Financial Performance - Total sales increased by 22.8% from HKD 371,276,000 to HKD 455,970,000 for the fiscal year ending March 31, 2022[10]. - Gross profit rose to HKD 61,069,000, with a gross margin of 13.39%, compared to 11.81% in the previous year[7]. - EBITDA before expected credit losses improved to HKD 9,656,000 from a loss of HKD 7,266,000 in the prior year[11]. - The company reported a net loss of HKD 38,847,000, compared to a loss of HKD 33,253,000 in the previous year[7]. - Cash and bank balances decreased to HKD 33,391,000 from HKD 63,853,000 year-on-year[7]. - The ratio of net loss to sales improved slightly to -8.5% from -9.0%[7]. - For the fiscal year ending March 31, 2022, the group's revenue increased by approximately 22.8% to about HKD 455,970,000 from approximately HKD 371,276,000 in the previous year[15]. - The gross profit margin improved from 11.8% in the previous year to 13.4% in the review year, primarily due to effective cost control[15]. - The operating loss (before expected credit loss provisions) for the review year was HKD 1,174,000, compared to a loss of HKD 25,939,000 in the previous year, indicating an improvement of approximately HKD 30,164,000[16]. - The net loss for the review year was approximately HKD 38,847,000, compared to a loss of about HKD 33,253,000 in the previous year, largely due to significant expected credit loss provisions of HKD 37,673,000[16]. - EBITDA (excluding expected credit losses) for the review year was approximately HKD 9,656,000, compared to a comparable EBITDA loss of HKD 7,266,000 in the previous year[17]. Customer and Market Dynamics - The company aims to exceed pre-pandemic sales levels based on current order books, despite potential retail demand declines due to inflation and geopolitical concerns[10]. - Sales to the largest customer increased by 15.8%, but their share of total sales decreased from 74.7% to 70.3%[10]. - The majority of revenue (95.7%) came from the United States, totaling HKD 436,514,000, while Italy contributed HKD 17,708,000 (3.9%) and the UK contributed HKD 569,000 (0.1%) in the review year[21]. - The revenue contribution by product category showed that outerwear generated HKD 165,506,000, bottoms HKD 175,695,000, tops HKD 50,699,000, and other products HKD 63,415,000 in the review year[20]. Operational Efficiency - The company has streamlined operations and maintained optimal capacity at its Sri Lanka factory to mitigate seasonal demand fluctuations[11]. - The company has implemented cost control measures since early 2020, resulting in monthly savings of at least USD 1 million in rent and employee costs[34]. - The group continues to implement strategies to enhance market penetration across different regions to reduce reliance on specific markets, addressing economic conditions affecting consumer confidence and purchasing habits[131]. Governance and Management - The company has a strong governance structure with independent non-executive directors providing oversight on strategy, policy formulation, and resource allocation[50]. - The company is focused on expanding its market presence and enhancing product development through strategic initiatives led by its experienced management team[44][45]. - The board includes members with extensive experience in compliance, finance, and corporate governance, ensuring robust oversight of the company's operations[50]. - The company has established three board committees: the audit committee, the remuneration committee, and the nomination committee, to enhance governance[79]. - The board believes that all directors have committed sufficient time and attention to their roles, contributing valuable insights and characteristics to the company[75]. - The company has adopted a board diversity policy effective June 1, 2019, considering various factors such as skills, experience, and gender in board appointments[92]. Risk Management - The group has established a risk management system to identify, assess, and monitor specific financial, operational, and compliance risks, with evaluations submitted to the audit committee semi-annually[118]. - The group continues to monitor customer credit risk and will only extend credit to customers with good credit records, ensuring adequate impairment losses are recognized for uncollectible amounts[132]. - The group is exposed to foreign currency risk due to foreign currency transactions and borrowings, and it actively manages and monitors this risk to ensure timely and effective measures are taken[137]. - The board believes that the risk management and internal control systems are effective and sufficient, with ongoing evaluations based on recommendations from the audit committee and management[121]. Employee and Labor Relations - The group employed 1,381 full-time employees across Hong Kong, mainland China, and Sri Lanka as of March 31, 2022[174]. - The group contributes 5% of employee income to the Mandatory Provident Fund in Hong Kong, capped at HKD 1,500 per month[174]. - There were no difficulties in recruiting experienced skilled employees during the reporting period[174]. - The group has not experienced any significant labor disputes or strikes that disrupted operations during the reporting period[174]. Financial Stability and Capital Management - The company has no capital commitments as of March 31, 2022[41]. - The group aims to maintain sufficient levels of cash and cash equivalents to meet operational needs and reduce cash flow volatility, ensuring compliance with relevant loan covenants[135]. - The group has not paid any interim dividends for the six months ended September 30, 2021, reflecting a focus on financial stability[128]. - The group has not reported any serious violations of laws and regulations that would have a significant impact on its business and operations as of March 31, 2022[143]. Shareholder Relations - The group did not recommend any final dividend for the year ended March 31, 2022, maintaining a conservative approach to shareholder returns[129]. - The company has a significant shareholder, Moonlight Global Holdings Limited, holding 40,100,000 shares, representing 20.05% of the total shares[173]. - Wang Meihui, the Executive Director and CEO, holds 40,100,000 shares through spousal rights, also accounting for 20.05%[165]. - There are no arrangements in place for directors to benefit from acquiring shares of the company or any other corporate entity[167].
STERLING GP(01825) - 2022 - 年度财报