Company Overview - The company operates two key production plants located in Dongguan and Heshan, Guangdong Province, China, specializing in paper product manufacturing and printing services[11]. - Major product categories include tabletop games, greeting cards, educational items, and premium packaging, with a strong focus on customized product engineering services[11]. - The company has over 30 years of operating history and has established stable business relationships with major customers in the United States and Europe[11]. - Major OEM customers include an international greeting cards publisher and several multinational children's educational products and toy brands[11]. - The company offers value-adding services and printing solutions for a wide spectrum of products, catering to both OEM customers and individual corporate clients[11]. - The company has a significant presence in the market, with products sold through direct sales and distribution networks as well as online sales channels[11]. - The interim report indicates a strong operational capability to meet mass quantity orders from OEM customers[11]. - The company is committed to expanding its market presence and enhancing its product offerings through continuous innovation and development[11]. Financial Performance - The Group recorded a net profit of HK$32.5 million for the six months ended 30 June 2021, a decrease of approximately 17.2% from HK$39.2 million for the same period in 2020[13]. - Revenue for the Group was approximately HK$589.6 million for 6M2021, representing an increase of approximately 16.6% from HK$505.6 million for 6M2020, primarily due to increased OEM sales[13]. - Revenue from OEM sales increased by approximately HK$58.8 million or 13.4% from approximately HK$437.6 million for 6M2020 to approximately HK$496.4 million for 6M2021[13]. - The Group achieved revenue of approximately HK$589.6 million for the first six months of 2021, representing an increase of approximately 16.6% compared to HK$505.6 million for the same period in 2020[29]. - OEM sales increased from approximately HK$437.6 million for 6M2020 to approximately HK$496.4 million for 6M2021, representing an increase of approximately 13.4%[32]. - Web sales increased from approximately HK$68.0 million for 6M2020 to approximately HK$93.2 million for 6M2021, representing an increase of approximately 37.1%[33]. - The U.S. market accounted for approximately 68.9% of total revenue in 6M2021, increasing from 67.6% in 6M2020, driven by higher demand for greeting cards and puzzles[38]. - The European market contributed approximately 17.4% to total revenue in 6M2021, up from 17.0% in 6M2020, due to economic recovery and new OEM customer orders[38]. Operational Developments - The Group plans to launch a new e-commerce website, MakeToteBags ("MTB"), targeting the global market for personalized bags, expected to be launched in Q3 2021[17]. - The Group is developing a new business-to-business-to-consumer platform, Q P Market Network ("QPMN"), aimed at enhancing market reach and sustainable growth in web sales[21]. - QPMN's first plugin program for customized puzzles is targeted for launch in Q3 2021, allowing online shops to offer personalized puzzles easily[21]. - The Group aims to expand its IT and digital marketing teams to support greater market penetration and diversification[17]. - The Group plans to enhance its digital capabilities by adding a state-of-the-art digital press, HP Indigo 100K, to its Dongguan production plant in the second half of 2021[27]. - The investment in the new digital press is expected to improve the Group's competitiveness and accommodate changing market needs[27]. - The Group has entered into a memorandum of understanding for a 48-year sublease of approximately 40,000 m² of land in Vietnam to establish its first self-owned production plant outside of China[23]. - Construction of the new production plant in Vietnam is expected to commence in Q1 2022, with operations anticipated to start in mid-2023[23]. Cost and Expenses - The Group's cost of sales increased by approximately 19.4% from approximately HK$344.2 million for 6M2020 to approximately HK$411.0 million for 6M2021[41]. - Selling and distribution expenses increased by approximately HK$16.6 million or 36.4%, amounting to approximately HK$62.2 million for 6M2021, mainly due to increased transportation expenses driven by the growth of web sales[49]. - Administrative expenses increased by approximately 20.2% from approximately HK$72.0 million for 6M2020 to approximately HK$86.6 million for 6M2021, attributed to the appreciation of RMB and increased manpower[49]. - The increase in cost of sales was also driven by the increase in raw materials cost and subcontracting charges due to higher sales of greeting cards[41]. - The increase in staff cost in cost of sales was due to the increase in the number of production staff[41]. - The Group engaged subcontractors for assembly work of greeting cards, which contributed to the increase in subcontracting charges[41]. Cash Flow and Liquidity - The net cash generated from operating activities for 6M2021 was approximately HK$27.1 million, a decrease from approximately HK$77.7 million for 6M2020[61]. - The net cash used in investing activities was approximately HK$31.0 million for 6M2021, compared to approximately HK$18.7 million for 6M2020[61]. - The net cash used in financing activities was approximately HK$77.7 million for 6M2021, contrasting with net cash generated from financing activities of approximately HK$31.3 million for 6M2020[61]. - The decrease in cash and cash equivalents as of 30 June 2021 was approximately HK$81.1 million compared to approximately HK$236.7 million as of 31 December 2020, primarily due to the payment of final dividend[58]. - As of June 30, 2021, the Group reported net current assets of approximately HK$186.9 million, a decrease from approximately HK$232.5 million as of 31 December 2020[58]. - Total borrowings and lease liabilities for the Group amounted to approximately HK$80.4 million as of 30 June 2021, down from approximately HK$92.9 million as of 31 December 2020[60]. - The Group is focused on monitoring its gearing ratio and managing liquidity to ensure sufficient cash flow to service its indebtedness[67]. Shareholder Information - Mr. Cheng Wan Wai and Mr. Yeung Keng Wu Kenneth each hold a long position of 310,353,954 shares, representing 58.34% of the total shareholding[104]. - Ms. Liu Shuk Yu Sanny holds 64,706,046 shares, accounting for 12.16% of the total shareholding[106]. - Mr. Chan Wang Tao Thomas has a long position of 19,950,000 shares, representing 3.75% of the total shareholding[106]. - Mr. Mak Chin Pang holds 3,990,000 shares, which is 0.75% of the total shareholding[106]. - As of June 30, 2021, Good Elite holds 310,353,954 shares, representing 58.34% of the total shareholding[130]. - Cypress Spurge holds 64,706,046 shares, representing 12.16% of the total shareholding[126]. - Mr. Cheng Wan Wai and Mr. Yeung Keng Wu Kenneth each beneficially own 50% of Good Elite[131]. - Ms. Liu Shuk Yu Sanny is the sole beneficial owner of Cypress Spurge, holding 100%[134]. Corporate Governance - The Company has complied with the Corporate Governance Code except for the deviation from code provision A.2.1, where the roles of chairman and chief executive officer are held by the same individual, Mr. Cheng Wan Wai[84]. - Mr. Cheng has been the key leadership figure since 1985, primarily involved in formulating business strategies and determining the overall direction of the Group[84]. - The Board believes that having Mr. Cheng in both roles provides strong and consistent leadership, facilitating efficient execution of business strategies[87]. - The Company adopted a Share Option Scheme on December 20, 2019, to provide incentives to selected eligible persons for their contributions to the Group[93]. - As of June 30, 2021, no options were granted under the Share Option Scheme to any Directors, eligible employees, or third parties[93]. - The Company’s shares were listed on the Main Board on January 16, 2020, with 133,000,000 ordinary shares allotted at an offer price of HK$1.18 per share[93]. - The actual net proceeds from the listing were approximately HK$111.9 million after deducting listing expenses[93]. - The Company intends to apply the net proceeds in a manner consistent with the description in the Prospectus, while continuing to evaluate business objectives[93]. - The Board will review the separation of the roles of chairman and chief executive officer at an appropriate time based on the Group's circumstances[87]. Risk Management - The Group's accounting policies remain consistent with those of the annual financial statements for the year ended 31 December 2020[181]. - The adoption of new and amended standards did not have significant impacts on the Group's results and financial position[181]. - There have been no changes in the risk management policies since 31 December 2020[197]. - There was no material change in the contractual undiscounted cash outflows for financial liabilities compared to the financial year end 31 December 2020[197]. - The Group is still assessing the impacts of adopting new standards and amendments in future reporting periods[189].
隽思集团(01412) - 2021 - 中期财报