Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.
(Stock Code: 0113)
GROUP INTERIM RESULTS
FOR THE SIX MONTHS ENDED
30TH SEPTEMBER, 2019
1
CHAIRMAN'S STATEMENT
FINANCIAL RESULTS AND INTERIM DIVIDEND
For the six months ended 30th September, 2019, the Group's turnover was HK$1,712.9 million, a decrease of 6.6 per cent..
Net profit attributable to equity shareholders was HK$119.0 million (2018 : HK$133.5 million), a decrease of 10.9 per cent.. The Group's investment portfolio contributed a net profit of HK$11.8 million (2018 : HK$10.3 million).
In view of these results, the Board has resolved to declare an interim dividend of HK8 cents (2018 : HK8 cents) per ordinary share.
BUSINESS REVIEW
During the period under review, the Group achieved significant growth in both sales and profit in Hong Kong during the initial few months. However, the retail climate in Hong Kong deteriorated significantly thereafter and Mainland Chinese tourists all but disappeared. In Taiwan, like-for-like profits increased by 169 per cent. as a result of margin improvement and cost and inventory control.
The new Harvey Nichols store at Pacific Place officially opened on 19th September, 2019, and marks the department store's first new format flagship store globally. For the first time, the department store combines its offline services and local product offering with Harvey Nichols' worldwide online product offering. By leveraging interactive digital displays alongside traditional physical display units, the store now showcases over three times the number of products with half the space, thereby enabling an increase in sales density with significantly reduced fixed costs, while offering customers a truly differentiated shopping experience. The new store has been well received since its opening. We are confident that the store and the new model will become a long- term success.
FULL YEAR PROSPECTS
The Group is extremely pessimistic about the retail climate in Hong Kong. Trading has been adversely affected and sales have been achieved at the expense of margin. Meanwhile, fixed costs remain very high. Additionally, the Group does not expect a return of Asian and Mainland Chinese tourists in the foreseeable future. Significantly worse result could be expected in the second half of this financial year. With Hong Kong in recession, the future looks bleak.
The Group has always rigorously controlled costs at all levels of operation and will continue to do so.
On the investment side, the Group will continue to seek new investment opportunities to diversify and broaden its earnings base.
2
With net cash of HK$1,728.0 million and its strong balance sheet, the Group is in a strong position to cope with Hong Kong's recession and the very difficult retail climate.
Dickson Poon
Group Executive Chairman
Hong Kong, 27th November, 2019
3
The board of Directors ("the Board") of Dickson Concepts (International) Limited ("the Company") announces that the unaudited consolidated results of the Company and its subsidiary companies (together "the Group") for the six months ended 30th September, 2019 together with the comparative figures are as follows :-
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the period ended 30th September, 2019
Six months ended 30th September, | |||||||||||
2019 | 2018 | ||||||||||
(unaudited) | (unaudited) | ||||||||||
(restated) | |||||||||||
NOTE | HK$'000 | HK$'000 | |||||||||
Revenue | 2 | 1,712,925 | 1,834,078 | ||||||||
Cost of sales | (956,426) | (951,016) | |||||||||
Gross profit | 756,499 | 883,062 | |||||||||
Other income | 3 | 515,268 | 7,365 | ||||||||
Selling and distribution expenses | (931,141) | (623,787) | |||||||||
Administrative expenses | (129,399) | (84,935) | |||||||||
Other operating expenses | (21,511) | (27,340) | |||||||||
Operating profit | 189,716 | 154,365 | |||||||||
Finance costs | (18,780) | (15,489) | |||||||||
Share of profit of an associated company | - | 1 | |||||||||
Profit before taxation | 4 | 170,936 | 138,877 | ||||||||
Taxation | 5 | (51,927) | (5,380) | ||||||||
Profit for the period attributable to equity | |||||||||||
shareholders of the Company | 119,009 | 133,497 | |||||||||
Earnings per share (basic and diluted) | 6 | 29.8 cents | 33.8 cents |
Note :-
The Group has initially applied HKFRS 16 on 1st April, 2019 using the full retrospective approach. Under this approach, comparative information has been restated.
4
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the period ended 30th September, 2019
Six months ended 30th September, | ||||||||
2019 | 2018 | |||||||
(unaudited) | (unaudited) | |||||||
(restated) | ||||||||
HK$'000 | HK$'000 | |||||||
Profit for the period | 119,009 | 133,497 | ||||||
Other comprehensive income for the period : | ||||||||
Item that may be reclassified subsequently to | ||||||||
profit or loss : | ||||||||
Exchange differences on translation of financial | ||||||||
statements of overseas subsidiary and associated | ||||||||
companies (Note a) | (5,218) | (29,181) | ||||||
Total comprehensive income for the period attributable | ||||||||
to equity shareholders of the Company | 113,791 | 104,316 | ||||||
Notes :-
- There is no tax effect relating to the above component of the comprehensive income.
- The Group has initially applied HKFRS 16 on 1st April, 2019 using the full retrospective approach. Under this approach, comparative information has been restated.
5
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30th September, 2019 | ||||||||||
30/9/2019 | 31/3/2019 | 1/4/2018 | ||||||||
(unaudited) | (restated) | (restated) | ||||||||
Non-current assets | NOTE | HK$'000 | HK$'000 | HK$'000 | ||||||
Property, plant and equipment | 51,628 | 65,212 | 96,192 | |||||||
Right-of-use assets | 492,209 | 794,812 | 857,234 | |||||||
Interest in an associated company | 23,000 | 24,188 | 25,895 | |||||||
Deferred tax assets | 2,936 | 2,958 | 3,171 | |||||||
Other financial assets | 8 | 991,062 | 489,621 | 239,698 | ||||||
Current assets | 1,560,835 | 1,376,791 | 1,222,190 | |||||||
Inventories | 344,685 | 415,440 | 472,271 | |||||||
Debtors, deposits and prepayments | 9 | 375,884 | 333,497 | 317,427 | ||||||
Tax recoverable | - | 1,152 | 2,138 | |||||||
Other financial assets | 8 | 172,118 | 351,612 | 175,793 | ||||||
Cash and bank balances | 2,319,344 | 1,739,142 | 1,754,795 | |||||||
3,212,031 | 2,840,843 | 2,722,424 | ||||||||
Current liabilities | ----------- | ----------- | ----------- | |||||||
Bank loans | 10 | 591,392 | - | 126,439 | ||||||
Bills payable | - | - | 9 | |||||||
Creditors and accruals | 11 | 528,342 | 688,030 | 596,751 | ||||||
Lease liabilities | 286,237 | 373,390 | 375,077 | |||||||
Taxation | 64,392 | 23,946 | 18,977 | |||||||
1,470,363 | 1,085,366 | 1,117,253 | ||||||||
------------- | ------------- | ------------- | ||||||||
Net current assets | 1,741,668 | 1,755,477 | 1,605,171 | |||||||
Total assets less current liabilities | 3,302,503 | 3,132,268 | 2,827,361 | |||||||
Non-current liabilities | ||||||||||
Lease liabilities | 780,377 | 591,987 | 556,671 | |||||||
Deferred tax liabilities | 20,572 | 21,607 | 24,417 | |||||||
Amount due to an associated company | 23,067 | 23,612 | 25,272 | |||||||
Net assets | 2,478,487 | 2,495,062 | 2,221,001 | |||||||
Capital and reserves | ||||||||||
Share capital | 12 | 118,463 | 119,999 | 117,975 | ||||||
Reserves | 2,360,024 | 2,375,063 | 2,103,026 | |||||||
Total equity attributable to equity | ||||||||||
shareholders of the Company | 2,478,487 | 2,495,062 | 2,221,001 |
Note :-
The Group has initially applied HKFRS 16 on 1st April, 2019 using the full retrospective approach. Under this approach, comparative information has been restated.
6
NOTES ON THE UNAUDITED INTERIM FINANCIAL REPORT
1. PRINCIPAL ACCOUNTING POLICIES
- Basis of preparation
The interim results set out in the announcement do not constitute the Group's interim financial report for the six months ended 30th September, 2019 but are extracted from the interim financial report.
This interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities ("the Listing Rules") on The Stock Exchange of Hong Kong Limited ("the Stock Exchange"), including compliance with Hong Kong Accounting Standard ("HKAS") 34, Interim financial reporting, issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"). It was authorised for issue on 27th November, 2019.
This interim financial report has been prepared in accordance with the same accounting policies adopted in the 2019 annual financial statements, except for the accounting policy changes that are expected to be reflected in the 2020 annual financial statements. Details of any changes in accounting policies are set out in Note 1(b).
The preparation of an interim financial report in conformity with HKAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.
This interim financial report contains condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the 2019 annual financial statements. The condensed consolidated interim financial statements and notes thereon do not include all of the information required for a full set of financial statements prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs").
This interim financial report is unaudited, but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410, Review of interim financial information performed by the independent auditor of the entity, issued by the HKICPA. KPMG's independent review report to the Board is included in the interim report to be sent to shareholders. In addition, this interim financial report has been reviewed by the Company's Audit Committee.
-
Changes in accounting policies
The HKICPA has issued a new HKFRS, HKFRS 16, Leases, and a number of amendments to HKFRSs that are first effective for the current accounting period of the Group.
7
Except for HKFRS 16, Leases, none of the developments have had a material effect on how the Group's results and financial position for the current or prior periods have been prepared or presented in this interim financial report. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.
HKFRS 16, Leases
HKFRS 16 replaces HKAS 17, Leases, and the related interpretations, HK(IFRIC) 4, Determining whether an arrangement contains a lease, HK(SIC) 15, Operating leases - incentives, and HK(SIC) 27, Evaluating the substance of transactions involving the legal form of a lease. It introduces a single accounting model for lessees, which requires a lessee to recognise a right-of-use asset and a lease liability for all leases, expect for leases that have a lease term of 12 months or less ("short-term leases") and leases of low value assets. The lessor accounting requirements are brought forward from HKAS 17 substantially unchanged.
The Group has initially applied HKFRS 16 on 1st April, 2019 using the full retrospective approach. Accordingly, the Group has recognised the cumulative effect of applying HKFRS 16 at the start of the earliest comparative period as if the accounting requirements under the new accounting standard had always been applied and restated the comparative information of the financial statements.
Further details of the nature and effect of the changes to the previous accounting policies are set out below:
- Change in the accounting policies
-
New definition of a lease
The change in the definition of a lease mainly relates to the concept of control. HKFRS 16 defines a lease on the basis of whether a customer controls the use of an identified asset for a period of time, which may be determined by a defined amount of use. Control is conveyed where the customer has both the right to direct the use of the identified asset and to obtain substantially all of the economic benefits from that use.
The Group applies the new definition of a lease in HKFRS 16 retrospectively to all contracts except for short-term leases and leases of low-value assets. - Lessee accounting
HKFRS 16 eliminates the requirement for a lessee to classify leases as either operating leases or finance leases, as was previously required by HKAS 17. Instead, the Group is required to capitalise all leases when it is the lessee, including leases previously classified as operating leases under HKAS 17, other than those short-term leases and leases of low-value assets. As far as the Group is concerned, these newly capitalised leases are primarily in relation to property.
-
New definition of a lease
8
Where the lease is capitalised, the lease liability is initially recognised at the present value of the lease payments payable over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using a relevant incremental borrowing rate. After initial recognition, the lease liability is measured at amortised cost and interest expense is calculated using the effective interest method. Variable leases payments that do not depend on an index or rate are not included in the measurement of the lease liability and hence are charged to profit or loss in the accounting period in which they are incurred.
The right-of-use asset recognised when a lease is capitalised is initially measured at cost, which comprises the initial amount of the lease liability plus any lease payments made at or before the commencement date, and any initial direct costs incurred. Where applicable, the cost of the right-of-use assets also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, discounted to their present value, less any lease incentives received.
The right-of-use asset is subsequently stated at cost less accumulated depreciation and impairment losses.
The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, or there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, or there is a change arising from the reassessment of whether the Group will be reasonably certain to exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.
- Lessor accounting
The accounting policies applicable to the Group as a lessor remain substantially unchanged from those under HKAS 17.
Under HKFRS 16, when the Group acts as an intermediate lessor in a sublease arrangement, the Group is required to classify the sublease as a finance lease or an operation lease by reference to the right-of-use asset arising from the head lease, instead of by reference to the underlying asset. The adoption of HKFRS 16 does not have a significant impact on the Group's financial statements in this regard.
- Critical accounting judgements and sources of estimation uncertainty in applying the above accounting policies.
9
Determining the leases term
As explained in the above accounting policies, the lease liability is initially recognised at the present value of the lease payments payable over the lease term. In determining the lease term at the commencement date for leases that include renewal options exercisable by the Group, the Group evaluates the likelihood of exercising the renewal options taking into account all relevant facts and circumstances that create an economic incentive for the Group to exercise the option, including favourable terms, leasehold improvements undertaken and the importance of that underlying asset to the Group's operation. The lease term is reassessed when there is a significant event or significant change in circumstance that is within the Group's control. Any increase or decrease in the lease term would affect the amount of lease liabilities and right-of-use assets recognised in future years.
-
Impact on the financial results and cash flows of the Group
After the initial recognition of right-of-use assets and lease liabilities at the inception of the leases, the Group as a lessee is required to recognise interest expense accrued on the outstanding balance of the lease liability and the depreciation of the right-of-use asset, instead of the previous policy of recognising rental expenses incurred under operating leases on a straight- line basis over the lease term. This results in a positive impact on the profit before taxation in the Group's consolidated statement of profit or loss, as compared to the results if HKAS 17 had been applied during the current period.
In the condensed consolidated cash flow statement, the Group as a lessee is required to split rentals paid under capitalised leases into their capital element and interest element. These elements are classified as financing cash outflows, rather than as operating cash outflows, as was the case for operating leases under HKAS 17. Although total cash flows are unaffected, the adoption of HKFRS 16 therefore results in a change in presentation of cash flows within the condensed consolidated cash flow statement.
The following table reconciles the Group's financial results and cash flows for the six months ended 30th September, 2018 as previously reported to the restated results upon the adoption of HKFRS 16.
10
Effect of | |||
As previously | adoption of | ||
reported | HKFRS 16 | As restated | |
HK$'000 | HK$'000 | HK$'000 | |
Consolidated statement of profit or | |||
loss for the corresponding six | |||
months ended 30th September, 2018 :- | |||
Selling and distribution expenses | (641,404) | 17,617 | (623,787) |
Administrative expenses | (85,132) | 197 | (84,935) |
Operating profit | 136,551 | 17,814 | 154,365 |
Finance costs | (2,284) | (13,205) | (15,489) |
Profit before taxation | 134,268 | 4,609 | 138,877 |
Profit for the period attributable to | |||
the equity shareholders of the | |||
Company | 128,888 | 4,609 | 133,497 |
Earnings per share (HK cent) | 32.6 | 1.2 | 33.8 |
Condensed consolidated cash flow | |||
statement for the corresponding | |||
six months ended 30th September, 2018 :- | |||
Net cash (used in) / generated from | |||
operating activities | (26,163) | 246,498 | 220,335 |
Capital element of lease rentals paid | - | (233,293) | (233,293) |
Interest element of lease rentals paid | - | (13,205) | (13,205) |
Net cash generated from / (used in) | |||
financing activities | 49,797 | (246,498) | (196,701) |
11
- Impact on the consolidated statement of financial position of the Group
The following table summarises the impact of the adoption of HKFRS 16 on the Group's financial positions as at 1st April, 2018 and 31st March, 2019 respectively.
Effect of | |||
As previously | adoption of | ||
reported | HKFRS 16 | As restated | |
HK$'000 | HK$'000 | HK$'000 | |
Consolidated statement of financial | |||
position as at 31st March, 2019 :- | |||
Property, plant and equipment | 65,347 | (135) | 65,212 |
Right-of-use assets | - | 794,812 | 794,812 |
Creditors, accruals and provisions | (832,999) | 144,969 | (688,030) |
Lease liabilities - current | - | (373,390) | (373,390) |
Lease liabilities - non-current | - | (591,987) | (591,987) |
Exchange reserve | (113,661) | (42) | (113,703) |
Retained profits | (1,760,718) | 25,773 | (1,734,945) |
Consolidated statement of financial | |||
position as at 1st April, 2018 :- | |||
Property, plant and equipment | 110,781 | (14,589) | 96,192 |
Right-of-use assets | - | 857,234 | 857,234 |
Creditors, accruals and provisions | (652,546) | 55,795 | (596,751) |
Lease liabilities - current | - | (375,077) | (375,077) |
Lease liabilities - non-current | - | (556,671) | (556,671) |
Retained profits | (1,479,328) | 33,308 | (1,446,020) |
2. REVENUE AND SEGMENTAL INFORMATION
-
Revenue
The principal activities of the Group are the Sale of Luxury Goods and Securities Investment.
Revenue represents the invoiced value of goods sold less discounts and returns, income from concession and consignment sales, net gain / (loss) on debt securities and securities held for trading, dividend income, and interest income from debt securities and short-term bank deposits under Securities Investment segment.
12
The amount of each significant category of revenue is as follows :-
Six months ended 30th September, | ||||||
2019 | 2018 | |||||
HK$'000 | HK$'000 | |||||
Revenue from Sale of Luxury Goods | ||||||
and net income from concession | ||||||
and consignment sales | ||||||
Watches and jewellery | 780,998 | 591,247 | ||||
Cosmetics and beauty products | 523,282 | 634,833 | ||||
Fashion and accessories | 389,023 | 597,821 | ||||
1,693,303 | 1,823,901 | |||||
Revenue from Securities Investment | 19,622 | 10,177 | ||||
1,712,925 | 1,834,078 | |||||
Information about major customers |
The Group sells goods to numerous individual customers without concentration of reliance. There is no disclosable information of major customers under HKFRS 8, Operating segments.
- Segment reporting
The Group manages its businesses by divisions. In a manner consistent with the way in which information is reported internally to the Group's most senior executive management for the purpose of resource allocation and performance assessment, the Group has presented the following two reportable segments :-
Sale of Luxury Goods business : The sale of luxury goods to retail and wholesale customers and net income from concession and consignment sales.
Securities Investment business : The investment in listed and unlisted securities.
-
Segment results
Information regarding the Group's reportable segments for the six months ended 30th September, 2019 and 30th September, 2018 respectively is set out below.
13
Sale of | Securities | |||||||||||
Luxury Goods | Investment | Total | ||||||||||
Six months ended | Six months ended | Six months ended | ||||||||||
30th September, | 30th September, | 30th September, | ||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||
(restated) | (restated) | |||||||||||
HK$'000 HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||||||||
Revenue | ||||||||||||
from | ||||||||||||
external | ||||||||||||
customers | 1,693,303 | 1,823,901 | 19,622 | 10,177 | 1,712,925 | 1,834,078 | ||||||
Reportable | ||||||||||||
segment | ||||||||||||
revenue | 1,693,303 | 1,823,901 | 19,622 | 10,177 | 1,712,925 | 1,834,078 | ||||||
Reportable | ||||||||||||
segment | ||||||||||||
profit | 107,164 | 123,187 | 11,845 | 10,310 | 119,009 | 133,497 |
Revenue and expenses are allocated to the reportable segments with reference to the sales generated and expenses incurred by those segments. The measure used for reporting segment profit is profit after taxation.
- Reconciliations of reportable segment revenue and profit or loss
Revenue and profit
No reconciliation of revenue and profit after taxation is required as the total reportable segments' figures are equal to the Group's consolidated figures.- Geographical information
The following table sets out information about the geographical location of- the Group's revenue from external customers; and (ii) the Group's property, plant and equipment, right-of-use assets and interest in an associated company. The geographical location of customers is based on the location at which the goods are delivered. The geographical location of the specified non-current assets is based on the physical location of the assets, in the case of property, plant and equipment, and right-of-use assets, and the location of operations, in the case of interest in an associated company.
14
Revenues from | Specified | ||||||||||
external customers | non-current assets | ||||||||||
Six months ended | |||||||||||
30th September, | |||||||||||
2019 | 2018 | 30/9/2019 | 31/3/2019 | ||||||||
(restated) | |||||||||||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||||||||
Hong Kong (place | 1,403,553 | 1,445,125 | 502,732 | 772,915 | |||||||
of domicile) | |||||||||||
------------ | ------------ | ------------ | ------------ | ||||||||
Taiwan | 259,428 | 297,397 | 31,474 | 40,105 | |||||||
Other territories | 49,944 | 91,556 | 32,631 | 71,192 | |||||||
309,372 | 388,953 | 64,105 | 111,297 | ||||||||
------------ | ------------ | ------------ | ------------ | ||||||||
Total | 1,712,925 | 1,834,078 | 566,837 | 884,212 | |||||||
3. | OTHER INCOME | |||||
Six months ended 30th September, | ||||||
2019 | 2018 | |||||
HK$'000 | HK$'000 | |||||
Net realised and unrealised (loss) / gain on | ||||||
unlisted equity securities | (2,371) | 3,524 | ||||
Interest income | 19,114 | 7,091 | ||||
Loss on disposal of property, plant and equipment | (163) | (169) | ||||
Net foreign exchange loss | (2,092) | (3,081) | ||||
Other income (Note) | 500,780 | - | ||||
515,268 | 7,365 | |||||
Note :-
Other income represented amounts received / receivable by the Group for termination / expiration of distribution licences.
15
4. | PROFIT BEFORE TAXATION | |||||||||
Six months ended 30th September, | ||||||||||
2019 | 2018 | |||||||||
(restated) | ||||||||||
HK$'000 | HK$'000 | |||||||||
Profit before taxation is arrived at after charging :- | ||||||||||
Depreciation | ||||||||||
- property, plant and equipment | 12,613 | 15,351 | ||||||||
- right-of-use assets | 187,034 | 237,782 | ||||||||
Interest on bank loans | 5,046 | 2,284 | ||||||||
Interest on lease liabilities | 13,734 | 13,205 | ||||||||
Impairment loss on right-of-use assets | 410,000 | - | ||||||||
5. | TAXATION | |||||||||
Six months ended 30th September, | ||||||||||
2019 | 2018 | |||||||||
HK$'000 | HK$'000 | |||||||||
Current tax - Hong Kong Profits Tax | ||||||||||
Provision for the period | 9,185 | - | ||||||||
Under-provision in respect of prior years | 300 | 24 | ||||||||
9,485 | 24 | |||||||||
------------ | ------------ | |||||||||
Current tax - Overseas | ||||||||||
Provision for the period | 42,746 | 5,322 | ||||||||
(Over) / under-provision in respect of prior years | (304) | 35 | ||||||||
5,357 | ||||||||||
42,442 | ||||||||||
------------ | ------------ | |||||||||
Deferred tax | ||||||||||
Origination and reversal of temporary differences | - | (1) | ||||||||
------------ | ------------ | |||||||||
Total income tax expense | 51,927 | 5,380 | ||||||||
Taxation in the consolidated statement of profit or loss includes provision for Hong Kong Profits Tax at 16.5 per cent. (2018 : 16.5 per cent.) on the estimated assessable profits for the period after deducting tax losses brought forward from previous years.
Taxation for overseas subsidiary companies is charged at the appropriate current rates of taxation ruling in the relevant countries.
16
6. EARNINGS PER SHARE
The calculation of basic and diluted earnings per share is based on the profit for the period attributable to ordinary equity shareholders of the Company of HK$119,009,000 (2018 (restated) : HK$133,497,000) and the weighted average number of 398,836,290 ordinary shares (2018 : 395,139,314 ordinary shares) in issue during the period.
Weighted average number of ordinary shares
Six months ended 30th September, | |||||||
2019 | 2018 | ||||||
Number | Number | ||||||
of shares | of shares | ||||||
Thousands | Thousands | ||||||
Issued ordinary shares at 1st April | 399,998 | 393,251 | |||||
ffect of scrip dividend | - | 2,095 | |||||
Effect of shares repurchased | (1,162) | (207) | |||||
Weighted average number of ordinary shares | |||||||
at 30th September | 398,836 | 395,139 | |||||
7. DIVIDENDS
Six months ended 30th September,
20192018
HK$'000 HK$'000
- Interim dividend declared after the interim period end : HK8 cents (2018 : HK8 cents)
per ordinary share | 31,536 | 32,463 | |
- Final dividend in respect of the previous financial year, approved and paid during the interim period, of HK27 cents
(for the year ended 31st March, 2018 :
HK23 cents) per ordinary share | 107,673 | 90,448 |
17
8. | OTHER FINANCIAL ASSETS | |||||
30/9/2019 | 31/3/2019 | |||||
HK$'000 | HK$'000 | |||||
Non-current assets | ||||||
Listed debt securities measured at amortised cost | 766,610 | 264,911 | ||||
Unlisted equity securities designated at fair value | ||||||
through profit or loss | 224,452 | 224,710 | ||||
991,062 | 489,621 | |||||
------------ | ------------ | |||||
Current assets | ||||||
Listed debt securities measured at amortised cost | 93,708 | 70,034 | ||||
Investment in securities held for trading at fair value | 78,410 | 70,219 | ||||
Listed equity securities held for trading | - | 211,359 | ||||
172,118 | 351,612 | |||||
------------ | ------------ | |||||
1,163,180 | 841,233 | |||||
9. DEBTORS, DEPOSITS AND PREPAYMENTS
Included in debtors, deposits and prepayments are trade debtors (net of loss allowance) with the following ageing analysis based on due date as at the end of the reporting period :-
30/9/2019 | 31/3/2019 | |||
HK$'000 | HK$'000 | |||
Current | 78,578 | 127,954 | ||
Over 60 days overdue | 83 | 136 | ||
78,661 | 128,090 | |||
Trade debtors are due within 30 to 90 days from the date of billing.
All debtors, deposits and prepayments of the Group, apart from certain rental deposits totalling HK$109,839,000 (as at 31st March, 2019 : HK$133,203,000), are expected to be recovered or recognised as an expense within one year.
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10. BANK LOANS
At the end of the reporting period, the bank loans were repayable within one year and secured as follows :-
30/9/2019 | 31/3/2019 | ||
HK$'000 | HK$'000 | ||
Secured | 591,392 | - | |
591,392 | - |
At 30th September, 2019, the banking facilities of a subsidiary company were secured by a charge over certain listed debt securities with total carrying value of HK$860,318,000.
The effective borrowing interest rate at 30th September, 2019 for the Group was 2.57 per cent..
11. CREDITORS AND ACCRUALS | ||||
30/9/2019 | 31/3/2019 | |||
(restated) | ||||
HK$'000 | HK$'000 | |||
Trade creditors | 188,355 | 273,117 | ||
Contract liabilities | 15,800 | 16,711 | ||
Net defined benefit asset | (844) | (850) | ||
Other creditors and accruals | 325,031 | 399,052 | ||
528,342 | 688,030 | |||
Included in creditors and accruals are trade creditors with the following ageing analysis based on due date as at the end of the reporting period :-
30/9/2019 | 31/3/2019 | ||||
HK$'000 | HK$'000 | ||||
Current | 186,337 | 272,918 | |||
1 to 30 days overdue | 146 | 151 | |||
31 to 60 days overdue | 1,279 | 32 | |||
Over 60 days overdue | 593 | 16 | |||
188,355 | 273,117 | ||||
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12. | SHARE CAPITAL | ||||||||||||||
30/9/2019 | 31/3/2019 | ||||||||||||||
Number | Nominal | Number | Nominal | ||||||||||||
of shares | value | of shares | value | ||||||||||||
Thousands | HK$'000 | Thousands | HK$'000 | ||||||||||||
Authorised :- | |||||||||||||||
Ordinary shares of HK$0.30 each | 518,000 | 155,400 | 518,000 | 155,400 | |||||||||||
Issued and fully paid :- | |||||||||||||||
Ordinary shares of HK$0.30 each | |||||||||||||||
Balance brought forward | 399,998 | 119,999 | 393,251 | 117,975 | |||||||||||
New ordinary shares issued | |||||||||||||||
under scrip dividend scheme | - | - | 18,260 | 5,478 | |||||||||||
Repurchases of shares | (5,120) | (1,536) | (11,513) | (3,454) | |||||||||||
Balance carried forward | 394,878 | 118,463 | 399,998 | 119,999 | |||||||||||
During the year ended 31st March, 2019, 18,260,477 new fully paid ordinary shares were issued and allotted at HK$3.35 per ordinary share to the shareholders who elected to receive new ordinary shares in lieu of cash pursuant to the scrip dividend scheme in relation to the final dividend for the year ended 31st March, 2018.
During the year ended 31st March, 2019, the Company repurchased a total of 11,513,500 ordinary shares on the Stock Exchange at an aggregate purchase price (excluding expenses) of HK$42,404,220. Such repurchased shares were subsequently cancelled during the year ended 31st March, 2019 and on 16th April, 2019 respectively. Details of the ordinary shares repurchased on the Stock Exchange during the year ended 31st March, 2019 are as follows :-
Highest | Lowest | Aggregate | ||
Number of | purchase | purchase | purchase | |
ordinary | price per | price per | price | |
Month of | shares | ordinary | ordinary | (excluding |
repurchase | repurchased | shares | share | expenses) |
HK$ | HK$ | HK$ | ||
August 2018 | 346,000 | 3.45 | 3.40 | 1,186,170 |
September 2018 | 1,543,500 | 3.51 | 3.41 | 5,323,755 |
October 2018 | 3,832,000 | 3.55 | 3.41 | 13,370,755 |
December 2018 | 3,989,000 | 3.88 | 3.79 | 15,452,435 |
January 2019 | 256,500 | 3.85 | 3.62 | 967,030 |
February 2019 | 641,500 | 3.90 | 3.76 | 2,479,135 |
March 2019 | 905,000 | 4.05 | 3.80 | 3,624,940 |
20
During the six months ended 30th September, 2019, the Company repurchased a total of 5,120,000 ordinary shares on the Stock Exchange at an aggregate purchase price (excluding expenses) of HK$22,596,905 and such repurchased shares were subsequently cancelled during the reporting period and on 3rd October, 2019 and 17th October, 2019. Details of the ordinary shares repurchased on the Stock Exchange during the reporting period are as follows :-
Highest | Lowest | Aggregate | ||
Number of | purchase | purchase | purchase | |
ordinary | price per | price per | price | |
Month of | shares | ordinary | ordinary | (excluding |
repurchase | repurchased | shares | share | expenses) |
HK$ | HK$ | HK$ | ||
July 2019 | 1,462,500 | 4.95 | 4.35 | 6,899,540 |
August 2019 | 1,393,000 | 4.50 | 4.13 | 5,966,755 |
September 2019 | 2,264,500 | 4.30 | 4.19 | 9,730,610 |
Subsequent to the end of the reporting period and up to the date of this announcement, the Company repurchased a total of 675,500 ordinary shares on the Stock Exchange at an aggregate purchase price (excluding expenses) of HK$2,882,190. Such repurchased shares were subsequently cancelled on 1st November, 2019. Details of the ordinary shares repurchased after the end of the reporting period are as follows:-
Highest | Lowest | Aggregate | ||
Number of | purchase | purchase | purchase | |
ordinary | price per | price per | price | |
Month of | shares | ordinary | ordinary | (excluding |
repurchase | repurchased | shares | share | expenses) |
HK$ | HK$ | HK$ | ||
October 2019 | 675,500 | 4.28 | 4.18 | 2,882,190 |
As a result of the above share repurchases, the issued share capital of the Company was accordingly reduced by the par value of the aforesaid repurchased ordinary shares which were cancelled during the reporting period and on 3rd October, 2019, 17th October, 2019 and 1st November, 2019. As at the date of this announcement, the number of issued shares of the Company is 394,202,808 ordinary shares.
The directors believe that the above share repurchases are in the best interests of the Company and its shareholders and that such shares repurchases would lead to an enhancement of the net assets value and / or earnings per share of the Company.
21
13. CAPITAL COMMITMENTS
Capital commitments outstanding at 30th September, 2019 not provided for in the consolidated financial statements were as follows :-
30/9/2019 | 31/3/2019 | ||
HK$'000 | HK$'000 | ||
Contracted for | 323 | 952 | |
Authorised but not contracted for | - | 48 | |
323 | 1,000 | ||
14. CONTINGENT LIABILITIES
At 30th September, 2019, the Company had the following contingent liabilities in respect of :-
- Guarantees of HK$933,527,000 (at 31st March, 2019 : HK$1,003,455,000) given to banks to secure facilities granted to certain subsidiary companies. The facilities were utilised to the extent of HK$96,831,000 (at 31st March, 2019 : HK$112,233,000) at the end of the reporting period.
- Guarantees given to licensors to guarantee the performance by certain subsidiary companies of obligations under certain agreements. The amount due under the agreements was HK$1,791,000 (at 31st March, 2019 : HK$15,273,000) at the end of the reporting period.
As at the end of the reporting period, the directors do not consider it probable that a claim will be made against the Company under any of the guarantees. No provision was therefore made in this respect at 30th September, 2019 and 31st March, 2019.
15. COMPARATIVE FIGURES
The Group has initially applied HKFRS 16 on 1st April, 2019 using the full retrospective approach. Accordingly, the comparative figures have been restated as if the accounting requirements under HKFRS 16 had always been applied. Further details of the changes in accounting policies are disclosed in Note 1(b).
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OTHER INFORMATION
EMPLOYMENT AND REMUNERATION POLICIES
As at 30th September, 2019, the Group had 997 (2018 : 1,393) employees. Total staff costs
(including directors' emoluments) amounted to HK$237.8 million (2018 : HK$210.8 million). Remuneration policies are reviewed regularly by the Board and by the Remuneration Committee in respect of directors and senior management. Remuneration packages are structured to take into account the level and composition of pay and the general market conditions in the respective countries and businesses in which the Group operates. Details of the share option scheme ("the Share Option Scheme") were disclosed in the Company's 2019 annual report ("the 2019 Annual Report"). No share options were granted or exercised under the Share Option Scheme during the period under review.
LIQUIDITY AND FINANCIAL RESOURCES
During the six months ended 30th September, 2019, the Group's net cash generated from operating activities was HK$838.2 million. It was utilised to finance HK$527.1 million purchase of other financial assets, HK$203.2 million lease rentals payment and HK$107.7 million final dividend payment.
The Group's net liquid financial resources as at 30th September, 2019 stood at HK$1,728.0 million, represented by cash and bank balances of HK$2,319.4 million less short- term bank borrowings of HK$591.4 million.
The Group also maintains substantial uncommitted short-term loan facilities with selected international banks for day-to-day requirements and funding flexibility. Utilisation of these facilities over and above prevailing levels during the second half of the current financial year is not anticipated given the Group's net cash position.
FOREIGN CURRENCY EXPOSURE AND FINANCIAL MANAGEMENT
Merchandise purchased by the Group is mainly denominated in United States Dollars, Euros, Pounds Sterling and Swiss Francs. Where appropriate, forward foreign exchange contracts are utilised to purchase the relevant currency to settle amounts due and it is the Group's policy that such foreign exchange contracts or foreign currency purchases are strictly limited to approved purchase budget amounts or actual purchase commitments.
Exposure to fluctuations in the exchange rate of regional currencies in respect of the Group's overseas operations is minimised by utilising local currency borrowings, where necessary, to fund working capital and capital expenditure requirements with repayment from funds generated from local sales.
Financial risk management for the Group is the responsibility of the treasury department based in Hong Kong which implements the policies and guidelines issued by the Board. Surplus cash is held mainly in United States Dollars, New Taiwan Dollars, Hong Kong Dollars and Renminbi with the majority placed on short-term deposits with established international banks.
23
As at 30th September, 2019, the Group's current ratio, being current assets divided by current liabilities, was 2.2 times compared to 2.6 times (restated) as at 31st March, 2019. The Group has maintained a net surplus cash position throughout the period under review and its gearing ratio, being total bank borrowings net of cash balances as a percentage of consolidated capital and reserves is Nil (as at 31st March, 2019 : Nil).
INTERIM DIVIDEND
In view of the results, the Board has resolved to declare an interim dividend of HK8 cents (2018 : HK8 cents) per ordinary share. The interim dividend represents a dividend payout ratio of 26.50 per cent. (2018 (restated) : 24.32 per cent.) and will absorb a total of about HK$31.54 million (2018 : HK$32.46 million). Shareholders whose names appear in the Register of Members of the Company on Friday, 3rd January, 2020 will be entitled to the interim dividend which will be paid on Friday, 17th January, 2020.
CLOSURE OF REGISTER OF MEMBERS
For the purpose of ascertaining shareholders' entitlement to the interim dividend, the Register of Members of the Company will be closed from Thursday, 2nd January, 2020 to Friday, 3rd January, 2020, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the interim dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company's Hong Kong Branch Registrar, Tricor Tengis Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong not later than 4:30 p.m. on Tuesday, 31st December, 2019.
SHARE PURCHASE, SALE AND REDEMPTION
Details of ordinary shares repurchased by the Company on the Stock Exchange during the period under review are set out in Note 12 on pages 20 and 21 of this announcement.
Save as disclosed in Note 12, there was no purchase, sale or redemption by the Company, or any of its subsidiary companies, of the Company's ordinary shares during the period under review and up to the date of this announcement.
CORPORATE GOVERNANCE PRACTICES
The Company is committed to maintaining high standards of corporate governance. The Company recognises that corporate governance practices are fundamental to the smooth, effective and transparent operation of a company and its ability to attract investment, protect the rights of shareholders and enhance shareholder value.
The Company has applied the principles and complied with all the code provisions of the Corporate Governance Code ("the CG Code") as set out in Appendix 14 of the Listing Rules throughout the period under review except code provision A.2.1 of the CG Code as the functions of the Chief Executive Officer are now performed by Sir Dickson Poon, the Group Executive Chairman.
Detailed information on the Company's other corporate governance practices was set out in the Corporate Governance Report included in the 2019 Annual Report.
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REVIEW OF GROUP INTERIM RESULTS
The Audit Committee has reviewed the unaudited consolidated interim results of the Group for the six months ended 30th September, 2019 with the Board.
As at the date of this announcement, the Board comprises :-
Executive Directors: | Independent Non-Executive Directors: |
Dickson Poon (Group Executive Chairman) | Bhanusak Asvaintra |
Chan Hon Chung, Johnny Pollux | Nicholas Peter Etches |
Lau Yu Hee, Gary | Fung Yue Ming, Eugene Michael |
Poon Dickson Pearson Guanda |
By Order of the Board
Or Suk Ying, Stella
Company Secretary
Hong Kong, 27th November, 2019
- For identification purposes only
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Dickson Concepts (International) Ltd. published this content on 27 November 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 November 2019 08:57:04 UTC