GIORDANO INT'L(HK:00709)2021-09-02 08:57Financial Performance - Group sales for the first half of 2021 were HK$1,681 million, representing a 19.0% increase compared to HK$1,413 million in 2020[6]. - Operating profit for the period was HK$94 million, a significant improvement from a loss of HK$182 million in 2020, marking a 151.6% change[5]. - Profit attributable to shareholders was HK$60 million, compared to a net loss of HK$175 million in the previous year, reflecting a 134.3% increase[5]. - Gross profit rose by 24.2% to HK$959 million, with a gross margin improvement of 2.4 percentage points to 57.0%[10][15]. - Profit after income taxes for the period was HK$77 million, compared to a loss of HK$182 million in the same period of 2020[59]. - The Group achieved a gross profit of HK$959 million for the six months ended June 30, 2021, compared to HK$772 million in the same period of 2020, reflecting a gross profit margin improvement[59]. - Operating profit improved significantly to HK$94 million, compared to an operating loss of HK$182 million in the previous year[10]. - The Group recorded an operating profit of HK$94 million for the first half of 2021, compared to an operating loss of HK$182 million in the same period of 2020[18]. - The profit after income taxes for the period was HK$60 million, contributing to a total comprehensive income of HK$51 million[64]. Sales and Market Performance - Online business sales grew by 21.6%, contributing 10.1% to total sales, with non-Mainland China platforms exceeding expectations with a 41.9% increase[12][14]. - Wholesale to franchisees recorded a 21.1% increase, driven by the reopening of stores after the relaxation of movement controls[12]. - Sales in Southeast Asia and Australia increased by 31.4% to HK$531 million, while sales in Mainland China rose by 21.1% to HK$362 million[10]. - Total sales for the six months ended June 30, 2021, were HK$728 million, a decrease of 2.0% compared to HK$743 million in 2020[25]. - Sales in Mainland China reached HK$332 million, a double-digit increase of 11.0% from HK$299 million in 2020, with a net addition of 15 franchised stores[31]. - Total sales for the Group reached HK$1,681 million, with Mainland China contributing HK$362 million, Hong Kong and Macau HK$177 million, Taiwan HK$235 million, Southeast Asia and Australia HK$531 million, Gulf Cooperation Council HK$258 million, and Wholesale to Overseas Franchisees HK$118 million[89]. Cost Management and Expenses - Operating expenses decreased by 2.9% to 54.1% of sales, down from 66.3% in 2020[6]. - Other income and gains decreased by 13.0% to HK$47 million, contributing 2.8% to total sales[10]. - The finance expense was HK$16 million, down from HK$22 million in 2020, mainly due to a reduction in imputed interest on lease liabilities[18]. - Cost of sales increased to HK$726 million in 2021 from HK$629 million in 2020, an increase of approximately 15.5%[100]. - Staff costs rose to HK$293 million in 2021, up from HK$286 million in 2020, reflecting a growth of about 2.4%[100]. Dividends and Shareholder Returns - The Board declared an interim dividend of 6.5 HK cents per share, an increase of 109.7% from 3.1 HK cents per share in 2020[5]. - Proposed dividends for the period were HK$103 million, compared to HK$109 million in the previous year[63]. - The declared interim dividend is 6.5 HK cents per share, an increase from 3.1 HK cents per share in 2020, representing a 109% increase[115]. - The dividend payment is scheduled for September 17, 2021, to shareholders on record as of September 9, 2021[171]. Cash Flow and Liquidity - Cash and bank balances, net of bank loans, were HK$932 million as of June 30, 2021, compared to HK$989 million in the same period of 2020[6]. - Net cash inflow from operating activities was HK$170 million for the first half of 2021, down from HK$231 million in the same period of 2020[68]. - Cash and cash equivalents at the end of the period were HK$1,022 million, a decrease from HK$1,101 million at the end of June 2020[69]. - The current ratio improved to 1.9, based on current assets of HK$1,946 million and current liabilities of HK$1,050 million[46]. - The total cash and bank balances decreased to HK$1,084 million as of June 30, 2021, from HK$1,256 million as of December 31, 2020, a decrease of 13.7%[116]. Inventory and Receivables Management - Inventory turnover on cost decreased by 14 days to 124 days, attributed to increased sales and stable inventory levels[6]. - Trade receivables turnover days decreased by 13 days to 35 days, attributed to better credit control and a strategy to avoid loading franchisees' inventories[50]. - Trade payables turnover days decreased by 18 days to 23 days due to a faster payment schedule to long-term vendors to alleviate financial stress from the Covid-19 pandemic[50]. - The ageing analysis of trade receivables shows that amounts overdue by 0-30 days decreased from HK$162 million to HK$85 million, a reduction of 47.5%[118]. Corporate Governance and Management - The Group's management committee includes the Chairman and Chief Executive, Lau Kwok Kuen, and other executive directors[199]. - The Audit Committee is chaired by Barry John Buttifant, with other members including Kwong Ki Chi and Alison Elizabeth Lloyd[199]. - The Group has maintained a strong corporate governance structure to ensure effective oversight of management[194]. - The Group's unaudited condensed consolidated interim financial information for the six months ended June 30, 2021, has been reviewed by PricewaterhouseCoopers[198]. Future Outlook and Strategic Plans - The Group expects enhanced profitability in the coming years due to better sales, improved gross margins, and further rental reductions[18]. - Management anticipates further increases in the proportion of franchised stores, which currently account for over two-thirds of total stores[30]. - The company plans to search for better store locations with realistic rental arrangements, particularly in Hong Kong and Macau[51]. - The Group's strategy includes managing its retail and distribution segments geographically and by brand, focusing on expansion in the Asia Pacific and Gulf Cooperation Council regions[88].