福田实业(00420) - 2024 - 中期业绩

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS This section presents the Group's financial performance and position for H1 2024, highlighting a return to profitability and a strengthened balance sheet CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME The Group achieved profitability in H1 2024 with a HKD 4.243 million profit, driven by a 42.9% gross profit increase and reduced finance costs Key Profit or Loss Data for H1 2024 (HKD thousands) | Metric | H1 2024 | H1 2023 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue (HKD thousands) | 2,219,366 | 2,193,867 | +1.2% | | Gross Profit (HKD thousands) | 244,814 | 171,339 | +42.9% | | Profit/(Loss) before Income Tax (HKD thousands) | 25,833 | (43,136) | Turned profitable | | Profit/(Loss) for the Period (HKD thousands) | 4,243 | (74,527) | Turned profitable | | Loss Attributable to Owners of the Company (HKD thousands) | (9,906) | (81,607) | Loss narrowed by 87.9% | | Basic Loss Per Share (HK cents) | (0.8) | (6.7) | Loss narrowed by 88.1% | CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As of June 30, 2024, the Group maintained a robust financial position with HKD 4.70 billion in total assets and significantly reduced bank borrowings Key Financial Position Data (HKD thousands) | Metric | June 30, 2024 | December 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Total Assets (HKD thousands) | 4,699,782 | 4,900,839 | -4.1% | | Total Liabilities (HKD thousands) | 1,266,861 | 1,432,173 | -11.5% | | Net Assets (HKD thousands) | 3,432,921 | 3,468,666 | -1.0% | | Bank Borrowings (HKD thousands) | 55,323 | 199,557 | -72.3% | | Bank Balances and Cash (HKD thousands) | 702,096 | 1,005,127 | -30.1% | NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS This section details the accounting policies, segment information, dividend policies, loss per share, and changes in assets and liabilities 3. PRINCIPAL ACCOUNTING POLICIES The condensed consolidated financial statements are prepared on a historical cost basis, with new HKFRS amendments having no significant impact - The Group adopted several HKFRS amendments, including those to HKFRS 16 and HKAS 1, with no significant impact on financial statements[9][12] 6. REVENUE AND SEGMENT INFORMATION Total revenue slightly increased by 1.2% to HKD 2.219 billion, with dyed fabric and yarn sales growing 3.2% and garment sales declining 9.1% Revenue by Business Segment (HKD thousands) | Business Segment | H1 2024 | H1 2023 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Manufacturing and Sales of Dyed Fabric and Yarn | 1,893,885 | 1,835,782 | +3.2% | | Manufacturing and Sales of Garments | 325,481 | 358,085 | -9.1% | | Total | 2,219,366 | 2,193,867 | +1.2% | External Sales by Geographical Region (HKD thousands) | Region | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Hong Kong | 357,146 | 326,894 | | China | 729,890 | 766,548 | | Taiwan | 71,144 | 94,997 | | South Korea | 128,083 | 129,954 | | Sri Lanka | 456,997 | 375,906 | | Americas | 103,163 | 123,455 | | Europe | 9,233 | 31,968 | | Other Regions | 363,710 | 344,145 | 10. DIVIDENDS The Board did not recommend an interim dividend for H1 2024, but a 2023 final dividend of HKD 0.03 per share was distributed - The Board decided not to declare an interim dividend for 2024 (H1 2023: nil)[32] - A 2023 final dividend of HKD 0.03 per share, totaling approximately HKD 36.751 million, was approved and distributed on June 21, 2024[31][32] 11. LOSS PER SHARE Basic and diluted loss per share attributable to owners significantly narrowed to HKD 0.008 in H1 2024 due to reduced losses Loss Per Share Calculation | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Loss Attributable to Owners of the Company (HKD thousands) | (9,906) | (81,607) | | Weighted Average Number of Ordinary Shares | 1,225,026,960 | 1,225,026,960 | | Basic and Diluted Loss Per Share (HK cents) | (0.8) | (6.7) | 12. MOVEMENTS IN PROPERTY, PLANT AND EQUIPMENT The Group invested HKD 59.342 million in PPE for upgrades but recognized a HKD 10.767 million impairment loss on idle equipment - Capital expenditure for expanding and upgrading production facilities totaled HKD 59.342 million (H1 2023: HKD 42.638 million)[36] - An impairment loss of HKD 10.767 million was recognized on idle equipment due to capacity reduction at Jiangyin Fuhui factory[37][38] 17. BANK BORROWINGS Bank borrowings significantly decreased to HKD 55.32 million by June 30, 2024, with all loans unsecured and covenant ratios met - The Group obtained HKD 34.012 million in new bank borrowings and repaid HKD 178 million during the period[50][53] - Average effective annual interest rate for bank borrowings was 6.36% (end of 2023: 5.99%), with all borrowings unsecured[50][53][92] - The Group complied with all bank-required financial covenant ratios during the reporting period[51] MANAGEMENT DISCUSSION AND ANALYSIS This section provides an overview of the Group's H1 2024 business performance, future outlook, financial review, employee information, and corporate governance practices BUSINESS REVIEW Despite external challenges, the Group achieved profitability in H1 2024, driven by a 1.2% revenue increase, 14% sales volume growth, and improved gross margin - The Group achieved a turnaround to profit before income tax expenses through strategic adjustments amidst a complex external environment[57][59] H1 2024 Performance Highlights | Metric | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | Approx. HKD 2.219 billion | Approx. HKD 2.194 billion | +1.2% | | Total Fabric Sales Volume | Not Applicable | Not Applicable | +14% | | Gross Profit Margin | 11.0% | 7.8% | +3.2 percentage points | | Loss Attributable to Owners of the Company | Approx. HKD 10 million | Approx. HKD 82 million | Loss significantly narrowed | - Key initiatives for improved performance included ceasing Jiangyin Fuhui's dyeing and finishing operations, enhancing capacity at Yancheng Fuhui and Dongguan Shatin Li Hai, and promoting lean production[58][59] OUTLOOK The Group holds a cautiously optimistic outlook for H2 2024, expecting further loss reduction driven by secured orders and strategic initiatives - Global economic growth is projected to stabilize at 2.6% in 2024, according to the World Bank, though challenges persist[75] - The Group maintains a cautiously optimistic outlook for H2 2024, expecting further loss narrowing due to substantial orders and effective cost control[76][79] - Future strategic priorities include technological innovation, international market expansion, production technology transformation (informatization, automation, intelligence, greening), and enhanced lean management[76][79] FINANCIAL REVIEW The financial review highlights a 1.2% revenue increase, improved gross and EBITDA margins, and reduced bank borrowings in H1 2024 Key Financial Ratios | Ratio | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Gross Profit Margin (%) | 11.0% | 7.8% | | EBITDA Margin (%) | 5.7% | 3.1% | | Inventory Turnover Period (Days) | 79 | 71 | | Receivables Turnover Period (Days) | 73 | 76 | | Payables Turnover Period (Days) | 62 | 48 | - Revenue increased by 1.2%, driven by a 14.0% rise in fabric sales volume, partially offset by an 8.7% decrease in average fabric selling price due to product mix changes[84] - Finance costs decreased from HKD 13.711 million to HKD 8.014 million, reducing its proportion of revenue from 0.6% to 0.4%[85] - As of June 30, 2024, bank balances and cash (including short-term deposits) totaled HKD 1.114 billion, with bank borrowings at HKD 55.32 million[87][88] EMPLOYEES AND REMUNERATION POLICIES The Group had approximately 5,700 full-time employees as of June 30, 2024, a slight reduction due to production team streamlining and cost control - As of June 30, 2024, the Group had approximately 5,700 full-time employees, a year-on-year decrease of about 100 individuals[95] - To mitigate unfavorable market conditions, the Group has been reducing production and streamlining its production team at Jiangyin Fuhui Textile since late 2022 to control labor costs[95] CORPORATE GOVERNANCE CODE The company complied with the Corporate Governance Code, with the exception of the combined Chairman and CEO roles, which the Board believes enhances strategic planning - The company deviated from the Corporate Governance Code by having the Chairman and Chief Executive Officer roles combined and held by Mr Liu Xianfu[95] - The Board believes this arrangement facilitates more efficient strategic planning and objective achievement, and its appropriateness will be continuously reviewed[95][96]