Financial Performance - Group revenue for the period was HK$465,666 thousand, with external sales contributing HK$382,766 thousand and inter-segment sales at HK$4,631 thousand[1] - The group reported a pre-tax loss of HK$48,727 thousand, with a segment performance loss of HK$13,004 thousand[1] - Revenue for the first half of fiscal year 2024 decreased by 7.2% to HKD 432.0 million compared to HKD 465.7 million in the first half of fiscal year 2023, primarily due to a decline in revenue from other branded watches (China) business[93] - Net profit attributable to owners of the company was HKD 11.5 million in the first half of fiscal year 2024, compared to a net loss of HKD 44.9 million in the first half of fiscal year 2023, driven by reduced exchange losses and inventory provisions[100] - Revenue for the six months ended December 31, 2023, was HK$431.964 million, a decrease from HK$465.666 million in the same period in 2022[187] - Gross profit for the period was HK$315.582 million, down from HK$327.167 million in the previous year[187] - Net profit for the period was HK$11.023 million, a significant improvement from a net loss of HK$45.218 million in 2022[187] - The company's total revenue for the period was HK$431.964 million, with external sales contributing HK$379.4 million from the Tian Wang watch business, HK$39.796 million from the watch movement trading business, and HK$12.768 million from other brands (China) business[199] - The Tian Wang watch business generated a segment profit of HK$4.041 million, while the watch movement trading business and other brands (China) business reported segment losses of HK$1.247 million and HK$1.259 million, respectively[199] - The company's profit before tax for the period was HK$15.36 million, after accounting for interest income of HK$32.73 million, other income and losses of HK$1.078 million, central administrative costs of HK$17.515 million, and financing costs of HK$312,000[199] - The company's total segment revenue was HK$436.644 million, with inter-segment sales of HK$4.68 million, primarily from the watch movement trading business[199] Revenue Breakdown - Tian Wang watch business contributed 87.8% of the total revenue in the first half of fiscal year 2024, with revenue slightly decreasing by 0.9% to HKD 379.4 million compared to HKD 382.8 million in the first half of fiscal year 2023[94] - Revenue from the watch movement trading business increased by 9.0% to HKD 39.8 million in the first half of fiscal year 2024, accounting for 9.2% of total revenue[96] - The revenue contribution of the Tianwang watch business to the group's total revenue in the first half of the 2024 fiscal year was approximately 87.8%, up from 82.2% in the same period of the 2023 fiscal year[104] - Revenue from other brands (China) business decreased by HKD 33.6 million or 72.5% from HKD 46.4 million in the first half of fiscal year 2023 to HKD 12.8 million in the first half of fiscal year 2024[125] - The revenue from other branded watches (China business) decreased by approximately HKD 33.6 million, or 72.5%, from HKD 46.4 million in the first half of the 2023 fiscal year to HKD 12.8 million in the first half of the 2024 fiscal year[117] Inventory and Trade Receivables - Inventory levels included raw materials and consumables at HK$59,318 thousand, work-in-progress at HK$6,964 thousand, and finished goods at HK$163,288 thousand[23] - Trade receivables from related parties aged 0-30 days stood at HK$12,692 thousand, while those aged 31-60 days were HK$12,187 thousand[27] - Trade receivables decreased from HKD 161,998 thousand as of June 30, 2023, to HKD 126,420 thousand as of December 31, 2023, with the largest decrease in the 0-60 days category from HKD 128,996 thousand to HKD 89,185 thousand[47] - Inventory balance increased by HKD 1.0 million or 0.4% to HKD 229.6 million as of December 31, 2023, compared to HKD 228.6 million as of June 30, 2023[126] - Inventory turnover days decreased from 408 days as of June 30, 2023, to 359 days in the first half of fiscal year 2024[126] - The average inventory turnover days decreased from 408 days as of June 30, 2023, to 359 days as of December 31, 2023[114] Financial Assets and Liabilities - The group's financial assets measured at amortized cost were valued at HK$412,661 thousand, down from HK$445,124 thousand in the previous period[22] - The group's investments in debt instruments through other comprehensive income had coupon rates ranging from 5.00% to 6.38%, with semi-annual payments[20] - The group's deposits and certificates of deposit were valued at HK$61,679 thousand, while life insurance policies were valued at HK$7,603 thousand[17] - The group's fair value of financial assets measured on a recurring basis was HK$125,668 thousand as of June 30, 2023, with a foreign exchange adjustment of HK$327 thousand[15] - Deferred tax assets slightly decreased from HKD 52,638 thousand as of June 30, 2023, to HKD 51,994 thousand as of December 31, 2023, while deferred tax liabilities decreased from HKD 66,893 thousand to HKD 62,779 thousand over the same period[51] - The company's financial assets measured at fair value through other comprehensive income decreased to HK$101.893 million from HK$198.151 million as of June 30, 2023[190] - The company's deferred tax assets were HK$51.994 million as of December 31, 2023, compared to HK$52.638 million as of June 30, 2023[190] - The company's investments in debt instruments measured at fair value through other comprehensive income include corporate bonds issued by Hong Kong-listed companies, with a comparative figure from June 30, 2023[158] - The company's financial assets measured at fair value through profit or loss include non-listed financial products purchased from commercial banks and insurance companies, with a comparative figure from June 30, 2023[176] Cash Flow and Liquidity - Net cash generated from operating activities increased by HKD 44.4 million to HKD 84.3 million in the first half of fiscal year 2024, compared to HKD 39.9 million in the first half of fiscal year 2023[128] - Cash and cash equivalents were HKD 927.8 million as of December 31, 2023, compared to HKD 792.2 million as of June 30, 2023[144] - Net cash generated from investing activities was HKD 133.1 million in the first half of fiscal year 2024, primarily from the purchase of property, plant, and equipment of HKD 19.5 million and net cash inflows from the redemption of financial assets[145] - The company's net cash used in financing activities was approximately HKD 85.8 million in the first half of the 2024 fiscal year, primarily due to dividends paid of approximately HKD 82.3 million[109] - The company maintains a strong financial position with a focus on cash management and liquidity to navigate the challenging retail environment[185] Shareholding Structure - Tung Koon Ming holds 1,466,869,000 shares, representing 71.27% of the company's equity, through a trust arrangement[43][44] - Red Glory Investments Limited holds 1,456,277,000 shares, representing 70.76% of the company's equity[66] - Areo Holdings Limited holds 186,292,000 shares, representing 9.05% of the company's equity, with interests controlled by Lin Liming and Li Jipei[66][68] - Orchid Asia V, L.P. holds 180,946,000 shares, representing 8.79% of the company's equity[66] - Webb David Michael holds 63,354,320 shares, representing 3.08% of the company's equity, and an additional 41,217,680 shares as a beneficial owner[66] Operational Expenses and Efficiency - Administrative expenses decreased by 11.0% to HKD 43.8 million in the first half of fiscal year 2024, mainly due to reduced employee costs[99] - Employee costs were HKD 137.4 million in the first half of fiscal year 2024, compared to HKD 163.6 million in the first half of fiscal year 2023[131] - The company employed approximately 3,200 full-time employees as of December 31, 2023, compared to 3,100 as of June 30, 2023[131] - The company's other business segments, including the Baige watch business and other brands in China, remain under pressure due to current market conditions, with short-term goals focused on improving overall operational efficiency[164] Retail Network and Sales Strategy - The retail network for Tian Wang watches decreased by 21 sales points from 1,786 to 1,765 between June 30, 2023, and December 31, 2023[94] - The company operates a retail network of approximately 1,900 directly managed and controlled sales points across China, along with e-commerce channels on major platforms[83] - The company strategically expanded its sales network and increased investment in e-commerce to enhance overall competitiveness[89] - The number of Tianwang watch sales points decreased by 21, from 1,786 as of June 30, 2023, to 1,765 as of December 31, 2023[123] - Directly managed sales points accounted for over 65.2% of the sales of Tian Wang and Baige watches in the first half of fiscal year 2024[139] - The company plans to continue monitoring the performance of its sales outlets and expand the retail network for its Tian Wang watches, while optimizing the sales network for better regional market coverage[163] Brand and Product Development - The company's core brand, Tian Wang, established in 1988, is one of China's leading domestic watch brands targeting the mass market[88] - The company's other brand, Balco, acquired in 2002, targets young middle-income consumers with Swiss-made watches[88] - The company launched over 40 new Tianwang watch models in the first half of the 2024 fiscal year, with prices ranging from approximately RMB 160 to RMB 5,680[104] - The company is actively seeking a prominent Chinese film and television star to serve as the new brand ambassador for Tian Wang watches, aligning with the brand's image and perception[182] E-commerce and Online Sales - E-commerce sales of watches increased from approximately HKD 115.0 million in the first half of the 2023 fiscal year to HKD 120.5 million in the first half of the 2024 fiscal year, a growth of HKD 5.5 million[106] - The company's e-commerce business faces increasing competition, but it plans to enhance online operations through live streaming, short videos, and new media channels like Douyin and Dewu[184] Capital Expenditure and Investments - The group purchased property, plant, and equipment worth HK$19,464 thousand, a significant decrease from HK$53,067 thousand in the same period last year[13] - The company's property, plant, and equipment were valued at HK$379.016 million as of December 31, 2023, compared to HK$385.626 million as of June 30, 2023[190] - The company's investment properties were valued at HK$125.995 million as of December 31, 2023, slightly higher than HK$125.668 million as of June 30, 2023[190] - The company's IPO proceeds of HKD 742.0 million as of February 2013 have seen HKD 705.5 million utilized by the end of the 2023 fiscal year, with no further utilization in the first half of the 2024 fiscal year[181] - The company has not made any significant acquisitions, disposals, or investments in subsidiaries, associates, or joint ventures during the first half of the 2024 fiscal year[179] Market and Economic Outlook - The company expects its performance and financial condition to be inevitably affected by the uncertain and challenging economic outlook and retail industry in China over the next few years[165] - The company holds foreign currency sales, exposing it to foreign exchange risk, with financial assets, trade receivables, bank balances, and loans denominated in foreign currencies[151] Dividends and Shareholder Returns - The company did not declare an interim dividend for the six months ended December 31, 2023, consistent with the previous year[42] Gross Profit Margin - The gross profit margin increased by 2.8 percentage points from 70.3% in the first half of the 2023 fiscal year to 73.1% in the first half of the 2024 fiscal year[119] Total Assets and Liabilities - Total assets as of December 31, 2023, were HK$2,394.393 million, slightly lower than HK$2,464.421 million as of June 30, 2023[191] - The asset-to-liability ratio was approximately 1.2% as of December 31, 2023, compared to 1.3% as of June 30, 2023[146] - The company's total equity decreased by approximately HKD 65.1 million from HKD 2,387.6 million as of June 30, 2023, to HKD 2,322.5 million as of December 31, 2023[109]
时计宝(02033) - 2024 - 中期财报