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eprint Group Limited — Interim / Quarterly Report 2017
Nov 18, 2016
50240_rns_2016-11-18_303b8407-a6ea-490b-8777-c20c3e4e7868.pdf
Interim / Quarterly Report
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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.
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eprint GROUP LIMITED eprint 集團有限公司
(Incorporated in the Cayman Islands with limited liability)
(Stock code: 1884)
INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016 AND RE-DESIGNATION OF DIRECTOR
FINANCIAL HIGHLIGHTS
| For the six months ended | For the six months ended | ||
|---|---|---|---|
| 30 September | |||
| 2016 | 2015 | Change | |
| HK$’000 | HK$’000 | ||
| (Unaudited) | (Unaudited) | ||
| Operating Results | |||
| Revenue | 200,171 | 190,466 | 5.1% |
| — e-print segment | 163,527 | 167,809 | (2.6%) |
| — e-banner segment | 36,644 | 22,657 | 61.7% |
| Segment results | 3,378 | 12,791 | (73.6%) |
| — e-print segment | 10,925 | 17,685 | (38.2%) |
| — e-banner segment | (7,547) | (4,894) | 54.2% |
| Profit for the period attributable to | |||
| equity holders of company | 5,808 | 13,239 | (56.1%) |
| Net profit margin % (Attributable to | |||
| equity holders of company) | 2.9% | 7.0% | |
| Gross profit margin % | 33.7% | 35.7% | |
| Basic earnings per share (HK Cents) | 1.06 | 2.57 | (58.8%) |
— 1 —
| As at | As at | ||
|---|---|---|---|
| 30 September | 31 March | ||
| 2016 | 2016 | Change | |
| HK$’000 | HK$’000 | ||
| (Unaudited) | (Audited) | ||
| Financial Position | |||
| Total assets | 291,666 | 299,158 | (2.5%) |
| Total equity | 195,022 | 206,831 | (5.7%) |
| Cash and cash equivalents | 87,317 | 90,295 | (3.3%) |
The board (the “ Board ”) of directors (the “ Directors ”) of eprint Group Limited (the “ Company ”) announces the unaudited consolidated interim results of the Company and its subsidiaries (collectively, the “ Group ”) for the six months ended 30 September 2016, together with the comparative figures for the corresponding period in 2015.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 September 2016
| Note Revenue Cost of sales Gross profit Other income Other losses — net Selling and distribution expenses Administrative expenses |
Six months ended 30 September 2016 2015 HK$’000 HK$’000 (Unaudited) (Unaudited) 200,171 190,466 (132,808) (122,531) 67,363 67,935 3,465 4,326 (4,666) (3,346) (21,524) (16,798) (41,260) (39,326) |
|---|---|
— 2 —
| Note Operating profit 4 Finance income Finance costs Finance (costs)/income — net 5 Share of profit of joint ventures — net Share of losses of associates Profit before income tax Income tax expense 6 Profit for the period Other comprehensive income: Item that may be subsequently reclassified to profit or loss Currency translation differences Total comprehensive income for the period Profit for the period attributable to: Equity holders of the Company Non-controlling interest Earnings per share — basic and diluted (expressed in HK cents per share) 7 Total comprehensive income attributable to: Equity holders of the Company Non-controlling interest |
Six months ended 30 September 2016 2015 HK$’000 HK$’000 (Unaudited) (Unaudited) 3,378 12,791 396 1,054 (711) (605) (315) 449 713 328 (461) (13) 3,315 13,555 (1,640) (2,857) 1,675 10,698 (834) (868) 841 9,830 5,808 13,239 (4,133) (2,541) 1,675 10,698 1.06 2.57 5,078 12,371 (4,237) (2,541) 841 9,830 |
|---|---|
— 3 —
CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2016
Note ASSETS Non-current assets Property, plant and equipment Intangible assets Held-to-maturity investments 9 Financial assets at fair value through profit or loss 10 Investment in associates Investments in joint ventures Deferred income tax assets Deposits and prepayments Long-term bank deposits Current assets Inventories Trade receivables 11 Deposits, prepayments and other receivables Held-to-maturity investments 9 Current income tax recoverable Amounts due from related companies Cash and cash equivalents Total assets |
As at 30 September 2016 HK$’000 (Unaudited) 102,482 1,657 — 12,041 3,602 6,045 2,311 18,192 232 146,562 5,047 4,591 22,685 20,000 — 5,464 87,317 145,104 291,666 |
As at 31 March 2016 HK$’000 (Audited) 113,467 1,872 40,295 11,950 4,196 5,655 2,311 4,732 — 184,478 5,191 3,571 7,458 — 282 7,883 90,295 114,680 299,158 |
|---|---|---|
— 4 —
| As at 30 September 2016 Note HK$’000 (Unaudited) EQUITY Capital and reserves attributable to the equity holders of the Company Share capital 5,500 Share premium 132,921 Other reserves 61,035 199,456 Non-controlling interests (4,434) Total equity 195,022 LIABILITIES Non-current liabilities Obligations under finance leases 10,013 Deferred income tax liabilities 10,710 20,723 Current liabilities Trade payables 12 11,889 Accruals and other payables 28,246 Borrowings 22,518 Obligations under finance leases 8,957 Amount due to related companies 198 Amounts due to directors 250 Current income tax payable 3,863 75,921 Total liabilities 96,644 Total equity and liabilities 291,666 |
As at 31 March 2016 HK$’000 (Audited) 5,500 132,921 68,607 207,028 (197) 206,831 8,417 11,754 20,171 15,274 26,775 17,840 9,448 15 265 2,539 72,156 92,327 299,158 |
|---|---|
— 5 —
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATION
1 BASIS OF PREPARATION
This condensed interim consolidated financial information for the six months ended 30 September 2016 has been prepared in accordance with Hong Kong Accounting Standard (“ HKAS ”) 34 “Interim financial reporting” issued by the Hong Kong Institute of Certified Public Accountants (“ HKICPA ”) and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange (the “ Listing Rules ”).
This condensed interim consolidated financial information should be read in conjunction with the Group’s consolidated financial statements for the year ended 31 March 2016, which are prepared in accordance with Hong Kong Financial Reporting Standards (“ HKFRSs ”).
2 PRINCIPAL ACCOUNTING POLICIES
The accounting policies applied are consistent with those used in preparing the Group’s financial statements for the year ended 31 March 2016, except as stated below.
- (a) The following amended standards and new interpretation are mandatory for the Group’s accounting period beginning on 1 April 2016:
| HKFRSs (Amendment) | Annual Improvements to HKFRSs 2012-2014 |
|---|---|
| Cycle | |
| HKAS 1 (Amendment) | The disclosure initiative |
| HKAS 16 and HKAS 38 | Clarification of acceptable methods of depreciation |
| (Amendment) | and amortisation |
| HKAS 16 and HKAS 41 | Agriculture: bearer plants |
| (Amendment) | |
| HKAS 27 (Amendment) | Equity method in separate financial statements |
| HKFRS 10, HKFRS 12 and | Investment entities applying the consolidation |
| HKAS 28 (Amendment) | exception |
| HKFRS 11 (Amendment) | Accounting for acquisitions of interests in joint |
| operations | |
| HKFRS 14 | Regulatory deferral accounts |
The Group has adopted these amended standards and interpretation which did not have a significant impact on the Group’s results and financial position.
There are no other amended standards or interpretations that are effective for the first time for this interim period that could be expected to have a material impact on the Group.
— 6 —
- (b) The following new standards and amendments have been issued, but are not effective for the Group’s accounting period beginning on 1 April 2016 and have not been early adopted:
| Effective for | ||
|---|---|---|
| annual periods | ||
| beginning on | ||
| or after | ||
| HKFRS 10 and HKAS | Sale or contribution of assets between | Note |
| 28 (Amendment) | an investor and its associate or | |
| joint venture | ||
| HKFRS 15 | Revenue from contracts with | 1 January 2018 |
| customers | ||
| HKFRS 9 | Financial instruments | 1 January 2018 |
| HKFRS 16 | Leases | 1 January 2019 |
Note: To be announced by HKICPA
The Group has commenced an assessment of the impact of these new standards and amendments but is not yet in a position to state whether they would have a significant impact on its results of operations and financial position.
- (c) Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.
3 SEGMENT INFORMATION
The chief operating decision-maker has been identified as the board of directors of the Company. The chief operating decision-maker has determined the operating segments based on the reports reviewed by the board of directors of the Company, that are used to make strategic decisions and assess performance.
The chief operating decision-maker has determined the operating segments based on these reports. The Group is organised into two business segments:
-
(a) paper printing segment (mainly derived from the brand “e-print”); and
-
(b) banner printing segment (mainly derived from the brand “e-banner”).
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-marker.
— 7 —
Management assesses the performance of the operating segments based on a measure of gross profit less distribution costs, administrative and selling expenses, and other operating expenses that are allocated to each segment. Other information provided is measured in a manner consistent with that in the financial statements.
Sales between segments are carried out at arm’s length basis.
The subsidiary incorporated in the People’s Republic of China (the “ PRC ”) provides information technology (“ I.T. ”) support services within the Group. The subsidiaries operate in Malaysia and Australia generated immaterial external revenue during the period. Since the Group mainly operates in Hong Kong and the Group’s assets are mainly located in Hong Kong, no geographical segment information is presented.
During the six months ended 30 September 2015 and 2016, no external customers contributed over 10% of the Group’s revenue.
| Segment revenue Revenue from external customers Inter-segment revenue Total Segment results Finance income Finance costs Share of profit of joint venture Share of losses of associates Profit before income tax Income tax expense Profit for the period Non-controlling interest Profit attributable to equity holders of the Company |
For the six months ended 30 September 2016 Paper printing Banner printing Eliminations Total HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 163,527 36,644 — 200,171 245 57 (302) — 163,772 36,701 (302) 200,171 10,925 (7,547) 3,378 396 (711) 713 (461) 3,315 (1,640) 1,675 4,133 5,808 |
For the six months ended 30 September 2016 Paper printing Banner printing Eliminations Total HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 163,527 36,644 — 200,171 245 57 (302) — 163,772 36,701 (302) 200,171 10,925 (7,547) 3,378 396 (711) 713 (461) 3,315 (1,640) 1,675 4,133 5,808 |
For the six months ended 30 September 2016 Paper printing Banner printing Eliminations Total HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 163,527 36,644 — 200,171 245 57 (302) — 163,772 36,701 (302) 200,171 10,925 (7,547) 3,378 396 (711) 713 (461) 3,315 (1,640) 1,675 4,133 5,808 |
|---|---|---|---|
| Paper printing HK$’000 (Unaudited) 163,527 245 163,772 10,925 |
Banner printing HK$’000 (Unaudited) 36,644 57 36,701 (7,547) |
Eliminations HK$’000 (Unaudited) — (302) (302) |
— 8 —
| Segment revenue Revenue from external customers Inter-segment revenue Total Segment results Finance income Finance costs Share of profit of joint venture Share of loss of an associate Profit before income tax Income tax expense Profit for the period Non-controlling interest Profit attributable to equity holders of the Company |
For the six months ended 30 September 2015 Paper printing Banner printing Eliminations Total HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 167,809 22,657 — 190,466 211 301 (512) — 168,020 22,958 (512) 190,466 17,685 (4,894) 12,791 1,054 (605) 328 (13) 13,555 (2,857) 10,698 2,541 13,239 |
For the six months ended 30 September 2015 Paper printing Banner printing Eliminations Total HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 167,809 22,657 — 190,466 211 301 (512) — 168,020 22,958 (512) 190,466 17,685 (4,894) 12,791 1,054 (605) 328 (13) 13,555 (2,857) 10,698 2,541 13,239 |
For the six months ended 30 September 2015 Paper printing Banner printing Eliminations Total HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 167,809 22,657 — 190,466 211 301 (512) — 168,020 22,958 (512) 190,466 17,685 (4,894) 12,791 1,054 (605) 328 (13) 13,555 (2,857) 10,698 2,541 13,239 |
|---|---|---|---|
| Paper printing HK$’000 (Unaudited) 167,809 211 168,020 17,685 |
Banner printing HK$’000 (Unaudited) 22,657 301 22,958 (4,894) |
Eliminations HK$’000 (Unaudited) — (512) (512) |
— 9 —
4 OPERATING PROFIT
Operating profit is stated after charging the following:
| Depreciation of property, plant and equipment Recovery of trade receivables previously written off Loss on disposal of property, plant and equipment Loss on disposal of financial assets Transaction cost in relation to acquisition of a subsidiary Net exchange loss Investment income Cost of materials Subcontracting fee Operating lease rental of premises and equipment |
Six months ended 30 September 2016 2015 HK$’000 HK$’000 (Unaudited) (Unaudited) (9,055) (7,976) 12 12 (2,955) (441) (1,803) — — (67) (20) (2,905) 1,808 1,098 (29,717) (44,707) (67,089) (40,228) (12,363) (9,961) |
|---|---|
5 FINANCE (COST)/INCOME — NET
| Finance income Interest income from bank deposits Unwinding of discount on held-to-maturity investments Finance costs Finance charge on obligations under finance lease Interest expenses on borrowings Finance (cost)/income — net |
Six months ended 30 September 2016 2015 HK$’000 HK$’000 (Unaudited) (Unaudited) 114 1,073 282 (19) 396 1,054 (377) (507) (334) (98) (711) (605) (315) 449 |
|---|---|
— 10 —
6 INCOME TAX EXPENSE
| Current income tax — Hong Kong profits tax — PRC corporate income tax Over provision in prior year Deferred income tax Income tax expense |
Six months ended 30 September 2016 2015 HK$’000 HK$’000 (Unaudited) (Unaudited) 3,310 2,457 17 — (643) — (1,044) 400 1,640 2,857 |
Six months ended 30 September 2016 2015 HK$’000 HK$’000 (Unaudited) (Unaudited) 3,310 2,457 17 — (643) — (1,044) 400 1,640 2,857 |
|---|---|---|
| 2,857 |
Taxation on profits has been calculated on the estimated assessable profits for the six months ended 30 September 2016 at the rates of taxation prevailing in the countries/ places in which the Group operates. Income tax expense is recognised based on management’s estimate of the weighted average annual income tax rate expected for the full financial year.
7 EARNINGS PER SHARE
(a) Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue for the six months ended 30 September 2015 and 2016.
| Profit attributable to the equity holders of the Company (HK$’000) Weighted average number of ordinary shares in issue (thousands) Basic earnings per share (HK cents) |
Six months ended 30 September 2016 2015 (Unaudited) (Unaudited) 5,808 13,239 550,000 514,208 1.06 2.57 |
Six months ended 30 September 2016 2015 (Unaudited) (Unaudited) 5,808 13,239 550,000 514,208 1.06 2.57 |
|---|---|---|
| 514,208 | ||
| 2.57 |
— 11 —
(b) Diluted
For the six months ended 30 September 2016 and 2015, diluted earnings per share is the same as the basic earnings per share as there was no dilutive potential ordinary shares.
8 DIVIDENDS
A dividend of HK$12,650,000 that relates to the year ended 31 March 2016 was paid in August 2016 (2015: HK$19,415,000).
| Six months ended | Six months ended | |
|---|---|---|
| 30 September | ||
| 2016 | 2015 | |
| HK$’000 | HK$’000 | |
| (Unaudited) | (Unaudited) | |
| Interim dividend declared of HK cents nil per share | ||
| (2015: HK2.40 cents per share) | — | 13,200 |
The board of directors of the Company resolved not to declare an interim dividend for the six months ended 30 September 2016 (2015: HK2.40 cents per share).
9 HELD-TO-MATURITY INVESTMENTS
| As at | As at |
|
|---|---|---|
| 30 September | 31 March |
|
| 2016 | 2016 | |
| HK$’000 | HK$’000 | |
| (Unaudited) | (Audited) | |
| Unlisted bond securities at amortised costs | 20,000 | 40,295 |
— 12 —
The movement in held-to-maturity investments is summarised as follows:
| At beginning of the period Additions Unwinding of discount on held-to-maturity investments_(Note 5)_ Disposal Redemption Currency translation differences At end of the period |
Six months ended 30 September 2016 2015 HK$’000 HK$’000 (Unaudited) (Unaudited) 40,295 — — 39,951 282 (19) (10,584) — (10,000) — 7 — 20,000 39,932 |
|---|---|
There were no provision of impairment of held-to-maturity investment as at 30 September 2016 and 2015.
The fair values of unlisted securities are based on cash flows discounted using a rate based on the market interest rate and the risk premium specific to the unlisted securities at 10.9% for the six months ended 30 September 2016 (for the year ended 31 March 2016: 11.9%).
| As at 30 September 2016 HK$’000 (Unaudited) HK dollar 20,000 US dollar — 20,000 |
As at 31 March 2016 HK$’000 (Audited) 30,000 10,295 40,295 |
|---|---|
The maximum exposure to credit risk at the reporting date is the carrying value of the debt securities classified as held-to-maturity investments. None of these financial assets is either past due or impaired.
— 13 —
10 FINANCIAL ASSET AT FAIR VALUE THROUGH PROFIT OR LOSS
| Fair value of insurance policy investment | As at 30 September 2016 HK$’000 (Unaudited) 12,041 |
As at 31 March 2016 HK$’000 (Audited) 11,950 |
|---|---|---|
The insurance policy investment is an insurance contract provided to a director with underlying investment on a capital fund.
Financial asset at fair value through profit or loss is presented within investing activities in the consolidated statement of cash flows.
Changes in fair value of financial asset at fair value through profit or loss are recorded in ‘Other losses — net’ in the consolidated statement of comprehensive income.
The fair value of the insurance policy investment is based on the unobservable inputs and is classified within level 3 of the fair value hierarchy.
11 TRADE RECEIVABLES
The Group’s credit terms granted to customers of printing services are mainly cash on delivery and on credit. Our average credit period offered to customers ranges from 30 days to 60 days.
The ageing analysis of the trade receivables based on the invoice date are as follows:
| As at 30 September 2016 HK$’000 (Unaudited) Up to 30 days 3,026 31-60 days 1,195 Over 60 days 370 4,591 |
As at 31 March 2016 HK$’000 (Audited) 2,488 438 645 3,571 |
|---|---|
— 14 —
12 TRADE PAYABLES
The ageing analysis of trade payables based on the invoice date is as follows:
| Up to 30 days 31-60 days 61-90 days Over 90 days |
As at 30 September 2016 HK$’000 (Unaudited) 7,791 2,338 1,396 364 11,889 |
As at 31 March 2016 HK$’000 (Audited) 5,856 2,972 3,726 2,720 15,274 |
|---|---|---|
— 15 —
MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW
For the six months ended 30 September 2016, the Group’s revenue amounted to HK$200.2 million, an increase of 5.1% as compared with the same period last year. The Group’s unaudited profit attributable to equity holders for the six months ended 30 September 2016 was HK$5.8 million, a decrease of 56.1% as compared with the same period last year. Net profit margin (profit attributable to equity holders of company) was 2.9%, representing a decrease of 4.1% as compared with the same period last year.
The decrease in profit was mainly due to the one-off loss on disposal of financial asset for the six months ended 30 September 2016 being absent for the six months ended 30 September 2015, the increase in loss on disposal of property, plant and equipment, and the increase in selling and distribution expenses.
As for the Group’s paper printing segment, there is a drop of revenue from external customers of 2.6% from HK$167.8 million to HK$163.5 million. The drop of revenue is mainly due to the deterioration in the Hong Kong market for the six months ended 30 September 2016. The cost of sales increased by HK$3.0 million from HK$104.4 million to HK$107.4 million, and it is mainly due to the Group’s plan of more subcontracting to manufacturers in China to achieve lower average cost, while the existing production capacity takes time for downsizing. The increase in cost of sales from the aforesaid arrangement is transitional.
As for the Group’s banner printing segment, there is a significant growth in revenue from external customers of 61.7% from HK$22.7 million to HK$36.6 million. The increase in revenue is mainly due to both the increase in average selling price and number of order from the Hong Kong market. Despite the growth in revenue, the banner printing segment’s operating loss increased by HK$2.7 million, which is mainly due to the increase of operating loss made by its business in Malaysia by HK$1.5 million from HK$1.3 million to HK$2.8 million, and the HK$0.9 million of operating loss made by its App Solutions Business which was newly operated in December 2015.
OUTLOOK
Looking forward to the second half of the financial year ending 31 March 2017, as far as the management is aware, there is neither recent industry or regulatory changes nor unfavorable trends or developments which may have a material adverse impact on the Group’s operations, business and financial performance. Nevertheless, the Group will continue to strive for diversifying its business, including but not limited to expanding banner business in Hong Kong, Malaysia and Australia, reinforcing internal controls and streamlining factory operation, production outsourcing in order to achieve stable revenue growth for the Group. Meanwhile, the Group will look for new business opportunities from time to time to strengthen its market share.
— 16 —
Under the leadership of the Board, the management of the Group has formed a broad consensus in response to the key improvement areas in the existing business operation and market expansion in order to further enhance the Group’s overall competitiveness.
The Group will continue to strengthen its market position and increase the market share by making use of the following competitive advantages:
-
Well-positioned to seize enormous online market potential
-
Comprehensive information technology infrastructure and unique eprint system which is automatically operated
-
Well-recognised local brand
FINANCIAL REVIEW
Revenue
Income from the provision of printing services in Hong Kong increased by HK$9.7 million or 5.1% from HK$190.5 million for the six months ended 30 September 2015 to HK$200.2 million for the six months ended 30 September 2016. Such increase was primarily due to the increase of average monthly orders and selling price of banner printing service. The following table sets forth a breakdown of the revenue by service category and their respective percentage of the total revenue for the periods indicated.
| Advertising printing Bound book printing Stationery printing Banner printing Other services Total |
2016 HK$’000 (Unaudited) 68,991 46,620 41,115 33,354 10,091 200,171 |
34.5% 23.3% 20.5% 16.7% 5.0% 100% |
2015 HK$’000 (Unaudited) 68,008 50,560 43,582 21,404 6,912 190,466 |
35.7% 26.6% 22.9% 11.2% 3.6% |
|---|---|---|---|---|
| 100% |
The contribution to the sales mix by the banner printing category increased from 11.2% of total revenue for six months ended 30 September 2015 to 16.7% of total revenue for six months ended 30 September 2016, while advertising printing remained our primary printing service that accounted for 34.5% and 35.7% of our total revenue for six months ended 30 September 2016 and 2015, respectively.
— 17 —
| Sales Channels Stores Websites Others_(Note)_ Total |
Six months ended 30 September 2016 2015 HK$’000 HK$’000 (Unaudited) (Unaudited) 51,582 25.8% 57,197 30.0% 85,618 42.8% 79,907 42.0% 62,971 31.4% 53,362 28.0% 200,171 100.0% 190,466 100.0% |
Six months ended 30 September 2016 2015 HK$’000 HK$’000 (Unaudited) (Unaudited) 51,582 25.8% 57,197 30.0% 85,618 42.8% 79,907 42.0% 62,971 31.4% 53,362 28.0% 200,171 100.0% 190,466 100.0% |
|---|---|---|
| 100.0% |
Note: “Others” refers to revenue derived from orders received over the telephone, through e-mail, e-print mobile application and “Photobook” program.
Websites sales channel contributed 42.8% of total revenue for the six months ended 30 September 2016, which accounted for 7.1% increase as compared with that of the six months ended 30 September 2015. Such increase was primarily due to the continuous improvement in our online self-service ordering platform. The contribution from other channels increased from 28.0% of total revenue for the six months ended 30 September 2015, to 31.4% of total revenue for the six months ended 30 September 2016. Such increase was primarily due to the Group’s banner business relying more on sales team receiving customer orders via phone call and e-mail.
Other income
Other income primarily comprises interest income from held-to-maturity investments, sales of scrap materials, such as used zinc printing plates and paper scrap, equipment rental income and license fee income received from the Group’s joint venture.
Other losses — net
Other losses — net primarily comprises net loss on disposal of plant and equipment, loss on disposal of financial assets and net foreign exchange loss. The increase in amount during the six months ended 30 September 2016 compared to that of the six months ended 30 September 2015 was primarily due to the increase in net loss on disposal of plant and equipment resulting from restructuring the production facilities, and the loss on a one-off disposal of financial assets.
Selling and distribution expenses
Selling and distribution expenses primarily consist of staff costs for the sales team, delivery expenses, handling charges for electronic payments received, and store rentals as well as advertising and marketing expenses. Selling and distribution expenses represent 10.8% and 8.8% of the revenue for the six months ended 30 September 2016 and 2015, respectively. Such an increase was primarily due to the additional staff costs of the sales team and rental expenses for retail outlets from the banner business.
— 18 —
Administrative expenses
Administrative expenses primarily comprise directors’ fees, staff costs, outsourced customer support expenses, information technology support services expenses, office rental and utilities, depreciation, internet and telephone expenses, professional expenses and other miscellaneous administrative expenses. Administrative expenses remain stable representing 20.6% and 20.6% of the total revenue for the six months ended 30 September 2016 and 2015, respectively. The increase in administrative expenses was primarily due to the employee benefits expense incurred increased by HK$1.1 million from approximately HK$19.7 million for the six months ended 30 September 2015 to HK$20.8 million for the six months ended 30 September 2016.
Finance income
Finance income primarily consists of unwinding of discounts on held-to-maturity investments and interest income from cash and cash equivalents.
Finance costs
Finance costs primarily consist of interest expenses on bank borrowings and finance charges on obligations under finance lease.
Share of profit of joint ventures
Share of profit of joint ventures represents the share of losses or profits of the Group’s joint ventures in each period using equity method of accounting. During the six months ended 30 September 2016, the Company had one jointly controlled entity in Malaysia.
Share of losses of associates
Share of losses of associates represents the share of losses of the Group’s new associates in each period using equity method of accounting. During the six months ended 30 September 2016, the Company had three associates operating in the PRC (one of which had been disposed on 1 August 2016) and four associates operating in Hong Kong (one of which had been disposed on 1 August 2016).
Profit for the year attributable to equity holders of the Company
Profit decreased by HK$7.4 million or 56.1%, from HK$13.2 million for six months ended 30 September 2015 to HK$5.8 million for the six months ended 30 September 2016. Net profit margin also decreased from 7.0% for the six months ended 30 September 2015 to 2.9% for the six months ended 30 September 2016. The decreases in net profit and net profit margin were primarily due to the one-off loss on disposal of financial asset of HK$1.8 million for the six months ended 30 September 2016 being absent for the six months ended 30 September 2015, the increase in loss on disposal of property, plant and equipment by HK$2.5 million, and the increase in selling and distribution expenses by HK$4.7 million.
— 19 —
Liquidity and Financial Information
As at 30 September 2016, the total amount of bank balances and cash of the Group was approximately HK$87.3 million, a decrease of approximately HK$3.0 million compared with that as at 31 March 2016. The decrease was mainly arising from the payment of dividends offset by the proceeds from disposal of financial asset and disposal of property, plant and equipment. As at 30 September 2016, the financial ratios of the Group were as follows:
| As at | As at |
||
|---|---|---|---|
| 30 | September | 31 March |
|
| 2016 | 2016 | ||
| Current ratio(1) | 1.9 | 1.6 | |
| Gearing ratio(2) | 21.3% | 17.3% |
Notes:
-
(1) Current ratio is calculated based on total current assets divided by total current liabilities.
-
(2) Gearing ratio is calculated based on total borrowings and obligation under finance leases divided by total equity and multiplied by 100%.
Borrowings
The Group had bank borrowings as at 30 September 2016 and 31 March 2016 in the sum of approximately HK$22.5 million and HK$17.8 million respectively. All bank borrowings were made from banks in Hong Kong and were repayable within 3 years. The bank borrowings with repayable on demand clause was classified as current liabilities. No financial instruments were used for hedging purposes, nor were there any foreign currency net investments hedged by current borrowings and/or other hedging instruments. The weighted average interest rates (per annum) were 4.1% for the six months ended 30 September 2016.
Treasury policies
The Group has adopted a prudent financial management approach towards its treasury policies and thus maintained a healthy liquidity position throughout the year. The Board closely monitors the Group’s liquidity position to ensure that the liquidity structure of the Group’s assets, liabilities and other commitments can meet its funding requirements from time to time. Surplus cash will be invested to meet the Group’s cash need in support of the Group’s strategy direction from time to time.
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Capital structure
The capital of the Company comprises ordinary shares and other reserves. The shares of the Company were listed on the Main Board of the Stock Exchange since 3 December 2013. On 10 August 2015, the Company issued and allotted 50,000,000 ordinary shares at HK$1.122 per share. As at 30 September 2016, the total number of issued ordinary shares of the Company was 550,000,000 shares.
Capital commitments
As at 30 September 2016 and 31 March 2016, the Group has capital commitments of HK$56.1 million for purchase of properties, leasehold improvement and computer equipment, and HK$7.2 million for investment in an associate and purchase of computer equipment, respectively.
Significant investments held
Except for the investments in joint venture and an associate, the Group did not hold any significant investment in equity interest in any other company during the period under review.
Future plans for material investments and capital assets
On 27 June 2016, the Group signed two respective provisional sale and purchase agreements with CTP Limited, which was a connected person of the Group, for the purchase of two properties. These two properties were rented by the Group as its retail outlets. The aggregate consideration excluding the related transaction costs was HK$62 million. The acquisitions of the properties were approved by the independent shareholders of the Company on 15 August 2016 and the transactions were completed on 31 October 2016. Except for the aforesaid investments and those mentioned in previous sections, the Group did not have other plans for material investments and capital assets during the six months ended 30 September 2016.
Material acquisitions or disposals
The Group did not have any material acquisition or disposal of associates, subsidiaries or joint ventures during the six months ended 30 September 2016.
Exposure to foreign exchange risk
The Group operates principally in Hong Kong and its business is supported by an information technology support services centre located in the PRC. The Group is exposed to foreign exchange risk arising from the exposure of Renminbi against Hong Kong dollars. The Group does not hedge its foreign exchange risk as its exposure to foreign exchange risk is low as the Group’s cash flows mainly denominated in Hong Kong dollars.
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Charge of assets
At 30 September 2016 and 31 March 2016, the Group pledged the plant and machinery with a carrying value of approximately HK$32.5 million and HK$50.9 million respectively, as collaterals to secure the Group’s obligation under finance leases.
Use of proceeds
The Company’s shares were listed (the “ Listing ”) on the Stock Exchange since 3 December 2013 and raised a net proceed from the Listing of approximately HK$66.5 million. During the period between the listing date and 30 September 2016, HK$55.6 million of the net proceed from the Listing were utilised in accordance with the proposed applications set out in the section headed “Future Plans and Use of Proceeds” in the prospectus of the Company dated 20 November 2013. The unused proceeds were deposited in licensed banks in Hong Kong.
On 12 August 2015, the Company raised a net proceed of HK$53.1 million from the subscription for 50,000,000 new shares at the subscription price of HK$1.112 per share pursuant to the subscription agreement entered into on 29 July 2015. The net proceeds were intended to be used as general working capital and business development of the Group. As at 30 September 2016, net proceeds of approximately HK$4.6 million was used in an investment in an associate. The unused proceeds were deposited in licensed banks in Hong Kong.
Capital expenditure
During the period under review, the Group invested approximately HK$6.3 million in property, plant and equipment, represented an increase of about 16.7% in capital expenditure of the same period last year. The respective amount for the six months ended 30 September 2015 of HK$5.4 million excluded the property, plant and equipment acquired in the business combination.
EMPLOYEES AND EMOLUMENT POLICIES
As at 30 September 2016, the Group had 369 full time employees. There was no significant change in the Group’s emolument policies. On top of basic salaries, bonuses may be paid by reference to the Group’s performance as well as individual’s performance. Other staff benefits include housing allowances, contributions to Mandatory Provident Fund retirement benefits scheme in Hong Kong, the provision of pension funds, medical insurance, unemployment insurance and other relevant insurance for employees who are employed by the Group pursuant to the PRC rules and regulations and the prevailing regulatory requirements of the PRC, the Employees Provident Fund and contributions to Social Security Organization for employees who are employed by the Group pursuant to the Malaysian rules and regulations and the prevailing regulatory requirements of Malaysia, and contributions to the Superannuation for employees who are employed by the Group pursuant to the Australian rules and regulations and the prevailing regulatory requirements of Australia.
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INTERIM DIVIDEND
The Board has resolved not to declare an interim dividend for the six months ended 30 September 2016.
PURCHASE, SALE OR REDEMPTION OF SECURITIES
Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities for the six months ended 30 September 2016.
MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS
The Company has adopted the Model Code as set out in Appendix 10 to the Listing Rules as the code of conduct regarding Directors’ securities transactions. Having made specific enquiry of all Directors, all the Directors have confirmed that they have complied with the required standards as set out in the Model Code for the six months ended 30 September 2016.
CODE ON CORPORATE GOVERNANCE PRACTICES
The Company has adopted the code provisions set out in the Corporate Governance Code and Corporate Governance Report (“ CG Code ”) as set out in Appendix 14 to the Listing Rules.
To the knowledge of the Board, the Company had fully complied with the relevant code provisions in the CG Code for the six months ended 30 September 2016 save for the deviation as explained below.
Code provision A.2.1 of the CG Code provides that the roles of the chairman and chief executive officer should be separated and should not be performed by the same individual. The Company does not at present separate the roles of the chairman and chief executive officer. Mr. She Siu Kee William is the chairman and chief executive officer of the Company. The Board believes that vesting the roles of both chairman and chief executive officer in the same person has the benefit of ensuring consistent leadership within the Group and enables more effective and efficient overall strategic planning for the Group. The Board further believes that the balance of power and authority for the present arrangement will not be impaired and is adequately ensured by the current Board which comprises experienced and high caliber individuals with sufficient number thereof being non-executive Directors and independent non-executive Directors.
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AUDIT COMMITTEE
The Company established the Audit Committee on 13 November 2013 with written terms of reference, which was revised on 22 April 2016 in compliance with the CG Code. The primary duties of the Audit Committee are to review and supervise the financial reporting system and to review the risk management and internal control systems of the Group. The Audit Committee comprises three independent non-executive Directors of the Company, namely, Ms. Luk Mei Yan (chairlady), Mr. Poon Chun Wai and Mr. Chi Man Shing Stephen. The Audit Committee has reviewed the unaudited condensed interim consolidated financial information for the six months ended 30 September 2016.
INTERIM REPORT
The interim report of the Company for the six months ended 30 September 2016 will be published and dispatched to the equity holders of the Company in mid-December 2016.
RE-DESIGNATION OF DIRECTOR
The Board is pleased to announce that Mr. Lam Shing Kai (“ Mr. Lam ”) has been redesignated from a non-executive Director to an executive Director with effect from 18 November 2016.
Mr. Lam, aged 44, is a director of certain subsidiaries of the Group. He has also been appointed as a member of the Executive Committee of the Board on 18 November 2016. Mr. Lam has approximately 20 years of experience in printing industry. Mr. Lam has entered into a service agreement with the Company on 18 November 2016 for a term of three years commencing from 18 November 2016 until terminated by not less than three months’ notice in writing served by either party on the other. Mr. Lam is subject to retirement by rotation and re-election in accordance with the Articles of Association of the Company. Mr. Lam is entitled to an annual remuneration of HK$720,000 and discretionary bonus as may be determined by the Board, which was determined by the Board with reference to the recommendation of the remuneration committee of the Company by taking into account the prevailing market conditions, the duties and responsibilities of Mr. Lam within the Group.
As at the date of this announcement, Mr. Lam is interested in 313,125,000 shares of the Company held through eprint Limited, the controlling shareholder of the Company and owned as to 21.62% by Mr. Lam. Save as aforesaid, Mr. Lam does not have any interest in the shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong).
Save as disclosed above, Mr. Lam does not hold any other position within the Group and does not hold any directorship in any other listed company in Hong Kong or overseas in the last three years nor does he has any relationship with any of the Directors, senior management of the Company, or substantial or controlling shareholders of the Company.
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Save as disclosed above, there is no information to be disclosed pursuant to any of the requirements of Rule 13.51(2) of the Listing Rules (particularly in relation to sub-paragraphs (h) to (v) therein) nor are there any other matters that need to be brought to the attention of the shareholders of the Company in respect of Mr. Lam.
The Board would like to welcome Mr. Lam for his new appointment.
On behalf of the Board eprint Group Limited She Siu Kee William Chairman and Chief Executive Officer
Hong Kong, 18 November 2016
As at the date of this announcement, the executive Directors are Mr. She Siu Kee William and Mr. Lam Shing Kai; the non-executive Directors are Mr. Leung Wai Ming, Mr. Chong Cheuk Ki and Mr. Deng Xiaen; and the independent non-executive Directors are Mr. Poon Chun Wai, Mr. Chi Man Shing Stephen and Ms. Luk Mei Yan.
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