弥明生活百货(08473) - 2019 Q3 - 季度财报

GEM Market Characteristics The GEM market provides a listing platform for small and medium-sized companies, entailing higher investment risks and potential for significant market volatility - The GEM market provides a listing platform for small and medium-sized companies, with higher investment risks[5] - GEM securities may be subject to significant market volatility and there is no guarantee of high liquidity[5] - Hong Kong Exchanges and Clearing Limited and the Stock Exchange are not responsible for the content of this report[5] Company Information Board of Directors and Committees This section lists the company's board members, including executive, non-executive, and independent non-executive directors, and their roles in audit, remuneration, and nomination committees - The Board of Directors includes Ms. Yuen Mi Ming (Chairperson and CEO), Ms. Yuen Mi Mong (Executive Director), Mr. Cheung Siu Hon and Mr. Lam Yu Yeung (Non-executive Directors), and three Independent Non-executive Directors: Ms. Chan Sze Lai, Ms. Shum Wai Sze, and Ms. Tsang Wing Yee[7] - The Audit Committee comprises Ms. Tsang Wing Yee (Chairperson), Ms. Chan Sze Lai, and Ms. Shum Wai Sze[7] - The Remuneration Committee comprises Ms. Chan Sze Lai (Chairperson), Ms. Yuen Mi Ming, and Ms. Shum Wai Sze[7] - The Nomination Committee comprises Ms. Yuen Mi Ming (Chairperson), Ms. Chan Sze Lai, and Ms. Shum Wai Sze[7] Other Company Information This section provides detailed company information including auditor, compliance advisor, registered office, share registrar, compliance officer, headquarters, company secretary, authorized representatives, principal bankers, website, and stock code - The auditor is Deloitte Touche Tohmatsu[7] - The compliance advisor is Kingston Corporate Finance Limited[7] - The company's stock code is 8473[8] Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Results for the Three and Nine Months Ended December 31, 2018 The Group's revenue for the nine months ended December 31, 2018, was HK$107,567 thousand, with a profit for the period of HK$19,628 thousand and basic earnings per share of 1.75 HK cents, showing significant growth across financial metrics compared to the prior year Key Financial Data for the Three and Nine Months Ended December 31, 2018 | Metric | Three Months Ended Dec 31, 2018 (HK$ Thousand) | Three Months Ended Dec 31, 2017 (HK$ Thousand) | Nine Months Ended Dec 31, 2018 (HK$ Thousand) | Nine Months Ended Dec 31, 2017 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 38,466 | 30,987 | 107,567 | 86,637 | | Gross Profit | 23,953 | 18,822 | 65,766 | 52,478 | | Profit Before Tax | 10,882 | 6,331 | 23,705 | 13,425 | | Profit and Total Comprehensive Income for the Period | 9,011 | 5,234 | 19,628 | 10,843 | | Earnings Per Share - Basic (HK cents) | 0.80 | 0.62 | 1.75 | 1.29 | Unaudited Condensed Consolidated Statement of Changes in Equity Changes in Equity for the Nine Months Ended December 31, 2018 As of December 31, 2018, the Group's total equity increased to HK$107,947 thousand from HK$98,399 thousand on April 1, 2018, primarily due to a HK$19,628 thousand increase in profit for the period, offset by HK$10,080 thousand in dividends paid Changes in Equity for the Nine Months Ended December 31, 2018 | Metric | Share Capital (HK$ Thousand) | Share Premium (HK$ Thousand) | Merger Reserve (HK$ Thousand) | Retained Profits (HK$ Thousand) | Total (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | As at April 1, 2018 (Audited) | 11,200 | 91,927 | (37,316) | 32,588 | 98,399 | | Profit and Total Comprehensive Income for the Period | – | – | – | 19,628 | 19,628 | | Dividends Paid | – | – | – | (10,080) | (10,080) | | As at December 31, 2018 (Unaudited) | 11,200 | 91,927 | (37,316) | 42,136 | 107,947 | Notes to the Unaudited Condensed Consolidated Financial Statements 1. General Information and Reorganisation The Company was incorporated in the Cayman Islands on November 4, 2016, underwent a group reorganisation for its GEM listing, became a holding company on January 23, 2018, and primarily engages in multi-brand beauty and health product retail in Hong Kong, with shares listed on GEM since February 12, 2018 - The Company was incorporated in the Cayman Islands on November 4, 2016, as an investment holding company[16] - The Group is principally engaged in the retail of multi-brand beauty and health products in Hong Kong[17] - The shares have been listed on GEM of the Stock Exchange since February 12, 2018 (the Listing Date)[18] 2. Basis of Preparation and Accounting Policies The unaudited condensed consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards, comply with GEM Listing Rules, and maintain consistency with prior year's audited statements, with no significant impact from new or revised standards - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards (HKFRS) issued by the Hong Kong Institute of Certified Public Accountants[19] - The accounting policies are consistent with those used in the audited consolidated financial statements for the year ended March 31, 2018[19] - The adoption of new and revised HKFRS had no significant impact on the statement of profit or loss for the current period[19] 3. Revenue The Group's revenue primarily derives from product sales and consignment commissions, totaling HK$107,567 thousand for the nine months ended December 31, 2018, with retail store sales being the largest contributor and significant growth in online store and distributor sales - Revenue primarily comprises sales of goods and commission income from consignment sales[21] Revenue Analysis for the Three and Nine Months Ended December 31, 2018 | Revenue Source | Three Months Ended Dec 31, 2018 (HK$ Thousand) | Three Months Ended Dec 31, 2017 (HK$ Thousand) | Nine Months Ended Dec 31, 2018 (HK$ Thousand) | Nine Months Ended Dec 31, 2017 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Sales of goods - Retail stores | 33,775 | 29,884 | 95,838 | 83,823 | | Sales of goods - Online stores | 3,177 | 695 | 7,051 | 1,796 | | Sales of goods - Consignment sales | 558 | 28 | 897 | 121 | | Sales of goods - Distributors | 843 | 206 | 3,427 | 392 | | Commission income from consignment sales | 113 | 174 | 354 | 505 | | Total | 38,466 | 30,987 | 107,567 | 86,637 | 4. Income Tax Expense Income tax expense for the nine months ended December 31, 2018, increased to HK$4,077 thousand from HK$2,582 thousand in the prior year, primarily calculated at Hong Kong Profits Tax rate of 16.5% Income Tax Expense | Metric | Three Months Ended Dec 31, 2018 (HK$ Thousand) | Three Months Ended Dec 31, 2017 (HK$ Thousand) | Nine Months Ended Dec 31, 2018 (HK$ Thousand) | Nine Months Ended Dec 31, 2017 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Current tax: Hong Kong Profits Tax | 1,871 | 1,097 | 4,077 | 2,754 | | Deferred tax | – | – | – | (172) | | Total | 1,871 | 1,097 | 4,077 | 2,582 | - Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profits for the relevant period[22] 5. Profit for the Period Profit for the period is achieved after deducting various expenses, with total employee benefit expenses for the nine months ended December 31, 2018, amounting to HK$18,445 thousand and cost of inventories recognized as expense at HK$41,454 thousand Key Deductions from Profit for the Period | Expense Item | Three Months Ended Dec 31, 2018 (HK$ Thousand) | Three Months Ended Dec 31, 2017 (HK$ Thousand) | Nine Months Ended Dec 31, 2018 (HK$ Thousand) | Nine Months Ended Dec 31, 2017 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Directors' remuneration | 1,074 | 909 | 3,222 | 2,727 | | Other staff salaries and allowances | 4,777 | 4,278 | 14,535 | 12,895 | | Retirement benefit scheme contributions | 223 | 199 | 688 | 588 | | Total employee benefit expenses | 6,074 | 5,386 | 18,445 | 16,210 | | Depreciation of property, plant and equipment | 586 | 686 | 1,885 | 2,118 | | Cost of inventories recognised as an expense | 14,264 | 12,161 | 41,454 | 34,141 | 6. Earnings Per Share Basic earnings per share for the nine months ended December 31, 2018, increased to 1.75 HK cents from 1.29 HK cents in the prior year, driven by higher profit attributable to owners, with no diluted earnings per share presented due to the absence of potential ordinary shares Basic Earnings Per Share Calculation | Metric | Three Months Ended Dec 31, 2018 | Three Months Ended Dec 31, 2017 | Nine Months Ended Dec 31, 2018 | Nine Months Ended Dec 31, 2017 | | :--- | :--- | :--- | :--- | :--- | | Profit for the period attributable to owners of the Company (HK$ Thousand) | 9,011 | 5,234 | 19,628 | 10,843 | | Weighted average number of ordinary shares (in thousands) | 1,120,000 | 840,000 | 1,120,000 | 840,000 | | Basic earnings per share (HK cents) | 0.80 | 0.62 | 1.75 | 1.29 | - The number of ordinary shares used for calculating basic earnings per share for the three and nine months ended December 31, 2017, was determined assuming the reorganisation and capitalisation issue had become effective on April 1, 2017[28] - No diluted earnings per share for the relevant periods are presented as there were no potential ordinary shares in issue during those periods[29] 7. Dividends For the nine months ended December 31, 2018, the Company declared and paid an interim dividend of 0.9 HK cents per share, totaling approximately HK$10.1 million, with no dividends paid in the prior corresponding period - For the nine months ended December 31, 2018, the Company declared and paid an interim dividend of 0.9 HK cents per share, totaling approximately HK$10,100,000[30] - No dividends were paid for the nine months ended December 31, 2017[30] Management Discussion and Analysis Business Review and Prospects The Group operates nine retail stores in Hong Kong under the 'MI MING MART' brand, selling skincare, cosmetics, food, and health products with a 'harmless living' philosophy, and plans to expand its sales network and product portfolio to enhance competitiveness - The Group operates nine retail stores in Hong Kong under the brand 'MI MING MART', primarily selling beauty and health products[32] - The Group's philosophy is 'starting from harmless living', focusing on providing quality products free from ingredients that may affect customer health[32] - Sales channels include retail stores, online stores, consignment sales, and distributors[32] - Looking ahead, the Group aims to expand its sales network and enrich its product portfolio to enhance competitiveness and maintain market leadership[33] Financial Review This section provides a detailed review of the financial performance for the nine months ended December 31, 2018, covering changes in revenue, cost of sales, gross profit, various expenses, and net profit for the period, along with their key drivers Revenue - Revenue increased by approximately 24.2% from approximately HK$86.6 million for the nine months ended December 31, 2017, to approximately HK$107.6 million for the same period in 2018[36] - The increase in revenue was primarily attributable to new retail store operations, sales growth after the relocation of the Causeway Bay store, increased sales volume of skincare, food, and health products, the launch of a new online sales platform, and increased distributor sales[36] Cost of Sales - Cost of sales increased by approximately 22.4% from approximately HK$34.2 million for the nine months ended December 31, 2017, to approximately HK$41.8 million for the same period in 2018[37] - The increase in cost of sales was consistent with the revenue growth, primarily comprising cost of inventories sold, commission expenses, and inbound shipping, freight, and delivery charges[37] Gross Profit and Gross Profit Margin - Gross profit increased by approximately 25.3% from approximately HK$52.5 million for the nine months ended December 31, 2017, to approximately HK$65.8 million for the same period in 2018[38] - Gross profit margin slightly increased from approximately 60.6% to approximately 61.1%[38] - The increase in gross profit margin was mainly due to increased sales of high-margin products for which the Group holds exclusive distribution rights[38] Selling and Distribution Expenses - Selling and distribution expenses increased by approximately 8.2% from approximately HK$22.2 million for the nine months ended December 31, 2017, to approximately HK$24.0 million for the nine months ended December 31, 2018[36] - This was mainly due to an increase of approximately HK$1.5 million in rental and related expenses, and an increase of approximately HK$0.9 million in salaries, allowances, and commissions[36] - The increase in expenses was partially offset by a decrease of approximately HK$0.9 million in marketing expenses[36] Administrative and Operating Expenses - Administrative and operating expenses increased by approximately 20.3% from approximately HK$14.7 million for the nine months ended December 31, 2017, to approximately HK$17.7 million for the nine months ended December 31, 2018[41] - The increase in administrative expenses was mainly due to an increase of approximately HK$1.8 million in audit and compliance advisor fees, an increase of approximately HK$0.8 million in staff costs, and an increase of approximately HK$0.5 million in directors' remuneration[41] Interest Expense on Bank Borrowings - For the nine months ended December 31, 2018, interest expense on bank borrowings was less than HK$1,000 (nine months ended December 31, 2017: HK$139,000)[42] Other Expenses - For the nine months ended December 31, 2018, the Group incurred no other expenses (nine months ended December 31, 2017: HK$550,000)[43] Listing Expenses - For the nine months ended December 31, 2018, the Group incurred no listing expenses (nine months ended December 31, 2017: HK$1,600,000)[44] Net Profit for the Period - Net profit for the period increased by approximately 81.0% from approximately HK$10.8 million for the nine months ended December 31, 2017, to approximately HK$19.6 million for the nine months ended December 31, 2018[45] - The Group's net profit margin increased from approximately 12.5% to approximately 18.2% during the relevant period[45] Basic Earnings Per Share - Basic earnings per share increased by approximately 0.46 HK cents from approximately 1.29 HK cents for the nine months ended December 31, 2017, to approximately 1.75 HK cents for the nine months ended December 31, 2018[46] - This increase is consistent with the increase in profit for the period attributable to owners of the Company for the nine months ended December 31, 2018[46] Reserves Changes in the Group's reserves for the nine months ended December 31, 2018, are presented in the unaudited condensed consolidated statement of changes in equity - Changes in the Group's reserves for the nine months ended December 31, 2018, are set out in the unaudited condensed consolidated statement of changes in equity above[48] Dividends For the nine months ended December 31, 2018, the Company declared and paid an interim dividend of 0.9 HK cents per share, totaling approximately HK$10.1 million, with no dividends paid in the prior corresponding period - For the nine months ended December 31, 2018, the Company declared and paid an interim dividend of 0.9 HK cents per share, totaling approximately HK$10,100,000[50] - No dividends were paid for the nine months ended December 31, 2017[50] Capital Commitments As of December 31, 2018, the Group had no significant capital commitments - As at December 31, 2018, the Group had no significant capital commitments[51] Material Investments, Acquisitions or Disposals For the nine months ended December 31, 2018, the Group did not undertake any material investments, acquisitions, or disposals - For the nine months ended December 31, 2018, the Group did not undertake any material investments, acquisitions, or disposals[52] Contingent Liabilities As of December 31, 2018, the Group had no significant contingent liabilities - As at December 31, 2018, the Group had no significant contingent liabilities[53] Corporate Governance and Other Information Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares, and Debentures of the Company and its Associated Corporations As of December 31, 2018, Ms. Yuen Mi Ming held 69.6% of the Company's shares through her wholly-owned Prime Era Holdings Limited, with her spouse Mr. Lam Yu Yeung deemed to have the same interest Directors' Interests in Shares of the Company | Name of Director | Capacity/Nature of Interest | Number of Shares Interested | Percentage of the Company's Shareholding | | :--- | :--- | :--- | :--- | | Ms. Yuen Mi Ming | Interest in a controlled corporation | 780,000,000 (L) | 69.6% | | Mr. Lam Yu Yeung | Spouse's interest | 780,000,000 (L) | 69.6% | - Prime Era holds a direct interest in 780,000,000 shares and is wholly and beneficially owned by Ms. Yuen Mi Ming, who is therefore deemed to be interested in all shares held by Prime Era[56] - Mr. Lam Yu Yeung, being the spouse of Ms. Yuen Mi Ming, is deemed under the Securities and Futures Ordinance to be interested in the same number of shares in which Ms. Yuen Mi Ming is interested[56] Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares of the Company As of December 31, 2018, Prime Era Holdings Limited, a wholly-owned entity of Ms. Yuen Mi Ming, was a substantial shareholder holding 69.6% of the Company's shares Substantial Shareholders' Interests in Shares of the Company | Name of Shareholder | Capacity/Nature of Interest | Number of Shares Held | Percentage of the Company's Shareholding | | :--- | :--- | :--- | :--- | | Prime Era (Note 2) | Beneficial owner | 780,000,000 (L) | 69.6% | - Prime Era is wholly and beneficially owned by Ms. Yuen Mi Ming, who is deemed under the Securities and Futures Ordinance to be interested in all shares held by Prime Era[59] Share Option Scheme The Company approved and adopted a share option scheme on January 23, 2018, but no options have been granted since its adoption date - The Company has a share option scheme which was approved and adopted by written resolutions on January 23, 2018[60] - No share options have been granted by the Company under the share option scheme since its adoption date[60] Code of Conduct for Securities Transactions by Directors The Company adopted the GEM Listing Rules' required standard of dealings for directors' securities transactions and confirmed all directors complied with it for the nine months ended December 31, 2018 - The Company has adopted the required standard of dealings set out in Rules 5.48 to 5.67 of the GEM Listing Rules as the code of conduct for directors' securities transactions[61] - Specific enquiries have been made to all Directors, and each Director has confirmed compliance with the required standard of dealings for the nine months ended December 31, 2018[61] Directors' Interests in Competing Businesses For the nine months ended December 31, 2018, no directors, controlling shareholders, or their associates held any interests in businesses competing or potentially competing with the Group - For the nine months ended December 31, 2018, none of the Directors, controlling shareholders of the Company, or their respective associates had any interests in businesses that compete or are likely to compete with the Group's business[62] Corporate Governance Practices The Board is committed to good corporate governance, adopting the GEM Listing Rules' Corporate Governance Code; despite the Chairman and CEO roles being combined, the Board believes this arrangement serves the Group's best interests - The Company has applied the principles and practices set out in the Corporate Governance Code in Appendix 15 to the GEM Listing Rules[65] - Ms. Yuen Mi Ming is the founder, Chairperson, Executive Director, and Chief Executive Officer of the Company, which deviates from Code Provision A.2.1, but the Board believes this arrangement is in the best interests of the Group[66] Purchase, Sale or Redemption of the Company's Listed Securities For the nine months ended December 31, 2018, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the nine months ended December 31, 2018, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[67] Interests of the Compliance Advisor Other than the compliance advisor agreement, Kingston Corporate Finance Limited, its directors, employees, or close associates held no interests in the securities of the Company or any other Group entity - Save for the compliance advisor agreement and its supplemental letter entered into between the Company and Kingston Corporate Finance Limited, neither the compliance advisor nor any of its directors, employees, or close associates had any interests in the securities of the Company or any other member of the Group[68] Audit Committee The Audit Committee, composed of three independent non-executive directors chaired by Ms. Tsang Wing Yee, assists the Board in reviewing internal audit, financial reporting, internal controls, and risk management, and has reviewed the unaudited quarterly results for this period - The Audit Committee comprises three independent non-executive Directors: Ms. Tsang Wing Yee (Chairperson), Ms. Chan Sze Lai, and Ms. Shum Wai Sze[69] - Ms. Tsang Wing Yee possesses the appropriate professional accounting qualifications and relevant financial management expertise as required under Rule 5.05(2) of the GEM Listing Rules[69] - The primary duties of the Audit Committee are to assist the Board in providing an independent review of the Group's internal audit function, financial reporting process, internal control, and risk management systems, and to oversee the audit process[69] - The Audit Committee has reviewed the unaudited quarterly results for the nine months ended December 31, 2018[69]