Financial Performance - The Group recorded a revenue decline of 14.0% year-on-year to HK$2,316,315,000 for the year ended March 31, 2022, compared to HK$2,693,865,000 in the previous year[22]. - Gross profit decreased from HK$319,645,000 to HK$245,532,000, maintaining a gross profit margin of 10.6%[22]. - Profit attributable to equity holders of the Company decreased by 45.1% to HK$56,858,000, down from HK$103,626,000 in the previous year[22]. - For FY2021/22, the Group's revenue decreased by 14.0% year-on-year to approximately HK$2,316,315,000, down from HK$2,693,865,000 in FY2020/21[24]. - Gross profit also declined from HK$319,645,000 to HK$245,532,000, maintaining a stable gross margin of 10.6% despite the revenue drop[24]. - Shareholders' profit decreased by 45.1% to HK$56,858,000 compared to HK$103,626,000 in the previous fiscal year[24]. - The overall gross profit margin decreased by 1.3 percentage points from 11.9% to 10.6%, with gross profit declining by 23.2% from HK$319,645,000 to HK$245,532,000[46]. - Profit attributable to equity holders of the Company decreased by 45.1% year-on-year from approximately HK$103,626,000 to HK$56,858,000, with basic earnings per share dropping to HK12.95 cents from HK23.61 cents[47]. Impact of COVID-19 - The adverse impact of the COVID-19 pandemic, including changes in fair value of real estate development projects, contributed to the decline in profit[22]. - The COVID-19 pandemic has heightened operational risks, leading to significant business uncertainty and restricted operations in several products[133]. - Supply chain disruptions due to COVID-19 have caused material price increases and challenges in securing stable quality supplies, though the Group remains confident in managing these risks[142]. Cost Management and Strategy - The Group implemented stringent cost control measures to stabilize raw material and labor costs while optimizing the product mix[22]. - The macro operating environment faced challenges such as rising commodity prices and increased production costs due to the pandemic[14]. - The Group continues to focus on maintaining a balance between production schedules and cost management amid ongoing market uncertainties[22]. - The Group will continue stringent cost control measures to manage rising labor, raw materials, and logistics costs[36]. - The transition from a volume-driven to a margin-driven strategy is underway, focusing on smaller projects with higher margins[23]. - The Group's strategic initiatives include reshaping the product portfolio and geographical diversification to ensure a sustainable future[41]. Market and Product Development - Future strategies may involve exploring new markets and enhancing product offerings to adapt to changing consumer demands[22]. - The Group aims to expand its customer portfolio in emerging markets such as electric vehicles and coffee machines to increase revenue streams[28]. - The Group plans to explore Original Brand Manufacturing (OBM) opportunities to enhance brand awareness and profit margins[30]. - The Motors Segment contributed HK$1,044,052,000, accounting for 45.1% of the Group's consolidated turnover for the year, compared to 38.9% in the previous year[49]. - The Group's strategy to reduce reliance on a single major customer in the robotics sector has freed up production capacity to explore new industries and customers with higher margins[54]. - The juvenile products and baby care products sector is expected to benefit from a positive outlook, with the global baby care products market projected to reach USD25.4 billion by 2028, growing at a CAGR of 4.3%[58]. - The smart home market is anticipated to grow at a strong CAGR of 25.3% from 2022 to 2027, reaching USD313.95 billion by 2027, benefiting the Group's Smart Products sector[59]. - The Group is actively exploring collaborations in the medical sector, with new projects confirmed and mass production scheduled to begin in the financial year ending March 31, 2023[60]. Operational Adjustments - A new production site in Southeast Asia is being considered to provide lower labor and logistics costs, enhancing flexibility for brand customers[31]. - The Group plans to shift its focus towards juvenile and baby care products while exploring new overseas markets using its Malaysia plant[65]. - The Motors Segment successfully acquired new customers, particularly in the automobile and home appliance sectors, with mass production set to begin in FY2023[76]. - The Motors Segment plans to closely monitor raw material prices and maintain sufficient inventories while ensuring on-time delivery to meet customer demand[76]. - The Motors Segment aims to expand its presence in European markets by increasing sales and marketing personnel and diversifying its customer portfolio[78]. Financial Position and Governance - As of March 31, 2022, the Group's cash and bank balances were HK$257,584,000, down from HK$390,556,000 as of March 31, 2021, representing a decrease of approximately 34%[92]. - The Group's net current assets increased to HK$525,724,000 as of March 31, 2022, compared to HK$417,886,000 as of March 31, 2021, reflecting an increase of about 26%[92]. - Total bank borrowings decreased to HK$529,147,000 as of March 31, 2022, from HK$659,546,000 as of March 31, 2021, indicating a reduction of approximately 20%[92]. - The current ratio improved to 1.46 times as of March 31, 2022, compared to 1.29 times as of March 31, 2021[92]. - The gearing ratio decreased to 33.3% as of March 31, 2022, down from 44.0% as of March 31, 2021[92]. - The Group's profit for the year and financial position are detailed in the financial statements on pages 86 to 227 of the annual report[127]. - The Board does not recommend the payment of a final dividend to shareholders for the year[127]. - The Company has maintained a stable board of independent non-executive directors since 2004, ensuring governance and oversight[115]. - The Company continues to uphold its commitment to corporate governance through the active participation of its independent directors in key committees[119]. Employee and Leadership - The Group employed approximately 5,600 full-time employees as of March 31, 2022, with fewer than 70 based in Hong Kong[99]. - The Group's employee benefits in Hong Kong include retirement plans, medical plans, and performance bonuses, while in China and Malaysia, benefits are provided according to local labor laws[99]. - The Group has established a stock option plan to incentivize and reward high-performing employees[99]. - The Chairman and CEO, Mr. Cheng Chor Kit, has over 40 years of experience in the toy industry, indicating strong leadership in this sector[102]. - Mr. Liu Tat Luen, an executive director, has over 20 years of experience in the financial industry across Asia, enhancing the Group's financial expertise[103]. - The Group's executive team includes members with extensive backgrounds in engineering and product development, ensuring a strong foundation for innovation[108]. Risk Management - The Group has established risk management and internal control systems to continuously identify and manage principal risks[132]. - The Group's financial performance is influenced by macroeconomic and political factors, including exchange rate fluctuations and trade tariffs[134]. - The Group's foreign currency exposure and interest rate risk details are provided in the "Management Discussion and Analysis" section of the annual report[135].
广和通(00638) - 2022 - 年度财报