Intangible Assets and Impairment - The company recognizes intangible assets acquired independently with a finite useful life, such as patents, at cost less accumulated amortization and any accumulated impairment losses[1]. - Intangible assets with indefinite useful lives, such as trademarks, are reported at cost less any subsequent accumulated impairment losses[1]. - The carrying amount of trademarks at the reporting period end was approximately zero, with an impairment loss of HKD 9,278,000 recognized, compared to HKD 2,499,000 in 2021[66]. - The company assesses non-financial assets for impairment at each reporting date, recognizing any impairment loss in the income statement[23]. - The impairment loss for cash-generating units is first allocated based on goodwill and then proportionately to other assets of the cash-generating unit[49]. Financial Assets and Credit Risk - The company measures financial assets at amortized cost if the investment is held to collect solely principal and interest payments[8]. - Trade receivables are recognized at amortized cost less credit loss allowances, using the effective interest method[10]. - Expected credit loss provisions for financial assets are updated at each reporting date to reflect changes in credit risk since initial recognition[24]. - The group evaluates the credit risk of financial instruments to determine if there has been a significant increase in credit risk since initial recognition[51]. - The company considers a financial asset to have low credit risk if it has an external credit rating of "investment grade" or an internal rating of "good"[29]. - If a financial asset is overdue by more than 90 days, it is considered a default event unless there is reliable information to support a more lenient standard[31]. - The group assesses expected credit losses based on the difference between all contractual cash flows expected to be received and the cash flows expected to be collected[66]. Taxation - The company recognizes deferred tax liabilities based on the tax rates expected to apply when the liabilities are settled[21]. - The group must pay income tax in multiple jurisdictions, and significant estimates are required in determining income tax provisions[63]. - The income tax for the year ended December 31, 2022, was HKD 16,888,000, compared to HKD 16,279,000 in 2021[41]. Property, Plant, and Equipment - The carrying amounts of property, plant, and equipment as of December 31, 2022, were HKD 155,881,000 and HKD 235,626,000, respectively, compared to HKD 176,148,000 and HKD 258,463,000 in 2021[64]. - The economic useful life and residual value of property, plant, and equipment are estimated based on current market prices and other economic factors[39]. - The company's capital expenditure for property, plant, and equipment was approximately HKD 32,270,000, aimed at enhancing production capacity[184]. Revenue and Profitability - The company's consolidated revenue for 2022 decreased by approximately HKD 96,543,000 or 8.9% to about HKD 986,094,000 compared to the previous year[128]. - The profit attributable to the company's owners was approximately HKD 6,228,000, a decrease of 88.7% from the previous year's profit of approximately HKD 55,092,000[128]. - The gross profit for the year decreased by about 8.0% to approximately HKD 406,635,000 due to reduced sales[133]. - The company's revenue for the fiscal year ended December 31, 2022, was approximately HKD 986,094,000, a decrease of about 8.9% from HKD 1,082,637,000 in the previous year[152]. - The net profit attributable to the company's owners was approximately HKD 6,228,000, down 88.7% from HKD 55,092,000 in the previous year[152]. - Revenue from the United States decreased by approximately HKD 77,178,000 or 9.5%, totaling around HKD 736,916,000[187]. - Revenue from the European market decreased by approximately HKD 7,134,000 or 8.0%, totaling around HKD 81,797,000[169]. - Revenue from Mexico increased by approximately HKD 961,000 or 7.5%, reaching about HKD 13,753,000[171]. Corporate Governance - The board of directors held five meetings during the year, with all members receiving sufficient information to make informed decisions[76]. - The company has adopted a code of conduct for securities trading by directors, in compliance with the listing rules[79]. - The company reported a significant focus on enhancing corporate governance practices in line with the Hong Kong Stock Exchange's guidelines, ensuring compliance as of December 31, 2022[104]. - The board consists of five executive directors and three independent non-executive directors, meeting the requirement of having at least one-third independent members[106]. - The remuneration committee is responsible for reviewing the compensation policies for directors and senior management, ensuring the company can attract and retain high-quality talent[111]. - The company has introduced director development programs to ensure board members are well-informed and skilled[113]. Operational Performance and Strategy - The company operates four factories in Vietnam and employs around 3,000 staff across various regions including Hong Kong, China, and the United States[122]. - The company aims to enhance its product portfolio and diversify its customer base despite economic uncertainties and geopolitical risks[115]. - The company will continue to manage its financial and cash position prudently to strengthen its ability to respond to adverse business conditions[115]. - The company plans to increase automation to improve efficiency and maximize long-term returns for shareholders[115]. - The company launched a new vehicle product "Rocket Alliance" in the third quarter of 2022 to enrich its product portfolio[149]. - The company launched a new toy car product "Rocket League" in the third quarter to enrich its product portfolio[185]. - The company continues to focus on improving product and inventory management to retain customers amid the negative impacts of the pandemic[198]. - New toy product brands "CAT," "Fart Ninjas," and "Bright Fairy Friends" are being introduced with new sales plans[198]. Financial Position and Cash Flow - The company maintained a strong cash flow position, with cash and bank balances of approximately HKD 258,959,000 as of December 31, 2022, compared to HKD 164,076,000 in the previous year[158]. - The operating cash flow for the year was approximately HKD 229,171,000, an increase from HKD 207,747,000 in the previous year[159]. - The current ratio improved to 3.5, up from 3.2 in the previous year, mainly due to a decrease in trade payables[143][157]. - Trade payables decreased by approximately 59.6% to about HKD 29,085,000, primarily due to reduced procurement of raw materials[135]. - The company implemented cost control measures and automation to manage financial and cash flow challenges in a difficult operating environment[185]. - The company's total assets decreased by approximately 8.1% to about HKD 1,263,221,000 from HKD 1,416,142,000 in the previous year[184]. Market Conditions - Consumer purchasing power has been weakened due to soaring electricity and food prices, with new job creation and spending on goods and services slowing down[198]. - The revenue breakdown by market shows that the United States accounted for 74.7% and Europe for 8.3% of total revenue in 2022[126]. - Research and development expenses decreased by approximately 4.2% to about HKD 20,624,000 due to fewer resources allocated for toy product development[156]. - The company declared a final dividend of HKD 0.08 per share, up from HKD 0.06 per share in the previous year, resulting in a total dividend of HKD 0.12 per share for the year[178].
MATRIX HOLDINGS(01005) - 2022 - 年度财报