliers and stores becoming standard practice, contributing to cost and time savings[9] Management Discussion and Analysis This section provides management's insights and analysis of the company's performance, market conditions, financial health, and future outlook Overview and Operating Results In 2020, Group sales fell 35.7% to HK$3.122 billion due to the pandemic, with gross margin dropping to 55.6%, resulting in a full-year net loss of HK$112 million despite H2 improvement, primarily impacted by H1 sales decline and HK$70 million non-cash impairment, while online sales grew 22.1% to 10.5% of total sales, and the company maintained a strong financial position with year-end net cash increasing to HK$1.104 billion, proposing a full-year dividend of HK10.0 cents per share 2020年集团经营业绩摘要 | Indicator | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Group Sales (Million HKD) | 3,122 | 4,852 | (35.7%) | | Gross Margin | 55.6% | 58.7% | -3.1pp | | Operating Profit (Loss) (Million HKD) | (105) | 397 | (126.4%) | | Profit (Loss) Attributable to Shareholders (Million HKD) | (112) | 230 | (148.7%) | | Basic Loss Per Share (HK cents) | (7.1) | 14.6 | Turned from profit to loss | | Year-End Net Cash (Million HKD) | 1,104 | 994 | +11.1% | - Online sales grew by 22.1%, accounting for 10.5% of total sales (compared to 5.5% in 2019), with online sales in regions outside Mainland China increasing by 123.5%[11][17][19] - Operating expenses decreased by 21.7% year-on-year, but a full-year operating loss was recorded due to a significant decline in sales and a special net impairment charge of HK$70 million; in the second half, an operating profit of HK$77 million was achieved due to sales improvement and government assistance[24] Analysis by Market This chapter analyzes the Group's operating performance by region, showing a 32.8% sales decline in Greater China, with Hong Kong and Macau severely impacted by a 53.1% sales drop, while Mainland China began recovery in H2 focusing on online sales and franchise networks, other Asia Pacific regions saw a 38.0% sales decrease but most markets remained profitable, the Middle East sales fell 40.9% with recovery dependent on expatriate and international tourist return, and the South Korea joint venture's sales decreased 14.6% but online sales share rose to 35% 各主要市场销售额及门店数量变化 (2020年) | Market | Sales (Million HKD) | YoY Change | Total Stores at Year-End | Store Count Change | | :--- | :--- | :--- | :--- | :--- | | Mainland China | 706 | (29.0%) | 784 | (118) | | Taiwan | 514 | (12.4%) | 184 | (13) | | Hong Kong & Macau | 362 | (53.1%) | 62 | (11) | | Other Asia Pacific | 982 | (38.0%) | 599 | +2 | | Middle East | 391 | (40.9%) | 173 | (8) | | South Korea (JV) | 175,134 (Million KRW) | (14.6%) | 172 | (3) | - The Hong Kong and Macau markets suffered severe economic damage from the dual impact of 2019 social events and the 2020 pandemic, leading the Group to scale down operations by closing high-rent, loss-making stores[30][32] - The South Korea joint venture's online sales surged, accounting for 35% of its total sales (up from 25% in 2019), demonstrating the effectiveness of its digital transformation[43] Financial Position Despite a significant sales decline, the Group's financial position remains robust, with year-end net cash and bank balances increasing 11.1% to HK$1.104 billion due to cost control, reduced receivables and inventory, and government subsidies, while inventory decreased 20.8% to HK$434 million but inventory turnover days rose to 115, and a leverage ratio of -0.4 indicates low financial risk 2020年末关键财务状况指标 | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash and Bank Balances (Million HKD) | 1,104 | 994 | | Current Ratio | 1.8 | 1.4 | | Bank Loans (Million HKD) | 152 | 265 | | Leverage Ratio | -0.4 | -0.4 | | Inventory (Million HKD) | 434 | 548 | | Inventory Turnover Days | 115 | 100 | - Capital expenditure significantly decreased to HK$30 million (from HK$76 million in 2019), reflecting the company's cautious store renovation plans during the pandemic[47][48] - The Group increased its equity stake in PT Giordano Indonesia, an indirect non-wholly owned subsidiary in Indonesia, to 65.08% in July 2020[55] Outlook Management views 2020 as the most challenging year but notes robust financial health due to cash management, anticipating continued challenges but also opportunities in 2021, with strategic focus on operational digitalization, sales channel optimization, global footprint expansion (especially in developing markets like Africa), and leveraging reduced competition, expecting Taiwan to lead recovery, and Mainland China to steadily improve with online platforms and franchisees as key development areas - The company's strategic focus will be on operational and marketing digitalization, diversified and optimized sales channels, increasing global footprint, and leveraging opportunities from reduced competition[56] - Regarding market recovery, Taiwan is expected to lead a rapid recovery, followed by steady improvement in Mainland China, with online platforms and franchisee markets being key development areas[56] - The company will continue to expand its international business, particularly in developing markets, having achieved success in Kenya and Mauritius and currently negotiating with other African countries, aiming to increase market presence both within and outside the African continent[57] Directors and Senior Management Profiles This chapter provides detailed biographies of the company's board members and senior management, including their age, position, professional background, industry experience, and roles in other listed companies or organizations, highlighting the core management's extensive experience in retail, management, legal, and finance Directors and Senior Management Profiles This chapter provides detailed biographies of the company's board members and senior management, including their age, position, professional background, industry experience, and roles in other listed companies or organizations, highlighting the core management's extensive experience in retail, management, legal, and finance - Dr Lau Kwok Kuen, 68, serves as the Group's Chairman and Chief Executive Officer, having joined the Group in 1987 and possessing over 12 years of management and accounting experience[58] - The Board of Directors comprises diverse backgrounds, including professionals in retail operations (Dr Chan Ka Wai), law and human resources (Mr Mark Alan Loynd), corporate development (Dr Cheng Chi-kong), the jewelry industry (Mr Chan Sze Chung), and accounting and academia (Dr Peter Lo Tak-shing, Mr Kwong Chi Keung, Professor Wong Yuk, Dr Alison Elizabeth Lloyd)[58][59][60][61][62] Corporate Governance Report This section details the company's corporate governance practices, including its framework, board structure, committee functions, and risk management systems Corporate Governance Framework and Board The company is committed to high corporate governance standards, adopting HKEX's Corporate Governance Code, with two deviations in the reporting period: the Chairman and CEO roles are combined (Dr. Lau Kwok Kuen), and the Chairman is exempt from retirement by rotation, which the Board believes provides strong leadership, while the nine-member Board, including four independent non-executive directors, ensures effective oversight and checks and balances - The company deviates from Code Provision A.2.1 of the Corporate Governance Code, where the roles of Chairman and Chief Executive Officer are combined and held by Dr Lau Kwok Kuen, an arrangement the Board believes provides strong and consistent leadership and effective execution of long-term strategies[63][83][84] - The company deviates from Code Provision A.4.2, as the Chairman is exempt from retirement by rotation, which the Board believes is beneficial for the Group's continuity in the Chairman's role[71] - The Board of Directors consists of 3 executive directors, 2 non-executive directors, and 4 independent non-executive directors, with a high proportion of independent non-executive directors contributing to safeguarding shareholders' interests[66][67] Board Committees The company has established three core board committees—Audit, Nomination, and Remuneration—to support board operations, with the Audit Committee comprising all independent non-executive directors overseeing financial reporting, risk management, and internal audits, the Nomination Committee reviewing board structure and nominations, and the Remuneration Committee determining director and executive compensation, complemented by a Management Committee and Risk Management Committee - The Audit Committee comprises all four independent non-executive directors, chaired by Dr Peter Lo Tak-shing, and held four meetings in 2020 to review annual and interim results, internal audit reports, and assess risk management and internal control systems[86][88][90] - The Nomination Committee consists of Chairman Dr Lau Kwok Kuen and three independent non-executive directors, holding one meeting in 2020 to review board diversity policy, structure, and member rotation matters[90][91] - The Remuneration Committee, chaired by Professor Wong Yuk and including two other directors, held one meeting in 2020 to review and approve the remuneration packages for the Chairman, executive directors, and senior management[92] Risk Management and Internal Control The Board is fully responsible for the Group's risk management and internal control systems, delegating review to the Risk Management Committee, and has established a comprehensive framework including organizational structure, financial controls, budgeting, major expenditure approvals, and a whistleblowing mechanism, with the internal audit team collaborating with Deloitte to regularly report to the Audit Committee, ensuring system effectiveness - The Board bears overall responsibility for the risk management and internal control systems, aiming to safeguard assets, maintain accurate accounting records, and ensure compliance[94] - The company has a "whistleblowing" mechanism allowing employees to anonymously report misconduct by senior management to the Internal Audit Department, with reports then forwarded to the Audit Committee Chairman for handling[94][96] - The Risk Management Committee works closely with the internal audit team, including internal audit consultant Deloitte, reporting to the Board twice annually to confirm that the risk management and internal control systems are adequate and effective in all material aspects[96][98] Directors' Report This section provides the Directors' Report, covering the business review, financial summary, share capital, major suppliers and shareholders, continuing connected transactions, and share repurchases Business Review and Financial Summary The Directors' Report outlines the Group's primary business as retail and distribution of own-brand apparel, with performance detailed in the financial statements, and the Board recommends a final dividend of HK6.9 cents per share, bringing the full-year total to HK10.0 cents per share, with distributable reserves of HK$551 million at year-end 2020 - The Group's principal activities involve the retail and distribution of Giordano, Giordano Junior, Giordano Ladies, BSX, and other proprietary and licensed brands[110] 2020年度股息详情 | Dividend Type | Amount Per Share (HK cents) | Payment/Proposed Payment Date | | :--- | :--- | :--- | | Interim Dividend | 3.1 | September 18, 2020 | | Proposed Final Dividend | 6.9 | June 18, 2021 | | Total for Full Year | 10.0 | - | Share Capital, Major Suppliers and Shareholders This chapter discloses the company's share capital structure, key supplier and customer relationships, and director and major shareholder holdings, noting that the largest supplier accounted for 42% of total purchases in the year, and major shareholder Sino Wealth International Limited, ultimately controlled by Chow Tai Fook Holdings, collectively holds approximately 24.39% of the company's shares - In 2020, the Group's largest supplier accounted for 42% of total purchases, with the top five suppliers collectively accounting for 68%[113][119][121] - Major shareholder Sino Wealth International Limited (ultimately controlled by Chow Tai Fook Holdings) holds 384,830,000 shares in the company, representing approximately 24.39% of the issued share capital[137][140] - Executive Directors Lau Kwok Kuen, Chan Ka Wai, and Mark Alan Loynd hold approximately 1.74%, 0.72%, and 0.59% interests in the company respectively (including personal and derivative instrument interests)[128] Continuing Connected Transactions During the reporting period, the Group engaged in continuing connected transactions with New World Department Store China Limited, primarily involving property and counter rentals in Mainland China under a renewed comprehensive tenancy agreement signed on December 31, 2019, with the Group paying approximately HK$1.28 million in rent to New World Department Store China Limited in 2020, well below the HK$5 million annual cap - The Group entered into a renewed comprehensive tenancy agreement with New World Department Store China Limited (a connected person), effective until December 31, 2022, for the lease of properties and counters in Mainland China[148] 与新世界百货集团的租金交易 | Year | Actual Rent Paid/Payable (Million HKD) | Annual Cap (Million HKD) | | :--- | :--- | :--- | | 2020 | 1.28 | 5.0 | Purchase, Sale or Redemption of Listed Securities For the year ended December 31, 2020, the company repurchased 870,000 ordinary shares on the Stock Exchange for a total consideration of approximately HK$995,100, which the Board believes reflects confidence in the company's long-term business prospects, with all repurchased shares subsequently cancelled 2020年度股份购回详情 | Month of Repurchase | Number of Shares Repurchased | Highest Price Per Share (HKD) | Lowest Price Per Share (HKD) | Total Consideration (HKD) | | :--- | :--- | :--- | :--- | :--- | | June 2020 | 870,000 | 1.15 | 1.13 | 995,100 | Independent Auditor's Report This section contains the independent auditor's opinion on the consolidated financial statements, highlighting key audit matters Independent Auditor's Report PricewaterhouseCoopers, the independent auditor, issued an unmodified opinion on the Group's consolidated financial statements for the year ended December 31, 2020, affirming they present a true and fair view of the Group's financial position and performance, with specific emphasis on three key audit matters: valuation of goodwill impairment and put option liabilities, inventory valuation, and impairment of retail store assets - The auditor issued an unmodified opinion on the financial statements, confirming they present a true and fair view of the Group's financial position in accordance with Hong Kong Financial Reporting Standards[164] - Key audit matters include: - Valuation of goodwill impairment and put option liabilities: Involves significant judgment regarding the future performance of the Middle East business[169][170] - Inventory valuation: Estimation of net realizable value for apparel inventory involves complexity and judgment[172] - Impairment of retail store assets: Involves significant judgment regarding future cash flows of retail stores showing impairment indicators[173] Consolidated Financial Statements This section presents the Group's core consolidated financial statements for the reporting period Consolidated Financial Statements Summary This chapter presents the Group's core consolidated financial statements for 2020, including the income statement, statement of comprehensive income, balance sheet, cash flow statement, and statement of changes in equity, showing a shift from profit to loss, decreased sales, but continued net cash inflow from operating activities, with total assets and liabilities both declining, and the company maintaining a net current asset position 2020年合并财务报表关键数据 (百万港元) | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Income Statement: | | | | Sales | 3,122 | 4,852 | | Gross Profit | 1,736 | 2,846 | | Operating (Loss)/Profit | (105) | 397 | | (Loss)/Profit Attributable to Company Shareholders | (112) | 230 | | Balance Sheet (Year-End): | | | | Total Assets | 4,383 | 5,196 | | Total Liabilities | 1,752 | 2,349 | | Equity Attributable to Company Shareholders | 2,470 | 2,640 | | Net Current Assets | 916 | 714 | | Cash Flow Statement: | | | | Net Cash Inflow from Operating Activities | 616 | 1,068 | | Net Cash Inflow/(Outflow) from Investing Activities | 262 | (120) | | Net Cash Outflow from Financing Activities | (667) | (1,120) | | Cash and Cash Equivalents at Year-End | 1,194 | 970 | Notes to the Financial Statements This section provides detailed explanations and supplementary information for the consolidated financial statements Notes to the Financial Statements This chapter provides detailed explanations and supplementary information for the consolidated financial statements, covering the company's significant accounting policies, critical accounting estimates and judgments, financial risk management, segment information, and breakdowns of various asset, liability, and profit/loss items, which are crucial for understanding the company's financial position and operating results - The notes detail the application of key accounting policies such as revenue recognition, leases (HKFRS 16), financial instruments, and goodwill impairment testing[200][259][234][229] - The financial risk management section indicates that the Group faces primary financial risks including exchange rate risk, credit risk, and liquidity risk, and outlines corresponding management strategies[264] - Segment information reveals that retail and distribution is the main operating segment, managed by region and brand, with Other Asia Pacific being the largest sales contributor, but Hong Kong and Macau markets experiencing the most significant operating losses[308][311] Share Option Information This section provides details on the company's share option scheme, including grants, exercises, and outstanding options Share Option Information This chapter details the company's share option scheme, adopted in 2011 to incentivize and reward eligible participants contributing to the Group, disclosing share option movements in 2020, including new grants, lapses, and outstanding options at year-end, along with exercise prices and periods - The company adopted a new share option scheme ("2011 Share Option Scheme") on June 9, 2011, which is valid until June 8, 2021[490][491][500] - On September 9, 2020, the Board granted 77,310,000 share options under the scheme, with an exercise price of HK$1.39 per share[508] 截至2020年末董事持有的购股权 | Director Name | Number of Unexercised Share Options at Year-End | | :--- | :--- | | CHAN Ka Wai | 10,700,000 | | Mark Alan LOYND | 9,064,000 | Appendix – Environmental, Social and Governance Report This appendix provides the company's Environmental, Social, and Governance (ESG) report, detailing its performance and initiatives in these areas Environmental Aspect The company is committed to environmentally responsible operations, reducing its environmental impact by conserving energy (electricity), water, and minimizing waste, with total greenhouse gas emissions and water consumption decreasing in the reporting period, though intensity increased due to a larger sales decline, and has implemented various energy-saving measures like energy-efficient lighting and optimized air conditioning, while using recyclable materials in products 2020年环境绩效概览 | Indicator | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Total GHG Emissions (tCO2e) | 9,964 | 11,369 | -12.4% | | Total Water Consumption (cubic meters) | 79,651 | 81,312 | -2.0% | | Total Non-Hazardous Waste (metric tons) | 798 | 1,319 | -39.5% | - The company incorporates eco-friendly elements into its products, such as the G-Warmer series using biodegradable and recycled polypropylene, and the G-Motion brand utilizing fluorine-free eco-friendly water repellents[542] Social Aspect On the social front, the company focuses on employees, supply chain, product responsibility, anti-corruption, and community engagement, implementing diverse and equal employment policies, adopting work-from-home and enhanced sanitation measures during the pandemic, establishing strict supplier screening and quality control mechanisms, requiring suppliers to adhere to ethical sourcing, and consistently supporting 'Project Hope' by donating to 22 Hope Primary Schools - As of the end of 2020, the total number of employees in the reporting markets was 3,122, a year-on-year decrease of 26.92%, with female employees accounting for 80.4%[544][548] - In 2020, the company provided over 19,822 hours of internal training for employees and offers a study allowance program to encourage continuous learning[591][595] - The company prohibits child and forced labor and requires suppliers to comply with "Core Ethical Sourcing Guidelines"[625][631](index=631&type=chunk] As of the end of 2020, the company had 126 suppliers, with 81.6% located in Mainland China[638] - The company has long supported "Project Hope," having donated to 22 Giordano Hope Primary Schools by the end of 2020, providing educational opportunities for children in impoverished rural areas[669][672]