英记茶庄集团(08241) - 2023 Q3 - 季度财报

Management Discussion and Analysis This section provides an overview of the Group's business, financial performance, outlook, liquidity, and key risks for the reporting period Business and Operations Review For the nine months ended December 31, 2022, the Group's revenue decreased due to weak overall retail sentiment caused by ongoing COVID-19 social distancing measures in Hong Kong, exacerbated by global economic volatility and geopolitical events - During the reporting period, the Group's revenue decreased due to weak retail sentiment caused by COVID-19 social distancing measures[39] - Uncertainties such as global economic and interest rate fluctuations, and geopolitical events, exacerbated the challenging retail environment faced by the Group[39] Financial Review For the nine months ended December 31, 2022, the Group's consolidated revenue decreased by 1.4% year-on-year to approximately HKD 28.7 million, with net loss widening to approximately HKD 2.9 million; gross profit margin slightly declined to 76.5%, while administrative expenses and finance costs increased Financial Summary for the Nine Months Ended December 31, 2022 | Indicator | For the Nine Months Ended December 31, 2022 (HKD Thousands) | For the Nine Months Ended December 31, 2021 (HKD Thousands) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 28,722 | 29,073 | -1.2% | | Gross Profit | 21,968 | 22,774 | -3.5% | | Loss Before Tax | (2,940) | (2,695) | +9.1% | | Loss Attributable to Shareholders | (2,940) | (2,695) | +9.1% | | Loss Per Share (HK Cents) | (0.81) | (0.75) | +8.0% | - The net loss during the reporting period was primarily due to the weakening of the retail sector by the COVID-19 pandemic[35] - Administrative expenses increased by approximately 2.7% year-on-year to HKD 22.6 million, mainly due to the payment of double pay to employees before the 2023 Chinese New Year[37] - Finance costs increased to HKD 2.5 million from HKD 2.4 million in the prior period, primarily due to increased interest expenses on bank loans[38] Outlook and Prospects The Group is optimistic about the steady recovery of Hong Kong's retail and tourism sectors following the lifting of social distancing and travel restrictions, and plans to expand online sales through social media and e-commerce platforms like HKTV mall - The Group is optimistic about the steady recovery of Hong Kong's retail and tourism sectors, anticipating growth in retail sales and customer traffic[41] - To adapt to changing consumer habits, the Group plans to strengthen online sales through social media activities and e-commerce platforms such as HKTV mall[41] Liquidity and Cash Flow Management At the end of the reporting period, the Group's financial position faced pressure, shifting from a net current asset position to a net current liability of approximately HKD 2.7 million, with the current ratio decreasing to 0.8 times and the gearing ratio significantly rising to 540.8% due to reduced equity and increased losses, while capital expenditure significantly decreased Changes in Liquidity Indicators | Indicator | December 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Current Assets | Approx. HKD 13.5 Million | Approx. HKD 16.6 Million | | Current Liabilities | Approx. HKD 16.2 Million | Approx. HKD 15.0 Million | | Net Current (Liabilities)/Assets | Approx. HKD (2.7) Million | Approx. HKD 1.6 Million | | Current Ratio | Approx. 0.8x | Approx. 1.1x | | Gearing Ratio | Approx. 540.8% | Approx. 370.2% | | Cash and Bank Balances | Approx. HKD 3.6 Million | Approx. HKD 5.5 Million | - Capital expenditure during the reporting period was approximately HKD 50,000, primarily for plant and equipment, a significant decrease from HKD 200,000 in the prior period[50][55] Key Risks and Uncertainties The Group faces key risks including credit, foreign exchange, interest rate, and liquidity risks, which are managed through dealing with reputable parties, minimal exposure due to Hong Kong-centric operations, monitoring bank borrowings for interest rate sensitivity, and cash flow forecasting for liquidity - Credit Risk: The Group only transacts with reputable third parties and continuously monitors receivables, resulting in immaterial bad debt risk[56] - Foreign Exchange Risk: As almost all of the Group's assets, liabilities, and revenues are denominated in Hong Kong Dollars, foreign exchange risk is not significant[53] Interest Rate Risk Sensitivity Analysis | Increase in Prime Rate and HIBOR | Increase in Interest Expense | | :--- | :--- | | 0.25% | HKD 144,000 | | 0.50% | HKD 288,000 | - Liquidity Risk: The Group monitors cash shortage risk through monthly cash flow forecasts to maintain funding sustainability and flexibility[66] Other Operating Information At the end of the reporting period, the Group had 55 employees in Hong Kong with total staff costs of approximately HKD 10.5 million, the Board resolved not to declare dividends, certain property assets were pledged for bank financing, and there were no significant contingent liabilities or post-reporting period events - As of the end of the reporting period, the Group had 55 employees, with total staff costs of approximately HKD 10.5 million during the period, and received approximately HKD 1.3 million from the "Employment Support Scheme"[58] - The Board resolved not to declare any dividends for the reporting period[59][105][132] - The Group pledged two properties located in Hong Kong as collateral for bank financing[68] - At the end of the reporting period, the Group had no significant contingent liabilities or material events subsequent to the reporting period affecting its results[60][61] Other Information This section covers the Group's corporate governance, compliance, shareholding structures, share option scheme, and audit committee activities Corporate Governance and Compliance The Group maintained high corporate governance standards and complied with the GEM Listing Rules' Corporate Governance Code during the reporting period, with all directors confirming adherence to the code of conduct for securities transactions, and no listed securities were purchased, sold, or redeemed by the company - During the reporting period, the Company complied with the relevant provisions of the Corporate Governance Code[69] - All Directors confirmed compliance with the code of conduct regarding Directors' securities transactions[4] - During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[5] Directors', Chief Executive's and Major Shareholders' Interests This section discloses the shareholding interests of directors, the chief executive, and major shareholders, including controlling shareholder Profit Ocean's 74.70% stake jointly controlled by the Chan family members through acting-in-concert arrangements, and individual directors' interests via share option schemes Directors' and Chief Executive's Interests in the Company's Shares | Director's Name | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Chan Kwong Yuen | Interest in Controlled Corporation / Beneficial Owner | 270,000,000 / 3,200,000 | 74.70% / 0.89% | | Mr. Chan Kun Yuen | Interest in Controlled Corporation / Beneficial Owner | 270,000,000 / 3,200,000 | 74.70% / 0.89% | | Mr. Chan Shu Yuen | Interest in Controlled Corporation / Beneficial Owner | 270,000,000 / 3,200,000 | 74.70% / 0.89% | | Mr. Siu Tsz Ming | Beneficial Owner | 200,000 | 0.06% | | Mr. Li Wai Ho | Beneficial Owner | 200,000 | 0.06% | | Mr. Wong Tsz Chung | Beneficial Owner | 200,000 | 0.06% | - Major shareholder Profit Ocean Enterprises Limited holds 270,000,000 shares (74.70%), jointly controlled by Mr. Chan Tat Yuen, Mr. Chan Kun Yuen, Mr. Chan Shu Yuen, and Mr. Chan Kwong Yuen through acting-in-concert arrangements[72][86] Share Option Scheme The Company adopted a share option scheme on March 14, 2018, to incentivize contributors; during the reporting period, no new options were granted, exercised, or cancelled, with only 100,000 options lapsing due to employee resignations, leaving 28,350,000 outstanding options at period-end Summary of Share Option Movements (As of December 31, 2022) | Item | Number of Shares | | :--- | :--- | | Outstanding at Beginning of Period | 28,450,000 | | Granted During Period | - | | Exercised During Period | - | | Cancelled During Period | - | | Lapsed During Period | 100,000 | | Outstanding at End of Period | 28,350,000 | - All outstanding share options have an exercise price of HKD 0.189 and an exercise period until May 31, 2023[107] Audit Committee The Company's Audit Committee, comprising three independent non-executive directors chaired by Mr. Siu Tsz Ming, reviewed the unaudited condensed consolidated results for the quarter and deemed them compliant with accounting standards and disclosure requirements - The Audit Committee comprises all independent non-executive directors, Mr. Li Wai Ho, Mr. Siu Tsz Ming, and Mr. Wong Tsz Chung, with Mr. Siu Tsz Ming serving as Chairman[110] - The Audit Committee reviewed the unaudited results for the quarter, confirming compliance with applicable accounting standards and GEM Listing Rules, and adequate disclosure[90] Unaudited Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, including the statement of profit or loss, statement of changes in equity, and key notes Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The financial statements show that for the nine months ended December 31, 2022, the Company's revenue was HKD 28.722 million, a slight year-on-year decrease, with net loss widening to HKD 2.94 million from HKD 2.695 million in the prior year, while the third quarter alone recorded a profit of HKD 0.721 million, lower than HKD 2.093 million in the previous year Condensed Consolidated Statement of Profit or Loss (HKD Thousands) | Item | For the Three Months Ended December 31 (2022) | For the Three Months Ended December 31 (2021) | For the Nine Months Ended December 31 (2022) | For the Nine Months Ended December 31 (2021) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 14,271 | 14,677 | 28,722 | 29,073 | | Gross Profit | 10,823 | 11,365 | 21,968 | 22,774 | | Profit/(Loss) Before Income Tax | 721 | 2,093 | (2,940) | (2,695) | | Profit/(Loss) for the Period | 721 | 2,093 | (2,940) | (2,695) | | Basic and Diluted Profit/(Loss) Per Share (HK Cents) | 0.20 | 0.58 | (0.81) | (0.75) | Unaudited Condensed Consolidated Statement of Changes in Equity As of December 31, 2022, the Group's total equity was HKD 17.45 million, a decrease from HKD 20.39 million on April 1, 2022, primarily due to the HKD 2.94 million loss recorded during the period Summary of Changes in Equity (HKD Thousands) | Item | Total Equity | | :--- | :--- | | As at April 1, 2022 (Audited) | 20,390 | | Loss and Total Comprehensive Expense for the Period | (2,940) | | Lapsed Share Options | - | | As at December 31, 2022 (Unaudited) | 17,450 | Summary of Notes to Unaudited Condensed Consolidated Financial Statements The notes to the financial statements provide details on key accounting items, indicating that all revenue during the reporting period was from tea product sales, other income primarily from HKD 1.287 million in government grants, no Hong Kong profits tax provision due to tax losses, and a basic loss per share of HKD 0.81 cents - The Group is primarily engaged in the retail trading of tea products, with all revenue during the reporting period derived from tea product sales[115][101] - During the reporting period, the Group received HKD 1.287 million in subsidies from the Hong Kong Government's "Anti-epidemic Fund", recognized as other income[102][126] - No provision for Hong Kong profits tax was made as the Group incurred a tax loss during the reporting period[25][128] - Basic loss per share for the reporting period was calculated based on the loss attributable to equity holders of the Company of HKD 2.94 million and the weighted average of 361,450,000 ordinary shares[28][129]