慕尚集团控股(01817) - 2022 - 年度业绩

Financial Summary The company achieved a net profit of RMB 9.4 million in 2022 despite the COVID-19 impact, through enhanced internal management and cost control 2022 Key Financial Data | Metric | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 2,326.3 | 2,695.2 | -13.7% | | Net Profit/(Loss) | 9.4 | (91.3) | increased by 100.7 million | - COVID-19 significantly impacted business in 2022, but a net profit of RMB 9.4 million was successfully achieved through strengthened internal management and cost control[42] Consolidated Financial Statements This section presents the company's consolidated financial performance and position for the year ended December 31, 2022 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended December 31, 2022, total revenue was RMB 2,326,281 thousand, a 13.7% decrease from 2021, yet the company achieved a profit of RMB 9,351 thousand, reversing the 2021 loss, due to effective cost control and reduced impairment losses Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | 2022 (RMB thousand) | 2021 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Revenue | 2,326,281 | 2,695,234 | -13.7% | | Cost of Sales | (1,188,375) | (1,367,363) | -13.09% | | Gross Profit | 1,137,906 | 1,327,871 | -14.3% | | Other Income and Gains | 64,681 | 33,269 | +94.4% | | Selling and Distribution Expenses | (883,520) | (928,469) | -4.84% | | Administrative Expenses | (205,098) | (222,477) | -7.81% | | Net Impairment Loss on Financial Assets | (8,996) | (240,659) | -96.26% | | Other Expenses | (20,263) | (15,208) | +33.24% | | Finance Costs | (63,080) | (59,412) | +6.17% | | Profit/(Loss) Before Tax | 21,630 | (104,370) | turned profitable | | Income Tax (Expense)/Credit | (12,279) | 13,027 | increased tax expense | | Profit/(Loss) for the Year | 9,351 | (91,343) | turned profitable | | Basic Earnings/(Loss) Per Share Attributable to Owners of the Parent | RMB 1.36 cents | RMB (9.83) cents | turned profitable | - Total comprehensive loss for the year was RMB (61,347) thousand, primarily due to exchange differences on translating overseas operations[46] Consolidated Statement of Financial Position As of December 31, 2022, total current assets were RMB 2,199,693 thousand, total current liabilities were RMB 2,115,487 thousand, resulting in net current assets of RMB 84,206 thousand, with the gearing ratio increasing to 50.3% due to a shift from equity pledge to deposit pledge Key Data from Consolidated Statement of Financial Position | Metric | 2022年12月31日 (RMB thousand) | 2021年12月31日 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Inventories | 683,493 | 840,373 | -18.67% | | Trade and Bills Receivables | 361,657 | 427,072 | -15.32% | | Pledged Deposits | 603,954 | 11,920 | +4975.12% | | Cash and Cash Equivalents | 252,194 | 677,230 | -62.74% | | Total Current Assets | 2,199,693 | 2,211,697 | -0.54% | | Trade and Bills Payables | 439,366 | 474,924 | -7.49% | | Interest-bearing Bank and Other Borrowings (Current) | 1,184,004 | 971,877 | +21.83% | | Total Current Liabilities | 2,115,487 | 2,027,066 | +4.36% | | Net Current Assets | 84,206 | 184,631 | -54.39% | | Total Non-current Assets | 1,320,467 | 811,626 | +62.69% | | Total Non-current Liabilities | 716,195 | 255,783 | +179.92% | | Total Equity | 688,478 | 740,474 | -7.02% | - Cash and cash equivalents and pledged deposits totaled RMB 1,385.8 million as of December 31, 2022, an increase of 101.1% from the end of 2021[14] - The gearing ratio increased to 50.3% as of December 31, 2022 (2021: 35.0%), primarily due to the adjustment from equity pledge to deposit pledge[15] Notes to Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements Company and Group Information Mulsanne Group Holding Limited is an investment holding company incorporated in the Cayman Islands, primarily engaged in the design, marketing, and sale of apparel products in China through its subsidiaries, with no direct or ultimate holding company - The Company is a limited liability company incorporated in the Cayman Islands, with its principal place of business in Ningbo, Zhejiang Province, China[52] - The Company has no direct or ultimate holding company, with Great World Glory Pte. Ltd. and L Capital Asia 2 Pte. Ltd. as controlling shareholders[53] - The Company's subsidiaries are primarily engaged in the design, marketing, and sale of apparel products[59] Basis of Preparation The financial statements are prepared in accordance with International Financial Reporting Standards, Hong Kong Generally Accepted Accounting Principles, and the disclosure requirements of the Hong Kong Companies Ordinance, using the historical cost convention and presented in RMB - The financial statements are prepared in accordance with International Financial Reporting Standards, Hong Kong Generally Accepted Accounting Principles, and the disclosure requirements of the Hong Kong Companies Ordinance[53] - The financial statements are prepared on the historical cost basis and presented in RMB[53] Changes in Accounting Policies and Disclosures The Group adopted revised International Financial Reporting Standards for the first time this year, including IAS 16, IAS 37, and Annual Improvements to IFRS 2018-2020, which had no significant impact on its financial position or performance - The Group has adopted the revised IAS 16, IAS 37, and Annual Improvements to IFRS 2018-2020 for the financial statements for the current year[54][55] - Revised IAS 37 clarifies the cost components when assessing onerous contracts, and the Group found no onerous contracts, thus having no significant impact[57] - Revised IAS 16 prohibits deducting proceeds from selling items produced while bringing an asset to the location and condition necessary for it to be capable of operating as intended, and the Group did not sell such items, thus having no significant impact[63] Operating Segment Information The Group primarily sells apparel products through offline and online channels, with the CEO assessing segment performance based on gross profit, but asset and liability analysis by segment is not regularly provided - The Group is primarily engaged in the sale of apparel products, categorized into offline channels (self-operated stores, partner stores, offline distributors) and online channels (Tmall, Taobao, Vipshop, Douyin, WeChat mini-programs)[66] - The Chief Executive Officer assesses segment performance based on gross profit, but asset and liability analysis by operating segment is not regularly provided[66] Segment Revenue by Sales Channel | Segment Revenue (Sales to external customers) | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--- | :--- | :--- | | Offline Channels | 1,279,192 | 1,513,716 | | Online Channels | 1,036,195 | 1,158,980 | | Other | 10,894 | 22,538 | | Total | 2,326,281 | 2,695,234 | Revenue, Other Income and Gains Total revenue for 2022 was RMB 2,326,281 thousand, primarily from apparel product sales, with online channels contributing the most, while other income and gains significantly increased by 94.3% to RMB 64,681 thousand, driven by pledged deposit investment income and government subsidies Disaggregation of Revenue from Contracts with Customers | Revenue Source | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--- | :--- | :--- | | Online Channels | 1,036,195 | 1,158,980 | | Self-operated Stores | 735,163 | 847,488 | | Partner Stores | 150,626 | 194,182 | | Distributors | 393,403 | 472,046 | | Sales of Other Products | 8,084 | 12,273 | | Consignment Services | 2,810 | 10,265 | | Total | 2,326,281 | 2,695,234 | - Performance obligations are typically satisfied upon transfer of control of apparel products, with payments usually due within 1 to 3 months after shipment, extendable to one year for major customers[75] Analysis of Other Income and Gains | Other Income and Gains | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Bank Interest Income | 3,975 | 2,426 | +63.85% | | Pledged Deposit Investment Income | 28,023 | - | N/A | | Government Subsidies | 19,642 | 22,879 | -14.14% | | Net Exchange Gains | 7,859 | 1,224 | +542.08% | | Net Gain on Lease Termination | 2,407 | 1,979 | +21.63% | | Total | 64,681 | 33,269 | +94.3% | Profit/(Loss) Before Tax The Group's profit before tax for 2022 was RMB 21,630 thousand, a significant improvement from the RMB 104,370 thousand loss in 2021, primarily due to changes in various expenses including cost of sales, depreciation, amortization, and impairment Components of Profit/(Loss) Before Tax | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--- | :--- | :--- | | Cost of Inventories Sold | 1,206,962 | 1,323,997 | | Depreciation of Property, Plant and Equipment | 62,837 | 54,521 | | Depreciation of Right-of-use Assets | 139,061 | 125,372 | | Amortization of Intangible Assets | 6,317 | 4,913 | | Net Impairment Loss on Trade Receivables | 7,509 | 142,098 | | Inventories (Reversal of Write-down)/Write-down to Net Realizable Value | (20,963) | 35,653 | | Employee Benefit Expenses (Excluding Directors' and Chief Executive's Emoluments) | 131,902 | 151,823 | Income Tax Expense Income tax expense for 2022 was RMB 12,279 thousand, compared to an income tax credit of RMB 13,027 thousand in 2021, with mainland China subsidiaries enjoying preferential tax rates for small enterprises, and Hong Kong and Macau subsidiaries provisioned at local tax rates Total Income Tax Expense/(Credit) | Income Tax Expense/(Credit) | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--- | :--- | :--- | | Current Tax | 6,605 | 50,677 | | Deferred Tax | 5,674 | (63,704) | | Total Tax Expense/(Credit) for the Year | 12,279 | (13,027) | - Mainland China subsidiaries qualify as small enterprises, enjoying a preferential income tax rate of 20%, with an 87.5% tax reduction on the first RMB 1,000,000 of annual taxable income and a 75% tax reduction on income between RMB 1,000,000 and RMB 3,000,000[83] - Hong Kong profits tax is provided at a rate of 16.5%, and Macau profits tax at 12%[82] Dividends The Board of Directors does not recommend the payment of any final dividend for the year ended December 31, 2022 - The Board of Directors does not recommend the payment of any final dividend for the year (2021: nil)[85] Earnings/(Loss) Per Share Attributable to Ordinary Equity Holders of the Parent Basic earnings per share for 2022 was RMB 1.36 cents, reversing the basic loss per share of RMB 9.83 cents in 2021, and diluted loss per share for 2021 was the same as basic loss per share due to the anti-dilutive effect of restricted share units Basic and Diluted Earnings/(Loss) Per Share Data | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Profit/(Loss) Attributable to Ordinary Equity Holders of the Parent (RMB thousand) | 12,429 | (89,684) | | Weighted Average Number of Ordinary Shares in Issue for Basic Earnings/(Loss) Per Share | 912,500,000 | 912,500,000 | | Dilutive Effect - Weighted Average Number of Ordinary Shares from Restricted Share Units | 4,060,126 | 6,751,461 | | Basic Earnings/(Loss) Per Share | RMB 1.36 cents | RMB (9.83) cents | - Restricted share units had an anti-dilutive effect on the basic loss per share for 2021, as their inclusion would decrease the diluted loss per share, and were therefore ignored in the calculation of diluted loss per share[88] Trade and Bills Receivables As of the end of 2022, net trade and bills receivables totaled RMB 361,657 thousand, a 15.32% decrease from 2021, with the company maintaining strict control over receivables and credit terms generally ranging from 1 to 3 months, extendable to one year for major customers Trade and Bills Receivables | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Trade Receivables | 755,334 | 821,195 | -8.02% | | Bills Receivable | 44,840 | 44,020 | +1.86% | | Impairment of Trade Receivables | (438,517) | (438,143) | +0.08% | | Net Amount | 361,657 | 427,072 | -15.32% | Ageing Analysis of Trade Receivables | Ageing of Trade Receivables | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--- | :--- | :--- | | Less than 3 months | 248,563 | 296,549 | | 3 to 6 months | 33,976 | 23,542 | | 6 to 12 months | 42,743 | 45,705 | | 1 to 2 years | 54,036 | 82,225 | | Over 2 years | 376,016 | 373,174 | | Total | 755,334 | 821,195 | - Credit terms generally range from 1 to 3 months, extendable to a maximum of one year for important customers, while new customers typically require advance payment[91] Trade and Bills Payables As of the end of 2022, total trade and bills payables were RMB 439,366 thousand, a 7.49% decrease from 2021, with trade payables being non-interest bearing and generally settled within 120 days Trade and Bills Payables | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Trade Payables | 296,666 | 356,824 | -16.86% | | Bills Payable | 142,700 | 118,100 | +20.83% | | Total | 439,366 | 474,924 | -7.49% | Ageing Analysis of Trade Payables | Ageing of Trade Payables | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--- | :--- | :--- | | Within 3 months | 248,143 | 325,978 | | 3 to 6 months | 25,865 | 15,309 | | 6 to 12 months | 8,875 | 6,879 | | 1 to 2 years | 10,920 | 7,459 | | Over 2 years | 2,863 | 1,199 | | Total | 296,666 | 356,824 | - Trade payables are non-interest bearing and generally settled within 120 days, including amounts due to related parties of RMB 1,080 thousand[92][96] Interest-bearing Bank and Other Borrowings As of the end of 2022, total interest-bearing bank and other borrowings significantly increased to RMB 1,772,240 thousand from 2021, with most borrowings denominated in RMB and some in USD, secured by various forms including equity interests, leasehold land, and pledged deposits Total Interest-bearing Bank and Other Borrowings | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Current Borrowings | 1,184,004 | 971,877 | +21.83% | | Non-current Borrowings | 588,236 | 87,683 | +571.09% | | Total | 1,772,240 | 1,059,560 | +67.27% | - Bank loans are secured by the Company's equity interests in subsidiaries, leasehold land, and pledged deposits[94][99][100][101] - All loans are denominated in RMB, except for a USD 29,600,000 bank loan denominated in USD[102] Management Discussion & Analysis This section provides management's perspective on the Group's financial performance, position, and future outlook for the reporting period Business Overview and Outlook The Group's business was affected by recurring COVID-19 outbreaks in 2022, but a stable recovery is expected in 2023 with policy adjustments and effective growth strategies, including innovative marketing, supply chain integration, online-offline synergy, cost control, and brand portfolio optimization - Business in 2022 was affected by recurring COVID-19 outbreaks, but a stable recovery is expected in 2023[103] - Growth strategies include adopting continuous innovative marketing initiatives, leveraging online advantages to integrate the supply chain, reforming organizational structure to deepen online-offline integration, strengthening internal management and cost control, and reducing underperforming brand businesses[103] Revenue Analysis Total sales revenue for 2022 was RMB 2,326.3 million, a 13.7% decrease from 2021, primarily due to reduced product demand from recurring COVID-19 outbreaks, with online channels accounting for the largest share at 44.5% of total revenue - Total sales revenue for the period was RMB 2,326.3 million, a 13.7% or RMB 368.9 million decrease from 2021, primarily due to reduced product demand from recurring COVID-19 outbreaks[104] Revenue by Brand GXG remained the primary revenue source despite a 14.1% sales decline, while gxg jeans and Yatlas also saw decreases of 22.0% and 53.4% respectively due to the pandemic and brand repositioning, but gxg.kids and Mode Commuter grew by 10.5% and 44.8% from online old stock sales and new product development Revenue by Brand | Brand | 2022 (RMB thousand) | 2022 (%) | 2021 (RMB thousand) | 2021 (%) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | GXG | 1,847,359 | 79.4 | 2,150,987 | 79.8 | -14.1% | | gxg jeans | 218,728 | 9.4 | 280,265 | 10.4 | -22.0% | | gxg.kids | 199,347 | 8.6 | 180,358 | 6.7 | +10.5% | | Mode Commuter | 33,335 | 1.4 | 23,039 | 0.9 | +44.8% | | Yatlas | 10,188 | 0.4 | 21,926 | 0.8 | -53.4% | | Other | 17,324 | 0.8 | 38,659 | 1.4 | -55.2% | | Total | 2,326,281 | 100.0 | 2,695,234 | 100.0 | -13.7% | - Decreased sales revenue for GXG, gxg jeans, and Yatlas was primarily due to recurring COVID-19 outbreaks and brand repositioning[106][107] - Increased sales revenue for gxg.kids was primarily due to increased online sales of old stock, and for Mode Commuter due to new product development[107] Revenue by Sales Channel In 2022, all offline channels (self-operated, partner, distributor stores) experienced sales declines ranging from 13.3% to 22.5% due to recurring pandemic outbreaks, and online channel sales also decreased by 10.6% due to warmer weather during promotion season affecting winter wear sales and logistics disruptions, yet still comprised 44.5% of total revenue Revenue by Sales Channel | Sales Channel | 2022 (RMB thousand) | 2022 (%) | 2021 (RMB thousand) | 2021 (%) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Self-operated Stores | 735,163 | 31.6 | 847,488 | 31.4 | -13.3% | | Partner Stores | 150,626 | 6.5 | 194,182 | 7.2 | -22.5% | | Distributors | 393,403 | 16.9 | 472,046 | 17.5 | -16.7% | | Online Channels | 1,036,195 | 44.5 | 1,158,980 | 43.0 | -10.6% | | Sales of Other Products | 8,084 | 0.3 | 12,273 | 0.5 | -34.1% | | Consignment Services | 2,810 | 0.2 | 10,265 | 0.4 | -72.6% | | Total | 2,326,281 | 100.0 | 2,695,234 | 100.0 | -13.7% | - Online channel sales ranked first, accounting for 44.5% of the Group's revenue composition[110] - The decrease in online channel sales was primarily due to warmer weather during the November 11 promotion season leading to lower winter wear sales and logistics disruptions[110] Store Count Analysis As of December 31, 2022, the total number of offline stores decreased by 6.3% to 1,122 from 1,198 at the end of 2021, mainly due to the Group's brand repositioning, marketing strategy adjustments, store network optimization, closure of underperforming stores, and distributors' reduced confidence in opening new stores amidst the pandemic - The total number of offline stores decreased by 6.3% from 1,198 at the end of 2021 to 1,122 as of December 31, 2022[111][114] - The decrease in store count was primarily due to adjusting brand positioning and marketing strategies to improve store efficiency, and closing offline stores that failed to meet sales targets[111][114] - Under the impact of recurring COVID-19 outbreaks, distributors had insufficient confidence in expanding stores, resulting in fewer new distributor stores than closed ones[114] Store Count by Brand GXG store count slightly decreased but still represented 86.8% of the total, gxg jeans and gxg.kids also saw declines, Mode Commuter slightly increased, and Yatlas no longer had independent stores Store Count by Brand | Brand | 2022年12月31日 (Number of Stores) | 2022 (%) | 2021年12月31日 (Number of Stores) | 2021 (%) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | GXG | 973 | 86.8 | 992 | 82.8 | -1.9% | | gxg jeans | 80 | 7.1 | 99 | 8.3 | -19.2% | | gxg.kids | 51 | 4.5 | 82 | 6.8 | -37.8% | | Mode Commuter | 18 | 1.6 | 16 | 1.3 | +12.5% | | Yatlas | 0 | 0.0 | 8 | 0.7 | -100.0% | | Other | 0 | 0.0 | 1 | 0.1 | -100.0% | | Total | 1,122 | 100.0 | 1,198 | 100.0 | -6.3% | Store Count by Sales Channel As of the end of 2022, the number of self-operated, partner, and distributor stores all decreased, with distributor stores seeing the largest reduction, reflecting the company's store network adjustments and market environment impact Store Count by Sales Channel | Sales Channel | 2022年12月31日 (Number of Stores) | 2022 (%) | 2021年12月31日 (Number of Stores) | 2021 (%) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Self-operated Stores | 393 | 35.0 | 398 | 33.2 | -1.3% | | Partner Stores | 133 | 11.9 | 146 | 12.2 | -8.8% | | Distributors | 596 | 53.1 | 654 | 54.6 | -8.8% | | Total | 1,122 | 100.0 | 1,198 | 100.0 | -6.3% | Gross Profit and Gross Margin Analysis Total gross profit for 2022 was RMB 1,137.9 million, a 14.3% decrease from 2021, with the overall gross margin remaining relatively stable at 48.9%, attributed to strengthened brand operation management, optimized product structure, and effective control of operating costs - Total gross profit for the period was RMB 1,137.9 million, a 14.3% decrease from 2021[115] - The gross margin for the period remained stable at 48.9%, compared to 49.3% in 2021[115] - The overall gross margin remained relatively stable primarily due to continuous strengthening of brand operation management, optimization of product structure, and effective control of operating costs[116] Gross Profit and Gross Margin by Brand Gross profit for GXG and gxg jeans decreased due to reduced revenue, while gxg.kids and Mode Commuter saw increases from higher revenue; Yatlas gross profit significantly dropped by 69.7% mainly due to lower revenue and sales of lower-margin old stock, with gxg.kids and Yatlas gross margins declining due to increased online sales and old stock sales respectively Gross Profit and Gross Margin by Brand | Brand | 2022 Gross Profit (RMB thousand) | 2022 Gross Margin (%) | 2021 Gross Profit (RMB thousand) | 2021 Gross Margin (%) | | :--- | :--- | :--- | :--- | :--- | | GXG | 934,443 | 50.6 | 1,094,636 | 50.9 | | gxg jeans | 92,320 | 42.2 | 119,355 | 42.6 | | gxg.kids | 88,609 | 44.4 | 84,940 | 47.1 | | Mode Commuter | 15,733 | 47.2 | 11,062 | 48.0 | | Yatlas | 1,032 | 10.1 | 3,273 | 14.9 | | Other | 5,769 | 33.3 | 14,605 | 37.8 | | Total | 1,137,906 | 48.9 | 1,327,871 | 49.3 | - gxg.kids gross margin decreased by 2.7 percentage points, primarily due to increased sales through online channels, which typically have lower gross margins[119] - Yatlas gross margin decreased by 4.8 percentage points, primarily due to sales of old stock, which typically has lower gross margins[119] Gross Profit and Gross Margin by Sales Channel Gross profit for self-operated, partner, and distributor stores all decreased due to reduced revenue, with partner stores' gross margin declining by 3.3 percentage points to 32.9% mainly from increased old stock sales, while gross margins for self-operated, distributor, and online channels remained relatively stable Gross Profit and Gross Margin by Sales Channel | Sales Channel | 2022 Gross Profit (RMB thousand) | 2022 Gross Margin (%) | 2021 Gross Profit (RMB thousand) | 2021 Gross Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Self-operated Stores | 501,848 | 68.3 | 584,781 | 69.0 | | Partner Stores | 49,492 | 32.9 | 70,205 | 36.2 | | Distributors | 180,266 | 45.8 | 215,913 | 45.7 | | Online Channels | 405,333 | 39.1 | 453,909 | 39.2 | | Sales of Other Products | 533 | 6.6 | 511 | 4.2 | | Consignment Services | 434 | 15.4 | 2,552 | 24.9 | | Total | 1,137,906 | 48.9 | 1,327,871 | 49.3 | - Partner stores' gross margin decreased by 3.3 percentage points to 32.9%, primarily due to increased sales of old stock, which typically has lower gross margins[120] - Gross margins for self-operated stores, distributor stores, and online channels remained relatively stable compared to 2021[124][125][126] Other Income and Gains Other income and gains for 2022 were RMB 64.7 million, a significant increase of 94.3% from 2021, primarily driven by growth in pledged deposit investment income Other Income and Gains | Item | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Other Income and Gains | 64.7 | 33.3 | +94.3% | - The increase was primarily due to pledged deposit investment income[122] Selling and Distribution Expenses Total selling and distribution expenses for 2022 were RMB 883.5 million, a 4.8% decrease from 2021, mainly due to reduced store management fees, advertising expenses, and commissions payable to department stores; however, their percentage of total revenue increased from 34.5% in 2021 to 38.0%, reflecting a greater decline in revenue than in expenses Selling and Distribution Expenses | Item | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Selling and Distribution Expenses | 883.5 | 928.5 | -4.8% | - The decrease was primarily due to reduced store management fees, advertising expenses, and commissions payable to department stores[123] - Selling and distribution expenses as a percentage of the Group's total revenue increased from 34.5% in 2021 to 38.0%, primarily because the decrease in total revenue exceeded the decrease in selling and distribution expenses[1] Administrative Expenses Total administrative expenses for 2022 were RMB 205.1 million, a 7.8% decrease from 2021, mainly due to reduced employee benefit expenses, utilities, office expenses, and operating lease rentals, with administrative expenses as a percentage of total revenue remaining relatively stable at 8.8% Administrative Expenses | Item | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Administrative Expenses | 205.1 | 222.5 | -7.8% | - The decrease was primarily due to reduced employee benefit expenses, utilities and office expenses, and operating lease rentals[2] - Total administrative expenses as a percentage of the Group's total revenue remained relatively stable at 8.8% (2021: 8.3%)[2] Impairment Loss on Financial Assets, Net Net impairment loss on financial assets significantly decreased to RMB 9.0 million in 2022, a 96.3% reduction from RMB 240.7 million in 2021, primarily due to the Group's enhanced accounts receivable management and stricter credit control policies Net Impairment Loss on Financial Assets | Item | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Net Impairment Loss on Financial Assets | 9.0 | 240.7 | -96.3% | - The decrease was primarily due to the Group strengthening its accounts receivable management and adopting stricter credit control policies for customers[3] Other Expenses Other expenses increased by 33.6% to RMB 20.3 million in 2022, mainly due to increased impairment of right-of-use assets and renovation costs Other Expenses | Item | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Other Expenses | 20.3 | 15.2 | +33.6% | - The increase was primarily due to increased impairment of right-of-use assets and renovation costs[4] Finance Costs Finance costs increased by 6.2% to RMB 63.1 million in 2022, primarily due to increased bank loan interest Finance Costs | Item | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Finance Costs | 63.1 | 59.4 | +6.2% | - The increase was primarily due to increased bank loan interest[6] Profit Before Tax The Group recorded a profit before tax of RMB 21.6 million in 2022, a significant increase of RMB 126.0 million compared to a loss before tax of RMB 104.4 million in 2021, primarily driven by reduced selling and distribution expenses, administrative expenses, and net impairment loss on financial assets Profit/(Loss) Before Tax | Item | 2022 (RMB million) | 2021 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Profit/(Loss) Before Tax | 21.6 | (104.4) | increased by 126.0 million | - The increase in profit before tax was primarily due to reduced selling and distribution expenses, administrative expenses, and net impairment loss on financial assets[7] Income Tax Expense Income tax expense for 2022 was RMB 12.3 million, an increase of RMB 25.3 million compared to an income tax credit of RMB 13.0 million in 2021 Income Tax Expense/(Credit) | Item | 2022 (RMB million) | 2021 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Income Tax Expense/(Credit) | 12.3 | (13.0) | increased by 25.3 million | Profit for the Period Profit for the period in 2022 was RMB 9.4 million, a net increase of RMB 100.7 million compared to a loss of RMB 91.3 million in 2021, primarily attributable to the aforementioned reductions in expenses and improved revenue Profit/(Loss) for the Period | Item | 2022 (RMB million) | 2021 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Profit/(Loss) for the Period | 9.4 | (91.3) | increased by 100.7 million | [Operating Cash Flow](index=24&type=section&id=Operating%20