Corporate Information The company's governance structure includes its Board of Directors, key committees, and external auditor - The Board of Directors is led by Executive Directors Mr. Li Wai Keung (Chairman and CEO), Mr. To Hoi Pan, and Ms. Li Kwai Fong, with established Audit, Remuneration, and Nomination Committees111213 - The company's auditor is Grant Thornton Hong Kong Limited14 Financial Statements Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Revenue grew 22.1% YoY, but profit for the period fell sharply by 54.4% due to lower gross margin and higher expenses Consolidated Statement of Profit or Loss Summary (For the six months ended September 30) | Metric | 2021 (HK$ '000) | 2020 (HK$ '000) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 116,391 | 95,294 | +22.1% | | Gross Profit | 18,630 | 17,211 | +8.2% | | Operating Profit | 4,493 | 8,547 | -47.4% | | Profit for the period | 2,878 | 6,313 | -54.4% | | Basic earnings per share (HK cents) | 0.29 | 0.63 | -54.0% | Unaudited Condensed Consolidated Statement of Financial Position The company's financial position remained solid with a slight growth in net assets and a significant increase in cash reserves Consolidated Statement of Financial Position Summary | Metric | Sep 30, 2021 (HK$ '000) | Mar 31, 2021 (HK$ '000) | Period Change | | :--- | :--- | :--- | :--- | | Non-current assets | 56,258 | 56,196 | +0.1% | | Current assets | 171,549 | 165,174 | +3.9% | | Current liabilities | 45,152 | 41,363 | +9.2% | | Net current assets | 126,397 | 123,811 | +2.1% | | Net assets | 181,749 | 178,871 | +1.6% | | Bank balances and cash | 107,900 | 86,961 | +24.1% | Unaudited Condensed Consolidated Statement of Changes in Equity Total equity increased during the period, driven entirely by the profit recorded, with no other equity movements Summary of Changes in Equity (For the six months ended September 30) | Item | Amount (HK$ '000) | | :--- | :--- | | Balance at April 1, 2021 | 178,871 | | Profit for the period | 2,878 | | Balance at September 30, 2021 | 181,749 | Unaudited Condensed Consolidated Statement of Cash Flow Statement The company demonstrated strong cash generation with a significant increase in net cash from operating activities Consolidated Cash Flow Statement Summary (For the six months ended September 30) | Item | 2021 (HK$ '000) | 2020 (HK$ '000) | YoY Change | | :--- | :--- | :--- | :--- | | Net cash from operating activities | 22,450 | 10,279 | +118.4% | | Net cash from/(used in) investing activities | 535 | (2,191) | N/A | | Net cash used in financing activities | (2,046) | (1,985) | +3.1% | | Net increase in cash and cash equivalents | 20,939 | 6,103 | +243.1% | | Cash and cash equivalents at end of period | 107,900 | 121,205 | -11.0% | Notes to the Unaudited Condensed Consolidated Interim Financial Statements Revenue and Business Segment Total revenue grew 22.1%, driven by strong performance in imported and self-licensed toys, though the core ODM segment declined Revenue by Business Segment (For the six months ended September 30) | Business Segment | 2021 (HK$ '000) | 2020 (HK$ '000) | YoY Change | | :--- | :--- | :--- | :--- | | Sales of ODM toys to license holders | 56,767 | 62,709 | -9.5% | | Distribution of imported toys and related products | 30,285 | 20,825 | +45.4% | | Sales of self-licensed toys and related products | 29,339 | 11,760 | +149.5% | | Total | 116,391 | 95,294 | +22.1% | - Revenue from the Group's five largest customers accounted for approximately 72% of total revenue, indicating continued high customer concentration5758 - The Group's largest single customer contributed revenue of HK$58.604 million, representing approximately 50.3% of total revenue64 Other Key Financial Notes Net other income fell due to the absence of prior-year government subsidies, while staff costs rose significantly - Net other income decreased significantly as the government subsidies of HK$1.908 million received in the prior period were discontinued67 - Staff costs increased by 43.7% from HK$6.638 million to HK$9.542 million68 - No dividend was paid or declared by the company or any of its subsidiaries for the six months ended September 30, 2021106 Management Discussion and Analysis Business Review ODM toy revenue fell due to supplier constraints, while imported and self-licensed toy segments achieved substantial growth - Revenue from sales of ODM toys decreased by 9.5% due to severe capacity reductions at suppliers in mainland China caused by power and water supply failures117 - Revenue from distribution of imported toys grew by 45.4%, primarily driven by a popular high-end robot figure that contributed over 50% of the segment's sales118 - Revenue from sales of self-licensed toys surged by 149.5%, attributed to a low base in the prior period and the popularity of a newly developed superhero figure series119120 Financial Analysis Gross margin declined due to higher production costs, while administrative expenses rose from a discretionary bonus to the Chairman - Gross profit margin decreased from 18.1% to 16.0% due to additional production and labor costs passed on by suppliers amid an unstable production environment in mainland China128 - Selling expenses increased by 14.2%, mainly due to expenses related to the Ani-Com & Games Hong Kong event, which was canceled in the prior period130 - Administrative expenses rose by 29.3%, primarily due to a HK$3 million discretionary bonus paid to Chairman Mr. Li Wai Keung for his outstanding leadership since the company's listing in 2018139 Liquidity, Financial Resources and Capital Structure The Group maintained a strong financial position with ample cash reserves and a very low gearing ratio Key Liquidity and Capital Structure Metrics | Metric | Sep 30, 2021 | Mar 31, 2021 | | :--- | :--- | :--- | | Cash and bank balances (HK$ '000) | 107,900 | 86,961 | | Bank borrowings (HK$ '000) | 3,407 | 3,487 | | Lease liabilities (HK$ '000) | 2,543 | 3,559 | | Gearing ratio | 0.02 times | 0.02 times | Outlook and Principal Risks The Group plans to expand its revenue streams while actively managing key operational and strategic risks - The Board will actively seek potential business opportunities to expand beyond the ACG figure toy market, aiming to broaden revenue sources and enhance shareholder value174176 Principal Risks and Mitigation Measures | Principal Risk | Mitigation Measures | | :--- | :--- | | Failure to secure new orders | Maintain strong relationships with major customers and actively explore new ones | | Reliance on senior management team | Provide continuous training to enhance the performance of the senior management team | | Ineffective supplier and product quality control | A professional engineering team works closely with suppliers to maintain high-quality standards | | Customer payment delays or defaults | Offer credit terms only to reputable long-term customers; most transactions are on a cash basis | | Failure to renew or obtain new licenses | A dedicated team works closely with existing licensors and develops potential new ones | Other Information Interests of Directors and Major Shareholders Chairman and CEO Mr. Li Wai Keung and Mr. Wong Man Hin are the company's two substantial shareholders Major Shareholder Holdings (as at September 30, 2021) | Shareholder Name | Nature of Interest | Number of Shares | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Li Wai Keung | Interest in a controlled corporation | 380,800,000 (L) | 38.08% | | Infinite Force | Beneficial owner | 380,800,000 (L) | 38.08% | | Mr. Wong Man Hin | Beneficial owner | 102,920,000 (L) | 10.29% | Corporate Governance The company deviated from the Corporate Governance Code by not separating the roles of Chairman and CEO - The company complied with the Corporate Governance Code but deviated from code provision A.2.1, as the roles of Chairman and CEO are both held by Mr. Li Wai Keung199 - The Board believes that combining the roles of Chairman and CEO provides strong leadership and is beneficial for the Group's management and business development, and will continue to review this arrangement199 - The Audit Committee has reviewed the unaudited condensed consolidated interim financial statements and concluded that they comply with relevant standards and requirements with adequate disclosure203
佰悦集团(08545) - 2022 - 中期财报