Financial Performance - Revenue for 2020 was HK$1,050,064,000, a decrease of 4.6% from HK$1,100,649,000 in 2019[8]. - Gross profit for 2020 was HK$74,315,000, with a gross profit margin of 7.1%, down from HK$116,255,000 and 10.6% in 2019, representing a decline of 36.1%[8]. - The company reported a loss attributable to equity holders of HK$51,386,000 for 2020, compared to a profit of HK$35,593,000 in 2019[8]. - Basic loss per share for 2020 was HK(7.50) cents, compared to earnings of HK5.14 cents per share in 2019[8]. - Total dividends per share for the year were HK$4.0, a reduction of 33.3% from HK$6.0 in 2019[8]. - For the year ended 31 March 2020, turnover decreased by 4.6% year on year to approximately HK$1,050 million, down from approximately HK$1,101 million in 2019, with a 3.3% decline in business volume and a 2.0% drop in average selling price[104]. - The decline in turnover was attributed to the conservative procurement approach of branded customers, leading to reduced order batch sizes and delays in order placements due to weak purchasing power across target markets[105]. - The Group recorded a net loss of approximately HK$51 million for the year, compared to a profit of approximately HK$36 million in 2019, mainly due to decreased gross profit and increased impairment losses[117]. - Labor costs amounted to approximately HK$318 million, representing 30.3% of turnover, an increase of 1.1 percentage points from 29.2% in 2019[115]. - The average selling price of the Group's sales fell slightly due to clients controlling their R&D budgets, resulting in fewer high-value footwear products being introduced to the market[107]. Strategic Response to COVID-19 - The company plans to adjust its strategies in response to challenges posed by the COVID-19 crisis, focusing on long-term growth and core manufacturing capabilities[21]. - The Group anticipates a dip in growth rates across all markets due to heightened socio-political and economic uncertainties, with declines in apparel and footwear sales expected[29]. - The Group has implemented tighter cost and risk management measures in response to the ongoing crisis, maintaining a focus on prudent financial management[100]. - The Group aims to recover and return to a sustainable growth track following the pandemic[22]. - The Chairman emphasized confidence in the company's long-term strategy and manufacturing competence despite uncertain times[22]. - The Group plans to streamline workforces in anticipation of slower business for the remainder of the financial year, alongside a budgeted decrease in overheads for every operating unit during 2020/21[42]. Operational Adjustments - Manufacturing activities in Zhuhai, PRC, were discontinued in February 2020, with production floors leased out to reduce manufacturing costs and improve gross profit[45]. - The focus remains on enhancing profit margins by raising production efficiency and reallocating production capacity from the People's Republic of China to Southeast Asia[43]. - The company is committed to enhancing production efficiency and has plans to relocate capacity from China to Southeast Asia[46]. - The company is increasing automation and digitalization in its facilities to address labor shortages and improve productivity[53]. - A smart manufacturing system is being phased in to achieve production efficiency and flexibility[56]. - The company is exploring the establishment of a smart supply chain and integrating robotic processes into current production lines[58]. - The Group plans to build new premises to increase production capacity in response to higher utilization rates[157]. - A new plot of land in Vietnam has been secured for long-term expansion purposes[158]. Financial Position and Liquidity - Cash and cash equivalents were approximately HK$444 million at the end of 2020[8]. - The Group maintained a strong liquidity position with net cash of approximately HK$444 million as of March 31, 2020, down from approximately HK$610 million in 2019[128]. - Current and quick ratios improved to 2.9 and 2.3 respectively, compared to 2.7 and 2.3 in 2019, reflecting a healthier financial position[128]. - The Group has no interest-bearing bank borrowings as of March 31, 2020, maintaining a debt-free status[181]. - The Group's financial position remains healthy, with sufficient cash to meet current business needs, allowing it to navigate the challenges posed by the pandemic[100]. - The Group's treasury policies include the cautious use of derivative financial instruments for risk management purposes[188]. Market and Production Insights - The geographical revenue breakdown for 2020 showed that the United States accounted for 41.3%, Europe 28.4%, and Asia 15.6%[17]. - Southeast Asia contributed 89.8% of total production, while mainland China's share dropped to 10.2%[147]. - The Group's manufacturing output in southern Vietnam accounts for 72.6% of total production, up from 68.8% in 2019[161]. - The Group's manufacturing activity in mainland China has decreased to 10.2% of total output, down from 14.8% in 2019, due to rising costs and trade tensions[165]. - Major customers, including Asics and Skechers, contributed 91.9% of total turnover[150]. - Premium casual footwear accounted for 42.7% of turnover, while rugged shoes contributed 34.8%, showing a recovery in popularity[149]. Future Outlook - The Group anticipates that the year ending 31 March 2021 will be even more challenging than the previous year, but it is prepared to face severe headwinds[80]. - The Group is considering the potential for future asset appreciation in the Greater Bay Area, with plans to transform properties into industrial/commercial projects targeting emerging industries[73]. - The Group is committed to building a healthy portfolio of products that can generate higher value and profit margins over the long term despite current adversities[105].
信星集团(01170) - 2020 - 年度财报