顺诚(00531) - 2024 - 中期业绩

Interim Financial Statements Interim Condensed Consolidated Income Statement For the six months ended June 30, 2024, revenue decreased by 7.2% year-over-year, while loss for the period narrowed due to improved gross margin and cost control Key Financial Data for H1 2024 | Metric | H1 2024 (US$ thousand) | H1 2023 (US$ thousand) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 200,072 | 215,630 | -7.2% | | Gross Profit | 52,733 | 52,620 | +0.2% | | Loss Before Tax | (969) | (1,353) | -28.4% | | Loss for the Period | (716) | (1,123) | -36.2% | | Basic Loss Per Share (US cents) | (0.024) | (0.037) | -35.1% | Interim Condensed Consolidated Statement of Comprehensive Income Despite narrowed operating loss, total comprehensive loss for the period expanded due to increased exchange differences from foreign operations translation Summary of Comprehensive Income Statement | Item | H1 2024 (US$ thousand) | H1 2023 (US$ thousand) | | :--- | :--- | :--- | | Loss for the Period | (716) | (1,123) | | Exchange Differences on Translation of Foreign Operations | (2,096) | 419 | | Total Comprehensive Loss for the Period | (2,812) | (704) | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2024, total assets and liabilities decreased, net assets slightly reduced to US$312 million, and the current ratio remained stable Summary of Financial Position Statement | Metric | As of June 30, 2024 (US$ thousand) | As of Dec 31, 2023 (US$ thousand) | Change | | :--- | :--- | :--- | :--- | | Total Non-Current Assets | 189,923 | 196,997 | -3.6% | | Total Current Assets | 322,005 | 334,954 | -3.9% | | Total Assets | 511,928 | 531,951 | -3.8% | | Total Current Liabilities | 186,222 | 197,869 | -5.9% | | Total Non-Current Liabilities | 13,919 | 19,483 | -28.6% | | Total Liabilities | 200,141 | 217,352 | -8.0% | | Net Assets | 311,787 | 314,599 | -0.9% | Notes to the Financial Statements Basis of Preparation and Accounting Policies Interim financial information is prepared under HKAS 34, adopting new HFRS revisions with no significant impact on the Group's financial position or performance - The interim financial information is prepared in accordance with Hong Kong Accounting Standard 34, 'Interim Financial Reporting'[5] - The Group has adopted several new standards for the first time, including amendments to HKFRS 16, which, after assessment, have no impact on the Group's financial position or performance[6] Segment and Revenue Analysis The Group operates in a single furniture segment, with total revenue down 7.2% YoY, primarily due to decreased sales in the US market - The Group's revenue primarily derives from the manufacturing and sale of furniture, with all operating segments aggregated into a single reportable segment, thus no separate segment information is prepared[8] Revenue by Geographical Market | Region | H1 2024 (US$ thousand) | H1 2023 (US$ thousand) | YoY Change | | :--- | :--- | :--- | :--- | | United States of America | 195,560 | 203,703 | -4.0% | | People's Republic of China | 2,147 | 2,767 | -22.4% | | Others | 2,365 | 9,004 | -73.7% | | Total | 200,072 | 215,474 | -7.2% | Taxation, Dividends, and Loss Per Share The Group received a US$0.253 million tax credit, with no interim dividend recommended, and basic and diluted loss per share at US$0.024 cents - The Board does not recommend the payment of any interim dividend for the current period, consistent with the prior period[14] - Basic and diluted loss per share for the current period was 0.024 US cents, compared to 0.037 US cents in the prior period[15] - The Group obtained a total tax credit of US$0.253 million for the current period, primarily from deferred tax[13] Key Balance Sheet Items Analysis At period-end, the Group held US$82.32 million in trading investments, mostly a wealth management product, with stable trade receivables and payables aging - The fair value of the Group's 'Investment Fund Portfolio A' was US$74.63 million, accounting for approximately 14.6% of the Group's total assets, and this investment generated an unrealized loss of US$1.147 million during the period[17] - Trade receivables (net of provisions) amounted to US$49.35 million, with approximately 43% having an aging period of over one month[17] - Trade payables amounted to US$22.57 million, with approximately 49.7% having an aging period of over one month[18] Management Discussion and Analysis Business Review Despite US housing market challenges, the Group's hotel furniture business grew, and effective inventory and cost management maintained resilience for future growth - The US housing market remained sluggish in H1 2024 due to high interest rates and political instability, posing challenges to the Group's business[20] - The hotel furniture business achieved high single-digit sales growth through diversified brands and products, while the luxury brand business faced difficulties[20] - The Group optimized working capital, liabilities, and current ratio through continuous inventory management and cost reduction measures, restoring them to healthy levels[20] Financial Review Net sales decreased 7.2% to US$200.1 million, gross margin improved to 26.4%, and net loss narrowed to US$0.7 million due to margin increase and cost control Summary of Financial Performance | Metric | H1 2024 | H1 2023 | Reason for Change | | :--- | :--- | :--- | :--- | | Net Sales | US$200.1 million | US$215.6 million | Sluggish US housing market | | Gross Margin | 26.4% | 24.4% | Inventory destocking in H1 2023 lowered performance | | Total Operating Expenses | US$57.1 million | US$60.6 million | Decreased sales and cost control | | Net Loss | US$0.7 million | US$1.1 million | Increased gross margin and cost control | Liquidity, Financial Resources and Capital Structure The Group maintains a robust financial position with US$48.3 million cash, reduced borrowings to US$102.7 million, a lower debt-to-equity ratio of 32.9%, and a stable 1.7x current ratio Liquidity and Capital Structure Metrics | Metric | As of June 30, 2024 | As of Dec 31, 2023 | | :--- | :--- | :--- | | Cash and Cash Equivalents | US$48.3 million | US$55.2 million | | Total Interest-Bearing Bank Borrowings | US$102.7 million | US$127.2 million | | Debt-to-Equity Ratio | 32.9% | 40.4% | | Current Ratio | 1.7x | 1.7x | - The Group faces foreign exchange risk primarily from the Vietnamese Dong, as most cost of sales are paid in VND while most revenue is denominated in USD[22] Outlook The Group is optimistic about H2 2024 market recovery, focusing on cost control, product optimization, channel diversification, and digital marketing for competitive advantage and growth - Management believes the market will see signs of recovery in H2 2024 after entering an adjustment period in 2023[26] - Future strategic priorities include restoring profitability, improving margins, diversifying products, expanding multi-channel customers, investing in digital marketing, and streamlining operations[26] Corporate Governance and Other Information Corporate Governance and Director Dealings The company largely complied with the Corporate Governance Code, with a deviation for combined Chairman/CEO roles, while directors adhered to dealing codes and no securities were repurchased - A deviation from the Corporate Governance Code exists as the roles of Chairman and Chief Executive Officer are not separate, both held by Mr. Guo Shanhui, whose leadership the Board believes benefits the Group[28] - During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[30] Post-Reporting Period Events On July 11, 2024, the company received a privatization proposal from the offeror, potentially leading to delisting, with scheme document dispatch extended to October 4, 2024 - On July 11, 2024, the offeror, Fushan (Hong Kong) Limited, requested the Board to propose a privatization, planning to privatize the company and delist its shares via a scheme of arrangement[31] Independent Auditor Review and Publication The unaudited interim financial information was reviewed by independent auditor Ernst & Young and the Audit Committee, with no objections on accounting treatments - The Group's unaudited interim condensed consolidated financial information has been reviewed by the independent auditor, Ernst & Young, and the Board's Audit Committee[32]