Financial Performance - In the fiscal year 2019, the total export value of China's knitted garments decreased significantly by 16.5% to $74.6 billion compared to the previous year[16]. - Vietnam's textile and garment export value for the fiscal year 2019 reached $31.2 billion, marking a substantial increase of 16.1% year-on-year[16]. - The group recorded a loss of HKD 300.5 million after accounting for a non-cash impairment of intangible assets amounting to HKD 521.6 million related to the knit upper business[18]. - The company reported a loss attributable to owners of HKD 298.5 million for the year ended March 31, 2019, compared to a profit of HKD 327.0 million for the previous year[48]. - Adjusted net profit decreased from HKD 320.4 million for the year ended March 31, 2018, to HKD 227.4 million for the year ended March 31, 2019, with an adjusted net profit margin dropping from 9.3% to 5.2%[49]. - The group's revenue for the fiscal year 2019 increased by 26.5% to HKD 4,359.1 million, driven by higher sales volume in the knitwear business and a better product mix[18]. - Revenue from the Japanese and Chinese markets grew significantly by 23.3% and 54.8%, respectively[17]. - The overall gross profit decreased by 5.6% to HKD 672.4 million, with a gross margin decline to 15.4% due to rising raw material prices and changes in product mix[18]. - The company's revenue increased by 26.5% from HKD 3,446.4 million for the year ended March 31, 2018, to HKD 4,359.1 million for the year ended March 31, 2019, primarily due to higher average selling prices and increased sales volume of knitted products[25]. - The average selling price of knitted products rose by 13.1% from HKD 98.1 to HKD 111.0 per piece, while the sales volume increased by 7.6% from 34.4 million pieces to 37.0 million pieces[26]. Production and Operations - The utilization rate of the production capacity in Vietnam was improved faster than expected, enhancing production efficiency[15]. - The company has established a fully operational production base in Vietnam, allowing for flexible production planning and allocation for clients[16]. - The overall production costs continued to be under pressure due to the rising prices of raw materials[15]. - The group is expanding its weaving and dyeing fabric production in Vietnam, with a designed capacity of 36 million pounds per year, expected to begin trial production in the second half of the fiscal year 2020[20]. - The group plans to establish a joint venture to open a cashmere yarn factory with a designed capacity of 700 tons per year, expected to start production gradually in the fiscal year 2020[19]. - A new factory is planned to be built in Myanmar, leveraging the experience gained from the successful establishment of the Vietnam production base[19]. - The company aims to provide clients with flexible production arrangements by enhancing design capacity in response to changing procurement trends[15]. - The group aims to enhance product design and material development capabilities while improving production technology and efficiency to boost overall profitability and shareholder returns[20]. Corporate Governance - The company emphasizes the importance of good corporate governance to create value for shareholders[104]. - The board consists of five executive directors, two non-executive directors, and six independent non-executive directors, ensuring a diverse and experienced leadership team[109]. - The company has adopted the corporate governance code and has complied with all mandatory provisions as of March 31, 2019[104]. - The board is responsible for overseeing the management and performance of the company, including financial statements and major transactions[108]. - The company has established various committees to oversee specific functions and responsibilities within the board[108]. - The independent non-executive directors have confirmed their independence based on the criteria set forth in the listing rules[110]. - The company encourages directors to seek independent professional advice when necessary, with costs covered by the company[115]. - The company provides directors and senior management with liability insurance to cover costs arising from legal actions related to corporate activities[131]. Risk Management - The company identifies and assesses significant risks to its business environment and implements necessary measures to manage those risks[149]. - The risk management framework is based on the "three lines of defense" model, involving operational management, risk management functions, and internal audit[146]. - The company has categorized risks into six categories: strategic, financial, operational, compliance, external environment, and talent capital, and regularly assesses their potential impact and likelihood[158]. - The board of directors is responsible for overseeing the effectiveness of the company's risk management and internal control systems, which were deemed adequate and effective for the year ending March 31, 2019[166]. - Increased instances of cyberattacks pose a potential risk to the company's operations[164]. - The company is subject to fluctuations in the USD/CNY exchange rate, which can impact its costs and operating profit margins[163]. Market and Strategic Initiatives - The implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in January 2019 has helped enhance the competitiveness of Vietnam's textile and garment exports[16]. - The company is expanding its market presence in D regions, aiming to capture a larger share of the market[98]. - Recent acquisitions are expected to enhance the company's capabilities and drive future growth, with an estimated contribution of E million in revenue[99]. - The company is investing in R&D, allocating F% of its budget to develop new technologies and improve existing products[94]. - Strategic partnerships are being formed to leverage synergies and enhance competitive positioning in the market[95]. - The company has been recognized for its contributions to labor and community, enhancing its corporate reputation[84]. Financial Position and Cash Flow - The company's net cash position decreased, with excess cash dropping from HKD 96,572,023 in 2018 to HKD 29,930,148 in 2019[38]. - Cash and cash equivalents decreased by HKD 577.4 million, from HKD 1,009.5 million as of March 31, 2018, to HKD 414.8 million as of March 31, 2019[57]. - The net cash used in operating activities for the year ended March 31, 2019, was HKD 8.7 million, primarily due to a pre-tax loss of HKD 275.0 million and an impairment loss of intangible assets of HKD 521.6 million[54]. - The net cash used in investing activities for the year ended March 31, 2019, was HKD 330.2 million, mainly due to the acquisition of property, plant, and equipment amounting to HKD 322.9 million[55]. - The net cash used in financing activities for the year ended March 31, 2019, was HKD 238.5 million, resulting from a net decrease in bank borrowings and finance lease obligations of HKD 247.7 million[56]. - The group's leverage ratio increased from 29.6% as of March 31, 2018, to 42.6% as of March 31, 2019, primarily due to the impairment loss of HKD 521.6 million[58]. Employee and Community Engagement - As of March 31, 2019, the group employed approximately 15,400 full-time employees across China, Vietnam, and Hong Kong, with total employee costs amounting to HKD 919.9 million for the fiscal year[78]. - The group made charitable donations of approximately HKD 2.0 million for the year ended March 31, 2019, down from HKD 2.8 million in 2018[180]. - The company has been recognized as a preferred business partner for clients by improving production allocation between its factories in China and Vietnam[13].
南旋控股(01982) - 2019 - 年度财报