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Win Hanverky Holdings Limited 永嘉集團控股有限公司
(incorporated in the Cayman Islands with limited liability)
(Stock code: 3322)
ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2018
FINANCIAL HIGHLIGHTS
2018 | 2017 | Change | |
HK$'000 | HK$'000 | % | |
(Restated) | |||
Continuing operations | |||
Revenue | 4,137,949 | 3,496,499 | +18.3% |
Gross profit | 1,144,522 | 972,954 | +17.6% |
Gross profit margin | 27.7% | 27.8% | -0.1% pt |
Operating profit | 165,805 | 94,567 | +75.3% |
Profit/(loss) attributable to equity holders | |||
- Continuing operations | 86,868 | 74,967 | +15.9% |
- Discontinued operations | (44,615) | (53,922) | -17.3% |
42,253 | 21,045 | +100.8% | |
Basic EPS (HK cents) | 3.3 | 1.6 | +106.3% |
Dividends (HK cents) | |||
- Interim | 3.0 | 2.0 | |
- Final (proposed) | 1.0 | 2.0 | |
4.0 | 4.0 | - | |
OPERATIONAL HIGHLIGHTS |
- Revenue from continuing operations increased by 18.3% mainly attributable to revenue brought in from the newly acquired High-end Functional Outerwear Manufacturing Business, the Sport Field Group, and rapid expansion of retail networks in Mainland China for High-end Fashion Retailing Business.
- Profit attributable to equity holders increased from HK$21.0 million to HK$42.3 million.
- The Board proposed a final dividend of HK1.0 cent per Share. The interim and final dividends represent a total payment of HK4.0 cents (2017: HK4.0 cents) per Share which is equivalent to HK$51.4 million (2017: HK$51.4 million).
The board of directors (the "Board" or "Directors") of Win Hanverky Holdings Limited (the "Company") is pleased to present the audited consolidated results of the Company and its subsidiaries (together the "Group") for the year ended 31 December 2018, together with the comparative amounts for 2017 and the relevant explanatory notes.
CHAIRMAN'S STATEMENT
Business and Financial Highlights
In 2018, revenue of the Group generated from continuing operations amounted to HK$4,137.9 million (2017: HK$3,496.5 million), representing an increase of 18.3%.
Manufacturing Business has experienced another challenging year. Aligning with our strategic plan, Sportswear Manufacturing Business has recovered after a year of rectification and was back on the right track in the fourth quarter of 2018, thanks to the strong support from our major customer and the new management team at our main Vietnam factory. Together with the contributions from the Sport Field Group, the newly acquired High-end Functional Outerwear Manufacturing Business, revenue recorded from Manufacturing Business amounted to HK$2,924.7 million (2017:
HK$2,620.9 million), representing an increment of 11.6%.
Meanwhile, High-end Fashion Retailing Business sustained a high growth momentum.
Our retail stores further increased to 181 at the end of 2018 (2017: 150). Among which, 133 stores are situated in Mainland China, covering the major cities with strong consumption power. Revenue recorded from High-end Fashion Retailing Business amounted to HK$1,220.7 million (2017: HK$884.7 million), representing a remarkable increase of 38.0%.
At the same time, sportswear retail market in Hong Kong remained highly competitive and our Sportswear Retailing Business has suffered from continuous high rental expenses and operating costs as well as weak consumer sentiment over several years. As such, all sportswear retail stores in Hong Kong were closed during the year of 2018 in order to stop further losses.
In addition, the Group has followed its relocation strategy for Manufacturing Business and we had completed disposal of a wholly-owned subsidiary which owned a piece of factory land at Heyuan city, Guangdong province of Mainland China.
Our results for the year were impacted by the additional costs incurred for the higher level of production capacity and labour maintained for Manufacturing Business.
Nevertheless, this was largely offset by the profit contributed by the rapidly expanding High-end Fashion Retailing Business and gain from the sale of a piece of factory land in Mainland China. As a result, profit attributable to equity holders increased from HK$21.0 million to HK$42.3 million.
Outlook
After acquisition of the Sport Field Group, we have expanded our Manufacturing Business to include functional outerwear and supplemented our customer portfolio. The Sport Field Group possesses technologies and licensed facilities to produce high-end functional outerwear for certain internationally renowned sports and fashion brands. Its contribution will continue to be well-sustained by synergising with our existing product categories to enhance our operational efficiency and competitive edge in the manufacturing industry. We will continue to explore new growth drivers through acquisitions or investments in particular for garment related production facilities and technologies but will only do so if the product mix and footprint are in line with our strategic objectives.
The organic growth of our core business hinges upon continual investment in our existing infrastructure. According to our strategic plan, we anticipate that the existing production capacity in Vietnam would be fully utilised in 2020. In order to meet the increasing demand from existing customers and new sales orders from new customers, we have acquired two pieces of land with total area of 198,093 square metres in Vinh Long, a southern city in Mekong Delta in November 2018. Construction of new factories will commence later this year and pilot production is planned to start in the first half of 2020.
Our Manufacturing Business has seen a strong rebound in the fourth quarter of 2018. To keep the momentum, we will maintain close relationship with existing customers to achieve organic sales growth. On the other hand, we have succeeded in securing several internationally renowned sports brands into our customer portfolio in 2018 through the success of our product development and market penetration. We will continue developing new types of products by utilising internal resources and collaboration with business partners to further expand our customer base. Last but not the least, as one of our key long-term strategic initiatives, we will continuously implement cost reduction and productivity enhancement measures through process automation and advanced information technology platforms to improve our profitability.
As for the retail business, Mainland China remains a vast market with ample opportunities although its GDP growth might become slower. However, riding strong growth momentum, we are optimistic about the business opportunities and will continue to invest in Mainland China market. The Group will continue to grow our High-end Fashion Retailing Business in Mainland China through expansion of retail network in strategic cities and enhancement of operational efficiency.
Dividends
The Board is pleased to recommend the payment of a final dividend of HK1.0 cent per Share. Together with the interim dividend of HK3.0 cents per Share paid during the year, the dividend for the full financial year of 2018 totaled HK4.0 cents, representing total payment of HK$51.4 million. After assessment of our capital requirement and whenever there is free cash flow for distribution, we are committed to continue to deliver a steady return to our Shareholders. It is also our goal to maintain a flexible dividend payout policy, without prejudice to the development of the Company.
Acknowledgement
Finally, I would like to express my most sincere gratitude to our Directors, and the whole team for their consistent hard work, commitment and invaluable contributions to the Group. I would like to thank our clients, shareholders and business partners for their enduring support. We are well positioned to deal with challenges, expand on our capabilities and capture the opportunities ahead.
LI Kwok Tung Roy
Chairman
Hong Kong, 21 March 2019
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2018
2018 | 2017 | ||
Note | HK$'000 | HK$'000 | |
(Restated) | |||
Continuing operations | |||
Revenue | 3 | 4,137,949 | 3,496,499 |
Cost of sales | (2,993,427) | (2,523,545) | |
Gross profit | 1,144,522 | 972,954 | |
Selling and distribution costs | (588,823) | (473,676) | |
General and administrative expenses | (507,875) | (407,560) | |
Other net income | 4 | 117,981 | 2,849 |
Operating profit | 165,805 | 94,567 | |
Finance income | 5,185 | 3,908 | |
Finance costs | (12,970) | (3,297) | |
Finance (costs)/income - net | (7,785) | 611 | |
Share of (losses)/profits of associates | (1,226) | 1,335 | |
Profit before income tax | 156,794 | 96,513 | |
Income tax expense | 5 | (52,205) | (14,373) |
Profit from continuing operations | 104,589 | 82,140 | |
Discontinued operations | |||
Loss from discontinued operations | 10(b) | (47,361) | (57,240) |
Profit for the year | 57,228 | 24,900 |
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Win Hanverky Holdings Limited published this content on 21 March 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 21 March 2019 05:14:02 UTC