Financial Performance - The Group's revenue for the year was approximately HK$5,384.9 million, a decrease of 1.7% compared to HK$5,476.2 million in 2020 due to the impact of COVID-19[21]. - Profit attributable to equity holders was HK$721.5 million, representing a decrease of 3.0% from approximately HK$743.5 million in 2020, primarily due to a drop in sales revenue[21]. - The cost of sales was approximately HK$4,523.2 million, a decrease of 0.6% compared to HK$4,551.6 million in 2020, attributed to the decline in revenue[21]. - Total assets increased by 8.3% to HK$5,211.4 million as of March 31, 2021, up from HK$4,813.2 million in 2020, driven by increases in trade receivables and cash[25]. - The average effective tax rate was 12.3%, slightly higher than 11.8% in 2020, with an income tax expense of approximately HK$103.0 million for both years[24]. - Selling and distribution expenses rose to HK$86.3 million from HK$61.8 million in 2020, reflecting an increase in impairment loss on trade receivables[21]. - Finance costs increased by approximately 27.4% to HK$14.6 million, up from HK$11.4 million in 2020, mainly due to a rise in net exchange loss on cash and cash equivalents[22]. - Gross profit margin decreased to 16.0% from 16.9% in 2020, while return on equity fell to 21.9% from 25.6%[30]. - The Group's distributable reserves as of March 31, 2021, amounted to approximately HK$2,145 million, a decrease from HK$2,319 million in 2020[87]. - The Group incurred approximately HK$202 million in capital expenditure during the 2021 financial year, primarily to expand production capacity, compared to HK$153 million in 2020[87]. Operational Developments - The company is establishing a new textile mill in Nam Dinh Province, Vietnam, with a production capacity of 3 million pounds of fabrics per month[16]. - The new factory will implement high environmental protection standards with technical assistance from Toray[16]. - The Group is making progress in establishing a new textile factory in Vietnam, capable of producing 3 million pounds of fabric per month using efficient production technology[20]. - A new factory in Nam Dinh province, Vietnam, is expected to be completed in the second half of 2023 as part of the medium to long-term plan to expand production scale[46]. - The Group realized approximately HK$100 million from the disposal of two underutilized industrial premises in Hong Kong to enhance operational efficiency[46]. Market and Customer Insights - The demand for fabrics for lingerie and inner wear declined, while the demand for fabrics for sportswear increased due to changing customer preferences caused by COVID-19[14]. - Investment in research and development has expanded the customer base, partially offsetting profit margin declines[15]. - The Group is optimistic about the growth of the PRC domestic markets and is expanding its customer base, particularly in the leisure clothing and sportswear sectors[46]. - The number of new customers from both mainland China and overseas has been rising, particularly in the leisure clothing and sportswear sectors[46]. Risk Management - The Group identified key risks for the 2021 Financial Year, including business risk, strategic direction risk, and legal and compliance risk[75]. - The Group faced uncertainties due to slowing global economic growth and unstable foreign exchange and interest rates[66]. - Changes in governmental policies, such as environmental protection regulations, may lead to increased production costs[77]. - The ongoing tension in trade relations between China and the USA, along with the pandemic's impact in India, has led to increased material costs[46]. Corporate Governance - The Company has established an Audit Committee consisting of independent non-executive directors to enhance corporate governance practices[161]. - The Company maintained a public float of more than 25% of the issued shares as required under the Listing Rules[164]. - The Company complied with applicable code provisions and best practices in corporate governance throughout the 2021 Financial Year[172]. - The roles of Chairman and Chief Executive Officer were held by the same individual during the year, which did not comply with the CG Code provision A.2.1[173]. - The Board consists of four Executive Directors, one Non-executive Director, and three Independent Non-executive Directors, ensuring a balanced composition with diverse skills in textiles, management, and finance[185][186]. Employee and Community Engagement - The Group had 4,933 full-time employees as of March 31, 2021, down from 5,197 in 2020[45]. - The Group will continue to provide regular training and competitive remuneration packages to enhance employee motivation[45]. - The Group made charitable donations totaling approximately HK$1,697,000 in the review year, down from HK$2,090,000 in 2020[87]. Shareholder Information - The Board proposed a final dividend of HK22 cents per share for the 2021 Financial Year, compared to HK18 cents in 2020, with a total dividend of HK44 cents per share, unchanged from 2020[45]. - The Company declared an interim dividend of HK$0.22 per share for 2021, compared to HK$0.26 per share in 2020, and proposed a final dividend of HK$0.22 per share, up from HK$0.18 per share in 2020[85]. - Sales to the Group's five largest customers accounted for approximately 70.7% of total sales, with the largest customer contributing about 39.3%[96]. - Purchases from the Group's five largest suppliers represented approximately 47.5% of total purchases, with the largest supplier accounting for about 27.4%[96]. Strategic Outlook - Despite challenges, the management team adopted measures to ensure stable profit and business operations[14]. - The company remains optimistic about long-term development and believes the impact of COVID-19 will subside in the near future[15]. - The management team is focused on innovation to meet changing customer needs[15]. - The Group's management team is focused on overseeing production and operations while formulating business strategies to adapt to the changing global economic landscape[46].
互太纺织(01382) - 2021 - 年度财报