雅视光学(01120) - 2024 - 中期财报

Management Discussion and Analysis Business Review In H1 2024, the Group's consolidated revenue increased by 7% to HKD 606.4 million, but profit attributable to owners significantly declined by 88% to HKD 2.5 million, primarily due to ODM gross margin pressure, increased investment property revaluation losses, reduced associate earnings, and higher costs from optical lens business expansion Profitability Analysis Key Financial Indicators for H1 2024 | Indicator | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Consolidated Revenue | 606,400,000 HKD | 566,400,000 HKD | +7% | | Profit Attributable to Owners | 2,500,000 HKD | 21,700,000 HKD | -88.5% | | Earnings Per Share | 0.64 HK cents | 5.61 HK cents | -88.6% | | Gross Profit Margin | 28.4% | 30.2% | -1.8pp | - The significant decrease in net profit was primarily due to declining gross profit margin from 30.2% to 28.4% due to substantial price pressure from Original Design Manufacturer (ODM) clients[10] - Increased investment property revaluation losses expanded from HKD 0.7 million to HKD 4 million[10] - Reduced earnings from associates significantly decreased from HKD 9.2 million to HKD 4.2 million due to pricing competition[10] - Increased costs were incurred for staff, promotion, and exhibition expenses to develop the optical lens business in China and Southeast Asia[10] Original Design Manufacturer (ODM) Segment Original Design Manufacturer (ODM) Segment Performance | Indicator | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Sales | 419,000,000 HKD | 398,100,000 HKD | +5% | | % of Consolidated Revenue | 69% | 70% | -1pp | - Revenue growth was primarily driven by the Asian market, which achieved a significant 80% increase[11] - Geographically, Europe, the US, Asia, and other regions accounted for 49%, 25%, 25%, and 1% of the segment's revenue, respectively[11] Distribution Segment Distribution Segment Performance | Indicator | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 140,300,000 HKD | 129,700,000 HKD | +8% | | % of Consolidated Revenue | 23% | 23% | Flat | - Sales in the Asian region saw a significant 37% year-on-year increase, mainly due to marketing efforts in mainland China[12] - The German brand STEPPER remains the most popular brand in this segment[12] Optical Lens Segment Optical Lens Segment Performance | Indicator | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 47,100,000 HKD | 38,600,000 HKD | +22% | | % of Consolidated Revenue | 8% | 7% | +1pp | - The substantial increase in sales was primarily due to the Group's expansion of its optical lens factory production facilities in H2 2023[13] - Almost all current revenue is generated from Asia[13] Financial Position and Liquidity The Group's net cash significantly decreased due to capital expenditure and dividend payments, yet its gearing remained low with a debt-to-equity ratio of 6%, while working capital management saw shorter accounts receivable collection but longer inventory turnover Cash Flow - Net cash inflow from operating activities was HKD 28.2 million, a decrease from HKD 59.1 million in the prior year period[14] - Net cash (bank balances and cash less bank borrowings) decreased from HKD 136 million at the end of 2023 to HKD 72.4 million at the end of the reporting period, primarily due to the purchase of property, plant, and equipment (HKD 73.2 million) and dividend payments (HKD 19.3 million)[14] Working Capital Management Changes in Working Capital Indicators | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Accounts Receivable Turnover Period | 91 Days | 105 Days | | Inventory Turnover Period | 71 Days | 63 Days | - The Group strengthened control over inventory levels and trade receivables, with inventory and accounts receivable balances decreasing by 7% and 14%, respectively, compared to the end of 2023[15] - The current ratio remained stable, decreasing from 1.2 to 1.1[15] Balance Sheet and Net Assets - The gearing ratio remained low at approximately 6% as of June 30, 2024[16] - Net assets per share decreased from HKD 1.40 at the end of 2023 to HKD 1.34 as of June 30, 2024[17] Other Financial Items - As of June 30, 2024, the Group had no significant contingent liabilities[18] - As of June 30, 2024, the Group had HKD 20 million in bank borrowings secured by investment properties and leasehold land and buildings[19] Risk Management and Outlook The Group faces limited foreign exchange risk, but global economic uncertainties and pricing pressures will challenge the ODM business, while Asia presents growth opportunities for distribution and optical lens segments with planned increased resource allocation Foreign Currency Risk - The Group primarily faces volatility risk from the Renminbi against the US Dollar and Hong Kong Dollar, but overall foreign exchange risk is limited as most transactions are conducted in USD, HKD, or RMB[20] - The Group closely monitors exchange rate movements and enters into forward contracts when appropriate[20] Outlook - Due to global economic volatility, military conflicts, and US-China trade tensions, pricing pressure in the Original Design Manufacturer (ODM) segment is expected to persist, leading to a severe and challenging business environment in the coming years[21] - The Distribution and Optical Lens segments are becoming increasingly important for the Group's future development, with the Group recognizing business opportunities in Asia and planning to increase resources to establish its own network or form joint ventures with strategic partners in the region[21] Other Matters No significant events occurred post-reporting period, with the Group having HKD 164 million in capital commitments primarily for subsidiary investments and buildings under construction, and approximately 3,600 full-time employees as of June 30, 2024 Significant Events and Future Plans - No events with significant impact on the Group occurred from June 30, 2024, to the date of this report[22] - As of June 30, 2024, the Group's capital commitments amounted to HKD 163.8 million, with no other significant investment and capital expenditure plans[23] Employees and Remuneration Policy - As of June 30, 2024, the Group employed approximately 3,600 full-time employees, a slight decrease from 3,700 at the end of 2023[24] - Remuneration is determined based on employee performance, experience, and market levels[24] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income During the reporting period, revenue grew 7% to HKD 606 million, but gross profit remained flat, operating profit decreased from HKD 22.64 million to HKD 7.95 million, and profit for the period significantly fell to HKD 5.53 million, with profit attributable to owners down 88.6% to HKD 2.46 million Condensed Consolidated Income Statement Summary (HKD '000) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Revenue | 606,394 | 566,454 | | Gross Profit | 172,039 | 171,227 | | Operating Profit | 7,953 | 22,641 | | Profit Before Tax | 11,091 | 31,560 | | Profit for the Period | 5,534 | 24,497 | | Profit Attributable to Owners of the Company | 2,460 | 21,675 | Condensed Consolidated Statement of Financial Position As of June 30, 2024, total assets were HKD 1.245 billion, total liabilities HKD 636 million, and net assets HKD 609 million, representing a slight decrease from end-2023, with net current assets falling from HKD 133 million to HKD 83.33 million Condensed Consolidated Statement of Financial Position Summary (HKD '000) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Non-current Assets | 556,212 | 529,162 | | Current Assets | 688,422 | 747,382 | | Total Assets | 1,244,634 | 1,276,544 | | Current Liabilities | 605,095 | 613,953 | | Non-current Liabilities | 30,441 | 30,783 | | Total Liabilities | 635,536 | 644,736 | | Net Assets | 609,098 | 631,808 | | Equity Attributable to Owners of the Company | 516,803 | 541,923 | Condensed Consolidated Statement of Changes in Equity As of June 30, 2024, equity attributable to owners decreased from HKD 542 million at the beginning of the period to HKD 517 million, primarily due to total comprehensive expenses and dividends paid during the period - Equity attributable to owners of the Company decreased from HKD 542 million at the beginning of the period to HKD 517 million at the end of the period[30] - The change primarily includes profit for the period of HKD 2.46 million, other comprehensive expenses of HKD 7.83 million, and dividends paid of HKD 19.31 million[32] Condensed Consolidated Statement of Cash Flows Net cash inflow from operating activities was HKD 28.22 million, a year-on-year decrease, while net cash outflow from investing activities was HKD 66.24 million, mainly for property, plant, and equipment, and net cash inflow from financing activities was HKD 13.04 million, resulting in a decrease in cash and cash equivalents to HKD 124 million at period-end Condensed Consolidated Cash Flow Statement Summary (HKD '000) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 28,223 | 59,145 | | Net Cash Used in Investing Activities | (66,243) | (28,929) | | Net Cash from/(Used in) Financing Activities | 13,039 | (45,153) | | Net Decrease in Cash and Cash Equivalents | (24,981) | (14,937) | | Cash and Cash Equivalents at Beginning of Period | 151,563 | 189,710 | | Cash and Cash Equivalents at End of Period | 123,530 | 176,107 | Notes to the Condensed Consolidated Financial Statements Notes 1-4: Basis of Preparation, Accounting Policies and Segment Information The financial statements are prepared under HKAS 34, adopting new and revised financial reporting standards, with business segments categorized by geographical markets: Europe, US, Asia, and Other Regions, where Europe is the largest revenue source but Asia shows significant growth Revenue from External Customers by Geographical Region (HKD '000) | Region | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Europe | 295,998 | 333,586 | -11.3% | | United States | 120,353 | 103,826 | +15.9% | | Asia | 170,495 | 110,326 | +54.5% | | Other Regions | 19,548 | 18,716 | +4.4% | | Total | 606,394 | 566,454 | +7.0% | Notes 5-9: Profit and Dividend Details Finance costs increased year-on-year due to higher bank borrowing interest, income tax expense was HKD 5.56 million, the Board resolved not to declare an interim dividend, and basic earnings per share were 0.64 HK cents, significantly lower than 5.61 HK cents in the prior period - The Board resolved not to declare any interim dividend for the six months ended June 30, 2024 (H1 2023: nil)[60] - Basic earnings per share were 0.64 HK cents, calculated based on profit attributable to owners of the Company of HKD 2,460,000 and 386,263,374 issued shares[62][63] Notes 10-15: Assets, Liabilities and Borrowings Details Investment properties saw a fair value decrease of HKD 4 million, accounts receivable balances declined with a healthy aging structure, and total bank borrowings increased to HKD 52.26 million, partly floating-rate and secured by Group properties - During the period, a loss of HKD 4 million was recognized in profit or loss due to a decrease in the fair value of investment properties[64] Trade Receivables Aging Analysis (HKD '000) | Aging | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | 0 – 90 Days | 226,305 | 235,296 | | 91 – 180 Days | 64,108 | 104,895 | | Over 180 Days | 13,226 | 13,419 | | Total | 303,639 | 353,610 | - As of June 30, 2024, total secured bank borrowings amounted to HKD 52.26 million, a significant increase from HKD 16.55 million at the end of 2023[77] Notes 16-19: Share Capital, Commitments and Related Party Transactions The company's issued share capital remained unchanged, with capital commitments of HKD 164 million at period-end, and routine business transactions, primarily sales and purchases of optical products, were conducted with an associate during the period Summary of Capital Commitments (HKD '000) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Establishment costs for investments in subsidiaries | 119,994 | 151,310 | | Buildings under construction | 39,264 | 32,999 | | Machinery and plant | 3,808 | 7,013 | | Total | 163,753 | 193,057 | - During the period, the Group sold optical frames and sunglasses worth HKD 59.44 million to an associate (H1 2023: HKD 84.35 million)[82] Additional Information Shareholder and Board Matters The Board resolved not to declare an interim dividend, no listed shares were purchased, sold, or redeemed during the period, and director and major shareholder holdings, including Chairman Mr. Wu Hoi Ying and his spouse as controlling shareholders with approximately 56.25% interest, were disclosed as required - The Board resolved not to declare any interim dividend for the six months ended June 30, 2024[88] - During the six months ended June 30, 2024, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed shares[90] Major Directors' Shareholdings (as at June 30, 2024) | Director Name | Total Shares Held | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | | Wu Hoi Ying (Chairman) | 217,289,347 | 56.25% | | Wu Chi Hung (Spouse of Wu Hoi Ying) | 217,289,347 | 56.25% | Corporate Governance The company complied with all applicable Corporate Governance Code provisions during the reporting period, with the Audit, Remuneration, and Nomination Committees established and fulfilling their duties, and the Audit Committee having reviewed this interim report - The Company has complied with all applicable code provisions set out in the Corporate Governance Code contained in Appendix C1 to the Listing Rules throughout the six months ended June 30, 2024[95] - The Group's interim report has been reviewed by the Audit Committee, whose members are all independent non-executive directors[95] Company Information This section provides the company's basic registration details, board members, principal office address, auditor, legal counsel, and share registrar contact information - Chairman: Wu Hoi Ying - Chief Executive Officer: Wu Yat Shan - Auditor: RSM Hong Kong - Principal Place of Business in Hong Kong: Units A to G, 32nd Floor, King Palace Plaza, 55 King Yip Street, Kwun Tong, Kowloon, Hong Kong[98]