都市丽人(02298) - 2019 - 年度财报

Company Overview Company Information Urban Beauty (China) Holdings Limited's board, listing, offices, and key professional service providers are outlined - The company's board comprises executive, non-executive, and independent non-executive directors, with Mr. Zheng Yaonan as Chairman[4] - The company's shares are listed on The Stock Exchange of Hong Kong Limited under stock code 2298[4] - The registered office is in the Cayman Islands, headquarters in Dongguan, Guangdong Province, and Hong Kong business address on Connaught Road Central[4] - PricewaterhouseCoopers is the company's auditor, with principal bankers including Bank of China (Hong Kong) Limited and Industrial and Commercial Bank of China Limited[4] Financial Highlights Urban Beauty's key financial indicators for the year ended December 31, 2019, show significant declines in revenue and profit, a substantial drop in gross profit margin, and a recorded loss 2019 vs 2018 Financial Highlights Comparison | Indicator | 2019 (RMB thousands) | 2018 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 4,081,885 | 5,096,453 | -19.9% | | Operating (Loss)/Profit | (1,389,193) | 483,978 | From profit to loss | | (Loss)/Profit Attributable to Owners of the Company | (1,297,812) | 378,229 | From profit to loss | | Gross Profit Margin | 22.6% | 41.7% | -19.1% | | Operating (Loss)/Profit Margin | -34.0% | 9.5% | -43.5% | | (Loss)/Profit Margin Attributable to Owners of the Company | -31.8% | 7.4% | -39.2% | | (Loss)/Earnings Per Share – Basic | (57.76) RMB cents | 17.15 RMB cents | From profit to loss | | Final Dividend Per Share | – | 3.75 HK cents (3.20 RMB cents) | No dividend declared | | Special Final Dividend Per Share | – | 6.20 HK cents (5.30 RMB cents) | No dividend declared | Management Report and Analysis Chairman's Statement The company faced a challenging 2019 due to global economic slowdowns and domestic retail market shifts, leading to operational issues and a comprehensive transformation plan - Global economic growth slowed in 2019, trade barriers increased, and the Chinese retail market faced evolving consumption patterns, diversified consumer preferences, and technological innovation challenges[8] - The company experienced uneven retail and replenishment capabilities among franchisees, diversified sales channels, and inventory accumulation in both self-operated and franchised stores due to product quality and structural adjustments[9] - The previous strategy focusing on fast-fashion, sexy intimate wear failed to meet the demand for practical, functional, and cost-effective products from most female consumers, impairing store productivity and profitability[9] - The company appointed Mr. Vincent H.C. Siu as the new CEO and engaged Boston Consulting Group to formulate a transformation plan, including product strategy adjustments, channel expansion, inventory clearance, and cost control[12] - The company recognized substantial one-off accounting provisions, including approximately RMB 738 million for inventory impairment, RMB 395 million for trade receivables impairment and write-offs, and RMB 52 million for loss-making store closure costs and renovation provisions[16] Management Discussion and Analysis This section analyzes the company's 2019 financial performance, highlighting a 19.9% revenue decrease and a significant drop in gross profit margin due to inventory impairment, alongside strategic adjustments and a net cash position - Total revenue decreased by 19.9% to approximately RMB 4.082 billion in 2019, primarily due to adverse factors mentioned in the Chairman's Statement[18] 2019 Revenue by Sales Channel Comparison | Sales Channel | 2019 (RMB thousands) | 2019 (%) | 2018 (RMB thousands) | 2018 (%) | | :--- | :--- | :--- | :--- | :--- | | Sales to franchisees | 1,950,422 | 47.8 | 2,800,790 | 55.0 | | Retail | 1,378,873 | 33.8 | 1,494,518 | 29.3 | | E-commerce | 627,481 | 15.4 | 712,450 | 14.0 | | Raw material trading | 125,109 | 3.0 | 88,695 | 1.7 | | Total Revenue | 4,081,885 | 100.0 | 5,096,453 | 100.0 | 2019 Revenue by Product Category Comparison | Product Category | 2019 (RMB thousands) | 2019 (%) | 2018 (RMB thousands) | 2018 (%) | | :--- | :--- | :--- | :--- | :--- | | Bras | 1,872,085 | 45.9 | 2,504,239 | 49.1 | | Underwear | 745,952 | 18.3 | 819,577 | 16.1 | | Sleepwear and loungewear | 577,739 | 14.1 | 651,553 | 12.8 | | Thermal wear | 358,046 | 8.8 | 529,315 | 10.4 | | Raw material trading | 125,109 | 3.0 | 88,695 | 1.7 | | Others | 402,954 | 9.9 | 503,074 | 9.9 | | Total Revenue | 4,081,885 | 100.0 | 5,096,453 | 100.0 | - Gross profit margin significantly decreased to 22.6% (2018: 41.7%), primarily due to a one-off write-down of approximately RMB 738 million for old inventory; excluding this, the gross profit margin would be approximately 40.7%[26] - Selling and marketing expenses increased by 9.6% to approximately RMB 1.613 billion, mainly due to higher depreciation and amortization and increased advertising and promotional activities[27] - General and administrative expenses increased by 16.7% to approximately RMB 304 million, primarily due to higher consulting service fees and provisions for renovation costs of loss-making stores[28] 2019 Working Capital Management Indicators Comparison | Indicator | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Average inventory turnover days | 107 days | 140 days | Decreased by 33 days | | Average trade receivables turnover days | 49 days | 49 days | Unchanged | | Average trade payables turnover days | 68 days | 80 days | Decreased by 12 days | - The total number of stores in the distribution network decreased from 7,305 in 2018 to 5,970 in 2019, comprising 1,269 self-operated stores and 4,701 franchised stores[49] - In 2020, the company will venture into personal hygiene products, launching high-quality masks and antibacterial intimate wear, and plans to introduce air disinfectant purifiers and sprays to expand its product portfolio[52] Directors' Report The Directors' Report confirms the company's core business in intimate wear design, R&D, and sales, reviews 2019 performance, and details dividend policy, share repurchases, key stakeholders, and director interests - The company's principal business is the design, research, development, and sale of self-branded intimate wear products, ranking as China's largest intimate wear brand enterprise by retail sales value in 2019[194] - No interim dividend was paid in 2019, and the Board did not recommend a final dividend or special final dividend (both were paid in 2018)[197] - The company has adopted a dividend policy, with recommendations considering financial results, distributable reserves, shareholder interests, working capital needs, future expansion plans, taxation, gearing ratio, financial covenants, and overall business and economic conditions[200] - In 2019, the company repurchased and cancelled 6,567,000 shares on the Stock Exchange for a total consideration of approximately HK$15,653,000[207] - In 2019, the company's largest customer and top five customers accounted for 0.6% and 2.7% of turnover, respectively, while the largest supplier and top five suppliers accounted for 2.9% and 11.0% of purchases, respectively[211] - Directors including Mr. Zheng Yaonan, Ms. Wu Xiaoli, Mr. Zhang Shengfeng, Mr. Lin Zonghong, Mr. Cheng Zuming, Mr. Wen Baoma, and Dr. Lyu Hongde hold interests in the company's shares, with Mr. Zheng Yaonan and his spouse Ms. Wu Xiaoli collectively holding approximately 34.19% of the shares[222][224] - Post-reporting period, the COVID-19 pandemic led to the closure of most stores in February and early March, significantly reducing retail sales, but most stores have since reopened, and no material adverse impact on accounting items has been identified as of the report date[270] Corporate Governance and Social Responsibility Biographies of Directors and Senior Management This section details the backgrounds, experiences, and key responsibilities of the company's executive, non-executive, and independent non-executive directors, as well as senior management, highlighting their industry expertise and leadership - Mr. Zheng Yaonan serves as Chairman of the Board, Executive Director, and Chairman of the Nomination Committee, possessing over two decades of experience in intimate wear manufacturing and sales, responsible for the Group's strategic planning, business development, and corporate management[54] - Mr. Vincent H.C. Siu joined the Group as Chief Executive Officer in August 2019, previously serving as Senior Vice President of Commercial for Adidas Greater China, and is responsible for managing the Group's intimate wear business and strategic development[69] - The senior management team includes Mr. Zhang Shengfeng (responsible for design, R&D, and procurement), Ms. Wu Xiaoli (human resources and administration), Mr. Lo Hong Shing (Chief Financial Officer), and Mr. Yuasa Tsutomu (Chief Technology Officer), covering all critical operational functions[55][69][70][73] Corporate Governance Report The report details the company's compliance with the Corporate Governance Code in 2019, covering board composition, diversity policy, committee functions, director development, and securities trading, confirming separation of Chairman and CEO roles - The company complied with the Corporate Governance Code's requirement for separation of Chairman and Chief Executive Officer functions following Mr. Vincent H.C. Siu's appointment as CEO on August 19, 2019[78][79] - The Board comprises 11 directors, including 3 executive, 4 non-executive, and 4 independent non-executive directors, and has adopted a board diversity policy considering gender, age, culture, educational background, and professional experience[79][81] - The company established Audit, Nomination, Remuneration, and Risk Management Committees, each with clear terms of reference and regular reporting to the Board[85] - The Board confirmed maintaining appropriate and effective risk management and internal control systems, with no material issues affecting financial position or operating results identified[106][109] - The company is committed to effective communication with shareholders and investors, having adopted a shareholder communication policy and providing information via its website and investor meetings[111][114][116] Environmental, Social and Governance Report This report details the company's ESG commitments and practices, including employee welfare, supply chain management, product responsibility, anti-corruption, environmental protection, and community investment, demonstrating a balance between economic success and stakeholder expectations - The company's vision is to be a global mass-market intimate wear brand, its mission is to care for customers and create healthy lifestyles, its core values are accountability, innovation, efficiency, and win-win, and its strategic core is to promote the "Refined + Core" strategy[123] - The company highly values its employees, promoting open and trusting work relationships, fair talent selection, and providing career development paths and training; in 2019, the total workforce was 3,500 employees, with an average monthly turnover rate of 2.39%[129][130] - The company has obtained ISO 45001:2018 Occupational Health and Safety Management System certification and reported no work-related injuries or fatalities during the reporting year[136] - In 2019, the company's supplier base decreased from 175 to 106, with strict supplier screening, evaluation, and communication processes established to ensure product quality and ethical standards[142][147] - The company has obtained ISO 9001:2015 Quality Management System certification and established internal physical and chemical laboratories accredited by the China National Accreditation Service for Conformity Assessment (CNAS) to ensure product quality and safety[153] - The company maintains a zero-tolerance policy towards any unethical behavior, implementing anti-corruption policies, a whistleblowing hotline, and cooperating with law enforcement to ensure ethical business operations[154][155] - The company has achieved ISO 14001:2015 Environmental Management System certification and implemented various measures to reduce emissions, conserve resources (e.g., LED lighting, efficient water taps, electronic records replacing paper receipts), and protect the environment[156][157][159][160][162] 2019 vs 2018 Environmental Key Performance Indicators Comparison | Environmental Key Performance Indicator | Unit | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | :--- | | Nitrogen oxides emissions | tonnes | 0.406 | 0.860 | -52.8% | | Sulfur oxides emissions | tonnes | 0.000730 | 0.00124 | -41.1% | | Particulate matter emissions | tonnes | 0.0399 | 0.0846 | -52.9% | | Total greenhouse gas emissions | tonnes (CO2) | 5,554 | 6,274 | -11.4% | | Total energy consumption | Gigajoules | 25,090 | 29,009 | -13.5% | | Water consumption | cubic meters | 176,937 | 193,471 | -8.5% | | Packaging materials | tonnes | 271 | 293 | -7.5% | - In 2019, the company donated approximately RMB 828 thousand and contributed 550 volunteer hours to community investment, undertaking 8 volunteer projects covering community care, health, and sports promotion[171] Financial Statements Independent Auditor's Report PricewaterhouseCoopers issued an unmodified opinion on Urban Beauty's 2019 consolidated financial statements, affirming their fair presentation of the company's financial position, performance, and cash flows in compliance with IFRS and Hong Kong Companies Ordinance, with inventory and trade receivables impairment highlighted as key audit matters - PricewaterhouseCoopers issued an unmodified opinion on the Group's 2019 consolidated financial statements[273] - Key audit matters included assessing the carrying value of inventories (total inventories of RMB 1.467 billion, impairment provision of RMB 787 million) and assessing the impairment provision for trade receivables (total of RMB 349 million, impairment provision of RMB 73 million)[278][282] - The auditor evaluated the assumptions and methods applied by management in calculating inventory and trade receivables impairment provisions, deeming them supported by available audit evidence[278][283] Consolidated Statement of Profit or Loss and Other Comprehensive Income In 2019, the company's revenue decreased year-on-year, operating activities shifted from profit to a substantial loss, and net profit also turned into a significant loss, driven by a sharp decline in gross profit and a large increase in financial asset impairment losses, resulting in a considerable total comprehensive loss 2019 vs 2018 Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data | Indicator | 2019 (RMB thousands) | 2018 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 4,081,885 | 5,096,453 | -19.9% | | Cost of sales | (3,159,299) | (2,972,889) | +6.3% | | Gross profit | 922,586 | 2,123,564 | -56.5% | | Selling and marketing expenses | (1,612,604) | (1,471,006) | +9.6% | | General and administrative expenses | (304,106) | (260,589) | +16.7% | | Net impairment losses on financial assets | (419,550) | (4,492) | +9232.8% | | Operating (loss)/profit | (1,389,193) | 483,978 | From profit to loss | | (Loss)/profit before income tax | (1,406,538) | 502,282 | From profit to loss | | (Loss)/profit for the year | (1,299,792) | 379,609 | From profit to loss | | Total comprehensive (loss)/income for the year | (1,291,850) | 414,042 | From profit to loss | | Basic (loss)/earnings per share | (57.76) RMB cents | 17.15 RMB cents | From profit to loss | Consolidated Statement of Financial Position As of December 31, 2019, the company's total assets and equity significantly decreased, with notable reductions in current assets like inventories and trade receivables, while non-current assets increased due to right-of-use assets from new lease accounting standards, and total liabilities rose, particularly current lease liabilities and non-current borrowings 2019 vs 2018 Consolidated Statement of Financial Position Key Data | Indicator | 2019 (RMB thousands) | 2018 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Assets | | | | | Non-current assets | 1,826,313 | 1,121,244 | +62.9% | | Current assets | 2,513,726 | 4,294,956 | -41.5% | | Total Assets | 4,340,039 | 5,416,200 | -19.8% | | Equity | | | | | Share capital and reserves attributable to owners of the Company | 2,536,623 | 4,047,549 | -37.3% | | Non-controlling interests | 15,989 | 15,056 | +6.2% | | Total Equity | 2,552,612 | 4,062,605 | -37.1% | | Liabilities | | | | | Current liabilities | 1,314,192 | 1,339,861 | -1.9% | | Non-current liabilities | 473,235 | 13,734 | +3345.8% | | Total Liabilities | 1,787,427 | 1,353,595 | +32.0% | - Inventories decreased from RMB 1.165 billion to RMB 680 million, and trade receivables decreased from RMB 826 million to RMB 276 million, primarily due to significant impairment provisions[305] - Right-of-use assets increased by RMB 517 million due to the adoption of IFRS 16[305] - Total borrowings increased from RMB 184 million to RMB 455 million, with non-current borrowings increasing from zero to RMB 305 million[309] Consolidated Statement of Changes in Equity In 2019, the company's total equity significantly decreased, mainly due to the loss for the year and dividends paid, while share premium reduced from dividend payments and share repurchases, and other reserves changed due to share award schemes and exchange differences 2019 vs 2018 Consolidated Statement of Changes in Equity Key Data | Indicator | 2019 (RMB thousands) | 2018 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Total equity at beginning of year | 4,062,605 | 3,356,113 | +21.0% | | Total comprehensive (loss)/income for the year | (1,291,850) | 414,042 | From profit to loss | | Dividends paid | (196,706) | (115,725) | +69.9% | | Shares repurchased and cancelled in the market | (13,454) | (29,080) | -53.7% | | Equity-settled compensation | 7,944 | 5,607 | +41.7% | | Shares purchased for share award scheme | (18,840) | (1,121) | +1580.6% | | Total equity at end of year | 2,552,612 | 4,062,605 | -37.1% | - The loss attributable to owners of the company in 2019 was RMB 1,297,812 thousand, leading to a substantial reduction in retained earnings[311] - Share premium decreased due to dividends paid of RMB 196,706 thousand and shares repurchased and cancelled in the market of RMB 13,011 thousand[311] Consolidated Statement of Cash Flows In 2019, the company's operating cash flow shifted from net inflow to net outflow, investment cash outflow decreased, and financing cash flow moved from net inflow to net outflow, resulting in a net decrease in cash and cash equivalents 2019 vs 2018 Consolidated Statement of Cash Flows Key Data | Indicator | 2019 (RMB thousands) | 2018 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Net cash (used in)/generated from operating activities | (247,929) | 50,797 | From inflow to outflow | | Net cash used in investing activities | (215,902) | (236,968) | -8.9% | | Net cash (used in)/generated from financing activities | (193,296) | 235,317 | From inflow to outflow | | Net (decrease)/increase in cash and cash equivalents | (657,127) | 49,146 | From increase to decrease | | Cash and cash equivalents at end of year | 854,164 | 1,496,163 | -42.8% | - Net cash outflow from operating activities was primarily influenced by the loss before income tax of RMB 1.407 billion and changes in working capital, such as decreases in trade receivables and inventories[580] - Net cash outflow from financing activities was mainly due to dividend payments of RMB 197 million, loan repayments of RMB 199 million, and lease payments of RMB 218 million, despite receiving RMB 470 million in loan proceeds[318] Notes to the Consolidated Financial Statements The notes provide detailed explanations and supplementary information on the company's financial position, performance, and cash flows, covering accounting policies, risk management, estimates, segment information, revenue and expense breakdowns, balance sheet items, equity changes, cash flow notes, related party transactions, subsidiary information, and post-reporting period events - The company's functional currency is HK dollars, while its main Chinese subsidiaries' functional currency is RMB, and the financial statements are presented in RMB[346] - The initial adoption of IFRS 16 Leases on January 1, 2019, led to the recognition of lease liabilities and right-of-use assets, with adjustments made to the opening statement of financial position[326][335] - Post-reporting period, the COVID-19 pandemic significantly impacted the company's retail sales in February and early March, but most stores have resumed operations, and the company is assessing its impact on financial position and operating results[614] 1 General Information This section introduces the company's registration details, listing venue, principal activities, ultimate holding company, and the presentation currency and approval date of the financial statements - The company was incorporated in the Cayman Islands on January 28, 2014, and its ordinary shares were listed on the Main Board of the Stock Exchange of Hong Kong on June 26, 2014[320] - The principal business involves the design, marketing, and sale of intimate wear products in China[320] - The ultimate holding company is Yao Li Investment Holdings Limited, controlled by Mr. Zheng Yaonan[320] - The consolidated financial statements are presented in RMB and were approved for issue by the Board of Directors on March 25, 2020[321] 2 Summary of Significant Accounting Policies This section outlines the Group's key accounting policies for financial statement preparation, including newly adopted and revised standards (especially IFRS 16 Leases), consolidation principles, asset measurement, revenue recognition, employee benefits, and share-based payments - The Group first adopted IFRS 16 Leases on January 1, 2019, applying simplified transition provisions without restating 2018 comparative figures[326] - Following IFRS 16 adoption, leases previously classified as operating leases resulted in the recognition of lease liabilities and right-of-use assets, with RMB 152,132 thousand in lease liabilities recognized on January 1, 2019[326][330] - The principle of consolidation requires full consolidation of entities over which the Group has control[337] - Inventories are stated at the lower of cost and net realizable value, with cost determined using the weighted average method[369] - Revenue recognition is primarily based on the point at which control of products is transferred, including sales to franchisees, retail sales, and e-commerce transactions[407][411] 3 Financial Risk Management This section describes the market risks (foreign exchange, interest rate, price), credit risk, and liquidity risk faced by the Group, along with the company's policies and methods for managing these risks - The Group's primary transactions are denominated in RMB, resulting in no significant foreign exchange risk; borrowings are at fixed interest rates, thus not exposed to cash flow interest rate risk[433][434] - Credit risk is managed by extending credit only to franchisees with good credit records, collecting deposits, and placing bank balances with reputable financial institutions[436][438] - As of December 31, 2019, the Group was in a net cash position, with total bank balances, cash, and current investments exceeding bank borrowings by approximately RMB 43,339 thousand[443] - Fair value estimates for financial instruments use Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs) valuation hierarchies[446] 4 Critical Accounting Estimates and Judgements This section discloses areas requiring significant management estimates and judgments in preparing financial statements, including inventory net realizable value, impairment of financial and non-financial assets, current and deferred income tax, and fair value of certain financial assets - Estimates for inventory net realizable value are based on current market conditions and past sales experience, subject to change due to customer preferences and competition[453] - Impairment of financial assets, particularly trade receivables, relies on assumptions about default risk and expected loss rates, considering macroeconomic factors[454] - Assessing impairment for non-financial assets requires judgment and estimation to determine their recoverable amounts[455] - Recognition of income tax provisions and deferred tax assets involves significant judgment, which may be adjusted if final tax outcomes differ from initial records[456] 5 Segment Information The Group operates as a single operating segment, primarily engaged in the design, marketing, and sale of intimate wear products, with all major revenue derived from China - The Group operates as a single operating segment, with the Executive Directors serving as the chief operating decision makers[459] - All major revenue is derived from China, and no single external customer accounted for more than 10% of revenue in 2019[460][461] 6 Revenue This section details the Group's revenue breakdown by sales channel and discloses contract liabilities related to sales to franchisees and raw material trading 2019 vs 2018 Revenue by Sales Channel | Sales Channel | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Sales to franchisees | 1,950,422 | 2,800,790 | | Retail | 1,378,873 | 1,494,518 | | E-commerce | 627,481 | 712,450 | | Raw material trading | 125,109 | 88,695 | | Total Revenue | 4,081,885 | 5,096,453 | 2019 vs 2018 Contract Liabilities | Contract Liability Type | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Contract liabilities related to sales to franchisees | 108,227 | 77,621 | | Contract liabilities related to raw material trading | 25,448 | 8,142 | | Total Contract Liabilities | 133,675 | 85,763 | - Revenue recognized from opening contract liabilities in 2019 was approximately RMB 85,763 thousand[462] 7 Other Income This section lists the Group's other income sources for 2019, primarily including government grants, logistics, warehousing, and delivery income, and software usage fees, with a significant decrease in government grants 2019 vs 2018 Other Income | Income Source | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Government grants | 13,559 | 41,268 | | Logistics, warehousing and delivery income | 10,252 | 10,564 | | Software usage fee income | 1,290 | 2,462 | | Franchise fee income | 768 | 1,489 | | Investment income from financial assets at fair value through profit or loss | 157 | 8,885 | | Dividends received from financial assets at fair value through other comprehensive income | – | 14,000 | | Others | 9,893 | 12,269 | | Total | 35,919 | 90,937 | - Government grants primarily originated from various local governments in China, with no unfulfilled conditions or contingencies[464] 8 Other (Losses)/Gains – Net This section discloses the Group's net other (losses)/gains for 2019, primarily comprising foreign exchange losses, fair value losses on financial assets at fair value through profit or loss, and losses from the disposal of property, plant and equipment and a subsidiary 2019 vs 2018 Other (Losses)/Gains – Net | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Net foreign exchange (losses)/gains | (2,445) | 7,293 | | Fair value losses on financial assets at fair value through profit or loss | (2,334) | (523) | | Net loss on disposal of property, plant and equipment | (2,522) | (1,206) | | Net loss on disposal of a subsidiary | (4,137) | – | | Total | (11,438) | 5,564 | 9 Expenses by Nature This section details the Group's expenses by nature for 2019, including cost of inventories, employee benefits, store operating expenses, marketing and promotion, depreciation and amortization, and inventory impairment provisions, showing a significant increase in inventory impairment provisions 2019 vs 2018 Expenses by Nature | Expense Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Cost of inventories recognized as cost of sales | 2,381,264 | 2,895,327 | | Employee benefit expenses | 399,820 | 376,097 | | Operating expenses of stores under joint operation arrangements | 605,313 | 677,488 | | Marketing and promotion expenses | 190,141 | 160,963 | | Depreciation and amortization | 241,251 | 87,602 | | Inventory impairment provision | 737,912 | 27,902 | | Impairment of property, plant and equipment | 23,071 | – | | Consulting service fees | 33,541 | 15,133 | | Total | 5,076,009 | 4,704,484 | - Inventory impairment provision significantly increased from RMB 27,902 thousand in 2018 to RMB 737,912 thousand in 2019[468] - Depreciation of right-of-use assets amounted to RMB 136,571 thousand in 2019[468] 10 Employee Benefit Expenses This section discloses the composition of the Group's employee benefit expenses for 2019, including wages, salaries and bonuses, retirement benefit costs, welfare and allowances, and equity-settled share-based payments 2019 vs 2018 Employee Benefit Expenses | Expense Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Wages, salaries and bonuses | 339,685 | 316,982 | | Retirement benefit costs – defined contribution plans | 37,750 | 38,331 | | Welfare and allowances | 14,441 | 15,177 | | Equity-settled share-based payments | 7,944 | 5,607 | | Total | 399,820 | 376,097 | 11 Directors' and Chief Executive's Emoluments and Five Highest Paid Individuals This section details the emoluments of directors and the Chief Executive, as well as the remuneration structure of the five highest-paid individuals in 2019, including changes in the Chief Executive position 2019 Directors' and Chief Executive's Emoluments | Director Name | Fees (RMB thousands) | Salaries, allowances and benefits in kind (RMB thousands) | Employer's contribution to retirement schemes (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Mr. Zheng Yaonan | – | 757 | 64 | 821 | | Mr. Zhang Shengfeng | – | 640 | 64 | 704 | | Ms. Wu Xiaoli | – | 776 | 92 | 868 | | Mr. Lin Zonghong | – | – | 64 | 64 | | Mr. Cheng Zuming | – | 640 | 62 | 702 | | Mr. Wen Baoma | – | 50 | – | 50 | | Dr. Dai Yiyi | 150 | – | – | 150 | | Mr. Chen Zhigang | 120 | – | – | 120 | | Mr. Qiu Zhiming | 179 | – | – | 179 | | Dr. Lyu Hongde | 150 | – | – | 150 | | Total | 599 | 2,863 | 346 | 3,808 | - Mr. Vincent H.C. Siu was appointed Chief Executive Officer effective August 19, 2019, with his 2019 remuneration totaling RMB 6,368 thousand[473] 2019 vs 2018 Remuneration of Five Highest Paid Individuals (excluding Directors) | Remuneration Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Salaries, allowances and bonuses | 11,070 | 5,857 | | Retirement benefit costs – defined contribution plans | 462 | 192 | | Equity-settled share-based payments | 1,140 | – | | Total | 12,672 | 6,049 | 12 Net Impairment Losses on Financial Assets This section discloses a significant increase in the Group's net impairment losses on financial assets in 2019, primarily due to a one-off write-off of trade receivables and impairment provisions for trade receivables 2019 vs 2018 Net Impairment Losses on Financial Assets | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | One-off write-off of trade receivables | 326,602 | – | | Impairment provision for trade receivables | 68,665 | 2,372 | | Impairment provision for other receivables | 24,283 | 2,120 | | Total | 419,550 | 4,492 | 13 Finance Income and Expenses This section discloses the Group's finance income and expenses for 2019, indicating a decrease in finance income and an increase in finance expenses, resulting in net finance expenses 2019 vs 2018 Finance Income and Expenses | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Finance Income | | | | Interest income from short-term bank deposits | 9,522 | 16,491 | | Interest income from prepayments to suppliers | 425 | 3,486 | | Total Finance Income | 9,947 | 19,977 | | Finance Expenses | | | | Interest expense on bank borrowings | (20,324) | (10,056) | | Interest expense on lease liabilities | (9,963) | – | | Total Finance Expenses | (30,287) | (10,056) | | Net Finance (Expenses)/Income | (20,340) | 9,921 | 14 Income Tax (Credit)/Expense This section discloses the Group's income tax credit for 2019, primarily due to the reversal of prior year's over-provision for China corporate income tax and the recognition of deferred tax assets 2019 vs 2018 Income Tax (Credit)/Expense | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Current income tax | (8,108) | 147,603 | | Deferred income tax | (98,638) | (24,930) | | Income Tax (Credit)/Expense | (106,746) | 122,673 | - Guangdong Urban Beauty Industrial Co., Ltd. was approved as a high-tech enterprise in April 2019, qualifying for a preferential tax rate of 15%, leading to a reversal of over-provided income tax from 2018 in 2019[490][492] 15 (Losses)/Earnings Per Share This section discloses the Group's basic and diluted losses per share for 2019, contrasting with earnings per share in 2018 2019 vs 2018 (Losses)/Earnings Per Share | Indicator | 2019 | 2018 | | :--- | :--- | :--- | | (Loss)/profit for the year attributable to owners of the Company (RMB thousands) | (1,297,812) | 378,229 | | Weighted average number of ordinary shares for basic (loss)/earnings per share (thousands) | 2,247,066 | 2,205,670 | | Basic (Loss)/Earnings Per Share (RMB cents per share) | (57.76) | 17.15 | | Weighted average number of ordinary shares for diluted (loss)/earnings per share (thousands) | 2,247,066 | 2,211,483 | | Diluted (Loss)/Earnings Per Share (RMB cents per share) | (57.76) | 17.10 | 16 Dividends The Board did not recommend a final dividend or interim dividend for 2019, contrasting with dividend declarations in 2018 - The Board did not recommend a final dividend for 2019 (2018: 3.75 HK cents per ordinary share and a special final dividend of 6.20 HK cents per ordinary share)[500] - The Board did not recommend an interim dividend for the first half of 2019 (2018: 2.73 HK cents per share)[501] - In 2019, the total final dividend and special final dividend for 2018 paid amounted to approximately RMB 196,706 thousand[501] 17 Property, Plant and Equipment This section discloses the Group's property, plant and equipment movements in 2019, including additions, disposals, depreciation, and impairment losses, indicating a decrease in net book value at year-end 2019 vs 2018 Net Book Value of Property, Plant and Equipment | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Net book value at beginning of year | 564,357 | 565,009 | | Additions | 75,430 | 79,877 | | Disposals | (4,241) | (1,798) | | Depreciation | (97,073) | (78,731) | | Impairment losses | (23,071) | – | | Net Book Value at End of Year | 515,402 | 564,357 | - An impairment provision of RMB 23,071 thousand was recognized in 2019 for leasehold improvements of certain loss-making retail stores[504] - As of December 31, 2019, buildings with a carrying amount of approximately RMB 26,239 thousand were pledged as collateral for the Group's borrowings[505] 18 Leases This section provides the Group's lease information as a lessee, including right-of-use assets and lease liabilities recognized on the statement of financial position, and depreciation and interest expenses recognized in the statement of profit or loss 2019 Right-of-Use Assets and Lease Liabilities | Item | 2019 December 31 (RMB thousands) | 2019 January 1 (RMB thousands) | | :--- | :--- | :--- | | Right-of-Use Assets | | | | Properties | 441,101 | 154,606 | | Land use rights | 75,421 | 85,231 | | Total Right-of-Use Assets | 516,522 | 239,837 | | Lease Liabilities | | | | Current | 199,147 | 69,656 | | Non-current | 165,880 | 82,476 | | Total Lease Liabilities | 365,027 | 152,132 | - Additions to right-of-use assets in 2019 amounted to approximately RMB 409,917 thousand[509] - Depreciation expense for right-of-use assets was RMB 136,571 thousand, and interest expense on lease liabilities was RMB 9,963 thousand in 2019[511] - Some property leases include variable payment terms linked to store sales, ranging from 35% to 40% of sales[513] 19 Intangible Assets This section discloses the Group's intangible asset movements in 2019, including goodwill, purchased trademarks, and computer software, and details impairment reviews conducted 2019 vs 2018 Net Book Value of Intangible Assets | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Goodwill | 2,887 | 2,887 | | Purchased trademarks | 4,738 | 5,557 | | Computer software | 32,246 | 36,528 | | Total | 39,871 | 44,972 | - Management conducted an impairment review of goodwill, with the recoverable amount calculated based on value-in-use, using a five-year cash flow forecast and a discount rate of 19%[516] 20 Investments in Joint Ventures and an Associate This section discloses the Group's investment movements in joint ventures and an associate, including opening balances, additions, and share of profit for the year 2019 vs 2018 Movements in Investments in Joint Ventures and an Associate | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Beginning of year | 165,790 | 22,407 | | Additions | 116,389 | 135,000 | | Share of profit for the year | 2,995 | 8,383 | | End of Year | 285,174 | 165,790 | - The Group's investments in joint ventures include Guangdong Dongdu Industrial Co., Ltd., Jinghedu (Dongguan) Equity Investment Management Co., Ltd. and its fund partnership, and Shantou Lianda Technology Co., Ltd.[519] 21 Financial Assets at Fair Value Through Other Comprehensive Income This section discloses that the Group's financial assets at fair value through other comprehensive income primarily consist of unlisted equity investments 2019 vs 2018 Financial Assets at Fair Value Through Other Comprehensive Income | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Unlisted equity investments | 74,414 | 60,494 | 22 Deposits, Prepayments and Other Receivables This section details the composition of the Group's deposits, prepayments, and other receivables in 2019, and discloses impairment provisions 2019 vs 2018 Deposits, Prepayments and Other Receivables | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Prepayments for acquisition of property, plant and equipment and intangible assets | 105,816 | 5,043 | | VAT recoverable and prepaid taxes | 220,138 | 157,705 | | Prepayments and deposits | 8,509 | 11,715 | | Prepaid lease expenses under joint operation arrangements | 181,954 | 304,696 | | Prepayments for purchases of goods | 79,703 | 142,056 | | Prepayments for purchases of raw materials | 123,640 | 67,766 | | Less: Impairment provision for other receivables | (26,403) | (2,120) | | Current Portion | 694,154 | 790,493 | | Non-current Portion | 113,757 | 14,417 | - The impairment provision for other receivables in 2019 was RMB 26,403 thousand, a significant increase from 2018[526] 23 Deferred Taxation This section discloses the Group's deferred tax asset and liability movements in 2019, primarily influenced by inventory impairment provisions, trade receivables impairment, and tax losses 2019 vs 2018 Deferred Tax Assets | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Inventory impairment provision | 138,837 | 15,957 | | Trade receivables impairment | 14,806 | 1,114 | | Tax losses | – | 36,553 | | Impairment of property, plant and equipment | 5,031 | – | | Total Deferred Tax Assets | 178,444 | 79,983 | 2019 vs 2018 Deferred Tax Liabilities | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Intangible assets | 1,070 | 1,247 | - The Group did not recognize deferred tax liabilities for temporary differences related to undistributed profits of certain Chinese subsidiaries totaling RMB 359,964 thousand, as the Board believes these profits are unlikely to be distributed in the foreseeable future[531] 24 Inventories This section discloses the composition and impairment provisions of the Group's inventories in 2019, showing significant increases in both total inventories and impairment provisions 2019 vs 2018 Inventory Composition | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Raw materials | 12,633 | 23,121 | | Work in progress | – | 6,683 | | Finished goods | 1,454,118 | 1,198,958 | | Less: Impairment provision | (786,906) | (63,829) | | Net Inventories | 679,845 | 1,164,933 | - The inventory impairment provision significantly increased to RMB 737,912 thousand in 2019, primarily due to the deteriorating retail market and difficulties in selling old inventory, with management making provisions based on revised strategies[533] 25 Trade Receivables This section details the composition, aging analysis, and impairment provisions of the Group's trade receivables in 2019, showing significant increases in both total trade receivables and impairment provisions 2019 vs 2018 Trade Receivables Composition | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Amounts due from third parties | 349,347 | 830,401 | | Less: Impairment provision | (73,236) | (4,774) | | Net Trade Receivables | 276,111 | 825,627 | 2019 vs 2018 Aging Analysis of Trade Receivables (by invoice date) | Aging | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Within 30 days | 88,808 | 401,470 | | Over 30 days but within 60 days | 65,006 | 113,493 | | Over 60 days but within 90 days | 51,064 | 155,705 | | Over 90 days but within 180 days | 49,485 | 107,243 | | Over 180 days but within 360 days | 50,676 | 33,291 | | Over 360 days | 44,308 | 19,199 | | Total | 349,347 | 830,401 | - The impairment provision for trade receivables significantly increased to RMB 73,236 thousand in 2019, primarily due to a one-off write-off of overdue amounts from a major customer totaling RMB 326,602 thousand[537][541] 26 Financial Assets at Fair Value Through Profit or Loss This section discloses the composition of the Group's financial assets at fair value through profit or loss in 2019, including listed equity securities and trust investments 2019 vs 2018 Financial Assets at Fair Value Through Profit or Loss | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Current assets: Listed equity securities in Japan | 8,822 | 7,885 | | Non-current assets: Trust investments | 102,729 | 106,000 | | Total | 111,551 | 113,885 | - Fair value losses on financial assets at fair value through profit or loss amounted to RMB 2,334 thousand in 2019[544] - The Group received a prepayment of RMB 100,000 thousand from Jinghedu for the disposal of entrusted investments, with the transaction completed in early 2020[544] 27 Bank Balances and Cash This section discloses the composition and currency distribution of the Group's bank balances and cash in 2019, showing a significant decrease in cash and cash equivalents 2019 vs 2018 Bank Balances and Cash | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | 854,164 | 1,496,163 | | Time deposits with initial maturity over three months | 630 | 630 | | Restricted bank deposits | – | 9,225 | | Total | 854,794 | 1,506,018 | 2019 vs 2018 Currency Distribution of Bank Balances and Cash | Currency | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | RMB | 637,432 | 856,911 | | HKD | 87,646 | 496,136 | | Other currencies | 129,716 | 152,971 | | Total | 854,794 | 1,506,018 | - As of December 31, 2019, restricted bank deposits were released as final payments for certain property, plant and equipment were settled[548] 28 Share Capital and Share Premium This section discloses the Group's share capital and share premium movements in 2019, primarily affected by share repurchases and cancellations, and dividend payments 2019 vs 2018 Movements in Share Capital and Share Premium | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Share capital at beginning of year | 140,755 | 133,792 | | Share premium at beginning of year | 1,866,386 | 1,603,035 | | Shares repurchased and cancelled in the market | (443) | (778) | | Dividends | – | (115,725) | | Share Capital at End of Year | 140,312 | 140,755 | | Share Premium at End of Year | 1,656,669 | 1,866,386 | - In 2019, 6,567,000 shares repurchased from the market were cancelled during the year[552] 29 Other Reserves This section discloses the Group's other reserve movements in 2019, including merger reserve, statutory reserve, capital reserve, capital contribution reserve, equity-settled share-based payments, financial assets at fair value through other comprehensive income, and exchange reserve 2019 vs 2018 Movements in Other Reserves | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Other reserves at beginning of year | 416,471 | 275,445 | | Equity-settled share-based payments | 7,944 | 5,607 | | Shares purchased for share award scheme | (18,840) | (1,121) | | Exchange differences | 17,388 | 34,433 | | Transfer to statutory reserve | 5,290 | 98,133 | | Other Reserves at End of Year | 418,807 | 416,471 | - In 2019, the trustee of the share award scheme acquired and held 17,085,000 ordinary shares of the company from the open market, with a total consideration of approximately RMB 18,840 thousand[559] 30 Equity-settled Share-based Payments This section discloses the Group's equity-settled share-based payment schemes in 2019, including the 2016 Share Award Scheme, Employee Share Option Scheme, and 2019 Share Award Scheme, along with related expenses - No awards were granted under the 2016 Share Award Scheme from its adoption up to December 31, 2019[562] - Share options granted under the Employee Share Option Scheme were replaced by the 2019 Share Award Scheme, with the remaining balance of RMB 35,437 thousand as of December 31, 2018, continuing to be amortized[564] - The 2019 Share Award Scheme aims to incentivize management members and replaces the Employee Share Option Scheme, with 34,332,000 shares to be issued to participating employees as of December 31, 2019[566] 2019 vs 2018 Equity-settled Share-based Payment Expenses | Expense Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | 2019 Share Award Scheme (general and administrative expenses) | 5,018 | – | | Share-based payments related to senior management's interests in subsidiaries | – | 5,607 | | 2019 Share Award Scheme (selling and marketing expenses) | 2,926 | – | | Total | 7,944 | 5,607 | 31 Trade Payables This section discloses the composition and aging analysis of the Group's trade payables in 2019, including amounts due to third parties and related parties 2019 vs 2018 Trade Payables Composition | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Amounts due to third parties | 440,928 | 703,688 | | Amounts due to related parties | 19,714 | 7,417 | | Total | 460,642 | 711,105 | 2019 vs 2018 Aging Analysis of Trade Payables (by invoice date) | Aging | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Within 30 days | 76,738 | 128,260 | | Over 30 days but within 60 days | 50,898 | 185,045 | | Over 60 days but within 90 days | 150,834 | 229,615 | | Over 90 days but within 180 days | 130,202 | 82,371 | | Over 180 days but within 360 days | 47,521 | 39,235 | | Over 360 days | 4,449 | 46,579 | | Total | 460,642 | 711,105 | 32 Accruals and Other Payables This section discloses the composition of the Group's accruals and other payables in 2019, including payables for property, plant and equipment, salaries and benefits, and franchisee deposits 2019 vs 2018 Accruals and Other Payables | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Payables for acquisition of property, plant and equipment and intangible assets | 17,734 | 37,943 | | Accrued salaries and welfare | 47,566 | 47,827 | | Franchisee deposits | 53,658 | 54,731 | | Logistics payables | 40,480 | 26,963 | | Deposits received for proposed disposal of financial assets at fair value through profit or loss | 100,000 | – | | Other accruals and payables | 93,115 | 63,135 | | Total | 370,292 | 283,790 | 33 Borrowings This section discloses the composition and movement analysis of the Group's borrowings in 2019, including secured and unsecured bank loans 2019 vs 2018 Borrowings Composition | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Non-current: Secured bank loans | 189,990 | – | | Non-current: Unsecured bank loans | 115,200 | – | | Current: Unsecured bank loans | 150,000 | 183,960 | | Total | 455,190 | 183,960 | 2019 Borrowings Movement Analysis | Item | 2019 (RMB thousands) | | :--- | :--- | | Opening balance | 183,960 | | Repayment of bank loans | (198,770) | | Proceeds from new loans | 470,000 | | Closing Balance | 455,190 | - Approximately RMB 189,990 thousand of bank loans are secured by certain of the Group's buildings and land use rights, bear an annual interest rate of 5.23%, and are repayable by June 17, 2022[576] 34 Deferred Income This section discloses the composition of the Group's deferred income in 2019, primarily consisting of government grants related to property, plant and equipment 2019 vs 2018 Deferred Income | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Non-current | 1,095 | 12,487 | | Current | 436 | 2,958 | | Total | 1,531 | 15,445 | - Deferred income represents government grants related to property, plant and equipment[580] 35 Notes to the Consolidated Statement of Cash Flows This section provides supplementary information for the consolidated statement of cash flows, including reconciliation of (loss)/profit before income tax to net cash from operating activities, proceeds from disposal of property, plant and equipment, and reconciliation of net cash 2019 vs 2018 Reconciliation of (Loss)/Profit Before Income Tax to Net Cash from Operating Activities | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | (Loss)/profit before income tax | (1,406,538) | 502,282 | | Total adjustments | 51,816 | 581,132 | | Total changes in working capital | (183,752) | 174,764 | | Net Cash (Used in)/Generated from Operating Activities | (247,929) | 50,797 | 2019 vs 2018 Reconciliation of Net Cash | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Total bank balances and cash | 854,794 | 1,506,018 | | Current investments | 8,822 | 7,885 | | Borrowings | (455,190) | (183,960) | | Lease liabilities | (365,027) | – | | Net Cash | 43,399 | 1,329,943 | 36 Company-level Statement of Financial Position and Reserves This section discloses the company-level (non-consolidated) statement of financial position and reserves for 2019, including interests in subsidiaries, other receivables, bank balances and cash, share capital, share premium, other reserves, and accumulated losses 2019 vs 2018 Company-level Statement of Financial Position Key Data | Indicator | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Total Assets | 1,829,639 | 2,016,217 | | Total Equity | 1,821,116 | 2,009,061 | | Total Liabilities | 8,523 | 7,156 | 2019 vs 2018 Company-level Accumulated Losses | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Accumulated losses at beginning of year | (167,996) | (164,802) | | Loss for the year | (7,055) | (3,194) | | Accumulated Losses at End of Year | (175,051) | (167,996) | 2019 vs 2018 Company-level Other Reserves | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Other reserves at beginning of year | 169,916 | 67,050 | | Value of employee services | 7,944 | – | | Shares purchased for share award scheme | (18,840) | (1,121) | | Exchange differences | 40,166 | 103,987 | | Other Reserves at End of Year | 199,186 | 169,916 | 37 Commitments This section discloses the Group's capital commitments and operating lease commitments for 2019 2019 vs 2018 Capital Commitments | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Contracted but not provided for: Property, plant and equipment | 96,584 | 28,880 | | Contracted but not provided for: Intangible assets | 2,182 | 697 | | Total | 98,766 | 29,577 | 2019 vs 2018 Total Future Minimum Lease Payments Under Non-cancellable Operating Leases for Buildings | Period | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Not later than 1 year | 6 | 82,466 | | Later than 1 year but not later than 5 years | – | 85,689 | | Later than 5 years | – | – | | Total | 6 | 168,155 | - As of January 1, 2019, the Group recognized right-of-use assets for these leases, excluding short-term and low-value leases[598] 38 Related Party Transactions This section discloses the Group's significant related party transactions and year-end balances in 2019, including purchases of goods from and amounts payable to related parties - Related parties include directors (Mr. Zhang Shengfeng, Mr. Lin Zonghong), companies controlled by directors' spouses' brothers (Shantou Shengqiang Knitting Industrial Co., Ltd.), companies controlled by directors' brothers (Shantou Maosheng Knitting Underwear Co., Ltd.), companies controlled by Mr. Zheng Yaonan, and joint ventures[602] 2019 vs 2018 Purchases of Goods from Related Parties | Related Party | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Shantou Shengqiang | 30,208 | 28,348 | | Shantou Maosheng | 1,818 | 8,847 | | Total | 32,026 | 37,195 | 2019 vs 2018 Amounts Payable to Related Parties | Related Party | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Shantou Shengqiang | 19,714 | 7,417 | 2019 vs 2018 Key Management Personnel Emoluments | Item | 2019 (RMB thousands) | 2018 (RMB thousands) | | :--- | :--- | :--- | | Salaries, allowances and bonuses | 16,429 | 10,846 | | Retirement benefit costs – defined contribution plans | 876 | 663 | | Equity-settled share-based payments | 3,266 | – | | Total | 20,571 | 11,509 | 39 Information on Subsidiaries, Associates and Joint Ventures of the Group This section details the names, places of incorporation, issued/registered share capital, Group's equity interest, and principal business/operation locations for all subsidiaries, associates, and joint ventures as of December 31, 2019 - The Group holds interests in numerous direct and indirect subsidiaries primarily engaged in investment holding, intimate wear sales, raw material sales, logistics, warehousing and delivery services, corporate consulting, and property management services, with main operations in China and Hong Kong[607][609][610] - The Group holds interests in several joint ventures and one associate, primarily involved in investment management, r