Financial Performance - Group revenue for the six months ended 30 June 2022 was HK$295 million, a decrease of 22% compared to HK$380 million in the same period of 2021[11]. - Gross margin for the period was 45%, down from 50% in 2021, reflecting a decline of 5 percentage points[11]. - Profit attributable to owners was HK$22 million, a significant improvement from a loss of HK$68 million in the previous year[11]. - Same-store sales decreased by 9%, compared to a 12% decline in the same period of 2021[11]. - Revenue contribution from Hong Kong and Macau was 56%, down from 62% in the previous year[9]. - Gross profit for the same period was HK$132 million, down 30% from HK$189 million in 2021, with a gross margin decrease of 5 percentage points to 45%[18]. - Total operating expenses increased to 99% of sales, up from 71% in 2021, reflecting the pandemic's negative impact on asset assessments[19]. - The Group's same-store sales growth was negative 9%, while same-store gross profit growth was negative 17%[16]. - Revenue in Hong Kong and Macau was HK$166 million, down from HK$236 million in 2021, with same-store sales declining by 7%[37]. - In mainland China, revenue decreased to HK$90 million from HK$106 million in 2021, with same-store sales dropping 25%[48]. Store Operations - Directly managed stores in Mainland China increased to 155, up from 119 in December 2021, representing a growth of 30%[8]. - Total number of stores across all regions was 734, a decrease of 148 stores compared to 882 in the previous year[8]. - The Group operated 734 stores across 21 countries and regions, an increase from 698 stores at the end of 2021[28]. - The number of directly managed stores in Hong Kong and Macau decreased to 24 from 26 in 2021[37]. - The number of directly managed stores in mainland China increased to 155 from 119 in 2021[48]. - The export franchising business maintained 539 stores across 18 countries, with a cautious international expansion strategy[40]. Cash and Liabilities - Net cash balance as of 30 June 2022 was HK$256 million, down 31% from HK$373 million in 2021[11]. - The Group's net cash balances as of June 30, 2022, were HK$256 million, down from HK$373 million in 2021, with a current ratio of 1.88 times[54]. - The total liabilities to equity ratio increased to 153% as of June 30, 2022, compared to 77% in 2021[54]. Inventory and Expenses - Inventory level decreased by 19% to HK$151 million compared to HK$187 million in December 2021[7]. - Inventory turnover days increased to 176 days in 2022 from 136 days in 2021, while return on equity improved to 8% from -22%[56]. - Finance costs increased to HK$5 million, primarily due to interest on lease liabilities, up from HK$4 million in 2021[20]. - The Group recognized a non-cash impairment on assets of HK$10 million during the review period[19]. Future Outlook and Strategy - The operational situation is expected to remain difficult in the second half of the year due to lingering pandemic effects and economic risks[83]. - The company anticipates a challenging operating environment in the second half of the year due to ongoing economic risks and the pandemic's impact in mainland China, Hong Kong, and Macau[86]. - The company plans to increase the number of "bossini.X" brand stores to over 100 within this year as part of its long-term competitiveness strategy[95]. - The company aims to increase the proportion of e-commerce sales from approximately 8% to about 30% of overall sales[95]. - The company will actively develop franchising business and enhance marketing through live streaming and improved membership management[89]. - The company will reduce or suspend unnecessary back-office expenses and negotiate rent reductions to minimize operating losses during the pandemic[90]. Shareholder Information - The Board does not recommend any interim dividend for the six months ended June 30, 2022[97]. - As of June 30, 2022, the total issued shares of Viva China amounted to 9,664,352,393[141]. - Mr. Zhao Jianguo holds a personal interest in 289,666,667 Viva China shares and share options exercisable into 3,333,333 shares, with options exercisable at HK$0.67 per share[139]. - Dragon Leap Developments Limited holds 1,741,977,652 shares, representing approximately 70.59% of the issued share capital[155]. - The share options granted to directors include 30,000,000 options exercisable from January 18, 2023, to January 17, 2028, and another 30,000,000 options from January 18, 2024, to January 17, 2029[137]. - As of June 30, 2022, Mr. Cheung Chi is a beneficial owner of 39,200,000 shares, representing approximately 1.03% of the total issued shares[124]. - The convertible bonds held by Ms. Li Ying, spouse of Mr. Zhao, have a principal amount of HK$227,500,000, convertible into 700,000,000 shares[139]. - Mr. Li Ning and Mr. Li Chun each have a controlled interest in 1,741,977,652 shares, equivalent to 70.59% of the issued share capital[159][161]. Share Options - The Share Option Scheme saw a total of 108,892,659 share options at the beginning of the period, with 21,000,000 granted during the six months ended June 30, 2022[171]. - By June 30, 2022, the balance of share options had decreased to 98,409,039 due to 2,000,000 exercised and 29,483,620 lapsed[171]. - The exercise price for share options granted on January 5, 2021, was HK$0.456, with various exercisable periods until December 31, 2026[176]. - The total number of share options granted to employees was 21,000,000 during the reporting period[171]. - The Company had a balance of 15,000,000 share options for the co-CEO as of June 30, 2022[171]. - The Company’s share options are subject to various exercisable periods, with some options expiring as late as November 15, 2027[176]. - The Company’s share option movements indicate a strategic approach to incentivizing key personnel and aligning their interests with shareholder value[171]. - The fair value of equity-settled share options granted during the period was HK$5,399,000, estimated using a binomial model[183]. - The expected volatility for the share options was 69.17%[189]. - The risk-free interest rate used in the model was 2.03%[189]. - The expected life of the share options was estimated at 6 years[189]. - The company did not purchase, sell, or redeem any of its listed securities during the six months ended June 30, 2022[194]. - The company complied with the corporate governance code provisions for the six months ended June 30, 2022[200].
BOSSINI INT'L(00592) - 2022 - 中期财报