马可数字科技(01942) - 2021 - 中期财报

Company Information This section provides an overview of MOG Holdings Limited's corporate details, including governance structure and key operational contacts - The report provides an overview of MOG Holdings Limited's corporate details, including board members, committee composition, company secretary, authorized representatives, auditors, registered office, and principal place of business[12][13] - The company's principal bankers are CIMB Islamic Bank Berhad and Malayan Banking Berhad[16] Management Discussion and Analysis This section provides a comprehensive review of the Group's business operations, financial performance, and future outlook, including the impact of the COVID-19 pandemic Business Review The Group is one of Malaysia's largest optical product retailers, employing a multi-brand strategy across 10 retail brands to cover high-end, mid-range, and mass markets, with 83 self-owned stores, 10 franchised stores, and 2 licensed retail stores as of September 30, 2020 - The Group is one of Malaysia's largest optical product retailers, offering international, in-house, and manufacturer brands of lenses, frames, contact lenses, and sunglasses[19] - As of September 30, 2020, the Group operated 10 retail brands with a network of 83 self-owned stores, 10 franchised stores, and 2 licensed retail stores[19] - Market growth is driven by increased eye care awareness and rising myopia rates among young people, especially teenagers, due to excessive electronic device use[20] Impact of COVID-19 Pandemic Due to the Malaysian government's Movement Control Order (MCO) implemented on March 18, 2020, all the Group's retail stores were temporarily closed until May 5, when they gradually resumed operations, leading to reduced sales across all stores, particularly those targeting Singaporean tourists in Johor Bahru, though the board believes the Group's overall operations and financial position remain healthy despite reduced revenue and net profit - Due to the Malaysian government's Movement Control Order, all the Group's self-owned retail stores closed from March 18, 2020, and gradually resumed operations from May 5[21] - The pandemic led to reduced mall traffic, affecting all the Group's retail stores, especially those in Johor Bahru targeting Singaporean tourists, which saw significant sales declines due to border restrictions[21][22] - Despite subsequent "Conditional Movement Control Orders" imposing restrictions like shortened operating hours on most stores, the board believes the Group's overall operations and financial position remain healthy and stable[25][26] Outlook and Future Prospects Management anticipates Malaysia's economy to rebound in 2021 with GDP growth of 6.5% to 7.5%, contingent on pandemic control and external demand recovery, and the company remains optimistic, continuing to execute its established business strategies including retail network expansion, store upgrades, brand awareness enhancement, lens production capacity increase, and IT system upgrades - Malaysia's GDP is projected to grow by 6.5% to 7.5% in 2021, with the outlook dependent on pandemic control and external demand recovery[27] - The company will continue to execute five key business strategies: - Expanding its retail network - Upgrading and renovating self-owned retail stores - Enhancing brand awareness and marketing in-house brands - Increasing customized lens production capacity - Upgrading information technology systems[28] Financial Review For the six months ended September 30, 2020, the Group's financial performance was significantly impacted by COVID-19, with total revenue decreasing by 36.3% to RM47.5 million due to lower retail sales, while other income surged due to rent refunds and government subsidies, gross profit margin improved from 63.5% to 66.8% due to higher-margin lens sales, and despite a 28.9% drop in net profit to RM5.6 million, net profit margin increased from 10.5% to 11.7% primarily due to one-off listing expenses in the prior period, with the Group's financial position remaining robust, as evidenced by an improved current ratio from 2.20x to 3.44x and a reduced gearing ratio from 0.30x to 0.16x Revenue The Group's total revenue decreased by 36.3% year-on-year, from RM74.5 million to RM47.5 million, primarily driven by the retail business, which saw a 36.2% reduction to RM46.9 million due to the closure of all retail stores during the Movement Control Order (March 18 to May 4, 2020), leading to lower sales across all optical product categories Revenue Performance | Period | Revenue (RM million) | YoY Change | | :--- | :--- | :--- | | Six months ended September 30, 2019 | 74.5 | - | | Six months ended September 30, 2020 | 47.5 | -36.3% | Other Income Other income significantly increased by 511.7% year-on-year, from RM0.9 million to RM5.8 million, primarily due to mall rent refunds, government wage subsidies, and gains from the disposal of investment properties - Other income surged by 511.7% year-on-year, primarily driven by rent refunds, wage subsidies, and gains from the disposal of investment properties[33] Gross Profit and Gross Profit Margin Gross profit decreased by 33.0% year-on-year to RM31.7 million, mainly due to reduced revenue, however, gross profit margin improved from 63.5% to 66.8%, primarily attributable to a higher proportion of sales from high-margin lenses Gross Profit and Gross Profit Margin Performance | Period | Gross Profit (RM million) | Gross Profit Margin | | :--- | :--- | :--- | | Six months ended September 30, 2019 | 47.3 | 63.5% | | Six months ended September 30, 2020 | 31.7 | 66.8% | Net Profit and Net Profit Margin Net profit decreased by 28.9% year-on-year, from RM7.8 million to RM5.6 million, however, net profit margin increased from 10.5% to 11.7%, mainly because the prior period included RM4.3 million in one-off listing expenses, which lowered the comparative base Net Profit and Net Profit Margin Performance | Period | Net Profit (RM million) | Net Profit Margin | | :--- | :--- | :--- | | Six months ended September 30, 2019 | 7.8 | 10.5% | | Six months ended September 30, 2020 | 5.6 | 11.7% | Liquidity, Financial Resources, and Capital Structure As of September 30, 2020, the Group's financial position remained robust, with bank balances and cash increasing to RM66.7 million, the current ratio significantly improving from 2.20x to 3.44x due to increased proceeds from listing, and the gearing ratio decreasing from 0.30x to 0.16x due to increased equity, indicating an optimized capital structure - Bank balances and cash amounted to approximately RM66.7 million (March 31, 2020: RM34.1 million)[43] - The current ratio increased from 2.20x (March 31, 2020) to 3.44x, primarily due to increased cash and fixed deposits from listing proceeds[45] - The gearing ratio decreased from 0.30x (March 31, 2020) to 0.16x, primarily due to an increase in total equity after listing[50] Use of Proceeds The company listed on April 15, 2020, with net proceeds of approximately HKD91.1 million (RM50.3 million), and as of September 30, 2020, RM4.3 million had been utilized, primarily for enhancing brand awareness, upgrading IT systems, and supplementing general working capital, with the utilization of funds for planned store openings and optical laboratory development delayed due to COVID-19 related retail industry closures and restrictions Use of Proceeds and Utilization (As of September 30, 2020) | Purpose | Planned Net Amount (RM million) | Utilized Amount (RM million) | Unutilized Amount (RM million) | | :--- | :--- | :--- | :--- | | Establishment of 36 self-owned retail stores | 28.1 | - | 28.1 | | Upgrading and renovation of 25 self-owned retail stores | 5.1 | - | 5.1 | | Enhancing brand awareness and marketing | 4.7 | 0.3 | 4.4 | | Development of optical laboratory | 5.5 | - | 5.5 | | Upgrading IT systems | 4.3 | 1.4 | 2.9 | | General working capital | 2.6 | 2.6 | - | | Total | 50.3 | 4.3 | 46.0 | - The actual application of net proceeds was slower than expected, primarily due to obstacles, closures, and movement restrictions in the retail industry caused by the COVID-19 pandemic[74] Dividends The Board declared a special dividend of HKD0.025 per ordinary share, totaling HKD12,500,000, on September 28, 2020, and no interim dividend is recommended for the six months ended September 30, 2020, apart from this special dividend - A special dividend of HKD0.025 per share was declared, totaling HKD12,500,000[61] - The Board does not recommend the payment of an interim dividend[62] Corporate Governance and Other Information This section details the company's adherence to corporate governance practices, outlines directors' and major shareholders' interests, and describes the share option scheme Corporate Governance Practices The company has complied with the Corporate Governance Code set out in Appendix 14 of the Listing Rules throughout the reporting period (from its listing on April 15, 2020, to September 30, 2020), and has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, with all directors confirming full compliance - The company has applied and complied with the principles of the Corporate Governance Code from its listing date to September 30, 2020[79] - All directors confirmed full compliance with the Model Code for Securities Transactions by Directors of Listed Issuers during the reporting period[80] Directors' and Major Shareholders' Interests As of September 30, 2020, controlling shareholders Dato' Frankie Ng, Datin Bernice Low, and Dato' Henry Ng are considered parties acting in concert, collectively holding 75% of the company's issued shares indirectly through their respective wholly-owned entities, Jia Lian, Jia Fu, and Tian Le Limited, with the report detailing the shareholdings of each director and major shareholder - Controlling shareholders Dato' Frankie Ng, Datin Bernice Low, and Dato' Henry Ng, acting in concert, collectively hold 75% of the company's issued share capital[88][89] Share Option Scheme The company adopted a share option scheme on March 23, 2020, with a 10-year validity, allowing for a maximum of 50,000,000 shares to be issued, representing 10% of the issued share capital, and no share options have been granted, exercised, cancelled, or lapsed since its adoption up to the end of the reporting period - The company adopted a share option scheme, with a total of 50,000,000 shares available for issue, representing 10% of the issued share capital[97] - No share options have been granted, exercised, cancelled, or lapsed since the adoption of the share option scheme[98] Financial Statements This section presents the condensed consolidated financial statements, including the statement of profit or loss, financial position, changes in equity, cash flows, and accompanying notes Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended September 30, 2020, the company recorded revenue of RM47.5 million, a 36.3% year-on-year decrease, and gross profit of RM31.7 million, a 33.0% year-on-year decrease, but net profit was RM5.6 million, only a 28.9% decrease from RM7.8 million in the prior period due to higher one-off listing expenses in the comparative period, with basic earnings per share at RM0.0081 Condensed Consolidated Statement of Profit or Loss (Six Months Ended September 30) | Item (RM thousand) | 2020 (Unaudited) | 2019 (Audited) | | :--- | :--- | :--- | | Revenue | 47,451 | 74,488 | | Gross profit | 31,686 | 47,289 | | Profit before tax | 7,626 | 11,411 | | Profit for the period | 5,566 | 7,833 | | Profit for the period attributable to owners of the Company | 3,988 | 6,168 | | Basic and diluted earnings per share (RM cents) | 0.81 | 1.64 | Condensed Consolidated Statement of Financial Position As of September 30, 2020, the company's total assets significantly increased to RM173.9 million from RM109.1 million on March 31, 2020, primarily due to increased cash and deposits post-listing, with total liabilities at RM52.2 million, and total equity rising from RM63.6 million to RM121.7 million mainly from the listing share issuance, resulting in a substantial improvement in net current assets from RM43.9 million to RM104.0 million, indicating enhanced liquidity Summary of Condensed Consolidated Statement of Financial Position | Item (RM thousand) | September 30, 2020 (Unaudited) | March 31, 2020 (Audited) | | :--- | :--- | :--- | | Non-current assets | 27,285 | 28,744 | | Current assets | 146,587 | 80,399 | | Total assets | 173,872 | 109,143 | | Current liabilities | 42,637 | 36,479 | | Non-current liabilities | 9,585 | 9,061 | | Total liabilities | 52,222 | 45,540 | | Total equity | 121,650 | 63,603 | Condensed Consolidated Statement of Changes in Equity For the six months ended September 30, 2020, the company's total equity increased from RM63.6 million at the beginning of the period to RM121.7 million at the end, primarily driven by a net increase of approximately RM60.8 million from the global offering (IPO) share issuance (net of costs) and RM5.6 million in profit for the period, while dividend payments reduced equity by RM8.1 million - Total equity at the beginning of the period was RM63,603 thousand[134] - Total comprehensive income for the period was RM5,364 thousand[134] - Transactions with owners, including share issuance and dividend payments, resulted in a net increase in equity of RM52,683 thousand[134] - Total equity at the end of the period was RM121,650 thousand[134] Condensed Consolidated Statement of Cash Flows For the six months ended September 30, 2020, net cash generated from operating activities was RM13.9 million, net cash used in investing activities was RM34.1 million primarily for increased fixed deposits, and net cash generated from financing activities was RM53.2 million, mainly from global offering (IPO) proceeds net of transaction costs and dividends paid, resulting in a net increase of RM33.0 million in cash and cash equivalents, reaching RM66.7 million at period-end Summary of Condensed Consolidated Statement of Cash Flows (Six Months Ended September 30) | Item (RM thousand) | 2020 (Unaudited) | 2019 (Audited) | | :--- | :--- | :--- | | Net cash from operating activities | 13,867 | 21,817 | | Net cash used in investing activities | (34,080) | (1,274) | | Net cash from (used in) financing activities | 53,179 | (14,019) | | Net increase in cash and cash equivalents | 32,966 | 6,524 | | Cash and cash equivalents at end of period | 66,724 | 13,059 | Notes to the Condensed Consolidated Financial Statements The notes to the financial statements provide detailed explanations of the company's accounting policies, segment information, various income and cost items, assets and liabilities, related party transactions, and the impact of the COVID-19 pandemic, highlighting that the company's business is divided into two segments: sales of optical products and franchise/license management, with sales to retail customers being the primary revenue source, other income significantly increased due to government subsidies and rent concessions, the listing proceeds altered the capital structure, and while the pandemic negatively impacted operations, related rent concessions were obtained - The Group has early adopted the COVID-19-related rent concessions amendment to IFRS 16, recognizing rent concessions received in profit or loss for the current period[153] - The Group's business is divided into two reportable segments: sales of optical products and franchise and license management, with sales of optical products being the primary source of revenue and profit[160][161][163] - The COVID-19 pandemic led to a significant decrease in turnover and operating profit for the six months ended September 30, 2020, compared to the prior period, but the Group successfully obtained COVID-19-related rent concessions[407]