2022-04-28-港交所-利福中国_2021_年报_168页_7mb

Lifestyle China Group Ltd. 2021 Annual Report Summary

Core Content

Lifestyle China Group Ltd. is a well-established retail venue operator in the People's Republic of China (PRC), focusing on the mid-range to upper-end consumer market. The Group operates two "lifestyle" department stores under the Jiuguang brand in Shanghai and Suzhou, and has recently expanded with the opening of the Shanghai Jiuguang Center in late November 2021.

Key Information

• Stock Code: 2136
• Listing Exchange: The Stock Exchange of Hong Kong Limited
• Head Office: East Point Centre, 555 Hennessy Road, Causeway Bay, Hong Kong
• Registered Office: Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands
• Share Information:
  • Board Lot: 500 shares
  • Financial Year End: 31 December
  • Closing Share Price (31 December 2021): HK$1.22
  • Market Capitalisation (31 December 2021): HK$1,787 million

Main Business and Strategy

• The Group's Shanghai Jiuguang Center, a seven-storey shopping mall and two office towers, was opened in November 2021.
• It serves as a lifestyle and community hub, offering a wide range of retailers, restaurants, beauty salons, and fitness centers.
• The Group is committed to optimizing product mix and enhancing customer services to meet the diverse needs of local consumers.
• The Group maintains a strategic equity interest in Beiren Group, a leading retailing group in Hebei Province, PRC.

Financial Performance (Year Ended 31 December 2021)

• Revenue: Increased by 15.6% to RMB1,299.7 million, surpassing the pre-pandemic level of RMB1,204.1 million.
• Total Sales Proceeds: Rose by 17.3% to RMB3,482.9 million, up from RMB2,968.2 million in 2020.
• Gross Profit: Increased by 16.0% to RMB790.4 million, with a gross profit margin of 22.7% (vs. 23.0% in 2020).
• Net Profit Attributable to Shareholders: Declined by 32.6% to RMB143.4 million, compared to RMB212.7 million in 2020.
• Board Decision: No dividend was declared for the year.

Operating Expenses and Costs

• Selling and Distribution Costs: Increased by 28.1% to RMB523.7 million, mainly due to operating expenses, depreciation, and incentives for brand partners.
• Administrative Expenses: Rose by 52.7% to RMB238.3 million, driven by depreciation, one-off opening costs, and staff costs.
• Staff Costs: Increased by 22.9% to RMB191.3 million, partially offset by staff redundancies.
• Finance Costs: Decreased slightly to RMB124.9 million, with a portion of RMB27.9 million charged to the profit and loss account.

Liquidity and Financial Resources

• Cash and Cash Equivalents: Amounted to RMB1,858.2 million as of 31 December 2021, down from RMB1,906.9 million in 2020.
• Net Debt: Improved slightly to RMB444.8 million, down from RMB457.8 million in 2020.
• Debt to Equity Ratio: Improved to 25.1% from 26.1% in 2020.
• Bank Loans: Outstanding secured bank loans were RMB2,340 million, down from RMB2,400 million in 2020.

Strategic Initiatives

• The Group expanded its product portfolio by introducing mid-range and high-end products from international brands.
• Digitalization efforts were intensified, including the use of social media platforms and live streaming to drive foot traffic.
• The Group aims to enhance customer engagement and loyalty through improved services and experiences.

Future Outlook

• The Group remains cautiously optimistic about the future of China's retail sector, despite ongoing economic and geopolitical challenges.
• It expects to further increase its market presence in Shanghai with the Shanghai Jiuguang Center.
• The Group is committed to sustainable growth and strengthening its position as a leading lifestyle retailer.

Governance and Committees

• Chairman and CEO: Thomas Lau Luen Hung
• Non-Executive Director: Amy Chan Chor Ling
• Independent Non-Executive Directors: Cheung Mei Han, Cheung Yuet Man Raymond, Lam Kwong Wai
• Company Secretary: Poon Fuk Chuen
• Audit Committee: Lam Kwong Wai (Chairman), Cheung Mei Han, Cheung Yuet Man Raymond
• Remuneration Committee: Lau Luen Hung, Lam Kwong Wai (Chairman), Cheung Mei Han, Cheung Yuet Man Raymond
• Nomination Committee: Lau Luen Hung (Chairman), Cheung Mei Han, Cheung Yuet Man Raymond, Lam Kwong Wai

Additional Information

• Foreign Exchange Management: The Group does not currently require a comprehensive foreign currency hedging policy due to the majority of its transactions being denominated in RMB.
• Asset Pledge: Certain assets, including property, plant, and equipment, and investment property, were pledged to secure bank loans for the Shanghai Jiuguang Center.
• Contingent Liabilities: None were reported as of 31 December 2021.
• Significant Investments/Transactions: None were reported during the year.

Conclusion

The Group demonstrated resilience in 2021, achieving revenue growth and expanding its retail footprint in Shanghai. While net profit declined due to increased costs and one-off expenses, the Group remains focused on enhancing its competitive position through strategic expansion and digital transformation. It is well-positioned to capitalize on the evolving needs of China's middle-class consumers and continues to pursue sustainable growth in a challenging economic environment.