皇朝家居(01198) - 2024 - 年度业绩

Performance Highlights Financial Summary In FY2024, the Group's total revenue decreased by 36.5% to RMB 526 million, with gross profit margin improving to 6.7%, while the loss for the year was RMB 348 million, and net current liabilities surged to RMB 699 million, indicating significant liquidity and financial risk Key Financial Performance Indicators | Indicator | 2024 | 2023 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 526 million RMB | 828 million RMB | -36.5% | | Gross Profit | 35.41 million RMB | 26.12 million RMB | +35.6% | | Gross Profit Margin | 6.7% | 3.2% | +3.5pp | | Loss for the Year | (348 million RMB) | (386 million RMB) | -9.8% | | Loss Attributable to Owners of the Company | (334 million RMB) | (382 million RMB) | -12.4% | | Basic Loss Per Share (RMB cents) | (13.495) | (15.362) | -12.2% | Key Financial Position Indicators | Indicator | As at December 31, 2024 | As at December 31, 2023 | | :--- | :--- | :--- | | Total Assets | 5.028 billion RMB | 5.306 billion RMB | | Total Liabilities | 3.582 billion RMB | 3.519 billion RMB | | Net Assets | 1.446 billion RMB | 1.787 billion RMB | | Net Current Liabilities | (699 million RMB) | (96 million RMB) | | Gearing Ratio | 72% | 66% | Operating and Going Concern Risks The Group faces severe going concern challenges, with the auditor highlighting significant uncertainties due to a RMB 348 million annual loss and RMB 699 million net current liabilities, necessitating successful execution of management's mitigation plans including shareholder support and asset sales - The auditor emphasized in their independent report that the Group's annual loss and net current liabilities constitute a material uncertainty that may cast significant doubt on its ability to continue as a going concern[72] - As of year-end, the Group recorded a loss of approximately RMB 348 million, with current liabilities exceeding current assets by approximately RMB 699 million, and cash and cash equivalents of only RMB 20 million[9] - Management's measures to address liquidity pressure include: - The controlling shareholder, Science City Group, agreed to continue providing loan guarantees not exceeding RMB 2 billion - Seeking opportunities to dispose of equity interests in associates and subsidiaries - Accelerating collection of sales proceeds and controlling costs[12] Consolidated Financial Statements Consolidated Statement of Profit or Loss In FY2024, Group revenue decreased by 36.5% to RMB 526 million, with gross profit increasing to RMB 35.41 million, but high operating and finance costs, coupled with increased expected credit loss provisions, led to a RMB 432 million loss before tax, narrowing to RMB 348 million after tax credits Consolidated Statement of Profit or Loss | Item | 2024 (thousand RMB) | 2023 (thousand RMB) | | :--- | :--- | :--- | | Revenue | 525,607 | 827,916 | | Gross Profit | 35,411 | 26,117 | | Selling and Distribution Expenses | (100,166) | (165,352) | | Administrative Expenses | (128,942) | (157,194) | | Provision for Expected Credit Losses | (70,115) | (39,545) | | Finance Costs | (171,656) | (144,670) | | Loss Before Income Tax | (431,573) | (419,118) | | Loss for the Year | (348,306) | (385,971) | | Loss Attributable to Owners of the Company | (334,391) | (381,536) | | Basic Loss Per Share (RMB cents) | (13.495) | (15.362) | Consolidated Statement of Comprehensive Income Building on a RMB 348 million loss for the year, and incorporating other comprehensive income items like exchange differences and property revaluation surplus, the total comprehensive loss for the year amounted to RMB 340 million, a reduction from last year's RMB 362 million loss Consolidated Statement of Comprehensive Income | Item | 2024 (thousand RMB) | 2023 (thousand RMB) | | :--- | :--- | :--- | | Loss for the Year | (348,306) | (385,971) | | Other Comprehensive Income, Net of Tax | 7,931 | 24,373 | | Total Comprehensive Income for the Year | (340,375) | (361,598) | Consolidated Statement of Financial Position As of year-end 2024, total assets slightly decreased to RMB 5.028 billion, and net assets declined to RMB 1.446 billion, with a significant deterioration in liquidity as net current liabilities surged from RMB 96 million to RMB 699 million, indicating immense short-term repayment pressure Consolidated Statement of Financial Position | Item | 2024 (thousand RMB) | 2023 (thousand RMB) | | :--- | :--- | :--- | | ASSETS | | | | Non-current Assets | 3,002,462 | 3,145,022 | | Current Assets | 2,025,611 | 2,160,777 | | Total Assets | 5,028,073 | 5,305,799 | | LIABILITIES AND EQUITY | | | | Current Liabilities | 2,664,761 | 2,256,885 | | Non-current Liabilities | 917,163 | 1,262,390 | | Total Liabilities | 3,581,924 | 3,519,275 | | Net Assets | 1,446,149 | 1,786,524 | - The Group's net current liabilities amounted to RMB 699 million, compared to RMB 96 million in the prior year, indicating a significant deterioration in liquidity[6][56] Notes to the Financial Statements Basis of Preparation and Going Concern While financial statements are prepared on a going concern basis, both management and auditors acknowledge significant uncertainties due to substantial losses and severe liquidity shortfalls, with the Group's continued operation highly dependent on controlling shareholder support, successful asset sales, and improved operating performance - As of December 31, 2024, the Group's annual loss was approximately RMB 348 million, and current liabilities exceeded current assets by approximately RMB 699 million, indicating a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern[9] - The Group's ability to continue as a going concern depends on: (i) successfully obtaining continued financing from banks and creditors; (ii) timely and successful disposal of equity interests in associates and subsidiaries; and (iii) successful implementation of plans to improve operating performance[13] - The controlling shareholder, Science City Group, has agreed to continue providing guarantees for bank and other loans to the Group, totaling no more than RMB 2 billion, within the next twelve months[12] Operating Segment Information The Group operates in four segments, with the core 'Manufacturing and Sales of Furniture' segment contributing the majority of revenue (RMB 505 million) and RMB 43.81 million in gross profit, while other smaller segments like hotel and property investment are mostly loss-making, and the Group's operations are highly concentrated in mainland China Operating Segment Performance | Segment (2024) | Segment Revenue (thousand RMB) | Segment Results (Gross Profit/Loss) (thousand RMB) | | :--- | :--- | :--- | | Manufacturing and Sales of Furniture | 505,306 | 43,807 | | Development Properties Held for Sale and Property Investment | – | – | | Hotel Business | 15,206 | (8,170) | | Trading of Aluminum Ingots and Rods | 5,095 | (226) | | Total | 525,607 | 35,411 | - Geographical segment information is not presented separately as the majority of the Group's revenue and non-current assets are located in mainland China[26] Revenue, Other Income and Gains Total revenue in 2024 was RMB 526 million, primarily from sales of goods (RMB 408 million) and installation services (RMB 103 million), while other income and gains decreased to RMB 69.99 million, mainly due to lower bank interest income and the absence of prior year's fair value gains, with interest from an associate being a key component Revenue Breakdown | Revenue Sources (2024) | Amount (thousand RMB) | | :--- | :--- | | Sales of Goods | 407,825 | | Installation and Other Ancillary Services | 102,576 | | Hotel Business Revenue | 15,206 | | Total Revenue | 525,607 | Other Income and Gains Breakdown | Major Other Income and Gains (2024) | Amount (thousand RMB) | | :--- | :--- | | Interest Income from an Associate | 42,503 | | Compensation Income from Controlling Shareholder of an Associate | 9,467 | | Bank Interest Income | 5,023 | | Compensation from Legal Case | 4,000 | Trade Receivables and Payables At year-end, net trade receivables were RMB 232 million, but the provision for expected credit losses significantly increased from RMB 21.94 million to RMB 81.57 million, indicating higher collection risk, with a notable portion of receivables over one year old, while trade payables were RMB 206 million, with an increase in amounts over one year - The provision for expected credit losses on trade receivables increased from RMB 21.94 million at the beginning of the year to RMB 81.57 million at year-end, with a new provision of RMB 59.63 million recognized during the year[40] Trade Receivables Aging Analysis | Aging of Trade Receivables (Net) | 2024 (thousand RMB) | 2023 (thousand RMB) | | :--- | :--- | :--- | | Within One Year | 146,007 | 166,023 | | One to Two Years | 44,320 | 70,355 | | Over Two Years | 41,693 | – | Management Discussion and Analysis Financial Review In 2024, revenue significantly decreased by 36.5% due to a weak consumer market and the termination of commodity trading, while gross profit margin improved to 6.7%; despite reduced selling and administrative expenses, increased finance costs and expanded losses from associates impacted the year's overall loss - Revenue decreased by 36.5% to RMB 526 million, primarily due to a weak consumer market and the Group's termination of commodity trading business[48] - The overall gross profit margin increased from 3.2% to 6.7%, mainly due to improved gross profit margin in the furniture business and the cessation of low-margin commodity trading business[48] - Selling and distribution expenses decreased by 39.4%, and administrative expenses decreased by 18.0%, primarily benefiting from cost control measures; however, finance costs increased by 18.7%[50] Business Review Facing real estate market adjustments and consumption downgrades, the Group saw reduced dealer orders and closed three direct stores, while engaging a new brand ambassador to attract younger consumers; despite efforts to expand furniture engineering projects, this business experienced a slight decline, though hotel business revenue grew by 30.2%, showing continuous improvement - Affected by real estate market adjustments and consumption downgrades, dealer orders decreased, and the Group closed three direct stores to cut losses[52][53] - The Group appointed artist Ms. Yao Anna as its new brand ambassador to convey a young and fashionable brand image[53] - The hotel business continued to improve, with revenue increasing by approximately 30.2% year-on-year[54] Liquidity and Financial Resources The Group's liquidity position is extremely tight, with cash and cash equivalents at only RMB 20.5 million at year-end, as the current ratio deteriorated from 0.96 to 0.74, net current liabilities surged to RMB 699 million, and the gearing ratio increased from 66% to 72%, reflecting increased debt burden and financial risk Liquidity and Gearing Ratios | Indicator | As at December 31, 2024 | As at December 31, 2023 | | :--- | :--- | :--- | | Cash and Cash Equivalents | 20.50 million RMB | 29.30 million RMB | | Current Ratio | 0.74 | 0.96 | | Net Current Liabilities | 699 million RMB | 96 million RMB | | Gearing Ratio | 72% | 66% | Outlook For 2025, the Group anticipates continued economic recovery in China but a gradual consumer market improvement, focusing on its core home furnishing business by leveraging a new brand ambassador to expand sales channels and optimize cost structure, while financially planning to optimize its capital structure through timely asset sales to repay bank loans, reduce finance costs, and improve cash flow - The Group will continue to allocate resources to develop its home furnishing business, utilizing its brand and new brand ambassador to expand sales channels and optimize its cost structure[59] - The Group plans to continuously optimize its financial structure in 2025, disposing of assets in a timely manner to repay bank loans, aiming to reduce debt size and expenses[60] Other Significant Matters Summary of Independent Auditor's Report The auditor issued an unmodified opinion on the financial statements but highlighted a 'material uncertainty related to going concern,' noting that the Group's losses and liquidity issues raise significant doubt about its ability to continue as a going concern, though the auditor's opinion was not modified in respect of this matter - The auditor believes that the financial statements present a true and fair view of the Group's financial position and performance[71] - The report specifically draws attention to the "material uncertainty related to going concern" described in Note 2.1 to the financial statements, but the auditor's opinion was not modified in respect of this matter[72] Corporate Governance The Company largely complied with the Corporate Governance Code, with one deviation: the roles of Chairman and Chief Executive Officer are not separated, both held by Mr. Lin Ruhai, which the Company believes provides strong and stable leadership, and this structure will be continuously reviewed - The Company deviated from the Corporate Governance Code's provision requiring the separation of the roles of Chairman and Chief Executive Officer[73] - Mr. Lin Ruhai concurrently holds the positions of Chairman and Chief Executive Officer; the Board believes this structure provides strong and stable leadership and effective execution of business strategies[74] Dividend Policy Given the Company's loss-making position and financial pressures, the Board has resolved not to declare a final dividend for the year ended December 31, 2024 - The Board has resolved not to declare a final dividend for the year ended December 31, 2024[79] - The Company did not declare or pay any dividends in FY2024 and FY2023[35] Events After Reporting Period On February 20, 2025, the Company's indirect wholly-owned subsidiary publicly listed its intention to sell a 25% equity interest in Dongma (Guangzhou Bonded Area) Oil & Chemical Co., Ltd., as part of the Company's asset disposal plan to improve liquidity - The Company's indirect wholly-owned subsidiary intends to sell a 25% equity interest in Dongma (Guangzhou Bonded Area) Oil & Chemical Co., Ltd. through public listing, with the listing announcement published on February 20, 2025[61]