Financial Performance - For the fiscal year 2023/24, the company's revenue increased by approximately 0.3% to around HKD 442 million, primarily due to growth in domestic fresh agricultural products and upstream farming operations, although this was offset by a decline in traditional imported products [10]. - The net loss for the fiscal year 2023/24 was approximately HKD 196.4 million, compared to a net loss of about HKD 125.6 million in the previous fiscal year, with the increase in loss attributed to various factors including a 42.8% rise in selling and distribution expenses [10]. - The company's gross profit margin improved by approximately 1.2% during the fiscal year 2023/24, despite facing challenges from weak market demand and intense competition from domestic brands [10]. - The fast-moving consumer goods (FMCG) trading business experienced a revenue decline of about 2.7% compared to the previous fiscal year, impacted by weak market demand and aggressive pricing strategies from domestic competitors [11]. - The agricultural products business recorded revenue growth, driven by increased trade in domestic fresh agricultural products and upstream farming operations, despite facing similar competitive pressures as the FMCG sector [12]. - The company is actively developing its domestic fresh agricultural products and FMCG trading businesses to counter challenges posed by imported products, while also reducing unprofitable operations in securities brokerage and margin financing [9]. - The company is expanding its procurement network for domestic agricultural products, successfully negotiating lower procurement costs due to its larger operational scale [12]. - A food processing center located in Dongguan has commenced operations, significantly enhancing the development of domestic fresh product trade and improving procurement and transportation costs [12]. - The company plans to continue the process of reducing its securities brokerage and margin financing business until a complete exit from this business unit is achieved [9]. - Upstream farming business revenue increased by approximately 9.0% due to higher production and improved product quality from enhanced agricultural technology and better fertilizers [14]. - The company plans to promote new fertilizers in the domestic market to generate stable income sources in the future [14]. - The securities brokerage and margin financing business revenue decreased due to a weak capital market in Hong Kong and the company's strategy to gradually exit this business unit [14]. - The board decided not to recommend a final dividend for the year ending June 30, 2024, to maintain sufficient cash reserves amid unpredictable economic conditions [15]. - The company will focus on its core business and cautiously approach future developments, enhancing procurement networks and sourcing more suitable products from international and domestic suppliers [16]. - The company aims to enter the fertilizer trading business in China to create stable income sources while being conservative about new developments due to weak market demand and rising farming costs [16]. - Cost-saving measures will be implemented to reduce operating costs, and the company will thoroughly review development plans across business units to improve financial performance [16]. - The company believes its business model in providing one-stop services for fast-moving consumer goods and agricultural products will ensure high sustainability and long-term growth [17]. - The company is committed to strengthening its financial position to cope with unexpected adversities [16]. Revenue and Growth - The total revenue for the fiscal year was approximately HKD 442,000,000, a slight increase of about 0.3% compared to HKD 440,600,000 in the previous fiscal year [22]. - The contribution from domestic fresh agricultural products trade increased by approximately 17.1%, significantly offsetting the decline in revenue from traditional imported products [20]. - The gross profit margin improved from approximately 7.1% in the previous fiscal year to about 8.3%, primarily due to improved product mix and operational efficiency at the Dongguan food processing center [23]. - Other income and revenue rose to approximately HKD 12,300,000 from HKD 10,100,000 in the previous fiscal year, mainly driven by interest income from convertible bonds and bank deposits [24]. - The agricultural products business generated approximately HKD 172,500,000 in revenue, an increase of about 5.4% from HKD 163,600,000 in the previous fiscal year, mainly due to increased trade in domestic fresh agricultural products [30]. - Domestic agricultural product trading revenue increased by 17.1% compared to the previous fiscal year, contributing to a stable growth in total revenue from agricultural trading [31]. - The company confirmed an impairment loss of approximately HKD 112.8 million for certain assets and investments in the upstream farming business due to a decline in value [32]. Cost Management and Expenses - Sales and distribution expenses increased by approximately 42.8% from about HKD 30,500,000 to approximately HKD 43,600,000, accounting for about 9.9% of total revenue (previous fiscal year: 6.9%) [25]. - Administrative expenses decreased by approximately 3.0% from about HKD 64,300,000 to approximately HKD 62,400,000 due to cost-saving measures implemented by the company [25]. - Impairment losses on receivables and deposits increased to approximately HKD 6,300,000 from HKD 2,800,000 in the previous fiscal year, reflecting a cautious approach due to economic uncertainties [26]. - Non-financial asset impairment losses amounted to approximately HKD 112,800,000, primarily affecting upstream agricultural business assets [28]. - The company plans to enhance the efficiency of its food processing center to solidify the development of domestic agricultural trading [31]. - The company will implement stricter credit policies to mitigate risks associated with bad debts [59]. - The agricultural operations and distribution channels have shown improvement, but market demand remains weak, and rising cultivation costs pose threats to operations [60]. - The company plans to cautiously develop its agricultural business unit based on market demand and financial feasibility to minimize expenses and capital commitments [60]. Strategic Initiatives - The company is exploring opportunities to sell high-quality medical products in China through ongoing discussions with a domestic integrated healthcare and wellness products company [11]. - The company is actively seeking to procure new types of fertilizers from overseas suppliers to enhance its upstream farming operations [21]. - The company is attempting to enter the fertilizer trade business in China to generate stable revenue sources [60]. - The company is considering strategic acquisitions to bolster its product portfolio, with a budget of $30 million earmarked for potential targets [96]. - The company has initiated discussions with travel agencies to explore agricultural tourism business cooperation following China's economic reopening [32]. - The company maintains a conservative outlook on new developments in farming and agricultural tourism due to a weak economic environment and unpredictable weather conditions [32]. Corporate Governance and Compliance - The board emphasized the importance of maintaining strong corporate governance practices to mitigate risks associated with growth strategies [100]. - The company has adhered to all applicable corporate governance codes, ensuring transparency and accountability in its operations [100]. - The independent auditor's report will be presented at the upcoming annual general meeting, ensuring compliance with financial regulations [99]. - The board of directors held regular meetings to review and discuss the latest business developments and strategies, with all members attending 100% of the meetings [108]. - The audit committee conducted two meetings during the fiscal year ending June 30, 2024, with all members present, reviewing the group's financial reporting and internal control procedures [112]. - The remuneration committee held one meeting to evaluate the performance of executive directors and review the current compensation structure, with all members in attendance [113]. - The nomination committee convened once during the fiscal year, assessing the board's structure and composition, with full attendance from all members [114]. - The company adopted a whistleblowing policy and anti-corruption measures to enhance corporate governance mechanisms [109]. - The company secretary confirmed completion of no less than 15 hours of professional training to update skills and knowledge during the year [110]. - The company has established a risk management framework to identify and assess key inherent risks affecting its objectives [118]. - The board regularly discusses potential risks during meetings, ensuring close involvement in daily operations to monitor risks [118]. Financial Position and Assets - As of June 30, 2024, the group had floating rate borrowings of approximately HKD 100,000, significantly reduced from HKD 10,500,000 as of June 30, 2023 [51]. - The group has no significant unfulfilled hedging instruments as of June 30, 2024, and will monitor foreign currency risks closely [51]. - The group recorded a fair value gain of approximately HKD 5,900,000 and interest income of about HKD 4,300,000 from the investment in the convertible bond during the fiscal year [47]. - The company reported a total reserve of approximately HKD 816,445,000 as of June 30, 2024, compared to HKD 814,939,000 in 2023, indicating a slight increase of 0.18% [74]. - The company's share premium account was approximately HKD 2,455,999,000 as of June 30, 2024, up from HKD 2,439,015,000 in 2023, reflecting an increase of 0.69% [74]. - The company’s current assets were approximately HKD 514.4 million, down from HKD 591.8 million as of June 30, 2023, while current liabilities decreased to HKD 65.8 million from HKD 85.4 million [52]. - The current ratio improved to approximately 7.8 as of June 30, 2024, compared to 6.9 a year earlier [52]. - Total assets as of June 30, 2024, were approximately HKD 869.6 million, down from HKD 1,073.5 million in the previous year, with total liabilities decreasing to HKD 82.7 million from HKD 103.4 million [52]. - The debt-to-capital ratio was approximately 0.02% as of June 30, 2024, significantly lower than 1.0% a year prior, indicating a relatively low level of leverage [52]. - The company reported a significant increase in revenue for the fiscal year, with a total revenue of $500 million, representing a 20% growth compared to the previous year [96]. - The company’s cash and cash equivalents decreased from HKD 121,830,000 in 2023 to HKD 82,527,000 in 2024, a drop of around 32% [147]. - Total liabilities decreased from HKD 103,439,000 in 2023 to HKD 82,665,000 in 2024, a reduction of approximately 20% [149]. Impairment and Asset Management - The total asset impairment for the agricultural business segment amounted to approximately HKD 463 million as of June 30, 2024 [135]. - The total asset impairment for the fast-moving consumer goods (FMCG) trading business segment was approximately HKD 348 million as of June 30, 2024 [138]. - During the year, the agricultural business segment continued to record losses, increasing the risk of asset impairment [135]. - The FMCG trading business segment experienced a decline in revenue and continued to record losses, raising concerns about asset impairment [138]. - Impairment losses recognized during the year included approximately HKD 55 million for fixed assets and HKD 11 million for right-of-use assets [135]. - The company assessed the recoverable amount of cash-generating units based on value in use, requiring significant management judgment regarding future assumptions [135]. - The company evaluated the historical accuracy of forecasts by comparing past models with actual performance in the agricultural business segment [135]. - The company has engaged external valuation experts to assess the appropriateness of discount rates used in impairment evaluations [138]. Compliance with Financial Standards - The financial statements were prepared in accordance with the Hong Kong Financial Reporting Standards, reflecting a true and fair view of the group's financial position as of June 30, 2024 [130]. - The independent auditor's report highlighted key audit matters, including asset impairment assessments for both agricultural and FMCG segments [134]. - The group has adopted new and revised Hong Kong Financial Reporting Standards, which have no significant impact on the financial position and performance of the group [161]. - The group has not early adopted new standards and interpretations that are issued but not yet effective, with the expected application of these standards not having a significant impact on the consolidated financial statements in the foreseeable future [163]. - The new Hong Kong Financial Reporting Standard No. 18, effective from January 1, 2027, will significantly change the presentation of financial statements, focusing on the income statement and requiring enhanced disclosures of performance metrics defined by management [164].
亨泰(00197) - 2024 - 年度财报