Financial Performance - The group's revenue for the first half of the fiscal year 2024 increased by 98.1% to HKD 90,100,000, compared to HKD 45,500,000 in the same period last year[4]. - Gross profit rose by 1.6% to HKD 13,800,000, but the gross margin decreased from 29.9% to 15.3% due to intensified pricing competition in the luxury watch market[4]. - The company reported a loss attributable to owners of HKD 56,000,000 for the first half of fiscal year 2024, compared to a loss of HKD 47,400,000 in the same period last year[5]. - Revenue for the six months ended September 30, 2023, was HKD 90,092,000, a significant increase from HKD 45,474,000 in the same period of 2022, representing a growth of 97.8%[45]. - The net loss for the period was HKD 56,273,000, compared to a net loss of HKD 47,562,000 in 2022, reflecting an increase in losses of 18.0%[45]. - Total comprehensive loss for the period was HKD 67,924,000, down from HKD 95,709,000 in the previous year, showing an improvement of 29.1%[46]. - The basic and diluted loss per share for the period was HKD 0.93, compared to HKD 0.78 in the previous year, indicating a worsening of 19.2%[46]. - The company recorded a net loss of HKD 55,992,000 for the six months ended September 30, 2023, compared to a net loss of HKD 47,374,000 in the same period of 2022, indicating a worsening financial position[76]. Revenue Sources and Market Performance - Hong Kong remains the primary market, contributing 78.3% of total revenue, with revenue from this region increasing by 249.6% to HKD 70,500,000[11]. - Total revenue for the watch distribution segment was HKD 83,327,000, with a geographical breakdown of HKD 70,539,000 from Hong Kong and Macau, HKD 10,552,000 from other regions, and HKD 2,236,000 from mainland China[65]. - The watch distribution segment generated HKD 83,327,000 in revenue, with HKD 70,539,000 coming from Hong Kong, indicating a strong performance in the local market[70]. - Rental income from property investment was HKD 4,139,000, contributing to the overall revenue growth[70]. Expenses and Cost Management - Sales and distribution costs decreased by 50.2% to HKD 6,400,000, down from HKD 12,900,000 in the previous year, mainly due to reduced depreciation expenses[4]. - General and administrative expenses increased by 38.3% to HKD 53,200,000, compared to HKD 38,500,000 in the previous year, driven by legal and professional fees related to arbitration and increased employee costs[4]. - The total employee costs rose to HKD 23,503,000 in 2023 from HKD 18,670,000 in 2022, marking an increase of 25.0%[74]. Cash Flow and Financial Position - The company maintains cash and bank balances of HKD 74,200,000 as of September 30, 2023, up from HKD 65,500,000 on March 31, 2023[19]. - The company reported a net cash inflow from investing activities of HKD 6,281,000, contrasting with a cash outflow of HKD 5,772,000 in the same period last year[53]. - The company’s total cash and cash equivalents at the end of the period were HKD 74,229,000, significantly up from HKD 24,052,000 at the end of the previous year[53]. - Cash and cash equivalents increased by HKD 15,946,000, compared to a decrease of HKD 34,833,000 in the previous year[53]. - The company incurred a total of HKD 142,085,000 from other borrowings, indicating a significant financing activity during the period[53]. Assets and Liabilities - The capital debt ratio increased to 161.5% as of September 30, 2023, compared to 122.5% on March 31, 2023[19]. - Non-current assets decreased to HKD 471,702,000 as of September 30, 2023, from HKD 491,678,000 as of March 31, 2023, a decline of 4.1%[48]. - Current assets decreased to HKD 242,271,000 from HKD 284,467,000, representing a decrease of 14.9%[48]. - Total liabilities increased to HKD 540,238,000 as of September 30, 2023, compared to HKD 534,701,000 as of March 31, 2023, an increase of 1.4%[49]. - The company's equity decreased to HKD 173,735,000 from HKD 241,444,000, a decline of 28.0%[49]. Governance and Compliance - The company has complied with all provisions of the Corporate Governance Code, except for the combined roles of Chairman and CEO held by Zhang Xiaoliang[38][39]. - The company appointed Zheng Shengjiao as an independent non-executive director on May 12, 2023, ensuring compliance with listing rules regarding independent directors[41]. - The Audit Committee consists of four independent non-executive directors and is responsible for reviewing the company's financial reporting system and risk management[43]. - The company confirmed that all directors adhered to the standard code of conduct for securities trading during the six months ending September 30, 2023[42]. Strategic Initiatives - The company has signed a memorandum of understanding with a renowned Swiss watchmaker to obtain distribution rights in certain regions of mainland China, Hong Kong, and Macau[15]. - The group aims to enhance its sales network in mainland China, Hong Kong, Macau, and Taiwan, highlighting its ambition for a diversified brand portfolio[15]. - The company plans to enhance its distribution network in mainland China, Hong Kong, and Macau, focusing on strategic alliances with major duty-free operators[17]. - The company aims to diversify its revenue sources and improve financial strength by actively seeking appropriate opportunities[18]. - The company will assess rental rates and occupancy levels of its investment properties in China to enhance rental yield[18]. Legal and Contingent Liabilities - The arbitration involves a potential claim of approximately CHF 71,400,000 (about HKD 613,800,000) from Multicontinental for alleged failure to meet minimum purchase amounts[113]. - The company estimates potential losses of about CHF 14,000,000 (approximately HKD 118,000,000) based on cumulative shortfalls in minimum purchase amounts since April 1, 2019[116]. - Multicontinental is also seeking the return of consignment goods valued at approximately CHF 77,100,000 (about HKD 663,300,000)[116]. - The group has obtained financial support from third parties to fulfill its financial obligations if necessary[117].
SINCEREWATCH HK(00444) - 2024 - 中期财报