敏华控股(01999) - 2023 - 年度业绩

Financial Performance Overview Consolidated Statement of Comprehensive Income The company's total revenue decreased by 18.4% to HKD 17.79 billion, with profit attributable to owners declining by 14.8% in FY2023 Key Figures from Consolidated Statement of Comprehensive Income (HKD thousands) | Indicator | FY2023 | FY2022 | Change (%) | | :------------------ | :----------- | :----------- | :--------- | | Total Revenue | 17,788,864 | 21,787,920 | (18.4)% | | Main Business Revenue | 17,351,106 | 21,496,783 | (19.3)% | | Gross Profit | 6,678,267 | 7,890,595 | (15.3)% | | Operating Profit | 2,509,734 | 2,889,530 | (13.1)% | | Profit Before Income Tax | 2,354,872 | 2,819,489 | (16.5)% | | Profit for the Year | 1,858,178 | 2,316,560 | (19.8)% | Profit Attributable to Owners of the Company and Earnings Per Share | Indicator | FY2023 | FY2022 | Change (%) | | :-------------------------------------- | :----------- | :----------- | :--------- | | Profit Attributable to Owners of the Company (HKD thousands) | 1,914,914 | 2,247,491 | (14.8)% | | Basic Earnings Per Share (HK cents) | 48.80 | 56.90 | (14.2)% | | Diluted Earnings Per Share (HK cents) | 48.77 | 56.77 | (14.1)% | Consolidated Statement of Financial Position Total assets decreased by 4.3% to HKD 19.64 billion, driven by a 10.0% decline in current assets, while total liabilities fell by 8.5% Key Figures from Consolidated Statement of Financial Position (HKD thousands) | Indicator | March 31, 2023 | March 31, 2022 | Change (%) | | :------------------ | :------------- | :------------- | :--------- | | Total Assets | 19,640,488 | 20,521,244 | (4.3)% | | Non-current Assets | 11,225,854 | 11,180,502 | 0.4% | | Current Assets | 8,414,634 | 9,340,742 | (10.0)% | | Total Equity | 12,527,770 | 12,748,173 | (1.7)% | | Total Liabilities | 7,112,718 | 7,773,071 | (8.5)% | | Current Liabilities | 6,786,020 | 7,443,677 | (8.8)% | - Inventories within current assets decreased from HKD 2.70 billion to HKD 1.45 billion, and trade and bills receivables decreased from HKD 2.25 billion to HKD 1.60 billion[5] Notes to the Consolidated Financial Statements General Information Man Wah Holdings Limited, an investment holding company incorporated in Bermuda, has been listed on the Hong Kong Stock Exchange since April 2010 - The company was incorporated in Bermuda and listed on the Hong Kong Stock Exchange on April 9, 2010[8] - The company is an investment holding company, with its direct and ultimate holding companies owned by Directors Mr. Wong Man Li and Ms. Hui Wai Hing[8] Summary of Significant Accounting Policies Financial statements are prepared under IFRS and Hong Kong Companies Ordinance, primarily on a historical cost basis, with new standards having no material impact - Consolidated financial statements are prepared on a historical cost basis, with financial assets and investment properties at fair value through profit or loss measured at fair value[9] - The Group adopted several revised standards mandatory for the financial year beginning April 1, 2022, with no significant financial impact[10][11] - The potential impact of new and amended standards not yet adopted, including IAS 1, IAS 16, and IAS 37, is currently under assessment[12][13] Segment Information The Group's operating segments, including sofas and bedding, saw revenue declines in FY2023, with China remaining the largest market despite a 15.9% revenue decrease - The Group's operating and reportable segments include sofas and ancillary products, bedding and ancillary products, other products, other businesses, and Home Group business[14][15] - Executive Directors make decisions based on segment operating results, but do not review segment asset and liability information[16] Segment Revenue and Results All major segments experienced revenue declines in FY2023, with sofas and ancillary products down 15.9%, and Home Group business recording a loss Segment Revenue (HKD thousands) | Segment | FY2023 | FY2022 | Change (%) | | :----------------------- | :----------- | :----------- | :--------- | | Sofas and Ancillary Products | 12,298,602 | 14,616,557 | (15.9)% | | Bedding and Ancillary Products | 2,726,781 | 3,381,770 | (19.4)% | | Other Products | 1,417,246 | 2,236,450 | (36.6)% | | Other Businesses | 295,903 | 371,128 | (20.3)% | | Home Group Business | 612,574 | 890,878 | (31.2)% | | Total | 17,351,106 | 21,496,783 | (19.3)% | Segment Results (HKD thousands) | Segment | FY2023 | FY2022 | Change (%) | | :----------------------- | :----------- | :----------- | :--------- | | Sofas and Ancillary Products | 1,840,574 | 2,148,018 | (14.3)% | | Bedding and Ancillary Products | 640,121 | 699,658 | (8.5)% | | Other Products | 51,857 | 202,940 | (74.5)% | | Other Businesses | 175,041 | 197,645 | (11.5)% | | Home Group Business | (40,389) | 7,834 | (615.8)% | | Total | 2,667,204 | 3,256,095 | (18.1)% | Geographical Information Revenue from China, North America, and Europe declined significantly in FY2023, while non-current assets remain concentrated in China and Vietnam Revenue by Geographical Location of Customers (HKD thousands) | Region | FY2023 | FY2022 | Change (%) | | :--------------------------- | :----------- | :----------- | :--------- | | China (including Hong Kong and Macau) | 11,388,618 | 13,563,935 | (15.9)% | | North America | 4,188,848 | 5,667,477 | (26.1)% | | Europe | 1,149,321 | 1,580,265 | (27.3)% | | Other | 624,319 | 685,106 | (8.8)% | | Total | 17,351,106 | 21,496,783 | (19.3)% | Non-current Assets by Geographical Location of Assets (HKD thousands) | Region | FY2023 | FY2022 | Change (%) | | :--------------------------- | :----------- | :----------- | :--------- | | China (including Hong Kong and Macau) | 9,606,098 | 9,128,977 | 5.2% | | Europe | 350,795 | 517,468 | (32.2)% | | Vietnam | 1,236,923 | 1,407,038 | (12.1)% | | Other | 2,864 | 85,994 | (96.7)% | | Total | 11,196,680 | 11,139,477 | 0.5% | Income Tax Expense Income tax expense decreased by 1.2% to HKD 496.69 million in FY2023, with varying corporate tax rates applied across different regions Income Tax Expense (HKD thousands) | Tax Category | FY2023 | FY2022 | Change (%) | | :------------------- | :----------- | :----------- | :--------- | | China Corporate Income Tax | 393,657 | 368,289 | 6.9% | | China Withholding Income Tax | 35,089 | 46,191 | (24.0)% | | Macau Supplementary Income Tax | 27,035 | 60,361 | (55.2)% | | US Corporate Income Tax | 1,698 | 2,444 | (30.5)% | | Deferred Income Tax Expense/(Credit) | 1,197 | (2,418) | (149.5)% | | Total Income Tax Expense | 496,694 | 502,929 | (1.2)% | - Chinese subsidiaries are taxed at 25%, with some western region companies enjoying a 15% preferential rate, while Macau subsidiaries pay 12% supplementary income tax since 2021[22][23] Composition of Operating Profit Operating profit in FY2023 was impacted by significant expenses, including HKD 8.50 billion in inventory costs and HKD 2.93 billion in employee benefits, alongside substantial impairment provisions Items Deducted From/(Credited To) Operating Profit (HKD thousands) | Item | FY2023 | FY2022 | Change (%) | | :------------------- | :----------- | :----------- | :--------- | | Cost of Inventories | 8,502,750 | 11,229,027 | (24.3)% | | Amortization of Intangible Assets | 52,341 | 54,382 | (3.7)% | | Depreciation of Property, Plant and Equipment | 525,088 | 530,839 | (1.1)% | | Depreciation of Right-of-use Assets | 107,086 | 99,312 | 7.8% | | Employee Benefit Expenses | 2,934,144 | 3,238,391 | (9.3)% | | Impairment Provision for Goodwill | 133,753 | – | N/A | | Impairment Provision for Property, Plant and Equipment | 52,534 | – | N/A | | Impairment Provision for Inventories | 12,441 | 1,987 | 526.1% | | Legal and Professional Fees | 193,461 | 64,796 | 198.6% | Earnings Per Share Profit attributable to owners of the Company was HKD 1.91 billion, with basic and diluted EPS at 48.80 HK cents and 48.77 HK cents respectively, both declining Earnings Per Share Data | Indicator | FY2023 | FY2022 | | :-------------------------------------- | :----------- | :----------- | | Profit Attributable to Owners of the Company (HKD thousands) | 1,914,914 | 2,247,491 | | Weighted Average Number of Ordinary Shares in Issue (thousands) | 3,924,077 | 3,950,168 | | Basic Earnings Per Share for the Year (HK cents) | 48.80 | 56.90 | | Weighted Average Number of Ordinary Shares in Issue (Diluted) (thousands) | 3,926,080 | 3,958,687 | | Diluted Earnings Per Share for the Year (HK cents) | 48.77 | 56.77 | Dividends The company recognized total dividends of HKD 1.26 billion in FY2023, with the Board recommending a final dividend of HKD 0.10 per share Dividends Recognized (HKD thousands) | Dividend Type | FY2023 | FY2022 | | :--------------- | :--------- | :--------- | | Final Dividend (per share) | HKD 0.17 | HKD 0.16 | | Interim Dividend (per share) | HKD 0.15 | HKD 0.13 | | Total | 1,255,538 | 1,147,362 | - The Board recommended a final dividend of HKD 0.10 per share, totaling approximately HKD 392,095 thousand[27] - Total dividends declared for FY2023 represented approximately 51.2% of the profit attributable to owners of the Company[59] Trade and Other Receivables and Prepayments Net trade and bills receivables decreased by 28.8% to HKD 1.60 billion, while other receivables and prepayments increased by 21.8% in FY2023 Trade and Other Receivables and Prepayments (HKD thousands) | Item | March 31, 2023 | March 31, 2022 | Change (%) | | :------------------- | :------------- | :------------- | :--------- | | Net Trade and Bills Receivables | 1,598,310 | 2,245,088 | (28.8)% | | Other Receivables and Prepayments | 943,908 | 775,074 | 21.8% | | Total | 2,542,218 | 3,020,162 | (15.8)% | Ageing Analysis of Trade and Bills Receivables (HKD thousands) | Ageing | March 31, 2023 | March 31, 2022 | | :------------- | :------------- | :------------- | | 0 to 90 Days | 1,535,390 | 2,164,387 | | 91 to 180 Days | 41,788 | 64,419 | | Over 180 Days | 21,132 | 16,282 | Trade and Other Payables and Accrued Expenses Trade and bills payables decreased by 17.7% to HKD 950.94 million, while a provision of HKD 84.53 million was made for a supplier lawsuit, which the Group plans to appeal Trade and Other Payables and Accrued Expenses (HKD thousands) | Item | March 31, 2023 | March 31, 2022 | Change (%) | | :------------------- | :------------- | :------------- | :--------- | | Trade and Bills Payables | 950,941 | 1,155,911 | (17.7)% | | Other Payables and Accrued Expenses | 974,682 | 1,224,626 | (20.4)% | | Total | 1,925,623 | 2,380,537 | (19.2)% | - The Group made a provision of HKD 84,528 thousand for a lawsuit with a former supplier, where the court ruled in favor of the former supplier for HKD 118,881 thousand, and the Group will appeal the judgment[31][32][65] Ageing Analysis of Trade and Bills Payables (HKD thousands) | Ageing | March 31, 2023 | March 31, 2022 | | :------------- | :------------- | :------------- | | 0 to 90 Days | 950,475 | 1,154,833 | | 91 to 180 Days | 152 | 917 | | Over 180 Days | 314 | 161 | Market and Business Review Overall Market Environment and Company Strategy Amid global economic challenges, the company successfully shifted to a brand-sales-focused model in China, achieving global leadership in functional sofa sales for five consecutive years - Over the past three years, global and Chinese economies were impacted by the pandemic and US-China trade war, affecting both the Chinese market and export orders[34] - The Group's business model shifted from export OEM to brand sales, with China's brand sales exceeding 60%[34] - According to Euromonitor International, the Group has ranked first in global functional sofa sales for five consecutive years[35] China Market Performance China market revenue declined by 15.9% to HKD 11.09 billion in FY2023 due to the pandemic, with the company expanding stores and enhancing online sales strategies China Market Main Business Revenue (HKD thousands) | Year | Revenue | | :------------- | :----------- | | FY2023 | 11,092,715 | | FY2022 | 13,192,807 | - The company addressed pandemic impacts by supporting dealers, enhancing live streaming training, driving marketing, improving management, implementing CRM, and building an operational platform[37] - As of March 31, 2023, the Group had 6,471 brand specialty stores in China, with a net increase of 503 stores during the review period[37] - The Group enhanced online live streaming sales through short video promotion, in-store live streaming, and collaborations with top streamers to boost brand influence and sales conversion[37] North America Market Performance North American revenue declined by 26.1% to HKD 4.19 billion due to inflation and high inventory, while the company maintained its third-place ranking in functional sofa sales North America Market Main Business Revenue (HKD thousands) | Year | Revenue | | :------------- | :----------- | | FY2023 | 4,188,848 | | FY2022 | 5,667,477 | - The Group maintained its third-place ranking among US functional sofa manufacturers, with a market share of 10.1%[38] - To mitigate US tariff impacts, the Group established dual production facilities in Vietnam and Mexico, reducing export risks and transportation costs[39] Europe and Other Overseas Market Performance Revenue from Europe and other overseas markets (excluding Home Group) declined by 15.5%, while Home Group business revenue fell 31.2%, resulting in a HKD 133.75 million goodwill impairment Europe and Other Overseas Market Main Business Revenue (HKD thousands) | Market | FY2023 | FY2022 | | :------------------------------------ | :----------- | :----------- | | Europe and Other Overseas Markets (excluding Home Group) | 1,161,066 | 1,374,493 | | Home Group Business | 612,574 | 890,878 | - Home Group business revenue significantly decreased by 31.2%, primarily due to the pandemic and the Russia-Ukraine war[40] - The Group recognized a goodwill impairment provision of HKD 133,753 thousand for the Home Group[40] Detailed Financial Performance Analysis Revenue and Gross Margin Analysis Total revenue declined by 18.4% to HKD 17.79 billion in FY2023, yet overall gross margin improved by 1.8 percentage points to 38.5% Total Revenue and Gross Margin (HKD thousands) | Indicator | FY2023 | FY2022 | Change (%) | | :------------- | :----------- | :----------- | :--------- | | Total Revenue | 17,788,864 | 21,787,920 | (18.4)% | | Overall Gross Margin | 38.5% | 36.7% | 1.8pp | - Excluding Home Group business, the Group's sofa product sales volume decreased by approximately 20.8% to about 1,502 thousand units[42] Sofas and Ancillary Products Business Sofas and ancillary products revenue decreased by 15.9% to HKD 12.30 billion, while its gross margin improved from 37.3% to 38.5% Sofas and Ancillary Products Business Revenue and Gross Margin (HKD thousands) | Indicator | FY2023 | FY2022 | Change (%) | | :------------- | :----------- | :----------- | :--------- | | Revenue | 12,298,602 | 14,616,557 | (15.9)% | | Gross Margin | 38.5% | 37.3% | 1.2pp | China Market China market sofa and ancillary product revenue decreased by 12.5% to HKD 7.55 billion, driven by enhanced product competitiveness and multi-channel strategies Sofas and Ancillary Products Business - China Market Revenue (HKD thousands) | Year | Revenue | | :------------- | :----------- | | FY2023 | 7,546,520 | | FY2022 | 8,627,693 | - The company enhanced product competitiveness, empowered dealers, and boosted the "CHEERS" brand influence through online-offline synergy and new media channels like Douyin and live streaming[44] North America Market North American sofa and ancillary product revenue declined by 26.4% to HKD 3.98 billion, with the US contributing HKD 3.78 billion Sofas and Ancillary Products Business - North America Market Revenue (HKD thousands) | Year | Revenue | | :------------- | :----------- | | FY2023 | 3,981,267 | | FY2022 | 5,410,362 | - In North American market revenue, the US contributed HKD 3,780,639 thousand, and Canada contributed HKD 192,619 thousand[45] Europe and Other Overseas Markets Sofa and ancillary product sales revenue in Europe and other overseas markets increased by 33.2% to HKD 770.82 million Sofas and Ancillary Products Business - Europe and Other Overseas Markets Revenue (HKD thousands) | Year | Revenue | | :------------- | :----------- | | FY2023 | 770,815 | | FY2022 | 578,502 | Bedding and Ancillary Products Business Bedding and ancillary products revenue decreased by 19.4% to HKD 2.73 billion, while its gross margin improved from 40.8% to 44.5% Bedding and Ancillary Products Business Revenue and Gross Margin (HKD thousands) | Indicator | FY2023 | FY2022 | Change (%) | | :------------- | :----------- | :----------- | :--------- | | Revenue | 2,726,781 | 3,381,770 | (19.4)% | | Gross Margin | 44.5% | 40.8% | 3.7pp | Other Product Sales Other product sales revenue declined by 36.6% to HKD 1.42 billion, with gross margin decreasing from 24.0% to 22.9% Other Product Sales Revenue and Gross Margin (HKD thousands) | Indicator | FY2023 | FY2022 | Change (%) | | :------------- | :----------- | :----------- | :--------- | | Revenue | 1,417,246 | 2,236,450 | (36.6)% | | Gross Margin | 22.9% | 24.0% | (1.1)pp | Home Group Business Home Group business revenue decreased by 31.2% to HKD 612.57 million, with its gross margin declining from 25.3% to 23.5% Home Group Business Revenue and Gross Margin (HKD thousands) | Indicator | FY2023 | FY2022 | Change (%) | | :------------- | :----------- | :----------- | :--------- | | Revenue | 612,574 | 890,878 | (31.2)% | | Gross Margin | 23.5% | 25.3% | (1.8)pp | Other Businesses Other businesses revenue decreased by 20.3% to HKD 295.90 million, while its gross margin significantly improved from 79.9% to 88.3% Other Businesses Revenue and Gross Margin (HKD thousands) | Indicator | FY2023 | FY2022 | Change (%) | | :------------- | :----------- | :----------- | :--------- | | Revenue | 295,903 | 371,128 | (20.3)% | | Gross Margin | 88.3% | 79.9% | 8.4pp | Other Income Other income significantly increased by 50.4% to HKD 437.76 million in FY2023 Other Income (HKD thousands) | Year | Revenue | | :------------- | :----------- | | FY2023 | 437,758 | | FY2022 | 291,137 | Cost and Expense Analysis Cost of goods sold decreased by 21.6% due to lower raw material costs, while other losses expanded significantly due to impairment provisions Cost of Goods Sold Cost of goods sold decreased by 21.6% to HKD 10.67 billion, mainly driven by a 24.8% reduction in raw material costs across key materials Cost of Goods Sold Analysis (HKD thousands) | Item | FY2023 | FY2022 | Change (%) | | :------------- | :----------- | :----------- | :--------- | | Raw Material Costs | 8,268,801 | 10,990,545 | (24.8)% | | Staff Costs | 1,779,759 | 1,976,527 | (10.0)% | | Production Expenses | 624,279 | 639,116 | (2.3)% | | Total | 10,672,839 | 13,606,188 | (21.6)% | Year-on-Year Change in Average Unit Cost of Major Raw Materials | Major Raw Material | Year-on-Year Change (%) | | :----------------- | :---------------------- | | Genuine Leather | (9.5)% | | Steel | (17.0)% | | Plywood | (7.7)% | | Printed Fabric | (7.8)% | | Chemicals | (17.4)% | | Packaging Paper | (2.4)% | Other Gains and Losses Other gains and losses expanded significantly to a HKD 241.42 million loss, primarily due to goodwill and fixed asset impairment provisions Other Gains and Losses (HKD thousands) | Year | Loss | | :------------- | :----------- | | FY2023 | (241,416) | | FY2022 | (49,350) | - The expanded loss was mainly attributable to goodwill and fixed asset impairment provisions[54] Selling and Distribution Expenses Selling and distribution expenses decreased by 20.8% to HKD 3.32 billion, driven by lower overseas transportation costs and US tariffs, despite increased network service fees Selling and Distribution Expenses (HKD thousands) | Year | Expense | | :------------- | :----------- | | FY2023 | 3,317,923 | | FY2022 | 4,189,944 | - Advertising, marketing, and brand building expenses decreased by 15.4% to HKD 463,774 thousand[55] - Staff costs, benefits, and commissions for sales personnel decreased by 2.1% to HKD 784,873 thousand[55] - Overseas transportation and port charges decreased by 39.6% to HKD 793,773 thousand[55] - Tariffs on goods exported to the US decreased by 47.4% to HKD 91,042 thousand[55] - Network service fees increased by 24.2% to HKD 153,661 thousand[55] Administrative and Other Expenses Administrative and other expenses slightly decreased by 0.6% to HKD 1.05 billion, but their proportion of revenue increased from 4.9% to 6.0% Administrative and Other Expenses (HKD thousands) | Year | Expense | | :------------- | :----------- | | FY2023 | 1,046,952 | | FY2022 | 1,052,908 | - Administrative and other expenses as a percentage of revenue increased from approximately 4.9% in FY2022 to approximately 6.0% in FY2023[56] Income Tax Expense Income tax expense decreased by 1.2% to HKD 496.69 million, yet its proportion of profit before tax increased from 17.8% to 21.1% Income Tax Expense (HKD thousands) | Year | Expense | | :------------- | :----------- | | FY2023 | 496,694 | | FY2022 | 502,929 | - Income tax expense as a percentage of profit before tax increased from approximately 17.8% in FY2022 to approximately 21.1% in FY2023[57] Profitability and Dividend Policy Profit attributable to owners decreased by 14.8%, but net profit margin improved to 11.0% due to higher gross margin, with total dividends representing 51.2% of profit Profit Attributable to Owners of the Company and Net Profit Margin Profit attributable to owners decreased by 14.8% to HKD 1.91 billion, while net profit margin improved to 11.0% due to an increased gross margin Profit Attributable to Owners of the Company and Net Profit Margin | Indicator | FY2023 | FY2022 | | :-------------------------------------- | :----------- | :----------- | | Profit Attributable to Owners of the Company (HKD thousands) | 1,914,914 | 2,247,491 | | Net Profit Margin | 11.0% | 10.5% | - The net profit margin increase was primarily due to the gross margin rising from approximately 36.7% in FY2022 to approximately 38.5% in FY2023[58] Dividends The Board recommended a final dividend of HKD 0.10 per share, with total dividends representing approximately 51.2% of the profit attributable to owners - The Board recommended declaring a final dividend of HKD 0.10 per share[59] - Total dividends declared for FY2023 represented approximately 51.2% of the profit attributable to owners of the Company[59] Liquidity and Capital Management Working Capital Cash and bank balances increased by 32.0% to HKD 3.74 billion, primarily in RMB, reflecting sound financial management and capital commitment control Cash and Bank Balances (HKD thousands) | Year | Amount | | :------------- | :----------- | | March 31, 2023 | 3,738,234 | | March 31, 2022 | 2,831,559 | - Cash and bank balances are primarily denominated in RMB, totaling approximately HKD 3,540,054 thousand[60] - The Group maintains sound financial policies, effectively managing cash flow and capital commitments to ensure sufficient funds for current and future needs[60] Liquidity and Capital Resources Short-term borrowings were HKD 4.18 billion, with a current ratio of 1.2 and a gearing ratio of 36.1%, reflecting a mix of fixed and floating rate bank loans Borrowings (HKD thousands) | Borrowing Type | March 31, 2023 | March 31, 2022 | | :------------- | :------------- | :------------- | | Short-term Borrowings | 4,176,079 | 4,335,016 | | Long-term Borrowings | 350 | 566 | Liquidity Ratios | Indicator | March 31, 2023 | March 31, 2022 | | :------------- | :------------- | :------------- | | Current Ratio | 1.2 | 1.3 | | Gearing Ratio | 36.1% | 37.0% | - The weighted average effective annual interest rate for bank borrowings was 4.40% (2022: 1.48%) for floating rates and 2.74% (2022: 2.72%) for fixed rates[61] Treasury Management Policy The Group invests surplus cash in low-risk, short-term principal-protected products to generate returns without impacting operations or capital expenditures - The Group invests surplus cash reserves in low-risk, short-term (usually not exceeding one year) principal-protected wealth management products, structured deposits, or ordinary fixed deposits[62] - The treasury management objective is to generate returns without disrupting the Group's business operations or capital expenditures[62] Asset Impairment and Pledges The Group recognized HKD 12.44 million in inventory impairment and HKD 14.58 million in receivables impairment, with some Home Group assets pledged for financing Inventory Provisions Inventory impairment provisions significantly increased to HKD 12.44 million in FY2023 Inventory Impairment Provisions (HKD thousands) | Year | Amount | | :------------- | :----------- | | FY2023 | 12,441 | | FY2022 | 1,987 | Impairment Loss on Trade and Bills Receivables Impairment loss provisions for trade and bills receivables decreased to HKD 14.58 million in FY2023 Impairment Loss Provisions for Trade and Bills Receivables (HKD thousands) | Year | Amount | | :------------- | :----------- | | FY2023 | 14,578 | | FY2022 | 19,825 | Pledged Assets Restricted bank balances were HKD 7.39 million, and Home Group subsidiaries pledged HKD 871 thousand in property, plant, and equipment for financing Restricted Bank Balances (HKD thousands) | Year | Amount | | :------------- | :----------- | | March 31, 2023 | 7,394 | | March 31, 2022 | 4,045 | - Certain Home Group subsidiaries pledged property, plant, and equipment with a carrying amount of approximately HKD 871 thousand for financing[64] Capital Commitments and Contingent Liabilities Capital commitments totaled HKD 969.82 million for property and plant, with no significant contingent liabilities, though a HKD 84.53 million provision was made for a supplier lawsuit Capital Commitments (HKD thousands) | Item | March 31, 2023 | March 31, 2022 | Change (%) | | :--------------------------------- | :------------- | :------------- | :--------- | | Acquisition and Construction of Property, Plant and Equipment | 409,563 | 306,116 | 33.8% | | Construction of Production Plants | 558,073 | 1,037,613 | (46.2)% | | Construction of Properties Under Development | 2,182 | 5,603 | (61.0)% | | Total | 969,818 | 1,349,332 | (28.1)% | - The Group had no significant contingent liabilities[65] - The Group made a provision of HKD 84,528 thousand for a lawsuit with a former supplier, where the court ruled in favor of the former supplier for HKD 118,881 thousand, and the Group will appeal the judgment[31][32][65] Foreign Exchange Risk The Group faces currency risk from various foreign currency-denominated transactions across its global operations, with no current foreign exchange hedging policy - The Group's currency risk primarily arises from trade and other receivables, bank balances, trade and other payables, and bank borrowings denominated in non-functional currencies[66] - Overseas market sales are predominantly settled in USD, mainland China in RMB, and Hong Kong in HKD, while Home Group revenue is in EUR with costs in EUR, UAH, and PLN[66] - The Group has no foreign exchange hedging policy[66] Significant Investments and Acquisitions The Group made no significant investments or acquisitions in FY2023 but plans to pursue future furniture company acquisitions for accelerated development - In FY2023, the Group did not undertake any significant investments, major acquisitions, or disposals of subsidiaries, associates, or joint ventures[67] - The Group will continue to seek suitable opportunities to acquire furniture companies to accelerate its development[67] Operations and Strategic Outlook Future Major Investment or Capital Asset Plans The Group currently has no annual plans for future major investments or capital assets - The Group currently has no plans for major investments or capital assets for the coming year[68] Human Resources Employee count decreased by 9.9% to 25,832, with total employee costs at HKD 2.93 billion, while the company focuses on training, performance, and incentive schemes Employee Count and Costs (HKD thousands) | Indicator | March 31, 2023 | March 31, 2022 | Change (%) | | :------------- | :------------- | :------------- | :--------- | | Total Employees | 25,832 | 28,685 | (9.9)% | | Total Employee Costs | 2,934,144 | 3,238,391 | (9.3)% | - The Group provides comprehensive working and living conditions, with a robust employee training, performance evaluation, and incentive system, including share option and share award schemes[68] Purchase, Sale or Redemption of the Company's Listed Securities The company repurchased 11.65 million ordinary shares for approximately HKD 58.96 million in FY2023, with no other share transactions Share Repurchase Details (October 2022) | Month of Repurchase | Number | Highest (HKD) | Lowest (HKD) | Total Purchase Price (approx. HKD) | | :------------------ | :----------- | :------------ | :----------- | :--------------------------------- | | October 2022 | 11,647,600 | 5.30 | 4.83 | 58,958,729 | - Save for the aforementioned repurchases, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's shares during the review period[69] Future Plans and Outlook The Group will pursue a "Product + Brand" strategy, focusing on R&D, smart manufacturing, and digital management, while expanding market share in China and overseas - The Group will adhere to its "Product + Brand" core strategy, enhancing R&D for upgraded functional sofas (compact, aesthetic, lightweight, flat-reclining) using self-produced smart iron frame technology[71] - Investment will increase in smart manufacturing, digital management, and brand influence, aiming to reduce labor intensity and production costs through automated integrated production processes[71] - The Group will continue its "Dominating China" strategy to increase market share and leverage scaled production, quality, and cost advantages to expand in European and American markets as demand recovers[72] - The Chinese functional sofa market remains in a stage of low penetration with high growth potential[72] Corporate Governance and Administrative Matters Significant Events After Review Period As of the announcement date, the Directors are unaware of any significant disclosable events occurring after March 31, 2023 - As of this announcement date, the Directors are unaware of any significant disclosable events occurring after March 31, 2023[73] Corporate Governance Practices The company adheres to corporate governance best practices and the Listing Rules' code, with the Chairman and CEO roles combined, but the Board ensures power balance through independent directors and committee consultations - The Company adheres to corporate governance best practices and complied with the Corporate Governance Code in Appendix 14 of the Listing Rules during the review period[74][75] - Mr. Wong Man Li holds both Chairman and CEO roles, a deviation from Code Provision A.2.1, but the Board ensures power balance through consultations and four independent non-executive directors[75] Standard Code for Securities Transactions The company adopted the Standard Code for Directors' securities transactions, with all Directors and relevant employees confirming full compliance - The Company adopted the Standard Code in Appendix 10 of the Listing Rules as the code of conduct for Directors' securities transactions[76] - All Directors and relevant employees confirmed full compliance with the Standard Code upon inquiry[76] Audit Committee The Audit Committee, composed of four independent non-executive directors, including two with financial expertise, reviewed the FY2023 audited consolidated results with external auditors - The Audit Committee comprises four independent non-executive directors: Mr. Chow Cheuk Ay, Mr. Yeung Siu Sun, Mr. Ding Yuan, and Mr. Kan Chung Nin[77] - Mr. Chow Cheuk Ay and Mr. Yeung Siu Sun possess the professional qualifications and financial management expertise required by the Listing Rules[77] - The Audit Committee reviewed the Group's audited consolidated results for the financial year ended March 31, 2023, with the external auditor[77] Suspension of Share Register Closure Share transfer registration will be suspended from June 26-30 and July 6-10, 2023, to determine eligibility for the AGM and proposed final dividend - Share transfer registration will be suspended from June 26 to June 30, 2023, to determine eligibility for attending and voting at the Annual General Meeting[78] - Share transfer registration will be suspended from July 6 to July 10, 2023, to determine shareholders' eligibility for the proposed final dividend[79] Auditor's Scope of Work PricewaterhouseCoopers confirmed consistency between this announcement's financial data and the audited FY2023 statements, but their work does not constitute an assurance engagement - PricewaterhouseCoopers confirmed that the consolidated financial data in this announcement is consistent with the Group's audited consolidated financial statements for FY2023[80] - PricewaterhouseCoopers' work does not constitute an assurance engagement, thus no assurance is provided on this announcement[80] Board Information This announcement is signed by Chairman Mr. Wong Man Li, with a Board comprising five executive directors and four independent non-executive directors - This announcement is signed by Mr. Wong Man Li, Chairman of the Board[81] - Executive directors include Mr. Wong Man Li, Ms. Hui Wai Hing, Mr. Alan Marnie, Mr. Dai Quan Fa, and Ms. Wong Ying Ying[81] - Independent non-executive directors include Mr. Chow Cheuk Ay, Mr. Kan Chung Nin, Mr. Ding Yuan, and Mr. Yeung Siu Sun[81]