Financial Performance - Revenue increased by 6.1% to approximately HK$1,435.8 million (2020: HK$1,353.1 million) [9] - Gross profit decreased by 25.8% to approximately HK$269.6 million (2020: HK$363.5 million) [10] - Operating loss was approximately HK$92.4 million (2020: operating profit of approximately HK$102.2 million) [12] - Loss attributable to owners of the Company was approximately HK$93.5 million (2020: profit of approximately HK$79.0 million) [12] - Revenue for the year 2021 was HK$1,435,826, a decrease of 6.1% compared to 2020's revenue of HK$1,353,099 [1] - Profit for the year 2021 was a loss of HK$97,925, compared to a profit of HK$74,600 in 2020 [1] - Total assets as of December 31, 2021, were HK$1,738,724, a decrease from HK$1,803,435 in 2020 [1] - Total equity for 2021 was HK$1,094,446, down from HK$1,192,334 in 2020 [1] - The company faced challenges in 2021 due to the COVID-19 pandemic, trade tensions, and increased production costs [29] Dividends - No final dividend was recommended for the year ended December 31, 2021, and no interim dividend was declared during the six months ended June 30, 2021 [13] - The Group has suspended dividend payments for the year ended 31 December 2021, compared to a dividend of 2.5 HK cents per share in 2020, representing a 100% decrease [40] - The Board did not propose a final dividend for the year ended 31 December 2021, compared to a final dividend of HK1.5 cents per Share for the year ended 31 December 2020 [56] Revenue Breakdown - Revenue contributions from the hospitality supplies business, OS&E business, and health care and hygienic products business were approximately HK$1,088.1 million, HK$156.4 million, and HK$191.3 million, representing 75.8%, 10.9%, and 13.3% of total revenue respectively [42] - Revenue from the Group's hospitality supplies business increased by 32.5% to approximately HK$1,088.1 million for the year ended December 31, 2021, contributing 75.8% to the Group's total revenue [85] - Revenue from the Group's OS&E business was approximately HK$156.4 million for the year ended December 31, 2021, representing an increase of 38.5% compared to approximately HK$112.9 million for the year ended December 31, 2020 [99] - Revenue from the Group's health care and hygienic products business for the year ended 31 December 2021 was approximately HK$191.3 million, a decline from approximately HK$419.3 million in 2020, contributing 13.3% to the Group's total revenue [110] Profitability Metrics - Gross profit margin decreased by 8.1 percentage points to 18.8% (2020: 26.9%) [11] - The gross profit margin decreased by 8.1 percentage points to 18.8% from 26.9% in the prior year due to rising raw material prices and increased manufacturing costs [43] - Basic and diluted loss per share attributable to owners of the Company was (12.8) HK cents for the year ended 31 December 2021, compared to earnings of 10.8 HK cents in 2020, representing a decrease of 218.5% [40] - Gross profit from the hospitality supplies business rose by 13.4% to approximately HK$207.2 million for the year ended December 31, 2021, with a gross profit margin decrease of 3.3 percentage points to 19.0% [85] - Gross profit from the OS&E business increased by 24.0% to approximately HK$37.2 million for the year ended December 31, 2021, with a gross profit margin of 23.8% [99] - Gross profit from the healthcare and hygiene products business was about HKD 25.0 million, down from HKD 147.2 million year-on-year, with a gross margin decline of 22.0 percentage points to 13.1% [115] Market Conditions - Global tourism saw a mild increase in 2021, but remained below pre-pandemic levels of 2019 [29] - The prolonged COVID-19 pandemic has significantly impacted the travel, tourism, and aviation industries, leading to unsatisfactory results for the Group for the year ended December 31, 2021 [85] - The estimated domestic tourists in the PRC were 3.431 billion person-times in 2021, representing a 19% increase compared to 2020 [90] - The tourism revenue in the PRC reached RMB3.02 trillion in 2021, a 35% increase compared to 2020 [90] - The expected number of domestic tourists in China for 2022 is projected to be 3.98 billion person-times, with tourism revenue anticipated to reach RMB 3.81 trillion, reflecting year-on-year growth rates of 16% and 27%, respectively [119] Strategic Initiatives - The Group will continue to diversify its product range and strengthen research and development with new technologies in health care and hygienic products [32] - The Group aims to improve cost efficiency and productivity by utilizing existing production bases to meet market demands [36] - The Group plans to explore new business opportunities to consolidate its business performance in the coming year [36] - The Group aims to enhance competitiveness by developing its production base in Cambodia to reduce production costs and improve production efficiency [122] - The Group plans to expand its healthcare and hygiene products market by diversifying its product portfolio and enhancing sales channels to include business organizations, schools, and hospitals [119] - The Group's strategy includes a series of initiatives to achieve steady innovation and sustainable growth [122] Risks and Compliance - The Group faces risks related to reliance on direct sales customers and distributors for product sales, which may affect business and profitability [157] - Price fluctuations of raw materials may lead to increased production costs, adversely impacting profits if not managed properly [158] - Operational risks include potential defaults by customers and inadequacies in internal processes, which could negatively impact results [159] - Market risks such as currency fluctuations and interest rate volatility are inherent in the Group's business operations [160] - The Group's operations are subject to risks from compliance with laws and regulations, which may lead to significant expenditures or operational disruptions if not adhered to [169] Corporate Governance - The Group has complied with relevant laws and regulations, which significantly impact its operations, and aims to enhance governance and fulfill social responsibilities [170] - The Group maintains strong relationships with employees, customers, and suppliers, providing comprehensive benefits and ensuring quality products and services [178] - All Independent Non-Executive Directors have confirmed their independence as per Rule 3.13 of the Listing Rules [191] - The Group did not issue any shares or debentures during the year ended December 31, 2021 [182] Investments and Acquisitions - The company established a new VIE structure to comply with Cambodian laws, allowing it to control the Landholding Company and enjoy economic benefits from the land and properties [197] - A new loan agreement was signed for an interest-free loan of $2,500,000 to acquire 51% equity interests in the Landholding Company [200] - The local partner transferred 51% equity interests of the Landholding Company to Mr. CHING Tsun Wah, an Executive Director [197] - The new structured documents include various agreements such as the New Shareholders' Agreement and New Share Pledge Agreement [200]
明辉国际(03828) - 2021 - 年度财报