EPS创健科技(03860) - 2022 - 中期财报

Financial Highlights Financial Highlights For the six months ended September 30, 2021, the company recorded revenue of approximately HKD 246 million, turning from profit to loss with a post-tax loss of approximately HKD 5.6 million and basic loss per share of 1.1 HK cents The Board decided not to declare an interim dividend Key Performance Indicators for 2021/2022 Interim Results | Indicator | Amount/Value | | :--- | :--- | | Revenue | Approx. HKD 245.8 million | | Loss for the Period After Tax | Approx. HKD 5.6 million | | Basic Loss Per Share | Approx. 1.1 HK cents | | Interim Dividend | Not Recommended | Financial Information Condensed Consolidated Statement of Profit or Loss and Other Comprehensive (Loss) Income During the reporting period, the company's revenue increased by 19.1% year-on-year to HKD 246 million, with gross profit increasing to HKD 30.6 million However, due to increased costs such as new drug R&D expenses, administrative expenses, and professional fees for the mandatory cash offer, the company turned from a profit of HKD 4.45 million in the same period last year to a loss of HKD 5.59 million Key Data from Consolidated Statement of Profit or Loss (For the six months ended September 30) | Item | 2021 (HKD '000) | 2020 (HKD '000) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 245,768 | 206,332 | +19.1% | | Gross Profit | 30,600 | 26,845 | +14.0% | | (Loss) Profit Before Tax | (4,447) | 4,977 | Turned from profit to loss | | (Loss) Profit for the Period | (5,594) | 4,447 | Turned from profit to loss | | Basic (Loss) Earnings Per Share (HK cents) | (1.1) | 0.9 | Turned from profit to loss | Condensed Consolidated Statement of Financial Position As of September 30, 2021, the company's total assets increased to HKD 327 million, primarily due to a significant increase in bank and cash balances However, current liabilities rose sharply due to a surge in trade and other payables and amounts due to related companies, leading to a decrease in the current ratio despite growth in net current assets The company's net assets slightly decreased to HKD 130 million Key Financial Position Data | Item | September 30, 2021 (HKD '000) | March 31, 2021 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 326,930 | 151,167 | +116.3% | | Total Liabilities | 197,251 | 18,022 | +994.5% | | Net Assets | 129,679 | 133,145 | -2.6% | | Net Current Assets | 170,574 | 129,063 | +32.2% | | Bank and Cash Balances | 184,109 | 85,235 | +116.0% | Condensed Consolidated Statement of Cash Flows During the reporting period, the company's operating cash flow showed strong performance, turning from a net outflow of HKD 63.37 million in the same period last year to a net inflow of HKD 98.71 million, primarily due to improved working capital Cash and cash equivalents at period-end significantly increased to HKD 184 million Key Cash Flow Data (For the six months ended September 30) | Item | 2021 (HKD '000) | 2020 (HKD '000) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 98,713 | (63,369) | | Net Cash Generated from Investing Activities | 2,103 | (333) | | Net Cash (Used in) from Financing Activities | (1,963) | (861) | | Net Increase in Cash and Cash Equivalents | 98,853 | (64,563) | | Cash and Cash Equivalents at End of Period | 184,109 | 34,788 | Notes to the Condensed Consolidated Financial Statements General Information and Basis of Preparation This note outlines the company's general information, accounting policies, and application of new standards During the reporting period, the company's name changed from “Speed Apparel Holding Limited” to “EPS Creative Health Technology Group Limited”, and its main business expanded to include apparel supply chain management and new drug R&D services The financial statements are prepared in accordance with Hong Kong Accounting Standards - Company's English name changed to “EPS Creative Health Technology Group Limited”, and its dual foreign name changed to “EPS创健科技集团有限公司” to reflect business expansion[27] - Main businesses include apparel supply chain management services and new drug R&D services[28] Revenue Analysis During the reporting period, the company's total revenue was HKD 246 million, entirely from apparel supply chain management services, with new drug R&D services not yet generating revenue By region, Japan and the United States were the main markets, with significant revenue growth in the US market By product category, women's wear remained the largest revenue source, and all apparel categories achieved growth Revenue by Business Segment (HKD '000) | Business Segment | 2021 | 2020 | | :--- | :--- | :--- | | Apparel Supply Chain Management Services | 245,768 | 206,332 | | New Drug R&D Services | – | – | | Total | 245,768 | 206,332 | Revenue by Geographical Market (HKD '000) | Geographical Market | 2021 | 2020 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Japan | 100,230 | 102,020 | -1.7% | | United States of America | 88,970 | 64,884 | +37.1% | | Europe | 34,906 | 29,899 | +16.7% | | Hong Kong | 15,335 | 7,567 | +102.7% | | Others | 6,327 | 1,962 | +222.5% | - During the reporting period, two major customers contributed the majority of the company's revenue, with Customer A contributing HKD 129 million and Customer B contributing HKD 55.81 million[49] Dividends and Earnings Per Share Due to the loss recorded during the reporting period, the company's basic loss per share was 1.1 HK cents, compared to basic earnings per share of 0.9 HK cents in the same period last year The Board does not recommend the payment of any interim dividend for the six months ended September 30, 2021 - The Board does not recommend the payment of any interim dividend[53] Calculation of Basic (Loss) Earnings Per Share | Item | 2021 | 2020 | | :--- | :--- | :--- | | (Loss) Profit for the Period Attributable to Owners of the Company (HKD '000) | (5,594) | 4,447 | | Weighted Average Number of Ordinary Shares ('000) | 500,000 | 500,000 | | Basic (Loss) Earnings Per Share (HK cents) | (1.1) | 0.9 | Management Discussion and Analysis Business Review Despite a complex trade environment and the impact of the pandemic, the Group's revenue increased by 19.1% to HKD 246 million during the reporting period, driven by increased orders from US and Japanese customers The company has established a joint venture, formally entering the new drug R&D field However, due to new drug R&D investments of approximately HKD 5.4 million and professional fees of approximately HKD 1.4 million arising from the change in company control, the Group turned from profit to loss - Revenue growth primarily resulted from increased purchase orders from major US customers and other Japanese customers[77] - Established a joint venture to enter new drug R&D businesses, including drug screening for Parkinson's syndrome, weight-loss related drugs, and functional food screening[76] - Loss for the period mainly stemmed from research expenses for new drug development (approx. HKD 5.4 million) and professional fees for the unconditional mandatory cash offer (approx. HKD 1.4 million)[77] Financial Review This section provides a detailed analysis of financial performance Revenue growth of 19.1% was primarily driven by both increased sales volume and average selling prices Revenue from women's wear, men's wear, and children's wear all recorded double-digit growth Gross profit margin slightly decreased from 13.0% to 12.5%, mainly due to more competitive pricing offered to Japanese customers Increased expenses in sales, administration, and R&D led to the company turning from profit to loss overall Revenue and Changes by Product Category | Product Category | 2021 Revenue (HKD '000) | 2020 Revenue (HKD '000) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Women's Wear | 158,242 | 137,548 | +15.0% | | Men's Wear | 52,051 | 45,053 | +15.5% | | Children's Wear | 35,475 | 20,287 | +74.9% | | Total | 245,768 | 206,332 | +19.1% | - Gross profit margin decreased from 13.0% in the prior period to 12.5% in the reporting period, primarily due to offering competitive pricing to Japanese customers[92] - New drug development R&D expenses of approximately HKD 5.4 million were a significant contributor to the loss[99] Liquidity, Financial Resources and Capital Structure The Group maintains a sound financial position with ample liquidity As of the end of the reporting period, bank and cash balances significantly increased to HKD 184 million, and net current assets were HKD 171 million The gearing ratio remained at a very low level of 0.6% The capital structure remained stable, consisting solely of ordinary shares Liquidity and Financial Resources Indicators | Indicator | September 30, 2021 | March 31, 2021 | | :--- | :--- | :--- | | Net Current Assets | Approx. HKD 170.6 million | Approx. HKD 129.1 million | | Bank and Cash Balances | Approx. HKD 184.1 million | Approx. HKD 85.2 million | | Gearing Ratio | 0.6% | 1.8% | - The company's capital structure remained unchanged during the reporting period, with equity consisting solely of 500 million ordinary shares[112][113] Future Outlook Looking ahead, management anticipates a slow global economic recovery, but uncertainties from the COVID-19 pandemic persist The Group will continue to closely monitor market dynamics, implement cost control measures, and actively promote products through online platforms, business referrals, and video conferences, while also exploring business diversification opportunities - The Board expects a slow increase in demand for the Group's products, but uncertainties remain for the rest of the 2021/2022 fiscal year, and appropriate measures, including cost control, will be taken to address challenges[128] - The Group will actively promote products through online platforms, business networks, video conferences, and continue to explore business diversification opportunities[129] Other Information Interests of Major Shareholders As of September 30, 2021, EPS HD was the company's major controlling shareholder Through its holding structure, Mr Yan Hao was deemed to hold 375 million shares of the company, representing 75% of the issued share capital Major Shareholder Holdings | Shareholder Name | Nature of Interest | Number of Shares Held | Percentage of Holding | | :--- | :--- | :--- | :--- | | EPS HD | Beneficial Owner | 375,000,000 (L) | 75% | | Shinyou Corporation | Interest in Controlled Corporation | 375,000,000 (L) | 75% | | Mr Yan | Interest in Controlled Corporation | 375,000,000 (L) | 75% | Corporate Governance Practices The company is committed to maintaining a high level of corporate governance During the reporting period, the company complied with most provisions of the Corporate Governance Code, with only a brief deviation regarding the separation of Chairman and Chief Executive roles, which was resolved on June 30, 2021 The Audit Committee has reviewed this interim report - During the reporting period, the company complied with all code provisions of the Corporate Governance Code, with a brief deviation from code provision A.2.1 regarding the separation of Chairman and Chief Executive roles, which was rectified on June 30, 2021[143] - The Audit Committee, comprising three members, has reviewed this interim results report[149] Company Information Company Information This section lists key company information including Board members, committee compositions, company secretary, auditor, registered office, principal bankers, and stock code Significant changes occurred in the Board and committee members during the reporting period - Lists executive directors, non-executive directors, independent non-executive directors, and members and changes of various committees (Remuneration, Nomination, Audit)[150] - Provides information on the company's registered office, principal place of business in Hong Kong, share registrar, legal advisors, principal bankers, and company website[150][154]