HARSON(SH:603958)2019-08-27 16:00Financial Performance - The company's operating revenue for the first half of 2019 was CNY 634,330,007.50, a decrease of 12.50% compared to CNY 724,952,428.77 in the same period last year[18]. - The net profit attributable to shareholders of the listed company was CNY 8,828,548.79, down 76.77% from CNY 38,001,699.11 in the previous year[18]. - The net cash flow from operating activities was CNY 6,494,925.60, a significant decline of 88.56% compared to CNY 56,774,890.58 in the same period last year[19]. - The basic earnings per share decreased to CNY 0.04, down 76.47% from CNY 0.17 in the previous year[20]. - The total assets at the end of the reporting period were CNY 1,225,106,342.35, a decrease of 7.03% from CNY 1,317,716,727.01 at the end of the previous year[19]. - The net assets attributable to shareholders of the listed company increased slightly by 0.87% to CNY 1,022,213,170.99 from CNY 1,013,376,149.36 at the end of the previous year[19]. - The company reported a significant reduction in government subsidies received during the reporting period compared to the previous year, impacting net profit[20]. - The weighted average return on net assets decreased to 0.87%, down 2.32 percentage points from 3.19% in the previous year[20]. - The company achieved operating revenue of 634.33 million RMB, a decrease of 12.50% compared to the same period last year[34]. - Net profit attributable to the parent company was 8.83 million RMB, down 76.77% year-on-year[34]. Sales and Market Performance - Domestic sales revenue was 551.92 million RMB, a decline of 17.62%, while foreign sales revenue increased by 49.92% to 82.41 million RMB[34]. - The number of domestic stores decreased by 56, all of which were direct-operated stores, leaving a total of 1,532 stores[34]. - The domestic footwear market saw a sales revenue of 600 billion USD in 2018, with a growth rate of 5.1%[27]. - Online retail sales in China accounted for 19.6% of total retail sales in the first half of 2019, up from 18.4% the previous year[26]. Research and Development - The company’s R&D expenses were 6.36 million RMB, down 35.45% from the previous year[36]. - The company is investing 50 million in research and development for new technologies aimed at enhancing user experience[52]. - Research and development expenses for the first half of 2019 were CNY 6,361,143.52, down 35.5% from CNY 9,854,461.34 in the first half of 2018[91]. Cash Flow and Liquidity - The company's cash and cash equivalents decreased by 89.22% to ¥40,033,732.48, compared to ¥371,301,677.76 in the previous period[37]. - Other current assets increased significantly by 1,566.84% to ¥368,989,420.21, attributed to an increase in purchased financial products[37]. - Accounts payable decreased by 39.95% to ¥113,166,314.96, down from ¥188,463,415.78 in the previous period[37]. - The company's net cash flow from operating activities decreased due to a reduction in revenue[37]. - The company reported a 45.44% decrease in payable taxes, amounting to ¥6,761,933.21, down from ¥12,394,641.91[40]. Risks and Challenges - The company is facing risks related to channel changes, particularly the competition from online sales and shopping centers affecting traditional department store sales[44]. - Inventory control risks are present due to low turnover rates and potential overstocking, which could lead to losses if not managed properly[44]. - The company experienced a decline in export sales, with revenues dropping from ¥269 million in 2016 to ¥120 million in 2018, although there was a slight recovery in 2019[45]. Strategic Initiatives - The company plans to enhance online store operations and expand into shopping center channels to mitigate channel risk[44]. - The company is considering strategic acquisitions to bolster its product offerings, with a budget of 200 million allocated for potential deals[52]. - Market expansion plans include entering three new international markets by Q4 2019, which is expected to increase market share by 10%[52]. Shareholder and Equity Information - The company has committed to not transferring or entrusting the management of its shares for 36 months from the date of listing, with a lock-up period ending on June 29, 2019[49]. - After the lock-up period, the company will limit the number of shares transferred annually to no more than 25% of the total indirect shares held during the tenure of the executives[49]. - The company will announce any share reduction plans at least three trading days in advance if the shareholding exceeds 5%[50]. - The company has confirmed that all commitments made by shareholders and related parties have been fulfilled during the reporting period[49]. - The total number of shares decreased from 219,906,650 to 219,896,600 due to the cancellation of 10,050 shares[67]. Compliance and Regulatory Matters - There are no significant legal disputes or regulatory issues reported during the period, ensuring a stable operational environment[54]. - The company has committed to maintaining compliance with all financial regulations, with no outstanding debts or penalties reported[54]. Accounting Policies and Financial Reporting - The company has adjusted its accounting policies in accordance with new financial instrument standards effective from January 1, 2019, but this will not have a significant impact on financial statements[61]. - The company prepared its financial statements in accordance with the accounting standards issued by the Ministry of Finance, ensuring a true and complete reflection of its financial status and operating results[125]. - The company evaluates its ability to continue as a going concern for the next 12 months and found no significant doubts regarding its ongoing viability[123]. Financial Instruments and Investments - The company classifies financial instruments into three categories: financial assets measured at amortized cost, financial assets measured at fair value with changes recognized in other comprehensive income, and financial assets measured at fair value with changes recognized in profit or loss[144][145]. - The company recognizes foreign currency transactions at the spot exchange rate on the transaction date, with any exchange differences recorded in the current profit or loss[141]. - The company assesses expected credit losses based on the risk of default for financial assets measured at amortized cost and fair value, confirming loss provisions accordingly[160]. Fixed Assets and Depreciation - Fixed assets are recognized when they are held for production, service provision, leasing, or management, with a useful life exceeding one accounting year[191]. - The depreciation method for fixed assets includes straight-line depreciation with varying rates, such as 4.5% for buildings and 10% for machinery[191]. - Borrowing costs can be capitalized if they are directly attributable to the acquisition or production of qualifying assets[198].