飞达控股(01100) - 2024 - 中期财报

Management Discussion and Analysis This section reviews the company's financial performance, business operations, and future outlook Financial Review The Group saw significant declines in revenue and profit in H1 2024, but maintained its interim dividend and robust financial position Key Financial Indicators for H1 2024 | Indicator | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 687,114,000 | HKD 780,258,000 | -11.9% | | Gross Profit | HKD 219,510,000 | HKD 273,930,000 | -19.9% | | Gross Profit Margin | 31.9% | 35.1% | -3.2pp | | Profit Attributable to Owners | HKD 35,269,000 | HKD 65,075,000 | -45.8% | | Interim Dividend | 3 HK cents per share | 3 HK cents per share | Unchanged | - The Group's financial position is robust, with cash on hand of approximately HKD 189 million and unutilized banking facilities of approximately HKD 804 million as of June 30, 2024[3] Business Review Both manufacturing and trading businesses faced sales pressure from weak demand and destocking, leading to declining manufacturing profit and an operating loss in trading Manufacturing Business Manufacturing revenue declined 5.0% due to weak market demand and destocking, with varied factory performance and a 27.8% drop in segment operating profit Manufacturing Business Performance | Indicator | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 445,769,000 | HKD 469,233,000 | -5.0% | | Segment Operating Profit | HKD 93,178,000 | HKD 129,083,000 | -27.8% | - Factory performance varied, with Bangladesh improving costs despite lower sales, Shenzhen facing higher costs from reduced orders, and the new Mexico plant incurring initial operating losses[6] Trading Business Trading revenue fell 22.4% due to a weak retail market, with high distribution costs widening operating losses despite improved gross margin, prompting strategic acquisitions for market expansion Trading Business Performance | Indicator | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 241,345,000 | HKD 311,025,000 | -22.4% | | Operating Loss | (HKD 37,739,000) | (HKD 28,039,000) | Loss widened | - To expand market coverage, the Group acquired property in Missouri, USA, for a warehouse and a 55% equity interest in a Dutch design company to penetrate European and other overseas markets[7] Outlook Despite macroeconomic uncertainties, the Group is cautiously optimistic, focusing on enhancing factory efficiency, diversifying production, expanding market reach through acquisitions, and optimizing logistics with a new US warehouse - Production strategy: Focus on improving processes and stability at the Mexico factory, enhancing employee training; the Bangladesh factory will improve the synergistic benefits of newly added production lines for wallets, belts, and other accessories[10] - Trading strategy: Utilize the newly acquired Dutch design company to expand market coverage from Europe and America to the Middle East and Africa, and secure more brand licenses[10] - Infrastructure support: The Missouri, USA warehouse, expected to be operational in Q4 2024, will help save rental expenses and improve operational efficiency[10] Liquidity and Financial Resources The Group maintains a robust financial position with ample cash, unutilized banking facilities, and a low gearing ratio at period-end Liquidity Position (as of June 30, 2024) | Indicator | Amount | December 31, 2023 | | :--- | :--- | :--- | | Total Cash and Bank Balances | HKD 205.2 million | HKD 331.0 million | | Unutilized Banking Facilities | HKD 803.7 million | HKD 733.7 million | | Gearing Ratio (Borrowings to Total Equity) | 13.4% | 13.8% | Other Operating and Financial Information The Group incurred significant capital expenditures for US property and capacity upgrades, and completed the acquisition of Difuzed B.V. to expand market reach and product portfolio Capital Expenditure Major capital expenditures included HKD 102.4 million for US property and HKD 24.2 million for equipment upgrades, with future commitments for factory expansions and warehouse renovation - Capital expenditures during the period primarily included: - Investment of approximately HKD 102.4 million for property acquisition in Missouri, USA, for office and warehouse purposes - Investment of HKD 24.2 million for additions of plant and machinery to upgrade and expand production capacity[15] Acquisition of a Subsidiary In August 2024, the Group acquired a 55% stake in Difuzed B.V. for EUR 5 million to expand market reach to the EU, Middle East, and Africa, and diversify product lines - On August 23, 2024, the Group acquired a 55% equity interest in Dutch company Difuzed B.V. for a total consideration of EUR 5 million (approximately HKD 42.5 million), aiming to expand geographical market coverage and diversify its product lines[17] Foreign Exchange Risk The Group faces Bangladeshi Taka exchange rate risk, with a 1% Taka fluctuation estimated to impact manufacturing gross profit margin by approximately 0.28% - The Group estimates that a 1% appreciation or depreciation of the Bangladeshi Taka would result in a decrease or increase of approximately 0.28% in the manufacturing business's gross profit margin[18] Employees and Remuneration Policy As of period-end, the Group employed approximately 8,104 staff across five regions, with total employee expenses amounting to approximately HKD 192.3 million Employee Distribution and Expenses (as of June 30, 2024) | Region | Number of Employees | | :--- | :--- | | China (including Hong Kong) | 335 | | Bangladesh | 7,222 | | Mexico | 389 | | USA and UK | 158 | | Total | 8,104 | | Employee Expenses for the Period | HKD 192.3 million | Interim Dividend and Closure of Register of Members This section details the interim dividend declaration and related administrative procedures Interim Dividend The Board declared an interim dividend of 3 HK cents per share for H1 2024, consistent with the previous year - The Board declared an interim dividend of 3 HK cents per share, consistent with the same period in 2023, payable on or after October 10, 2024[20] Interim Condensed Consolidated Financial Statements This section presents the unaudited interim condensed consolidated financial statements, including the statement of profit or loss, financial position, and cash flows Interim Condensed Consolidated Statement of Profit or Loss For H1 2024, Group revenue declined 11.9% to HKD 687.1 million, with profit attributable to owners falling 45.8% to HKD 35.27 million Summary of Consolidated Statement of Profit or Loss (for the six months ended June 30) | Indicator (HKD thousands) | 2024 (Unaudited) | 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 687,114 | 780,258 | | Gross Profit | 219,510 | 273,930 | | Operating Profit | 65,048 | 100,000 | | Profit for the Period | 39,979 | 71,603 | | Profit Attributable to Owners of the Company | 35,269 | 65,075 | | Basic Earnings Per Share (HK cents) | 8.218 | 15.230 | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2024, the Group reported total assets of HKD 1,775.75 million and total equity of HKD 1,173.51 million, reflecting a stable financial position Summary of Consolidated Statement of Financial Position | Indicator (HKD thousands) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Total Assets | 1,775,751 | 1,786,603 | | Total Liabilities | 602,245 | 625,420 | | Total Equity | 1,173,506 | 1,161,183 | Interim Condensed Consolidated Statement of Cash Flows Net cash from operating activities decreased to HKD 31.77 million due to lower profit, while investing activities saw a HKD 123.07 million outflow for US property, and financing activities resulted in a net outflow Summary of Consolidated Statement of Cash Flows (for the six months ended June 30) | Indicator (HKD thousands) | 2024 (Unaudited) | 2023 (Unaudited) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 31,765 | 146,272 | | Net Cash Used in Investing Activities | (123,068) | (9,709) | | Net Cash Used in Financing Activities | (36,399) | (58,630) | | Net Decrease in Cash and Cash Equivalents | (127,702) | 77,933 | Summary of Notes to Unaudited Interim Condensed Consolidated Financial Information This section provides key explanatory notes to the interim condensed consolidated financial information, detailing segment performance, earnings per share, borrowings, and post-reporting period events Note 7: Segment Information Manufacturing contributed 64.9% of total revenue with a 20.9% operating profit margin, while trading accounted for 35.1% of revenue and incurred an operating loss Segment Results (for the six months ended June 30, 2024) | Business Segment | Revenue (HKD thousands) | % of Total Revenue | Operating Profit/(Loss) (HKD thousands) | | :--- | :--- | :--- | :--- | | Manufacturing Business | 445,769 | 64.9% | 93,178 | | Trading Business | 241,345 | 35.1% | (37,739) | Note 10: Earnings Per Share Basic earnings per share significantly decreased to 8.218 HK cents from 15.230 HK cents last year, with diluted earnings per share at 8.141 HK cents Earnings Per Share (for the six months ended June 30) | Indicator (HK cents) | 2024 | 2023 | | :--- | :--- | :--- | | Basic Earnings Per Share | 8.218 | 15.230 | | Diluted Earnings Per Share | 8.141 | 14.900 | Note 17: Borrowings At period-end, total borrowings were HKD 158 million, mostly current, with some from an affiliate of a company shareholder Borrowings Structure (as of June 30, 2024) | Category (HKD thousands) | Amount | | :--- | :--- | | Current Borrowings | 150,459 | | Non-current Borrowings | 7,197 | | Total Borrowings | 157,656 | Note 20: Events After the Reporting Period On August 23, 2024, the Group completed the acquisition of a 55% stake in Dutch company Difuzed B.V. for EUR 5 million - On August 23, 2024, the Group acquired a 55% equity interest in Dutch company Difuzed B.V. for a total consideration of EUR 5 million (approximately HKD 42.5 million)[86] Other Information Required by Listing Rules This section provides additional information as required by the Listing Rules, including details on directors' and major shareholders' interests, share option schemes, and corporate governance Directors' and Substantial Shareholders' Interests The report details directors' and substantial shareholders' interests, with Mr. Yan Hei Cheung and Ms. Ngan Po Ling collectively holding 65.23%, and Mr. Christopher Koch and NEHK holding 19.48% - As of June 30, 2024, Mr. Yan Hei Cheung and Ms. Ngan Po Ling, Pauline were deemed to be jointly interested in 65.23% of the Company's interests[89] - Substantial shareholder Mr. Christopher Koch and NEHK, controlled by him, held 19.48% of the Company's interests[100][101] Share Option Scheme A new share option scheme was adopted in May 2024, with 28,345,000 options unexercised under the previous scheme and no new grants during the period - As of June 30, 2024, 28,345,000 share options remained unexercised under the previous share option scheme[92][96] - The Company adopted a new share option scheme on May 24, 2024, with the total number of shares that may be issued not exceeding 10% of the then-issued shares[92] Corporate Governance The Board confirms compliance with the Corporate Governance Code during the period, and the Audit Committee has reviewed the interim financial information - The Board is of the view that the Company has complied with the code provisions of the Corporate Governance Code for the six months ended June 30, 2024[106] - The Audit Committee has reviewed the interim condensed consolidated financial information for the period ended June 30, 2024[108]