Financial Performance - The group's revenue for the six months ended June 30, 2023, was approximately HKD 92.6 million, a decrease of 35.3% compared to HKD 142.8 million for the same period in 2022[14]. - The gross profit for the same period was HKD 12.4 million, resulting in a gross margin of 13.4%, up from 8.6% in the previous year[14]. - The pre-tax loss narrowed to HKD 22.9 million from HKD 28.1 million year-on-year[14]. - The net loss attributable to the company's owners was HKD 19.5 million, compared to HKD 24.7 million in the prior year[14]. - Revenue for the six months ended June 30, 2023, was HKD 92,551,000, compared to HKD 142,842,000 for the same period in 2022, representing a decrease of approximately 35%[47]. - Gross profit for the same period was HKD 12,357,000, slightly up from HKD 12,222,000 in 2022, indicating a marginal increase of about 1%[47]. - The company reported a loss before tax of HKD 22,880,000 for the six months ended June 30, 2023, an improvement from a loss of HKD 28,099,000 in the previous year, reflecting a reduction of approximately 18%[47]. - The net loss attributable to shareholders for the period was HKD 19,459,000, compared to HKD 24,749,000 in 2022, showing a decrease of about 21%[47]. - The company reported a loss of HKD 19,459,000 for the six months ended June 30, 2023, compared to a loss of HKD 24,749,000 for the same period in 2022, reflecting an improvement of approximately 21%[83]. Cash and Liquidity - The group's cash and bank balances as of June 30, 2023, were approximately HKD 81.6 million, down from HKD 84.7 million at the end of 2022[3]. - Cash and cash equivalents decreased by HKD 2,863,000 for the six months ended June 30, 2023, compared to a decrease of HKD 20,624,000 for the same period in 2022, showing a significant reduction in cash outflow[67]. - The company raised new bank borrowings of HKD 31,000,000 during the six months ended June 30, 2023, compared to HKD 61,405,000 in the same period of 2022, indicating a decrease of about 49%[67]. - As of June 30, 2023, bank borrowings were approximately HKD 27.5 million, down from HKD 31.4 million at the end of 2022, with available bank financing at HKD 65.5 million compared to HKD 163.4 million previously[126]. - The company’s total non-current liabilities decreased to HKD 8,607,000 as of June 30, 2023, from HKD 12,528,000 as of December 31, 2022, a reduction of approximately 31%[59]. Assets and Liabilities - Total non-current assets as of June 30, 2023, were valued at HKD 159,539,000, down from HKD 163,548,000 at the end of 2022, indicating a decrease of about 2.4%[49]. - Current assets totaled HKD 214,558,000, a decrease from HKD 230,869,000 in the previous year, representing a decline of approximately 7%[49]. - The company's total assets less current liabilities amounted to HKD 302,620,000, down from HKD 326,000,000, reflecting a decrease of about 7.1%[49]. - The company’s net asset value as of June 30, 2023, was HKD 294,013,000, down from HKD 313,472,000 as of December 31, 2022, indicating a decrease of about 6.2%[59]. - The company’s reserves decreased from HKD 307,072,000 as of December 31, 2022, to HKD 287,613,000 as of June 30, 2023, reflecting a decline of about 6.3%[59]. Operational Efficiency - Employee benefits expenses capitalized as manufacturing inventory costs totaled HKD 19.8 million, down from HKD 26.6 million in the prior year[22]. - The company maintained a minimum workforce due to lower business volume, with 323 employees as of June 30, 2023, down from 353 employees at the end of 2022[128]. - The company experienced a decrease in inventory by HKD 14,670,000, compared to a decrease of HKD 15,291,000 in the prior period, indicating a stable inventory management[182]. - The operating cash flow before changes in working capital was a negative HKD 15,418,000, slightly better than the negative HKD 16,641,000 recorded in the previous period[182]. - The company reported a net cash inflow from operating activities of HKD 4,986,000, a recovery from a net outflow of HKD 7,288,000 in the prior period[182]. Market and Product Focus - The company is focusing on the US market due to a stable increase in order volume and is actively participating in denim exhibitions to expand its customer base[116]. - The main product remains elastic blended denim, accounting for 85.7% of total sales, slightly up from 85.5% in the previous year[116]. - The company is focusing on increasing sales by enhancing customer engagement and negotiating for more product shipments, particularly in the U.S. denim market, which is expected to grow at a CAGR of 4.5% until 2028[120]. - For the six months ended June 30, 2023, the revenue from elastic blended denim fabric increased to HKD 122.235 million from HKD 79.332 million in the same period of 2022, representing a growth of approximately 54.1%[200]. - The revenue from elastic cotton denim fabric rose to HKD 13.581 million, compared to HKD 7.925 million in the prior year, reflecting a growth of approximately 71.8%[200]. Strategic Initiatives - The company has implemented cost-saving measures since the second half of 2022 to strengthen its financial health[116]. - The company is actively pursuing diversification of its business portfolio, including property investments in Tsuen Wan, Hong Kong, which have shown promising tenant interest and increased foot traffic[121]. - The company plans to utilize proceeds from its IPO to acquire advanced dyeing and finishing equipment to enhance operational performance[121]. - The company is committed to developing flexible mixed denim fabrics that adapt to innovative designs while ensuring comfort and style for wearers[121]. - The company is planning to list its shares on the main board of the Hong Kong Stock Exchange, indicating a strategic move for market expansion[158]. Accounting and Reporting - The company has adopted accounting standards in accordance with Hong Kong Accounting Standard 34 for the preparation of interim financial reports[187]. - The application of the revised Hong Kong Financial Reporting Standards did not have a significant impact on the group's financial position and performance during the interim period[196]. - The group confirmed deferred tax assets and liabilities related to lease liabilities and associated assets in accordance with Hong Kong Accounting Standard 12[197]. - The company has maintained the same accounting policies and calculation methods for the interim financial statements as those used for the annual financial statements for the year ended December 31, 2022[194]. - The group has not identified any major impacts on disclosures in the interim financial statements due to the application of the revised standards[196].
兴纺控股(01968) - 2023 - 中期财报