Financial Statements This section presents the interim condensed consolidated financial statements, including the statement of profit or loss, comprehensive income, and balance sheet Interim Condensed Consolidated Statement of Profit or Loss For the six months ended June 30, 2023, the Group's revenue decreased by 17.2% to HK$780.26 million, with gross profit down 9.8% to HK$273.93 million, while profit attributable to owners of the Company declined 23.0% to HK$65.08 million, and basic earnings per share was 15.23 HK cents Interim Consolidated Statement of Profit or Loss Summary | Item | H1 2023 (HK$ thousands) | H1 2022 (HK$ thousands) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 780,258 | 941,912 | -17.2% | | Gross Profit | 273,930 | 303,717 | -9.8% | | Operating Profit | 100,000 | 118,413 | -15.5% | | Profit Before Income Tax | 91,612 | 113,624 | -19.4% | | Profit for the Period | 71,603 | 91,257 | -21.5% | | Profit Attributable to Owners of the Company | 65,075 | 84,486 | -23.0% | | Basic Earnings Per Share (HK cents) | 15.230 | 20.804 | -26.8% | | Diluted Earnings Per Share (HK cents) | 14.900 | 20.422 | -27.0% | Interim Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2023, total comprehensive income for the period decreased to HK$66.92 million from HK$88.03 million in the prior year, with total comprehensive income attributable to owners of the Company at HK$60.27 million Interim Consolidated Statement of Comprehensive Income Summary | Item | H1 2023 (HK$ thousands) | H1 2022 (HK$ thousands) | | :--- | :--- | :--- | | Profit for the Period | 71,603 | 91,257 | | Other Comprehensive Income | (4,685) | (3,228) | | Total Comprehensive Income for the Period | 66,918 | 88,029 | | Attributable to Owners of the Company | 60,273 | 81,448 | | Attributable to Non-controlling Interests | 6,645 | 6,581 | Interim Condensed Consolidated Balance Sheet As of June 30, 2023, the Group's total assets decreased to HK$1.839 billion from HK$1.958 billion at year-end 2022, with total liabilities reducing to HK$728.67 million and total equity increasing to HK$1.111 billion, while net current assets slightly improved Balance Sheet Summary | Item | June 30, 2023 (HK$ thousands) | December 31, 2022 (HK$ thousands) | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 718,892 | 697,091 | | Current Assets | 1,120,378 | 1,261,223 | | Total Assets | 1,839,270 | 1,958,314 | | Equity and Liabilities | | | | Total Equity | 1,110,602 | 1,068,981 | | Non-current Liabilities | 81,799 | 93,639 | | Current Liabilities | 646,869 | 795,694 | | Total Liabilities | 728,668 | 889,333 | | Total Equity and Liabilities | 1,839,270 | 1,958,314 | Notes to the Financial Statements This section provides detailed notes on the basis of preparation, accounting policies, segment information, and other financial details supporting the interim financial statements 1. Basis of Preparation and 2. Accounting Policies These interim financial statements are prepared in accordance with HKAS 34 'Interim Financial Reporting' and are unaudited, with accounting policies consistent with the annual financial statements for the year ended December 31, 2022, and new or revised standards adopted during the period having no significant impact on the Group's accounting policies - The interim financial information is prepared in accordance with HKAS 34 and should be read in conjunction with the 2022 annual financial statements13 - Except for insurance contract investments, accounting policies are consistent with the prior year, and newly issued standards have no significant impact on the Group202127 3. Segment Information The Group's operations are divided into manufacturing and trading segments, with manufacturing contributing the majority of revenue and all profit, while the trading segment recorded a loss, with manufacturing revenue at HK$469.23 million and segment profit at HK$129.08 million, and trading revenue at HK$311.03 million and segment loss at HK$28.04 million - The Group's operations are categorized into two main segments: Manufacturing, with production facilities in Bangladesh and Shenzhen, China, primarily serving customers in the US and Europe; and Trading, involving the trade and distribution of headwear, leather goods, and accessories through various subsidiaries in the US and European markets235148 Segment Results by Business for H1 2023 | Item (HK$ thousands) | Manufacturing | Trading | Total | | :--- | :--- | :--- | :--- | | Revenue from External Customers | 469,233 | 311,025 | 780,258 | | Reportable Segment Profit/(Loss) | 129,083 | (28,039) | 101,044 | 4. Profit Before Income Tax Profit before income tax for the period was HK$91.61 million, with key deductions including depreciation of property, plant and equipment at HK$25.68 million, amortization of other intangible assets at HK$13.66 million, and net finance costs of HK$8.37 million, alongside provisions of HK$1.94 million for obsolete inventories and HK$2.05 million for trade receivables - Provisions for obsolete inventories of HK$1.94 million and expected credit losses of HK$2.05 million were made during the period30 Key Expenses and Finance Costs | Item (HK$ thousands) | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Depreciation of Property, Plant and Equipment | 25,675 | 20,176 | | Amortization of Other Intangible Assets | 13,664 | 10,548 | | Finance Costs – Net | (8,374) | (4,711) | 5. Income Tax Expense For the six months ended June 30, 2023, income tax expense decreased to HK$20.01 million from HK$22.37 million in the prior year, with Hong Kong profits tax accrued at 16.5% and overseas profits tax calculated based on applicable rates in the respective operating countries Composition of Income Tax Expense | Item (HK$ thousands) | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Current Year Tax | 19,596 | 22,188 | | Deferred Income Tax | 413 | 179 | | Total Income Tax Expense | 20,009 | 22,367 | - Hong Kong profits tax rate is 16.5%, consistent with the prior year43 6. Earnings Per Share For the six months ended June 30, 2023, profit attributable to owners of the Company was HK$65.08 million, resulting in basic earnings per share of 15.23 HK cents based on a weighted average of 427.29 million ordinary shares outstanding, and diluted earnings per share of 14.90 HK cents after considering the dilutive effect of share options Basic Earnings Per Share Calculation | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company (HK$ thousands) | 65,075 | 84,486 | | Weighted Average Number of Ordinary Shares Outstanding | 427,289,401 | 406,107,058 | | Basic Earnings Per Share (HK cents) | 15.230 | 20.804 | Diluted Earnings Per Share Calculation | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Weighted Average Number of Ordinary Shares for Calculation | 436,741,782 | 413,696,223 | | Diluted Earnings Per Share (HK cents) | 14.900 | 20.422 | 7. Dividends The Board declared an interim dividend of 3 HK cents per share for the six months ended June 30, 2023, consistent with the prior year, totaling approximately HK$12.86 million, in addition to the final dividend of 6 HK cents per share for 2022, amounting to HK$25.70 million, paid during the period - Interim dividend of 3 HK cents per share declared, consistent with the same period in 202241 - Final dividend for 2022 of 6 HK cents per share, totaling HK$25.70 million, was paid during the period56 8. Capital Expenditure and Other Assets/Liabilities During the period, the Group's capital expenditure on property, plant and equipment was HK$23.69 million, and on intangible assets was HK$5.58 million, while net trade receivables decreased from HK$435 million to HK$365 million, primarily aged within 60 days, and trade payables also decreased from HK$234 million to HK$153 million 8.1 Capital Expenditure The Group incurred capital expenditures primarily for property, plant, and equipment, and intangible assets during the period - For the six months ended June 30, 2023, the Group's total capital expenditure amounted to HK$29.27 million, including HK$23.69 million for property, plant and equipment, and HK$5.58 million for intangible assets57 9. Right-of-use Assets and Lease Liabilities This section details the Group's right-of-use assets and corresponding lease liabilities as of the reporting date - As of June 30, 2023, the carrying amount of right-of-use assets was HK$57.09 million, and total lease liabilities were HK$60.93 million, with no additions to right-of-use assets during the period5960 10. Trade Receivables and 11. Trade Payables This section provides an aging analysis of the Group's trade receivables and trade payables Aging Analysis of Trade Receivables (HK$ thousands) | Aging | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | 0–30 Days | 135,248 | 127,622 | | 31–60 Days | 101,224 | 122,207 | | 61–90 Days | 67,405 | 85,906 | | Over 90 Days | 77,021 | 113,554 | | Total | 380,898 | 449,289 | Aging Analysis of Trade Payables (HK$ thousands) | Aging | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | 0–30 Days | 46,257 | 120,896 | | 31–60 Days | 22,819 | 30,694 | | 61–90 Days | 13,854 | 6,839 | | Over 90 Days | 70,327 | 75,150 | | Total | 153,257 | 233,579 | Management Discussion and Analysis This section provides an overview of the Group's financial performance, business operations, future outlook, and financial management strategies Financial and Business Review In the first half of 2023, the Group's revenue decreased by 17.2% to HK$780.26 million due to global market inventory overhang and weakening demand, yet gross margin increased to 35.1% through stable pricing and cost control, while manufacturing revenue declined 16.5% and trading revenue fell 18.1%, resulting in an operating loss for the latter, and profit attributable to shareholders decreased by 23.0% to HK$65.08 million - Facing market oversupply, the Group maintained a stable pricing strategy to protect gross margin, which slightly increased by 2.9 percentage points to 35.1%7072 - Manufacturing revenue decreased by 16.5%, primarily due to reduced shipments as European and US customers digested inventory73 - Trading revenue decreased by 18.1%, also impacted by customer inventory digestion, and recorded an operating loss of HK$28.04 million as sales decline outpaced cost savings76 Prospects Looking ahead, despite global economic uncertainties, the Group is cautiously optimistic about prospects as European and US retail markets are expected to improve with declining inflation, anticipating inventory levels in key markets to normalize by Q4, leading to order recovery, while the Group will leverage its rapid production capabilities, enhanced by a new Mexican production base, and expand product lines to accessories at the new Bangladesh plant for synergistic benefits - Major retailers' inventory levels are expected to return to healthy levels by Q4 this year, leading to a rebound in order volumes77 - The Group is establishing a new production base in Mexico, expected to be completed by year-end, which will enhance rapid order production capabilities and shorten delivery times to the US79 - The new Bangladesh plant is completed and will expand production lines to accessories like belts and wallets, aiming to optimize resource utilization and achieve production-trading synergies79 Liquidity, Financial Resources, and Capital Management As of June 30, 2023, the Group maintained a robust financial position with total cash and bank balances of HK$327.2 million and unutilized bank credit facilities of HK$705 million, while the gearing ratio improved to 19.5% from 22.8% at year-end, indicating sufficient financial resources for operational needs, with capital expenditure of approximately HK$29.3 million during the period Liquidity and Credit Status (HK$ millions) | Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and Bank Balances | 327.2 | 268.5 | | Unutilized Bank Credit | 705.0 | 579.5 | - Gearing ratio improved to 19.5% from 22.8% as of December 31, 202282 - Capital expenditure during the period included approximately HK$23.7 million for upgrading and expanding production capacity, and HK$5.6 million for trading business equipment and systems83 Other Operational Information The Group's assets and liabilities are primarily denominated in HKD, USD, RMB, or BDT, exposing it to foreign exchange risk, particularly from BDT fluctuations, while as of June 30, 2023, the Group had approximately 9,379 employees globally, with the majority in Bangladesh, and employee expenses for the period were approximately HK$182 million - The Group faces foreign exchange risk, with a 1% fluctuation in Bangladesh Taka expected to result in an approximate 0.2% inverse change in manufacturing segment gross margin84 - As of June 30, 2023, the Group employed 8,830 workers and employees in Bangladesh, 386 in China (including Hong Kong), and 163 in the US and UK84 Other Information This section covers dividend policies, shareholder information, and corporate governance practices Dividends and Shareholder Information The Board declared an interim dividend of 3 HK cents per share, payable on or after October 10, 2023, with share transfer registration suspended from September 18 to 20, 2023, to determine dividend entitlement, and no listed securities were purchased, sold, or redeemed by the Company during the period - Interim dividend of 3 HK cents per share declared, payable on or after October 10, 20238589 - Share transfer registration will be suspended from September 18 to 20, 2023, to determine eligibility for the interim dividend9186 - Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period92 Corporate Governance The Company has adopted and complied with the Corporate Governance Code and the Model Code for Securities Transactions by Directors of Listed Issuers as set out in the Listing Rules Appendix, and the Audit Committee, comprising all independent non-executive directors, has reviewed these interim financial statements - The Board believes the Company has complied with the Corporate Governance Code set out in Appendix 14 of the Listing Rules during the period93 - All Directors have confirmed compliance with the Model Code for Securities Transactions during the period87 - The Audit Committee has reviewed the interim condensed consolidated financial information for the period ended June 30, 202394
飞达控股(01100) - 2023 - 中期业绩