晶苑国际(02232) - 2025 - 中期财报

Company Information The company is a leading global apparel manufacturer and sustainability pioneer, headquartered in Hong Kong, with diversified product categories and production facilities across five countries About Crystal International Group Limited Crystal International Group, established in 1970 in Hong Kong, is a global apparel manufacturing leader and sustainability pioneer with diverse product lines and international production facilities - The company was established in 1970, headquartered in Hong Kong, and is a global apparel manufacturing leader and sustainability pioneer[2] - Its product portfolio is diversified, primarily categorized into five segments: casual wear, sportswear and outdoor wear, denim, intimate wear, and sweaters, with upstream vertical expansion into fabric production[2] - Production facilities are located across five countries: Vietnam, China, Cambodia, Bangladesh, and Sri Lanka[2][5] Mission and Values The Group's mission is to become the most profitable enterprise for the industry, customers, and employees, guided by core values including respect, quality, integrity, and innovation - Mission: To develop the Group into the most profitable enterprise in the industry, for its customers, and for its employees[3] - The Group's values include mutual respect, quality-oriented, integrity, customer-centricity, innovation, achieving optimal efficiency, inspiring morale, seamless integration, and transcending boundaries[6] Board of Directors and Committees The Board comprises executive, non-executive, and independent non-executive directors, supported by various committees to ensure effective corporate governance - Board members include Mr. Lo Lok Fung (Chairman), Ms. Lo Choi Yuen Ching (Vice Chairman), Mr. Lo Ching Leung (Vice Chairman and Chief Executive Officer), along with other executive, non-executive, and independent non-executive directors[8] - The company has an Audit Committee, Remuneration Committee, Nomination Committee, Human Resources Committee, and Sustainability Committee, each with clearly defined chairpersons and members[8] Financial Highlights This chapter summarizes unaudited key financial data for the six months ended June 30, 2025, including income statement metrics, financial position indicators, and definitions of financial ratios Key Financial Data (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Revenue | 1,229,475 | 1,093,672 | | Cost of sales | 986,873 | 880,220 | | Gross profit | 242,602 | 213,452 | | Profit for the period | 98,323 | 84,214 | | Earnings per share (US cents) | 3.44 | 2.94 | | Gross profit margin (%) | 19.7% | 19.5% | | Net profit margin (%) | 8.0% | 7.7% | Key Financial Position Data (As of June 30) | Indicator | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Total assets | 2,337,572 | 2,254,453 | | Total liabilities | 797,277 | 719,007 | | Total equity | 1,540,295 | 1,535,446 | | Bank balances and cash | 511,727 | 426,715 | | Cash conversion cycle (days) | 84 | 71 | - Net debt refers to total interest-bearing bank borrowings less short-term bank deposits and bank balances and cash[11] - Net debt to equity ratio refers to total interest-bearing bank borrowings less short-term bank deposits and bank balances and cash, divided by total equity[12] - Cash conversion cycle refers to inventory turnover days plus trade receivables and bills receivable turnover days, less trade payables and bills payable turnover days[13] Management Discussion and Analysis This chapter details the Group's operating results, market environment, financial position, sustainability strategy, and future outlook for the six months ended June 30, 2025, highlighting robust growth, tariff mitigation, and strategic investments Market Overview In H1 2025, the global apparel industry maintained strong sales, particularly in Asia and Europe, while the Group effectively mitigated US tariff impacts through its FOB revenue structure and brand client pricing advantages - In the first half of 2025, the apparel industry continued its strong sales momentum, with robust performance in Asian and European markets[16] - US President Trump signed the "Liberation Day" tariff executive order, imposing large-scale reciprocal tariffs on global trading partners and high differential tariffs on major apparel exporting countries like China, Vietnam, and Bangladesh, posing challenges to the Group's business[16][17] - The Group effectively mitigated tariff impacts through its FOB revenue structure (tariffs borne by brand customers), brand customer pricing advantages (retail mark-ups higher than FOB prices), and overall industry resilience (core competitiveness of suppliers offsetting tariff effects)[18] Business Review In H1 2025, the Group achieved balanced growth across all segments, with revenue up 12.4% to $1,229 million, gross profit up 13.7% to $243 million, and net profit up 16.8% to $98 million, while declaring an interim dividend of 16.3 HK cents per share - In the first half of 2025, all segments of the Group achieved balanced growth, primarily due to increased penetration with key brand customers[20] - The Group effectively mitigated the adverse impact of high US tariffs through strategic capacity expansion (hiring approximately 10,000 additional employees) and production efficiency optimization[20] Key Financial Performance in H1 2025 | Indicator | H1 2025 (million USD) | H1 2024 (million USD) | YoY Growth/Change | | :--- | :--- | :--- | :--- | | Revenue | 1,229 | 1,094 | +12.4% | | Gross profit | 243 | 213 | +13.7% | | Gross profit margin | 19.7% | 19.5% | +0.2pp | | Net profit | 98 | 84 | +16.8% | | Net profit margin | 8.0% | 7.7% | +0.3pp | - The Board resolved to declare an interim dividend of 16.3 HK cents per ordinary share (H1 2024: 13.8 HK cents), representing a payout ratio of 60%[21] - Capital expenditure amounted to $60 million (H1 2024: $52 million)[22] Financial Review This section analyzes revenue, gross profit, and gross margin by product category and geography, highlighting improved margins for casual wear and intimate wear, a stable financial position with ample operating cash flow, zero gearing, and increased cash conversion cycle Revenue by Product Category (Six Months Ended June 30) | Product Category | 2025 (thousand USD) | Share (%) | 2024 (thousand USD) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Casual Wear | 339,672 | 27.6% | 304,981 | 27.9% | | Sportswear and Outdoor Wear | 312,906 | 25.5% | 278,285 | 25.4% | | Denim | 262,202 | 21.3% | 237,697 | 21.7% | | Intimate Wear | 209,784 | 17.1% | 191,517 | 17.5% | | Sweaters | 104,911 | 8.5% | 81,192 | 7.5% | | Total Revenue | 1,229,475 | 100.0% | 1,093,672 | 100.0% | Sales by Geographical Location of Port of Discharge (Six Months Ended June 30) | Region | 2025 (thousand USD) | Share (%) | 2024 (thousand USD) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Asia Pacific | 478,286 | 38.9% | 417,729 | 38.2% | | North America | 462,934 | 37.6% | 414,566 | 37.9% | | Europe | 252,705 | 20.6% | 230,447 | 21.1% | | Other Countries/Regions | 35,550 | 2.9% | 30,930 | 2.8% | | Total Revenue | 1,229,475 | 100.0% | 1,093,672 | 100.0% | Gross Profit and Gross Margin by Product Category (Six Months Ended June 30) | Product Category | 2025 Gross Profit (thousand USD) | 2025 Gross Margin (%) | 2024 Gross Profit (thousand USD) | 2024 Gross Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Casual Wear | 69,801 | 20.5% | 60,344 | 19.8% | | Sportswear and Outdoor Wear | 64,869 | 20.7% | 58,158 | 20.9% | | Denim | 42,892 | 16.4% | 39,322 | 16.5% | | Intimate Wear | 43,637 | 20.8% | 37,311 | 19.5% | | Sweaters | 21,403 | 20.4% | 18,317 | 22.6% | | Total Gross Profit | 242,602 | 19.7% | 213,452 | 19.5% | - The increase in gross margin for casual wear and intimate wear was primarily due to improved production efficiency; the decrease in gross margin for sweaters was mainly due to increased sales of regular styles with lower gross margins[28] - Selling and distribution expenses remained stable at 1.3%; administrative, research and development expenses, and other income and expenses remained stable at 8.0% (H1 2024: 8.2%)[29][30] - The effective borrowing interest rate ranged from 1.52% to 5.64% (H1 2024: 4.97% to 6.65%), with finance costs as a percentage of revenue decreasing from 0.6% to 0.5%[30] - As of June 30, 2025, the Group maintained a positive net cash position of $517 million and a zero gearing ratio[32] - The cash conversion cycle increased from 71 days in 2024 to 84 days, primarily due to an increase in trade receivables and inventory turnover days[34] - Capital expenditure for the six months ended June 30, 2025, was $60 million (H1 2024: $52 million)[34] Employment, Training and Development As of June 30, 2025, the Group employed approximately 79,000 staff, with total staff costs at 26.5% of revenue, and provides continuous training and performance-based remuneration - As of June 30, 2025, the Group employed approximately 79,000 employees[44] - Total staff costs accounted for 26.5% of revenue (H1 2024: 25.7%)[44] - Remuneration policy is determined based on employee performance, qualifications, and industry practices, offering discretionary bonuses and incentives, and continuous training opportunities are provided to enhance employee skills and product knowledge[44] Sustainability Sustainability is a strategic priority, guided by five pillars, with a commitment to net-zero emissions by 2050 and a 35% reduction in GHG emissions by 2030, demonstrating significant progress in energy efficiency, renewable energy, talent empowerment, and community engagement - The sustainability framework is composed of five pillars: environmental protection, innovation, product integrity, employee care, and community engagement[45] - The "Crystal Sustainability Vision 2030" (CSV2030) has been formulated, committing to achieving net-zero emissions by 2050 and reducing total greenhouse gas emissions by 35% by 2030[45] - Over 120 energy efficiency measures have been completed, reducing over 30,000 tonnes of carbon emissions and approximately 32,600 MWh of energy consumption annually[50] - Total rooftop solar photovoltaic capacity has increased fivefold to approximately 23 MW, and off-site green electricity is purchased through power purchase agreements, with no coal-fired facilities in self-operated factories[50] - The company has been listed on the CDP Climate A List (Leadership) for two consecutive years and debuted on the CDP 2024 Supplier Engagement Rating (SEA) A List[51] - The CARE2 program has empowered over 70,300 female employees and promotes employee personal and professional development through training programs[52] - In collaboration with non-profit organizations, free eye examinations are provided to employees, with nearly 30,000 employees examined to date and over 9,200 provided with glasses[53] - The Group aims to plant two million trees globally, having planted 450,000 trees in Vietnam, China, Cambodia, and Sri Lanka to date[56] Outlook and Prospects The Group anticipates improved brand confidence from US tariff negotiations, plans to expand its workforce by 4,000 employees, modernize Vietnamese production, prioritize European and Asian market growth, and explore new European production bases, while continuing investments in vertical integration and automation - Steady progress in tariff negotiations between the US and its major trading partners is expected to significantly reduce trade policy uncertainty and boost apparel brand confidence[57] - The Group plans to actively accelerate workforce expansion in the second half of the year, strategically hiring approximately 4,000 additional employees at production bases to enhance overall capacity[57] - Vietnam, as the cornerstone of the Group's global production network, will further reserve capacity for growth, accelerate the modernization of local factories, and advance vertical supply chain development[57] - To address tariff impacts, the Group will prioritize growth opportunities in European and Asian markets and establish a new partnership with a leading European brand customer[57] - Capital expenditure plans focus on vertical integration, automation upgrades, and capacity expansion, with total expenditure for the current year expected to be similar to last year[58] - The Group is actively evaluating the feasibility of establishing new production bases in peripheral European regions to strengthen its capabilities in the European market and offer diversified regional sourcing options[58] - With robust operating cash flow, the Group expects to continue fulfilling its long-term commitment to delivering attractive returns to shareholders through stable and substantial dividend distributions[59] Corporate Governance and Other Information This chapter details the Group's corporate governance framework, shareholder communication, dividend policy, board composition, share award scheme, directors' and major shareholders' interests, public float, audit committee responsibilities, and risk management and internal control systems Communication with Shareholders The company held its Annual General Meeting on May 30, 2025, where all proposed resolutions were passed by poll vote - The 2025 Annual General Meeting was held on May 30, 2025, and all resolutions were passed[62] Interim Dividend and Closure of Register of Members The Board declared an interim dividend of 16.3 HK cents per ordinary share, payable on September 18, 2025, with the register of members closed from September 5 to September 9, 2025, to determine eligibility - The Board resolved to declare an interim dividend of 16.3 HK cents (approximately 2.1 US cents) per ordinary share, payable on September 18, 2025[63] - The record date for determining entitlement to the interim dividend is September 9, 2025[65] - The register of members will be closed from September 5 to September 9, 2025 (both dates inclusive)[64] Purchase, Sale or Redemption of the Company's Listed Securities For the six months ended June 30, 2025, neither the company nor its subsidiaries purchased, sold, or redeemed any of its listed securities - For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[66] Board of Directors and Senior Management This section outlines the Board's composition as of June 30, 2025, updates on director roles and remuneration adjustments, and confirms the senior management team remains consistent with the 2024 annual report - The Board's composition includes executive, non-executive, and independent non-executive directors, with no significant changes as of June 30, 2025[67][69] - Non-executive Director Mr. Lee no longer serves as a Nominated Member of Parliament in Singapore, and Independent Non-executive Director Mr. Cheung has retired as a director of Morningside Asia[71] - The annual salaries of Mr. Lo Ching Leung, Mr. Wong Sing Wah, and Mr. Lo Ching Ho were adjusted effective April 1, 2025[71] - The composition of the senior management team remains the same as disclosed in the company's 2024 Annual Report[73] - The company continues to provide directors and executives with information on corporate governance topics to support their ongoing professional development[74] Share Award Scheme The company's Share Award Scheme B, adopted in 2017 with a ten-year validity, had no unvested share awards or grants, vesting, cancellations, or lapses during the six months ended June 30, 2025, as all awards vested by November 3, 2019 - Share Award Scheme B was adopted on April 7, 2017, with a validity period of ten years[75] - As of the beginning and end of the six-month period ended June 30, 2025, the number of share awards available for grant was zero, and there were no unvested share awards[75] - All share awards held by employees of the Group under Share Award Scheme B vested on November 3, 2019[75] Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures As of June 30, 2025, directors and the company's chief executive held long positions in the company's shares, including beneficial ownership, spouse interests, and joint holdings, with Mr. Lo Lok Fung and Ms. Lo Choi Yuen Ching holding significant stakes Directors' Interests in the Company (Long Positions, as of June 30, 2025) | Director Name | Nature of Interest | Number of Shares (thousand shares) | Approximate Percentage (%) | | :--- | :--- | :--- | :--- | | Mr. Lo Lok Fung | Beneficial owner | 306,611 | 10.75 | | | Spouse's interest | 308,506 | 10.81 | | | Jointly held with another person | 1,569,052 | 55.00 | | Ms. Lo Choi Yuen Ching | Beneficial owner | 306,611 | 10.75 | | | Spouse's interest | 306,611 | 10.75 | | | Founder of discretionary trust | 1,895 | 0.07 | | | Jointly held with another person | 1,569,052 | 55.00 | | Mr. Lo Ching Leung | Beneficial owner | 68,074 | 2.39 | | Mr. Wong Sing Wah | Beneficial owner | 7,497 | 0.26 | | Mr. Wang Chih-Hui | Beneficial owner | 4,806 | 0.17 | | Mr. Lo Ching Ho | Beneficial owner | 41,346 | 1.45 | | Mr. Lee | Beneficial owner | 591 | 0.02 | - Save as disclosed above, as of June 30, 2025, no director or chief executive of the company had any other interests or short positions in the shares, underlying shares, or debentures of the company or any of its associated corporations that were required to be notified[79] Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares As of June 30, 2025, the directors were unaware of any other corporations or individuals, apart from directors or the company's chief executive, holding disclosable interests or short positions in the company's shares or underlying shares - As of June 30, 2025, the directors were not aware of any other corporations or individuals (other than the directors or chief executive of the company) who had interests or short positions in the shares or underlying shares of the company that were required to be disclosed[80] Public Float The company maintained the required public float as stipulated by the Listing Rules and agreed with the Stock Exchange throughout the six months ended June 30, 2025, and up to the date of this interim report - The company maintained the public float as required by the Listing Rules and agreed with the Stock Exchange throughout the six months ended June 30, 2025, and up to the date of this interim report[81] Corporate Governance Practices and Model Code for Securities Transactions by Directors The Board and management are committed to maintaining good corporate governance, confirming compliance with all code provisions of the Corporate Governance Code and the Model Code for Securities Transactions by Directors during the reporting period - The Board has reviewed the company's corporate governance practices and is satisfied that the company has complied with all code provisions of the Corporate Governance Code as set out in Appendix C1 of the Listing Rules throughout the six months ended June 30, 2025[82] - The company has adopted the Model Code for Securities Transactions by Directors as set out in Appendix C3 of the Listing Rules as its code of conduct for directors' securities transactions, and all directors have confirmed their compliance with the said code[83] Audit Committee The Audit Committee's composition remained unchanged for the six months ended June 30, 2025, as it continued to review financial reporting, internal controls, risk management, and audit processes, expressing satisfaction with the external auditor's work and recommending their reappointment - The composition of the Audit Committee remained unchanged for the six months ended June 30, 2025[85] - The primary responsibilities of the Audit Committee include continuously reviewing the adequacy of the Group's financial reporting and internal control systems, overseeing external and internal audit processes, reviewing the Group's management of existing and potential risks, and reviewing connected transactions[85] - The Audit Committee has reviewed the quality and independence of the external auditor's work, expressed satisfaction with both, and recommended to the Board the reappointment of Deloitte Touche Tohmatsu as the company's auditor for the coming year[85] - The Audit Committee has reviewed the accounting standards and policies adopted by the Group and discussed with them the unaudited condensed consolidated financial statements and interim report for the six months ended June 30, 2025[86] Risk Management and Internal Control Systems The Board is responsible for establishing and maintaining effective risk management and internal control systems, with the Audit Committee overseeing these systems, including cybersecurity and business compliance, and expressing satisfaction with the risk assessment procedures - The Board is responsible for ensuring that the Group establishes and maintains appropriate and effective risk management and internal control systems, and is satisfied with the effectiveness of the existing systems[88] - The Audit Committee continuously oversees the company's risk management and internal control systems, reviewing the progress of cybersecurity initiatives, cyberattack statistics, and business compliance[88] - The Group has written risk assessment procedures for identifying, assessing, and managing significant risks, and the Audit Committee is satisfied that these procedures continue to be effectively implemented[89] Review Report on Condensed Consolidated Financial Statements Deloitte Touche Tohmatsu has reviewed Crystal International Group Limited's condensed consolidated financial statements for the six months ended June 30, 2025, finding no matters that suggest they were not prepared in all material respects in accordance with IAS 34 - Deloitte Touche Tohmatsu has reviewed the Group's condensed consolidated financial statements for the six months ended June 30, 2025[92] - The scope of the review was conducted in accordance with International Standard on Review Engagements 2410, which is significantly less than an audit, and therefore no audit opinion is expressed[93] - Conclusion: Nothing has come to our attention that causes us to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34[95] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the unaudited condensed consolidated profit or loss and other comprehensive income for the six months ended June 30, 2025 and 2024, detailing revenue, cost of sales, gross profit, various expenses, profit before tax, income tax expense, profit for the period, and total comprehensive income for the period, along with basic earnings per share Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Revenue | 1,229,475 | 1,093,672 | | Cost of sales | (986,873) | (880,220) | | Gross Profit | 242,602 | 213,452 | | Other income, gains or losses | 12,070 | 12,656 | | Selling and distribution expenses | (16,135) | (14,567) | | Administrative expenses | (93,977) | (86,814) | | Research and development expenses | (16,308) | (15,721) | | Finance costs | (6,498) | (6,090) | | Profit Before Tax | 119,707 | 102,912 | | Income tax expense | (21,384) | (18,698) | | Profit for the Period | 98,323 | 84,214 | | Other comprehensive expense for the period | (3,021) | (7,832) | | Total Comprehensive Income for the Period | 95,302 | 76,382 | | Profit for the period attributable to owners of the company | 98,265 | 84,012 | | Basic earnings per share (US cents) | 3.44 | 2.94 | Condensed Consolidated Statement of Financial Position This statement presents the condensed consolidated financial position as of June 30, 2025, and December 31, 2024, detailing non-current assets, current assets, total equity, non-current liabilities, and current liabilities, reflecting the Group's robust asset and liability structure Condensed Consolidated Statement of Financial Position (As of June 30) | Indicator | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Assets | | | | Total non-current assets | 906,731 | 894,116 | | Total current assets | 1,430,841 | 1,360,337 | | Total Assets | 2,337,572 | 2,254,453 | | Equity and Liabilities | | | | Total equity | 1,540,295 | 1,535,446 | | Total non-current liabilities | 52,834 | 54,075 | | Total current liabilities | 744,443 | 664,932 | | Total Equity and Liabilities | 2,337,572 | 2,254,453 | Condensed Consolidated Statement of Changes in Equity This statement presents the condensed consolidated changes in equity for the six months ended June 30, 2025 and 2024, detailing opening balances, profit for the period, total other comprehensive income (expense), and the impact of dividends declared on equity, reflecting overall equity movements Condensed Consolidated Statement of Changes in Equity (Six Months Ended June 30) | Indicator | January 1, 2025 (thousand USD) | Profit for the Period (thousand USD) | Total Comprehensive Income (Expense) for the Period (thousand USD) | Dividends Declared for Distribution (thousand USD) | As of June 30, 2025 (thousand USD) | | :--- | :--- | :--- | :--- | :--- | :--- | | Attributable to owners of the company | 1,530,656 | 98,265 | 95,244 | (89,045) | 1,536,855 | | Non-controlling interests | 4,790 | 58 | 58 | (1,408) | 3,440 | | Total Equity | 1,535,446 | 98,323 | 95,302 | (90,453) | 1,540,295 | Condensed Consolidated Statement of Changes in Equity (Six Months Ended June 30) | Indicator | January 1, 2024 (thousand USD) | Profit for the Period (thousand USD) | Total Comprehensive Income (Expense) for the Period (thousand USD) | Dividends Declared for Distribution (thousand USD) | As of June 30, 2024 (thousand USD) | | :--- | :--- | :--- | :--- | :--- | :--- | | Attributable to owners of the company | 1,434,442 | 84,012 | 76,180 | (47,434) | 1,463,188 | | Non-controlling interests | 4,460 | 202 | 202 | – | 4,662 | | Total Equity | 1,438,902 | 84,214 | 76,382 | (47,434) | 1,467,850 | Condensed Consolidated Statement of Cash Flows This statement presents the condensed consolidated cash flows for the six months ended June 30, 2025 and 2024, detailing net cash from operating, investing, and financing activities, along with the effect of exchange rate changes on cash and cash equivalents, to arrive at the period-end balance Condensed Consolidated Statement of Cash Flows (Six Months Ended June 30) | Activity | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Net cash from operating activities | 154,920 | 43,613 | | Net cash (used in) from investing activities | (30,737) | 24,374 | | Net cash used in financing activities | (41,647) | (66,769) | | Net Increase in Cash and Cash Equivalents | 82,536 | 1,218 | | Effect of exchange rate changes | 2,476 | (1,832) | | Cash and cash equivalents at beginning of period | 426,715 | 543,444 | | Cash and Cash Equivalents at End of Period | 511,727 | 542,830 | Notes to the Condensed Consolidated Financial Statements This chapter provides detailed notes to the condensed consolidated financial statements, covering general information, significant accounting policies, revenue and segment information, profit before tax, income tax expense, dividends, earnings per share, property, plant and equipment, receivables, payables, bank borrowings, related party transactions, and fair value measurement of financial instruments General Information and Basis of Preparation Crystal International Group Limited, listed on the Hong Kong Stock Exchange, primarily engages in garment manufacturing and trading, with its condensed consolidated financial statements prepared in USD according to IAS 34 and applicable Listing Rules - The Group is principally engaged in garment manufacturing and trading, and its shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on November 3, 2017[107][108] - The condensed consolidated financial statements are presented in US dollars and have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[109] Significant Accounting Policies The condensed consolidated financial statements are prepared using the historical cost convention, with accounting policies and methods for the six months ended June 30, 2025, consistent with the 2024 annual consolidated financial statements, and IFRS amendments having no material impact - The condensed consolidated financial statements have been prepared on the historical cost basis, except for certain properties and financial instruments which are measured at revalued amounts or fair value, where applicable[110] - The accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended June 30, 2025, are the same as those applied in the preparation of the Group's annual consolidated financial statements for the year ended December 31, 2024[110] - The application of amendments to IFRS accounting standards (such as IAS 21 (Amendment) Lack of Exchangeability) has had no material impact on the Group's financial position and performance[111] Revenue and Segment Information The Group's revenue and results are segmented by product categories (casual wear, sportswear and outdoor wear, denim, intimate wear, sweaters), all showing growth in H1 2025, with Asia Pacific, North America, and Europe identified as key sales markets - The Group's operating segments primarily focus on five product categories: casual wear, sportswear and outdoor wear, denim, intimate wear, and sweaters[113][117] Revenue and Results by Operating Segment (Six Months Ended June 30, 2025) | Product Category | External Sales (thousand USD) | Segment Profit (thousand USD) | | :--- | :--- | :--- | | Casual Wear | 339,672 | 69,801 | | Sportswear and Outdoor Wear | 312,906 | 64,869 | | Denim | 262,202 | 42,892 | | Intimate Wear | 209,784 | 43,637 | | Sweaters | 104,911 | 21,403 | | Total | 1,229,475 | 242,602 | Revenue Information by Geographical Location of Port of Discharge (Six Months Ended June 30) | Region | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Asia Pacific | 478,286 | 417,729 | | North America | 462,934 | 414,566 | | Europe | 252,705 | 230,447 | | Other Countries/Regions | 35,550 | 30,930 | | Total | 1,229,475 | 1,093,672 | Profit Before Tax This section details the composition of profit before tax for the six months ended June 30, 2025 and 2024, primarily deducting staff costs, depreciation, amortization, inventory costs, net exchange losses, and finance costs, while including interest income Composition of Profit Before Tax (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Total staff costs | 325,521 | 280,651 | | Depreciation of property, plant and equipment | 31,000 | 31,687 | | Depreciation of right-of-use assets | 9,184 | 6,502 | | Amortization of intangible assets | 2,459 | 2,459 | | Cost of inventories recognized as expense | 986,873 | 880,220 | | Interest income | (9,058) | (12,224) | | Net exchange losses | 3,113 | 6,017 | | Finance costs | 6,498 | 6,090 | Income Tax Expense Income tax expense for the six months ended June 30, 2025, was $21,384 thousand, mainly comprising Hong Kong profits tax and overseas taxes, with the Group expecting no top-up tax under Pillar Two rules due to effective tax rates above 15% in all operating jurisdictions Income Tax Expense (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Hong Kong profits tax (current period) | 13,005 | 10,968 | | Overseas taxation (current period) | 9,829 | 8,580 | | Deferred tax | (546) | (132) | | Total | 21,384 | 18,698 | - Hong Kong profits tax is calculated at 16.5% of estimated assessable profits, while Chinese subsidiaries are taxed at 25%, and certain Cambodian subsidiaries may be exempt from profits tax[127][128][129] - The Group's management believes that, after considering Pillar Two rules and their best estimates, the Group is not required to pay top-up tax under Pillar Two rules, as its estimated effective tax rates in all jurisdictions where it operates are above 15%[130] Dividends This section discloses dividends declared for distribution for the six months ended June 30, 2025, including the 2024 final dividend and special dividend, noting that the interim dividend of 16.3 HK cents per ordinary share has been resolved but not yet recognized as a payable Dividends Declared for Distribution (Six Months Ended June 30) | Dividend Type | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Final dividend declared for 2024 of 19.0 HK cents per ordinary share | 69,055 | 47,434 | | Special dividend declared for 2024 of 5.5 HK cents per ordinary share | 19,990 | – | | Total | 89,045 | 47,434 | - The Board resolved to declare an interim dividend of 16.3 HK cents (approximately $59,242 thousand) per ordinary share, which has not yet been reflected as a payable in these condensed consolidated financial statements[133] Earnings Per Share Basic earnings per share attributable to owners of the company for the six months ended June 30, 2025, was 3.44 US cents, calculated based on $98,265 thousand profit and 2,852,822 thousand ordinary shares, with no diluted earnings per share presented due to the absence of dilutive potential ordinary shares Basic Earnings Per Share Calculation (Six Months Ended June 30) | Indicator | 2025 (thousand USD/thousand shares) | 2024 (thousand USD/thousand shares) | | :--- | :--- | :--- | | Profit for the period attributable to owners of the company used for basic EPS calculation | 98,265 | 84,012 | | Number of ordinary shares used for basic EPS calculation | 2,852,822 | 2,852,822 | | Basic Earnings Per Share (US cents) | 3.44 | 2.94 | - Diluted earnings per share for the six months ended June 30, 2025 and 2024, were not presented as there were no dilutive potential ordinary shares issued during these periods[134] Property, Plant and Equipment / Right-of-Use Assets For the six months ended June 30, 2025, the Group incurred $38,276 thousand in property, plant, and equipment purchases, recognized a $5,164 thousand revaluation surplus on owned properties, and recorded $6,952 thousand in new right-of-use assets and lease liabilities - For the six months ended June 30, 2025, the Group incurred total expenditure of $38,276 thousand (H1 2024: $29,600 thousand) for the purchase of property, plant and equipment[136] - As of the end of this interim period, the Group's owned properties classified as property, plant and equipment were revalued, resulting in a revaluation surplus of $5,164 thousand recognized in the property revaluation reserve[136] - New right-of-use assets of $6,952 thousand and lease liabilities of $6,952 thousand were recognized during this interim period[136] Trade Receivables, Bills Receivable and Other Receivables As of June 30, 2025, trade receivables (net of expected credit loss provision) amounted to $80,906 thousand, with the Group providing credit terms of 14 to 120 days to its trade customers, and this section includes an aging analysis Trade Receivables, Bills Receivable and Other Receivables (As of June 30) | Indicator | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Trade receivables (net) | 80,906 | 154,408 | | Bills receivable | 1,567 | 1,473 | | Temporary payments to suppliers | 17,346 | 13,988 | | Other receivables, deposits and prepayments | 38,579 | 36,217 | | Total | 138,398 | 206,086 | - The Group grants credit terms of 14 to 120 days to its trade customers[137] Aging Analysis of Trade Receivables (Net of Provision for Expected Credit Losses) (As of June 30, 2025) | Aging | Amount (thousand USD) | | :--- | :--- | | Within 60 days | 73,549 | | 61 to 90 days | 7,077 | | 91 to 120 days | 168 | | Over 120 days | 112 | | Total | 80,906 | Trade Receivables at Fair Value Through Other Comprehensive Income As part of cash flow management, the Group factors certain trade receivables, classifying them as fair value through other comprehensive income, totaling $297,560 thousand as of June 30, 2025, with an aging analysis provided - The Group factors certain trade receivables to financial institutions before their due payment, classifying them as trade receivables at fair value through other comprehensive income[139] Aging Analysis of Trade Receivables at Fair Value Through Other Comprehensive Income (As of June 30) | Aging | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Within 60 days | 200,291 | 236,485 | | 61 to 90 days | 91,584 | 45,972 | | 91 to 120 days | 5,107 | 9,834 | | Over 120 days | 578 | 2,295 | | Total | 297,560 | 294,586 | Impairment Losses Under Expected Credit Loss Model, Net of Reversals For the six months ended June 30, 2025, impairment losses of $2,047 thousand were recognized for trade receivables measured at amortized cost, while a $4 thousand reversal of impairment loss was recorded for trade receivables at fair value through other comprehensive income Impairment Losses (Reversals) Recognized (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Trade receivables measured at amortized cost | 2,047 | 56 | | Trade receivables at fair value through other comprehensive income | (4) | 37 | | Total | 2,043 | 93 | Short-term Bank Deposits Short-term bank deposits bear fixed annual interest rates ranging from 1.55% to 4.10% and are classified as current assets as they mature within 12 months from the reporting period end - Short-term bank deposits bear fixed annual interest rates ranging from 1.55% to 4.10% (December 31, 2024: 3.99% to 4.27%)[143] - Short-term bank deposits are classified as current assets as they mature within 12 months from the end of the reporting period[143] Trade Payables and Other Payables As of June 30, 2025, total trade payables and other payables amounted to $481,001 thousand, with trade payables having credit terms of 14 to 90 days, and this section provides an aging analysis of trade payables including bills payable Trade Payables and Other Payables (As of June 30) | Indicator | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Trade payables | 219,680 | 176,404 | | Bills payable | 4,350 | 3,476 | | Accrued staff costs | 105,596 | 122,280 | | Other payables | 49,971 | 66,348 | | Other accrued expenses | 101,404 | 109,538 | | Total | 481,001 | 478,046 | - Credit terms for trade payables range from 14 to 90 days[146] Aging Analysis of Trade Payables (Including Bills Payable) (As of June 30, 2025) | Aging | Amount (thousand USD) | | :--- | :--- | | Within 60 days | 204,945 | | 61 to 90 days | 15,340 | | 91 to 120 days | 2,020 | | Over 120 days | 1,725 | | Total | 224,030 | Lease Liabilities Lease liabilities include a $638 thousand balance due to related companies controlled by certain directors, with interest expense on these related company lease liabilities totaling $25 thousand for the six months ended June 30, 2025 - Lease liabilities include a balance of $638 thousand (December 31, 2024: $1,273 thousand) due to related companies controlled by certain directors of the company[148] - During this interim period, interest expense on related company lease liabilities amounted to $25 thousand (H1 2024: $30 thousand)[148] Bank Borrowings For the six months ended June 30, 2025, the Group obtained $128,344 thousand in new bank borrowings and repaid $152,397 thousand, with bank borrowings bearing market annual interest rates ranging from 1.52% to 5.64% - For the six months ended June 30, 2025, the Group obtained new bank borrowings amounting to $128,344 thousand and repaid bank borrowings amounting to $152,397 thousand[150] - The Group's bank borrowings bear market annual interest rates ranging from 1.52% to 5.64% (December 31, 2024: 4.61% to 6.65%)[150] Amounts Due to Associates Amounts due to associates are transactional, unsecured, interest-free, repayable within a 90-day credit period, and have an aging profile within 90 days - These amounts are transactional, unsecured, interest-free, repayable within a 90-day credit period, and have an aging profile within 90 days[151] Amounts Due from Related Companies As of June 30, 2025, amounts due from related companies totaled $215 thousand, are non-trade in nature, unsecured, interest-free, repayable on demand, and controlled by certain directors of the company Amounts Due from Related Companies (As of June 30) | Indicator | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Amounts due from related companies | 215 | 218 | - Amounts due from related companies are non-trade in nature, unsecured, interest-free, and repayable on demand[153] - Certain directors of the company (namely Mr. Lo Lok Fung, Ms. Lo Choi Yuen Ching, and Mr. Lo Ching Leung) have control over these companies[154] Share Capital The company's authorized share capital consists of 3,500,000 thousand ordinary shares with a par value of 0.01 HKD each, totaling $4,482 thousand, while issued and fully paid share capital comprises 2,852,822 thousand shares, totaling $3,654 thousand Composition of Share Capital (As of June 30) | Indicator | Number of Shares (thousand shares) | Share Capital (thousand USD) | | :--- | :--- | :--- | | Authorized share capital (ordinary shares of 0.01 HKD par value each) | 3,500,000 | 4,482 | | Issued and fully paid share capital | 2,852,822 | 3,654 | Capital Commitments As of June 30, 2025, the Group had capital commitments of $47,403 thousand for the purchase of property, plant, and equipment, which were contracted but not yet provided for in the condensed consolidated financial statements Capital Commitments (As of June 30) | Indicator | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Contracted but not provided for in the condensed consolidated financial statements for the purchase of property, plant and equipment | 47,403 | 51,952 | Pledged Assets As of June 30, 2025, the Group pledged property, plant, and equipment totaling $1,556 thousand and inventories totaling $3,257 thousand to banks as security for general banking facilities Pledged Assets (As of June 30) | Indicator | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Property, plant and equipment | 1,556 | 1,574 | | Inventories | 3,257 | 3,333 | | Total | 4,813 | 4,907 | Related Party Transactions This section discloses the Group's related party transactions, including material purchases from associates, interest expenses and handling fees with director-controlled companies, corporate guarantees for associates and subsidiaries, key management personnel remuneration, and a licensing agreement with a related company Related Party Transactions (Six Months Ended June 30) | Relationship | Nature of Transaction | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | :--- | | Associates | Purchase of materials | (21,012) | (20,232) | | Companies controlled by certain directors of the company | Interest expense on lease liabilities | (25) | (30) | | | Handling fees received | 16 | 14 | - The company has provided corporate guarantees to its associates to secure bank facilities of $5,000 thousand granted to the associates[160] - The company has provided corporate guarantees to its subsidiary incorporated in the United Kingdom to secure its obligations and liabilities related to a defined benefit plan of $10,973 thousand[161] Key Management Personnel Remuneration (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Short-term benefits | 1,704 | 1,676 | | Post-employment benefits | 44 | 41 | | Total | 1,748 | 1,717 | - On October 12, 2022, the Group entered into a license agreement with a related company controlled by Mr. Lo Lok Fung and Ms. Lo Choi Yuen Ching, executive directors of the company, to authorize the Group's use of certain trademarks and domain names for a consideration of HKD 1.00 for a period of three years[164] Fair Value Measurement of Financial Instruments This section provides fair value measurement information for certain financial assets, specifically trade receivables at fair value through other comprehensive income, which are classified as Level 2 fair value measurements and valued using the discounted cash flow method Fair Value Measurement of Financial Assets (As of June 30) | Indicator | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | Fair Value Level | Valuation Technique and Key Inputs | | :--- | :--- | :--- | :--- | :--- | | Trade receivables at fair value through other comprehensive income | 297,560 | 294,586 | Level 2 | Present value of cash flows arising from receivables assessed using discounted cash flow method with factoring arrangement discount rates | - Fair value measurements are categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[169] - There were no transfers into or out of Level 2 during both periods[168]