Fenbo Holdings Limited Reports Full Year 2023 Financial Result
Hong Kong, April 29, 2024 (GLOBE NEWSWIRE) -- Fenbo Holdings Limited (the "Company" or "Fenbo"), an established original equipment manufacturer (OEM) for a global home essential company, producing electrical hair styling products under the "Remington" brand which are currently sold to overseas markets, today announced its financial results for the full year ended December 31, 2023.
Full Year 2023 Financial Highlights
- Revenue remained relatively stable at HK$119.1 million (US$15.2 million) for the fiscal year ended December 31, 2023, slightly decreasing by HK$0.6 million, or 0.5% from HK$119.7 million for the same period in 2022.
- Gross profit was HK$22.1 million (US$2.8 million) for the fiscal year ended December 31, 2023, an increase of HK$3.3 million or 17.6% from HK$18.8 million for the same period in 2022, which, combined with an increase of general and administrative expenses, resulted in losses from operations of HK$0.4 million, a decrease in losses from operations of HK$2.1 million from the prior year.
- Gross profit margin for fiscal year ended December 31, 2023 rose to 18.6% as compared to gross profit margin of 15.7% for the fiscal year ended December 31, 2022.
- Net cash provided by operating activities was HK$9.7 million for fiscal year ended December 31, 2023, compared to HK$5.7 million during the same period in 2022.
Mr. Allan Li, Chairman and CEO of the Company commented: "We delivered another year of stable operation and financial performance for 2023, posting revenue of HK$119.1 million (US$15.2 million) for 2023, compared to HK$119.7 million for 2022. This increase in gross profit of HK$3.3 million combined with an increase in general and administrative costs, resulted in losses from operations decreasing by HK$2.1 million from the prior year to HK$0.4 million. Our gross margin also improved by nearly 3 percentage points for 2023 fiscal year."
"We closely monitor market dynamics, supply trends, and cost movements, enabling us to make informed decisions and optimize our purchasing strategies. We have successfully managed cost fluctuations in the past and expect to continue doing so in the future. Recognizing the importance of continuous improvement, we are committed to enhancing our product mix and quality to strengthen our competitive advantage and achieve higher margins. We’ll also enhance collaboration with our valuable client to expand in new and existing geographical markets in 2024."
"Looking ahead, we are confident in our ability to navigate market developments and proactively adjust our strategies to mitigate any adverse effects on our business, results of operations, and financial condition. We believe that our resilient approach will allow us to sustain our growth trajectory despite external challenges."
"We are optimistic about the opportunities that lie ahead. As our loss from operations continue to narrow, the Company is confident in our ability to improve profitability during 2024 through a combination of product optimization, quality enhancements, and strategic inventory management. We’ll also continue our efforts in the research and development of environment friendly products and packaging, and these positive steps should improve our financial performance and position us for growth in the long term."
Full Year 2023 Selected Financial Results
Revenues
Revenue decreased by HK$0.6 million, or 0.5%, to HK$119.1 million (US$15.2 million) for the fiscal year ended December 31, 2023 compared to HK$119.7 million for the same period in 2022 primarily because of the decrease in revenue for our curling wands and irons products.
The following table presented the Company’s revenues by product types for the fiscal years ended December 2023 and 2022:
| For the years ended December 31, | |||||||||
| 2023 | 2022 | ||||||||
| Revenues | HK$ Million | HK$ Million | Variance % | ||||||
| Products | |||||||||
| Curling Wands and Irons | HK$ | 32.8 | HK$ | 38.3 | (14.5 | )% | |||
| Flat Irons and Hair Straighteners | 82.8 | 78.6 | 5.3 | % | |||||
| Others | 3.5 | 2.8 | 27.6 | % | |||||
| Total revenues | 119.1 | 119.7 | (0.5 | )% | |||||
The following table presented the Company’s revenues by geographical areas based on the location of our sole customer for the fiscal years ended December 31, 2023 and 2022:
| For the years ended December 31, | |||||||||
| 2023 | 2022 | ||||||||
| Revenues | HK$ Million | HK$ Million | Variance % | ||||||
| Geographical areas | |||||||||
| Europe | HK$ | 65.4 | HK$ | 66.7 | (1.9 | )% | |||
| North America | 48.4 | 45.1 | 7.3 | % | |||||
| South America | - | 2.7 | (100 | )% | |||||
| Asia and others | 5.3 | 5.2 | 1.7 | % | |||||
| Total revenues | 119.1 | 119.7 | (0.5 | )% | |||||
Cost of sales
Cost of sales decreased to HK$97.0 million (US$12.4 million) for the fiscal year ended December 31, 2023, representing a decrease by HK$3.9 million from HK$100.9 million in the same period in 2022. The fluctuation of cost of sales was in line with the decrease in our revenue during the same period.
Gross profit
Gross profit for the fiscal year ended December 31, 2023, was HK$22.1 million (US$2.8 million), an increase of HK$3.3 million from HK$18.8 million for the same period in 2022.
During our fiscal year ended December 31, 2023, the COVID-19 Pandemic has been successfully brought under control and the adverse impacts of the pandemic have been gradually dissipating as economic activities resume to normal. The supply and prices of raw materials became stable during the year, and thus led to the decrease in the company’s average unit costs and increase in gross profit for the year.
The Company’s gross profit margin for fiscal year ended December 31, 2023 rose to 18.6% as compared to gross profit margin of 15.7% for the fiscal year ended December 31, 2022.
Selling and marketing expenses
Selling and marketing expenses was HK$2.0 million (US$0.3 million) for the fiscal year ended December 31, 2023, which decreased by HK$0.1 million from HK$2.1 million in the same period in 2022. The decrease during the fiscal year ended December 31, 2023 from the same period in 2022 was due mainly to a decrease in overall level of shipping of products.
General and administrative expenses
General and administrative expenses increased by HK$1.3 million to HK$20.5 million (US$2.6 million) for the fiscal year ended December 31, 2023 from HK$19.2 million for the fiscal year ended December 31, 2022. This increase was due mainly to the increase in staff costs and motor vehicles and travelling expenses as the travel restrictions of China and Hong Kong were lifted gradually during the fiscal year ended December 31, 2023.
Income (loss) from operations
Loss from operations decreased by HK$2.1 million to HK$0.4 million for the fiscal year ended December 31, 2023, from the loss from operations of HK$2.5 million for the fiscal year ended December 31, 2022. The improvement in the financial performance from operations during the fiscal year ended December 31, 2023 were primarily due to the combined effects of increase of gross profit of HK$3.4 million and the decrease of general and administrative expenses of HK$1.3 million during the fiscal year ended December 31, 2023.
Other income (expense), net
Major components of other income (expense) are exchange gain and loss, gain on disposal of property, plant and equipment, sundry income, government grant and bank interest income.
Other net income was HK$0.8 million (US$0.1 million) for the fiscal year ended December 31, 2023, which decreased by HK$12.2 million from HK$13.0 million in the same period in 2022. The decrease was due mainly to the decrease in gain on disposal of property, plant and equipment recognized during the fiscal year ended December 31, 2023.
Net income
The net income decreased by HK$10.1 million from a net income of HK$8.6 million for the year ended December 31, 2022 to a net loss of HK$1.5 million (US$0.2 million) for the fiscal year ended December 31, 2023. The decrease in the net income during the year ended December 31, 2023 was mainly attributable to the cumulative effect of the reasons set out above.
Recent development
The Company announced the closing of its initial public offering of 1,000,000 ordinary shares (the "Ordinary Shares") at a public offering price of $5.00 per share for total gross proceeds of $5,000,000, before deducting underwriting discounts and other offering expenses. The Ordinary Shares began trading on Nasdaq Capital Market on November 30, 2023, under the ticker symbol "FEBO".
About Fenbo Holdings Limited
Headquartered Hong Kong and through its operating subsidiaries in Hong Kong and Guangdong Province, Fenbo represents over 30 years of experience producing personal care electric appliances (principally electrical hair styling products) and toys products to overseas markets. The Company, since 2006 also has been served as an OEM and ODM for Spectrum Brands, a global home essential company, and its sole customer, producing electrical hair styling products, under the "Remington" brand which Spectrum Brands has the right of the use of, and which are currently sold to Europe, United States and Latin America. For more information, please visit: http://www.fenbo.com.
Forward-Looking Statement
This press release contains forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may, "will, "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. These forward-looking statements include, without limitation, the Company's statements regarding the expected trading of its Ordinary Shares on the Nasdaq Capital Market and the closing of the Offering. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions and the completion of the initial public offering on the anticipated terms or at all, and other factors discussed in the "Risk Factors" section of the registration statement filed with the SEC. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
For more information, please contact:
Investor Relations
WFS Investor Relations Inc.
Janice Wang, Managing Partner
Email: services@wealthfsllc.com
Phone: +86 13811768599
+1 628 283 9214
FENBO HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS
(Amount in thousands, except for share and per share data, or otherwise noted)
| As of December 31, | ||||||||||||||
| Note | 2022 | 2023 | 2023 | |||||||||||
| HK$’000 | HK$’000 | US$’000 | ||||||||||||
| (Note) | ||||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash | 13,853 | 46,342 | 5,933 | |||||||||||
| Accounts receivable, net | 3 | 32,938 | 31,486 | 4,031 | ||||||||||
| Deferred initial public offering cost | 1,903 | - | - | |||||||||||
| Inventories | 4 | 15,860 | 14,088 | 1,804 | ||||||||||
| Prepaid expenses and other current assets | 5 | 6,767 | 6,017 | 770 | ||||||||||
| Total current assets | 71,321 | 97,933 | 12,538 | |||||||||||
| Property, plant and equipment, net | 6 | 1,498 | 1,244 | 159 | ||||||||||
| Right-of-use assets | 7 | 7,117 | 3,801 | 487 | ||||||||||
| Total non-current assets | 8,615 | 5,045 | 646 | |||||||||||
| TOTAL ASSETS | 79,936 | 102,978 | 13,184 | |||||||||||
| Liabilities | ||||||||||||||
| Current liabilities | ||||||||||||||
| Bank loan – current | 9 | 11,000 | 11,000 | 1,408 | ||||||||||
| Accounts payable | 13,798 | 18,482 | 2,366 | |||||||||||
| Other payables and accrued liabilities | 8 | 5,799 | 7,049 | 904 | ||||||||||
| Lease liabilities – current | 7 | 5,626 | 4,060 | 520 | ||||||||||
| Amounts due to related parties | 10 | 5,117 | 2,413 | 309 | ||||||||||
| Total current liabilities | 41,340 | 43,004 | 5,507 | |||||||||||
| Non-current liabilities | ||||||||||||||
| Lease liabilities – non-current | 7 | 2,552 | 198 | 25 | ||||||||||
| TOTAL LIABILITIES | 43,892 | 43,202 | 5,532 | |||||||||||
| Commitments and contingencies | - | - | - | |||||||||||
| Shareholders’ equity | ||||||||||||||
| Preference shares US$0.0001 par value per share; 3,000,000 authorized capital; nil shares issued and outstanding | - | - | - | |||||||||||
| Ordinary shares US$0.0001 par value per share; 300,000,000 authorized capital; 11,000,000 shares issued and outstanding (2022: 10,000,000 shares issued and outstanding) | 13 | 8 | 9 | 1 | ||||||||||
| Additional paid-in capital | 2,492 | 28,494 | 3,648 | |||||||||||
| Statutory reserve | 13 | 2,806 | 2,806 | 359 | ||||||||||
| Retained earnings | 30,183 | 28,721 | 3,677 | |||||||||||
| Accumulated other comprehensive income | 555 | (254 | ) | (33 | ) | |||||||||
| Total shareholders’ equity | 36,044 | 59,776 | 7,652 | |||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 79,936 | 102,978 | 13,184 | |||||||||||
FENBO HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amount in thousands, except for share and per share data, or otherwise noted)
| For the year ended December 31, | ||||||||||||||
| Note | 2022 | 2023 | 2023 | |||||||||||
| HK$’000 | HK$’000 | US$’000 | ||||||||||||
| (Note) | ||||||||||||||
| Revenues | 119,728 | 119,110 | 15,249 | |||||||||||
| Cost of sales | (100,892 | ) | (97,004 | ) | (12,419 | ) | ||||||||
| Gross profit | 18,836 | 22,106 | 2,830 | |||||||||||
| Operating expenses: | ||||||||||||||
| Selling and marketing expenses | (2,057 | ) | (1,961 | ) | (251 | ) | ||||||||
| General and administrative expenses | (19,239 | ) | (20,535 | ) | (2,629 | ) | ||||||||
| Total operating expenses | (21,296 | ) | (22,496 | ) | (2,880 | ) | ||||||||
| Income from operations | (2,460 | ) | (390 | ) | (50 | ) | ||||||||
| Other (expense) income: | ||||||||||||||
| Exchange (loss) gain, net | - | 213 | 27 | |||||||||||
| Gain (loss) on disposal of property, plant and equipment | 12,458 | (1 | ) | - | ||||||||||
| Interest income | 20 | 84 | 11 | |||||||||||
| Interest expense | (1,581 | ) | (1,708 | ) | (219 | ) | ||||||||
| Government grant | - | 205 | 26 | |||||||||||
| Other income, net | 528 | 266 | 34 | |||||||||||
| Total other (expense) income | 11,425 | (941 | ) | (121 | ) | |||||||||
| Income (expense) before tax expense | 8,965 | (1,331 | ) | (171 | ) | |||||||||
| Income tax expense | 12 | (312 | ) | (131 | ) | (17 | ) | |||||||
| Net income (loss) | 8,653 | (1,462 | ) | (188 | ) | |||||||||
| Other comprehensive income | ||||||||||||||
| Foreign currency translation loss, net of taxes | (2,575 | ) | (809 | ) | (104 | ) | ||||||||
| Total comprehensive income (loss) | 6,078 | (2,271 | ) | (292 | ) | |||||||||
| Net income (loss) per share attributable to ordinary shareholders | ||||||||||||||
| Basic and diluted (cents) | 13, 14 | 86.53 | (14.50 | ) | (1.86 | ) | ||||||||
| Weighted average number of ordinary shares used in computing net income (loss) per share | ||||||||||||||
| Basic and diluted | 13, 14 | 10,000,000 | 10,084,932 | 10,084,932 | ||||||||||
FENBO HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amount in thousands, except for share and per share data, or otherwise noted)
| For the year ended December 31, | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| HK$’000 | HK$’000 | US$’000 | ||||||||||
| (Note) | ||||||||||||
| Operating activities | ||||||||||||
| Net income (loss) | 8,653 | (1,462 | ) | (188 | ) | |||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||
| Depreciation | 702 | 506 | 65 | |||||||||
| Amortization of right to use assets | 4,862 | 5,410 | 693 | |||||||||
| Interest on lease liabilities | 469 | 313 | 40 | |||||||||
| (Gain) loss on disposal of property, plant and equipment | (12,458 | ) | 1 | - | ||||||||
| Change in operating assets and liabilities: | ||||||||||||
| Change in accounts receivable | 10,228 | 789 | 101 | |||||||||
| Change in inventories | 4,217 | 1,475 | 189 | |||||||||
| Change in prepaid expenses and other current assets | (2,977 | ) | 2,526 | 323 | ||||||||
| Change in accounts payable | (2,253 | ) | 5,073 | 649 | ||||||||
| Change in other payables and accrued liabilities | 267 | 1,398 | 179 | |||||||||
| Payments on lease | (6,015 | ) | (6,301 | ) | (807 | ) | ||||||
| Net cash provided by operating activities | 5,695 | 9,728 | 1,244 | |||||||||
| Investing activities | ||||||||||||
| Purchase of property, plant and equipment | (554 | ) | (284 | ) | (36 | ) | ||||||
| Net cash used in investing activities | (554 | ) | (284 | ) | (36 | ) | ||||||
| Financing activities | ||||||||||||
| Proceeds from issuance of ordinary shares | - | 26,003 | 3,329 | |||||||||
| Advances (to) from related parties | 5,034 | (2,704 | ) | (346 | ) | |||||||
| Net cash provided by financing activities | 5,034 | 23,299 | 2,983 | |||||||||
| Net increase in cash | 10,175 | 32,744 | 4,191 | |||||||||
| Effect on exchange rate change on cash | (318 | ) | (255 | ) | (34 | ) | ||||||
| Cash as of beginning of the year | 3,996 | 13,853 | 1,776 | |||||||||
| Cash as of the end of the year | 13,853 | 46,342 | 5,933 | |||||||||
| Supplementary Cash Flows Information | ||||||||||||
| Cash paid for interest | 1,581 | 1,708 | 219 | |||||||||
| Cash paid (refund) for taxes | 3,492 | (196 | ) | (25 | ) | |||||||
| Supplemental schedule of non-cash investing and financing activities: | ||||||||||||
| Dividend made by addition to the amount due to related parties | (10,000 | ) | - | - | ||||||||
| Consideration for the sale of property to the shareholder settled by deduction from the amount due to the related parties | 13,880 | - | - | |||||||||
