2022 Annual Report

2022

Annual Report

Goodbaby International Holdings Limited

(Incorporated in the Cayman Islands with limited liability)

www.gbinternational.com.hk

Stock Code: 1086

Goodbaby

CONTENTS

GOODBABY 1

Annual Report 2022

CORPORATE INFORMATION 2

CHAIRMAN’S STATEMENT 5

MANAGEMENT DISCUSSION & ANALYSIS 12

DIRECTORS & SENIOR MANAGEMENT 27

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 37

CORPORATE GOVERNANCE REPORT 116

REPORT OF THE BOARD OF DIRECTORS 135

INDEPENDENT AUDITOR’S REPORT 156

CONSOLIDATED STATEMENT OF

PROFIT OR LOSS 161

CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME 162

CONSOLIDATED STATEMENT OF

FINANCIAL POSITION 163

CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY 165

CONSOLIDATED STATEMENT OF CASH FLOWS 166

NOTES TO FINANCIAL STATEMENTS 168

FIVE YEAR FINANCIAL SUMMARY 284

GOODBABY

Corporate

Information

CORPORATE INFORMATION

GOODBABY 3

Annual Report 2022

CORPORATE INFORMATION

DIRECTORS

EXECUTIVE DIRECTORS

Mr. Song Zhenghuan (Chairman)

Mr. Liu Tongyou (current Chief Executive Officer)

Mr. Martin Pos (former Chief Executive Officer

until 21 March 2023)

Mr. Xia Xinyue

Mr. Michael Nan Qu

NON-EXECUTIVE DIRECTORS

Ms. Fu Jingqiu

Mr. Ho Kwok Yin, Eric

INDEPENDENT NON-EXECUTIVE DIRECTORS

Ms. Chiang Yun

Mr. Shi Xiaoguang

Mr. Jin Peng

Mr. So Tak Young

AUDIT COMMITTEE

Ms. Chiang Yun (Chairlady)

Mr. Shi Xiaoguang

Mr. So Tak Young

NOMINATION COMMITTEE

Ms. Chiang Yun (Chairlady)

Mr. Shi Xiaoguang

Mr. So Tak Young

REMUNERATION COMMITTEE

Ms. Chiang Yun (Chairlady)

Mr. Shi Xiaoguang

Mr. So Tak Young

AUDITORS

Ernst & Young

Certified Public Accountants

Registered Public Interest Entity Auditor

27/F, One Taikoo Place

979 King’s Road

Quarry Bay

Hong Kong

PRINCIPAL SHARE REGISTRAR

Suntera (Cayman) Limited

Suite 3204, Unit 2A, Block 3, Building D

P.O. Box 1586, Gardenia Court

Camana Bay, Grand Cayman, KY1-1100

Cayman Islands

HONG KONG BRANCH SHARE

REGISTRAR

Computershare Hong Kong

Investor Services Limited

Shops 1712-1716, 17th Floor

Hopewell Centre

183 Queen’s Road East

Wan Chai

Hong Kong

GOODBABY

CORPORATE INFORMATION

Annual Report 2022

CORPORATE INFORMATION

REGISTERED OFFICE

Cricket Square

Hutchins Drive

P.O. Box 2681

Grand Cayman

KY1-1111

Cayman Islands

HEAD OFFICE

28 East Lufeng Road, Lujia Town

Kunshan City

Jiangsu Province, 215331

PRC

PRINCIPAL PLACE OF BUSINESS IN

HONG KONG

Room 2502, 25/F.

Tung Chiu Commercial Centre

193 Lockhart Road

Wan Chai

Hong Kong

COMPANY SECRETARY

Ms. Ho Wing Tsz, Wendy

AUTHORIZED REPRESENTATIVES

Mr. Song Zhenghuan

Ms. Ho Wing Tsz, Wendy

WEBSITE

www.gbinternational.com.hk

STOCK CODE

1086

Chairman’s

Statement

GOODBABY

CHAIRMAN’S STATEMENT

Annual Report 2022

CHAIRMAN’S STATEMENT

“Despite extremely volatile global environment, the Group’s profitability began to rebound in

the second half of the year, reflecting the resilience of the Group’s overall operations.”

Dear shareholders and investment analysts,

The year 2022 saw a downturn in the global economy that seriously affected consumer travel and consumer

confidence. It was the result of a series of factors that included the rampant pandemic, geopolitical

conflicts, supply chain disruptions and high inflation. Both the revenue and profit of the Group (“Goodbaby

International Holdings Limited, together with its subsidiaries”) were severely affected as a result. Under the

direct impact of strict pandemic lockdowns and control measures, our business in the China market recorded

a significant decline. However, the Group’s diversified brand portfolio and globally balanced footprint have

minimized risks associated with any single territory. During the Period (“the year ended 31 December 2022”),

the Group undertook measures to reduce costs and increase efficiency. Despite a decline in revenue, our

profitability began to rebound in the second half of the year, reflecting the resilience of the Group’s overall

operations.

In 2022, the Group recorded sales revenue of approximately HK$8,292.2 million, representing a decrease of

14.4% (a 10.9% decrease on a constant currency basis) from approximately HK$9,692.1 million in 2021. Due to

this decline in revenue, the Group’s gross profit also recorded a year-on-year decrease. These factors placed

the Group’s profitability under pressure, and we experienced a relatively significant decline in profitability.

CHAIRMAN’S STATEMENT

GOODBABY 7

Annual Report 2022

CHAIRMAN’S STATEMENT

“CYBEX further enhanced its leading position as a premium global “technical-lifestyle” brand.”

CYBEX achieved sales revenue of approximately HK$3,285.3 million, representing a year-on-year decrease

of 2.9% (a 7.3% increase on a constant currency basis). Consumer demand for CYBEX remained strong,

contributing to a very positive start in the first quarter with strong revenue growth. From the second quarter

on, however, revenue was hampered by continuing global supply chain disruptions, unfavorable exchange

rate fluctuations and regional geopolitical conflicts.

Overall, CYBEX outperformed its competitors and continued to increase its market share. Following its

launch in 2021 of the world’s first integrated full body airbag car seat Anoris T i-Size, during the Period this

product received the highest rating in the test organized by Stiftung Warentest (䗝㕜㉀ㅷ庠鑐㛇ꆃ剙) and

Allgemeiner Deutscher Automobil Club (䗝㕜导鮦⥡坽鿇, ADAC). Anoris has significantly raised the threshold

for industry innovation and consolidated the position of CYBEX as an industry benchmark for innovation.

During the Period, CYBEX products received one “Very Good” rating and five “Good” ratings in the ADAC

test, four Red Dot Design Awards (秊럊鏣鎘柿), and five German Design Awards (䗝㕜鏣鎘柿), reinforcing the

brand’s innovation leadership position. CYBEX’s innovative and fashionable product portfolio has attracted

numerous enthusiastic consumers. CYBEX has also been showcasing and enhancing its brand strength

through its own flagship stores and via social media marketing, and continuing to expand its omni-channel

distribution network around the world to tap market potential there and further enhance its leading position as

a premium global “technical-lifestyle” brand.

GOODBABY

CHAIRMAN’S STATEMENT

Annual Report 2022

CHAIRMAN’S STATEMENT

“In the face of critical developments, gb continued to right-size its operations and focus on

business transformation.”

gb experienced unprecedented challenges during the Period. The brand recorded sales revenue of

approximately HK$1,473.4 million, a year-on-year decrease of 35.9% (a 34.0% decrease on a constant

currency basis). During the Period, in its key China market, strict pandemic prevention and control measures

led to offline retail store closures, a sharp decrease in offline traffic and logistics disruptions, all of which

seriously weakened consumer confidence and hit the brand’s online and offline businesses hard. At the same

time, the continued decline in China’s birth rate has been putting further pressure on the brand’s business

development.

In the face of these critical developments, gb continued to right-size its operations and focus on business

transformation. Its efforts led to improvements in the brand’s gross profit margin year-on-year, as well as

continuous enhancements to its product research and development (“R&D”) and design capabilities. During

the Period, the brand won a total of eight world-class industrial design awards, namely five IDA Design

Awards from the United States, two G-MARK Design Awards from Japan, and one iF Design Award from

Germany. It further upgraded its new generation of flagship stores, and enriched the brand’s retail strategy.

CHAIRMAN’S STATEMENT

GOODBABY 9

Annual Report 2022

CHAIRMAN’S STATEMENT

“Evenflo achieved record revenue due to its strong growth from the digital channels and

innovative products that were warmly welcomed by the market and consumers.”

Evenflo achieved sales revenue of approximately HK$2,304.7 million in the Period, representing a year-on-

year increase of 16.2% (a 13.9% increase on a constant currency basis). Driven by outstanding performances

by its range of innovative products, Evenflo outperformed the overall US juvenile market, increasing its

market share. The brand’s digital channel grew strongly, and its new products were warmly welcomed by the

market and consumers. However, continued global supply chain disruptions and high external costs during

the Period, coupled with the impact of widespread destocking by major retailers in the United States in the

fourth quarter, meant that the full revenue potential of the brand was not realized, and profitability was

affected.

As the market has recognized Evenflo’s innovative products and the brand has increased its market share,

the average selling price of Evenflo products has increased significantly, as have its brand image and

premium. Evenflo will continue to upgrade its product portfolio, strengthen its brand marketing strategies,

and improve its digital operations. In particular, it will fully utilize the Group’s integrated “One-Dragon”

platform resources and optimize the synergies between the Group’s manufacturing bases in China, the

United States and Mexico to maintain strong growth momentum and further enhance its market position.

GOODBABY

CHAIRMAN’S STATEMENT

Annual Report 2022

CHAIRMAN’S STATEMENT

“The Group built strong competitive strength by leveraging its vertically integrated

One-Dragon platform.”

During the Period, our revenue from the Blue Chip business decreased due to weaker consumer demand and

lower orders as a result of destocking by major customers and retailers. Regardless, the Group will continue

to provide its Blue Chip customers with excellent service, manufacturing support, quality management,

on-time delivery and new product development that efficiently meets their needs. The Group maintains

stable relationships with its Blue Chip customers.

The Group’s R&D and innovation activities have continued to progress, with several new disruptive products

entering the engineering phase of development and a new batch of innovative projects being launched

during the Period. The Group applied for 410 patents in the Period, bringing its cumulative total of patent

applications to 12,334. Some of the Group’s products achieved the highest rating in the history of ADAC

tests, and took out four Red Dot Design Awards, one iF Design Award (iF鏣鎘柿), five IDA Design Awards,

two G-Mark Design Awards (G-Mark鏣鎘柿) and five German Design Awards. This total of seventeen world-

class awards demonstrate the Group’s innovation leadership in the global juvenile products industry.

The Group made good progress with its manufacturing supply chain management during the Period.

It further improved its organizational structure, completed its management system and upgraded its

technical capability. Its digitalization process has been accelerated, its team cohesion enhanced, and its ESG

framework further implemented. The Group’s supply chain function has achieved excellent results in quality,

delivery and service, coping effectively with the challenges of the pandemic and many other uncertainties

and providing strong momentum for our business.

In the field of global standard-setting, the Group’s experts are the rotating chairman of the ISO/TC 310

Children’s Products Technical Committee, and are entitled to convene two of the four ISO/TC 310 working

groups. The Group’s experts have been working with global partners to formulate international standards

for various types of children’s products. During the Period, the Group’s experts led or participated in the

formulation and revision of 40 domestic and international standards, 10 of which have been published. By

the end of 2022, the Group’s experts had in total been involved in formulating or revising 272 standards, 227

of which have been published.

The Group’s Anoris T i-Size car seat received the highest rating in the test

organized by independent consumer testing organization ADAC

CHAIRMAN’S STATEMENT

GOODBABY 11

Annual Report 2022

CHAIRMAN’S STATEMENT

Various negative factors are expected to continue to affect global economic activities in 2023. However,

as the Chinese government optimizes its pandemic prevention and control policies, China’s economic

activities accelerate and the global logistics supply chain situation stabilizes, the economy should gradually

recover. This will have a positive impact on the Group’s overall business development. Planned management

adjustments will further optimize our resource allocation, enabling the Group to focus more closely on

quality business development and implement its development strategy.

In the past few years, multiple factors have impacted on the Group’s business and led to significant

fluctuations. On behalf of the Board, I would like to express my gratitude to our shareholders, employees

and partners for their continued trust and support through these times. We will remain true to our original

aspirations, working hard to create greater value for our shareholders, our employees, and society as a

whole.

We look forward to your continued support.

Thank you!

Song Zhenghuan

Chairman

28 March 2023

Management

Discussion & Analysis

GOODBABY

MANAGEMENT DISCUSSION & ANALYSIS

GOODBABY 13

Annual Report 2022

MANAGEMENT DISCUSSION & ANALYSIS

OVERVIEW

THE GROUP ACHIEVES PROFITABILITY

MOMENTUM DESPITE GLOBAL MACRO

ENVIRONMENT CHALLENGES

The Group successfully navigated through many

varied challenges that prevailed throughout the

Period, including pandemic-related lockdowns in

China, dramatic and unprecedented logistics and

inflation related costs outside China, continued

global supply chain disruptions, a fourth quarter

inventory destocking period by North American

retailers and overall shaken global consumer

confidence due to the pandemic, regional

geopolitical conflicts and elevated inflation along

with the continued sharp decline in birth rate in

China.

Due to these global and regionally specific

challenges, the Group’s revenue and profitability

were both strongly impacted. However, thanks

to the strong competitive strengths built on its

vertically integrated “One-Dragon” platform of

own brands, omni-channel distribution platforms,

own manufacturing and operational services,

balanced brand mix and geographic footprints, the

Group as a whole weathered these unprecedented

storms. During the Period, the Group implemented

competitive price increases, initiated cost reduction

measures and efficiency improvement measures

in all business units and focused on profitability

improvement and cashflow management while

maintaining prudent investments in innovation.

As a result, the Group managed to record positive

full-year net profit in the extremely volatile

global environment and generated an operating

profitability rebound and strong operating cashflow

in the second half of the year, showcasing the

Group’s resilience.

Key highlights of our Group’s performance during

the Period include:

1. Recorded positive full-year net profit with

operating profitability rebound in the second

half of 2022 versus the second half of 2021

and versus the first half of 2022 and strong

operating cashflow in the second half of 2022;

2. Increased market share in Europe, North

America and Japan;

3. Competitive price increases implemented in the

second half of the year improved profitability

due to the strength of our respective brands;

4. Strength of the Group’s One-Dragon

vertically integrated platform of own brands,

omni-channel distribution platforms, own

manufacturing and operational services enabled

the Group to absorb significant negative

developments and thus outperform competition;

5. Our diversified portfolio of brands and

balanced global footprint minimized risk in any

one territory and resulted in a strong global

competitive advantage;

6. Strategic and dedicated investments in

innovation to maintain competitive strength;

7. Continued to extend own D2C online retail

platforms in key markets and extended our

international wholesale distribution platform.

GOODBABY

MANAGEMENT DISCUSSION & ANALYSIS

Annual Report 2022

MANAGEMENT DISCUSSION & ANALYSIS

Our revenue for the Period decreased by 14.4% to approximately HK$8,292.2 million from approximately

HK$9,692.1 million for the corresponding period in 2021. During the Period, foreign exchange rate fluctuations

impacted the overall revenue growth. On a constant currency basis, our revenue for the Period recorded

a 10.9% decrease compared to the corresponding period in 2021. Our reported gross profit decreased by

16.0% to approximately HK$3,355.9 million for the Period from approximately HK$3,995.2 million for the

corresponding period in 2021. Our reported operating profit decreased by 39.3% to approximately HK$100.8

million from approximately HK$166.0 million for the corresponding period in 2021 and our reported net profit

decreased by 68.6% to approximately HK$40.1 million for the Period from approximately HK$127.6 million

for the corresponding period in 2021. Additionally, on a non-GAAP basis, our operating profit decreased

by 38.9% to approximately HK$146.9 million for the Period from approximately HK$240.6 million for the

corresponding period in 2021 and our net profit decreased by 58.9% to approximately HK$79.0 million for

the Period from approximately HK$192.4 million for the corresponding period in 2021.

Summary of the Group’s strategic brands and Blue Chip business revenues:

For the year ended 31 December

Change (%)

Change on a constant

currency basis (%)

2022

2021

(HK$ million)

Group Revenue $8,292.2 $9,692.1 –14.4% –10.9%

Amount % of Revenue Amount % of Revenue Change (%)

Change on a constant

currency basis (%)

Strategic Brands $7,063.4 85.2% $7,665.7 79.1% –7.9% –3.4%

CYBEX 3,285.3 39.6% 3,384.5 34.9% –2.9% 7.3%

gb 1,473.4 17.8% 2,298.6 23.7% –35.9% –34.0%

Evenflo 2,304.7 27.8% 1,982.6 20.5% 16.2% 13.9%

Blue Chip $874.7 10.5% $1,535.5 15.8% –43.0% –43.1%

EXECUTIVE SUMMARY

During the Period, the Group’s strategic brands performed as follows:

• CYBEX brand recorded a slight revenue decrease of 2.9% (a 7.3% increase on a constant currency

basis) in the Period to approximately HK$3,285.3 million from approximately HK$3,384.5 million for the

corresponding period in 2021. Consumer demand remained strong, contributing to very strong revenue

growth in the first quarter; however, revenue development was tempered thereafter due to product

availability challenges resulting from factory shutdowns in China in the second quarter, ongoing global

supply chain disruptions, volatile consumer confidence resulting from geopolitical conflicts in Europe and

high inflation, and unfavorable foreign exchange fluctuations. The brand fundamentals remained robust

backed by its strong brand position, disruptive and innovative product portfolio and new launches. As a

leading premium brand, CYBEX continued to provide unique premium consumer experience by offering

creative and quality services and products through its continuous expansion of global omni-channel

distribution network, including the successful owned e-commerce platform. During the Period, CYBEX

was awarded 1 “very good” rating and 5 “good” ratings in ADAC, 4 Reddot design awards and 5 German

Design awards. These were part of its efforts to constantly hone CYBEX’s brand image and to provide

exceptional and innovative products across a range of consumer touchpoints amidst the external

turbulences and disruptions. As a result, CYBEX continued to outperform its competitors and increase

its market share in all key markets.

MANAGEMENT DISCUSSION & ANALYSIS

GOODBABY 15

Annual Report 2022

• gb brand recorded a decrease in revenue

of 35.9% (a 34.0% decrease on a constant

currency basis) in the Period to approximately

HK$1,473.4 million from approximately

HK$2,298.6 million for the corresponding period

in 2021. In its key China market, consistent

pandemic-related lockdowns and restrictions

throughout the Period caused offline store and

warehouse closures, significantly disrupted

logistic deliveries, suspended wholesale

activities and weakened consumer confidence

across the country. During the Period, China’s

birth rate experienced another deep decline.

These factors combined severely impacted the

brand’s revenue both online and offline as well

as its profitability. During the Period, the gb

brand executed aggressive remediation actions

to continue its business right-sizing and brand

transformation and focused on profitability

improvement and cashflow management.

Notwithstanding the challenges during the

Period, gb received several international

design awards in recognition of its steadfast

commitment of continued investment in

product development, innovation and design.

• Evenflo brand achieved record revenue with

a growth rate of 16.2% (a 13.9% increase

on a constant currency basis) in the Period

to approximately HK$2,304.7 million from

approximately HK$1,982.6 million for the

corresponding period in 2021. The brand’s

strong growth momentum, though partially

offset by a significant order downturn in

the fourth quarter due to overall inventory

destocking by major retailers in the United

States, was primarily driven by its growth

in digital channels and strong consumer

acceptance of innovative products, elevated

product portfolio and elevated brand image.

Evenflo outperformed the competition

and increased its market share. The brand

absorbed significant excess freight costs

during the Period, which was partially offset

by competitive price increases implemented

in the second half of the year. The successfully

improved product mix has contributed to gross

margin improvement and average selling price

increase.

During the Period, our Blue Chip business

recorded a significant revenue decrease of 43.0%

(a 43.1% decrease on a constant currency basis)

to approximately HK$874.7 million as compared

to approximately HK$1,535.5 million for the

corresponding period in 2021. The revenue decrease

was primarily attributable to order slowdowns

caused by customer and retailer inventory

destocking due to global logistic challenges and

weakening consumer demands amidst a volatile

macro environment. The Group’s relationship with

its Blue Chip customers remained stable.

GOODBABY

MANAGEMENT DISCUSSION & ANALYSIS

Annual Report 2022

MANAGEMENT DISCUSSION & ANALYSIS

During the Period, the Group’s revenue from

other business units including the Group’s

tactical brands approximated HK$354.1 million as

compared to approximately HK$490.9 million in the

corresponding period of 2021. The 27.9% decrease

(a 28.1% decrease on a constant currency basis) was

caused by COVID-19 related impacts combined with

continued portfolio rationalization.

OUTLOOK

AS PANDEMIC-RELATED RESTRICTIONS IN CHINA

CONTINUE TO BE LIFTED, GLOBAL SUPPLY

CHAIN DISRUPTIONS HAVE STABILIZED, AND

THE WORLD MACRO ECONOMIC ENVIRONMENT

STARTS TO SHOW SIGNS OF RECOVERY, THE

GROUP EXPECTS ITS BUSINESS TO REBOUND.

The Group will continue its focused strategy in

strategic brands of CYBEX, gb and Evenflo and the

ongoing development of the Blue Chip business.

CYBEX will generate robust global revenue growth

momentum across all key geographic regions and

increase its market share in the post-pandemic

era driven by its innovative product portfolio, new

and disruptive product launches, new category

extensions, strengthened supply chain capabilities

and expansion of omni-channels (including national

distribution platforms and own digital platforms) in

new geographic territories. That said, uncertainties

from geopolitical conflict in Europe resulting in

consumer insecurities remain a concern.

gb brand will continue to right-size and modernize

its online/offline omni-channel structure, and will

continue its brand upgrade, expansion of digital

and social media-based channels, the reformation

of its wholesale distribution channel and its focus

on product innovation, technologies and new

product launches. We will continue to precisely

invest in and execute our digital transformation to

strengthen customer engagement in all owned-

channels, upgrade our retail store concepts working

in concert with our cloud retail system to provide

deeper engagement and immersive experience with

consumers.

Evenflo will continue to drive revenue and market

share growth in both online and offline channels

based on strong consumer reception to its

innovative product portfolio; it will launch new and

more profitable products, and continue to fulfill

new awards of business from major retailers as the

brand is being recognized for its commitment to

overall brand enhancement and product innovation.

However, the risk of high inflation in the United

States could hamper consumer confidence.

On a global basis, we will continue to invest in B2C

platforms through our own national distribution

platforms in existing and new markets to ensure

we maintain a direct relationship with our fans and

consumers and provide them with a world class

online experience. We will continue to optimize

our supply chain strategies as we embrace supplier

partnerships and broaden our global footprint

to ensure we are quicker to market and leverage

regional capabilities. World class manufacturing,

supply chain excellence and cost optimization will

always remain the core of our vision of leading the

global juvenile eco-system and achieving sustained

profitable growth. We will continue to put strong

focus in improving profitability and cashflow

management across all our business units.

MANAGEMENT DISCUSSION & ANALYSIS

GOODBABY 17

Annual Report 2022

Our global management team has gained tremendous experience and skills in addressing crisis and turning

them into opportunities in our execution of measures to mitigate negative impacts from the pandemic in the

past three years. While sticking to our fundamental strategic priorities of brand building, the organization

has become swifter and more open to adapt to any unexpected situation and always prepared for the

new and the future. The Group has never stopped investments in innovation even in the difficult days and

constantly created disruptions that have reshaped the industry as it is fully aware of the importance of

this underpinning strength. While we will continue to remain vigilant given the risk of high inflations and

ongoing regional geopolitical conflicts and uncertainties it may incur, we are confident that our strong global

One-Dragon vertically integrated model is the key foundational element to continue to achieve significant

accomplishments in all environments.

FINANCIAL REVIEW

REVENUE

For the Period, the total revenue of the Group decreased by 14.4% to approximately HK$8,292.2 million from

approximately HK$9,692.1 million for the corresponding period in 2021. During the Period, foreign exchange

rate fluctuations impacted the overall revenue growth. On a constant currency basis, our revenue for the

Period recorded a 10.9% decrease compared to the corresponding period in 2021.

The table below sets out the revenue by business format for the periods indicated.

For the year ended 31 December

Change (%)

Change on a constant

currency basis (%)

2022

2021

(HK$ million) Revenue % of revenue Revenue % of revenue

Group’s own brand and

retailer private label businesses 7,417.5 89.5 8,156.6 84.2 –9.1% –4.8%

– APAC 2,066.6 24.9 2,994.6 30.9 –31.0% –28.2%

– EMEA 2,914.4 35.1 2,979.1 30.8 –2.2% 8.2%

– Americas 2,436.5 29.5 2,182.9 22.5 11.6% 9.4%

Blue Chip business 874.7 10.5 1,535.5 15.8 –43.0% –43.1%

Total 8,292.2 100.0 9,692.1 100.0 –14.4% –10.9%

GOODBABY

MANAGEMENT DISCUSSION & ANALYSIS

Annual Report 2022

MANAGEMENT DISCUSSION & ANALYSIS

The 9.1% decrease (4.8% decrease on a constant

currency basis) of the Group’s own brands and

retailer private label businesses was attributable to

the combination result of growth of our strategic

brands CYBEX and Evenflo on a constant currency

basis, as well as the revenue decline of brand

gb, for more information about performances by

brand, please refer to Executive Summary of this

Management Discussion and Analysis section.

• In region APAC, we recorded revenue from

China market of approximately HK$1,616.2

million in the Period against approximately

HK$2,515.3 million in the corresponding period

in 2021, a decrease of 35.7% (a decrease

of 33.7% on a constant currency basis).

The decrease in region APAC was mainly

attributable to the decrease in revenue from our

core strategic brand gb in China. The revenue

from APAC markets outside China remained

stable on a constant currency basis.

• In region EMEA, we recorded revenue of

approximately HK$2,914.4 million for the Period,

a decrease of 2.2% (8.2% increase on a constant

currency basis) from approximately HK$2,979.1

million for the corresponding period in 2021. The

growth in region EMEA on a constant currency

basis was mainly attributable to the increase in

revenue from our core strategic brand CYBEX.

• In region Americas, we recorded revenue

of approximately HK$2,436.5 million in the

Period, an increase of 11.6% (9.4% increase on

a constant currency basis) from approximately

HK$2,182.9 million for the corresponding period

in 2021. The increase was mainly attributable to

the increase in revenue from our core strategic

brand Evenflo.

During the Period, our Blue Chip business recorded

a decrease of 43.0% (43.1% decrease on a constant

currency basis) to approximately HK$874.7

million as compared to approximately HK$1,535.5

million for the corresponding period in 2021.

The revenue decrease was primarily attributable

to order slowdowns caused by customer and

retailer inventory destocking due to global logistic

challenges and weakening consumer demands

amidst a volatile macro environment. The Group’s

relationship with its Blue Chip customers remained

stable.

COST OF SALES, GROSS PROFIT AND GROSS

PROFIT MARGIN

Cost of sales decreased by 13.4% to approximately

HK$4,936.3 million for the Period from

approximately HK$5,696.9 million for the

corresponding period in 2021. Gross profit for the

Group decreased to approximately HK$3,355.9

million for the Period from approximately

HK$3,995.2 million for the corresponding period

in 2021, and the gross profit margin decreased by

0.7 percentage points to 40.5% for the Period from

approximately 41.2% for the corresponding period

in 2021. Gross profit decline was primarily driven by

decrease in revenue, caused by ongoing pandemic

related lockdowns in China and significant decrease

in Blue Chip revenues in the second half of the year,

and absorption of input costs partially offset by

price increases, while lack of product availability

due to global supply chain disruptions and overall

destocking by major US retailers in the last quarter

suppressed our own brands’ revenue in markets

outside China. Gross margin slightly declined due

primarily to negative impacts from input cost

increases, unfavorable forex movements and

unfavorable brand revenue mix, which were partially

offset by product price increases.

MANAGEMENT DISCUSSION & ANALYSIS

GOODBABY 19

Annual Report 2022

OTHER INCOME AND GAINS

Other income and gains of the Group increased by

approximately HK$84.6 million to approximately

HK$165.4 million for the Period as compared

to approximately HK$80.8 million for the

corresponding period in 2021, which was mainly

attributable to the increase in foreign exchange

gain, the increase in gain on disposal of fixed assets

and the increase in fair value gains on call/put

options over non-controlling interests.

SELLING AND DISTRIBUTION EXPENSES

The Group’s selling and distribution expenses

primarily consist of marketing expenses, personnel

costs, rental and commission and warehousing and

transportation costs. The selling and distribution

expenses decreased by approximately HK$403.8

million to approximately HK$2,072.4 million for the

Period from approximately HK$2,476.2 million for

the corresponding period in 2021. The decrease was

mainly attributable to:

a) the decrease in rental and commission paid in

retail channel to approximately HK$143.2 million

for the Period from approximately HK$260.1

million for the corresponding period in 2021;

b) the decrease in marketing expenses to

approximately HK$428.5 million for the Period

from approximately HK$517.9 million for the

corresponding period in 2021;

c) the decrease in personnel costs to

approximately HK$576.6 million for the Period,

compared to approximately HK$635.1 million in

the corresponding period in 2021;

d) the decrease in warehousing and transportation

costs to approximately HK$494.8 million for the

Period from approximately HK$542.3 million for

the corresponding period in 2021; and

e) the decrease in provision for product liabilities

costs to approximately HK$34.3 million for the

Period from approximately HK$66.4 million for

the corresponding period in 2021.

ADMINISTRATIVE EXPENSES

The Group’s administrative expenses primarily

consist of personnel costs, R&D costs, professional

service expenses, depreciation and amortization

cost and other office expenses. The administrative

expenses decreased by approximately HK$80.9

million to approximately HK$1,345.6 million for the

Period from approximately HK$1,426.5 million for

the corresponding period in 2021. The decrease was

mainly due to:

a) the decrease in personnel costs to

approximately HK$513.4 million for the Period

from approximately HK$574.1 million for the

corresponding period in 2021;

b) the decrease in the R&D costs to approximately

HK$407.0 million for the Period from

approximately HK$418.9 million for the

corresponding period in 2021; and

c) other administrative expenses remaining

relatively stable.

GOODBABY

MANAGEMENT DISCUSSION & ANALYSIS

Annual Report 2022

MANAGEMENT DISCUSSION & ANALYSIS

OTHER EXPENSES

Other expenses of the Group decreased to

approximately HK$2.4 million for the Period from

approximately HK$7.3 million for the corresponding

period in 2021. Other expenses of the Group

decreased by approximately HK$4.9 million, which

was mainly attributable to the decrease in foreign

exchange loss.

OPERATING PROFIT

As a result of the foregoing, the Group’s operating

profit decreased by approximately 39.3%, or

HK$65.2 million, to approximately HK$100.8 million

for the Period from approximately HK$166.0 million

for the corresponding period in 2021.

FINANCE INCOME

For the Period, the Group’s finance income

increased by approximately 22.5%, or HK$7.9

million, to approximately HK$43.0 million from

approximately HK$35.1 million for the corresponding

period in 2021. The Group’s finance income mainly

represents interest income from bank deposits.

FINANCE COSTS

For the Period, the Group’s finance costs increased

by approximately 52.2%, or HK$47.3 million, to

approximately HK$137.9 million from approximately

HK$90.6 million for the corresponding period in

2021. The increase was mainly attributable to rapid

increase of interest rate, especially LIBOR and

SOFR.

PROFIT BEFORE TAX

As a result of the foregoing, the profit before tax

of the Group decreased to approximately HK$1.2

million for the Period from approximately HK$111.8

million for the corresponding period in 2021.

INCOME TAX

The Group’s income tax was a credit of

approximately HK$38.9 million for the Period,

and the income tax was a credit of approximately

HK$15.8 million for the corresponding period in

2021. The increase in the income tax credit was

aligned with the decrease of the profit before tax of

the Group.

PROFIT FOR THE YEAR

Profit of the Group for the Period decreased

by 68.6% to approximately HK$40.1 million

from approximately HK$127.6 million for the

corresponding period in 2021.

The non-GAAP profit of the Group decreased by

approximately 58.9% to approximately HK$79.0

million for the Period from approximately HK$192.4

million for the corresponding period in 2021.

NON-GAAP FINANCIAL MEASURES

To supplement the consolidated results of the

Group prepared in accordance with IFRS, certain

non-GAAP financial measures, including non-GAAP

operating profit, non-GAAP operating margin,

non-GAAP profit before tax, non-GAAP profit for

the year and non-GAAP net margin, have been

presented in this announcement. The Company’s

management believes that the non-GAAP financial

measures provide investors with more clear

view on the Group’s financial results, and with

useful supplementary information to assess the

performance of the Group’s strategic operations

by excluding certain impact of certain non-cash

items, certain impact of merger and acquisition

transactions, certain one-off operating loss and

recognition of deferred tax expenses due to the

change of tax law. Nevertheless, the use of these

non-GAAP financial measures has limitations as an

analytical tool. These unaudited non-GAAP financial

measures should be considered in addition to, not as

a substitute for, analysis of the Company’s financial

performance prepared in accordance with IFRS. In

addition, these non-GAAP financial measures may

be defined differently from similar terms used by

other companies.

MANAGEMENT DISCUSSION & ANALYSIS

GOODBABY 21

Annual Report 2022

The following tables set forth the reconciliations of the Company’s non-GAAP financial measures for the

years ended 31 December 2022 and 2021 to the nearest measures prepared in accordance with IFRS:

Year Ended 31 December 2022

Adjustments

As reported

Equity-settled share

option expenses

Net fair value gains on call

and put options (a)

Amortization of

intangible assets (b)

Non-GAAP

(HK$ million)

Operating profit 100.8 15.2 –10.0 40.9 146.9

Profit before tax 1.2 15.2 –10.0 40.9 47.3

Profit for the year 40.1 15.2 –6.8 30.5 79.0

Operating margin 1.2% 1.8%

Net margin 0.5% 1.0%

Year Ended 31 December 2021

Adjustments

As reported

Equity-settled share

option expenses

Net fair value gains on call

and put options (a)

Amortization of

intangible assets (b)

Non-GAAP

(HK$ million)

Operating profit 166.0 35.5 –2.8 41.9 240.6

Profit before tax 111.8 35.5 –2.8 41.9 186.4

Profit for the year 127.6 35.5 –2.0 31.3 192.4

Operating margin 1.7% 2.5%

Net margin 1.3% 2.0%

Notes:

(a) Net fair value gains or losses on call options and put options granted to non-controlling shareholders of certain

subsidiaries of the Group.

(b) Amortization of intangible assets arising from acquisitions, net of related deferred tax.

GOODBABY

MANAGEMENT DISCUSSION & ANALYSIS

Annual Report 2022

MANAGEMENT DISCUSSION & ANALYSIS

WORKING CAPITAL AND FINANCIAL RESOURCES

As at

31 December 2022

As at

31 December 2021

(HK$ million)

Trade and notes receivables (including trade receivables due from related parties) 999.8 1,254.2

Trade and notes payables (including trade payables due to related parties) 1,170.4 1,637.2

Inventories 1,902.0 2,402.8

As at

31 December 2022

As at

31 December 2021

Trade and notes receivables turnover days

(1)

49 44

Trade and notes payables turnover days

(2)

102 98

Inventories turnover days

(3)

157 141

Notes:

(1) Trade and notes receivables turnover days = Number of days in the reporting period x (average balance of trade and

notes receivables at the beginning and at the end of the period)/revenue in the reporting period.

(2) Trade and notes payables turnover days = Number of days in the reporting period x (average balance of the trade and

notes payables at the beginning and at the end of the period)/cost of sales in the reporting period.

(3) Inventories turnover days = Number of days in the reporting period x (average balance of inventories at the beginning

and at the end of the period)/cost of sales in the reporting period.

The decrease of trade and note receivables was mainly attributable to the decrease of revenue. The increase

in trade and notes receivables turnover days was attributable to higher balance at the beginning of the

period.

The decrease of trade and note payables was mainly attributable to lower procurements near the end of

the Period than procurements near the end of previous year. The trade and notes payables turnover days

remained stable.

The decrease of inventories was mainly attributable to the lower level of inventory in transit and less delayed

shipments caused by instability of global logistics at the end of the Period as compared to year end 2021.The

increase of inventory turnover days was attributable to higher inventories balance at the beginning of the

period.

MANAGEMENT DISCUSSION & ANALYSIS

GOODBABY 23

Annual Report 2022

LIQUIDITY AND FINANCIAL RESOURCES

As at 31 December 2022, the Group’s monetary

assets, including cash and cash equivalents, time

deposits, pledged deposits and financial assets

designated at fair value through profit or loss, were

approximately HK$2,069.7 million (31 December

2021: approximately HK$2,256.1 million).

As at 31 December 2022, the Group’s interest-

bearing bank loans and other borrowings were

approximately HK$3,354.8 million (31 December

2021: approximately HK$3,517.5 million), including

short-term bank loans and other borrowings of

approximately HK$1,182.0 million (31 December

2021: approximately HK$1,223.1 million) and long-

term bank loans and other borrowings with

repayment terms ranging from two to three years

of approximately HK$2,172.8 million (31 December

2021: approximately HK$2,294.4 million).

As a result, as at 31 December 2022, the Group’s net

debt position was approximately HK$1,285.1 million

(31 December 2021: approximately HK$1,261.4

million).

CONTINGENT LIABILITIES

In the ordinary course of business, the Group may

from time to time be involved in legal proceedings

and litigations. The Group records a liability when

the Group believes that it is both probable that a

loss has been incurred by the Group and the amount

can be reasonably estimated. With respect to the

Group’s outstanding legal matters, notwithstanding

that the outcome of such legal matters is inherently

unpredictable and subject to uncertainties, the

Group believes that, based on its current knowledge,

the amount or range of reasonably possible loss

will not, either individually or in the aggregate, have

a material adverse effect on the Group’s business,

financial position, results of operations, or cash

flows.

EXCHANGE RATE FLUCTUATIONS

The Group is a multinational enterprise with

operations in different countries and the money that

it used to conduct its business and transaction is

denominated in various currencies, and the Group

uses Hong Kong dollar (“HK$”) as its reporting

currency, which is pegged to US$. The Group’s

revenue is mainly denominated in US$, RMB and

EUR. The Group’s procurement and OPEX are

mainly denominated in RMB, US$ and EUR. The net

exposures to foreign currency risks of the Group’s

operating results are mainly the US$ and EUR

revenue against RMB procurement and OPEX. The

Group would benefit from the appreciation of US$

and EUR against RMB but would suffer losses if US$

or EUR depreciates against RMB. The Group uses

forward contracts to eliminate the foreign currency

exposures.

PLEDGE OF ASSETS

As at 31 December 2022, bank deposits of

approximately HK$788.7 million (31 December 2021:

HK$805.6 million) were pledged for certain standby

letter of credit from banks and for guarantee.

Bank deposits of approximately HK$9.8 million (31

December 2021: HK$7.1 million) were pledged for

interest reserve. Nil (31 December 2021: HK$330.3

million) bank deposits were pledged for certain

long-term bank loans. Certain machinery amounting

to approximately HK$2.3 million (31 December 2021:

HK$5.8 million) was pledged to secure bank loan

granted to the Group.

GOODBABY

MANAGEMENT DISCUSSION & ANALYSIS

Annual Report 2022

MANAGEMENT DISCUSSION & ANALYSIS

GEARING RATIO

As at 31 December 2022, the Group’s gearing ratio

(calculated by net debt divided by the sum of

adjusted capital and net debt; the amount of net

debt is calculated by the sum of trade and bills

payables, other payables and accruals, payables

due to related parties and interest-bearing bank

loan and other borrowings (current and non-

current) less monetary assets, including cash and

cash equivalents, time deposits, pledged deposits

and financial assets designated at fair value through

profit or loss; the amount of adjusted capital is

calculated by equity attributable to owner of the

parent minus hedging reserve) was approximately

36.9% (31 December 2021: approximately 38.6%),

or 39.0% after taking into consideration the impact

of IFRS 16) (as at 31 December 2021: approximately

40.4%).

EMPLOYEES AND REMUNERATION POLICY

As at 31 December 2022, the Group had a total

of 7,357 full-time employees (31 December 2021:

8,826). For the Period, costs of employees, excluding

Directors’ emoluments, amounted to a total of

approximately HK$1,762.3 million (year ended 31

December 2021: approximately HK$1,804.4 million).

The Group determined the remuneration packages

of all employees with reference to their position,

competency, performance, value and market salary

trend. The Group provides its employees in the

PRC and other countries and regions with welfare

schemes as required by applicable local laws and

regulations.

On 5 November 2010, the Company adopted a

share option scheme (“2010 Share Option Scheme”)

to incentivize or reward eligible participants for

their contribution to the Group for the purpose

of motivating the eligible participants to optimize

their performance efficiency for the benefit of the

Group, and attracting and retaining or otherwise

maintaining on-going business relationship with the

eligible participants whose contributions are or will

be beneficial to the long-term growth of the Group.

As the 2010 Share Option Scheme expired on the

tenth anniversary of its adoption, and to enable

the Company to continue to grant share options

to eligible participants as incentives or rewards for

their contributions to the success of the Group,

the Company terminated the 2010 Share Option

Scheme and approved and adopted a new share

option scheme (the “2020 Share Option Scheme”)

at its annual general meeting held on 25 May 2020.

A summary of the principal terms of the 2020 Share

Option Scheme is set out in Appendix III of the

Company’s circular dated 22 April 2020.

As at 31 December 2022, there were 132,301,300

outstanding share options in total under the 2010

Share Option Scheme and the 2020 Share Option

Scheme (31 December 2021: 136,099,167 outstanding

share options).

KEY RISKS AND UNCERTAINTIES

The Company’s financial condition, results of

operations, businesses and prospects may be

affected by a number of risks and uncertainties.

The followings are the key risks and uncertainties

identified by the Company with the understanding

that it is not an exhaustive list of all risks and

uncertainties. There may be other risks and

uncertainties in addition to those shown below

which are not known to the Company or which

may not be material now but could turn out to be

material in the future.

MANAGEMENT DISCUSSION & ANALYSIS

GOODBABY 25

Annual Report 2022

OPERATIONAL RISK

Operational risk is the risk of loss resulting from

inadequate or failed internal processes, people and

systems or from external events. The Company

adopts the “three lines of defense” model for

operational risk governance: 1) the first line of

defense is the business and functional management

unit which is responsible for identifying and

managing the risks inherent in the products,

activities, processes and systems for which it

is accountable; 2) a functionally independent

corporate operational risk and compliance

function, typically the finance or internal control

department, is the second line of defense, generally

complementing the business line’s operational

risk management activities and ensuring the first

line of defense is properly designed, in place, and

operating as intended; 3) the third line of defense is

internal audit function which provides assurance on

the effectiveness of governance, risk management,

and internal controls. The Company recognizes that

operational risks cannot be eliminated completely

and that it may not always be cost effective to do

so.

Business units and supporting functions in the

Company are guided by their internal control

policies and standard operating procedures,

limits of authority and reporting framework which

are updated in response to business changes or

business needs from time to time. The Company

identifies and assesses key operational exposures

from time to time so that appropriate risk response

can be taken.

Ability to attract, retain and motivate key personnel

and talents with appropriate and required skills,

experience and competence in a tightening talent

market could lead to the risk of impacting the

Company’s operating and financial performance.

The Company will continue to assess and enhance

our remuneration, training and career development

policy and system to attract, retain and motivate

suitable talents.

BUSINESS RISK

The Company’s product market is highly

fragmented and competitive worldwide. The

Company faces competition primarily from third-

party local juvenile product brand owners in the

mass market and owners of international brands

in the mid to high end market. Failure to maintain

the Company’s competitive position may materially

adversely affect our business, financial condition,

results of operations and prospects. Furthermore,

change of the overall market condition including

but not limited to macroeconomic conditions and

applicable regulations may also materially adversely

impact the Company’s sales, cost, expenses and

profitability. The Company seeks to mitigate these

potential adverse impacts through strategies such

as safeguarding market competitiveness of the full

range product portfolios, strengthening extensive

global sales network, broadening customer base

and geographical locations by leveraging the three

home markets of the Company anchored in the

three main regions, i.e. APAC, EMEA and Americas,

and continual innovations and commercialization of

cutting edge products to sustain market leadership.

FINANCIAL RISK

In the course of business operations, the Company is

exposed to a variety of financial risks, including but

not limited to market, liquidity and credit risks. The

currency environment, interest rates cycles and mark

to market value of derivative financial instruments

may pose significant risks to the Company’s financial

condition, results of operations and businesses.

The Company’s overall risk management program

focuses on the unpredictability of financial markets

and seeks to minimize potential adverse effects of

these risks with a material impact on the Company’s

financial performance.

GOODBABY

MANAGEMENT DISCUSSION & ANALYSIS

Annual Report 2022

MANAGEMENT DISCUSSION & ANALYSIS

Market risk is the risk that the Company’s earnings

and capital or its ability to meet its business

objectives will be adversely affected by movement

in foreign exchange rates, interest rates and equity

prices. The Company has transactional currency

exposure which arises from sales or purchases by

operating units in currencies other than the units’

functional currency. The Company closely monitors

the relative foreign exchange positions of its assets

and liabilities and has developed a complete set of

foreign exchange management policies, processes

and mechanism to mitigate foreign currency risk,

such as negotiation of appropriate commercial

terms and use of derivative financial instruments to

hedge these risk exposures.

Financing risk is the potential that the Company will

be unable to meet its obligations when they fall due

because of an ability to obtain adequate funding

or liquidate assets. In managing financing risk, the

Company monitors cash flows and maintains an

adequate level of cash and credit facilities to ensure

the ability to finance the Company’s operations and

reduce the effects of fluctuation in cash flows.

Credit risk is the risk of losses arising from a

counterparty defaulting on an obligation which

will result in an economic loss to the Company. It

arises from manufacturing and sales businesses

and other activities undertaken by the Company.

The Company’s exposure to credit risk for its

businesses arises primarily from its customers. New

customers are subject to credit evaluation while

the Company continues to monitor its existing

customers, especially those with repayment issues.

Adequate credit insurance schemes, credit control

and accounts receivable management systems are

in place and managed centrally at group level to

mitigate default impacts. The bank balances are

deposited with creditworthy banks with no recent

history of default.

REGULATORY AND COMPLIANCE RISK

The business operations of the Company cover

three main regions and it is important to ensure

compliance of applicable laws and regulations in

different jurisdictions, such as laws of patent and

product safety, that are relevant to the business

scope and products/services of the Company. The

Company has a few internal professional teams

who, with the support from the appropriate external

advisers, oversee compliance with prevailing

legislative and industry requirements, monitor

changes and new requirements set out in the

relevant laws and regulations and formulate and

take the appropriate actions and measures (where

necessary).

Directors & Senior

Management

GOODBABY

DIRECTORS & SENIOR MANAGEMENT

Annual Report 2022

DIRECTORS & SENIOR MANAGEMENT

DIRECTORS

EXECUTIVE DIRECTORS

SONG Zhenghuan (㸡ꀾ鼧), aged 74, is the chairman

and executive director of the Company. He was also

the chief executive officer of the Company from

listing to 15 January 2016. With more than 30 years

of experience in the juvenile products industry,

Mr. Song is the founder and primarily responsible

for our group’s overall strategic direction and

the management of the Group’s business. Mr.

Song majored in mathematics and graduated

from Jiangsu Teachers University (寐豣䌌眔㷷ꤍ)

in 1981 with a certificate of graduation. Prior to

establishing the Company, Mr. Song was a teacher

in Lujia Middle School in Kunshan City from 1973

to 1984 and was the Vice Principal from 1984 to

1993. Between 1989 and 1993, Mr. Song was also in

charge of a factory run by Lujia Middle School, the

predecessor of Goodbaby Group Co., Ltd., which is

a major founding shareholder of our Group. In 1989,

Mr. Song invented the first “push and rock” stroller

and subsequently founded our Group to engage in

the design, manufacture and marketing of strollers

under the “㥨㷚㶨 Goodbaby” brand in China.

Because of Mr. Song’s outstanding achievements,

he was awarded the Ernst & Young Entrepreneur of

the Year Award (㸜宕⟰噟㹺柿) for the Greater China

region in 2006. In 2012, Mr. Song was awarded the

“Chinese Toy Industry’s Outstanding Achievement

Award” (⚥㕜梖Ⱗ遤噟⪀⳿䧭㽟柿) by the China Toy

Association. In 2013, Mr. Song was selected as

winner of Walter L. Hurd Executive Medal 2013 by

the Walter L. Hurd Fo.

Mr. Song is currently a director of the following

companies in the Group:

(i) Goodbaby Child Products Co., Ltd.*;

(ii) Ningbo Goodbaby Child Products Co., Ltd.*;

(iii) Goodbaby Children’s Products, Inc.;

(iv) Goodbaby (Hong Kong) Limited;

(v) Shanghai Goodbaby Fashion Co., Ltd.;

(vi) Magellan Holding GmbH;

(vii) Goodbaby US Holdings, Inc.;

(viii) Serena Merger Co., Inc.;

(ix) WP Evenflo Holdings, Inc.;

(x) Evenflo Company, Inc.;

(xi) Evenflo Asia, Inc.;

(xii) Lisco Feeding, Inc.;

(xiii) Lisco Furniture, Inc.;

(xiv) Goodbaby (Europe) Group Limited;

(xv) Rollplay (Hong Kong) Co., Limited;

(xvi) OASIS DRAGON LIMITED;

(xvii) Goodbaby Retail & Service Holdings

Company;

(xviii) Goodbaby (China) Retail & Service Company;

and

(xix) Goodbaby Europe Holdings Limited.

Mr. Song is an indirect shareholder and a director

of Cayey Enterprises Limited and Pacific United

Developments Limited (“PUD”), both of which are

substantial shareholders of the Company.

Mr. Song is also a shareholder and a director of Sure

Growth Limited, a substantial shareholder of the

Company.

Mr. Song is the spouse of Ms. Fu Jingqiu, the non-

executive director of the Company.

*For identification purpose only

DIRECTORS & SENIOR MANAGEMENT

GOODBABY 29

Annual Report 2022

LIU Tongyou (⷟ず⿼), aged 55, was appointed as an

executive director of the Company on 21 February

2017 and Regional Chairman APAC on 15 July 2017.

Mr. Liu has been appointed as the chief executive

officer (“CEO”) of the Company since 21 March

2023. Apart from being responsible for the overall

management of the Group in his role as the CEO,

Mr. Liu has also been responsible for the direct

supervision and management of Group’s finance,

internal audit, legal affairs, investor relations and

mergers and acquisitions, and the development and

implementation of strategy and target for these

areas in his direct supervision and management.

Mr. Liu started to support the Group from 1994 and

formally joined the Group in 1996. Since joining the

Group, Mr. Liu has been responsible for the Group’s

finance, internal audit, legal affairs and investment &

financing management, and has successively served

as the vice president and chief financial officer of

the Group. Mr. Liu received his bachelor’s degree of

science in 1989 and master’s degree in economics

in 1992. Mr. Liu worked for a famous Economist,

Jiang Yiwei (詑♧袡), as his academic secretary in

1992. He joined the Beijing Standard Consultancy

Company (⻌❨垥彊肄⟦镨鑈剣ꣲⰕ぀) in 1993 as the

business director and responsible for consulting on

the restructuring as well as listing consultancy of

a number of Chinese enterprises, including Haier

Electric Appliance Company and Hainan Airlines

Company. Mr. Liu was awarded the “2010 China Top

Ten Outstanding CFOs” by China’s “Chief Financial

Officer” magazine and the “CFO of the Year” by the

Hong Kong “2017 China Finance Awards”.

Mr. Liu is currently a director of the following Group

companies:

(i) Goodbaby (Hong Kong) Limited;

(ii) Goodbaby Child Products Co., Ltd.*;

(iii) Ningbo Goodbaby Child Products Co., Ltd.*;

(iv) EQO Testing and Certification Services Co.,

Ltd.*;

(v) Goodbaby Czech Republic s.r.o.;

(vi) Columbus Trading-Partners Japan Limited;

(vii) Goodbaby Europe Holdings Limited; and

(viii) Kunshan Goodbaby Yijia Retail Co., Ltd.*.

*For identification purpose only

Mr. Liu is also a director of PUD, a substantial

shareholder of the Company.

Mr. Liu is a shareholder and a director of Silvermount

Limited. Mr. Liu is also a shareholder of Sure Growth

Investments Limited, a substantial shareholder of

the Company.

GOODBABY

DIRECTORS & SENIOR MANAGEMENT

Annual Report 2022

DIRECTORS & SENIOR MANAGEMENT

Martin POS, aged 53, is an executive director of

the Company. Mr. Pos is the founder of the world’s

leading high-end child car seat brand CYBEX and

he is the executive chairman of CYBEX, leading

the brand’s strategy implementation and overall

management, all the brand’s business units and

functions across each continent, comprising

technical services, supply chain and manufacturing,

brand portfolio management, international

distribution, national distribution and the brand’s

central services, reporting directly to the Board.

He is an entrepreneur with over 21 years of

industry experience including the development

and management of premium lifestyle brands,

most notably the global distribution, design and

development of premium baby products. Following

the merger of CYBEX in early 2014, Mr. Pos was

appointed as the executive director of the Company

in March 2014 primarily responsible for the

management of portfolio of global brands for the

Company. In December 2014, Mr. Pos was appointed

as the deputy chief executive officer. During the

period from January 2016 to 21 March 2023, Mr. Pos

acted as the CEO of the Company.

XIA Xinyue (㢙妆鬨), aged 53, was appointed

as an executive director of the Company on 10

November 2017, Chief Competitiveness Officer on

6 November 2017 and Chief Operating Officer on

28 May 2018. Mr. Xia is responsible for the Group’s

global supply chain strategy and its execution,

including production, procurement and logistic.

Mr. Xia is also responsible for core business

processes optimization, organization development,

sustainability development, competitiveness

building up on quality, cost, innovations and digital

transformations. Mr. Xia has extensive management

experience in automotive industry for over 26

years. He was the president of the China division

of the Faurecia Automotive Seating Business

Group for more than 7 years managing 15 factories

before he joined our Group. Prior to this, he served

various positions within Faurecia Automotive

Seating Business Group China division from plant

general manager to deputy general manager of the

China division. Before he joined Faurecia China in

December 2004, Mr. Xia ever worked for different

international companies of automotive industry in

China. Mr. Xia obtained a bachelor’s degree in Tele-

Communication Engineering from the Shanghai

Tiedao University in 1992. He also obtained a

master of business administration degree from the

DongHua University in 2001 and a doctorate degree

in management science from the Shanghai Jiao

Tong University in 2007.

Mr. Xia is currently a director of the following Group

companies:

(i) Goodbaby Child Products Co., Ltd.*;

(ii) Ningbo Goodbaby Child Products Co., Ltd.*;

(iii) EQO Testing and Certification Services Co.,

Ltd.*;

(iv) CYBEX (China) Child Product Co., Ltd.; and

(v) Goodbaby Child Products Pingxiang Co.,

Ltd.*.

*For identification purpose only

DIRECTORS & SENIOR MANAGEMENT

GOODBABY 31

Annual Report 2022

Michael Nan QU (刼⽂), aged 55, was appointed as

an executive director of the Company since 18 March

2014 and chairman for the Northern and Southern

markets since 15 July 2017. Since December 2014,

Mr. Qu has been primarily responsible for our Blue

Chip Customers worldwide, working in a leadership

role for the American market. Prior to this, Mr.

Qu was our company’s vice president, primarily

responsible for managing key overseas accounts

and strategic overseas resources. Mr. Qu joined us

in 1994 and he is one of the founding members of

the overseas business of the Group. Mr. Qu studied

economics in the Economics School of Peking

University from 1986 to 1989. He then went to the

United States to study business administration at

George Mason University from 1989 to 1992.

Mr. Qu is currently a director of the following

companies in the Group:

(i) Goodbaby Children’s Products, Inc. (also as

an executive vice president);

(ii) Goodbaby (Hong Kong) Limited;

(iii) Goodbaby US Holdings, Inc.;

(iv) Serena Merger Co., Inc.;

(v) WP Evenflo Holdings, Inc.;

(vi) Evenflo Company, Inc.;

(vii) Evenflo Asia, Inc.;

(viii) Lisco Feeding, Inc.;

(ix) Lisco Furniture, Inc.;

(x) Columbus Trading – Partners USA Inc.;

(xi) Goodbaby Canada Inc.;

(xii) Muebles Para Ninos De Baja, S.A. De C.V.;

(xiii) Goodbaby Europe Holdings Limited; and

(xiv) Columbus Trading – Partners Canada Inc.

Mr. Qu is a shareholder of Sure Growth Investments

Limited, a substantial shareholder of the Company.

NON-EXECUTIVE DIRECTORS

FU Jingqiu (㺡兪猧), aged 71, was appointed as

a non-executive director of the Company on

10 November 2017. With her over 30 years of

extensive experience in retail and distribution of

juvenile products in China, Ms. Fu provides business

operation guidance and advisory consulting services

to the Group for development and management

of its business in China market. Ms. Fu is the co-

founder of Goodbaby China Holdings Limited

(together with its subsidiaries collectively referred

to “CAGB Group”) and is now primarily responsible

for the overall business management and strategic

development of CAGB Group. Before the founding

of CAGB Group, Ms. Fu was the vice president of

Goodbaby Child Products Co., Ltd. (“GCPC”), from

February 1993 to July 2010, where she was primarily

responsible for retail and distribution of GCPC

products in China market.

Ms. Fu is currently a director of the following

companies in the Group:

(i) Shanghai Goodbaby Fashion Co., Ltd.;

(ii) Goodbaby (China) Retail & Service Company;

(iii) Kunshan Goodbaby Yijia Retail Co., Ltd.*; and

(iv) Goodbaby (Nantong) Fashion Co., Ltd.*.

Ms. Fu is an indirect shareholder and a director of

Cayey Enterprises Limited and PUD, both of which

are substantial shareholders of the Company.

Ms. Fu is a shareholder and a director of Sure

Growth Investments Limited, a substantial

shareholder of the Company. Ms. Fu is also an

indirect shareholder and a director of Rosy Phoenix

Limited, a substantial shareholder of the Company.

Ms. Fu is the spouse of Mr. Song Zhenghuan, the

chairman and executive director of the Company.

*For identification purpose only

GOODBABY

DIRECTORS & SENIOR MANAGEMENT

Annual Report 2022

DIRECTORS & SENIOR MANAGEMENT

HO Kwok Yin, Eric (⡦㕜颩), aged 66, was appointed

as a non–executive director of the Company on 1

February 2013. Mr. Ho was admitted as a solicitor

in England and Wales in 1987 and as a solicitor in

Hong Kong in 1988. He was a founding partner of

Sidley Austin in Hong Kong and remained a partner

of the firm until his retirement in 2010. Mr. Ho has

over 30 years of experience in the legal profession

with related expertise in international mergers and

acquisitions and private equity transactions. Mr. Ho

received a Bachelor of Social Science Degree from

the Chinese University of Hong Kong in 1980.

INDEPENDENT NON-EXECUTIVE DIRECTORS

CHIANG Yun (䓸催), aged 55, was re-designated

as an independent non-executive director of the

Company with effect from 23 May 2014. Ms. Chiang

was a non-executive director of the Company for

the period from 15 November 2007 to 22 May 2014

and a director of the Company for the period from

14 July 2000 to 14 November 2007. Ms. Chiang

has over 28 years of private equity investment

experience and is the founder of Prospere Capital

Ltd. She was a founding managing partner of the

private equity business of Pacific Alliance Group. Ms.

Chiang is an independent non-executive director

of Sands China Ltd. (HKEX: 1928) (“Sands”), and

a member of the audit committee, the nomination

committee and the Chairlady of the ESG Committee

of Sands. Ms. Chiang is also an independent non-

executive director of Pacific Century Premium

Developments Limited (HKEX: 432) (“PCPD”), the

chairlady of PCPD’s remuneration committee and a

member of PCPD’s audit committee and nomination

committee. Ms. Chiang was appointed as a non-

executive director of Yantai Changyu Pioneer

Wine Company Limited, a company listed on the

Shenzhen Stock Exchange, on 1 June 2020. Ms.

Chiang received an EMBA degree from The Kellogg

Graduate School of Management of North-western

University in the U.S. and Hong Kong University

of Science and Technology in 1999. Ms. Chiang

also received her Bachelor of Science degree, cum

laude, from Virginia Polytechnic Institute and State

University in the U.S. in 1992.

DIRECTORS & SENIOR MANAGEMENT

GOODBABY 33

Annual Report 2022

SHI Xiaoguang (瀖凶⯔), aged 76, was appointed

as an independent non-executive director of

the Company on 5 November 2010. Mr. Shi is

the consultant of China Toy & Juvenile Products

Association since 26 March 2015. In January 2012,

Mr. Shi became the member of the Governance

Board of the ICTI CARE Foundation. Mr. Shi has

been elected as a new director of the ICTI CARE

Foundation representing China since June 2016.

Mr. Shi was formerly the chairman of China Toy &

Juvenile Products Association (⚥㕜梖Ⱗㄤ㵤畘欽ㅷ⼿

剙) (formerly known as the China Toy Association

(⚥㕜梖Ⱗ⼿剙) and a director of the International

Council of Toy Industries since 2005. In October

2000, Mr. Shi was appointed as the vice-chairman of

the National Technical Committee of Standardization

for Toys by the General Administration of Quality

Supervision Inspection and Quarantine. China Toy

& Juvenile Products Association routinely provides

information and holds training seminars on toy

safety, product design and market development.

The responsibilities of China Toy & Juvenile Products

Association include recommending the safety

standards and/or regulations of durable juvenile

products, and recommending the safety standards

and/or regulations of other general toys and related

products in the industry. Mr. Shi graduated from

Beijing University of Chemical Technology (⻌❨⻉䊨

㣐㷷) (formerly known as Beijing College of Chemical

Technology (⻌❨⻉䊨㷷ꤍ)) with a Bachelor’s

degree in chemical apparatus and engineering in

July 1974. Mr. Shi served as the vice-chairman of

the department of general administration of The

Ministry of Science and Technology from 1985 to

1987. He became a certified engineer in the PRC in

September 1987, as granted by the State Scientific

and Technological Commission (㕜㹺猰㷷䪮遭㨻㆞剙).

From November 1987 to November 1990, he served

as the deputy general manager of China National

Scientific Instruments and Materials Corporation

(⚥㕜猰㷷㐻勞Ⱅ぀). Mr. Shi was appointed as the

chairman of the service centre of The Ministry of

Light Industry in 1989. From 1993 to 2007, he served

as the general manager of China National Arts &

Crafts (Group) Corporation (⚥㕜䊨诿繟遭꧊㕰Ⱅ぀)

(formerly known as China National Arts & Crafts

Corporation (⚥㕜䊨诿繟遭籍Ⱅ぀)).

JIN Peng (ꆃ땃), aged 47, was appointed as

an independent non-executive director of the

Company on 21 February 2017. Mr. Jin has over 20

years of experience in technology investments,

entrepreneurship, financial advisory and corporate

management. Mr. Jin started his career in 1998

as a member of Bear Stearns Asia’s New Media &

Telecom group. In 2000, Mr. Jin joined 21 Vianet

Group Inc. (NASDAQ: VNET) as an executive vice

president where he was responsible for overseeing

business development, product, marketing and

international sales and was later appointed as a

chief financial officer. From 2003 to 2007, Mr. Jin

served as a partner in CEC Capital Group (formerly

known as China eCapital Corporation) where he

provided fund raising, merger and acquisition

advisory services for growth stage companies in the

PRC. In 2008, Mr. Jin co–founded Keytone Ventures,

a venture fund focusing on early stage technology

investment opportunities with a total asset under

management of US$420 million. Mr. Jin left Keytone

Ventures in 2014 to start Emerge Ventures, a

venture studio specializing in mostly seed and

angel investments and incubating technology

startups. Mr. Jin was appointed as chief operating

officer and secretary of Bison Capital Acquisition

Corp. (NASDAQ: BCACU) on 20 December 2016.

In addition, Mr. Jin was appointed as an executive

director of Cinedigm Corp. (NASDAQ: CIDM) on

1 November 2017. Mr. Jin obtained a bachelor’s

degree with a dual major in Finance and Information

Systems from the New York University in 1998.

GOODBABY

DIRECTORS & SENIOR MANAGEMENT

Annual Report 2022

DIRECTORS & SENIOR MANAGEMENT

SO Tak Young (豣䗝䳓), aged 53, has been

appointed as an independent non-executive director

of the Company on 23 May 2022. Mr. So has more

than 20 years of experience in finance, accounting,

investment and private equity businesses with

global financial institutions and asset management

companies. He started his career as an auditor with

Ernst & Young, Hong Kong from February 1993 to

December 1994. Mr. So has served as a managing

partner of FastLane Group since July 2012. He has

been serving as an independent non-executive

director and chairman of the audit committee

of Shanghai Henlius Biotech, Inc. (HKEX: 2696)

since September 2019 and CARsgen Therapeutics

Holdings Limited (HKEX: 2171) since June 2021. Mr.

So has previously served various positions, including

vice president of global capital market/Asia treasury

and vice president of financial controls of Bank of

America, Hong Kong from January 1998 to March

2002, head of finance and operations of consumer

and commercial banking in Hong Kong, head of

asset and liability management of Greater China

and chief financial officer of private client banking

in Hong Kong of ABN AMRO Bank N.V., Hong Kong

from March 2002 to January 2005, chief financial

officer of Hamon Asset Management Limited, an

affiliate of Bank of New York Mellon from February

2005 to August 2007, chief financial officer of Asia

Pacific of asset management division for Deutsche

Bank, Hong Kong from August 2007 to November

2011, and chief financial officer of PAG Capital

from November 2011 to April 2012. Mr. So received

his bachelor of business degree and his master of

business administration degree from the University

of Technology in Sydney, Australia in April 1994 and

September 1998, respectively. He is a fellow member

of Certified Practicing Accountant Australia since

August 2011.

Save as otherwise disclosed, there is no relationship

between any members of the Board except that Ms.

Fu Jingqiu is the spouse of Mr. Song Zhenghuan,

and no information relating to the directors which is

required to be disclosed pursuant to Rules 13.51(2)

and 13.51(B)(1) of the Rules Governing the Listing

of Securities on the Stock Exchange (the “Listing

Rules”).

SENIOR MANAGEMENT

Johannes SCHLAMMINGER, aged 43, is the

Executive Vice President Group Brand Portfolio

Management and the CEO of the strategic

brand CYBEX. He joined CYBEX in 2010 and has

held various management positions within the

Company. In November 2016, Mr. Schlamminger was

appointed as chief executive officer of CYBEX and

in November 2017, he was appointed as Group’s

Executive Vice President responsible for group

brand portfolio management while continuing

his role as CEO of CYBEX as well as supporting

product development and international sales

for gb brand durable products. Prior to this, Mr.

Schlamminger had worked as head of channel

business for ZF Electronics, a supplier of computer

devices and electronic automotive parts, and was

a professional basketball player at BBC Bayreuth.

Through the many positions he was holding, Mr.

Schlamminger was able to gain strong commercial

and retail experience in the global juvenile industry.

Paired with his excellent capabilities in customer

understanding and attention to detail, this acquired

knowledge leads to an exceptional commercial and

operational record.

DIRECTORS & SENIOR MANAGEMENT

GOODBABY 35

Annual Report 2022

Rongfen JIANG (㩌覀蓶), aged 50, is the CEO of the

China market business and the CEO of the strategic

brand gb. Ms. Jiang took over the responsibility for

the Group’s business development in China as CEO

of the China market business since November 2018.

In addition to this role, Ms. Jiang is also responsible

for development of the gb brand globally as CEO of

gb. Ms. Jiang joined the Group in February 2016 as

General Manager of gb branded baby care business.

Given her proven track record of achieving fast and

profitable growth for the baby care business for two

consecutive years, Ms. Jiang was then promoted

to Senior Vice President to assume responsibility

for the business of all the gb branded product

categories in China. Before Ms. Jiang joined the

Group, she had more than 15 years of experience in

managing international fashion brands and retailing

in China market.

David B, TAYLOR, aged 60, is the Senior Vice

President Group Business Development and M&A,

Vice Regional Chairman Americas and CEO of

the strategic brand Evenflo. Mr. Taylor joined the

Group in March 2015, after years of successful

experience in the global juvenile industry. Mr.

Taylor previously held the roles of Chief Financial

Officer and Chief Operating Officer at Evenflo

and subsequently assumed the role of SVP Group

Business Development and M&A in 2018. He assumed

the role of Evenflo CEO in September 2021. Prior to

joining the Group, Mr. Taylor was Chief Operating

Officer at Welch Packaging Group in Elkhart,

Indiana from 2013 to 2015. Before joining Welch

Packaging Group in 2013, he worked for nine years

at Dorel Juvenile Group, Inc. as President and CEO

from 2006 to 2012, for which he was responsible

for the Dorel Juvenile Group’s hundreds of millions

in revenue from its juvenile consumer products

business, the primary focus of which was the

marketing and manufacturing of children’s furniture,

gear and safety products serving the world’s retail

and consumer markets. Mr. Taylor started his career

at Price Waterhouse and later worked for several

other US consumer goods/industrial companies. Mr.

Taylor has over 30 years of professional experience

in total, with six years of international experience,

having worked in Hong Kong and Germany.

GOODBABY

DIRECTORS & SENIOR MANAGEMENT

Annual Report 2022

DIRECTORS & SENIOR MANAGEMENT

COMPANY SECRETARY

Ms. Ho Wing Tsz, Wendy (⡦鑄稗), is an Executive

Director of Corporate Services of Tricor Services

Limited. She is a Fellow of both The Hong Kong

Chartered Governance Institute (formerly known as

The Hong Kong Institute of Chartered Secretaries)

and The Chartered Governance Institute (formerly

known as The Institute of Chartered Secretaries and

Administrators). Ms. Ho has over 25 years of work

experience in the field of corporate secretarial and

regulatory compliance services.

Environmental,

Social and

Governance Report

GOODBABY

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Annual Report 2022

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE REPORT

PART 1: EXECUTIVE SUMMARY

ABOUT THIS REPORT

Goodbaby International Holdings Limited (together

with its subsidiaries “the Group”, “Goodbaby

International”, “Goodbaby” or “we”) has prepared

this 2022 Environmental, Social and Governance

(“ESG”) Report in accordance with the latest update

of the Environmental, Social and Governance

Reporting Guide (the “ESG Reporting Guide”), which

is contained in Appendix 27 to the Rules Governing

the Listing of Securities on the Main Board of The

Stock Exchange of Hong Kong Limited (“SEHK” or

“Stock Exchange”). This report has followed the

reporting principles of Materiality, Quantitative and

Consistency and the Reporting Boundary as laid

out in the ESG Reporting Guide in its collection of

relevant materials, analysis of data, and reviewing of

information.

For details of the corporate governance practices

of the Group, please refer to the Corporate

Governance Report section in page 116 of the 2022

Annual Report.

REPORTING PERIOD AND SCOPE

This report covers initiatives and achievements

relating to the Group’s environmental, social and

governance practices and their integration into the

Group’s corporate strategy and risk management

for the period from 1 January 2022 to 31 December

2022 (the “Reporting Period”). Unless otherwise

specified, the policies, statements and key

performance indicator data given in this report

cover the Group’s main operational sites in the

People’s Republic of China (the “PRC”), the Federal

Republic of Germany (“Germany”), the United States

of America (the “U.S.”), the United Mexican States

(“Mexico”) and Japan, and its activities across

research and development (“R&D”), manufacturing,

logistics, marketing and distribution, and retailing.

These are consistent with the scope of its financial

report.

The Group will continue to refine the scope of its

environmental, social and governance reporting, and

may include new topics and expand the depth of its

reporting in the future.

DATA SOURCES AND RELIABILITY

ASSURANCE

The data in this report, including information about

the Group’s policies, initiatives, practices and case

studies, comes mainly from its internal systems,

statistics, reports and records. The Group takes

responsibility for the authenticity, accuracy and

completeness of the content of its ESG Report.

CONFIRMATION AND APPROVAL

Following confirmation by the Environmental, Social

and Governance Working Group and approval by

the Chief Executive Officer of the Group, this report

was approved by the Board on 28 March 2023.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

GOODBABY 39

Annual Report 2022

PART 2: ESG STRATEGY AND

OVERSIGHT

GROUP OVERVIEW

Our Vision: To become an outstanding enterprise with global and future-ready competitiveness.

Our Mission: Care for children, serve families, and give back to society.

Our Values: To contribute value to our consumers, enable creators to realize their value, promote

innovation and openness, and forge ahead together.

With its mission of “Care for Children, Serve Families

and Give Back to Society”, Goodbaby International

has grown more than thirty years to become a

world-leading juvenile products group. Its home

markets are Germany, the PRC and the U.S.. To date,

we have served hundreds of millions of families in

over 120 countries and regions across the globe

through our design, R&D, manufacture, marketing

and sales of children’s car safety seats, strollers,

apparel, daily living products, toys and other

products. Our capabilities in R&D, design, supply

chain and quality management, along with our rapid

responsiveness to market needs, have won us much

recognition among our industry peers, and have

helped us forge long-term supplying relationships

that have further expanded the Group’s advantages

in terms of economies of scale.

The Group’s three strategic brands of CYBEX, gb

and Evenflo each enjoy leading positions in their

respective home markets, and offer complementary

influential local brands such as CBX, HD, Exersaucer,

Urbini and Rollplay to suit the needs of different

countries and regions. The Group has a product

portfolio that ranges from high-end brands to

household names, and which together cater for

multiple facets of global parenting needs.

It is the mainstream consensus that relying on non-

renewable natural resources is unsustainable given

the mounting challenges from climate change to

humankind. Goodbaby International is continuing to

explore and take steps in adopting environmentally

friendly materials in the context of its product life

cycles, as well as using resources and energy more

efficiently in its business activities, to deliver its

commitments to sustainable development together

with our suppliers.

Lingering into its third year, the COVID-19 pandemic

impacted societies and economies around the world

in 2022. With its manufacturing capabilities largely

concentrated in the PRC, the Group faced uncharted

territory as it addressed these challenges. Its

revenue declined to HK$8,292.2 million as a result of

relatively sluggish market demand and logistical and

travel restrictions arising from COVID-19 prevention

and control measures.

Nevertheless, the Group continued building its

capabilities during 2022 in the belief that the

world would eventually emerge from the crisis.

We launched over 500 new and upgraded product

models, and are proud to have won multiple

meaningful awards in areas in which we have

established industry leadership. Among them, our

CYBEX Anoris T i-Size, the first car seat with an

integrated full-body airbag, was awarded the ‘best

child car seat ever tested in its class’ by the leading

independent German consumer testing organization

Stiftung Warentest and the Allgemeiner Deutscher

Automobil-Club. Our products also won 17 world

class industrial design awards, including four Red

Dot design awards, one iF design award, five IDA

design awards, two G-Mark design awards and five

German Design awards. The number of the Group’s

accumulated patents rose to 3,800, including 555

new approvals in the reporting period, representing

a good reserve for post-pandemic business

recovery.

GOODBABY

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Annual Report 2022

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE REPORT

CULTURE

At Goodbaby, our culture is built around the five-

pillar sustainability framework, namely leading

product quality, creativity and innovation, energy

conservation and environmental protection,

caring for employees, and connecting with local

communities.

VISION, MISSION, VALUES AND

STRATEGY

Information on the Group’s vision, mission and

values are contained in the paragraphs headed Part

2: ESG Strategy and Oversight – Group Overview

in this Environment, Social and Governance Report

(“ESG Report”). The principal objective of the Group

is to create long-term values and returns for all

our customers and shareholders. The Chairman’s

Statement and Management Discussion and Analysis

contained in this Annual Report include discussions

and analyses of the performance of the Group and

the strategy based upon which the Group generates

value over the long term. Besides that, the Group

has been increasingly focusing on minimizing the

impact on the environment and natural resources.

ALIGNMENT OF VISION, MISSION,

VALUES, STRATEGY WITH CULTURE

All the products we manufacture are made with

unwavering focus on quality and safety (with

further information in Part 4: Quality Design and

Procurement for a Robust Manufacturing System in

the ESG Report).

We strive to innovate and create products that not

only meet but exceed our customers’ expectations

(with further information in Part 6: Innovation

Driving Product Resilience in the ESG Report).

We are committed to achieving our goals in ways

that minimize our impact on the environment and

natural resources wherever possible (with further

information in Part 7: Rigorous Operation Highlights

Environmental Benefits in the ESG Report). We

prioritize our employees’ occupational health

and safety and well-being and strive to create a

workplace culture that is supportive, inclusive and

empowering (with further information in Part 8:

Protecting Employees’ Rights and Interests and

Ensuring Occupational Safety in the ESG Report).

Despite that 2022 was a challenging year in terms

of our Group’s overall financial results, we are

proud to say that our commitment to quality and

innovation and sustainability continued to pay

off in specific brands such as CYBEX and Evenflo

which outperformed industry peers (with further

information in the “Chairman’s Statement” in this

Annual Report). In 2022, the Group had continued

to take part in the drafting and revising of numerous

international and national standards in relation

to children’s products. Our focus on R&D and

innovation was recognised with numerous awards

(with further information in Part 3: Adhering to a

Quality Mission, and Setting High Standards in the

ESG Report).

We are also committed to give back to the larger

community in meaningful ways (with further

information in Part 9: Contributing to Society and

Local Communities in the ESG Report).

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

GOODBABY 41

Annual Report 2022

The Board takes the lead in driving and shaping

the Group’s culture and defining the Group’s vision,

mission and values and strategic directions. The

Group’s culture is reflected across its business

operations, workforce and workplace practices

and policies. The Board’s oversight of the Group’s

culture based on a wide range of measures (such

as providing employees training, implementing

various code of conduct and policies (e.g., Code of

Business Conduct, Conflict of Interests Policy and

Whistleblowing Policy) and review any reports from

employees or other whistleblowers, monitoring staff

turnover rates and any employees’ occupational

health and safety incidents, reviewing and

monitoring data on gas emissions and wastewater

discharge, generation of wastes, efficiency in

use of energy, water and raw materials, legal

and regulatory compliance and services to the

community). Our culture and expected behaviors

are clearly communicated to all employees from

time to time through implementing of various code

of conduct and policies and hosting of departmental

meetings and employees town halls. Dedicated

forums and reporting channels are available for

sharing of ideas and concerns on any misconduct

or misalignment identified such as the policies

mentioned above and employees meetings and

town halls. Taking into account our corporate

culture in a range of contexts, the Board considers

that the culture and our vision, mission, values and

strategy are aligned.

BOARD STATEMENT

1. RISKS AND OPPORTUNITIES

Goodbaby International recognizes that global

warming is seriously disrupting the agricultural

productivity that human life relies on. This, coupled

with many secondary hazards, is aggravating the

structural inequality of the allocation of global

resources, and posing an existential threat to future

generations and even humankind in its entirety.

The Group remains vigilant on climate change and

resilience-building in the context of the impact on

future generations whose interests are where our

utmost business purpose serves.

The Group’s products primarily utilize fabrics,

plastics and metals, and our production activities

mainly consume electricity. As a result, we are

focusing on improving the efficiency of our

consumption of energy and natural resources. The

Group provides over 8,000 jobs globally, and it

ensures its hiring practices are both fully compliant

and responsible, in order to attract talents and

enable their growth within the Group.

The Group benchmarks and aligns its business

activities with the 17 sustainable development goals

set forth by the United Nations, and monitors the

relevant carbon reduction targets and plans of

the countries and regions where it operates. We

are applying several initiatives to our design and

production processes, for example exploring the

scalable application of renewable resources and

recycling alternatives, as well as delivering on our

product safety commitments.

2. STRATEGY, APPROACH AND GOALS

Taking into consideration stakeholders’ concerns,

Goodbaby International has established a five-

pillar sustainability framework, namely leading

product quality, creativity and innovation, energy

conservation and environmental protection,

caring for employees, and connecting with local

communities. We have also embarked on a process

of setting mid– to long-term targets for our

carbon footprints in areas such as energy intensity,

environmentally-friendly design, recycled material

and transport efficiency.

GOODBABY

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Annual Report 2022

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE REPORT

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Energy Conservation

and Environmental

Protection

Leading Product

Quality

Caring for

Employees

Connecting with

Local Communities

Creativity and

Innovation

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

GOODBABY 43

Annual Report 2022

3. OVERSIGHT AND ACCOUNTABILITY

The Board is ultimately responsible for Goodbaby

International’s ESG strategies and performance.

The Board delegates to the Group Chief

Executive Officer (“CEO”) the responsibility to

1) establish ESG-related risks and opportunities,

risk management and internal control systems; 2)

formulate ESG approaches, strategies, priorities,

adequately analyze the principles and processes

adopted, and review related progress made; 3)

ensure ESG goals and strategies are aligned with

the expectations or requirements of the Nationally

Determined Contributions targets of the countries

or regions in which the Group operates; and 4) fulfill

and comply with the regulatory requirements for

ESG reporting.

To achieve these ends, the Group CEO leads an ESG

Working Group (“Working Group”) which drives

ESG-related work in four main areas. They are 1) the

establishment, improvement and implementation

of policies and systems; 2) the assessment of risks

and opportunities, establishment of targets, and

monitoring of progress made; 3) the construction

of information systems and development of reports;

and 4) the review of risk management and internal

control systems. A bi-monthly reporting system is in

place.

In 2022, the Group’s ESG Working Group, supported

by external ESG consultants, conducted a gap

analysis benchmarking the Group’s ESG disclosure

against regulatory requirements and industry best

practices, following which a set of two–to–three-

year improvement guidelines and priorities were

established.

MATERIALITY ASSESSMENT AND

CONFIRMATION

The Group’s identification and disclosure of material

ESG topics is an important reporting principle of

this report. As an industry leading company, we

are fully aware of the impact that our business

decision-making processes may have on various

stakeholders, including consumers, government and

regulatory bodies, investors, suppliers, distributors,

and employees. We are committed to engaging

with our stakeholders in constructive dialogue via

our regular operating activities and/or dedicated

channels, in order to better understand their views

and expectations and solicit their comments and

feedback.

GOODBABY

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IDENTIFICATION OF POTENTIAL MATERIAL TOPICS

In 2022, we refreshed the Group’s ESG topic universe as in the table below. It comprises 14 environmental, 14

social and 4 governance topics of risks and opportunities. This was undertaken after communication with our

stakeholders and reference to other sources, with the topic universe being drawn from 1) the material topics

for the manufacturing and retailing sectors under the Sustainability Accounting Standards Board Standards;

2) the requirements set forth by regulatory bodies; 3) media reports on ESG-related topics in the industry;

4) suggestions by and requests from customers; 5) major events experienced by different business units and

functional departments of the Group during the year; and 6) the results of the Group’s materiality assessment

for 2021.

Materiality Topics

Environmental Social Governance

1. GHG emissions

2. Product carbon footprint

3. Climate change impact

4. Green finance

5. Circular economy

6. Renewable energy

7. Energy consumption and

efficiency

8. Water consumption and

management

9. Reliance on non-renewable

energy

10. Hazardous gas emissions

11. Waste management

12. Packaging materials

13. Plastic waste

14. Noise pollution

15. Compensation and welfare

16. Development and training

17. Work intensity and health

18. Equal opportunity

19. Production safety

20. Technological development

and innovation

21. Product quality and safety

22. Customer service

23. Privacy and data security

24. Responsible marketing

25. Supply chain labor standards

26. Supply chain business ethics

27. Environmentally friendly

materials

28. Community relations

29. Board effectiveness

30. Compliance with laws and

regulations

31. Feedback mechanism

32. Anti-bribery and

anti-corruption

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MATERIALITY ASSESSMENT

In accordance with the relevant requirements of Appendix 27 to the Main Board Listing Rules of the SEHK,

the Group amalgamated the expectations of stakeholders with the Group’s business strategies and policies

to draw up a materiality matrix. The results showed that material topics of high priority included: product

quality and safety, compliance with laws and regulations, technological development and innovation,

production safety, board effectiveness, customer service, feedback mechanism, anti-bribery and anti-

corruption, compensation and welfare, staff training and development, and packaging materials.

Goodbaby International’s Materiality Matrix

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4.00

5.00

6.00

7.00

8.00

9.00

5.00 5.50 6.00 6.50 7.00 7.50 8.00 8.50 9.00 9.50 10.00

The Working Group reported to the CEO and senior management on the materiality assessment results,

especially the 11 topics considered of higher priority by both stakeholders and management. These material

ESG topics approved by the Board are presented in this report under their respective sections and given in-

depth discussion. The Group is looking to develop and implement plans to address these priorities in its daily

business operations.

GOODBABY

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BUSINESS ETHICS AND CORPORATE

CONDUCT

The Group’s governance structure is set up to

ensure all operating activities strictly comply with

applicable laws and regulations and with required

internal policies and processes. These are duly

implemented, and their results and effectiveness

measured. As a listed company in Hong Kong, we

strictly observe the requirements stipulated by

the Stock Exchange for disclosures of connected

transactions and inside information, and have

formulated appropriate internal systems and review

mechanisms, including the provision of training for

those in relevant positions. We are also committed

to high and uncompromising standards of business

ethics, and have formulated measures to shape our

corporate conduct accordingly.

In the Reporting Period, the Group updated its Code

of Business Conduct, Conflict of Interests Policy

and Whistleblowing Policy to fully comply with

regulation changes and to reference global best

practices. Steps were taken to ensure these policies

are followed effectively with measurable actions in

all the countries and regions where we operate.

In 2022, we optimized our Code of Business

Conduct across multiple topics to ensure greater

compliance and to increase its effectiveness as

a guiding principle, particularly in the areas of

protecting company information and assets (e.g.

intellectual property rights and trade secrets). The

Code emphasizes the need for a healthy working

culture of mutual respect and equality among

colleagues, as well as the obligations relating to

insider information and share trading compliance.

Goodbaby International Code of Business Conduct

Framework

Compliance with laws and ethics

Mutual respect, equality and anti-discrimination

Fair competition

Gifts, entertainment and other hospitality

Protection and proper use of company assets

Record keeping and condentiality

Insider information and share trading

Conict of interests

Corporate opportunity rst

Environment, health and safety

External communication and use of social media

Complaints and whistleblowing

During the Reporting Period, the Group further

reviewed and optimized its system for managing

conflict of interests in the PRC, the U.S. and Europe

with the aim of lifting the quality of conflict of

interest declarations. The declaration scope for

conflict of interest cases was also expanded

from those in specific positions to all staff

, with

an applicable declaration reply rate of 100%

Applicable declarations from suppliers were also

expanded to include all active suppliers in our

system, with exemptions to certain super-sized

companies, government institutions and small-sized

procurement partners.

Not including frontline workers.

Excluding situations where staff have retired or are on leave.

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Declaration of Conflict of Interests under the Code of Business Conduct

In 2022, Goodbaby International revised its Conflict of Interests declaration form under the Code of

Business Conduct, and offered training to all eligible employees globally. The training offered explanation

in detail the relevant requirements in the form to ensure staff thoroughly understood the purpose and

methods of the declaration. Such mobilisation proved to be helpful in raising the quality and accuracy of

the declaration exercise. The Conflict of Interests Policy lays out disciplinary consequences for confirmed

deliberate omissions or concealment, including termination of employment contract; it also specifies

that if there is a confirmed conflict of interest, the individuals concerned will have their responsibilities

redefined or changed.

Flowchart of Declaration on Conflict of Interests under Code of Business Conduct

Annual COI & COC Form Conrmation

Annual COI & COC Declaration

Collection and Compilation of Results

Declaration Verication and Conrmation

Determination of Results and Control Measures

Control Measures Approval

Control Measures Implementation

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The Group also revised its Whistleblowing Policy to

further recognize anonymous reports and guarantee

whistleblower protection. Dedicated whistleblowing

emails are in place for our businesses in the PRC, the

Americas and Europe, as well as for stakeholders,

to raise concerns on existing or suspected direct

or indirect fraud, bribery, corruption, or violation of

material corporate policies. The Group runs internal

campaigns with annual training and posters to

help raise employees’ awareness of the importance

of this policy. We also encourage our staff to

communicate their concerns on inappropriate

behavior at work via other available channels if more

appropriate. In the Reporting Period, the Group

received some complaints on harassing language

and discriminatory behavior, and reports of cases

of suspected fraud, all of which were reviewed and

resolved.

All reports deemed material are reported to the

Chair of the Audit Committee of the Board of

Directors, who is charged with leading further

investigation and handling of the cases. The Group

has pushed for its suppliers and partners to set up

similar mechanisms and principles, and provided

relevant guidance on their rights and accountability

in its Supplier Guiding Principles Policy. The Group

also requires suppliers to sign a letter of undertaking

to confirm their understanding of our Code of

Business Conduct and abide by whistleblowing

obligations.

In 2022, the Group’s legal and internal control

departments jointly led the annual two-hour training

on Code of Business Conduct, Conflict of Interests

Policy and Whistleblowing Policy across all business

units, through online and in-person sessions.

Reports from internal control on violation incidents

during the reporting year demonstrated a good

level of observance of all codes, due to the gradual

familiarity gained by employees from regular annual

training over the years.

Whistleblowing Policy Training

The whistleblowing policy training emphasized the rationale of the system

and the role of each staff member, and showcased past cases (including the

ratio of anonymous and real-name reporting). It fostered a speak-up culture

and explained the process clearly, ensuring a good level of awareness and a

sense of responsibility among all.

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The Group conducts anti-corruption training

annually in the fourth quarter of each year. In 2022,

all board directors completed anti-corruption

training, as did 4,035 employees at all levels.

All management members partook in it. In the

Reporting Period, no fraud or corruption-related

lawsuits were filed against anyone from the Group,

and no material cases were received via the

whistleblowing channel.

PART 3: ADHERING TO A QUALITY

MISSION, AND SETTING HIGH

STANDARDS

As a major player in the juvenile products industry,

Goodbaby International is committed to its mission

of “Care for Children, Serve Families and Give Back

to Society” and the extraordinary level of product

responsibility that brings. For children still lacking

a full safety sense, product quality and reliability

are critical and much relied-on protections. In

view of this, Goodbaby International has always

embraced a “Quality First” philosophy aiming to

deliver “Absolute Safety” and “Utmost Experience”

in its products and services. Its quality management

principle of “Zero Defect, Zero Tolerance” has been

instilled across its entire operations, including at the

levels of formulation of standards, product design,

procurement, production, compliance testing and

packaging and transportation.

Goodbaby International has a clear quality mission:

The Mission of Group Quality is to protect the Group by identifying legal, reputational or financial

risks due to non-conforming products or non-value adding quality activities and assure that

processes are defined and followed to mitigate those risks.

Quality is the cornerstone for Goodbaby International’s operations and business development. Our product

quality has received widespread recognition among consumers and peers alike in the markets worldwide.

Group Quality Mission

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HIGH QUALITY SPRINGS FROM HIGH

STANDARDS

Goodbaby International has come to play an

important part in the formulation of national and

international standards, having become proficient

in applying relevant European and American

standards in its own practices over the past decade

or so. Our goal of making the best products and

being a responsible company drives us to maintain

a quality management system with industry leading

standards.

STANDARDS SETTING

The Group participates in the development of

international and national industry standards for

children’s car safety seats, and is a key member

of industry standards committees in the PRC, the

U.S., the European Union and Japan. Goodbaby

International jointly launched the ISO/TC 310

Technical Committee for Child Care Articles with

the French National Standards Committee in June

2021 and served as the rotating Chairman. In 2022,

the Committee’s management group established

the Chairman’s Advisory Group, whose Technical

Committee set up a special taskforce focusing on 44

subjects in four categories, namely general safety

requirements, feeding and oral products, activity

and protective products, and sleeping products.

Respective working groups were established

and assigned with specific standard setting tasks

accordingly. Goodbaby International served as the

convener of two working groups, those for general

safety requirements and for activity and protective

products, and was in charge of planning and driving

initiatives. It participated in the second global expert

conference of the committee on 30 November 2022.

In recent years, Goodbaby International has

also participated in the development of various

standards for children’s products in the PRC. In

2022, the national standard Disposable Diapers-

Part 1: Disposable Diapers for Baby, which the Group

played a part in developing, came into effect.

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Implemented in 2022:

Disposable Diapers-Part 1: Disposable Diapers for Baby

Standards published before 2022 include:

National Standards:

Guidelines on Determining Plasticized Materials in Toys or Parts of Toys that can be

Placed in the Mouth

Toys, Child Use and Care Articles’ Terms and Definitions

General Technical Requirements of Electrically Driven Ride-on Vehicles for Children

Restraining Devices for Child Occupants of Power-driven Vehicles

Infant Feeding Bottles and Teats

Baby Carrier with Hipseat

Industry Standards:

Cribs

Association Standards:

Safety Requirements for Restraining Devices for Child Occupants of Power-driven

Vehicles Wet Wipes for Babies and Children

By the end of 2022, the Group had taken part in the drafting and revising of 272 international and national

standards. 13 international standards, 137 national standards, 49 standards for the PRC, and 28 industry,

regional and association standards, are effective. In 2022, Goodbaby International participated in the drafting

and revising of 40 international and national standards, 10 of which have been published.

Goodbaby International has been Involved in the Development of Multiple

Standards for Children’s Products in the PRC

GOODBABY

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ISO/TC 310 Rotating Chairman

ISO/TC 22 Expert panel

SAC/TC 253 Vice Chairman

SAC/TC 463 Committee member

SAC/TC 480 Committee member

CPSCF15 Committee member

CEN/TC252 Committee member

CPSA Committee member

SAC/TC141/SC5 Committee member

SAC/TC305 Committee member

Standards Committees of which Goodbaby International is a Member:

Enterprise Standards

The Group operates a set of enterprise standards

that far exceed the standards used in other countries

and regions across the globe. In addition, we invest

resources in regular research on consumer behavior

and monitor market information on product

misuse, the result of these exercises is reviewed

and referenced in updating the relevant enterprise

standards, such updates are regularly implemented

in our design and production processes.

Goodbaby International’s enterprise standards

encompass over 80 product standards and over

70 standards for components. Many key indicators,

such as those for collision protection, dynamic

durability, handlebar strength and material

composition, far exceed internationally accepted

industry specifications. This is especially true for

the testing of hazardous substances in production

materials. Our testing covers over 300 substances,

far exceeding the 19 substances regulated by the

European Union.

The Group has also established a research

knowledge center for standards that leverages our

unique product testing capabilities and consumer

experience data to validate and ensure that our

standards are science-based, advanced, and

comprehensive.

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Collect and analyze global case studies

involving product recall, product liability

and accidents

Identify product risks in normal use,

and cases of misuse or abuse

Follow and undertake research on

updates to overseas and domestic

standards and regulations

Investigate problems

identied during research

and production, and quality

issues raised by consumers

Knowledge

Center

Goodbaby International’s enterprise standards cover the most extensive scope and are the strictest in the

industry. We also draw on multiple disciplines for the further upgrading of key technical indicators. For

example, the Group has drawn on quality management standards developed by the automotive industry, as

well as hazard analysis and critical control points adopted by the food industry, in a bid to create the best

possible protection for child users. In 2022, the Group added eight new standards to its enterprise standards

system.

Research Knowledge Center for Standards

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Goodbaby International Enterprise Standards Far Exceeding Industry and International Standards

Product Category Main Indexes ISO Standards Enterprise Standards

Strollers

Outside walking test None Test for 500 km

Backrest static load test None Load 30 kg on backrest for 10 min

Backrest operation durability:

2,500 cycles

Footrest static load test None Load 23 kg on the footrest for 1 min

Test for dynamic strength

of carriers/pram bodies

None 15,000 cycles

Bumper bar/tray static

load test

None 1. Load 30 kg on bumper bars for 10

min

2. Load 20 kg on trays for 10 min

Car safety seats

Frontal impact test 50 km/h 80 km/h

Carrying handle misuse None 27 KGF

Sand test None 30 cycles

Carrying handle operation

durability

None 5,000 cycles

Packaging drop test 10 cycles from

a height of not

more than

760 mm

14 cycles from a height of 1,500 mm

Materials

Formaldehyde 20 ppm 16 ppm

Soluble lead 90 ppm 23 ppm

Flame retardants None 28 kinds, each flame retardant must

be less than 5 ppm

Total lead 300 ppm 10 ppm

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The Goodbaby Standards Committee, established

in 2010, is responsible for the integrity of the

Group’s enterprise standards. It issues new releases

and updates in accordance with our Product and

Components Standards Management Policy. The

Committee provides institutional assurance that

resources are being correctly allocated to maintain

the Group’s leadership position in standards-setting.

It brings together the rich experience and expertise

of over 50 specialists from home and abroad, and

ensures that Goodbaby’s enterprise standards

remain at the forefront of safety, reliability and user

experience across general techniques, products,

procurement and manufacturing standards.

PART 4: QUALITY DESIGN AND

PROCUREMENT FOR A ROBUST

MANUFACTURING SYSTEM

Goodbaby International’s quality management

system includes strict specifications and procedures

covering the entire process of design, procurement,

production, packaging and shipping. The Group

also relies on its self-owned industry-leading

testing capabilities, along with third-party testing

accreditation, to deliver experience-driven childcare

products.

RISK CONTROL FROM DESIGN STAGE

ONWARDS

Goodbaby International’s quality system starts

at the product design stage. It applies Failure

Modes and Effects Analysis (FMEA) to concept

generation and structure and appearance design,

as well as at the development stage to visualize

the relationships between products, functions and

failures. By analyzing failure modes and the causes

and consequences of failure, potential problems can

be identified before mass production and measures

taken to systematically improve product quality and

reliability.

The Group undertakes 137 key tasks from concept

design to mass production to ensure that new

products successfully get through the entire process

of prototyping, validation and trial production. Its

child car safety seats also draw on quality control

methods and techniques taken from the automotive

industry, such as Advanced Product Quality

Planning (APQP), Impact Simulation Analysis (CAE

Simulation), All-around Testing (including dynamic,

static and misuse testing), and Product Verification

Checklist.

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The Group has five production bases, in Kunshan,

Ningbo, Pingxiang in the PRC, Piqua in the U.S., and

Tijuana in Mexico. They are principally engaged in

the production of durable juvenile goods including

child car safety seats, strollers, electric ride-

ons for children, cribs, and baby seats. All three

PRC production bases have ISO 9001 Quality

Management System certification, and their supply

chain system is managed according to GBT 19580

Excellent Performance Evaluation Criteria. In

the Americas, our two production bases operate

according to a set of quality management systems

and procedures based on ISO standards and

principles.

THE PRC

Our production bases and Quality Assurance Center

in the PRC developed 882 quality management

policies and over 10,000 operation requirements,

including those laid out in the Quality Manual,

Product Safety Management System (including

recall system), Product Liability Management

System, and Product Experience and Evaluation

Management System. These ensure the stability

and consistency of different products throughout

production, and guarantee quality assurance from

materials acquisition and production to shipment.

The Group’s quality management system is

based on a series of operational documents that

include Corrective and Preventive Management

Procedures, Document Control Procedures, Record

Control Procedures, Non-conforming Products

Control Procedures and Data Analysis Management

Procedures. To ensure continuous quality

improvements, the Group analyzes the reasons

for non-conforming or non-standard products and

implements appropriate corrective or preventive

measures.

In 2022, our production bases in the PRC launched

a new Non-conforming Product Scrapping Process,

and revised a number of quality control system

documents such as the Red and Yellow Material Box

Management System, Rework under Control, Error

Prevention Management System, Final Inspection

Management System, Audit Control Procedures and

Supplier Quality Management. The Group conducted

training on implementing the newly added or

revised content for relevant positions including

workshop managers, quality engineers, quality

inspectors, production engineers and front-line

operators.

With technological development, and especially

digital technology, the Group has established a

blueprint for digital transformation by integrating

smart products, smart manufacturing, information

flows and materials flows. In 2022, the Group kicked

off a digitization upgrade of its production sites in

the PRC.

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The Manufacturing Execution System (MES) was the focus of our 2022 digital upgrade for the

production bases in the PRC. MES covers the entire process from order receipt, production

planning, materials planning, order delivery to final shipment. It facilitates integration of workshop

production management and scheduling, as well as Enterprise Resource Planning (ERP) at the

enterprise management level. During the year, we completed the development of an MES system

for the plastics factory, logistics center, and trolley and safety seat assembly plant at our Kunshan

production base.

THE AMERICAS

In the Americas, Evenflo continues to deepen its role as a parenting partner with its century-old beliefs and

traditions. The management of production quality for Evenflo products is focused on reliability, stability and

durability. Strict controls are in place concerning risks, processes, changes and personnel, making for sound

management of the brand’s reputation.

Manufacturing Execution System (MES)

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Evenflo has three robust quality objectives, namely robust design, robust process and robust

process controls. The three objectives fully meet the requirements of the Quality Requirements

and operation standards.

Evenflo’s Three Robust Quality Objectives

We have developed targeted testing methods

including Sled Testing, Structural Integrity Testing,

CFR Testing and Lifecycle Testing, as well as

relevant quality indicators and metrics, to ensure

quality control and management throughout the

product lifecycle. These methods are based on

standards higher than most industry or national

standards.

The Group strictly complies with and has fully met

relevant laws, regulations and standards in the

Americas, including the U.S. Consumer Product

Safety Improvement Act, American Society for

Testing and Materials, the U.S. Car Seat Standard

FMVSS213, Safety Standard for the Handheld

Infant Carriers F2050, the Canadian Carriages and

Strollers Regulations SOR/2016-167, Canadian Safety

Regulation for Expansion Gates and Expandable

Enclosures SOR/2016-179, and Toy Regulations

SOR/2022-17 under the Canada Consumer Product

Safety Act.

These laws and regulations include clear

requirements for product labelling and instructions,

including product features, usage, certification

information and labelling. In addition to being in

strict compliance with these to ensure consumer

rights, we also take into account the readability of

our labels and the environmental friendliness of the

paper and printing used. In addition, we follow the

quality specifications of our retail partners, and were

involved in the certification of 11 product categories

under the Juvenile Products Manufacturers

Association of America.

Throughout the entire product lifecycle, the quality

of the initial design underpins the subsequent

process development and control. With risk

mitigation as a core strategy, we incorporate all

quality requirements when designing a product

according to stringent enterprise standards and

performance specifications, while meeting market

and client needs. We have adopted a five-step

approach “Identify Risk, Mitigate Risk, Control

Risk, Manage Risk and Address Risk”, quantifying

risk monitoring indicators, to ensure the effective

operation of our quality management system.

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Risk Control in Design Process

Identify Risk

Control Risk

Identify deﬁciencies in product design or

production processes in advance, considering the

technical limitations of manufacturing/assembly.

Determine whether performance meets the

speciﬁcations and desired functions speciﬁed

during product development through Pilot Run

and Product Validation.

Mitigate Risk

Further analyze product design through Quad

Charts and Plant Metrics, test and review potential

problems using error-prooﬁng techniques, and

make corrections and improvements proactively.

Apply error-prooﬁng techniques to all

processes, test and inspect products, take

improvement measures to solve problems

identiﬁed.

Use Corrective Action/Preventive Action 8D to

deﬁne and correct recurring quality problems

around the eight basic guidelines to solve

structural problems in product and process

improvement.

Perform data analysis and assessment to

quantify risks and, if necessary, restart relevant

processes.

Manage Risk

Address Risk

In 2022, we reviewed the new product development process and integrated quality management into the

design and development process, with a view to strengthening our ability to identify potential failure modes

and analyze consequences. The Group organized a number of training sessions for relevant employees.

GOODBABY

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BUILD SYNERGIES WITH SUPPLIERS

TO ACHIEVE SUSTAINABLE WIN-WIN

RESULTS

QUALITY FIRST

Goodbaby International works with qualified and

reputable suppliers with the highest levels of quality

and ethical behavior. Suppliers play an important

part in the Group’s quality system, and help ensure

the industry-leading positions of our brands.

The Group has 728 production materials suppliers,

180 OEM suppliers and 1,121 non-production

suppliers. Production materials that we source

are mainly metals, plastics, fabrics, chemicals and

packaging materials; non-production suppliers

include suppliers of IT, consultancy and other

services; OEM procurement relates mainly to

parenting products sold by the gb brand in the

PRC, primarily in the four categories of durables,

consumables, apparel, and cotton fabrics.

Our procurement strategy has always been

centered around a stable supply chain (especially

over the past three years when both consumers

and the manufacturing sector were affected by the

pandemic), so the quality and timeliness of product

supply are top criteria for evaluating suppliers. Our

key production materials and OEM suppliers have

ISO 9001 certification, and ISO 14001 certifications

are required for tissue and skincare suppliers. In

2022, 87% of our production material suppliers

had signed zero defect and hazardous substance

management agreements. We have also set up a

supplier quality management platform based on

the enterprise resource planning system to enable

real-time updates to all our quality improvement

projects, which is enhancing communication

efficiency with suppliers as well as product quality

traceability.

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SUPPLIER MANAGEMENT

As the main production engines of Goodbaby

International, the production bases in the PRC carry

out steady procurement and supplier management

work in accordance with the New Supplier

Introduction Procedures, Supplier Elimination

Process, Supplier Management Control Procedures,

and Procurement Principles Procedures. The

Supplier Quality Management team, which works

in parallel with the procurement function, monitors

quality levels and performs monthly evaluations

during the supplier selection and order fulfilment

process. As the Group scales up its investment

in the R&D of smart products, the procurement

team has been building up a pool of suppliers for

technology-driven and smart products, such as

biometrics, smart electronics, airbags and recyclable

materials.

In the Americas, Evenflo has always upheld the

quality principle of “Continuous Improvement” and

encouraged its suppliers to have a comprehensive

commitment to quality. The two production sites in

the region are principally engaged in assembly and

injection molding, sourcing mainly raw materials

including resins, metal parts and cardboards.

In addition to the Quality Manual and Quality

Requirements, Evenflo recommends its suppliers

to refer to the Automotive Industry Action Group’s

Statistical Process Control Reference Manual and

Potential Failure Mode and Consequence Analysis

Manual.

The gb brand covers a wide range of product

categories, and collaborates with OEM suppliers

for non-durable product lines. When selecting,

reviewing and evaluating OEM suppliers, the gb

brand uses management policies such as Product

Supplier Management Procedures, Procurement

Order Management Procedures, Procurement

Control Procedures and Product Pricing for Contract

Management Procedures to specify its procurement

management principles and standards. The quality

department serves as the gate keeper in the

procurement process to ensure the conformity of

product quality. In 2022, the gb brand reviewed and

made revisions to the main management systems

mentioned above in response to consumers’

evolving behavior and efficiency requirements for in

the Internet era.

In terms of OEM supplier management, the gb brand

mainly focuses on three dimensions, namely level of

quality, supply capacity and cost control. It regulates

the development, audit, evaluation and elimination

mechanism for suppliers through its Product

Supplier Management Procedures for transparent

supplier acquisition and management. In addition,

the brand has developed a series of supplier quality

management measures which specify the control

methods and implementation process for supplier

quality management, and ensure that all materials,

parts, outsourced products and finished products

from suppliers meet its quality requirements.

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gb Brand Supplier Quality Management Measures

Measures for the

Administration of Hazardous

Substance

Control Procedures

for Design Change

Quality Management

System for Outsourcing

of Finished Products

Supplier PPAP

Management System

Supplier Quality

Responsibility

Management System

Supplier

Emergency

Response

Supplier Order

Delivery

Assessment

Procurement

Control

Procedures

Supplier Quality

Management

Measures

To identify problems promptly and build healthy

long-term relationships with suppliers, the gb

brand has moved quality control ahead of other

steps, and implemented it at the level of the

suppliers’ manufacturing process. It has also moved

inspections from the warehouse side to the factory

side to stop defective products from entering

warehouses and then the market. The gb brand has

168 OEM suppliers based on product categories.

In 2022, the brand’s procurement team worked

to identify suppliers with competitive advantages

in both cost and quality. The brand also launched

a Value Analysis/Value Engineering program to

strengthen its integrated management of suppliers

to reduce costs and improve economic efficiency.

During the Reporting Period, annual reviews of 637

of the Group’s global suppliers

were completed,

leading to the removal of 79. Another 46 suppliers

were added. The disruption that the pandemic

brought to the supply chain led the Group to take

more local and regional suppliers into consideration

when developing sourcing plans, to expand its

supply capabilities within existing operating regions.

Non-production suppliers are excluded.

The PRC

832

The U.S.

Mexico

Germany

Others

Number of Suppliers

by Geographical

Location 2022

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SUPPLIER TRAINING

Goodbaby International shares its quality culture

and management practices with its suppliers,

aiming to collaborate and integrate with them more

closely in their daily operations. In total, 91% of its

materials and OEM suppliers are from the PRC. The

Group has paid extra attention to communications

with suppliers in the PRC due to the impact of the

pandemic and travel restrictions.

We continued to organize training sessions for

suppliers, mainly online, due to the travel restrictions

during the pandemic in the PRC. In 2022, we trained

90 suppliers on the Measures for the Administration

of Chemicals for a total of 225 training hours. We

also conducted small-scale offline activities for

suppliers when pandemic controls allowed. Our

Kunshan production base sent environmental

and occupational health experts on visits to three

neighboring suppliers, where they inspected safety

production arrangements and provided training. Our

efforts drew positive responses from the suppliers

and recognition from the local government.

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In 2022, the gb brand provided 22 on-site and online

training sessions for OEM suppliers of durables,

consumables and apparel that covered new product

standards, quality management processes and

complaints. In doing so, we further strengthened

suppliers’ understanding of changes in products

and market demand, as well as the Group’s specific

quality and process control requirements.

SUSTAINABLE SUPPLY CHAIN

In 2022, the Group updated its global Supplier

Guiding Principles Policy with the aim of ensuring

that its suppliers meet the highest level of quality

and are willing and able to operate in accordance

with Goodbaby International’s applicable rules,

regulations and ethical standards. The standards

specified in the Supplier Guiding Principles Policy

have been incorporated into supplier agreements,

with suppliers expected to build and implement

their internal business procedures to comply.

The Group encourages suppliers to incorporate

sustainability into their business operations, and

notes that some have already achieved positive

results in terms of environmental performance,

such as building their own self-owned photovoltaic

power generation systems, and launching a green

fiber business from recyclable plastic bottles. During

the year, the declaration of supplier conflict of

interests included global OEM suppliers for the first

time, covering 100% of eligible suppliers.

In 2022, with Goodbaby International’s encouragement,

the water cup supplier for the gb brand incorporated

sustainability into its business by replacing its

air conditioners with a green ventilation system,

significantly reducing energy consumption and noise.

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IMPROVED TESTING CAPABILITIES TO

SAFEGUARD PRODUCT QUALITY

Goodbaby International’s enterprise standards

and quality systems rely on its well-equipped

and powerful testing laboratory. After years of

expansion, the laboratory is recognized as the

most professional and comprehensive testing and

certification awarding institution in the field of

juvenile products worldwide. The Group’s laboratory

is the only institution that can test according to the

national standards of the PRC, the European Union,

the U.S. and Japan at the same time. It is accredited

by the U.S. Consumer Product Safety Commission,

and is authorized to provide ECE R44 child safety

seat testing and certification services. It is also the

first authorized testing institution to test according

to the standards of the Allgemeiner Deutscher

Automobil-Club.

Holding the laboratory qualifications of the China

National Accreditation Service for Conformity

Assessment, the China Metrology Accreditation

Service and the China Center for Automotive

Accreditation, the Group’s laboratory in the PRC

also serves as the designated laboratory for the

China Compulsory Certification, and the partnering

laboratory for the China Quality Certification Center,

the Certification Center of the Light Industry Council

and other mandatory product quality certification

bodies. In 2022, the laboratory was selected to

join the list of the National SME Public Service

Demonstration Platform as an exemplary company

in the technical service category.

Our laboratory has world-class collision simulation

testing technology, and shares its testing data

in real time with authoritative institutions across

the globe. Testing reports are automatically

generated, conforming to the standards stipulated

by internationally recognized organizations. The

laboratory also has over 2,500 testing capabilities

for toxic and hazardous substances and 360

environmental testing capabilities for water, gas,

noise and soil.

The laboratory in the PRC owns over 1,000 pieces

of advanced testing equipment, and its testing

capabilities span eight major categories, namely

car crash simulation, auto parts testing, chemical

testing, mechanical and physical testing, fabric

testing, environmental testing, material reliability

testing and microbial testing. It is the only dynamic

laboratory in the industry for strollers that can

perform an array of tests in environments between

–20°C and +70°C. It fully meets the testing needs of

Goodbaby’s entire product family, from prototype

design and trial through to mass production.

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The laboratory in Piqua also conducts product integrity testing, sled testing and batch testing of

materials such as fabrics in accordance with the Quality Requirements. We also invite qualified

third-party laboratories to conduct annual testing according to the requirements of the U.S.

Consumer Product Safety Commission.

As new technologies emerge, smart products for children have become a major trend. The Group has

developed a series of smart products for children such as smart electric strollers, smart beds, smart car seats

and smart mats. Since there is no industry standard for children’s smart products, the Group has developed

its own specific quality requirements and testing capabilities for these products, such as vibration tests,

damp heat cycle, over-voltage performance, and reverse voltage performance.

Taking the smart electric stroller as an example, the Group has developed special testing

equipment to test the reliability of the product, targeted at its function of adding uphill assistance

and downhill resistance. Testing takes place at different temperatures (from +70°C to –20°C).

We have also developed other tests, such as triple integrated vibration and rapid temperature

change tests, to reflect the performance of smart products more accurately during transportation

and actual use, and identify flaws in product design.

Before launch, every Goodbaby International product undergoes hundreds of tests under four categories.

The Safety Test is a basic test to meet international or national standards, and a Reliability Test is then

conducted to ensure durability and reliability. The Quality Requirements Test is an overall test based on the

product features, and the 3F (Fit Feel Finish) Test is a test for both functions and user experience. We also

perform a Structure Integrity Test (SIT), a Confirmation of Production (COP) and a Product Maturity Test

during the development stage. Third-party testing organizations also conduct some product tests for the

Group, in addition to tests carried out at our own crash test laboratories.

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Four Types of Tests for Goodbaby International Brands

Product

durability and

reliability

Reliability Test

Meet international

or national

standards

Safety Test

Testing

speciﬁcations of

each product

Quality

Requirements Test

Unboxing experience,

including touch,

appearance and smell.

Product supports a good

user experience

3F (Fit Feel Finish) Test

In 2022, the Group added testing capabilities for vibration tests, damp heat cycle, over-voltage performance,

and reverse voltage performance.

Technology Breakthrough

on the New U.S. Standard of

Child Restraint System

The U.S. has updated its Child Restraint System

standards in recent years, adding relevant safety

requirements regarding the risk of side impacts,

which are common in trac accidents.

In order to meet the latest requirements of CRS, the

Group developed relevant testing technologies,

upgraded and improved frontal impact test in

accordance with the U.S. Car Seat Standard

FMVSS213, and also introduced a new seat for

frontal impact test. We have also developed a 10°

lateral impact technology for child car seats,

replacing the costly honeycomb aluminum

deceleration technology with reusable cylinder

deceleration technology.

Building Child Car Seat

Airbag Testing Capabilities

To test child car seats with airbags, we

apply automotive airbag detection technology

that can conduct high-precision static and

dynamic point-blown tests.

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CULTIVATE QUALITY CULTURE

The Group’s “Quality First, Zero Defect, Zero

Tolerance” quality culture represents an

accumulation of experience and practices over

time. In response to emerging trends in new

materials, process efficiency and consumer demand

globally, we are actively exploring, re-organizing

and integrating our approaches, while always

keeping children’s health, safety and happiness at

the forefront, in order to keep Goodbaby’s quality

culture abreast of the changing era.

With absolute safety and utmost experience as

its goals, the Group’s Safety Committee develops

product standards and regulatory studies, product

safety management systems, and specialized

monitoring systems. In line with the principle of zero

tolerance for product safety. The Safety Committee

also organizes training and education on product

quality and safety issues, supported by the quality,

R&D and product engineering departments.

To foster a culture where everyone cares about and

takes responsibility for quality, the PRC production

bases have developed a quality incentive

mechanism for internal staff. This has involved

introducing quality knowledge competitions and

quality training for employees at all levels, linking

quality performance to performance assessment

and promotion, and setting up quality awards such

as the Quality Improvement Award and the Best

Quality Improvement Award. The Group has also

built a quality management system and operation

standards that specify accountability and lay out

key performance indicators for different levels, and

that delegates responsibilities to specific positions

and individuals.

In the Americas, we have built a quality team

structured around the needs of Evenflo consisting

of Product Integrity, Supplier Quality, Americas

Production Quality and Asia Production Quality.

General and specialized skills training is provided

for quality-related positions for relevant employees

to help them fully understand and fulfill their daily

responsibilities, and gain personal growth and

development from the Group’s quality system.

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PART 5: NEEDS-BASED SERVICES

ACCOMPANYING CHILDREN’S

GROWTH

Looking to provide the safest juvenile products

and the best services to families with children, over

the years Goodbaby International has continuously

expanded its offline networks of distributors and

self-owned channels while also increasing its

comprehensive online capabilities. Currently, the

Group provides products and services of all brands

to parenting families in over 120 countries and

regions.

During the Reporting Period, the COVID-19

pandemic continued to impact negatively on

consumer spending globally. Nevertheless,

Goodbaby International’s strong reputation and

innovative product features helped it maintain its

market-leading position in major segments such as

child car safety seats and child strollers. Each of the

Group’s core brands has its own distinctive market

positioning and runs its own independent sales

and service systems, which work to identify and

promptly serve the ever-changing parenting needs

of consumers.

A NEW MODEL OF COMPANIONSHIP

Goodbaby International’s classic high-end

international brand CYBEX offers sales and services

worldwide through direct business and national

agency arrangements. Its self-owned marketing,

sales and after-sales service has presence in 47

countries, through 102 flagship stores and 58

maintenance centers. CYBEX also provides products

and services via exclusive agency partnerships in

nearly 70 countries. The gb brand focuses on the

Chinese market where it serves millions of parenting

families through approximately 4,500 retail sales

points, including 468 self-owned stores. In the

U.S., the long-standing Evenflo brand works in

partnership with the four big retailers of Walmart,

Amazon, Target and buybuy BABY, to expand its

sales coverage.

Distributors, large chain stores and franchisees

are key channels through which we connect with

consumers, and also important communicators and

defenders of our product images and values. Each

of our brand takes into account the characteristics

of its own target market segments and applicable

laws and regulations in managing its downstream

customers and ensuring service standards and

procedures, with the aim of offering consumers with

high quality products and services while further

expanding its markets. We conduct a partner

satisfaction survey annually in areas such as product

quality, delivery capacity and service level, and

follow up with improvements as necessary.

Three years on, the COVID-19 pandemic has

substantially altered consumers’ purchasing patterns

and spending habits. The flat sales model, where

the Internet serves as a direct link to consumers,

has been widely accepted. The integration of online

and offline channels has prompted a significant shift

in consumer behavior, whereby they take active

decision “searching for goods” with features they

need. We have responded to these market changes

by carefully exploring and reworking our before–

and after-sales interactive models, supported by

our proprietary insights on demands and increased

operational efficiency supported by data capability.

We are striving to transform from a Group “providing

juvenile products” to one “offering companionship

to parenting families”.

Our CYBEX and gb brands each have membership

centers that offer targeted childcare and parenting

information and product services based on member

profiles, complementing our traditional services

that react upon consumer request. In 2022, CYBEX

had online stores in 19 countries, and the gb

brand added over 6 million members. Moreover,

gb’s presence on social commerce sites such as

Xiaohongshu, Tiktok and Zhihu as well as its online

flagship stores on e-commerce platforms such as

Tmall, JD.com, and Pinduoduo attracted a record

high of approximately 100 million visitors during

the year. Evenflo’s retail partners possess strong

online capabilities. The brand also sells its products

through Evenflo corporate website and is exploring

the possibility of upgrading its own online shopping

system. During the reporting period, the Group’s

online and offline turnover made up 29% and 71% of

its total turnover respectively.

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BUILDING POSITIVE RELATIONSHIPS OF TRUST

The Group provides consumers and members with a variety of communication channels. Enquiries,

suggestions and complaints can be made through our channel partners or customer service hotlines and

emails of the various brands under Goodbaby International. Consumers in the PRC can also reach out to us

through various social media platforms. Ways of accessing our customer services are clearly stated in all the

product manuals produced by Goodbaby International (unless otherwise specified by laws and regulations).

In addition, consumers can easily locate relevant information on the brands’ websites.

All enquiries and complaints are logged according to categories such as information shared, accessories

required and maintenance arrangements, and are handled and followed through by the relevant departments.

We pay special attention to the response rate. All brands and markets set their own response timeframes in

light of local conditions and complaint channels, but these are generally within 24 hours. Issues that can be

solved locally will be settled in seven days and be matched up with a review mechanism when appropriate.

Complaints relating to product quality and performance that are lodged with Goodbaby’s customer service

hotlines or distributor channels are collected and sorted by each brand’s quality department for analysis, and

filed as reference materials to be used for continuous product improvement.

The gb brand handles complaints in strict accordance with its Customer Complaint Procedures and

User Service Management Procedures. The customer service center, quality center and logistics center

collectively take the responsibility of resolving the complaint until the consumer concerned is satisfied. In

2022, its customer service processes and practices were further upgraded, including:

• Reduced maintenance time: the time required for accessory distribution and maintenance was

shortened to three working days from five working days.

• Process optimization: designated personnel at headquarters must now follow through maintenance

orders and complaints up until case closure, significantly improving handling efficiency.

The Group has constantly kept its communication channels open and proactively responded to consumer

complaints. During the Reporting Period, gb brand processed 73 consumer complaints, CYBEX 100

complaint cases from the European and the North American markets, and Evenflo 159 complaints.

In 2022, the Group was involved in three disputes arising from product liability, which are currently

undergoing litigation.

Customer and consumer surveys are other important ways by which the Group listens to market demand

and expectations and assesses its brand images. We conduct customer and consumer satisfaction surveys

regularly every year, and carry out on-demand consumer product surveys each month. To carry out the

annual satisfaction surveys, each of our markets either engages a third party agent or uses their own

customer service teams according to local conditions. Monthly consumer surveys focus more on gaining

consumer insights into the functions, materials, packaging and brand awareness of specific products. The

sample size of such surveys varies from around one thousand to ten thousand people.

gb Brand’s Customer Service Process and Practices

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The gb brand’s Measures for Customer Satisfaction Survey Management is the basis of a satisfaction

survey conducted among channel customers, distributors and consumers at the beginning of each year.

We carefully assess feedback on our product quality, delivery and services, and refer comments for

further analysis and development or update of corrective or preventive measures as needed.

Taking into account gb’s product range and categories, our satisfaction evaluations cover seven key

areas: customer expectations, perception of quality, perception of service quality, perception of value,

customer satisfaction, customer complaints and customer loyalty. Our surveys take the form of telephone

interviews to ensure clarity. We also welcome comments on our product quality, design, merchantability,

after-sales service and sales policy.

In gb’s consumer satisfaction evaluations for 2022, the comprehensive satisfaction rating for durable

products was 87.6/100, for nursing supplies 88.1/100, and for channels and distributors 84.6/100.

Our channel and distributor partners also made suggestions and comments on market issues such as

competition challenges and channel conflicts.

In April 2022, CYBEX initiated a voluntary U.S. product recall of the Sirona M convertible car seat series built

before September 2018. A total of 20,256 products were recalled, accounting for 0.05% of all products sold.

In May of the same year, CYBEX made available a free product improvement kit and an instruction video for

proper use to all registered customers.

Consumer Letters to Evenflo

In the U.S., our regular monthly consumer group interview results show that the top four attributes of the

Evenflo brand are trust, quality, safety and innovation.

Every so often, Evenflo receives emails from families with children or their relatives sharing how child

safety seats helped their children survive a traffic accident.

“Thankfully my grandson was not injured when

the accident occurred. My daughter was sitting

at a red light and was hit from behind by the

other vehicle going 75 miles per hour. We are

fully conﬁdent that the only reason he wasn’t

hurt was because of his car seat (Gold

Revolve360). It has been the best investment

we could ever have made in a car seat!”

- From Anne

“I am glad I purchased the Evenﬂo gold car

seat (Gold SecureMax) for my daughter. And I

particularly love the sensor safe clip. It gives us

peace of mind. I would highly recommend this

product.”

- From Yolanda

gb Brand’s Customer Satisfaction Survey

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As part of listening to consumers’ voices, the Group has incorporated a number of activities into its product

design process that utilize consumer input, such as product experience testing and design. This helps us

realize customer value, and is also an opportunity for us to engage and share our sustainable practices. The

Group also attaches importance to guiding consumers towards greater environmental awareness during the

sales process. In the PRC, the gb brand starts with a core design and offers product matching and modular

choices for accessories, which enable consumers to replace spare parts, reduce waste and extend the

product life cycle.

In the U.S., selected consumers are approached for us to act as bystanders with their permissions.

We conduct in-field detail observation of their use of products for a couple of hours, capturing unmet

consumer needs in various user scenarios directly.

gb Promotes Environmental Protection to PRC Consumers

1) In the PRC, the gb brand connects designers with users on a common platform to unleash their

creativity together.

2) We have built an upcycling platform that helps consumers to alter or repurpose their children’s

clothes and modify used strollers for further use.

3) We encourage consumers to reuse purchase bags, and reward them with Goodbaby points for

product redemption.

EFFECTIVE PRIVACY MANAGEMENT

The integration of online and offline retail platforms has made direct communication with consumers the

new norm. We understand that we are obliged to duly protect consumers’ personal data and privacy, as we

innovate our product and service model.

The Group strictly abides by the Cybersecurity Law of the People’s Republic of China, the European Union

General Data Protection Regulation, and the Privacy Act in the U.S.. The Group has laid down guiding

principles in its Code of Business Conduct on the collection, reading, storage, usage and transfer of consumer

information. It has also detailed sets of rules in its Information Security Policy for the PRC operations, and

in the Quality Manual and Roles and Responsibilities of Management document for the U.S. operations.

These prohibit any unauthorized access and use of consumer information, with control procedures and roles

defined accordingly. Training and inspections are regularly conducted. In 2022, the Group did not record any

leaks of private consumer information, nor did it receive any relevant complaints.

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PART 6: INNOVATION DRIVING PRODUCT RESILIENCE

At Goodbaby International, exceptional quality and safety performance grounded on innovation is a keystone

in our pursuit of excellence in product development. Through open development methods and a clear

grasp of consumption trends and user scenarios, our more than 600 R&D personnel at eight R&D centers in

Europe, the PRC and the U.S. have accumulated a large technological knowledge pool that is enabling the

Group to continue launching innovative new products while optimising and upgrading its classic ones.

Upgrades and breakthroughs

to traditional classic products

Carbon reduction concept

integrated into design

Dierentiated new and innovative products

that lead the industry

New products backed by

smart applications

Innovation systems and mechanisms supporting R&D and design

Designer teams, knowledge hub, drivers for

innovation, capital investment, beyond compliance

Our pace of development and innovation was not slowed by the COVID-19 pandemic. In 2022, our R&D

investment reached HK$407 million and we launched more than 500 new products, vindicating our steadfast

commitment to safeguarding product safety for the wellbeing of children and families.

In 2022, Goodbaby International’s CYBEX brand launched a total of 71 new and upgraded products. The

brand has cumulatively garnered approximately 500 safety awards.

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SOLID ORGANIZATIONAL

ARCHITECTURE UNDERPINNING

INNOVATION

Goodbaby International’s market leadership springs

from its ability to constantly create innovative

products. The Group is continuously optimising its

own systems and mechanisms, and has a range of

processes in place to help it identify and respond

to changes in product demand among younger

parenting families, cross-field applications of smart

and data technologies, online and offline integration

of sales models, and consumers’ increasing

preference for sustainable products.

Our “Integrated Product Development Model”

encourages consumers to voluntarily participate

in the experience testing of our product design,

manufacturing and services through various

channels. Related feedback is imported into our

database. This database also covers industry

knowledge, market intelligence and experience, such

as industry recall deficiencies, forming an important

knowledge basis for product design decisions.

In 2022, the Group applied for 448 patents and was

granted 555 patents, bringing its cumulative number

of patents granted to 3,800. The Group also applied

for 130 trademarks and was granted 71 trademarks,

bringing its cumulative number of trademarks

granted to 2,532.

Over the years, innovation has been a major

driving force behind Goodbaby International’s

development, and a core competitive advantage.

We strictly abide by the applicable laws and

regulations of the countries and jurisdictions

where we operate, including the Patent Law, the

Trademark Law and the Copyright Law in the

PRC, the Patent Act, the Utility Model Act, and the

Design Act in Germany and the Copyright Act, the

Trademark Act and the Defend Trade Secrets Act

in the U.S., and have laid down a series of related

policies such as our Policy on Intellectual Property

Rights Management, our Mechanism on Avoiding

Intellectual Property Rights Risks, our Control

Procedures for the Implementation, Licensing and

Transfer of Intellectual Property Rights, and our

Policy on Enterprise Trademark Management. We

pay high respect to intellectual property rights in

the industry, and accordingly work hard to protect

our own intellectual property rights and trademarks

to prevent counterfeit and inferior products and to

safeguard the rights and interests of consumers.

During the Reporting Period, the Group filed a

patent infringement lawsuit for which it received

compensation for RMB2 million (about HK$2.31

million). The Group also won an administrative case

involving the determination of trademark rights, and

safeguarded its Class 12 “Haohaizi” trademark.

UPGRADES AND BREAKTHROUGHS TO

TRADITIONAL CLASSIC PRODUCTS

Many of Goodbaby International’s brands have

maintained leading positions in their respective

market segments for years. We firmly believe

that only by constantly challenging ourselves and

absorbing new ideas can we serve consumers over

time and keep forging ahead.

We challenged the traditional thinking that child

safety seats should always face forward. Taking

into account the better safety performance of

rear-facing seats alongside human beings’ natural

preference to face forward, we developed the

industry’s first rotatable safety seat with both

forward-facing and rear-facing options. The product

has won much praise and recognition in the market

owing to its higher safety and more user-friendly

qualities, and has set new standards for the safety

seat industry.

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However, when children reach the age of around 6

years, the limited stretch space of a rear-facing seat

becomes evident, and the natural comfort of a front-

facing seat is obvious. Children in this age group

often resist the rear-facing setting. Therefore, a new

mission of the CYBEX brand has been to find ways

of creating a forward-facing child car seat that has

the same high safety performance as a rear-facing

one. This has involved us creating an airbag safety

seat which inflates an airbag within milliseconds of a

collision to provide head, neck and body protection

for the child in the seat.

We have also continued to pursue product

excellence in our mature car seat products by

challenging conventions and making breakthroughs,

and have won critical acclaim from respected

institutions and from consumers for our excellent

design and manufacturing capabilities. In May

2022, the Group’s Anoris T i-Size airbag safety seat

clinched the Safest Seat Award from the leading

consumer testing organization Stiftung Warentest

and the Allgemeiner Deutscher Automobil-Club for

its unprecedented level of safety.

NEW PRODUCTS BACKED BY SMART

APPLICATIONS

In 2022, Goodbaby International made product

intelligence a major R&D focus. It established a

science and technology innovation center where

concepts and technologies such as the Internet,

Internet of Things and artificial intelligence are

being applied to childcare and parenting scenarios,

with protecting children’s safety and wellbeing as

the driving force for product innovation.

GOODBABY

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Annual Report 2022

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE REPORT

NURSING AND

FEEDING

COMFORT CARE REST AND

SLEEP

RECREATION

AND SPORTS

TRAVEL AND

PROTECTION

During the Reporting Period, Goodbaby International achieved progressive results in the new field of smart

mother and baby products. The Group applied smart recognition technology based on infant signs and

movement characteristics to its childcare product series, helping to significantly reduce the risks faced

by infants and young children in certain day-to-day scenarios. This makes parenting more convenient and

secure, and elevates the concept of parenting to a new level.

New Smart-based Products

– We have developed smart safety seats that can be set automatically, eliminating the risk of

installation errors and reducing installation complexity for anyone driving with young children alone.

– We have also added functions such as deep sleep mode and voice control to our safety seat products,

allowing a driver behind the wheel easily and safely to adjust the recline angle of the child car seat in

the rear seat for more comfortable sleeping.

– To facilitate communication between infants and parents, we have integrated big data, smart

technology, and infant physiological characteristics to develop a baby cry translator. This can identify

different crying sounds generated by hunger, sleepiness, and discomfort, etc. with a high level of

probability, enabling parents to soothe their babies quickly.

– We have applied baby cry monitoring technology to cribs, and integrated biological information and

sensing technology into products such as baby seat cushions.

Main Application Scenarios

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

GOODBABY 77

Annual Report 2022

1) Equipped with rocking and music functions to soothe baby to sleep, the button indicator light shows the current gear

(low gear, high gear, stop); 2) Rocking and music soothing functions automatically start when crying is detected.

The baby cry translator identifies different baby cries, helping parents understand why their baby is crying

(e.g. hunger, tiredness, stomach pain, hiccups or discomfort) and respond to its needs more quickly.

GOODBABY

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Annual Report 2022

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE REPORT

CARBON REDUCTION CONCEPT

INTEGRATED INTO PRODUCTS

Goodbaby International takes the entire lifecycle

of its products into account when assessing their

environmental impact and recyclability. With

the European Union having implemented strict

regulations on products’ carbon footprints, the

Group is embracing the challenge and social

responsibility of providing products with more

environmental benefits.

At the design stage, we have simplified product

parts and packaging materials and utilized

recyclable fabrics as far as practicable. For this,

we take into consideration the number of parts

in the structural design process, the combination

of different materials, the balance between the

strength and weight of materials, and the materials’

recyclability. We are also making plans for the use

of recyclable materials and for reducing plastics and

printing in our packaging design. Clever designs that

incorporate the concept of sustainable development

can also help broaden the usage scenarios of our

products and extend their lifecycle, reducing the

consumption of resources associated with repeated

purchases.

Goodbaby Bicycle – Environmentally friendly materials

Materials used in traditional child bicycles: Heavy metals

and benzene

Goodbaby Bicycle: Environmentally friendly materials for

frame coating, grips, decals, saddle and yarn

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

GOODBABY 79

Annual Report 2022

Goodbaby Latex Pillow – Natural latex materials

Natural latex

Green, healthy and environmentally friendly printing

and dyeing process

✓ Annex XVII of REACH regulation

✓ US Consumer Product Safety Improvement Act

(CPSIA)

✓ China GB 18401 safety technical specification

Goodbaby Crib – Natural New Zealand eco pine

Paint-free and non-toxic, green and environmentally

friendly, health protection

✓ Obtained FSC forest management certification

✓ Complies with QBT 2453 national standard

requirements

GOODBABY

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Annual Report 2022

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE REPORT

PART 7: RIGOROUS OPERATION

UNDERSCORING ENVIRONMENTAL

BENEFITS

The scramble of struggle for natural resources

arising from human activities and the rapid

shrinkage of resources on the Earth have become

acute in recent decades, the most obvious

manifestation being the climate change. In 2016,

the United Nations put forward global sustainable

development goals to combat climate change.

Since then, almost 200 countries and regions have

committed themselves to laying down nationally

determined contributions targets in accord with the

Paris Agreement’s goal of keeping global warming

below 1.5 degrees Celsius, and further actions and

legislation are expected. Against this backdrop,

Goodbaby International has taken steps to steadily

reduce the impact of its business activities and

of its different product life cycle stages on the

environment.

From the product design phase, we have

systematically evaluated the carbon footprint of our

materials, production, packaging, transportation

and recycling. Concurrently, we have sought out

new technologies and methods to improve energy

efficiency, studied the feasibility of replacing some

materials with environmentally friendly ones, and

explored efficiency improvements in packaging and

transportation. Taking an uncompromising stand

against the safety and functions of our products, we

have gradually promoted sustainable development

measures in a rigorous manner. As for exhaust

gas emissions, wastewater discharge and garbage

disposal in our self-operated production activities,

we have insisted on compliance with all external

and internal rules and regulations. By implementing

a comprehensive plan, we have managed to reduce

the impact of the Group’s unit output value on the

environment, helping to alleviate climate change.

In 2022, the Group recorded 37,177 tonnes of CO

equivalent GHG emissions, and 4.48 intensity in

tonnes of CO

equivalent per million HK dollar

revenue, representing 16.21% and 2.11% year-on-year

decrease respectively.

PRODUCTION FACILITY AND

MANAGEMENT OVERVIEW

Most of the child car seats, strollers, carrier baskets,

daily necessity products and toys manufactured by

the Group are primarily composed of plastic parts,

fabrics and metal structural parts such as aluminum.

Consequently, our production process encompasses

plastics processing, metal processing, fabric cover

sewing and product assembly. The energy required

for the production process is mainly electricity,

while some processes require the use of natural

gas. Additionally, many processes are connected

to the municipal water supply for water as needed.

The production processes that use the most energy

are aluminum alloy processing and plastic parts

manufacturing.

The Group has three production bases in the PRC,

located in Kunshan, Ningbo and Pingxiang, and

another two in Piqua in the U.S. and Tijuana in

Mexico. The PRC production bases are the primary

production sites, with the largest being that in

Kunshan. In addition to production processes

and supporting facilities, the Kunshan base is

also equipped with staff dormitories that can

accommodate more than 3,000 people, and

operates shuttle buses to and from the industrial

park where it is located. Of the two production

bases in North America, the Tijuana base focuses on

assembly whereas that in Piqua possesses injection

molding and assembly capabilities. The operations

in Germany concentrate on marketing, sales and

channel management, with 58 maintenance centers.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

GOODBABY 81

Annual Report 2022

Energy Demand and Emissions for Main Production Process

ect

moldin

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Hazard

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was

ranu

makin

Electricit

Hazard

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Fabric Cover

Processing

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Electricit

lectricit

Nil Nil

Pre-

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Metal

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Grinding Rinsing Welding

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Powder

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& baking

Nil Hazardous

waste

Noise

Exhaust

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Noise

Wastewater

Exhaust

gas

Noise

Exhaust

gas

Exhaust

gas

Hazardous

waste

Wastewater

Exhaust

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Wastewater

Natural gas

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Electricity Natural

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Process

Consumption

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GOODBABY

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Annual Report 2022

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE REPORT

In 2022, the Group further studied and ensured

that the PRC production bases conformed with

various laws and regulations on environment and

occupational health. Of the 52 internal policies

it reviewed, 23 were subsequently updated and

various new policies were put into practice,

including Supervision and Measurement Control

Procedures, Three Wastes Control Guidelines and

Waste Control Guidelines. During the reporting

period, the production bases reported no

environmental pollution accidents. They were

awarded the national blue environmental protection

credit rating for the fourth consecutive year, on top

of being included in the environmental protection

positive list.

Through years of identifying environmental risks,

we have emphasized the fundamental importance

of compliance for identifying risks and hidden

dangers, and carried out thorough management of

our environmental work and hazard elimination. In

2022, the Group completed four initiatives to further

reduce the risk of environmental pollution.

In line with the Environmental Management System

– Requirements and Guidelines for Use and the

Occupational Health and Safety Management

System – Requirements and Guidelines for Use of

the PRC bases as well as the requirements specified

in the Quality and Environmental Management

Manual at the group level, an internal compliance

review was carried out at the end of September, and

nonconformities identified were rectified.

EXHAUST GAS MANAGEMENT AND OTHER

EMISSIONS

Aluminum alloy processing generates hazardous

gases such as sulfur oxides, nitrogen oxides, dust

and sulfuric acid mist. Plastics processing produces

volatile organic compounds and non-methane

hydrocarbons during the sub-processes of injection

molding and printing. All hazardous gas emission

sources are managed in confined environments

equipped with gas treatment devices that ensure

the treated gases conform fully to the emission

standards and requirements of the countries and

regions where we operate.

In the PRC, we have a set of Exhaust Gas

Management Regulations formulated according

to national laws and regulations. We have hired a

third-party professional environmental assessment

agency to regularly evaluate and report to us on

pollutant emissions, in addition to our own testing

and management of emissions. In the Americas, our

production activities comply fully with the relevant

requirements of the Environmental Protection

Agency of the U.S. and the Ministry of Environment

and Natural Resources of Mexico.

Fugitive Emission Transformation Project at Kunshan Plastic Factory, the PRC, in 2022

We continued to reduce the fugitive emissions of exhaust gases during the plastic granulation process,

completing a centralized collection installation to ensure that the treated gas is only discharged after

reaching the approved standard. We also designed a safety and noise modification improvement for the

dust collector to further improve its safety and noise levels. The project has now moved into the feasibility

evaluation stage.

Types of Exhaust Gases Unit 2022 2021 2020

Nitrogen Oxides (NO

) Tonnes 0.38 0.62 0.85

Sulfur Oxides (SO

) Tonnes 0.02 0.12 0.60

Particulate Matters (PM) Tonnes 1.10 1.00 0.92

Volatile Organic Compounds (VOCs) Tonnes 0.43 0.80 –

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

GOODBABY 83

Annual Report 2022

WASTE MANAGEMENT AND RECYCLING

Hazardous waste generated during the production process mainly comes from the processing of aluminum

alloys and plastics, and includes waste emulsion, waste mineral oils, waste sulfuric acid, waste activated

carbon, waste surface treatment liquid, retired containers for hazardous waste and oily rags. The Group has a

series of policies and measures for disposing of hazardous waste that include Hazardous Waste Identification

Standards, Hazardous Waste Collection and Storage Management System and Hazardous Waste Disposal

Procedures for its PRC production bases. It has erected signage identifying designated waste storage spaces

at specific locations. Qualified professional agencies collect the hazardous waste for decontamination,

in accordance with the regulations of different countries. The policies and measures facilitate systematic

control of the generation, collection, storage and transfer of hazardous waste.

Improvement of Handling of Industrial Solid Waste at PRC Production Bases

– General solid waste and hazardous waste warehouse responsibilities assigned to specific posts

– Renovation of chemical warehouse and hazardous waste warehouse at Pingxiang base

– Improvement of hazardous waste warehouse and video monitoring of flow of hazardous waste at

Ningbo base

The Group also generates general solid waste throughout the production process, including waste metals,

waste plastics, waste wood and waste packaging materials. The Group’s PRC business recycles scrapped

product parts according to its Waste Management Regulations and its Waste Disposal Management Policy.

Crushed and scrapped waste plastics and leftovers are collected and melted into granules, while the

remaining non-hazardous waste items are passed to qualified agencies for recycling. In the Americas, the

production bases strictly conform to the environmental protection laws and regulations of the countries

where they operate in waste handling.

Waste Recycling

The Group is exploring ways of recycling industrial waste in the production process. At its production

bases in the PRC and the U.S., waste plastics generated in the injection molding process are collected,

regranulated and reshaped into non-load bearing parts, such as cup holders in child strollers. During the

reporting period, the Group recycled a total of 59.15 tonnes of waste plastics.

Types of Waste Unit 2022 2021 2020

Hazardous Waste Tonnes 304 377 195

Intensity of Total Hazardous Waste produced Tonnes/Million Revenue (HK$) 0.04 0.04 0.02

Non-hazardous Waste Tonnes 1,781 1,686 1,662

Intensity of Total Non-hazardous Waste produced Tonnes/Million Revenue (HK$) 0.21 0.17 0.20

Note: The total amount of non-hazardous waste disposal in 2022 included office and domestic waste and non-recyclable

industrial waste. In 2021, only office and domestic waste was counted.

GOODBABY

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Annual Report 2022

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE REPORT

Types of Recycled Waste Unit 2022 2021 2020

Plastics Tonnes 1,097 707 704

Metals Tonnes 879 767 780

Packaging Materials/Cardboards Tonnes 983 1,315 1,431

Other Ancillary Materials Tonnes 271 298 325

Total Volume of Non-hazardous Waste Recycled Tonnes 3,230 3,087 3,240

Intensity of Total Non-hazardous Waste Recycled Tonnes/Million Revenue (HK$) 0.39 0.32 0.39

WATER USE AND DISCHARGE

The Group’s primary water consumption is by staff dormitories at the Kunshan production base in the PRC.

The demand for water in production is relatively small, arising mainly from rinsing and spraying in the pre-

treatment of aluminum alloy processing. In 2022, the Group’s total water consumption was 816,516 cubic

meters, and its water consumption intensity was 98.47 tonnes/million revenue (HK$).

In the PRC, waste water is transported to the waste water treatment station of each production base or

entrusted to a qualified third party for treatment and discharge after reaching discharge standards, in

accordance with the Group’s Waste Water Management Regulations and related rules. Online detection

instruments for real-time monitoring are in place to ensure that the total amount and concentration

of discharges meet the requirements of the Pollutant Discharge Permit issued and approved by the

government.

Rain and Sewage Diversion Project

Rainwater and domestic sewage from the Kunshan production base in the PRC is carried by two

independent pipe networks. However, during high-frequency and heavy rainfall events, areas where old

pipe networks intersect may allow domestic sewage to seep into the rainwater drainage system and

eventually flow directly into the river. This poses a potential risk of river pollution.

In 2022, we renovated the network and completely disconnected the two pipe networks. We also installed

two new pumping stations and a real-time pH monitoring device outside the rainwater discharge outfall.

If the pH value exceeds the standard, the discharge valve will automatically close, stopping the outflow of

water and redirecting it into the domestic sewage system.

Industrial Wastewater Management Project

Up to 2022, industrial wastewater from our Kunshan production base in the PRC was directly discharged

into the river after treatment, with the permission of the local government. To reduce the risk of industrial

wastewater being treated incorrectly and causing river pollution, in 2021 we began discussions with the

local government which led to a re-planning of the discharge in 2022. The industrial wastewater from

our factory is now incorporated into the municipal sewage pipe network after meeting the treatment

standard, and undergoes a second round of handling at the local sewage treatment plant prior to final

discharge into the river.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

GOODBABY 85

Annual Report 2022

Water Consumption Unit 2022 2021 2020

Water Consumption by Volume Cubic Meters 816,561 827,467 742,829

Water Consumption Intensity

Cubic Meters/

Million Revenue (HK$) 98.47 84.08 89.44

Wastewater Discharge Unit 2022 2021 2020

Chemical Oxygen Demand (COD) Tonnes 0.37 0.67 0.26

Total Nitrogen (TN) Tonnes 0.02 0.03 0.20

Total Phosphorus (TP) Tonnes 0.002 0.001 –

CLIMATE CHANGE AND GHG EMISSIONS

With the rise in global temperatures in recent years bringing frequent natural disasters, financial damage

and crop failures, addressing climate risks is high on the agenda of both governments and industries. Both

China and EU countries have announced their nationally determined contributions targets, and consequently

improving energy efficiency and resource use have become important sustainability issues for industry

leaders.

Goodbaby International has business operations in many countries, each with different climate challenges

and different national climate policies. This presents complex risk profiles and opportunities for the Group’s

supply chain and sales operations. With reference to the Guidance on Climate Disclosures published by the

SEHK, the Group is in the process of assessing the precise correlations between its worldwide business

activities and climate change. With the Group’s strategic planning as guidance, we have fully analyzed

existing supply chain landscape and geographical coverage of sales network, as well as national climate

policies, and have identified physical and transitional risks to evaluate potential financial impacts.

Emission Reduction Request from a Client

Following increasing regulatory requirements and industry-wide awareness of emissions reductions, we

have received enquiries from a blue-chip customer about the types of energy used in our production as

the customer explores the possibility of using clean energy for the future manufacture of products. This

push from the supply chain has prompted us to explore new options for reducing the carbon footprint of

our materials, components and products.

The Group’s GHG emissions mainly come from electricity and fuel consumption, so we are focused on

enhancing the efficiency of our usage of energy and natural resources. On the one hand, we are exploring

and utilizing feasible new technologies and modifying our existing equipment as necessary; on the other, we

are kickstarting a systematic energy consumption screening and assessment process and implementing its

findings in our daily operations.

Over the past decade, our production bases in the PRC have developed annual targets for energy

conservation and emission reduction, driving concrete actions across all our business segments. After all

three PRC production bases were fully ISO 14001 and ISO 50001 certified for their environmental and energy

management systems, the Group set up a special team in 2022 to conduct an energy review to determine

the current status of energy management, and identify problems and areas for improvement.

GOODBABY

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Annual Report 2022

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE REPORT

Setting the Carbon Inventory Basics for PRC Production

The Group’s three production bases in the PRC completed an

energy review in 2022 for the period from 1 September 2021 to

31 August 2022. It covered consumption of electricity, natural

gas, diesel and water in the manufacturing of approximately 2.7

million child strollers and 2 million car seats, and referenced over

30 industry standards.

The review covered the energy consumption of all equipment

and facilities in all plants and workshops, based on our internal

Identification, Evaluation and Control on Use of Energy policy and

taking into consideration operational variables such as production

volume, operating hours, process parameters, human factors,

as well as floor area, capacity level, shift and product scope. A

primary equipment inventory with corresponding sources of

energy titled Log Book of Major Energy Consumption (Process/

Equipment) and Major Energy Control Posts and Employees was

produced, which included potential improvement opportunities in

energy management.

We have identified the energy consumption ratio of each workshop, among which electricity consumption

of the plastics plants accounted for around one-third of the total electricity consumed by all production

bases in the PRC. Four management and three technical areas of improvement were formalized, and relevant

teams were made accountable for the measurable implementation of improvements.

Energy

Management

1. Extrusion machine, T4 and

T6: consolidated operation

with time control

2. Compressor: controlled air

volume and improved

ventilation

3. Centralized

air-conditioning: tightened

control

4. Fixed machines: improved

maintenance

Technical

Improvements

1. Eliminated outdated high

energy consuming

equipment

2. Replaced with frequency

conversion compressor and

cool dryer, and reworked the

ducting

3. Changed lighting for

energy-saving lighting

Energy

Review

Energy

consumption

improvement

areas

Formulate

energy

management

tools

Set energy

consumption

goals

Establish

energy

performance

indicators

Key post

training

Energy

consumption

overview

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

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Kraft Carton Upgrade Project

Replacing the original white packaging with kraft

cartons helps lower environmental impacts in terms

of carton material and paint usage. In 2022, the

Piqua base switched to using kraft cartons for its

own products and expects to cover all products by

early 2023.

Hi-tech Injection Molding Technology Project

The Hi-tech Injection Molding Technology is

expected to reduce the time needed for injection

molding process by 20% at the Piqua base,

resulting in a reduction in energy consumption.

The technology also reduces resin use by 3%.

Preliminary studies and tests have shown that this

hi-tech injection molding technology can achieve

energy efficiency with economic benefits. It is

currently in the trial and validation phase.

The Group has made significant progress in

improving production energy efficiency in both

the PRC and the U.S.. In the PRC production bases,

efforts mainly included replacing low-efficiency

equipment. A three-year air compressor revamp

project was completed during the year, with the 77

air compressors consuming 35% less energy after

modifications. At the end of 2022, the average

price of electricity at the PRC production bases was

approximately 20% higher than at the beginning of

the year while the oil price was 80% higher, saving

energy and enhancing energy efficiency also helped

to lower production costs.

The Piqua production base in the U.S. is mainly

engaged in injection molding and assembly. Its

carbon emissions primarily come from electricity

consumption, with a small percentage from its

self-owned vehicles. Due to the city’s water and

photovoltaic facilities, 25% of the site’s operational

electricity comes from renewable sources, and the

office uses LED lights to reduce lighting energy

usage.

In 2022, the Piqua base launched two new

environmentally friendly projects, adopting Hi-tech

Injection Molding Technology to improve the

production and energy use efficiency of injection

molding machines, and replacing self-produced

product packaging boxes with environmentally

friendly cartons.

GOODBABY

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Annual Report 2022

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE REPORT

To reduce carbon emissions from logistics, the Piqua production base has looked into re-routing imports of

raw materials by changing its import port from the West to the East coast, and analyzed carbon emissions

of shipping distances and vehicles. This has enabled it to come up with an alternative solution which could

reduce carbon emissions throughout the logistics process by nearly 20%. This plan will provide a solid

sustainability base for future logistics decision-making.

Total energy consumption for the year fell by 12.26% to 70,357 MWh and GHG emissions down by 16.21%

year-on-year to 37,177 tonnes of CO

equivalent, due to a lower level of production and the adoption of

energy-saving measures.

Types of Energy Unit 2022 2021 2020

Unleaded Gasoline MWh 413 615 1,339

Diesel MWh 664 1,387 3,846

Natural Gas MWh 9,508 12,119 8,208

Liquefied Petroleum Gas MWh 59 129 82

Total Direct Energy Consumption MWh 10,644 14,250 13,475

Purchased Energy MWh 59,713 65,936 64,819

Total Indirect Energy Consumption MWh 59,713 65,936 64,819

Total Energy Consumption MWh 70,357 80,186 78,294

Energy Consumption Intensity MWh/Million Revenue (HK$) 8.48 8.27 9.43

Note: The calculation of energy consumption is based on “How to Prepare an ESG Report Appendix 2: Reporting Guidance

on Environmental KPIs” issued by the SEHK, and the “Energy Statistics Manual” issued by the International Energy

Agency (IEA).

GHG Emissions Unit 2022 2021 2020

Direct GHG Emissions (Scope 1) tCO

e 2,543 4,140 2,983

Energy Indirect GHG Emissions (Scope 2) tCO

e 34,634 40,228 50,506

Total GHG Emissions (Scope 1&2) tCO

e 37,177 44,368 53,489

GHG Emissions Intensity tCO

e/Million Revenue (HK$) 4.48 4.58 6.44

Note: The calculation of GHG emissions is based on “How to Prepare an ESG Report Appendix 2: Reporting Guidance on

Environmental KPIs” issued by the SEHK.

Consumption of Product Packaging Materials Unit 2022 2021 2020

Plastics Tonnes 927 1,992 1,727

Cardboards Tonnes 13,798 21,344 17,454

Total Product Packaging Consumption Tonnes 14,725 23,336 19,181

Product Packaging Consumption Intensity Tonnes/Million Revenue (HK$) 1.78 2.41 2.31

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

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Annual Report 2022

PART 8: PROTECTING EMPLOYEES’

RIGHTS AND INTERESTS AND

ENSURING OCCUPATIONAL SAFETY

In 2022, the COVID-19 pandemic continued to rage

with many ebbs and flows. The global economy

began gradually to recover, but the recovery

remained uneven, with businesses around the world

facing unprecedented challenges in an uncertain

environment. Countries adjusted their public

health measures at times to contain the situation,

and travel restrictions were widely imposed. The

consumer market was inevitably impacted by these

developments. In response, Goodbaby International

refined its management arrangements, pursued cost

reduction and efficiency enhancement initiatives,

and streamlined and optimized its departmental

structure and organizational deployment to

better align the internal resources at the Group.

As we tightened our operations in the face of the

pandemic, we remained fully committed to investing

in talent development that would transform

our human capital into a catalyst for corporate

efficiency and future growth.

The Group set up management protocols to fight

the pandemic in its three home markets, in each

case addressing specific local challenges. We

strived to maintain normal operations while ensuring

a safe environment for all employees at work, and

to achieve a good balance between corporate

constraints and staff expectations.

In the PRC, the Group strictly adhered to national

policies and assiduously undertook a range of

COVID-19 prevention and control activities. At the

height of the pandemic, we cooperated closely

with local authorities to implement closed-loop

management. We gave our staff volunteers training

in nucleic acid testing and helped local governments

to carry out community testing, on top of

conducting such tasks within our organization.

In the U.S. and Europe, the Group also launched

a series of anti-COVID measures in line with the

requirements of the local disease prevention and

control authorities and specific circumstances. We

spared no effort to execute these effectively to

minimize the impact of COVID-19 on our workforce

and our business operations.

CORPORATE CULTURE AND

EMPLOYMENT POLICY

As a leader in the juvenile products industry,

Goodbaby International operates in a highly

responsible manner in its pursuit of business

excellence. Adhering to its consumer-centric

strategy, the Group is committed to becoming an

outstanding enterprise within its industry, with

strong global and future-ready competitiveness. We

strive to constantly improve children’s quality of life

through our products and services, contribute value

to our consumers and enable our employees to

realize their value.

Goodbaby International operates in line with

the United Nations’ Sustainable Development

Goal “Decent Work and Economic Growth”, and

strictly abides by the labor laws and employment

regulations of all the markets where it operates.

The Group’s Code of Business Conduct sets out

its principles, directions and requirements for

ethical behavior in various business practices. It

is applicable to all employees (i.e. full-time, part-

time, consulting and temporary outsourcing staff),

and serves as a basis for refining relevant rules and

systems in different regions.

The Group’s global human resources work is led by

the Chief Operating Officer. Regular monthly global

meetings are held to establish management rules

and policies in human resources, introduce major

human resources topics, share experiences and case

studies from different business regions, and discuss

projects in progress. In line with their different

business structures, each of our home markets has

human resources policies, measures and work plans

in place that observe local laws and regulations and

specific national conditions.

GOODBABY

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ENVIRONMENTAL, SOCIAL AND

GOVERNANCE REPORT

The Group is committed to creating a working

environment that fosters mutual respect and trust,

allowing employees to work in a fair atmosphere.

We are respectful of every individual including

employees, consumers and business partners, as well

as the cultures of different countries and regions.

Our Code of Business Conduct and employment-

related policies clearly state that all employees

deserve equal opportunities in employment and

other personnel activities covering recruitment,

employment, promotion, transfer, remuneration,

benefits, and training, and that employee diversity

is beneficial to the Group’s business growth. It also

states that no employee may be treated differently

on account of gender, age, race, sexual orientation,

marital status, religion or cultural background.

In the U.S., our Equal Employment Opportunity

Policy affirms our stance of taking action to employ,

advance and treat qualified Vietnam-era veterans

and disabled veterans without discrimination. We

provide equal employment opportunities to all

employees and applicants for employment with

respect to selection processes, terms and conditions

of employment, benefits and termination.

Goodbaby International strictly abides by all laws

and regulations on the prohibition of the use of child

and forced labor. Through precautions taken during

the recruitment process for full-time, part-time

and contract workers, we pay special attention to

avoiding the employment of under-age workers or

allowing forced labor, and require our suppliers to

commit to this. During 2022, no case of employing

under-aged workers or forced labor were identified

in the Group. We also have zero tolerance for

any unlawful discrimination, harassment or other

violations of laws and regulations.

The Group makes appropriate adjustments

to job deployment based on work needs, and

employees are welcome to apply for job transfers

according to their abilities and wishes. We fully

support internal transfers and advancement,

and look to cultivate and promote talents from

within by offering opportunities to those with the

required job skills, exceptional performance, or

high potential. We believe this not only improves

personnel mobility, but also helps facilitate cross-

functional collaboration and capacity building in the

organization.

RESPECTING AND PROTECTING

EMPLOYEES’ RIGHTS AND INTERESTS

Goodbaby International has a target-oriented

remuneration structure based on roles and

responsibilities that has proven effective over the

years. Our compensation and welfare arrangements

are competitive, and we offer an array of insurance

options. Remuneration policies are reviewed

and updated annually by the human resources

departments in each of the Group’s three home

markets, to ensure we attract talent effectively and

maintain workforce stability.

The Group offers paid annual leave for employees

and ensures that all enjoy their rights to marriage

leave, compassionate leave, maternity leave and sick

leave, according to prevailing local practices in each

region. In 2022, in line with the move of the State

Council of China to optimize the country’s birth

policies and the suggestions in the Implementation

Plan of Jiangsu Province on Improving Birth

Policies to Promote the Long-Term and Balanced

Population Development, the Group enhanced its

childcare-related policy, extending maternity leave,

nursing leave and parental leave for employees

to make certain that the maternity rights and

interests of women are fully protected. Similarly,

we are also studying policies for the support of

elderly care for one-child parents. In the U.S., we

modified our holiday schedule for Evenflo staff to

embrace diversity, equity and inclusion-specific

holidays from 2023. Besides, CYBEX employees

can take emergency time-off to look after their

children if they fall sick, in addition to regular leave

entitlements.

Goodbaby International has a whistleblowing

policy. Every employee has the right to report

any suspected or actual violation of company

policies and procedures, in good faith and from the

perspective of protecting their own interests.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

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The role of the Employees’ Representatives Conference in the PRC

In the PRC, a trade union is duly formed within an organization in compliance with the Trade Union

Law. The Group concludes a “Collective Contract” with the union in accordance with relevant rules and

regulations, which includes honoring and protecting employees’ rights and interests in the areas of salary

payment, working hours, rest days, holidays and leave, occupational safety and health, specific protection

for female workers, social insurance and welfare, and vocational skills training.

An Employees’ Representatives Conference, which comprises elected employee representatives, is held

at least once a year. It has the power to discuss and review the company’s major reform plans, salary

adjustments, employee welfare, social insurance, housing provident fund payments, and other policies,

rewards and penalties involving the vital interests of employees.

Any major matters directly related to the vital interests of employees that call for revision or update

warrant a discussion with the Employees’ Representatives Conference and all employees. Decisions are

only arrived at through negotiation with the trade union or union representatives. The management of

the company implements and handles relevant resolutions and proposals put forward by the Conference,

which can inspect and supervise their work.

Through roundtables organized by the trade union, employees are encouraged to voice their opinions

on company affairs. In 2022, such activities generated a total of 53 pieces of feedback, of which 39 were

directly or indirectly associated with labor rights and interests. As at 31 December 2022, all these items

were resolved.

In the U.S., Evenflo staff become DEI Ambassadors

In the U.S., promotion of diversity and inclusion has continued and is a regular topic of discussion. The

Group’s U.S. operation is committed to making diversity and inclusion an integral part of its workplace

culture. We embrace fairness and community through every employee and acknowledge a diverse mix of

minds, identities, backgrounds and experiences, aiming to bring out the best in everybody.

Led by the Employee Resource Group, the diversity, equity and inclusion (“DE&I”) team has so far had 13

DEI Ambassadors from different managerial levels attached to virtually every functional department. They

advocate, promote and participate in DE&I initiatives in the company as well as in their local communities,

unleashing the potential of the organization and staff members and helping to expedite individuals’

personal and professional growth. This is also helping us to attract and retain top talent and create a

better future for the benefit of our customers, partners and the community.

GOODBABY

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Annual Report 2022

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE REPORT

As at 31 December 2022, the Group had a total of 7,393 employees around the world, down by 1,433 from

the previous year. This was mainly due to the Group’s efforts to optimize its organizational structure and

improve its sales and operational efficiency. During the reporting period, the number of employees in the

PRC, the Americas and EMEA all went lower than the previous year, with a rate at a controlled level. There

were also 53 part-time employees. The Group’s overall employee turnover rate was 45.60%.

Employee distribution by gender, age group, geographical region and employee category

Employees by gender

2021

2022

Male Female

3,120 4,273

3,663 5,221

Employees by age group

2021

2022

29 and under 30-49

979 5,390 1,024

1,040

1,478 6,366

50 and above

Employees by geographical region

2021

2022

The PRC EMEA

5,971 710 712

815

7,265 804

The Americas

Employees by employee category

2021

2022

Senior

management

Middle

management

6,319650

773

7,673

149

275

291

147

Supervisory

sta

General

sta

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

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In 2022, the Group’s employee turnover rates by category were as follows:

Employee turnover rates by category 2022 2021

Male 46.46% 34.26%

Female 44.99% 36.19%

Aged 29 and below 100.65% 68.85%

Aged 30-49 36.18% 29.82%

Aged 50 and above 36.13% 23.42%

The PRC 45.68% 32.22%

EMEA 28.23% 18.67%

The Americas 62.07% 44.61%

ENABLING EMPLOYEE DEVELOPMENT

Goodbaby International believes that an impactful employee development plan should not just focus on job

promotion, but also involve ways of acquiring knowledge and skills through reading, listening, exploring and

practising in a journey of continuous learning and self-growth. The Group has developed a career training

system based on the characteristics, conditions and requirements of each job, supported by training funding

as per internal procedures, which is providing employees with systematic and well-planned occupational

skills training.

The ebbs and flows of the COVID-19 pandemic presented new challenges for delivering some of our trainings

in our home markets. Although several training initiatives had to come to a temporary halt, the Group’s

vision for employee training and development and the corresponding framework for training planning have

remained unchanged.

Goodbaby International’s Employee Training and Development Framework

Goodbaby

International

Creating a learning-based,

skill-centric and

innovative workforce

Middle

echelon

construction

Management

essentials and

advancement

Cultivation of

new generation

force

Capability

development of

frontliners

Nurturing of

university

graduates

Corporate

culture

publicity

Compliance

training

Soft

skills

Hard

techniques

Creativity

Digitalization

GOODBABY

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Annual Report 2022

ENVIRONMENTAL, SOCIAL AND

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The Group regularly conducts an employee survey to identify key training needs before finalizing its

annual training planning plan. The results of the survey are important for planning the scope of the training

program in a way that balances business needs, performance results and organizational capacity. In the

PRC, employee performance management includes not only assessing employees’ performance but also

engaging in constructive dialogue with them on potential development areas and capability requirements,

mainly through performance feedback and career development planning interviews. We strive to tap our

employees’ full potential, allowing them to further develop themselves in their work by formulating personal

development plans for each new year.

Training Structure for 2022 in the PRC

70% learning

through daily job

20% learning from

role models via

peer interaction

10% classroom professional

knowledge learning

70%

10%

20%

In 2022, Goodbaby International in the U.S. launched

its first multi-year online leadership training program

for executives in the post-pandemic era. With 11

participants, the program covers topics that include

People Smart Leader, Leadership and Influence,

Discover Your Team Type, Creating Alignment and

Taking Action, and Diversity, Equity and Inclusion

for Leaders. The expected completion date is mid-

2023.

In the PRC, the Captain Program for building up the

management echelon carried over into 2022. With

28 managers taking part, the program followed

a blended learning model and had its curriculum

expanded to include mentoring, phased workshops,

classroom learning and research studies. A solid list

of modules formed an integral base for the program,

namely MBA Enterprise Management, Ultimate

Leadership, Effective Team Building, Evaluation and

Application Workshop, Business Planning Workshop,

Essence of Project Management, Practical Project

Management, Interdepartmental Collaboration,

Winning Communication, as along with management

case studies and reading and sharing. Its goal is

to nurture a group of high-potential managerial

candidates and equip them with agile thinking and

organizational skills.

Goodbaby International has responded to the

national “Strategy on Developing a Quality

Workforce” in the new era by implementing various

measures for “Cultivating the Company’s Skilled

Talents and Stabilizing Core Talents”. Our production

bases in the PRC have carried out pre-job training,

professional skills ranking identification and project-

based training to speed up the development of a

highly skilled workforce. The Group recognizes that

professional qualification evaluation can serve as

a motivator for frontline employees, since it gives

those who are on a progressive skills grading scale

the opportunity to have their professional skills

evaluated and recognized. During the year, the

number of participants in the evaluation scheme

increased by 39.29% year-on-year, and a total of

523 employees passed the evaluation. Against this

backdrop, our production bases saw expansions

in both types of work and skill levels, adding new

positions such as senior draftsman, junior and

intermediate stamping workers, sewing technician

and assembly technician. Employees’ salaries and

benefits will also be adjusted in keeping with the

new ranking. Over the years, we have worked hard

and steadily to develop the skills of frontliners and

back their career advancement. Our initiatives to

drive this have received tremendous support from

our frontline employees.

In 2022, the total hours of training provided for

employees in the Group’s three home markets

reached 127,919 hours.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

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Goodbaby International’s Online Learning Platforms

The PRC

Cloud Learning Academy

z Launched in 2019, Cloud Learning

Academy is an upgraded version of the

previous Spark virtual learning platform,

which has eectively supplemented

on-site training during the COVID-19

pandemic.

z As at the end of 2022, the cumulative

number of online courses oered by Cloud

Learning Academy reached

4,300, up

by 358 from the previous year.

z Courses on oer cover digitalization in

manufacturing, ﬁnancial management,

supply chain management, gist of

environmental and safety management

system, lean production, product

engineering, detection and testing

technology, skills appraisal, quality

management, sales management,

leadership development, career

development, party building management,

teamwork and communication, and

compliance training.

z In 2022, the number of employees taking

part in online training stood at

3,685,

an increase of 9.74% compared with

the previous year.

The U.S.

Goodbaby University

z Since its inception in 2019, Goodbaby

University has transformed into a

large-scale learning platform in just over

three years, oering comprehensive

training support to the Group’s U.S.

operations.

z As at the end of 2022, the cumulative

number of online courses oered by

Goodbaby University was

500.

z It is a self-service training site for

participants to access professional

opportunities at their own pace. The

content covers compliance, management,

wellness, supervisory and management

soft skills and more.

z Dedicated pages and courses have been

added on “Diversity, Equity and Inclusion”.

z In 2022, a total of

110 employees took

part in online training, an increase of

25% compared with the previous year.

Percentage of Employees Trained, and Average Training Hours by Gender and Employee Category

Number of employees trained Average training hours

2022 2021 2022 2021

Employee training rates by category No. of employees Percentage Percentage Hours Hours

Male employees 1,891 56.10% 52% 15.56 18.7

Female employees 2,374 50.38% 46% 16.02 22.7

Senior management 52 33.55% 17% 3.64 7.0

Middle management 146 50.50% 12% 5.19 5.4

Management 305 42.40% 35% 9.80 16.6

General staff 3,762 54.36% 52% 17.17 22.4

GOODBABY

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ENVIRONMENTAL, SOCIAL AND

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COMMUNICATION AND EMPLOYEE CARE

Goodbaby International strives to create an open

communication environment for employees in which

they can freely communicate with their supervisors

and other managerial colleagues. This allows us

to provide timely feedback to questions and take

up suggestions put forward by our employees,

continuously enhancing the management of the

Group.

Ways of communication between employees and

management vary depending on the business

region. Options include email, WeChat, public

notices, staff seminars, staff interviews, regular work

meetings, and staff suggestions box/CEO mailbox.

Employees can raise complaints about work-

related issues, labor conditions and other employee

relations matters with their supervisors, who have

the responsibility to respond without delay.

In the PRC, the Human Resources Department

conducts employee engagement survey (formerly

known as employee satisfaction survey) in

accordance with the usual practice. The survey

for 2022 was themed on four main categories:

employee value, employee growth, employee

efficiency and employee protection. Employees

were invited to share their opinions on the aspects

of corporate prospects, training and development,

work teams as well as work environment. More

than 85% of employees responded to the survey, in

which all the categories gained an average score of

four on a five-point rating scale and a “satisfactory”

grade. Employees generally appreciated the

Group’s efforts put into management and

communication. The survey results have been fed

back to the management and relevant measures for

enhancement will be carried out in 2023.

UPHOLDING PRODUCTION SAFETY AND

OCCUPATIONAL HEALTH

For Goodbaby International, production safety

and occupational health are integral parts of its

overall quality management. In the PRC, our three

production bases in Kunshan, Ningbo and Pingxiang

strictly comply with the Work Safety Law, the Law

on the Prevention and Control of Occupational

Diseases, the Implementation of the Regulations on

Work-Related Injury Insurance and other relevant

labor protection-related laws and regulations of

the country. We are constantly looking to enhance

our labor safety and health management policies,

faithfully implement labor safety and health

regulations and standards, and ensure our labor

safety and health facilities meet national standards.

Additionally, we have set up a clear labor safety

responsibility policy, formulated safety operation

procedures for each post, and provided essential

protective equipment in line with labor safety and

health requirements. All three of our PRC production

bases hold ISO 45001 Occupational Health and

Safety Management Systems certification.

Our production bases in Piqua in the U.S. and

Tijuana in Mexico abide by the relevant laws and

regulations of the U.S. Occupational Safety and

Health Administration and the Mexican Ministry of

Labor and Social Welfare respectively. We take

our responsibility to provide a safe and healthy

workplace for employees on all fronts.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

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In 2022, the Group conducted an annual review

of its PRC production bases and updated various

safety management policies and documents

accordingly. These included the Safety Production

Responsibility Policy, the Accident and Hazard

Inspection and Control Policy, the Policy on Safety

Management of Key Devices and Key Parts, the

Work Accident Management Policy, the Fire Safety

Management Policy, the Occupational Health and

Safety Management Manual and the Policy on Safety

Production Education and Training Management.

In conformity with the Law on the Prevention and

Control of Occupational Diseases, the Group also

formulated and implemented an annual occupational

health work plan, which included:

• Organization and responsibilities: updating the

Responsibility Policy on the Prevention and

Control of Occupational Diseases for 2022

• Policies and procedures: improving or updating

the Occupational Health Management Policy

and its operating procedures

• Plan development: formulating the 2022 plan

on the prevention and control of occupational

diseases as well as related implementation

programs

• Standard development: formulating or updating

the configuration standards and usage

guidelines for personal protective equipment

• Detection: detecting occupational hazards in

the workplace

• Training: training for personnel exposed to

occupational hazards

• Health check-up: occupational health screening

and body checks

• File building: filing of employees’ personal

occupational health monitoring records

• Drill: emergency drills for occupational hazard

accidents

Our management of policies on occupational

diseases prevention and control and relevant

responsibilities was strictly implemented. We

delegate related occupational health targets and

performance indicators to respective departments

or functions based on our organizational structure,

designating areas of responsibilities throughout

the hierarchy. We regularly check all occupational

hazards at work premises and evaluate issues

that are identified. These primarily include noise

from metal processing and arc light from welding.

Positions involving these tasks operate in shifts,

and there are routine health checks to ensure

occupational health and safety.

We keep our grip firmly on occupational health and

safety through multiple security checkpoints in the

areas of machinery safeguards, personal protection,

real-time monitoring and employee health checks.

In 2022, our production bases in the PRC launched

a research study on noise and made plans for

reducing the impact of noise sources by optimizing

or upgrading noisy equipment such as stamping

machines and engraving and milling machines.

GOODBABY

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Annual Report 2022

ENVIRONMENTAL, SOCIAL AND

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Monitoring of Occupational Health

Occupational Health

Monitoring Record

Management

Occupational

health checks

Personal

Protection

Identiﬁcation of

occupational

hazards

Improvement of

engineering

measures

Identify the

positions/type of

work/employees

involved

Conduct pre-job,

on-job, and o-job

occupational health

check-ups

Equip sta with

suitable personal

protective equipment

E.g.: Chilled water and

air-conditioning

system for metal

workshop

01 02

04 03

Waste gas

collection and

emission for metal

welding workshop

Cooling air system

for plastic factory

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Separation of people and

vehicles – shelf aisles,

workshop aisles

Special management of

forklift charging area –

independent room for

isolation, configuration of

fire emergency measures

Emergency pull switch

facilitates rapid power-off

to ensure safe operation

of equipment in long

production line

Partition protection in

welding workshop

Electrical control parts of

single and double bending

machines and stamping

machines moved to the

outside of the protective

fence to lower risks in

electrical control systems

during inspection and

maintenance

Upgrade of safety

protection for engraving

and milling machines and

extruders. Main electrical

control systems have been

reconfigured and placed

outside to reduce risks in

operation and programming

Upgrade of polishing

machines and spraying

lines with enhanced safety

installations such as

hydrogen alarm system and

water level gauge

Safety interlock device

for automated machinery

in plastic factory

Continuous Improvement at PRC Factories

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Health and safety indicator Unit 2022 2021 2020

Number of work-related fatalities Person 0 0 0

Rate of work-related fatalities % 0 0 0

Goodbaby International’s high standards of labor

practices cover production and workplace safety

and occupational health standards. The Group

also advocates these standards to its suppliers

and business partners, and regularly shares its

experiences with them. Our Supplier Guiding

Principles Policy clearly states our expectations

of suppliers with regard to production safety and

occupational health, workplace discrimination, child

labor and forced labor, and seeks for a reciprocal

establishment of similar labor standards.

Every year our PRC production bases arrange a

health check-up service for employees. Through

Goodbaby’s staff club, the “Health House”,

employees would have the risk analysis in their

health check report explained to them. A variety

of health management programs and fitness

equipment have also been provided, allowing

employees to work out during break times. Our

U.S. work premises include their own medical clinic,

making it the first and only enterprise to launch

such an initiative in the region, and one which

has been broadly welcomed by our employees.

In Europe, we maintain a company doctor at our

German operations to advise employees on general

health-related issues and to assist on-site in the

implementation of mandatory health and safety

measures, such as vaccinations during the COVID-19

pandemic.

In 2022, our three production bases in the PRC

conducted a total of 30 emergency drills. These

encompassed equipment drills (such as pressure

pipes, boilers, forklifts), along with drills for

hazardous waste warehouse and hazardous chemical

leakage, electric shocks, falling from heights, being

struck by objects, confined spaces, factory fire

evacuations, and professional fire brigade drills

undertaken by the security department.

During the Reporting Period, none of the Group’s

five production bases experienced any major

production safety incidents or fatal accidents. The

number of lost working days logged due to work-

related injuries was 94 days.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

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PART 9: CONTRIBUTING TO SOCIETY AND LOCAL COMMUNITIES

With a global footprint, Goodbaby International is rooted in its three home markets and serves hundreds of

millions of families with children across the world. The Group’s mission is “Care for Children, Serve Families

and Give Back to Society”, and it is keen on partnering with public organizations involved with the wellbeing

of families and communities. The Group has received much praise and recognition for its positive influence

made in the countries and regions where it operates.

The Group’s operations in the U.S. took a step forward by introducing a Volunteer Time Off Policy, giving

its employees time to support their local communities through civic and charitable volunteer activities.

Employees can volunteer to serve a charitable organization during company time for up to 20 hours per

calendar year. Time spent volunteering under the policy will be considered as paid time off.

During the year, restrictions on travel and group gatherings due to the COVID-19 pandemic made it

necessary for the Group to reduce or cancel some of its planned community and volunteer services in various

locations. Nonetheless, wherever feasible we maintained connections with local communities, providing

timely and concrete support.

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In 2022, following a “Meat Free Monday” campaign that had been personally led by the Group’s Chief

Executive Officer the previous year, our PRC operations organized for the second time a vegetarian day

named “Meatless and Vegetarian Threesome” to promote a healthy, energy-efficient and sustainable meat-

free lifestyle to colleagues. By introducing the health benefits of a vegetarian diet and the concept of

environmental protection, it helped more people recognize the need to be part of the transition to carbon

neutrality. The event attracted more than 1,000 employees, who jointly shared over 12,000 vegetarian action

stories on the Group’s WeChat platform and Cloud Learning Academy. Their collective green actions helped

reduce global emissions by the equivalent of over 9,000kg of carbon dioxide.

THE PRC

International Autism Awareness Day in April saw our gb brand partner with the China Social Welfare

Foundation in a charitable event called “Blissful Sunflowers” in which local communities were invited to

come together for the autistic children. The brand organized a charity bazaar to raise funds for the autistic

children’s fund and contribute to the treatment and rehabilitation of children with autism.

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In August, our PRC operations organized employees’ participation in the 2022 annual blood donation

event held by the Lujia Town Government. Nearly 100 colleagues took part in this voluntary activity, with a

total blood donation volume of 15,000ml. The annual volume of blood donated by our Chinese colleagues

constituted over 50% of the gross total collected in the town.

In September, the PRC team and Yunlin Western Education Aid jointly launched a computer donation project

to provide dozens of computers to students from underprivileged families living in rural areas of western

China. After a journey of more than 2,266km, the computers donated by Goodbaby International finally

arrived at their destinations of Chengduo County in the Yushu Tibetan Autonomous Prefecture in Qinghai

and Muli County in the Liangshan Prefecture in Sichuan. A total of 43 youngsters about to enter higher

education welcomed the electronic devices, which will help open vital doors to knowledge.

During the year, the Group also made donations for around 100 orphaned and disabled children living in

10 welfare homes in the PRC. With the COVID-19 pandemic triggering city lockdowns, the Group took the

initiative to send supporting materials to Shanghai Children’s Hospital to alleviate the supply shortage for

sick children. It also organized group purchases for families in Shanghai, making more than 3,000 urgent

delivery trips of maternal and infant supplies.

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ENVIRONMENTAL, SOCIAL AND

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GERMANY

In March, CYBEX in Germany donated EUR100,000 to UNICEF in response to its humanitarian call for help to

children and families in war-torn Ukraine. CYBEX also carried out a series of initiatives to support Ukrainian

refugees through product donations in multiple operating locations in Europe.

In December, CYBEX provided support for the third consecutive year to Bayreuther Frauenhaus, an

organization that provides shelter and protection from domestic violence for women and children. Following

a giving program organized in the workplace, a donation of EUR20,000 was made to contribute to those in

need and make a positive community impact.

In December, CYBEX kicked off its yearly Christmas Project with Bayreuther Tafel. Concerted support from

all staff resulted in 140 gifts being delivered to children in need, helping them to enjoy a joyous Christmas.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

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THE U.S.

In January and February, Evenflo in the U.S. donated car seats to Hannah’s Treasure Chest, a nonprofit

organization in Ohio dedicated to enriching the lives of children in need. We have been supporting this

group from time to time and will continue to do so. Hannah’s Treasure Chest is also a recipient of our annual

charity golf outing.

In November, Evenflo took part in a car seat distribution event in North Port, Florida, giving away 30 car

seats and 15 play yards.

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In November and December, Evenflo participated in the international “Giving Tuesday” event. It made gift

donations to the Marine Toys for Tots Foundation, which distributes toys to children whose parents cannot

afford buying gifts for Christmas. By collecting and passing on toys to this charitable organization, we were

able to deliver hope and happiness to some of America’s less fortunate children.

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VOLUNTEER SERVICE FOR COVID-19 PREVENTION AND CONTROL

During COVID-19 outbreaks, the Group’s PRC operations organized a volunteer team to assist with nucleic

acid testing and sampling in the company’s dormitory zone. As at 31 December 2022, 255 corporate

volunteers had worked tirelessly to conduct 133 rounds of nucleic acid testing and sampling for 2,125

employees in two workers’ dormitory areas, with more than 280,000 person counts. The services they

performed included ‘four checks and one test’ (i.e. health code, travel code, test report, vaccination, and

body temperature), data entry, nucleic acid sampling, number checking, order maintenance and sticker

distribution.

During the year, 22 employees of the Group were awarded the “2022 Kunshan City Epidemic Prevention and

Control Volunteer Service Certificate” issued by the Kunshan City Volunteer Federation for their exemplary

service.

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APPENDIX I. LIST OF APPLICABLE POLICIES AND LAWS AND REGULATIONS

Scopes Applicable Policies and Laws and Regulations

Emissions Management

The PRC:

• Environmental Protection Law of the People’s Republic of China

• Law of the People’s Republic of China on Environmental Impact Assessment

• Law of the People’s Republic of China on the Prevention and Control of Atmospheric Pollution

• Water Pollution Prevention and Control Law of the People’s Republic of China

• Measures for Pollutant Discharge Permitting Administration (For Trial Implementation)

• Laws of the People’s Republic of China on Prevention and Control of Pollution from Environmental Noise

• Law of the People’s Republic of China on the Prevention and Control of Environmental Pollution by Solid Waste

• Measures for Pollutant Discharge Permitting Administration

• Regulations of Jiangsu Province on Atmospheric Pollution Prevention and Control

• Measures for the Administration of Transfer of Hazardous Wastes ( )

• Measures for the Administration of Permit for Operation of Dangerous Wastes

• Regulations of Jiangsu Province on Prevention and Control of Environmental Noise Pollution

• Regulations of Jiangsu Province on the Prevention and Treatment of the Environmental Pollution by Solid Wastes

• Department of Ecology and Environment of Jiangsu Province: Notice on Strengthening the Monitoring and Management of the Current Situation of

Environmental Impact Assessment ( )

• Standard for Fugitive Emission of Volatile Organic Compounds (GB 37822-2019)

• Measures of Jiangsu Province for the Administration of Prevention and Control of Volatile Organic Compounds Pollution (

)

• Jiangsu Province: Volatile Organic Compounds Special Treatment Work Plan 2020 ( 2020 )

Germany:

• European Union Waste Framework Directive

The U.S.:

• U.S. Clean Air Act

• U.S. Federal Hazardous Substances Act

• U.S. Clean Water Act

Mexico:

• General Law on the Prevention and Comprehensive Management of Waste

Use of Resources

The PRC:

• Energy Conservation Law of the People’s Republic of China

• Regulations of Jiangsu Province on Conserving Energy

• Renewable Energy Law of the People’s Republic of China

• Cleaner Production Promotion Law of the People’s Republic of China

• Electric Power Law of the People’s Republic of China

• Regulations on the Protection of Power Facilities

• Regulations of Jiangsu Province on Electric Power

• Measures for the Administration of Electricity Conservation ( )

• Water Law of the People’s Republic of China

• Regulations of Jiangsu Province on Water Resources Management ( )

• Regulations of Jiangsu Province on Water Conservation ( )

• The 14th Five-Year National Clean Production Implementation Plan ( )

Germany:

• Treaties of the European Union

The U.S.:

• U.S. Energy Independence and Security Act of 2007

• U.S. Energy Policy Act of 2005

Mexico:

• National Water Law

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Scopes Applicable Policies and Laws and Regulations

Employment

The PRC:

• Labor Law of the People’s Republic of China

• Employment Contract Law of the People’s Republic of China

• Regulation on the Implementation of the Employment Contract Law of the People’s Republic of China

• Provisions of the State Council on Working Hours of Employees ( )

• Regulation on Paid Annual Leave for Employees

• Implementation Measures for Paid Annual Leave for Employees of Enterprises

• Provisions on Minimum Wages

• Interim Regulations on Wage Payment ( )

• Regulations of Jiangsu Province on Wage Payment

• Trade Union Law of the People’s Republic of China

• Social Insurance Law of the People’s Republic of China

• Interim Regulation on the Collection and Payment of Social Insurance Premiums

• Regulation on the Administration of Housing Accumulation Funds

• Regulation on Work-Related Injury Insurance

• Regulations on Unemployment Insurance

• Regulations of Jiangsu Province on the Collection and Payment of Social Insurance Premiums ( )

• Interim Provisions on Labor Dispatch

• Notice on Further Regulations on Issues Concerning Work-Related Injury Insurance for Labor Dispatching Units (

)

• Special Rules on the Labor Protection of Female Employees

• Special Provisions of Jiangsu Province on the Labor Protection for Female Employees ( )

• Provisions on the Administration of the Employment of Foreigners in China

• Interim Measures for the Participation in Social Insurance of Foreigners Employed in China

• Provisions on Medical Period for Sickness or Non-Work-Related Injury of Enterprise Employees ( )

• Implementation Plan of Jiangsu Province on Improving Birth Policies to Promote the Long-Term and Balanced Population Development (

)

Germany:

• German Civil Code

• Germany Minimum Wage Legislation

• German Social Code

• German Labor Protection Act

The U.S.:

• Federal and state employment laws

• U.S. Occupational Safety and Health Act

Mexico:

• Mexican Federal Labor Law

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Scopes Applicable Policies and Laws and Regulations

Workplace Environment and Occupational Health Management

The PRC:

• Production Safety Law of the People’s Republic of China

• Administrative Measures for Work Safety Training

• The Administrative Regulations on the Work Safety of Construction Projects

• Interim Measures for the Supervision and Administration of “Three Simultaneities” for Safety Facilities of Construction Projects

• Regulation on Emergency Responses to Work Safety Accidents

• Law of the People’s Republic of China on the Prevention and Treatment of Occupational Diseases

• Measures for the Supervision and Administration of “Three Simultaneities” of Facilities for the Prevention and Control of Occupational Diseases of

Construction Projects

• Regulation of Jiangsu Province on Work Safety

• Provisions on the Administration of Work Safety Supervision ( )

• Regulations of Jiangsu Province on the Prevention and Treatment of Occupational Diseases ( )

• Notice of Jiangsu Provincial Safety Supervision Bureau on the Implementation of the “Measures for the Supervision and Administration of ‘Three

Simultaneities’ of Facilities for the Prevention and Control of Occupational Diseases of Construction Projects” (

)

• Provisions on the Supervision and Administration of Occupational Health at Work Sites – Order No. 47 of the State Administration of Work Safety

• Measures for the Supervision and Administration of Employers’ Occupational Health Surveillance – Order No. 49 of the State Administration of Work

Safety

• Measures for the Declaration of Projects with Occupational Hazards – Order No. 48 of the State Administration of Work Safety

• Measures for the Administration of Occupational Health Checks – Order No. 5 of the National Health and Family Planning Commission

The U.S.:

• U.S. Occupational Safety and Health Act

Prevention of Child and Forced Labor

The PRC:

• Employment Contract Law of the People’s Republic of China

• Law of the People’s Republic of China on the Protection of Minors

• Civil Code of the People’s Republic of China

• Provisions on the Prohibition of Using Child Labor

• Criminal Law of the People’s Republic of China

• Measures for Lump-sum Compensation to the Disabled or Deceased Employees of Entities Involving Illegal Employment

• Opinions of the Jiangsu Provincial Department of Labor and Social Security and the Jiangsu Provincial Labor Dispute Arbitration Commission on Issues

Concerning the Injury and Injury of Employees and Child Labor in Illegal Employment Units (

)

Germany:

• German Civil Code

• German Social Code

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Scopes Applicable Policies and Laws and Regulations

Product Responsibilities

The PRC:

• Trademark Law of the People’s Republic of China

• Regulation on the Implementation of the Trademark Law of the People’s Republic of China

• Provisions on the Determination and Protection of Well-known Trademarks

• Copyright Law of the People’s Republic of China

• Regulation on the Implementation of the Copyright Law of the People’s Republic of China

• Patent Law of the People’s Republic of China

• Regulation on the Implementation of the Patent Law of the People’s Republic of China

• Anti-Unfair Competition Law of the People’s Republic of China

• Regulations of Jiangsu Province on the Promotion and Protection of Intellectual Property Rights ( )

• Product Quality Law of the People’s Republic of China

• Provisions on the Management of Enterprise Product Standards ( )

• Interim Measures for the Administration of Supervisory Spot Checks on Product Quality

• Measures of Jiangsu Province on Provisions and Administration of Product Quality ( )

• Law of the People’s Republic of China on the Protection of Consumer Rights and Interests

• Regulations on Quality Responsibility for Industrial Products

• Cyber Security Law of the People’s Republic of China

• E-Commerce Law of the People’s Republic of China

• Personal Information Protection Law of the People’s Republic of China

• Passport Law of the People’s Republic of China

• Law of the People’s Republic of China on Resident Identity Cards

• Advertising Law of the People’s Republic of China

• Provisions on the Scope of Necessary Personal Information Required for Common Types of Mobile Internet Applications

• Regulations of Jiangsu Province on the Protection of Consumers’ Rights and Interests

Germany:

• European Union General Data Protection Regulation

• Patent Act

• Utility Model Act

• Trademark Act

• Design Act

• Trade Secret Act

• Copyright Act

• IT Security Act

• Product Safety Act

• EU General Product Safety Directive

• EU Consumer Rights Directive

The U.S.:

• U.S. Patent Reform Act

• Consumer Product Safety Improvement Act

• Federal copyright statutes

• Federal patent statutes

• Federal and state trademark laws

• Federal and state defend trade secrets laws

• Federal Motor Vehicle Safety Standard 213 (FMVSS 213)

• Safety Standard for Hand-Held Infant Carriers (ASTM F2050-19)

• Juvenile Products Manufacturers Association protocols

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Scopes Applicable Policies and Laws and Regulations

Anti-Bribery and Corruption

The PRC:

• Anti-Unfair Competition Law of the People’s Republic of China

• Anti-Money Laundering Law of the People’s Republic of China

• Interim Provisions on Banning Commercial Bribery Upon the Order of the State Administration for Industry and Commerce of the People’s Republic of

China

• Measures of Jiangsu Province for the Implementation of the “Anti-Unfair Competition Law of the People’s Republic of China”

( )

HKSAR, the PRC:

• Prevention of Bribery Ordinance

Germany:

• German Criminal Code

The U.S.:

• Foreign Corrupt Practices Act

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APPENDIX II: HKEX ESG REPORTING GUIDE CONTENT INDEX

Subject Areas, Aspects,

Disclosures and KPIs Description Sections/Declaration

Aspect A1: Emissions

General Disclosure Information on:

(a) the policies; and

(b) compliance with relevant laws and regulations that have a significant impact on the issuer

relating to exhaust gas and GHG emissions, discharges into water and land, and generation of

hazardous and non-hazardous waste.

Appendix I

Part 7 > Rigorous Operation

Underscoring Environmental Benefits

KPI A1.1 The types of emissions and respective emissions data. Part 7 > Exhaust Gas Management and

Other Emissions

KPI A1.2 Direct (Scope 1) and energy indirect (Scope 2) GHG emissions in total (in tonnes) and, where appropriate,

intensity (e.g. per unit of production volume, per facility).

Part 7 > Climate Change and GHG

Emissions

KPI A1.3 Total hazardous waste produced (in tonnes) and, where appropriate, intensity (e.g. per unit of production

volume, per facility).

Part 7 > Waste Management and

Recycling

KPI A1.4 Total non-hazardous waste produced (in tonnes) and, where appropriate, intensity (e.g. per unit of production

volume, per facility).

Part 7 > Waste Management and

Recycling

KPI A1.5 Description of emission target(s) set and steps taken to achieve them. Part 7 > Waste Management and

Recycling

KPI A1.6 Description of how hazardous and non-hazardous wastes are handled, and a description of reduction

target(s) set and steps taken.

Part 2 > Statement from the Board

Part 7 > Rigorous Operation

Underscoring Environmental Benefits;

Waste Management and Recycling

Aspect A2: Use of Resources

General Disclosure Policies on the efficient use of resources, including energy, water and other raw materials. Part 7 > Water Use and Discharge;

Climate Change and GHG Emissions

KPI A2.1 Direct and/or indirect energy consumption by type in total (kWh in ’000s) and intensity (e.g. per unit of

production volume, per facility).

Part 7 > Climate Change and GHG

Emissions

KPI A2.2 Water consumption in total and intensity (e.g. per unit of production volume, per facility). Part 7 > Water Use and Discharge

KPI A2.3 Description of energy use efficiency target(s) and steps taken to achieve them. Part 2 > Statement from the Board

Part 7 > Climate Change and GHG

Emissions

KPI A2.4 Description of whether there is any issue in sourcing water that is fit for purpose, water efficiency target(s)

set and steps taken to achieve them.

Part 7 > Water Use and Discharge

KPI A2.5 Total packaging material used for finished products (in tonnes) and, if applicable, with reference to per unit

produced.

Part 7 > Climate Change and GHG

Emissions

Aspect A3: The Environment and Natural Resources

General Disclosure Policies on minimising the issuer’s significant impact on the environment and natural resources. Part 7 > Rigorous Operation

Underscoring Environmental Benefits;

Climate Change and GHG Emissions

KPI A3.1 Description of the significant impacts of activities on the environment and natural resources and the actions

taken to manage them.

Part 7 > Rigorous Operation

Underscoring Environmental Benefits;

Climate Change and GHG Emissions

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Subject Areas, Aspects,

Disclosures and KPIs Description Sections/Declaration

Aspect A4: Climate Change

General Disclosure Policies on identification and mitigation of significant climate-related issues which have impacted, and those

which may impact, the issuer.

Part 7 > Climate Change and GHG

Emissions

KPI A4.1 Description of the significant climate-related issues which have impacted, and those which may impact, the

issuer, and the actions taken to manage them.

Part 7 > Climate Change and GHG

Emissions

Aspect B1: Employment

General Disclosure Information on:

(a) the policies; and

(b) compliance with relevant laws and regulations that have a significant impact on the issuer

relating to compensation and dismissal, recruitment and promotion, working hours, rest periods,

equal opportunity, diversity, anti-discrimination, and other benefits and welfare.

Appendix I

Part 8 > Corporate Culture and

Employment Policy; Respecting and

Protecting Employees’ Rights and

Interests

KPI B1.1 Total workforce by gender, employment type (e.g. full – or part-time), age group and geographical region. Part 8 > Respecting and Protecting

Employees’ Rights and Interests

KPI B1.2 Employee turnover rate by gender, age group and geographical region. Part 8 > Respecting and Protecting

Employees’ Rights and Interests

Aspect B2: Health and Safety

General Disclosure Information on:

(a) the policies; and

(b) compliance with relevant laws and regulations that have a significant impact on the issuer

relating to providing a safe working environment and protecting employees from occupational

hazards.

Appendix I

Part 8 > Upholding Production Safety

and Occupational Health

KPI B2.1 Number and rate of work-related fatalities occurred in each of the past three years, including the reporting

year.

Part 8 > Upholding Production Safety

and Occupational Health

KPI B2.2 Lost days due to work injury. Part 8 > Upholding Production Safety

and Occupational Health

KPI B2.3 Description of occupational health and safety measures adopted, and how they are implemented and

monitored.

Part 8 > Upholding Production Safety

and Occupational Health

Aspect B3: Development and Training

General Disclosure Policies on improving employees’ knowledge and skills for discharging duties at work. Description of training

activities.

Part 8 > Enabling Employee

Development

KPI B3.1 The percentage of employees trained by gender and employee category (e.g. senior management, middle

management).

Part 8 > Enabling Employee

Development

KPI B3.2 The average training hours completed per employee by gender and employee category. Part 8 > Enabling Employee

Development

Aspect B4: Labor Standards

General Disclosure Information on:

(a) the policies; and

(b) compliance with relevant laws and regulations that have a significant impact on the issuer

relating to preventing child and forced labor.

Appendix I

Part 8 > Corporate Culture and

Employment Policy

KPI B4.1 Description of measures to review employment practices to avoid child and forced labor. Part 8 > Corporate Culture and

Employment Policy

KPI B4.2 Description of steps taken to eliminate such practices when discovered. Part 8 > Corporate Culture and

Employment Policy

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Subject Areas, Aspects,

Disclosures and KPIs Description Sections/Declaration

Aspect B5: Supply Chain Management

General Disclosure Policies on managing environmental and social risks of the supply chain. Part 4 > Supplier Management

KPI B5.1 Number of suppliers by geographical region. Part 4 > Quality First

KPI B5.2 Description of practices relating to engaging suppliers, number of suppliers where the practices are being

implemented, and how they are implemented and monitored.

Part 4 > Quality First; Supplier

Management

KPI B5.3 Description of practices used to identify environmental and social risks along the supply chain, and how they

are implemented and monitored.

Part 4 > Supplier Management;

Sustainable Supply Chain

KPI B5.4 Description of practices used to promote environmentally preferable products and services when selecting

suppliers, and how they are implemented and monitored.

Part 4 > Sustainable Supply Chain

Aspect B6: Product Responsibility

General Disclosure Information on:

(a) the policies; and

(b) compliance with relevant laws and regulations that have a significant impact on the issuer

relating to health and safety, advertising, labelling and privacy matters relating to products and services

provided and methods of redress.

Part 4 > Improved Testing Capabilities

to Safeguard Product Quality

Part 5: Effective Privacy Management

KPI B6.1 Percentage of total products sold or shipped subject to recalls for safety and health reasons. Part 5 > Building Positive Relationships

of Trust

KPI B6.2 Number of products and service-related complaints received and how they are dealt with. Part 5 > Building Positive Relationships

of Trust

KPI B6.3 Description of practices relating to observing and protecting intellectual property rights. Part 6 > Solid Organizational

Architecture Underpinning Innovation

KPI B6.4 Description of quality assurance process and recall procedures. Part 4 > Improved Testing Capabilities

to Safeguard Product Quality

KPI B6.5 Description of consumer data protection and privacy policies, and how they are implemented and monitored. Part 5 > Building Positive Relationships

of Trust

Aspect B7: Anti-Corruption

General Disclosure Information on:

(a) the policies; and

(b) compliance with relevant laws and regulations that have a significant impact on the issuer

relating to bribery, extortion, fraud and money laundering.

Appendix I

Part 2 > Business Ethics and Corporate

Conduct

KPI B7.1 Number of concluded legal cases regarding corrupt practices brought against the issuer or its employees

during the reporting period and the outcomes of the cases.

Part 2 > Business Ethics and Corporate

Conduct

KPI B7.2 Description of preventive measures and whistleblowing procedures, how they are implemented and

monitored.

Part 2 > Business Ethics and Corporate

Conduct

KPI B7.3 Description of anti-corruption training provided to directors and staff. Part 2 > Business Ethics and Corporate

Conduct

Aspect B8: Community Investment

General Disclosure Policies on community engagement to understand the needs of the communities where the issuer operates

and to ensure its activities take into consideration the communities’ interests.

Part 9 > Contributing to Society and

Local Communities

KPI B8.1 Focus areas of contribution (e.g. education, environmental concerns, labor needs, health, culture, sport). Part 9 > Contributing to Society and

Local Communities

KPI B8.2 Resources contributed (e.g. money or time) to the focus area. Part 9 > Contributing to Society and

Local Communities

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GOODBABY 117

The board (the “Board”) of directors (the “Directors”) is pleased to present this corporate governance

report in the annual report for the year ended 31 December 2022. The manner in which the principles and

code provisions as set out in the Corporate Governance Code (the “CG Code”) contained in Appendix 14

of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock

Exchange”) (the “Listing Rules”) are applied and implemented, as explained in the following sections of this

corporate governance report:

CORPORATE GOVERNANCE STRUCTURE AND PRACTICES

SHAREHOLDERS & STAKEHOLDERS

BOARD OF DIRECTORS

REMUNERATION

COMMITTEE

NOMINATION

COMMITTEE

AUDIT

COMMITTEE

INTERNAL

AUDIT

CHIEF

EXECUTIVE

OFFICER

SENIOR

MANAGEMENT

CORPORATE GOVERNANCE PRACTICES

The Board is committed to achieving high corporate governance standards. It believes that high corporate

governance standards are essential in providing a framework for the Company to safeguard the interests of

shareholders of the Company (“Shareholder(s)”) and formulate its business strategies and policies as well as

to enhance corporate value and to enhance transparency and accountability.

Corporate governance is the process by which the Board instructs management of the Group to conduct

its affairs with a view to ensuring that its objectives are met. The Board is committed to maintaining and

developing robust corporate governance practices that are intended to ensure:

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GOODBABY 118

– satisfactory and sustainable returns to

Shareholders;

– that the interests of those who deal with the

Company are safeguarded;

– that overall business risk is understood and

managed appropriately;

– the delivery of high-quality products and

services to the satisfaction of customers; and

– that high standards of ethics are maintained.

The Board is of the view that throughout the

year ended 31 December 2022, the Company has

complied with all the code provisions and certain

recommended best practices in the CG Code.

The Company is committed to enhancing its

corporate governance practices appropriate to the

conduct and growth of its business and to review

such practices from time to time to ensure that they

comply with the CG Code and align with the latest

developments.

LEADERSHIP

The Board oversees the Company’s businesses,

strategic decisions and performance and should

take decisions objectively in the best interests

of the Company. The Company is headed by an

effective Board which assumes responsibility

for its leadership and control and be collectively

responsible for promoting the Company’s success

by directing and supervising the Company’s affairs.

Directors take decisions objectively in the best

interests of the Company.

The Board has a balance of skills, experience

and diversity of perspectives appropriate to

the requirements of the Company’s business

and regularly reviews the contribution required

from a Director to perform his responsibilities

to the Company and whether the Director is

spending sufficient time performing them that

are commensurate with their role and the Board

responsibilities. The Board includes a balanced

composition of Executive Directors and Non-

executive Directors (including Independent Non-

executive Directors) so that there is a strong

independent element on the Board, which can

effectively exercise independent judgement.

BOARD COMPOSITION

During the year, the Board comprises eleven

Directors, consisting of five executive Directors, two

non-executive Directors and four independent non-

executive Directors, as follows:

Executive Directors

Mr. SONG Zhenghuan (Chairman)

Mr. LIU Tongyou (current Chief Executive Officer)

Mr. Martin POS (former Chief Executive Officer until

21 March 2023)

Mr. XIA Xinyue

Mr. Michael Nan QU

Non-executive Directors

Ms. FU Jingqiu

Mr. HO Kwok Yin, Eric

Independent non-executive Directors

Mr. Iain Ferguson BRUCE (retired on 23 May 2022)

Mr. SHI Xiaoguang (member of audit, nomination

and remuneration committees)

Ms. CHIANG Yun (Chairlady of audit, nomination and

remuneration committees)

Mr. JIN Peng

Mr. So Tak Young (member of audit, nomination and

remuneration committees) (appointed on 23 May

2022)

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GOODBABY 119

The biographical information of the Directors are

set out in the section headed “Directors and Senior

Management” on pages 27 to 36 of this annual

report.

Ms. FU Jingqiu, non-executive Director, is the

spouse of Mr. SONG Zhenghuan, the Chairman

and executive Director of the Company. Save as

disclosed above, there is no relationships (including

financial, business, family or other material/relevant

relationship(s)) between the Board members and

in particular, between the Chairman and the Chief

Executive Officer.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

During the year 2022, the positions of Chairman

of the Company (“Chairman”) and Chief Executive

Officer of the Company (“CEO”) were held by Mr.

SONG Zhenghuan and Mr. Martin POS respectively.

Since 21 March 2023, Mr. Liu Tongyou succeeded

the role of CEO after Mr. Martin POS’ stepping down

from such role. The Chairman provides leadership

and is responsible for the effective functioning

and leadership of the Board. The CEO focuses on

the Company’s business development and daily

management and operations generally. Their

respective responsibilities are clearly defined and

set out in writing.

NON-EXECUTIVE DIRECTORS

Non-executive Directors serve the relevant

function of bringing independent judgment on the

development and performance, etc. of the Group.

They have the same duties of care and skill and

fiduciary duties as executive Directors.

INDEPENDENT NON-EXECUTIVE DIRECTORS

During the year ended 31 December 2022, the Board

at all times met the requirements of the Listing

Rules relating to the appointment of at least three

independent non-executive Directors representing

one-third of the Board with one of whom possessing

appropriate professional qualifications or accounting

or related financial management expertise.

The Company has received written annual

confirmation from each of the independent

non-executive Directors in respect of his/her

independence in accordance with the independence

guidelines as set out in Rule 3.13 of the Listing

Rules. The Company considers all independent

non-executive Directors are independent.

POLICY ON INDEPENDENCE OF DIRECTORS

The Board has mechanisms to ensure independent

views and input are available to the Board, and

during the year ended 31 December 2022, such

mechanisms had been codified into a Policy on

Independence of Directors, which provided, among

others:

• Criteria for evaluating the independence of non-

executive Directors (or a person proposed to

be appointed as an independent non-executive

Director), which are no less than the standards

set under Rule 3.13 of the Listing Rules which

the Stock Exchange would normally take into

account when accessing the independence of a

non-executive director; and

• Reiterating the disclosure requirements when

an independent non-executive Director who has

served for more than nine years is proposed to

be re-elected at a forthcoming annual general

meeting of the Company.

Upon a review on the said Policy on Independence

of Directors, the Board was the view that the

mechanisms therein remained effective and has

been effectively implemented.

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DIRECTORS’ SECURITIES TRANSACTIONS

The Company has adopted the Model Code for

Securities Transactions by Directors of Listed Issuers

(the “Model Code”) as set out in Appendix 10 to the

Listing Rules. Specific enquiry has been made of

all the Directors and the Directors have confirmed

that they have complied with the Model Code

throughout the year ended 31 December 2022. The

Company has also established a code of conduct no

less exacting than the Model Code (the “Employees

Code of Conduct”) for securities transactions by

employees who are likely to be in possession of

unpublished price-sensitive information of the

Company. No incident of non-compliance of the

Employees Code of Conduct by the employees was

noted by the Company.

RESPONSIBILITIES, ACCOUNTABILITIES

AND CONTRIBUTIONS OF THE BOARD AND

MANAGEMENT

The Board is responsible for leadership and

control of the Company and oversees the Group’s

businesses, strategic decisions and performance and

is collectively responsible for promoting the success

of the Company by directing and supervising its

affairs. The Directors take decisions objectively

in the interests of the Company. The Board has

delegated to the CEO, and through him, to the

senior management the authority and responsibility

for the day-to-day management and operation of

the Group. In addition, the Board has established

board committees and has delegated to these

board committees various responsibilities as set out

in their respective terms of reference.

The Board reserves for its decision all major

matters relating to policy matters, strategies and

budgets, internal control and risk management,

material transactions (in particular those that may

involve conflict of interests), financial information,

appointment of Directors and other significant

operational matters of the Company. Responsibilities

relating to implementing decisions of the Board,

directing and coordinating the daily operation and

management of the Company are delegated to the

management.

All Directors, including non-executive Directors and

independent non-executive Directors, have brought

a wide spectrum of valuable business experience,

knowledge and professionalism to the Board for its

efficient and effective functioning. The independent

non-executive Directors are responsible for ensuring

a high standard of regulatory reporting of the

Company and providing a balance in the Board

for bringing effective independent judgement on

corporate actions and operations.

All Directors have full and timely access to all

the information of the Company as well as the

services and advice of the company secretary of

the Company (“Company Secretary”) and senior

management. The Directors may, upon request,

seek independent professional advice in appropriate

circumstances, at the Company’s expenses for

discharging their duties to the Company.

The Directors have disclosed to the Company

details of other offices held by them and the Board

regularly reviews the contribution required from

each Director to perform his/her responsibilities

to the Company. The Company has arranged for

appropriate insurance cover for Directors’ and

officers’ liabilities in respect of legal actions against

its Directors and senior management arising out of

corporate activities.

CONTINUOUS PROFESSIONAL DEVELOPMENT OF

DIRECTORS

Directors keep abreast of regulatory developments

and changes in order to effectively perform their

responsibilities and to ensure that their contribution

to the Board remains informed and relevant. Every

newly appointed Director will receive a formal and

comprehensive induction on the first occasion

of his/her appointment to ensure appropriate

understanding of the business and operations

of the Company and full awareness of director’s

responsibilities and obligations under the Listing

Rules and relevant statutory requirements. Such

induction shall be supplemented by visits to the

Company’s key plant sites and meetings with senior

management of the Company.

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GOODBABY 121

Directors should participate in appropriate

continuous professional development to develop

and refresh their knowledge and skills to ensure that

their contribution to the Board remains informed

and relevant. Internal briefings for Directors will be

arranged and reading material on relevant topics

will be issued to Directors where appropriate.

All Directors are encouraged to attend relevant

training courses at the Company’s expenses. During

the year ended 31 December 2022, all Directors

have provided the Company with a record of the

training they received on a half yearly basis, and

such records were maintained by the Company.

The training record of each Director during the year

ended 31 December 2022 is set out in the table

below:

Hours of

Training in 2022

Name of Directors

SONG Zhenghuan 17

LIU Tongyou 17

Martin POS 16

XIA Xinyue 16

Michael Nan QU 16

FU Jingqiu 17

HO Kwok Yin, Eric 16

SHI Xiaoguang 17

CHIANG Yun 16

JIN Peng 16

So Tak Young (appointed on 23 May 2022) 16

APPOINTMENT AND RE-ELECTION OF DIRECTORS

Code provision B.2.2 of the CG Code stipulates that

every directors, including those appointed for a

specific term, should be subject to retirement by

rotation at least once every three years, subject to

renewal after the expiry of the then current term.

Each of the executive Directors has entered into a

service contract/signed an appointment letter with

the Company and is appointed for a specific term

of three years unless terminated by not less than

three months’ notice in writing served by either

the executive Director or the Company. The non-

executive Directors and each of the independent

non-executive Directors has signed an appointment

letter with the Company and is appointed for a

specific term of three years.

The appointment of all Directors are subject to the

provisions of retirement and rotation of Directors

under the Company’s articles of association

(“Articles of Association”). In accordance with the

Articles of Association, all Directors of the Company

are subject to retirement by rotation at least once

every three years and any new Director appointed

to fill a causal vacancy shall submit himself/herself

for reelection by Shareholders at the first general

meeting after appointment. Any new Director

appointed as an addition to the Board shall submit

himself/herself for re-election by Shareholders at

the next following general meeting.

The procedures and process of appointment, re-

election and removal of Directors are laid down

in the Articles of Association. The nomination

committee of the Company (“Nomination

Committee”) is responsible for reviewing the

Board composition, developing and formulating

the relevant procedures for nomination and

appointment of Directors, monitoring the

appointment and succession planning of Directors

and assessing the independence of independent

non-executive Directors.

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GOODBABY 122

REMUNERATION OF DIRECTORS AND SENIOR

MANAGEMENT

The Company has established a formal and

transparent procedure for formulating policies

on remuneration of senior management of the

Group. Details of the remuneration of each of the

Directors of the Company for the year ended 31

December 2022 are set out in note 9 to the financial

statements.

Pursuant to code provision E.1.5 of the CG Code,

the remuneration payable to members of senior

management by band for the year ended 31

December 2022 is set out below:

Number of

persons

Remuneration bands (HK$)

HK$1,000,001 to HK$2,000,000 –

HK$2,000,001 to HK$3,000,000 –

over HK$3,000,001 3

COMPANY SECRETARY

Ms. Ho Wing Tsz, Wendy has been appointed as the

Company’s company secretary since 5 September

2022*. Ms. Ho Wing Tsz, Wendy is an executive

director of Corporate Services of Tricor Services

Limited, a global professional services provider

specializing in integrated business, corporate and

investor services.

The Company Secretary’s biography is set out in the

section headed “Directors and Senior Management”

on pages 27 to 36 of this annual report. For the year

ended 31 December 2022, the company secretary

has undertaken not less than 15 hours of the relevant

professional training respectively in compliance with

Rule 3.29 of the Listing Rules.

All Directors have access to the advice and services

of the company secretary on corporate governance

and board practices and matters. Ms. WANG Qi,

Group Legal & Compliance Director of the Company

has been designated as the primary contact

person at the Company which would work and

communicate with the company secretary on the

Company’s corporate governance and secretarial

and administrative matters.

* On 16 June 2022, Ms. Ho Siu Pik (“Ms. Ho”) resigned as

the company secretary of the Company. Immediately

after the resignation of Ms. Ho, Ms. Chow Yuk Yin,

Ivy (“Ms. Chow”) was appointed as the company

secretary of the Company. On 5 September 2022,

Ms. Chow resigned as the company secretary of the

Company. Immediately after the resignation of Ms.

Chow, Ms. Ho Wing Tsz, Wendy was appointed as the

company secretary of the Company with effect from 5

September 2022.

BOARD COMMITTEES

The Board has established three committees, namely

the Audit Committee, the Remuneration Committee

and the Nomination Committee, for overseeing

particular aspects of the Company’s affairs. All

Board committees of the Company are established

with specified written terms of reference which deal

clearly with their authority and duties. The terms of

reference of the Board committees are posted on

the Company’s website and the Stock Exchange’s

website and are available to shareholders upon

request. All members of each Board committee are

independent non-executive Directors. A list of the

chairman and members of each Board committee is

set out under “Corporate Information” on pages 2 to

4 of this annual report.

AUDIT COMMITTEE

During the year ended 31 December 2022, the audit

committee of the Company (“Audit Committee”)

consists of the following independent non-executive

Directors, namely Mr. Iain Ferguson BRUCE (retired

on 23 May 2022), Mr. SHI Xiaoguang, Ms. CHIANG

Yun and Mr. So Tak Young (appointed on 23 May

2022). Ms. CHIANG Yun is the Chairlady of the Audit

Committee.

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GOODBABY 123

The terms of reference of the Audit Committee are

of no less exacting terms than those set out in the

CG Code. The main duties of the Audit Committee

are to assist the Board in reviewing the financial

information and reporting process, risk management

and internal control systems, effectiveness of

the internal audit function, scope of audit and

appointment of external auditors, and arrangements

to enable employees of the Company to raise

concerns about possible improprieties in financial

reporting, internal control or other matters of the

Company.

Pursuant to code provision D.3.2 of the CG Code, a

former partner of an issuer’s current auditing firm

shall be prohibited from acting as a member of its

audit committee member for a period of two years

from the date the person ceasing to be a partner

or have any financial interests in such auditing

firm. The Company has adopted a revised terms

of reference of the Audit Committee to reflect the

requirement since 14 December 2018 with an effort

to keep abreast of the latest development of the CG

Code.

The Audit Committee held two meetings on 21

March 2022 and 20 August 2022 respectively, to

review the annual financial results and report for the

year ended 31 December 2021, and interim financial

results and report for the six months ended 30 June

2022 as well as significant issues on the financial

reporting, operational and compliance controls,

the effectiveness of the risk management and

internal control systems, appointment of external

auditors, continuing connected transactions and

arrangements for employees to raise concerns

about possible improprieties. During the year ended

31 December 2022, the Audit Committee also met

the external auditors twice without the presence of

the executive Directors.

REMUNERATION COMMITTEE

During the year ended 31 December 2022,

the remuneration committee of the Company

(“Remuneration Committee”) consists of the

following independent non-executive Directors,

namely Mr. Iain Ferguson BRUCE (retired on 23 May

2022), Mr. SHI Xiaoguang and Ms. CHIANG Yun and

Mr. So Tak Young (appointed on 23 May 2022). Ms.

CHIANG Yun is the Chairlady of the Remuneration

Committee.

The terms of reference of the Remuneration

Committee are of no less exacting terms than those

set out in the CG Code. The primary functions of

the Remuneration Committee include determining/

reviewing and making recommendations to the

Board on the remuneration packages of individual

executive Directors and senior management,

the remuneration policy and structure for all

Directors and senior management; and establishing

transparent procedures for developing such

remuneration policy and structure to ensure that no

Director or any of his/her associates will participate

in deciding his/her own remuneration.

The Company’s remuneration policy is to ensure

that the remuneration offered to employees,

including Directors and senior management,

is based on skill, knowledge, responsibilities

and involvement in the Company’s affairs. The

remuneration packages of executive Directors are

also determined with reference to the Company’s

performance and profitability, the prevailing market

conditions and the performance or contribution of

each executive Director. The remuneration for the

executive Directors comprises basic salary, pensions

and discretionary bonus. Executive Directors may

receive options to be granted under the Company’s

share option scheme. The remuneration policy for

non-executive Directors and independent non-

executive Directors is to ensure that non-executive

Directors and independent non-executive Directors

are adequately compensated for their efforts

and time dedicated to the Company’s affairs,

including their participation in Board committees.

The remuneration for the non-executive Directors

and independent non-executive Directors mainly

comprises Director’s fee which is determined with

reference to their duties and responsibilities by the

Board. Individual Directors and senior management

have not been involved in deciding their own

remuneration.

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GOODBABY 124

The Remuneration Committee held a meeting on 21

March 2022 to review and make recommendation

to the Board on the remuneration policy and the

remuneration packages of executive Directors

and senior management for 2022 as well as other

related matters. The Remuneration Committee also

made recommendations to the Board on the terms

of service agreement.

The Remuneration Committee also made

recommendations to the Board on the terms of

letter of appointment of the new independent non-

executive Director appointed during the year.

NOMINATION COMMITTEE

During the year ended 31 December 2022, the

Nomination Committee consists of the following

independent non-executive Directors, namely Mr.

Iain Ferguson BRUCE (retired on 23 May 2022), Mr.

SHI Xiaoguang and Ms. CHIANG Yun and Mr. SO Tak

Young (appointed on 23 May 2022). Ms. CHIANG

Yun is the chairlady of the Nomination Committee.

The terms of reference of the Nomination

Committee are of no less exacting terms than those

set out in the CG Code. The principal duties of the

Nomination Committee include reviewing the Board

composition, developing and formulating relevant

procedures for the nomination and appointment

of Directors, making recommendations to the

Board on the appointment and succession planning

of Directors, and assessing the independence of

independent non-executive Directors. External

recruitment professionals might be engaged to

carry out recruitment and selection process when

necessary.

In assessing the Board composition, the Nomination

Committee would take into account various aspects

as well as factors concerning Board diversity as set

out in the Company’s Board Diversity Policy. The

Nomination Committee would discuss and agree on

measurable objectives for achieving diversity on the

Board, where necessary, and recommend them to

the Board for adoption.

The Nomination Committee held meetings on

21 March 2022 and 23 May 2022 to review the

structure, size and composition of the Board, the

independence of the independent non-executive

Directors, and to consider the qualifications of

the retiring directors standing for election at the

annual general meeting; and the appointment

of the independent non-executive Director. The

Nomination Committee considered an appropriate

balance of diversity perspectives of the Board is

maintained.

GENDER DIVERSITY

The Company values gender diversity across all

levels of the Group. As at 31 December 2022, one

third of the Group’s senior management are female

and the Board also comprises male and female

Directors. For details of the Group’s Directors and

senior management, please refer to pages 27 to 36

in section headed “Directors & Senior Management”

in this report. Details on the gender ratio of the

Group together with relevant data can be found on

page 92 in Environmental, Social and Governance

Report.

Taking into account the Group’s business model

and specific needs from time to time, and that the

Board comprises male and female members, the

gender diversity target of the Board has generally

been achieved and adhered to. The Board is

mindful of the measurable objectives in the Board

Diversity Policy which include gender diversity for

assessing potential candidates of Board members,

and will continue to ensure any successors to the

Board shall follow the gender diversity as well as

other measurable objectives in the Board Diversity

Policy. Similar considerations shall also be made

for assessing potential candidates of the senior

management team from time to time.

As at 31 December 2022, the number of male and

female in the workforce (including the Directors

and senior management) is approximately 3,120 and

4,273 respectively.

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GOODBABY 125

As such, the Company’s workforce has achieved

gender diversity between males and females.

The Company shall continue to take into account

diversity perspectives including gender diversity in

its hiring of employees and assessment of potential

successors to the Board and the senior management

team from time to time.

DIRECTOR NOMINATION POLICY

The Board has delegated its responsibilities and

authority for selection and appointment of Directors

to the Nomination Committee of the Company.

The Company has adopted a director nomination

policy which sets out the selection criteria and

process and the Board succession planning

considerations in relation to nomination and

appointment of Directors of the Company and aims

to ensure that the Board has a balance of skills,

experience and diversity of perspectives appropriate

to the Company and the continuity of the Board and

appropriate leadership at Board level, via written

resolutions passed by the Directors on 14 December

2018.

The Company shall appoint independent non-

executive Directors representing at least one-third

of the Board. The Nomination Committee should

assess the independence of the independent non-

executive Directors in taking into account the

factors set out on Rule 3.13 of the Listing Rules.

The Nomination Committee will conduct regular

review on the structure, size and composition of

the Board and this Policy and where appropriate,

make recommendations on change to the Board to

complement the Company’s corporate strategy and

business needs.

The Nomination Committee would consider the

character and integrity, potential contributions

in terms of qualifications, skills, experience,

independence and diversity, and other perspectives

that are appropriate to the Company’s business and

succession as the criteria for selecting candidate for

directorship.

For appointment of new Director, the Nomination

Committee should evaluate the candidates based on

the criteria as set out in the nomination policy, rank

them by order of preference based in the needs

of the Company and recommend the appropriate

candidate to the Board for appointment. For any

person that is nominated by a Shareholder for

election at the general meeting, the Nomination

Committee should also evaluate the candidates

based on the criteria and make recommendation to

Shareholders in respect of the proposed election of

director at the general meeting.

For re-election of Director at general meeting, the

Nomination Committee should review the overall

contribution and services to the Company of the

retiring Director and the level of participation and

performance on the Board and whether the retiring

Director continues to meet the criteria as set out in

the nomination policy. The Nomination Committee

should then make recommendation to Shareholders

in respect of the proposed re-election of director

at the general meeting. Where the Board proposes

a resolution to elect or re-elect a candidate as

Director at the general meeting, the relevant

information of the candidate should be disclosed

in the circular to shareholders and/or explanatory

statement accompanying the notice of the relevant

general meeting in accordance with the Listing

Rules and/or application laws and regulations.

The Nomination Committee will review the Director

Nomination Policy, as appropriate, to ensure its

effectiveness.

BOARD DIVERSITY POLICY

The Company has amended the board diversity

policy, which were adopted on 23 August 2013,

setting out the approach to achieve diversity of

the Board via written resolutions passed by the

Directors on 14 December 2018. The Company

recognizes and embraces the benefits of having a

diverse Board and sees increasing diversity at the

Board level as an essential element in maintaining

the Company’s competitive advantage and

corporate governance.

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GOODBABY 126

The Nomination Committee has primary

responsibility for identifying individuals suitably

qualified to become members of the Board and

selecting, or making recommendations to the

Board on the selection of, individuals nominated

for directorships. In assessing potential candidates

for the Board, the Nomination Committee will

consider the diversity perspectives in accordance

with the board diversity policy adopted by the

Company, including but not limited to gender, age,

cultural and educational background, professional

qualifications, skills, knowledge and industry and

regional experience. The Company aims to maintain

an appropriate balance of diversity perspective

of the Board that are relevant to the Company’s

business growth.

The Nomination Committee will review the board

diversity policy as appropriate and recommend

revisions, if any, to the Board for consideration

and approval. The Nomination Committee had

conducted a review of the implementation and

effectiveness of the board diversity policy in respect

of the year ended 31 December 2022. In forming

its perspective on diversity, the Company will also

take into account factors based on its own business

model and specific needs from time to time. Upon

conducting its review, the Nomination Committee

was of the view that board diversity has been

achieved and the Board has an appropriate mix of

skills, experience and diversity taking into factors

such as gender, educational background, age, skills

and experience of the Directors, which can be found

in the “Directors and Senior Management” section

of this report, in the context of the Group’s own

business model and specific needs from time to

time.

CORPORATE GOVERNANCE FUNCTIONS

The Board is responsible for performing the

corporate governance duties as set out in the

Corporate Governance Functions of the Board

adopted by the Company including:

• to develop and review the Company’s policies,

procedures and practices on corporate

governance;

• to review and monitor the training and

continuous professional development of

Directors and senior management;

• to review the effectiveness of the risk

management and internal control system on an

ongoing basis and to remedy material internal

control weaknesses;

• to review and monitor the Company’s policies

and practices on compliance with legal and

regulatory requirements;

• to develop, review and monitor the code

of conduct and compliance manual (if any)

applicable to employees and Directors;

• to review the adequacy of resources,

competency of employees, training programs

and budget of the Company’s accounting,

internal audit and financial reporting functions;

• to review on the compliance of the Mode Code

and the Employee Code of Conduct; and

• to review the Company’s compliance with

CG Code and disclosure in the corporate

governance report in the annual report of the

Company.

The Board may delegate the corporate governance

duties to a committee of the Board.

The Board’s annual review of the Company’s

corporate governance practices for the year ended

31 December 2022 has covered the aforesaid

matters.

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GOODBABY 127

THE COMPANY’S CULTURE, PURPOSE, VALUES

AND STRATEGY

The Board has established its vision, mission, values

and strategy and is satisfied that these are aligned

with the Company’s culture. For details please refer

to the section headed “Environmental, Social and

Governance Report – Part 2: ESG Strategy and

Oversight – Group Overview” in this annual report.

BOARD MEETINGS

BOARD PRACTICES AND CONDUCT OF MEETINGS

Annual meeting schedules and draft agenda of each

meeting are normally made available to Directors in

advance.

Regular Board meetings were held involving active

participation, either in person or through electronic

means of communication, of a majority of Directors.

Notice of regular Board meetings is served to all

Directors at least 14 days before the meeting. For

other Board and committee meetings, reasonable

notice is generally given. Board papers together with

all appropriate, complete and reliable information

are sent to all Directors at least 3 days before each

Board meeting or committee meeting to keep

Directors apprised of the latest developments and

financial position of the Company and to enable

them to make informed decisions. The Board and

each Director also have separate and independent

access to the senior management where necessary.

Where necessary, the senior management attend

regular Board meetings and other Board and

committee meetings, to advise on business

developments, financial and accounting matters,

statutory and regulatory compliance, corporate

governance and other major aspects of the

Company.

The Articles of Association contain provisions

requiring Directors to abstain from voting and

not to be counted in the quorum at meetings for

approving transactions in which such Directors or

any of their associates have a material interest.

ATTENDANCE RECORD OF DIRECTORS AND

COMMITTEE MEMBERS

The attendance record of each Director at the Board

and Board committee meetings and the general

meeting of the Company held during the year ended

31 December 2022 is set out in the table below:

Attendance/Number of Meetings in 2022

Name of Director

Board

Audit

Committee

Remuneration

Committee

Nomination

Committee

General

Meeting

Executive Directors

SONG Zhenghuan 4/5 N/A N/A N/A 1/1

LIU Tongyou 5/5 N/A N/A N/A 1/1

Martin POS 2/5 N/A N/A N/A 0/1

XIA Xinyue 5/5 N/A N/A N/A 0/1

Michael Nan QU 4/5 N/A N/A N/A 0/1

Non-executive Directors

FU Jingqiu 4/5 N/A N/A N/A 1/1

HO Kwok Yin, Eric 5/5 N/A N/A N/A 1/1

Independent Non-

executive Directors

SHI Xiaoguang 5/5 2/2 2/2 1/1 1/1

CHIANG Yun 4/5 2/2 2/2 1/1 1/1

JIN Peng 1/5 N/A N/A N/A 0/1

SO Tak Young (appointed

on 23 May 2022) (Note) 4/4 1/1 1/1 0/0 0/1

Note: The denominators of attendance of Mr. SO Tak

Young at board meetings, board committee meetings

and general meetings refer to the total number of

those meetings held in 2022 after his appointment on

23 May 2022.

Apart from regular Board meetings, the Chairman

also held a meeting solely with the independent

non-executive Directors on 22 March 2022.

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GOODBABY 128

ACCOUNTABILITY AND AUDIT

DIRECTORS’ RESPONSIBILITY IN RESPECT OF THE

FINANCIAL STATEMENTS

The Directors acknowledge their responsibility for

preparing the financial statements of the Company

for the year ended 31 December 2022 with the

support of the accounting and finance team. The

Directors are not aware of any material uncertainties

relating to events or conditions that may cast

significant doubt upon the Company’s ability to

continue as a going concern. The statement of the

independent auditors of the Company about their

reporting responsibilities on the financial statements

is set out in the Independent Auditors’ Report on

pages 156 to 160.

RISK MANAGEMENT AND INTERNAL CONTROLS

The Board acknowledges its responsibility for the

risk management and internal control systems and

reviewing their effectiveness. Such systems are

designed to manage rather than eliminate the risk

of failure to achieve business objectives and can

only provide reasonable and not absolute assurance

against material misstatement or loss.

The Audit Committee reviews and monitors the

scope, issues, results and action plans in relation to

or arising from the internal and external audits. The

Audit Committee also assists the Board in fulfilling

its oversight and corporate governance roles in the

Company’s risk management and internal controls,

and the resources of the finance and internal audit

functions.

The key elements of the Company’s risk

management and internal control systems include

the following areas:

• A closed loop risk management framework that

monitors and assesses risks, internal control

operating environment and the execution and

results of corrective actions to address on the

identified risks and control deficiencies;

• An organizational structure with clearly defined

and distinct lines of authority and control

responsibilities;

• Approval from executive director/responsible

senior executive prior to commitment on all

material matters;

• A robust financial and management

accounting system to provide for performance

measurement indicators and to ensure

compliance with relevant rules;

• Annual plans prepared by senior management

on financial reporting, operations and

compliance with consideration of potential

opportunities and risks;

• Strict prohibition on the release of confidential

information;

• Appropriate policy to ensure the adequacy

of resources, qualifications and experience

of employees of the Company’s accounting,

financial reporting and internal audit functions,

and their training programs and budget;

• On an ongoing basis, review and evaluation

of the adequacy and effectiveness of risk

management and internal control systems and

hence any enhancement implementation as

appropriate.

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GOODBABY 129

The Company has taken the following assessments

annually to assess the risk management and internal

control systems and the related accountability of

the management team:

1) Control Self-Assessment (CSA) – CSA is a

regular, systematic and standardized approach

to facilitate self-review and self-audit of the

adequacy and effectiveness of internal controls

across the Company at the process, business

unit and corporate levels. Internal control

department developed and continuously

enhances the self-assessment questionnaire to

identify and evaluate key control requirements

based on the principles of the Internal Control

– Integrated Framework (2013) issued by the

Committee of Sponsoring Organizations of the

Treadway Commission (“COSO”). Business/

process owners are required to carry out self-

assessment and report on the internal control

status of their responsible business unit under

the guidance of internal control department.

Corrective action plans are required to be

reported by business/process owners and

are monitored by internal control department

for the identified control deficiencies. chief

executive officer and chief financial officer

of the Company review the submitted self-

assessment results and the corrective action

plans, assess the internal control status

and confirm on the overall adequacy and

effectiveness of the internal control system in

place.

2) Annual Risk Assessment (ARA) – ARA is

a comprehensive risk analysis based on

inputs from corporate executives and senior

management of business units and core

supporting functions to identify the strategic,

operational, compliance and financial risk

factors. Through the ARA process, major risks

that may impede the business from achieving

its objectives are assessed, year-over-year

trend analyzed, root causes are scrutinized, and

adequate response are developed. The high

risk internal control areas identified out of the

analysis are subject to be audited by internal

audit function.

During 2022, the Board, through the Audit

Committee, conducted a review of the effectiveness

of the risk management and internal control system

of the Company. The Audit Committee and the

Board were not aware of any areas of concern that

would have a material impact on the Company’s

financial position or results of operations and

considered the risk management and internal

control systems to be generally effective and

adequate including the adequacy of resources,

employees qualifications and experience, training

programs and budget of the accounting, financial

reporting and internal audit functions as well as

those relating to the Company’s ESG performance

and reporting.

In addition to the review of risk management and

internal controls undertaken within the Company,

the external auditor also assessed the adequacy

and effectiveness of certain key risk management

and internal controls as part of their statutory

audits. Where appropriate, the external auditor’s

recommendations are adopted and enhancements

to the risk management and internal controls will be

made.

The Company has established a set of corporate

governance policies to ensure compliance with

the various rules and obligations imposed on it as

a company listed on the Stock Exchange, and to

improve the effectiveness of its risk management

and internal control systems. Among the mentioned

policies, the key policies are illustrated as follows.

INTERNAL AUDIT FUNCTION

The Company has a professional and independent

internal audit department reporting directly to

the Audit Committee. Audit Committee reviews

internal audit’s periodic risk assessment report

and approves annual audit plan and the related

resource requirements. Internal control deficiencies

identified by internal audit and corrective action

progress update are communicated in a timely

manner to management and Audit Committee.

Audit Committee has evaluated the performance

of internal audit function in year 2022 and was

satisfied with the effectiveness of the function.

CORPORATE GOVERNANCE REPORTAnnual Report 2022

CORPORATE GOVERNANCE REPORT

GOODBABY 130

CODE OF BUSINESS CONDUCT

We strive to be a company that embodies high

ethical standards and we take steps to bolster

strong business ethics in our daily operations. All

employees of the Company shall comply with the

Code of Business Conduct Policy. We assess the

Code of Business Conduct Policy on a regular basis

to ensure that it complies with the latest legal

and regulatory requirements, reflects global best

practices and fosters proper governance on the

business activities. The Company has updated the

Code of Business Conduct Policy in year 2022. It

provides the guiding principles for all employees

to do what is right, behave with integrity, honesty

and mutual respect, treat people fairly without

discrimination, obey all applicable laws, and handle

matters such as inside information and share

trading, business opportunities, gift, entertainment

and other hospitality, environment, health and

safety with a diligent and appropriate approach.

WHISTLE-BLOWING POLICY AND ANTI-

CORRUPTION POLICY

The Company has executed a robust whistle-

blowing mechanism to encourage employees and

those who deal with the Company to report with

confidence on any wrongdoing which they suspect

or believe may be occurring within or related to

the Company without the risk of unfair treatment.

In order to further strengthen the whistle-blowing

mechanism and comply with the latest requirements

of the Stock Exchange, the Company has updated

the Whistle-blowing Policy in year 2022. The Audit

Committee oversees execution of the Whistle-

blowing Policy. The Company expects and

encourages its employees, customers, suppliers and

other stakeholders who have concerns about any

suspected misconduct or malpractice within the

Company to report on these concerns which could

facilitate risk monitoring, fraud alert and continuous

improvement in internal controls. The Whistle-

blowing Policy specifies reporting channels, permits

anonymous reports, and protects the whistleblower

from any harm or unfair treatment. The whistle-

blowing mechanism has formulated standard

guidelines and procedures to cover three main

areas, i.e. whistle-blowing channels, case handling

and investigation, reporting and follow up. The main

objectives of the whistle-blowing mechanism are to

ensure adequate whistle-blowing reporting channels

are in place and communicated to stakeholders,

protection of whistle-blower and evidence,

proper execution of investigation procedures, and

appropriate implementation of action plans for the

reported cases and more importantly, the follow

up actions to identify and remedy any relevant

potential internal control deficiencies across the

Company. Whistle-blowing cases, investigation

results, actions taken and proposed internal control

improvements shall ultimately be reported to the

Audit Committee.

The Company has also in place the Anti-Corruption

Policy to safeguard against corruption and bribery

within the Company. The Company has an internal

reporting channel that is open and available for

employees of the Company to report any suspected

corruption and bribery. Employees can also make

anonymous reports to the internal audit function,

which is responsible for investigating the reported

incidents and taking appropriate measures. The

Company continues to carry out anti-corruption

and anti-bribery activities to cultivate a culture of

integrity, and actively organizes anti-corruption

training and inspections to ensure the effectiveness

of anti-corruption and anti-bribery.

CORPORATE GOVERNANCE REPORTAnnual Report 2022

GOODBABY 131

DISCLOSURE POLICY

The Company has developed its disclosure policy

which provides a general guide to the Company’s

directors, officers, senior management and relevant

employees in handling confidential information,

monitoring information disclosure and responding

to enquiries.

The Company adopts an upward approach for

identifying and escalating any potential inside

information to the Board. The Board may resolve

to designate one or more executive Directors or

Chief Financial Officer to monitor and implement

information of the Company. Employees of the

Company must be made aware of the disclosure

policy and the importance of bringing any potential

inside information promptly to their immediate

supervisors or the Heads of business units or

departments as appropriate. Heads of business

units or departments should promptly verify and

assess such details reported by the staff and notify

and escalate the details of any potential proposal,

transaction or business development which may give

rise to disclosure obligations to the Chief Financial

Officer. The Chief Financial Officer shall seek

professional advice (where appropriate) and report

to the Board or its delegate(s) and provide them

with adequate details for review and assessment

of the likely impact of such proposal, transaction

or business development and ascertain whether

it constitutes inside information or is subject to

disclosure in order to avoid a false market. The

Board or its delegate(s) should review all relevant

details and factors and decide whether disclosure is

required and approve the relevant announcement

and any further actions where applicable.

Control procedures have been implemented to

ensure that unauthorized access and use of inside

information are strictly prohibited.

The Connected Transaction Policy is established

to provide consistent group-wide rules on the

identification, assessment and approval and

disclosure of connected transactions, in compliance

with the rules defined in Chapter 14A of the Listing

Rules.

EXTERNAL AUDITORS’ REMUNERATION

The remuneration paid to the external auditors of

the Company in respect of audit services and non-

audit services for the year ended 31 December

2022 amounted to HK$9,182,000 and HK$221,000

respectively. An analysis of the remuneration paid

to the external auditors of the Company, Ernst &

Young, in respect of audit services and non-audit

services for the year ended 31 December 2022 is set

out below:

Fees Paid/

Payable

Service Category (HK$)

Audit Services 9,182,000

Non-audit Services 221,000

• Transfer pricing documentation 221,000

COMMUNICATION WITH

SHAREHOLDERS AND INVESTORS/

INVESTOR RELATIONS

The Company considers that effective

communication with shareholders is essential

for enhancing investor relations and investor

understanding of the Group’s business performance

and strategies. The Company endeavours to

maintain an on-going dialogue with shareholders

and in particular, through annual general meetings

and other general meetings. The Chairman, non-

executive Directors, independent non-executive

Directors, and the chairmen of all Board committees

(or their delegates) will make themselves available

at the annual general meeting to meet shareholders

and answer their enquiries.

The 2023 annual general meeting (“AGM”) of the

Company will be held on 22 May 2023. The notice of

AGM was sent to the shareholders at least 21 days

before the AGM.

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CORPORATE GOVERNANCE REPORT

GOODBABY 132

To promote effective communication, the Company

maintains a website at www.gbinternational.com.hk,

where up-to-date information and updates on the

Company’s business operations and developments,

financial information, corporate governance

practices and other information are available for

public access.

During the year under review, the Company has not

made any changes to its articles of association. An

up-to-date version of the Articles of Association is

also available on the Company’s website and the

Stock Exchange’s website. The Board proposes

to amend the Company’s existing memorandum

and articles of association by adopting the second

amended and restated memorandum and articles

of association at the forthcoming AGM. For further

details, please refer to the section headed “Report

of the Board of Directors – Proposed Adoption

of the Amended and Restated Memorandum and

Articles” in this annual report.

SHAREHOLDERS’ COMMUNICATION POLICY

The Board has adopted a shareholders’

communication policy made reference to the CG

Code as contained in Appendix 14 of the Listing

Rules at a board meeting held on 16 March 2014,

which aims at establishing a two-way relationship

and communication between the Company and

its Shareholders and maintains a website at

www.gbinternational.com.hk, where up-to-date

information on the Company’s business operations

and developments, financial information, corporate

governance practices and other information

are available for public access. Information will

be communicated to the shareholders through

the Company’s financial reports, annual general

meetings and other general meetings that may be

convened, as well as all the disclosures submitted

to the Stock Exchange. The Board will review the

Shareholders’ communication policy regularly to

ensure its effectiveness. The Board has conducted

a review of the implementation and effectiveness of

the shareholders’ communication policy in respect

of the year ended 31 December 2022 and, including

taking into account the up-to-date information

about the Company provided on various platforms

such as the Company’s website, the Company’s

financial reports published, the conducting of

the Company’s general meetings as well as

announcements and other disclosures published by

the Company during the year ended 31 December

2022, the Company confirmed that the policy has

been implemented effectively.

SHAREHOLDERS’ RIGHTS

To safeguard shareholder interests and rights,

separate resolution is proposed for each

substantially separate issue at general meetings,

including the election of individual Director. Except

where the chairman, in good faith, decides to allow

a resolution which relates purely to a procedural

or administrative matter to be voted on by a show

of hands, all resolutions put forward at general

meetings will be voted on by poll pursuant to

the Listing Rules. Poll results will be posted on

the websites of the Company and of the Stock

Exchange after each general meeting.

PROCEDURES FOR SHAREHOLDERS TO CONVENE

AN EGM (INCLUDING MAKING PROPOSAL(S)/

MOVING RESOLUTION(S) AT THE EGM)

Any one or more shareholders holding at the date

of deposit of the requisition not less than one-tenth

of the paid-up capital of the Company carrying the

right of voting at general meetings of the Company

(the “Eligible Shareholder(s)”) shall at all times

have the right, by written requisition to the Board

of the Company or the company secretary of the

Company (the “Company Secretary”), to require

an extraordinary general meeting (the “EGM”) to

be called by the Board for the transaction of any

business specified in such requisition, including

making proposals or moving a resolution at the

EGM.

Eligible Shareholders who wish to convene an

EGM for the purpose of making proposal(s) or

moving resolution(s) at the EGM must deposit a

written requisition (the “Requisition”) signed by the

Eligible Shareholder(s) concerned at the principal

place of business of the Company in Hong Kong at

Room 2502, 25/F., Tung Chiu Commercial Centre,

193 Lockhart Road, Wanchai, Hong Kong, for the

attention of the Company Secretary.

CORPORATE GOVERNANCE REPORTAnnual Report 2022

GOODBABY 133

The Requisition must state clearly the name of

the Eligible Shareholder(s) concerned, his/her/

their shareholding in the Company, the reason(s)

to convene an EGM, the agenda proposed to

be included and the details of the business(es)

proposed to be transacted in the EGM, signed by

the Eligible Shareholder(s) concerned.

The Company will check the Requisition and

the identity(ies) and the shareholding(s) of the

Eligible Shareholder(s) will be verified with the

Company’s branch share registrar in Hong Kong.

If the Requisition is found to be proper and in

order, the Board will be asked to convene an EGM

within 2 months and/or include the proposal(s)

or the resolution(s) proposed by the Eligible

Shareholder(s) at the EGM after the deposit of

the Requisition. On the contrary, if the Requisition

has been verified as not in order, the Eligible

Shareholder(s) concerned will be advised of this

outcome and accordingly, the Board will not

call for an EGM and/or include the proposal(s)

or the resolution(s) proposed by the Eligible

Shareholder(s) at the EGM.

The notice period to be given to all the registered

shareholders for consideration of the proposal

raised by the Eligible Shareholder(s) concerned

at an EGM varies according to the nature of the

proposal, as follows:

• at least twenty-one (21) clear days’ notice in

writing if the proposal constitutes a special

resolution of the Company, which cannot

be amended other than to a mere clerical

amendment to correct a patent error; and

• at least fourteen (14) clear days’ notice in

writing if the proposal constitutes an ordinary

resolution of the Company.

Procedures for Shareholders to Propose a Person

for Election as a Director

Shareholders may propose a person for election as

Director, the procedures for which are available on

the Company’s website in the section of “Corporate

Governance” under the column of “Investor

Relations”.

Putting Forward Enquiries to the Board

For putting forward any enquiries to the Board of

the Company, shareholders may send their enquiries

and concerns to the Board by addressing them to

the Head of Legal and Compliance Department to

the Company’s principal place of business in Hong

Kong at Room 2502, 25/F., Tung Chiu Commercial

Centre, 193 Lockhart Road, Wanchai, Hong Kong by

post, or by email to [email protected].

For the avoidance of doubt, shareholder(s) must

deposit/send the original duly signed written

enquiries or concerns (as the case may be) to the

Company’s aforesaid address and provide his/her/

their full name(s) and contact details in order to

give effect thereto. Shareholders’ information may

be disclosed as required by law.

Note: The Company will not normally deal with verbal or

anonymous enquiries.

AMENDMENTS TO CONSTITUTIONAL

DOCUMENTS

During the year under review, the Company has not

made any changes to the memorandum and articles

of association of the Company (the “Memorandum

and Articles”). The Company will amend its

Memorandum and Articles to update with the latest

changes in the Listing Rules at the forthcoming

annual general meeting. Details of the amendments

are set out in the circular dated 20 April 2023 to the

shareholders.

CORPORATE GOVERNANCE REPORTAnnual Report 2022

CORPORATE GOVERNANCE REPORT

GOODBABY 134

DIVIDEND POLICY

The Board has established a dividend policy

setting out the principles and guidelines that

the Company will apply when considering the

declaration and payment of dividends to the

shareholders of the Company via written resolutions

of the Directors passed on 14 December 2018. The

Company is subject to the Articles of Association

and all applicable laws (including the Cayman

Companies Law), rules and regulations, when

making declaration and payment of dividends to

shareholders of the Company.

According to the Board’s dividend policy, the

Company may, subject to the Cayman Companies

Law, from time to time in general meeting

declare dividend in any currency to be paid to the

shareholders of the Company but no dividend shall

be declared in excess of the amount recommended

by the Board.

The Board has the discretion to declare dividends

to the shareholders of the Company, subject to the

Articles of Association and all applicable laws and

regulations and taking into consideration factors set

out below:

(1) financial results;

(2) cash flow situation;

(3) business conditions and strategies;

(4) future operations and earnings;

(5) capital requirements and expenditure plans;

(6) interests of shareholders;

(7) taxation consideration;

(8) any contractual, statutory and regulatory

restrictions on payment of dividends; and

(9) any other factors that the Board may consider

relevant.

135

GOODBABY

Report of the

Board of Directors

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

REPORT OF THE BOARD OF DIRECTORS

GOODBABY 136

The Board is pleased to present their report and the

audited financial statements for the year ended 31

December 2022 of the Group.

Goodbaby International Holdings Limited (the

“Company”, together with its subsidiaries, the

“Group”) is an investment holding company, and its

subsidiaries are principally engaged in the design,

research and development, manufacture, marketing

and sales of children’s car safety seats, strollers,

apparels and home textile products, feeding, nursing

and personal care products, cribs, bicycles and

tricycles and other children products. The analysis

of the revenue of the Group for the year is set out in

note 5 to the Financial Statements.

BUSINESS REVIEW AND PERFORMANCE

A review of the business of the Group and a

discussion and analysis of the Group’s performance

during the year under review and a discussion

on the Group’s future business development and

outlook of the Company’s business, possible risks

and uncertainties that the Group may be facing

and important events affecting the Company

occurred during the year ended 31 December 2022

are provided in the section headed “Chairman’s

Statement” and the section headed “Management

Discussion and Analysis” in this annual report.

An account of the Company’s relationships with

its key stakeholders is included in the paragraph

headed “Relationships with Employees, Suppliers

and Customers” on page 137 of this annual report.

An analysis of the Group’s performance during

the year ended 31 December 2022 using financial

performance indicators is provided in the section

headed “Management Discussion and Analysis” in

this annual report.

In addition, more details regarding the Group’s

performance by reference to environmental and

social-related key performance indicators and

policies, as well as compliance with relevant laws

and regulations which have a significant impact on

the Company are provided in the section headed

“Environmental, Social and Governance” on pages

37 to 115 of this annual report.

FINANCIAL STATEMENTS

The results of the Group for the year are set out in

the Consolidated Statement of Profit or Loss and

Consolidated Statement of Comprehensive Income

on page 161 and page 162 respectively. The financial

position as at 31 December 2022 of the Group are

set out in the Consolidated Statement of Financial

Position on pages 163 to 164. The cash flow of the

Group during the year is set out in the Consolidated

Statement of Cash Flows on pages 166 to 167.

SHARE CAPITAL

The changes in share capital of the Group during

the year are set out in note 31 to the Financial

Statements.

FINAL DIVIDEND

The Board does not recommend the payment of a

final dividend for the year ended 31 December 2022

(2021: nil).

CLOSURE OF REGISTER OF MEMBERS

For the purposes of ascertaining the members’

eligibility to attend and vote at the annual general

meeting, the Company’s register of members will be

closed during the following periods respectively:

For ascertaining eligibility to attend and vote at the

annual general meeting:

• Latest time to lodge

transfers documents

for registration

4:30 p.m. on 16 May

2023 (Tuesday)

• Closure of register of

members

17 May 2023

(Wednesday) to 22

May 2023 (Monday),

both days inclusive

To be eligible to attend and vote at the annual

general meeting, all duly stamped instruments

of transfers, accompanied by the relevant share

certificates must be lodged for registration with the

Company’s share registrar in Hong Kong, namely

Computershare Hong Kong Investor Services

Limited, at Shops 1712-1716, 17th Floor, Hopewell

Centre, 183 Queen’s Road East, Wanchai, Hong Kong

not later than the respective latest time as stated

above.

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

GOODBABY 137

RESERVE

Details of the changes in reserves of the Group

during the year are set out in note 33 to the

Financial Statements.

As at 31 December 2022, the reserves of the

Company available for distribution to shareholders

was approximately HK$3,320.4 million.

PROPERTY, PLANT AND EQUIPMENT

The changes in property, plant and equipment

during the year are set out in note 14 to the

Financial Statements.

MAJOR CUSTOMERS AND SUPPLIERS

During the year, the percentages of sales attributable

to the Group’s major customers out of the Group’s

total revenue are as follows:

– the largest customer 11.8%

– five largest customers in aggregate 34.8%

During the year, purchases from the Group’s five

largest suppliers accounted for less than 30% of the

Group’s total purchases.

As far as the Company is aware, at no time during

the year that any of the Directors or his/her

close associates or any shareholder which to the

knowledge of the Directors own over 5% of the

number of issued shares of the Company had any

interest in the above-mentioned suppliers and

customers.

RELATIONSHIPS WITH EMPLOYEES,

SUPPLIERS AND CUSTOMERS

The Group understands that employees are

valuable assets. The Group provides competitive

remuneration package to attract and motivate

the employees. The Group regularly reviews the

remuneration package of employees and makes

necessary adjustments to conform to the market

standard.

The Group’s business is built on a customer

oriented culture, and are focused on establishing

relationships with retailers, brand owners and

distributors globally. The Group also understands

that it is important to maintain good relationship

with its suppliers and customers to fulfil its

immediate and long-term goals. To maintain its

market competitiveness within the industry, the

Group aims at delivering constantly high standards

of quality in the service to its customers. During

the year under review, there was no material and

significant legal dispute between the Group and its

suppliers and/or customers.

DONATION

During the year under review, the charitable

contributions and other donations amounted to

HK$1,584,744.

DIRECTORS

The Directors in office during the year and as at the

date of this report were as follows:

Executive Directors

Mr. SONG Zhenghuan

Mr. LIU Tongyou

Mr. Martin POS

Mr. XIA Xinyue

Mr. Michael Nan QU

Non-executive Directors

Ms. FU Jingqiu

Mr. HO Kwok Yin, Eric

Independent Non-executive Directors

Ms. CHIANG Yun

Mr. SHI Xiaoguang

Mr. JIN Peng

Mr. SO Tak Young

Further details of the Directors and senior

management are set forth in the section headed

“Directors and Senior Management” of this annual

report.

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

REPORT OF THE BOARD OF DIRECTORS

GOODBABY 138

In accordance with the articles of association of the

Company, and based on the Listing Rules, Mr. Martin

POS, Mr. LIU Tongyou, Mr. JIN Peng and Mr. SO Tak

Young will retire in the forthcoming annual general

meeting. All of the above Directors, being eligible,

will offer themselves for re-election at the Annual

General Meeting.

SERVICE CONTRACTS OF DIRECTORS

Each of the executive Directors has entered into a

service contract/signed an appointment letter with

the Company and is appointed for a specific term

of three years unless terminated by not less than

three months’ notice in writing served by either the

executive Director or the Company.

Each of the non-executive Directors and the

independent non-executive Directors has signed

an appointment letter with the Company and is

appointed for a specific term of three years with

effect from the respective date stated therein.

There was no service contract entered into/

appointment letter signed by the Company and any

Directors to be re-elected in the forthcoming annual

general meeting which is not determinable by the

Company within one year without payment of

compensation, other than statutory compensation.

DIRECTORS’ OR SUBSTANTIAL

SHAREHOLDERS’ INTERESTS IN

CONTRACTS

Other than those transactions disclosed in note

38 to the Financial Statements and in the section

“Connected Transactions” below, there was no other

transaction, arrangement or contract of significance

with any member of the Group as the contracting

party and in which any Director or substantial

Shareholder or any entity connected with a Director

or substantial Shareholder was materially interested,

directly or indirectly, and which was still valid on the

year end date or any time during the year.

DIRECTORS’ INTERESTS IN COMPETING

BUSINESS

For the year ended 31 December 2022, the Company

has received an annual written confirmation from

each of Mr. SONG Zhenghuan and Ms. FU Jingqiu

in respect of their and their close associates’

compliance with the deed of non-competition dated

23 October 2017 (which replaces the deed of non-

competition dated 9 November 2010 as disclosed in

the Company’s prospectus for global offering dated

11 November 2010). Further details of the deed of

non-competition are set out in the circular of the

Company dated 4 September 2017.

The independent non-executive Directors have

reviewed and were satisfied that each of them has

complied with the deed of non-competition for the

year ended 31 December 2022.

CONFIRMATION OF INDEPENDENT

STATUS

The Company has received, from each of the

independent non-executive Directors, an annual

confirmation of his/her independence pursuant

to Rule 3.13 of the Listing Rules. The Company

considers all of the independent non-executive

Directors independent.

SHARE OPTION SCHEME

On 5 November 2010, the Company adopted a share

option scheme (“2010 Share Option Scheme”) to

incentivize or reward eligible participants (including

(i) any full-time or part-time employees, executives

or officers of the Company or any of its subsidiaries;

(ii) any directors (including non-executive directors

and independent non-executive directors) or any

directors of its subsidiaries and any suppliers,

customers, consultants, agents and advisers who,

in the sole opinion of the Board, will contribute or

have contributed to our Company and/or any of

its subsidiaries as described in the share option

scheme) for their contribution to the Group for

the purpose of motivating the eligible participants

to optimise their performance efficiency for the

benefit of the Group, and attracting and retaining

or otherwise maintaining on-going business

relationship with the eligible participants whose

contributions are or will be beneficial to the long-

term growth of the Group.

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

GOODBABY 139

As the 2010 Share Option Scheme expired on the

tenth anniversary of its adoption, and to enable

the Company to continue to grant share options

to eligible participants as incentives or rewards for

their contributions to the success of the Group,

the Company terminated the 2010 Share Option

Scheme and approved and adopted a new share

option scheme (the “2020 Share Option Scheme”)

at its annual general meeting held on 25 May 2020.

Upon termination of the 2010 Share Option Scheme,

no further options may be granted thereunder but

the provisions of the 2010 Share Option Scheme

shall remain in force to the extent necessary to give

effect to the exercise of any options granted prior

to the termination.

Eligible participants of the share option schemes

include full-time or part-time employees, executives

or officers of the Company or any of its subsidiaries,

any Directors (including non-executive and

independent non-executive Directors) of the

Company or any of its subsidiaries and advisers,

consultants, suppliers, customers, agents and such

other persons who in the sole opinion of the Board

will contribute or have contributed to the Company

or any of its subsidiaries as described in the 2020

Share Option Scheme.

With the approval of the shareholders of the

Company in general meetings, the Directors may

“refresh” the scheme limit under the share option

schemes.

Pursuant to the shareholders’ approval obtained by

the Company at its annual general meeting held on

25 May 2017, the original scheme limit of the 2010

Share Option Scheme was refreshed to 111,630,600

shares, representing 10% of the then total number of

shares in issue.

At the Company’s extraordinary general meeting

held on 28 May 2018, the scheme limit was refreshed

and approved by the then shareholders such that

the total number of shares which may fall to be

issued upon exercise of all share options to be

granted under the 2010 Share Option Scheme and

any other share option scheme(s) as may from

time to time be adopted by the Company must not

exceed 166,802,317, i.e. 10% of the shares in issue as

at the date of approval of the refreshed limit by the

shareholders.

Pursuant to the shareholders’ approval obtained by

the Company at its annual general meeting held on

25 May 2020, the maximum number of share options

currently permitted to be granted under the 2020

Share Option Scheme is 166,802,317, representing

10% of the shares of the Company in issue as at 25

May 2020.

On 19 June 2020, in order to effectively incentivize

the existing grantees of the share options, the

Company allowed grantees of share options granted

on 28 August 2017, 27 March 2018, 28 May 2018

and 23 May 2019 to exchange their existing share

options for new share options to be granted under

the 2020 Share Option Scheme. For further details,

please refer to the announcement of the Company

dated 19 June 2020.

The Company may continue to make option grants

using the existing scheme mandate under the latest

amended Chapter 17 (the “amended Chapter 17”)

of the Listing Rules (which took effect on 1 January

2023), but any future grants will only be made to

participants described in Rule 17.03A of the Listing

Rules. The Company will comply with the amended

Chapter 17 on or before the refreshment or expiry

of the existing scheme mandate or adoption of any

new share option scheme, whichever occurs first.

During the year under review, the Company granted

675,000 share options on 16 June 2022 under the

2020 Share Option Scheme.

Under the 2010 Share Option Scheme, 2,810,000

share options were forfeited and none of the share

options were exercised during 2022.

Under the 2020 Share Option Scheme, 1,662,867

share options were forfeited and none of the share

options were exercised during 2022.

As at 31 December 2022, 132,301,300 share options

were outstanding under the 2010 Share Option

Scheme and the 2020 Share Option Scheme in total

(31 December 2021: 136,099,167).

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

REPORT OF THE BOARD OF DIRECTORS

GOODBABY 140

Movements of the share options granted during the year ended 31 December 2022 were as follows:

Number of share options

Name of

Director/

former

Director/

Associate

Date of grant

Exercise Price

Outstanding as at 1 January 2022

Granted during this year

Exercised during this year

Weighted average closing price

immediately before the date of

exercise

Cancelled/Lapsed during this year

Outstanding as at 31 December 2022

Percentage of total issued share

capital

(1)

Exercise period

Closing price of securities

immediately before the date of

grant

(HK$) (HK$) (HK$)

Mr. Song

Zhenghuan

29 September 2014 3.58 1,390,000 – – N/A – 1,390,000 0.083%

29 September 2014 to

28 September 2024

(2)

3.49

Mr. Liu

Tongyou

29 September 2014 3.58 2,400,000 – – N/A – 2,400,000 0.144%

29 September 2014 to

28 September 2024

(2)

3.49

23 May 2019 3.75 6,300,000 – – N/A – 6,300,000 0.378%

23 May 2019 to

22 May 2029

(7)

1.94

19 June 2020 0.96

390,600 – – N/A – 390,600 0.023%

23 May 2022 to

22 May 2029

(8)

0.92585,900 – – N/A – 585,900 0.035%

23 May 2023 to

22 May 2029

(8)

976,500 – – N/A – 976,500 0.059%

23 May 2024 to

22 May 2029

(8)

Mr. Martin Pos

29 September 2014 3.58 2,400,000 – – N/A – 2,400,000 0.144%

29 September 2014 to

28 September 2024

(2)

3.49

27 March 2018 4.54 17,500,000 – – N/A – 17,500,000 1.049%

27 March 2018 to

27 March 2028

(5)

4.12

19 June 2020 0.96

840,000 – – N/A – 840,000 0.050%

27 September 2020 to

27 March 2028

(8)

0.921,260,000 – – N/A – 1,260,000 0.076%

27 September 2021 to

27 March 2028

(8)

2,100,000 – – N/A – 2,100,000 0.126%

27 September 2022 to

27 March 2028

(8)

Mr. Xia Xinyue

27 March 2018 4.54 10,000,000 – – N/A – 10,000,000 0.600%

27 March 2018 to

27 March 2028

(5)

4.12

19 June 2020 0.96

480,000 – – N/A – 480,000 0.029%

27 September 2020 to

27 March 2028

(8)

0.92720,000 – – N/A – 720,000 0.043%

27 September 2021 to

27 March 2028

(8)

1,200,000 – – N/A – 1,200,000 0.072%

27 September 2022 to

27 March 2028

(8)

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

GOODBABY 141

Number of share options

Name of

Director/

former

Director/

Associate

Date of grant

Exercise Price

Outstanding as at 1 January 2022

Granted during this year

Exercised during this year

Weighted average closing price

immediately before the date of

exercise

Cancelled/Lapsed during this year

Outstanding as at 31 December 2022

Percentage of total issued share

capital

(1)

Exercise period

Closing price of securities

immediately before the date of

grant

(HK$) (HK$) (HK$)

Mr. Michael

Nan Qu

29 September 2014 3.58 1,600,000 – – N/A – 1,600,000 0.096%

29 September 2014 to

28 September 2024

(2)

3.49

19 June 2020 0.96

620,000 – – N/A – 620,000 0.037%

23 May 2022 to

22 May 2029

(8)

0.92930,000 – – N/A – 930,000 0.056%

23 May 2023 to

22 May 2029

(8)

1,550,000 – – N/A – 1,550,000 0.093%

23 May 2024 to

22 May 2029

(8)

Ms. Fu Jingqiu

29 September 2014 3.58 1,390,000 – – N/A – 1,390,000 0.083%

29 September 2014 to

28 September 2024

(2)

3.49

23 May 2019 3.75 600,000 – – N/A – 600,000 0.036%

23 May 2019 to

22 May 2029

(7)

1.94

19 June 2020 0.96

43,400 – – N/A – 43,400 0.003%

23 May 2022 to

22 May 2029

(8)

0.9265,100 – – N/A – 65,100 0.004%

23 May 2023 to

22 May 2029

(8)

108,500 – – N/A – 108,500 0.007%

23 May 2024 to

22 May 2029

(8)

Mr. Ho Kwok

Yin, Eric

29 September 2014 3.58 1,000,000 – – N/A – 1,000,000 0.060%

29 September 2014 to

28 September 2024

(2)

3.49

19 June 2020 0.96

19,200 – – N/A – 19,200 0.001%

27 September 2020 to

27 March 2028

(8)

0.9228,800 – – N/A – 28,800 0.002%

27 September 2021 to

27 March 2028

(8)

48,000 – – N/A – 48,000 0.003%

27 September 2022 to

27 March 2028

(8)

Mr. Shi

Xiaoguang

29 September 2014 3.58 800,000 – – N/A – 800,000 0.048%

29 September 2014 to

28 September 2024

(2)

3.49

19 June 2020 0.96

19,200 – – N/A – 19,200 0.001%

27 September 2020 to

27 March 2028

0.9228,800 – – N/A – 28,800 0.002%

27 September 2021 to

27 March 2028

(8)

48,000 – – N/A – 48,000 0.003%

27 September 2022 to

27 March 2028

(8)

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

REPORT OF THE BOARD OF DIRECTORS

GOODBABY 142

Number of share options

Name of

Director/

former

Director/

Associate

Date of grant

Exercise Price

Outstanding as at 1 January 2022

Granted during this year

Exercised during this year

Weighted average closing price

immediately before the date of

exercise

Cancelled/Lapsed during this year

Outstanding as at 31 December 2022

Percentage of total issued share

capital

(1)

Exercise period

Closing price of securities

immediately before the date of

grant

(HK$) (HK$) (HK$)

Ms. Chiang

Yun

29 September 2014 3.58 800,000 – – N/A – 800,000 0.048%

29 September 2014 to

28 September 2024

(2)

3.49

19 June 2020 0.96

19,200 – – N/A – 19,200 0.001%

27 September 2020 to

27 March 2028

(8)

0.9228,800 – – N/A – 28,800 0.002%

27 September 2021 to

27 March 2028

(8)

48,000 – – N/A – 48,000 0.003%

27 September 2022 to

27 March 2028

(8)

Mr. Jin Peng 19 June 2020 0.96

19,200 – – N/A – 19,200 0.001%

27 September 2020 to

27 March 2028

(8)

0.9228,800 – – N/A – 28,800 0.002%

27 September 2021 to

27 March 2028

(8)

48,000 – – N/A – 48,000 0.003%

27 September 2022 to

27 March 2028

(8)

Mr. Iain

Ferguson

Bruce (former

Director)

(11)

29 September 2014 3.58 800,000 – – N/A 800,000 0 N/A Refer to note

(11)

3.49

19 June 2020 0.96

19,200 – – N/A 19,200 0 N/A Refer to note

(11)

0.9228,800 – – N/A 28,800 0 N/A Refer to note

(11)

48,000 – – N/A 48,000 0 N/A Refer to note

(11)

Ms. Sharon

Nan Kobler

(associate

of Mr. Song

Zhenghuan and

Ms. Fu Jingqiu)

19 June 2020 0.96

124,000 – – N/A – 124,000 0.007%

23 May 2022 to

22 May 2029

(8)

0.92186,000 – – N/A – 186,000 0.011%

23 May 2023 to

22 May 2029

(8)

310,000 – – N/A – 310,000 0.019%

23 May 2024 to

22 May 2029

(8)

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

GOODBABY 143

Number of share options

Name of

Director/

former

Director/

Associate

Date of grant

Exercise Price

Outstanding as at 1 January 2022

Granted during this year

Exercised during this year

Weighted average closing price

immediately before the date of

exercise

Cancelled/Lapsed during this year

Outstanding as at 31 December 2022

Percentage of total issued share

capital

(1)

Exercise period

Closing price of securities

immediately before the date of

grant

(HK$) (HK$) (HK$)

Mr. Martin

Patrick Pos

(associate of

Mr. Martin Pos)

11 December 2020 1.01

62,000 – – N/A – 62,000 0.004%

11 December 2023 to

10 December 2030

(9)

1.00

93,000 – – N/A – 93,000 0.006%

11 December 2024 to

10 December 2030

(9)

155,000 – – N/A – 155,000 0.009%

11 December 2025 to

10 December 2030

(9)

Total number

held by

Directors

29 September 2014 3.58 11,780,000 – – N/A – 11,780,000 0.706%

29 September 2014 to

28 September 2024

(2)

3.49

27 March 2018 4.54 27,500,000 – – N/A – 27,500,000 1.649%

27 March 2018 to

27 March 2028

(5)

4.12

23 May 2019 3.75 6,900,000 – – N/A – 6,900,000 0.414%

23 May 2019 to

22 May 2029

(7)

1.94

19 June 2020 0.96 12,254,000 – – N/A – 12,254,000 0.735% Refer to note

(8)

0.92

Total number

held by

former

Director

(11)

29 September 2014 3.58 800,000 – – N/A 800,000 0 N/A Refer to note

(11)

3.49

19 June 2020 0.96

19,200 – – N/A 19,200 0 N/A Refer to note

(11)

0.9228,800 – – N/A 28,800 0 N/A Refer to note

(11)

48,000 – – N/A 48,000 0 N/A Refer to note

(11)

Total number

held by

Associates

19 June 2020 0.96 620,000 – – N/A – 620,000 0.037% Refer to note

(8)

0.92

11 December 2020 1.01 310,000 – – N/A – 310,000 0.019% Refer to note

(9)

1.00

Total number

held by

Employees

of the Group

29 September 2014 3.58 12,500,000 – – N/A – 12,500,000 0.749%

29 September 2014 to

28 September 2024

(3)

3.49

7 October 2015 3.75 9,800,000 – – N/A – 9,800,000 0.588%

7 October 2015 to

6 October 2025

(4)

3.66

27 March 2018 4.54 4,000,000 – – N/A – 4,000,000 0.240%

27 March 2018 to

27 March 2028

(5)

4.12

28 May 2018 5.122 3,600,000 – – N/A – 3,600,000 0.216%

28 May 2018 to

27 May 2028

(6)

4.92

23 May 2019 3.75 29,800,000 – – N/A 2,010,000 27,790,000 1.666%

23 May 2019 to

22 May 2029

(7)

1.94

19 June 2020 0.96 12,147,167 – – N/A 1,256,867 10,890,300 0.653% Refer to note

(8)

0.92

11 December 2020 1.01 3,992,000 – – N/A 310,000 3,682,000 0.221% Refer to note

(9)

1.00

16 June 2022 1.042 – 675,000 – N/A – 675,000 0.040% Refer to note

(10)

1.03

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

REPORT OF THE BOARD OF DIRECTORS

GOODBABY 144

Fair values of the share options granted at the date

of grant were as follows:

For director/former director/associate

Exercise period

Fair value HK$

per share

(12)

Date of grant

29 September 2014 29 September 2017 to 28 September 2024

(2)

1.11

29 September 2014 29 September 2018 to 28 September 2024

(2)

1.17

29 September 2014 29 September 2019 to 28 September 2024

(2)

1.23

27 March 2018 27 September 2020 to 27 March 2028

(5)

1.66

27 March 2018 27 September 2021 to 27 March 2028

(5)

1.76

27 March 2018 27 September 2022 to 27 March 2028

(5)

1.84

23 May 2019 23 May 2022 to 22 May 2029

(7)

0.29

23 May 2019 23 May 2023 to 22 May 2029

(7)

0.31

23 May 2019 23 May 2024 to 22 May 2029

(7)

0.33

19 June 2020 28 August 2020 to 27 August 2027

(8)

0.27

19 June 2020 28 August 2021 to 27 August 2027

(8)

0.31

19 June 2020 28 August 2022 to 27 August 2027

(8)

0.35

19 June 2020 27 September 2020 to 27 March 2028

(8)

0.28

19 June 2020 27 September 2021 to 27 March 2028

(8)

0.32

19 June 2020 27 September 2022 to 27 March 2028

(8)

0.35

19 June 2020 28 May 2021 to 27 May 2028

(8)

0.30

19 June 2020 28 May 2022 to 27 May 2028

(8)

0.34

19 June 2020 28 May 2023 to 27 May 2028

(8)

0.37

19 June 2020 23 May 2022 to 22 May 2029

(8)

0.35

19 June 2020 23 May 2023 to 22 May 2029

(8)

0.38

19 June 2020 23 May 2024 to 22 May 2029

(8)

0.41

11 December 2020 11 December 2023 to 10 December 2030

(9)

0.40

11 December 2020 11 December 2024 to 10 December 2030

(9)

0.43

11 December 2020 11 December 2025 to 10 December 2030

(9)

0.45

For Employees:

Exercise period

Fair value HK$

per share

(12)

Date of grant

29 September 2014 29 September 2017 to 28 September 2024

(3)

1.06

(13)

29 September 2014 29 September 2018 to 28 September 2024

(3)

1.14

(13)

29 September 2014 29 September 2019 to 28 September 2024

(3)

1.20

(13)

29 September 2014 29 September 2017 to 28 September 2024

(3)

1.09

(14)

29 September 2014 29 September 2018 to 28 September 2024

(3)

1.16

(14)

29 September 2014 29 September 2019 to 28 September 2024

(3)

1.22

(14)

7 October 2015 7 October 2018 to 6 October 2025

(4)

1.22

7 October 2015 7 October 2019 to 6 October 2025

(4)

1.30

7 October 2015 7 October 2020 to 6 October 2025

(4)

1.37

27 March 2018 27 September 2020 to 27 March 2028

(5)

1.42

27 March 2018 27 September 2021 to 27 March 2028

(5)

1.53

27 March 2018 27 September 2022 to 27 March 2028

(5)

1.62

28 May 2018 28 May 2021 to 27 May 2028

(6)

1.48

28 May 2018 28 May 2022 to 27 May 2028

(6)

1.59

28 May 2018 28 May 2023 to 27 May 2028

(6)

1.68

23 May 2019 23 May 2022 to 22 May 2029

(7)

0.25

23 May 2019 23 May 2023 to 22 May 2029

(7)

0.28

23 May 2019 23 May 2024 to 22 May 2029

(7)

0.31

19 June 2020 28 August 2020 to 27 August 2027

(8)

0.27

19 June 2020 28 August 2021 to 27 August 2027

(8)

0.31

19 June 2020 28 August 2022 to 27 August 2027

(8)

0.35

19 June 2020 27 September 2020 to 27 March 2028

(8)

0.28

19 June 2020 27 September 2021 to 27 March 2028

(8)

0.32

19 June 2020 27 September 2022 to 27 March 2028

(8)

0.35

19 June 2020 28 May 2021 to 27 May 2028

(8)

0.30

19 June 2020 28 May 2022 to 27 May 2028

(8)

0.34

19 June 2020 28 May 2023 to 27 May 2028

(8)

0.37

19 June 2020 23 May 2022 to 22 May 2029

(8)

0.35

19 June 2020 23 May 2023 to 22 May 2029

(8)

0.38

19 June 2020 23 May 2024 to 22 May 2029

(8)

0.41

11 December 2020 11 December 2023 to 10 December 2030

(9)

0.40

11 December 2020 11 December 2024 to 10 December 2030

(9)

0.43

11 December 2020 11 December 2025 to 10 December 2030

(9)

0.45

16 June 2022 16 June 2025 to 15 June 2032

(10)

0.45

16 June 2022 16 June 2026 to 15 June 2032

(10)

0.49

16 June 2022 16 June 2027 to 15 June 2032

(10)

0.52

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

GOODBABY 145

Notes:

(1) The percentage is calculated based on the total

number of 1,668,031,166 shares in issue as at 31

December 2022.

(2) The share options are exercisable within a period of

10 years from 29 September 2014 and subject to the

following vesting schedule and performance review:

(i) one third of the share options vested on 29

September 2017;

(ii) one third of the share options vested on 29

September 2018; and

(iii) the remaining one third of the share options

vested on 29 September 2019.

(3) The share options are exercisable within a period of

10 years from 29 September 2014 and subject to the

following vesting schedule and performance review:

(i) for some grantees, the share options shall be

vested on 29 September 2018; and

(ii) for the remaining grantees, one third of the share

options vested on 29 September 2017, one third

of the share options vested on 29 September 2018

and the remaining one third of the share options

vested on 29 September 2019.

(4) The share options are exercisable within a period of 10

years from 7 October 2015 and subject to the following

vesting schedule and performance review:

(i) one third of the share options vested on 7

October 2018;

(ii) one third of the share options vested on 7

October 2019; and

(iii) the remaining one third of the share options

vested on 7 October 2020.

(5) The share options are exercisable within a period of 10

years from 27 March 2018 and subject to the following

vesting schedule and performance review:

(i) 20% of the share options vested on 27 September

2020;

(ii) another 30% of the share options vested on 27

September 2021; and

(iii) the remaining share options vested on 27

September 2022.

(6) The share options are exercisable within a period of 10

years from 28 May 2018 and subject to the following

vesting schedule and performance review:

(i) 20% of the share options vested on 28 May 2021;

(ii) another 30% of the share options vested on 28

May 2022; and

(iii) the remaining share options vested on 28 May

2023.

(7) The share options are exercisable within a period of 10

years from 23 May 2019 and subject to the following

vesting schedule and performance review:

(i) 20% of the share options vested on 23 May 2022;

(ii) another 30% of the share options vested on 23

May 2023; and

(iii) the remaining share options vested on 23 May

2024.

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

REPORT OF THE BOARD OF DIRECTORS

GOODBABY 146

(8) Among the 23,764,300 share options, the vesting

schedule and exercise period are as follows:

(i) 93,333 share options will be vested on 28 August

2020 and exercisable until 27 August 2027;

(ii) 93,333 share options will be vested on 28 August

2021 and exercisable until 27 August 2027;

(iii) 93,334 share options will be vested on 28 August

2022 and exercisable until 27 August 2027;

(iv) 2,107,200 share options will be vested on 27

September 2020 and exercisable until 27 March

2028;

(v) 3,160,800 share options will be vested on 27

September 2021 and exercisable until 27 March

2028;

(vi) 5,268,000 share options will be vested on 27

September 2022 and exercisable until 27 March

2028;

(vii) 180,000 share options will be vested on 28 May

2021 and exercisable until 27 May 2028;

(viii) 270,000 share options will be vested on 28 May

2022 and exercisable until 27 May 2028;

(ix) 430,000 share options will be vested on 28 May

2023 and exercisable until 27 May 2028;

(x) 2,483,100 share options will be vested on 23 May

2022 and exercisable until 22 May 2029;

(xi) 3,594,450 share options will be vested on 23 May

2023 and exercisable until 22 May 2029; and

(xii) 5,990,750 share options will be vested on 23 May

2024 and exercisable until 22 May 2029.

(9) The share options are exercisable within a period of

10 years from 11 December 2020 and subject to the

following vesting schedule and performance review:

(i) 20% of the share options vested on 11 December

2023;

(ii) another 30% of the share options vested on 11

December 2024; and

(iii) the remaining share options vested on 11

December 2025.

(10) The share options are exercisable within a period of 10

years from 16 June 2022 and subject to the following

vesting schedule and performance review:

(i) 20% of the share options vested on 16 June 2025;

(ii) another 30% of the share options vested on 16

June 2026; and

(iii) the remaining share options vested on 16 June

2027.

(11) Mr. Iain Ferguson Bruce, a former independent non-

executive Director, retired and ceased to be a Director

upon the conclusion of the annual general meeting held

on 23 May 2022 (the “date of cessation”). Accordingly,

under the terms of the 2010 Share Option Scheme

and the 2020 Share Option Scheme, the share options

granted to him by the Company and vested before his

retirement had been automatically lapsed and become

not exercisable as they were not exercised within three

months from the date of cessation. Share options

granted to him by the Company but not yet vested

before his retirement, had automatically lapsed and

become not exercisable immediately from the date of

cessation.

(12) The fair value of the share options is determined in

accordance with HKFRS 2 by reference to the cost of

purchase of the share options, or the fair value at grant

date, taking into account all non-vesting conditions

associated with the grant on grant date. No adjustment

is required for expected dividends since the employees

are entitled to receive dividends paid during the

vesting period. Details of the accounting policy

adopted are set out in Note 2.4 to the consolidated

Financial Statements.

During 2022, 675,000 share options, with a total fair

value of HK$337,500 were granted to two employees.

(13) The share options were granted for employees of

CYBEX.

(14) The share options were granted for employees of gb.

As at 1 January 2022 and 31 December 2022, the

total number of options available for grant under

the 2020 Share Option Scheme was 116,586,316 and

11,723,316, respectively.

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

GOODBABY 147

As at 31 December 2022, the number of shares that

may be issued in respect of the options granted

under the 2010 Share Option Scheme and the

2020 Share Option Scheme in total divided by the

weighted average number of ordinary shares of the

Company in issue for the year ended 31 December

2022 was 7.93%.

As at 31 December 2022, the total number of shares

available for issue under the 2020 Share Option

Scheme was 11,723,316 shares, which represented

7.03% of the shares in issue as at the date of this

annual report.

The options issued pursuant to the 2010 Share

Option scheme and the 2020 Share Option Scheme

will expire no later than 10 years from the date of

grant of the option.

As at the date of this Annual Report, the

remaining life of the 2020 Share Option Scheme is

approximately 7 years and 2 months.

For any options granted to Directors, chief

executives or substantial shareholders of the

Company, or any of their respective associate,

options to be granted to any of these persons shall

be approved by the independent non-executive

Directors (excluding any independent non-

executive Director who is the proposed grantee of

options). Where any option granted to a substantial

shareholder or an independent non-executive

Director, or any of their respective associates,

would result in the shares issued or to be issued

upon exercise of all options already granted and to

be granted to such person in the 12-month period,

(i) representing in aggregate over 0.1% of the shares

in issue on the date of such grant; and (ii) having

an aggregate value, based on the closing price of

the shares, in excess of HK$5 million, such grant

of options shall be subject to prior approval by

resolutions of the shareholders (voting by way of

poll).

The maximum number of shares issued and to be

issued in respect of options granted and may be

granted to any individual in any 12-month period is

not permitted to exceed 1% of the total shares of

the Company in issue, without prior approval from

the shareholders of the Company and with such

participants and his associates abstaining from

voting.

The offer of a grant of share options may be

accepted within 30 days from the date of offer,

upon payment of a nominal consideration of

HK$1.00 in total by the grantee. The exercise price

is determined by the Directors, and will not be

less than the higher of (i) the closing price of the

Company’s shares on the date of grant; (ii) the

average closing price of the Company’s shares

for the five trading days immediately preceding

the date of offer; and (iii) the nominal value of the

Company’s share.

ARRANGEMENTS TO PURCHASE SHARES

OR DEBENTURES

Other than the Share Option Schemes as set out in

note 32 to the consolidated financial statements,

at no time during the year was the Company, its

holding companies or any of its subsidiaries a

party to any arrangement to enable the Directors

to acquire benefits by means of the acquisition of

shares in, or debt securities including debentures of,

the Company or any other body corporate.

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

REPORT OF THE BOARD OF DIRECTORS

GOODBABY 148

INTEREST AND SHORT POSITIONS

OF DIRECTORS IN THE SHARES,

UNDERLYING SHARES OR DEBENTURES

As at 31 December 2022, the interests or short

positions of the Directors or chief executives of the

Company then in office in the shares, underlying

shares and debentures of the Company or its

associated corporations (within the meaning of

Part XV of the SFO) required to be notified to the

Company and the Stock Exchange pursuant to

Divisions 7 and 8 of Part XV of the SFO (including

interest or short positions which they were taken or

deemed to have under such provisions of the SFO)

or which would be required, pursuant to section 352

of the SFO, to be entered in the register referred to

therein, or which would be required, pursuant to the

Model Code, are as follows:

DIRECTORS’ INTEREST IN THE SHARES AND/OR

UNDERLYING SHARES

Nature of Interest

Number of

Shares and/

or Underlying

Approximate

percentage of

Shareholding

Name of Director

Mr. Song Zhenghuan

(“Mr. Song”)

(Notes 2 & 5)

Beneficiary of a

trust/Beneficial

owner/Interest

of controlled

corporation/Interest

of spouse

769,639,427 (L) 46.14%

Mr. Liu Tongyou

(“Mr. Liu”) (Note 3)

Beneficial owner/

Interest of controlled

corporation

39,710,573 (L) 2.38%

Mr. Martin Pos Beneficial owner 73,747,293 (L) 4.42%

Mr. Xia Xinyue Beneficial owner 12,400,000 (L) 0.74%

Mr. Michael Nan Qu

Beneficial owner/

Interest of spouse

4,809,000 (L) 0.29%

Ms. Fu Jingqiu

(“Ms. Fu”)

(Notes 2 & 5)

Beneficiary of a

trust/Beneficial

owner/Interest of

spouse

769,639,427 (L) 46.14%

Mr. Ho Kwok Yin, Eric Beneficial owner 1,096,000 (L) 0.07%

Mr. Shi Xiaoguang Beneficial owner 896,000 (L) 0.05%

Ms. Chiang Yun Beneficial owner 896,000 (L) 0.05%

Mr. Jin Peng Beneficial owner 96,000 (L) 0.01%

Notes:

(1) The letter “L” denotes the person’s long position in

such shares.

(2) Mr. Song and Ms. Fu are beneficiaries of Grappa Trust

of which Credit Suisse Trust Limited (Singapore) is

the trustee. Ms. Fu is a beneficiary of Golden Phoenix

Trust of which Credit Suisse Trust Limited (Guernsey)

is the trustee. See notes (2) to (4) of the section

headed “Substantial Shareholders’ Interests and Short

Positions” for further details of the interest.

(3) Mr. Liu is interested in 29,057,573 shares of the

Company held through Silvermount Limited, a

company wholly owned by him. He also holds

10,653,000 share options of the Company.

(4) Each of the Directors is deemed to have an interest

in the underlying shares of the Company within the

meaning of Part XV of the SFO in respect of the share

options of the Company granted to him/her, details

are as follows:

Number of

Share Options

granted

Name of Director

Mr. Song Zhenghuan 1,390,000

Mr. Liu Tongyou 10,653,000

Mr. Martin Pos 24,100,000

Mr. Xia Xinyue 12,400,000

Mr. Michael Nan Qu 4,700,000

Ms. Fu Jingqiu 2,207,000

Mr. Ho Kwok Yin, Eric 1,096,000

Mr. Shi Xiaoguang 896,000

Ms. Chiang Yun 896,000

Mr. Jin Peng 96,000

(5) Since Ms. Fu is Mr. Song’s spouse, each of Mr. Song and

Ms. Fu is deemed to have an interest in the underlying

Shares of the Company within the meaning of Part

XV of the SFO in respect of the Share Options of the

Company granted to each of them.

(6) Mr. Iain Ferguson Bruce, a former independent non-

executive Director, retired and ceased to be a Director

upon the conclusion of the annual general meeting held

on 23 May 2022 (the “date of cessation”). Accordingly,

under the terms of the 2010 Share Option Scheme

and the 2020 Share Option Scheme, the share options

granted to him by the Company and vested before his

retirement had been automatically lapsed and become

not exercisable as they were not exercised within three

months from the date of cessation. Share options

granted to him by the Company but not yet vested

before his retirement, had automatically lapsed and

become not exercisable immediately from the date of

cessation. Please refer to section headed “Employees

and Remuneration Policy” above for further details.

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

GOODBABY 149

Save as disclosed above, as at 31 December 2022,

none of the Directors or chief executive of the

Company or their respective close associates

had any interests or short positions in the shares,

underlying shares or debentures of the Company

or any of its associated corporations (within the

meaning of Part XV of the SFO) as recorded in the

SFO or as otherwise notified to the Company and

the Stock Exchange pursuant to the Model Code.

SUBSTANTIAL SHAREHOLDERS’

INTERESTS AND SHORT POSITIONS

As at 31 December 2022, the following persons

(other than the Directors and chief executives of

the Company) had or deemed or taken to have an

interest and/or short position in the shares or the

underlying shares which would fall to be disclosed

under the provisions of Divisions 2 and 3 of Part XV

of the SFO as recorded in the register required to

be kept by the Company under section 336 of SFO,

or who was, directly or indirectly, interested in 5%

or more of the issued share capital of the Company:

Capacity

Number of

Shares and/

or Underlying

Approximate

Percentage of

Shareholding

Name

Cayey Enterprises

Limited (Note 2)

Interest of Controlled

Corporation/

Beneficial Owner

548,994,581 (L) 32.91%

Credit Suisse Trust

Limited (Singapore)

(Note 2)

Trustee 548,994,581 (L) 32.91%

Grappa Holdings Limited

(Note 2)

Interest of Controlled

Corporation

548,994,581 (L) 32.91%

Pacific United

Developments Limited

(“PUD”) (Note 2)

Beneficial Owner 409,518,229 (L) 24.55%

Sure Growth Investments

Limited (Note 3)

Beneficial Owner 129,293,975 (L) 7.75%

FIL Limited Investment Manager 115,622,000 (L) 6.93%

Pandanus Associates

Inc.

Investment Manager 115,622,000 (L) 6.93%

Pandanus Partners L.P. Investment Manager 115,622,000 (L) 6.93%

Credit Suisse Trust

Limited (Guernsey)

(Note 4)

Trustee 87,753,871 (L) 5.26%

Golden Phoenix Limited

Interest of Controlled

Corporation

87,753,871 (L) 5.26%

Rosy Phoenix Limited

(Note 4)

Beneficial Owner 87,753,871 (L) 5.26%

Notes:

(1) The letter “L” denotes the person’s long position in

such shares.

(2) PUD is owned as to approximately 53.44% by Cayey

Enterprises Limited, which in turn is, as at 31 December

2022, wholly owned by Grappa Holdings Limited the

issued share capital of which is owned as to 50% by

Seletar Limited and as to 50% by Serangoon Limited, as

nominees for Credit Suisse Trust Limited (Singapore),

which is the trustee holding 548,994,581 interest on

trust for the beneficiaries of the Grappa Trust. The

beneficiaries of the Grappa Trust include Mr. Song,

Ms. Fu and family members of Mr. Song and Ms. Fu.

The Grappa Trust is a revocable discretionary trust

established under the laws of Singapore.

(3) Sure Growth Investments Limited is owned as to

44.44% by Mr. Song, as to 22.22% by Ms. Fu, as to 11.11%

by Mr. Liu, executive director of the Company and as

to 5.56% by Mr. Michael Nan Qu, executive director of

the Company.

(4) Rosy Phoenix Limited is indirectly held by Credit

Suisse Trust Limited (Guernsey) as the trustee of

the Golden Phoenix Trust; Ms. Fu is the settlor of the

Golden Phoenix Trust and Credit Suisse Trust Limited

(Guernsey) is the trustee holding 87,753,871 interest on

trust for the beneficiaries that include Ms. Fu.

Save as disclosed above, as at 31 December 2022,

the Company had not been notified of any interests

or short positions in the shares and underlying

shares of the Company as recorded in the register

required to be kept under section 336 of the SFO.

SUBSIDIARIES

The Group’s operations are conducted worldwide

through its direct or indirect subsidiaries. Details of

the principal subsidiaries of the Company as at 31

December 2022 are set out in note 1 to the Financial

Statements.

MANAGEMENT CONTRACTS

No contracts concerning the management and

administration of the whole or any substantial part

of the business of the Company were entered into

or existed during the year ended 31 December 2022.

CONNECTED TRANSACTIONS

The Group’s related parties transactions marked

with “#” for the year ended 31 December 2022 set

out in note 38 to the Financial Statements constitute

connected transactions as defined in chapter 14A

of the Listing Rules and the Company has complied

with the disclosure requirements in chapter 14A of

the Listing Rules.

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

REPORT OF THE BOARD OF DIRECTORS

GOODBABY 150

CONTINUING CONNECTED TRANSACTIONS

WHICH ARE EXEMPTED FROM THE INDEPENDENT

SHAREHOLDERS’ APPROVAL REQUIREMENT, BUT

SUBJECT TO THE REPORTING, ANNUAL REVIEW

AND ANNOUNCEMENT REQUIREMENTS OF THE

LISTING RULES

SUPPLY AGREEMENTS WITH GOODBABY CHINA

HOLDINGS LIMITED (THE “GCHL” OR “CAGB”)

On 28 August 2018, the Company and GCHL

entered into a supply agreement (the “2018

Supply Agreement”) for a fixed term of 3 years

commencing from 1 January 2019 and ending on 31

December 2021. On 23 August 2021, the Company

and GCHL entered into a renewal agreement

(the “2021 Supply Agreement”, together with the

2018 Supply Agreement referred to as “Supply

Agreements”) to renew the 2018 Supply Agreement

for a fix term of 3 years commencing from 1 January

2022 to 31 December 2024.

Pursuant to the Supply Agreements, the Company

agreed to supply, or procure its subsidiaries to

supply, among other things, (i) durable juvenile

products of strollers, children’s car seats, cribs,

children’s bicycles and other durable juvenile

products under the “CYBEX”, “Evenflo”, “gb”,

“Happy Dino” and other brands; and (ii) non-durable

juvenile products of infant, hygiene care, wipes,

apparels, footwear and accessories and other non-

durable juvenile products under “gb”, “Happy Dino”

and other brands (“MBC Products”) to GCHL and

its subsidiaries as non-exclusive distributors to

distribute the MBC Products domestically in the

PRC.

Subject to the Supply Agreements, the total price

and terms of each order will be set out in individual

contracts. The price of each MBC Product to be

supplied by the Group under the 2021 Supply

Agreement will be determined upon arm’s length

negotiation between the parties in the ordinary

course of business of the Group.

To determine the prevailing market price, the

production or outsourcing department of the

Company will provide the cost analysis in relation

to each MBC Product to the market and sales

department for consideration. The prevailing

market price is determined through market research

involving obtaining questionnaires from potential

customers and/or distributors based on the type

and nature of the relevant product. At the same

time, the market and sales department will also

obtain quotes of similar products from not less

than two competing brands unless such quotes are

not available for certain types of products. Once

the information on prevailing market price of the

relevant product has been gathered through market

research, the market and sales department will

determine the proposed benchmark retail price and

then discuss with the finance department on the

gross profit requirement applicable to each relevant

product in order to determine the mark-up rate as

well as the discount rate applicable to each relevant

product, and submit the final purchase price of the

relevant product to the general manager of the

market and sales department for final approval.

The price of each MBC Product will be determined

along the following principles:

(1) Pre-determine a benchmark retail price for each

MBC Product;

(2) Determine the discount rate; and

(3) Ensure the terms offered to GCHL and its

subsidiaries, as connected persons of the Group,

are no more favourable to the terms offered to

independent third parties.

The annual caps under the 2018 Supply Agreement

for each of the three years ending 31 December

2021 are RMB45,100,000, RMB63,400,000 and

RMB89,600,000, respectively. The annual caps

under the 2021 Supply Agreement for each

of the three years ending 31 December 2024

are RMB20,000,000, RMB26,000,000 and

RMB34,000,000, respectively.

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

GOODBABY 151

The transaction between the Company and its

subsidiaries and GCHL and its subsidiaries in relation

to the MBC Products sold for the year ended 31

December 2022 was RMB957,000 (approximately

HK$1,112,000). For further details, please also refer

to the announcements of the Company dated 28

August 2018, 23 August 2021 and 13 September

2021, respectively.

GCHL is a company which is held as to

approximately 94.58% by companies ultimately

controlled by the Chairman and his spouse,

including Pacific United Developments Limited

(“PUD”), a substantial shareholder of the Company.

Accordingly, GCHL is an associate of the Chairman

under the Listing Rules and thus it is regarded as a

connected person of the Company under the Listing

Rules and the entering of the Supply Agreements

constitute connected transactions for the Company.

The Company has complied with the disclosure

requirements prescribed in Chapter 14A of the

Listing Rules with respect to the continuing

connected transactions above of the Group.

Pursuant to Rule 14A.56 of the Listing Rules, the

Board has engaged the auditors of the Company

to perform certain agreed-upon procedures on

the aforesaid continuing connected transactions.

Based on the work performed, the auditors of

the Company have provided a letter to the Board

confirming that the aforesaid continuing connected

transactions:

(i) have been approved by the Directors;

(ii) were entered into in accordance with the

pricing policies of the Company;

(iii) were entered into in accordance with the terms

of the relevant agreements governing such

transactions; and

(iv) did not exceed the annual cap amounts.

A copy of the auditor’s letter has been provided by

the Company to the Stock Exchange. Pursuant to

Rule 14A.55 of the Listing Rules, the independent

non-executive Directors have reviewed the above

continuing connected transactions and confirmed

that the transactions have been entered into:

(i) in the ordinary and usual course of the business

of the Group;

(ii) on normal commercial terms or better; and

(iii) in accordance with the relevant agreements

governing them on terms that are fair

and reasonable and in the interests of the

shareholders of the Company as a whole.

SPECIFIC PERFORMANCE OBLIGATIONS

OF CONTROLLING SHAREHOLDERS

UNDER RULE 13.18 OF THE LISTING

RULES

APRIL 2021 FACILITY AGREEMENT

To refinance certain existing bank loans, on 13

April 2021, Goodbaby (Hong Kong) Limited, a

wholly-owned subsidiary of the Company (as

borrower), the Company (as guarantor), one

financial institution (as mandated lead arranger

and bookrunner and underwriter, facility agent and

security agent) and certain financial institutions (as

original lenders) entered into a facility agreement

(the “April 2021 Facility Agreement”) in respect of

a US$165,000,000 term loan facility with a term

of 36 months from the first utilisation date. The

total commitment under the April 2021 Facility

Agreement may be increased by not more than

US$85,000,000 by way of accession(s) of additional

lender(s). With this refinance, the debt structure of

the Company will be optimized and relevant finance

cost will be improved.

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

REPORT OF THE BOARD OF DIRECTORS

GOODBABY 152

Under the April 2021 Facility Agreement, if (a)

Mr. Song (together with his family, including his

or his spouse’s family trust) is, collectively, no

longer the single largest beneficial shareholder of

the Company; or (b) Mr. Song (together with his

family, including his or his spouse’s family trust)

collectively, no longer beneficially owns at least 30%

of the issued share capital of the Company, then the

borrower shall:

(1) immediately notify the facility agent thereof.

Forthwith after the occurrence of such event

or circumstance, no further utilisation shall

be made and all the available facility shall be

automatically cancelled in full; and

(2) at the request of any lender, prepay that

lender’s participation in the loans together with

accrued interests thereon and break costs (if

any).

If the shares in the Company are beneficially

owned by any person mentioned above through

one or more corporations (“holding companies”)

controlled by such person(s) (whether acting alone

or together), then the entire shareholding of such

holding companies in the Company shall be taken

into account in determining compliance with (a) and

(b) above.

The term loan facility under this April 2021 Facility

Agreement was fully utilised in 23 September 2021.

As at the date of this report, US$165,000,000

remains outstanding in respect of this April 2021

Facility Agreement.

For further details, please also refer to the

announcement of the Company dated 13 April 2021.

Save as disclosed above, as at 31 December

2022, the Company did not have other disclosure

obligations under Rule 13.18 of the Listing Rules.

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE

ENVIRONMENTAL PROTECTION

While maintaining our own production and

operation capabilities, the Company also has

reinforced the fusion of environmental protection,

safety, health and social responsibility into our

corporate development strategies by establishing

the ESG report working team in line with our

business development. The Company and the Group

uphold the concept of sustainable development,

focus attention on the design of research

and development, production and operation

environment, social and governance risks, strive to

achieve sustainable growth.

The Company considers our staff, shareholders

and potential investors, government authorities,

suppliers, community individuals, media and

consumers as our key stakeholders, and values highly

the expectations and opinions of our stakeholders

on us with respect to environment, society and

governance. The Company has commenced

multidimensional risk analysis, identified issues

on the environment, society and importance of

governance which are the concerns in our own

development and of the relevant stakeholders.

For further relevant information regarding

our performance on environment, society and

governance during the current financial year,

please refer to the Environmental, Social and

Governance section in the annual report for details.

The Company has formulated the compliance

procedures to ensure compliance with, in particular,

the applicable laws, rules and regulations having

material effect on us. The relevant employees and

the relevant operating entities will be informed

of any changes in the applicable laws, rules and

regulations from time to time.

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

GOODBABY 153

CORPORATE GOVERNANCE

Principal corporate governance practices adopted

by the Company are set out in the corporate

governance report contained in this annual report.

PROPOSED ADOPTION OF THE

AMENDED AND RESTATED

MEMORANDUM AND ARTICLES

The Board proposes to amend the existing

Memorandum and Articles of the Company by

adopting the second amended and restated

memorandum and articles of association (the

“Amended and Restated Memorandum and

Articles”), in order to (a) bring the existing

Memorandum and Articles to conform with the

core shareholder protection standards set out

in Appendix 3 to the Listing Rules; (b) provide

flexibility to the Company in relation to the conduct

of general meetings by allowing general meetings

of the Company to be held as virtual meetings

or hybrid meetings where Shareholders may

participate by electronic communication facilities in

substitution for or in addition to physical attendance

at one or more locations; and (c) incorporate certain

general updating and housekeeping amendments

(the “Proposed Amendments”).

The Proposed Amendments and adoption of the

Amended and Restated Memorandum and Articles

are subject to the approval of the Shareholders by

way of passing a special resolution to be proposed

at the AGM. A circular of the AGM containing,

among other things, details of the Proposed

Amendments and adoption of the Amended and

Restated Memorandum and Articles, together with

a notice of the AGM, will be despatched to the

Shareholders in due course.

INDEMNITY AND INSURANCE

PROVISIONS

The Company has arranged appropriate directors

and officers liability insurance in respect of legal

action against Directors. Also, each Director or

other officer of the Company shall be entitled to

be indemnified out of the assets of the Company

against all losses or liabilities which he or she

may sustain or incur in or about the execution

of the duties of his or her office or otherwise in

relation thereto in accordance with the Articles of

Association.

EXCHANGE RISKS

Details of the exchange risks are set out in note 41

to the Financial Statements.

PURCHASE, SALE, REDEMPTION OR RE-

PURCHASE OF SHARES

There was no purchase, sale, redemption and

re-purchase of any listed securities of the Company

by the Company or any of its subsidiaries during the

year ended 31 December 2022.

DISCLOSURE UNDER RULE 13.20 OF THE

LISTING RULES

The Directors are not aware of any circumstances

resulting in the responsibility of disclosure under

Rule 13.20 of the Listing Rules regarding the

provision of advances by the Company to an entity.

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

REPORT OF THE BOARD OF DIRECTORS

GOODBABY 154

DISCLOSURE OF INFORMATION OF

DIRECTORS UNDER RULES 13.51(2) AND

13.51B(1) OF THE LISTING RULES

Changes in Directors’ biographical details since the

date of the 2022 interim report of the Company,

which are required to be disclosed pursuant to

Rules 13.51(2) and 13.51(B)(1) of the Listing Rules, are

set out below.

With effect from 21 March 2023:

• Mr. Martin POS, an executive Director, has

stepped down from his role as the CEO of the

Company; and

• Mr. Liu Tongyou, an executive Director, has

been appointed as the CEO of the Company.

On 17 February 2023, the Board approved the

renewal of appointment letters of the Directors as

follows:

• Mr. Martin POS as an executive Director for a

term of three years commencing from 18 March

2023;

• Mr. Liu Tongyou as an executive Director for

a term of three years commencing from 21

February 2023;

• Mr. Michael Nan Qu as an executive Director

for a term of three years commencing from 18

March 2023;

• Ms. Chiang Yun as an independent non-

executive Director for a term of three years

commencing from 23 May 2023; and

• Mr. Jin Peng as an independent non-executive

Director for a term of three years commencing

from 21 February 2023.

EVENT AFTER THE REPORTING PERIOD

Details of the event after the reporting period of

the Group are set out in note 43 to the Financial

Statements.

FINANCIAL SUMMARY

The summary of the results, assets and liabilities of

the Group in the past five financial years is set out in

page 284 of this report.

PRE-EMPTIVE RIGHTS

There is no provision regarding pre-emptive rights

in the articles of association of the Company or the

laws of the Cayman Islands which would oblige the

Company to offer new shares on a pro-rata basis to

existing shareholders.

TAX RELIEF AND EXEMPTION OF

HOLDERS OF LISTED SECURITIES

The Company is not aware of any tax relief or

exemption available to the Shareholders by reason

of their holding of the Company’s securities.

EQUITY-LINKED AGREEMENTS

Saved for the share option, the Company had not

entered into any equity-linked agreements during

the year ended 31 December 2022.

SUFFICIENT PUBLIC FLOAT

Based on the information that is publicly available

to the Company and to the best knowledge of the

Directors, as at the date of this annual report, the

Company has maintained sufficient public float of

not less than 25% of the Company’s issued shares as

required by the Listing Rules.

REPORT OF THE BOARD OF DIRECTORSAnnual Report 2022

GOODBABY 155

AUDITORS

The financial statements of the Company for the

year ended 31 December 2022 have been audited

by Ernst & Young which will retire, and, being

eligible, offer themselves for re-appointment at the

forthcoming annual general meeting.

A resolution for the re-appointment of Ernst &

Young as auditors of the Company is to be proposed

at the forthcoming annual general meeting.

For and on behalf of the Board of Directors

Song Zhenghuan

Chairman

28 March 2023

GOODBABY

INDEPENDENT AUDITOR’S REPORT

156

Annual Report 2022

INDEPENDENT AUDITOR’S REPORT

To the shareholders of Goodbaby International Holdings Limited

(Incorporated in the Cayman Islands with limited liability)

OPINION

We have audited the consolidated financial statements of Goodbaby International Holdings Limited (the

“Company”) and its subsidiaries (the “Group”) set out on pages 161 to 283, which comprise the consolidated

statement of financial position as at 31 December 2022, and the consolidated statement of profit or loss,

the consolidated statement of comprehensive income, the consolidated statement of changes in equity and

the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial

statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial

position of the Group as at 31 December 2022, and of its consolidated financial performance and its

consolidated cash flows for the year then ended in accordance with International Financial Reporting

Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”) and have been

properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

BASIS FOR OPINION

We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the

Hong Kong Institute of Certified Public Accountants (“HKICPA”). Our responsibilities under those standards

are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements

section of our report. We are independent of the Group in accordance with the HKICPA’s Code of Ethics for

Professional Accountants (the “Code”), and we have fulfilled our other ethical responsibilities in accordance

with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide

a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our

audit of the consolidated financial statements of the current period. These matters were addressed in the

context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon,

and we do not provide a separate opinion on these matters. For each matter below, our description of how

our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the

consolidated financial statements section of our report, including in relation to these matters. Accordingly,

our audit included the performance of procedures designed to respond to our assessment of the risks

of material misstatement of the consolidated financial statements. The results of our audit procedures,

including the procedures performed to address the matters below, provide the basis for our audit opinion on

the accompanying consolidated financial statements.

INDEPENDENT AUDITOR’S REPORT

GOODBABY 157

Annual Report 2022

KEY AUDIT MATTERS (Continued)

Key audit matter How our audit addressed the key audit matter

Impairment assessment of goodwill and intangible assets with indefinite lives

The goodwill and other intangible assets with

indefinite lives of the Group arose from business

combinations amounted to HK$2,631 million and

HK$1,638 million as at 31 December 2022, which

represented 22% and 14% of the total assets,

respectively. The Group is required to perform

impairment testing on goodwill and intangible

assets with indefinite life annually. Management’s

assessment process involves significant estimates

and judgements, including assessing expected

future cash flow forecasts, associated growth rates,

budgeted gross margins and the discount rates

applied.

The Group’s disclosures about goodwill and

intangible assets with indefinite lives are included

in Note 2.4, Note 3 and Note 16 to the financial

statements.

Our audit procedures, among others, included an

assessment of the evaluation of management and

testing of key assumptions, methodologies, cash-

generating unit determination, cash flow forecast

and other data used by the Group. In performing

audit procedures, we checked the sales assumption

to historical actual sales with growth rates

comparable to the market and assessed budgeted

gross margin against historical trend and the

discount rate assumption against the cost of equity

and the cost of debt of comparable companies. We

also involved our internal specialists to assist us in

assessing the assumptions and methodologies used

by the Group. We also focused on the adequacy

of the Group’s disclosures of the assumptions to

which the outcome of the impairment test is more

sensitive.

Provision for product liabilities

As at 31 December 2022, the provisions for product

liabilities amounted to HK$59 million. The Group

made provisions for product liabilities in relation

to the indemnity provided to its customers for

damages or injuries caused in connection with the

use of the Group’s sold products.

The provision for product liabilities involved

significant management estimation and judgements

based upon estimated future costs to be incurred

in claims. The Group engaged an external valuation

expert to perform an estimation of product

liabilities obligation, and there were significant

estimates included in the management’s analysis

and projection, such as discount rates used and

an assessment on possible outcome of the claims

based on historical experience.

The Group’s disclosures about the provision for

product liabilities are included in Note 2.4, Note 3

and Note 27 to the financial statements.

Our audit procedures, among others, included

obtaining an understanding of the basis for the

provisions made and assessing the consistency of

the provisioning policy applied. We also assessed

management estimation and key assumptions by

reference to the historical experience and trend,

and checked subsequent claims after the end

of the reporting period. In performing our audit

procedures, we involved our internal valuation

specialists to assess the valuation methodology

used and key assumptions applied to calculate the

provision. We also obtained confirmations from

external legal counsels for those claims in progress

regarding product liabilities.

GOODBABY

INDEPENDENT AUDITOR’S REPORT

158

Annual Report 2022

INDEPENDENT AUDITOR’S REPORT

OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT

The directors of the Company are responsible for the other information. The other information comprises the

information included in the Annual Report, other than the consolidated financial statements and our auditor’s

report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not

express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the

other information and, in doing so, consider whether the other information is materially inconsistent with

the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to

be materially misstated. If, based on the work we have performed, we conclude that there is a material

misstatement of this other information, we are required to report that fact. We have nothing to report in this

regard.

RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL

STATEMENTS

The directors of the Company are responsible for the preparation of the consolidated financial statements

that give a true and fair view in accordance with IFRSs issued by the IASB and the disclosure requirements of

the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary

to enable the preparation of consolidated financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the consolidated financial statements, the directors of the Company are responsible for assessing

the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless the directors of the Company either intend

to liquidate the Group or to cease operations or have no realistic alternative but to do so.

The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for

overseeing the Group’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL

STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as

a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report

that includes our opinion. Our report is made solely to you, as a body, and for no other purpose. We do not

assume responsibility towards or accept liability to any other person for the contents of this report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise

from fraud or error and are considered material if, individually or in the aggregate, they could reasonably

be expected to influence the economic decisions of users taken on the basis of these consolidated financial

statements.

INDEPENDENT AUDITOR’S REPORT

GOODBABY 159

Annual Report 2022

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL

STATEMENTS (Continued)

As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional

scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether

due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit

evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting

a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may

involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates

and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,

based on the audit evidence obtained, whether a material uncertainty exists related to events or

conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we

conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to

the related disclosures in the consolidated financial statements or, if such disclosures are inadequate,

to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our

auditor’s report. However, future events or conditions may cause the Group to cease to continue as a

going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements,

including the disclosures, and whether the consolidated financial statements represent the underlying

transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Group to express an opinion on the consolidated financial statements. We

are responsible for the direction, supervision and performance of the group audit. We remain solely

responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing

of the audit and significant audit findings, including any significant deficiencies in internal control that we

identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical

requirements regarding independence and to communicate with them all relationships and other matters

that may reasonably be thought to bear on our independence, and where applicable, actions taken to

eliminate threats or safeguards applied.

GOODBABY

INDEPENDENT AUDITOR’S REPORT

160

Annual Report 2022

INDEPENDENT AUDITOR’S REPORT

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL

STATEMENTS (Continued)

From the matters communicated with the Audit Committee, we determine those matters that were of most

significance in the audit of the consolidated financial statements of the current period and are therefore

the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes

public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter

should not be communicated in our report because the adverse consequences of doing so would reasonably

be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Siu Fung Terence Ho.

Ernst & Young

Certified Public Accountants

Hong Kong

28 March 2023

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

GOODBABY 161

Annual Report 2022

CONSOLIDATED STATEMENT OF

PROFIT OR LOSS

YEAR ENDED 31 DECEMBER 2022

Notes

2022

2021

(HK$’000)

Revenue 5 8,292,152 9,692,137

Cost of sales (4,936,271) (5,696,909)

Gross profit 3,355,881 3,995,228

Other income and gains 5 165,429 80,800

Selling and distribution expenses (2,072,449) (2,476,241)

Administrative expenses (1,345,590) (1,426,458)

Other expenses (2,437) (7,266)

Finance income 6 42,971 35,074

Finance costs 7 (137,906) (90,594)

Share of profits and losses of:

Joint ventures (4,621) 1,277

An associate (85) (8)

PROFIT BEFORE TAX 8 1,193 111,812

Income tax credit 11 38,935 15,749

PROFIT FOR THE YEAR 40,128 127,561

Attributable to:

Owners of the parent 33,487 123,817

Non-controlling interests 6,641 3,744

40,128 127,561

EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT: 13

Basic

For profit for the year (HK$) 0.02 0.07

Diluted

For profit for the year (HK$) 0.02 0.07

GOODBABY

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

162

Annual Report 2022

CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

YEAR ENDED 31 DECEMBER 2022

2022

2021

(HK$’000)

PROFIT FOR THE YEAR 40,128 127,561

OTHER COMPREHENSIVE (LOSS)/INCOME

Other comprehensive (loss)/income that may be reclassified to profit or loss in subsequent periods:

Cash flow hedges

Effective portion of changes in fair value of hedging instruments arising during the year (56,530) 24,044

Reclassification adjustments for gains/(losses) included in the consolidated statement of profit or loss 30,066 (12,807)

Income tax effect 3,666 (1,948)

(22,798) 9,289

Exchange differences on translation of foreign operations (572,752) 143,048

Net other comprehensive (loss)/income that may be reclassified to profit or loss in subsequent periods (595,550) 152,337

Other comprehensive income that will not be reclassified to profit or loss in subsequent periods:

Actuarial gains of defined benefit plans 384 489

Net other comprehensive income that will not be reclassified to profit or loss in subsequent periods 384 489

OTHER COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR, NET OF TAX (595,166) 152,826

TOTAL COMPREHENSIVE (LOSS)/INCOME (555,038) 280,387

Attributable to:

Owners of the parent (559,460) 275,959

Non-controlling interests 4,422 4,428

(555,038) 280,387

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

GOODBABY 163

Annual Report 2022

CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

YEAR ENDED 31 DECEMBER 2022

Notes

31 December

2022

31 December

2021

(HK$’000)

NON-CURRENT ASSETS

Property, plant and equipment 14 986,099 1,031,631

Right-of-use assets 15(a) 330,552 336,549

Goodwill 16 2,631,379 2,812,866

Other intangible assets 17 2,086,571 2,281,555

Investments in joint ventures 9,497 6,513

Investment in an associate 4,396 –

Deferred tax assets 29 67,413 85,109

Pledged deposits 23 829,430 1,152,021

Time deposits 23 302,258 –

Other long-term assets 18 11,197 11,294

Total non-current assets 7,258,792 7,717,538

CURRENT ASSETS

Inventories 19 1,902,009 2,402,801

Trade receivables 20 997,328 1,247,410

Prepayments and other receivables 21 572,204 641,951

Due from related parties 38 2,503 6,775

Financial assets at fair value through profit or loss 22 28,519 17,824

Cash and cash equivalents 23 921,961 1,087,413

Pledged deposits 23 16,018 9,454

Derivative financial instruments 24 15,361 40,546

Total current assets 4,455,903 5,454,174

CURRENT LIABILITIES

Trade and bills payables 25 1,169,653 1,636,633

Other payables and accruals 26 784,438 905,027

Income tax payable 32,019 39,483

Provision 27 72,167 99,003

Interest-bearing bank loans and other borrowings 28 1,181,953 1,223,104

Lease liabilities 15(b) 102,936 98,979

Derivative financial instruments 24 44,098 4,260

Due to related parties 38 730 604

Defined benefit plan liabilities 359 337

Total current liabilities 3,388,353 4,007,430

NET CURRENT ASSETS 1,067,550 1,446,744

TOTAL ASSETS LESS CURRENT LIABILITIES 8,326,342 9,164,282

GOODBABY

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

164

Annual Report 2022

CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

YEAR ENDED 31 DECEMBER 2022

Notes

31 December

2022

31 December

2021

(HK$’000)

NON-CURRENT LIABILITIES

Interest-bearing bank loans and other borrowings 28 2,172,825 2,294,380

Provision 27 29,295 53,870

Defined benefit plan liabilities 2,882 3,534

Other liabilities 30 1,934 2,129

Lease liabilities 15(b) 197,236 201,925

Deferred tax liabilities 29 364,517 510,940

Total non-current liabilities 2,768,689 3,066,778

Net assets 5,557,653 6,097,504

EQUITY

Equity attributable to owners of the parent

Share capital 31 16,680 16,680

Reserves 33 5,499,998 6,044,271

5,516,678 6,060,951

Non-controlling interests 40,975 36,553

Total equity 5,557,653 6,097,504

SONG Zhenghuan LIU Tongyou

Director Director

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

GOODBABY 165

Annual Report 2022

CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY

YEAR ENDED 31 DECEMBER 2022

Attributable to owners of the parent

Non-controlling interests

Total equity

Share capital

Share premium

Share option reserve

Statutory reserve funds

Cumulative translation

adjustments

Defined benefit plans

Merger reserve

Capital reserve

Hedging reserve

Retained earnings

Total

(HK$’000)

(note 31) (note 33) (note 33)

At 31 December 2021 and 1 January 2022 16,680 3,320,411 192,403 237,652 287,726 5,474 153,975 (8,256) 11,394 1,843,492 6,060,951 36,553 6,097,504

Profit for the year – – – – – – – – – 33,487 33,487 6,641 40,128

Remeasurement effects of defined benefit plans – – – – – 384 – – – – 384 – 384

Cash flow hedges, net of tax – – – – – – – – (22,798) – (22,798) – (22,798)

Exchange differences on translation – – – – (570,533) – – – – – (570,533) (2,219) (572,752)

Total comprehensive loss for the year – – – – (570,533) 384 – – (22,798) 33,487 (559,460) 4,422 (555,038)

Profit appropriation – – – 27,465 – – – – – (27,465) – – –

Equity-settled share option arrangements – – 15,187 – – – – – – – 15,187 – 15,187

At 31 December 2022 16,680 3,320,411* 207,590* 265,117* (282,807)* 5,858* 153,975* (8,256)* (11,404)* 1,849,514* 5,516,678 40,975 5,557,653

At 31 December 2020 and 1 January 2021 16,680 3,320,401 156,865 218,797 145,362 4,985 153,975 (8,256) 2,105 1,738,530 5,749,444 32,125 5,781,569

Profit for the year – – – – – – – – – 123,817 123,817 3,744 127,561

Remeasurement effects of defined benefit plans – – – – – 489 – – – – 489 – 489

Cash flow hedges, net of tax – – – – – – – – 9,289 – 9,289 – 9,289

Exchange differences on translation – – – – 142,364 – – – – – 142,364 684 143,048

Total comprehensive income for the year – – – – 142,364 489 – – 9,289 123,817 275,959 4,428 280,387

Share option exercises – 10 (2) – – – – – – – 8 – 8

Profit appropriation – – – 18,855 – – – – – (18,855) – – –

Equity-settled share option arrangements – – 35,540 – – – – – – – 35,540 – 35,540

At 31 December 2021 16,680 3,320,411 192,403 237,652 287,726 5,474 153,975 (8,256) 11,394 1,843,492 6,060,951 36,553 6,097,504

* These reserve accounts comprise the consolidated reserves of HK$5,499,998,000 (2021: HK$6,044,271,000) in the consolidated

statement of financial position.

GOODBABY

CONSOLIDATED STATEMENT OF CASH FLOWS

166

Annual Report 2022

CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED 31 DECEMBER 2022

2022

2021

CASH FLOWS FROM OPERATING ACTIVITIES (HK$’000)

Profit before tax 1,193 111,812

Adjustments for:

Finance costs 137,906 90,594

Share of profits and losses of:

Joint ventures 4,621 (1,277)

An associate 85 8

Interest income (42,971) (35,074)

Gain on wealth investment products received (103) (841)

(Gain)/loss on disposal of items of property, plant and equipment (22,342) 114

Loss on disposal of Intangible assets 49 200

Fair value gains, net:

Derivative instruments – transactions not qualifying as hedges (12,470) (1,249)

Gain on call/put options over non-controlling interests (10,010) (2,640)

Revision of a lease term arising from a change in the non-cancellable period of a lease (927) –

Covid-19-related rent concessions from lessors – (97)

Depreciation of property, plant and equipment 298,236 304,586

Depreciation of right-of-use assets 117,284 130,443

Amortisation of other intangible assets 66,554 65,319

Provision of inventories 8,032 2,940

Provision for impairment of receivables 9,346 4,474

Equity-settled share option expenses 15,187 35,540

569,670 704,852

Decrease/(increase) in inventories 492,760 (344,302)

Decrease/(increase) in trade receivables 240,736 (117,227)

Increase in prepayments and other receivables (116,695) (63,898)

Decrease/(increase) in amounts due from related parties 4,272 (243)

(Increase)/decrease in pledged deposits (4,031) 1,777

Decrease/(increase) in derivative financial assets 25,185 (22,863)

Decrease in other long-term assets 97 34

(Decrease)/increase in trade and bills payables (466,980) 181,187

Decrease in other payables and accruals (130,341) (11,877)

(Decrease)/increase in provision (51,411) 34,767

Increase/(decrease) in derivative financial liabilities 39,838 (1,743)

Increase/(decrease) in amounts due to related parties 126 (2,623)

Decrease in defined benefit plan liabilities (630) (749)

(Decrease)/increase in other liabilities (195) 257

Cash generated from operations 602,401 357,349

Income tax refund 17,594 26,275

Income tax paid (68,473) (70,976)

Net cash flows generated from operating activities 551,522 312,648

CONSOLIDATED STATEMENT OF CASH FLOWS

GOODBABY 167

Annual Report 2022

Note

2022

2021

CASH FLOWS FROM INVESTING ACTIVITIES (HK$’000)

Interest received 18,563 16,581

Gain on wealth investment products received 103 841

Purchase of property, plant and equipment (326,413) (314,506)

Addition to other intangible assets (33,522) (44,799)

Proceeds from disposal of property, plant and equipment 27,485 9,096

Investment in an associate (4,677) –

Increase in investments in joint ventures (7,753) –

Repayment of wealth investment products 7,748 –

Net cash flows used in investing activities (318,466) (332,787)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issues of shares –8

New bank loans 11,003,292 3,296,922

Repayment of bank loans (11,091,612) (2,555,143)

Interest paid (118,832) (80,878)

Principal portion of lease payments (114,991) (126,896)

Increase in pledged deposits and time deposits (23,509) (1,119,057)

Net cash flows used in financing activities (345,652) (585,044)

NET DECREASE IN CASH AND CASH EQUIVALENTS (112,596) (605,183)

Cash and cash equivalents at beginning of year 1,087,413 1,693,152

Effect of foreign exchange rate changes, net (52,856) (556)

CASH AND CASH EQUIVALENTS AT END OF YEAR 23 921,961 1,087,413

GOODBABY

NOTES TO FINANCIAL STATEMENTS

168

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

1. CORPORATE AND GROUP INFORMATION

The Company was incorporated in the Cayman Islands on 14 July 2000 as an exempted company with

limited liability. The address of its registered office is Cricket Square, Hutchins Drive, P.O. Box 2681,

Grand Cayman KY1-1111, Cayman Islands. The Company’s shares were listed on the Main Board of The

Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 24 November 2010.

The Group is principally engaged in design, research and development (“R&D”), manufacturing,

marketing and distribution of products for children.

INFORMATION ABOUT SUBSIDIARIES

Particulars of the Company’s principal subsidiaries as at the reporting date are as follows:

Name of company

Subsidiaries

Place and date of

incorporation/

registration and

place of operation

Percentage of

equity interest

attributable to the

Company

Issued

ordinary/registered

share capital

Principal activities

Direct Indirect

Goodbaby (Hong Kong) Limited (“GBHK”) Hong Kong,

23 July 1999

100% – Hong Kong Dollar

(“HK$”) 1,001

Investment holding and sales agent

company

Goodbaby Child Products Co., Ltd. (“GCPC”)

(Notes (a), (b) and (c))

The People’s Republic

of China

(“PRC/Mainland China”),

18 November 1994

– 100% United States Dollar

(“US$”) 66,660,000

Manufacture, distribution and sale of

safety belts, cloth sets, car safety seats,

car components for children, infant

strollers and bicycles

Ningbo Goodbaby Child Products Co., Ltd.

(“GCPN”) (Notes (a) and (b))

PRC/Mainland China,

9 September 1996

– 85% Renminbi (“RMB”)

10,000,000

Manufacture, distribution and sale of

child cloth beds, infant strollers, bath

chairs for children and stadium chairs

Pingxiang Goodbaby Child Products Co., Ltd.

(“GCPX”) (Notes (a) and (b))

PRC/Mainland China,

26 December 2011

– 100% RMB2,000,000 Manufacture, distribution and sale of

child cloth beds, infant strollers, bath

chairs for children and stadium chairs

EQO Testing and Certification Services Co.,

Ltd. (“EQTC”) (Notes (a) and (b))

PRC/Mainland China,

30 November 2012

– 100% RMB50,000,000 Testing of children’s products, tools,

electronic products and advisory service

for risk valuation of product quality

Serena Merger Co., Inc. (“SERE”) The United States (“U.S.”),

28 May 2014

– 100% US$1,000 Investment holding

Evenflo Company, Inc. (“EFCD”) U.S.,

1 October 1992

– 100% US$86,500 Manufacture, distribution and sale of

car safety seats, infant strollers and

baby related products

Muebles Para Ninos De Baja, S.A.

De C.V. (“EFMX”)

Mexico,

29 June 1987

– 100% Mexican Peso (“MXN”)

1,720,000

Manufacture of baby related products

Goodbaby Canada Inc. (“EFCA”) Canada,

18 March 1991

– 100% US$7,000 Distribution and sale of baby related

products

Columbus Trading-Partners GmbH & Co. KG

(“CTPE”)

Germany,

26 February 2016

– 100% Euro (“EUR”) 100 Distribution and sale of car safety seats,

infant strollers and other parenting

products

NOTES TO FINANCIAL STATEMENTS

GOODBABY 169

Annual Report 2022

Name of company

Subsidiaries

Place and date of

incorporation/

registration and

place of operation

Percentage of

equity interest

attributable to the

Company

Issued

ordinary/registered

share capital

Principal activities

Direct Indirect

Goodbaby Czech Republic s.r.o. (“GBCZ”) Czech Republic,

8 February 2016

– 100% Czech Koruna

(“CZK”)200,000

IT services and a share service centre

Goodbaby (Europe) GmbH & Co KG (“GEGC”) Germany,

28 January 2014

– 100% EUR100 Investment holding

Cybex GmbH (“CBGM”) Germany,

5 March 2014

– 100% EUR33,400 Purchase, sale, holding and

management of participating interests

and development and production of

child car-seats, strollers, child carrying

systems, pushchairs, high chairs and

other products for children

GB GmbH (“GBGM”) Germany,

21 August 2015

– 100% EUR25,000 Purchase, sale, holding and

management of participating interests

and development and production of

child car-seats, strollers, child carrying

systems, pushchairs, high chairs and

other products for children

Columbus Trading Partners USA Inc.

(“CBUS”)

U.S.,

24 November 2014

– 100% US$1 Distribution and sale of car safety seats,

infant strollers and other parenting

products

Columbus Trading Partners Japan

Limited (“CBJP”)

Japan,

20 February 2018

– 80% Japanese Yen (“JPY”)

2,200,000

Distribution and sale of car safety seats,

infant strollers and other parenting

products

Cybex Retail GmbH (“CBRG”) Germany,

20 October 2021

– 100% EUR25,000 Wholesale and retail of children’s

products

Goodbaby (China) Retail & Service Company

(“GRCN”) (Notes (a), (b) and (c))

PRC/Mainland China,

11 May 2016

– 100% RMB50,000,000 Wholesale and retail of children’s

products

Shanghai Goodbaby Children Fashion

Co., Ltd. (“SHFS”) (Notes (a) and (b))

PRC/Mainland China,

20 January 1998

– 100% RMB20,000,000 Distribution and retail business of

children’s products

Goodbaby Nantong Fashion Co., Ltd.

(“NTFS”) (Notes (a) and (b))

PRC/Mainland China,

19 March 2015

– 80% RMB10,000,000 Wholesale and retail of children’s

products

Note (a) Limited liability companies established in the PRC

Note (b) English names for identification only

Note (c) Registered as wholly-foreign-owned enterprises in the PRC

1. CORPORATE AND GROUP INFORMATION (Continued)

INFORMATION ABOUT SUBSIDIARIES (Continued)

Particulars of the Company’s principal subsidiaries as at the reporting date are as follows: (Continued)

GOODBABY

NOTES TO FINANCIAL STATEMENTS

170

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

1. CORPORATE AND GROUP INFORMATION (Continued)

INFORMATION ABOUT SUBSIDIARIES (Continued)

The above table lists the subsidiaries of the Company which, in the opinion of the Directors, principally

affected the results for the year or formed a substantial portion of the net assets of the Group. To give

details of other subsidiaries would, in the opinion of the Directors, result in particulars of excessive

length.

2.1 BASIS OF PREPARATION

These financial statements have been prepared in accordance with International Financial Reporting

Standards (“IFRSs”) (which include all International Financial Reporting Standards, International

Accounting Standards (“IASs”) and Interpretations) issued by International Accounting Standards Board

(the “IASB”) and the disclosure requirements of the Hong Kong Companies Ordinance. They have been

prepared under the historical cost convention, except for call and put options over non-controlling

interests, derivative financial instruments and wealth management products which have been measured

at fair value. These financial statements are presented in Hong Kong dollars (“HK$”) and all values are

rounded to the nearest thousand except when otherwise indicated.

BASIS OF CONSOLIDATION

The consolidated financial statements include the financial statements of the Company and its

subsidiaries (collectively referred to as the “Group”) for the year ended 31 December 2022. A subsidiary

is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control

is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the

investee and has the ability to affect those returns through its power over the investee (i.e., existing

rights that give the Group the current ability to direct the relevant activities of the investee).

Generally, there is a presumption that a majority of voting rights results in control. When the Company

has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group

considers all relevant facts and circumstances in assessing whether it has power over an investee,

including:

(a) the contractual arrangement with the other vote holders of the investee;

(b) rights arising from other contractual arrangements; and

The financial statements of the subsidiaries are prepared for the same reporting period as the Company,

using consistent accounting policies. The results of subsidiaries are consolidated from the date on which

the Group obtains control, and continue to be consolidated until the date that such control ceases.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 171

Annual Report 2022

2.1 BASIS OF PREPARATION (Continued)

BASIS OF CONSOLIDATION (Continued)

Profit or loss and each component of other comprehensive income are attributed to the owners of

the parent of the Group and to the non-controlling interests, even if this results in the non-controlling

interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash

flows relating to transactions between members of the Group are eliminated in full on consolidation.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that

there are changes to one or more of the three elements of control described above. A change in the

ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and

liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative

translation differences recorded in equity; and recognises (i) the fair value of the consideration received,

(ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The

Group’s share of components previously recognised in other comprehensive income is reclassified to

profit or loss or retained earnings, as appropriate, on the same basis as would be required if the Group

had directly disposed of the related assets or liabilities.

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The Group has adopted the following revised IFRSs for the first time for the current year’s financial

statements:

Amendments to IFRS 3 Reference to the Conceptual Framework

Amendment to IFRS 16 Covid-19-Related Rent Concessions beyond 30 June 2021

Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use

Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling a Contract

Annual Improvements to

IFRSs 2018-2020

Amendments to IFRS 1, IFRS 9, Illustrative Examples

accompanying IFRS 16, and IAS 41

GOODBABY

NOTES TO FINANCIAL STATEMENTS

172

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued)

The nature and the impact of the revised IFRSs that are applicable to the Group are described below:

(a) Amendments to IFRS 3 replace a reference to the previous Framework for the Preparation and

Presentation of Financial Statements with a reference to the Conceptual Framework for Financial

Reporting (the “Conceptual Framework”) issued in June 2018 without significantly changing

its requirements. The amendments also add to IFRS 3 an exception to its recognition principle

for an entity to refer to the Conceptual Framework to determine what constitutes an asset or a

liability. The exception specifies that, for liabilities and contingent liabilities that would be within

the scope of IAS 37 or IFRIC 21 if they were incurred separately rather than assumed in a business

combination, an entity applying IFRS 3 should refer to IAS 37 or IFRIC 21 respectively instead of

the Conceptual Framework. Furthermore, the amendments clarify that contingent assets do not

qualify for recognition at the acquisition date. The Group has applied the amendments prospectively

to business combinations that occurred on or after 1 January 2022. As there were no business

combinations during the year, the amendments did not have any impact on the financial position

and performance of the Group.

(b) Amendments to IAS 16 prohibit an entity from deducting from the cost of an item of property, plant

and equipment any proceeds from selling items produced while bringing that asset to the location

and condition necessary for it to be capable of operating in the manner intended by management.

Instead, an entity recognises the proceeds from selling any such items, and the cost of those

items as determined by IAS 2 Inventories, in profit or loss. The Group has applied the amendments

retrospectively to items of property, plant and equipment made available for use on or after 1

January 2021. Since there was no sale of items produced prior to the property, plant and equipment

being available for use, the amendments did not have any impact on the financial position or

performance of the Group.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 173

Annual Report 2022

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued)

IAS 37, the cost of fulfilling the contract comprises the costs that relate directly to the contract.

Costs that relate directly to a contract include both the incremental costs of fulfilling that contract

(e.g., direct labour and materials) and an allocation of other costs that relate directly to fulfilling that

contract (e.g., an allocation of the depreciation charge for an item of property, plant and equipment

used in fulfilling the contract as well as contract management and supervision costs). General and

administrative costs do not relate directly to a contract and are excluded unless they are explicitly

chargeable to the counterparty under the contract. The Group has applied the amendments

prospectively to contracts for which it has not yet fulfilled all its obligations at 1 January 2022 and

no onerous contracts were identified. Therefore, the amendments did not have any impact on the

financial position or performance of the Group.

(d) Annual Improvements to IFRSs 2018-2020 sets out amendments to IFRS 1, IFRS 9, Illustrative

Examples accompanying IFRS 16, and IAS 41. Details of the amendments that are applicable to the

Group are as follows:

• IFRS 9 Financial Instruments: clarifies the fees that an entity includes when assessing whether

the terms of a new or modified financial liability are substantially different from the terms of the

original financial liability. These fees include only those paid or received between the borrower

and the lender, including fees paid or received by either the borrower or lender on the other’s

behalf. The Group has applied the amendment prospectively from 1 January 2022. As the fees

included in the modification of the Group’s financial liabilities during the year meet the definition

above, the amendment did not have any impact on the financial position or performance of the

Group.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

174

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.3 ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING

STANDARDS

The Group has not applied the following new and revised IFRSs, that have been issued but are not yet

effective, in these financial statements.

Amendments to IFRS 10 and

IAS 28

Sale or Contribution of Assets between an Investor and its

Associate or Joint Venture

Amendments to IFRS 16 Lease Liability in a Sale and Leaseback

Amendments to IAS 1 Classification of Liabilities as Current or Non-current

(the “2020 Amendments”)

2, 4

Amendments to IAS 1 Non-current Liabilities with Covenants (the “2022 Amendments”)

Amendments to IAS 1 and

IFRS Practice Statement 2

Disclosure of Accounting Policies

Amendments to IAS 8 Definition of Accounting Estimates

Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from

a Single Transaction

Effective for annual periods beginning on or after 1 January 2023

Effective for annual periods beginning on or after 1 January 2024

No mandatory effective date yet determined but available for adoption

As a consequence of the 2022 Amendments, the effective date of the 2020 Amendments was deferred to annual

periods beginning on or after 1 January 2024. In addition, as a consequence of the 2020 Amendments and 2022

Amendments, Hong Kong Interpretation 5 Presentation of Financial Statements – Classification by the Borrower of

a Term Loan that Contains a Repayment on Demand Clause was revised to align the corresponding wording with

no change in conclusion

Further information about those IFRSs that are expected to be applicable to the Group is described

below.

Amendments to IFRS 10 and IAS 28 address an inconsistency between the requirements in IFRS 10

and in IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or

joint venture. The amendments require a full recognition of a gain or loss resulting from a downstream

transaction when the sale or contribution of assets between an investor and its associate or joint

venture constitutes a business. For a transaction involving assets that do not constitute a business,

a gain or loss resulting from the transaction is recognised in the investor’s profit or loss only to the

extent of the unrelated investor’s interest in that associate or joint venture. The amendments are to

be applied prospectively. The previous mandatory effective date of amendments to IFRS 10 and IAS

28 was removed by the IASB in January 2016 and a new mandatory effective date will be determined

after the completion of a broader review of accounting for associates and joint ventures. However, the

amendments are available for adoption now.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 175

Annual Report 2022

2.3 ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING

STANDARDS (Continued)

Amendments to IFRS 16 specify the requirements that a seller-lessee uses in measuring the lease

liability arising in a sale and leaseback transaction to ensure the seller-lessee does not recognise any

amount of the gain or loss that relates to the right of use it retains. The amendments are effective for

annual periods beginning on or after 1 January 2024 and shall be applied retrospectively to sale and

leaseback transactions entered into after the date of initial application of IFRS 16 (i.e., 1 January 2019).

Earlier application is permitted. The amendments are not expected to have any significant impact on the

Group’s financial statements.

Amendments to IAS 1 Classification of Liabilities as Current or Non-current clarify the requirements for

classifying liabilities as current or non-current, in particular the determination over whether an entity has

a right to defer settlement of the liabilities for at least 12 months after the reporting period. Classification

of a liability is unaffected by the likelihood that the entity will exercise its right to defer settlement of

the liability. The amendments also clarify the situations that are considered a settlement of a liability.

In 2022, the IASB issued the 2022 Amendments to further clarify that, among covenants of a liability

arising from a loan arrangement, only those with which an entity must comply on or before the reporting

date affect the classification of that liability as current or non-current. In addition, the 2022 Amendments

require additional disclosures by an entity that classifies liabilities arising from loan arrangements as

non-current when it has a right to defer settlement of those liabilities that are subject to the entity

complying with future covenants within 12 months after the reporting period. The amendments are

effective for annual periods beginning on or after 1 January 2024 and shall be applied retrospectively.

Earlier application is permitted. An entity that applies the 2020 Amendments early is required to apply

simultaneously the 2022 Amendments, and vice versa. The Group is currently assessing the impact of

the amendments and whether existing loan agreements may require revision. Based on a preliminary

assessment, the amendments are not expected to have any significant impact on the Group’s financial

statements.

Amendments to IAS 1 Disclosure of Accounting Policies require entities to disclose their material

accounting policy information rather than their significant accounting policies. Accounting policy

information is material if, when considered together with other information included in an entity’s

financial statements, it can reasonably be expected to influence decisions that the primary users of

general purpose financial statements make on the basis of those financial statements. Amendments to

IFRS Practice Statement 2 provide non-mandatory guidance on how to apply the concept of materiality

to accounting policy disclosures. Amendments to IAS 1 are effective for annual periods beginning

on or after 1 January 2023 and earlier application is permitted. Since the guidance provided in the

amendments to IFRS Practice Statement 2 is non-mandatory, an effective date for these amendments is

not necessary. The Group is currently revisiting the accounting policy disclosures to ensure consistency

with the amendments.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

176

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.3 ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING

STANDARDS (Continued)

Amendments to IAS 8 clarify the distinction between changes in accounting estimates and changes in

accounting policies. Accounting estimates are defined as monetary amounts in financial statements that

are subject to measurement uncertainty. The amendments also clarify how entities use measurement

techniques and inputs to develop accounting estimates. The amendments are effective for annual

reporting periods beginning on or after 1 January 2023 and apply to changes in accounting policies

and changes in accounting estimates that occur on or after the start of that period. Earlier application

is permitted. The amendments are not expected to have any significant impact on the Group’s financial

statements.

Amendments to IAS 12 narrow the scope of the initial recognition exception in IAS 12 so that it no longer

applies to transactions that give rise to equal taxable and deductible temporary differences, such as

leases and decommissioning obligations. Therefore, entities are required to recognise a deferred tax asset

(provided that sufficient taxable profit is available) and a deferred tax liability for temporary differences

arising from these transactions. The amendments are effective for annual reporting periods beginning

on or after 1 January 2023 and shall be applied to transactions related to leases and decommissioning

obligations at the beginning of the earliest comparative period presented, with any cumulative effect

recognised as an adjustment to the opening balance of retained profits or other component of equity

as appropriate at that date. In addition, the amendments shall be applied prospectively to transactions

other than leases and decommissioning obligations. Earlier application is permitted. The amendments

are not expected to have any significant impact on the Group’s financial statements.

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVESTMENTS IN AN ASSOCIATE AND JOINT VENTURES

An associate is an entity in which the Group has a long term interest of generally not less than 20% of

the equity voting rights and over which it is in a position to exercise significant influence. Significant

influence is the power to participate in the financial and operating policy decisions of the investee, but is

not control or joint control over those policies.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the

arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed

sharing of control of an arrangement, which exists only when decisions about the relevant activities

require the unanimous consent of the parties sharing control.

The Group’s investments in an associate and joint ventures are stated in the consolidated statement of

financial position at the Group’s share of net assets under the equity method of accounting, less any

impairment losses.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 177

Annual Report 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

INVESTMENTS IN AN ASSOCIATE AND JOINT VENTURES (Continued)

The Group’s share of the post-acquisition results and other comprehensive income of an associate

and joint ventures is included in the consolidated statement of profit or loss and consolidated other

comprehensive income, respectively. In addition, when there has been a change recognised directly

in the equity of the associate or joint venture, the Group recognises its share of any changes, when

applicable, in the consolidated statement of changes in equity. Unrealised gains and losses resulting from

transactions between the Group and its associate or joint venture are eliminated to the extent of the

Group’s investment in the associate or joint ventures, except where unrealised losses provide evidence

of an impairment of the assets transferred. Goodwill arising from the acquisition of an associate or joint

ventures is included as part of the Group’s investment in an associate or joint ventures.

When an investment in an associate or a joint venture is classified as held for sale, it is accounted for in

accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

BUSINESS COMBINATIONS AND GOODWILL

Business combinations are accounted for using the acquisition method. The consideration transferred

is measured at the acquisition date fair value which is the sum of the acquisition date fair values of

assets transferred by the Group, liabilities assumed by the Group to the former owners of the acquiree

and the equity interests issued by the Group in exchange for controls the acquiree. For each business

combination, the Group elects whether to measure the non-controlling interests in the acquiree that

are present ownership interests and entitle their holders to a proportionate share of net assets in the

event of liquidation at fair value or at the proportionate share of the acquiree’s identifiable net assets. All

other components of non-controlling interests are measured at fair value. Acquisition-related costs are

expensed as incurred.

The Group determines that it has acquired a business when the acquired set of activities and assets

includes an input and a substantive process that together significantly contribute to the ability to create

outputs.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for

appropriate classification and designation in accordance with the contractual terms, economic

circumstances and pertinent conditions as at the acquisition date. This includes the separation of

embedded derivatives in host contracts of the acquiree.

If the business combination is achieved in stages, the previously held equity interest is remeasured at its

acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

178

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

BUSINESS COMBINATIONS AND GOODWILL (Continued)

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the

acquisition date. Contingent consideration classified as an asset or liability is measured at fair value with

changes in fair value recognised in profit or loss. Contingent consideration that is classified as equity is

not remeasured and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred,

the amount recognised for non-controlling interests and any fair value of the Group’s previously held

equity interests in the acquiree over the identifiable assets acquired and liabilities assumed. If the sum of

this consideration and other items is lower than the fair value of the net assets acquired, the difference is,

after reassessment, recognised in profit or loss as a gain on bargain purchase.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill

is tested for impairment annually or more frequently if events or changes in circumstances indicate

that carrying value may be impaired. The Group performs its annual impairment test of goodwill as at

31 December. For the purpose of impairment testing, goodwill acquired in a business combination is,

from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-

generating units, that are expected to benefit from the synergies of the combination, irrespective of

whether other assets or liabilities of the Group are assigned to those units or groups of units.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group

of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-

generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is

recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and

part of the operation within that unit is disposed of, the goodwill associated with the operation disposed

of is included in the carrying amount of the operation when determining the gain or loss on the disposal.

Goodwill disposed of in these circumstances is measured based on the relative value of the operation

disposed of and the portion of the cash-generating unit retained.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 179

Annual Report 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

FAIR VALUE MEASUREMENT

The Group measures its derivative financial instruments and equity investments at fair value at the end

of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer

a liability in an orderly transaction between market participants at the measurement date. The fair value

measurement is based on the presumption that the transaction to sell the asset or transfer the liability

takes place either in the principal market for the asset or liability, or in the absence of a principal market,

in the most advantageous market for the asset or liability. The principal or the most advantageous

market must be accessible by the Group. The fair value of an asset or a liability is measured using the

assumptions that market participants would use when pricing the asset or liability, assuming that market

participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to

generate economic benefits by using the asset in its highest and best use or by selling it to another

market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient

data are available to measure fair value, maximising the use of relevant observable inputs and minimising

the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are

categorised within the fair value hierarchy, described as follows, based on the lowest level input that is

significant to the fair value measurement as a whole:

Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 – based on valuation techniques for which the lowest level input that is significant to the

fair value measurement is observable, either directly or indirectly

Level 3 – based on valuation techniques for which the lowest level input that is significant to the

fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the

Group determines whether transfers have occurred between levels in the hierarchy by reassessing

categorisation (based on the lowest level input that is significant to the fair value measurement as a

whole) at the end of each reporting period.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

180

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

IMPAIRMENT OF NON-FINANCIAL ASSETS

Where an indication of impairment exists, or when annual impairment testing for an asset is required

(other than inventories, deferred tax assets, financial assets and goodwill), the asset’s recoverable

amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s

value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the

asset does not generate cash inflows that are largely independent of those from other assets or groups

of assets, in which case the recoverable amount is determined for the cash-generating unit to which the

asset belongs. In testing a cash-generating unit for impairment, a portion of the carrying amount of a

corporate asset (e.g., a headquarters building) is allocated to an individual cash-generating unit if it can

be allocated on a reasonable and consistent basis or, otherwise, to the smallest group of cash-generating

units.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a

pre-tax discount rate that reflects current market assessments of the time value of money and the risks

specific to the asset. An impairment loss is charged to the statement of profit or loss in the period in

which it arises in those expense categories consistent with the function of the impaired asset.

An assessment is made at the end of each reporting period as to whether there is an indication that

previously recognised impairment losses may no longer exist or may have decreased. If such an

indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an

asset other than goodwill is reversed only if there has been a change in the estimates used to determine

the recoverable amount of that asset, but not to an amount higher than the carrying amount that would

have been determined (net of any depreciation/amortisation) had no impairment loss been recognised

for the asset in prior years. A reversal of such an impairment loss is credited to the statement of profit

or loss in the period in which it arises, unless the asset is carried at a revalued amount, in which case the

reversal of the impairment loss is accounted for in accordance with the relevant accounting policy for

that revalued asset.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 181

Annual Report 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

RELATED PARTIES

A party is considered to be related to the Group if:

(a) the party is a person or a close member of that person’s family and that person

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or of a parent of the Group;

(b) the party is an entity where any of the following conditions applies:

(i) the entity and the Group are members of the same group;

(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow

subsidiary of the other entity);

(iii) the entity and the Group are joint ventures of the same third party;

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third

entity;

(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or

an entity related to the Group;

(vi) the entity is controlled or jointly controlled by a person identified in (a);

(vii)

a person identified in (a)(i) has significant influence over the entity or is a member of the key

management personnel of the entity (or of a parent of the entity); and

(viii)

the entity, or any member of a group of which it is a part, provides key management personnel

services to the Group or to the parent of the Group.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

182

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION

Property, plant and equipment, other than construction in progress, are stated at cost less accumulated

depreciation and any impairment losses. When an item of property, plant and equipment is classified

as held for sale or when it is part of a disposal group classified as held for sale, it is not depreciated

and is accounted for in accordance with IFRS 5. The cost of an item of property, plant and equipment

comprises its purchase price and any directly attributable costs of bringing the asset to its working

condition and location for its intended use.

Cost may also include transfers from equity of any gains or losses on qualifying cash flow hedges of

foreign currency purchases of items of property, plant and equipment.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as

repairs and maintenance, is normally charged to the statement of profit or loss in the period in which it is

incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection

is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property,

plant and equipment are required to be replaced at intervals, the Group recognises such parts as

individual assets with specific useful lives and depreciates them accordingly.

Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant

and equipment to its residual value over its estimated useful life. The principal annual rates used for this

purpose are as follows:

Estimated useful lives Estimated residual value

Freehold land Not depreciated –

Buildings 20 years 0-10%

Plant and machinery 5-15 years 0-10%

Motor vehicles 3-5 years 0-10%

Furniture and fixtures 3-15 years –

Leasehold improvements The lesser of

lease terms and

useful lives

–

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item

is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual

values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at

each financial year end.

An item of property, plant and equipment including any significant part initially recognised is

derecognised upon disposal or when no future economic benefits are expected from its use or disposal.

Any gain or loss on disposal or retirement recognised in the statement of profit or loss in the year the

asset is derecognised is the difference between the net sales proceeds and the carrying amount of the

relevant asset.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 183

Annual Report 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION (Continued)

Construction in progress represents a building under construction, which is stated at cost less any

impairment losses, and is not depreciated. Cost comprises the direct costs of construction during the

period of construction. Construction in progress is reclassified to the appropriate category of property,

plant and equipment or investment properties when completed and ready for use.

INTANGIBLE ASSETS (OTHER THAN GOODWILL)

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible

assets acquired in a business combination is the fair value as at the date of acquisition. The useful lives

of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are

subsequently amortised over the useful economic life and assessed for impairment whenever there is

an indication that the intangible asset may be impaired. The amortisation period and the amortisation

method for an intangible asset with a finite useful life are reviewed at least at each financial year end.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at

the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible

asset with an indefinite life is reviewed annually to determine whether the indefinite life assessment

continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is

accounted for on a prospective basis.

Trademarks

Trademarks are capitalised and amortised using the straight-line method over their estimated useful

lives of ten to thirty years except for certain trademarks amounting to HK$1,638,379,000 (2021:

HK$1,767,585,000) acquired through the business combinations of Columbus Holding GmbH, WP Evenflo

Group Holdings, Inc. and Oasis Dragon Limited whose useful lives are indefinite, as their legal rights are

capable of being renewed indefinitely at insignificant cost and therefore are perpetual in duration, and

based on future financial performance of the Group, they are expected to generate positive cash flows

indefinitely.

Computer software

Expenditure on computer software is capitalised and amortised using the straight-line method over its

estimated useful life of five years to ten years.

Patents, non-compete agreement and customer relationship

Expenditure on acquired patents, a non-compete agreement and customer relationship is capitalised

and amortised using the straight-line method over their estimated useful lives of five to twenty years.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

184

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

INTANGIBLE ASSETS (OTHER THAN GOODWILL) (Continued)

Research and development costs

All research costs are charged to the statement of profit or loss as incurred.

Expenditure incurred on projects to develop new products is capitalised and deferred only when the

Group can demonstrate the technical feasibility of completing the intangible asset so that it will be

available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset

will generate future economic benefits, the availability of resources to complete the project and the

ability to measure reliably the expenditure during the development. Product development expenditure

which does not meet these criteria is expensed when incurred.

Deferred development costs are stated at cost less any impairment losses and are amortised using the

straight-line basis over the commercial lives of the underlying products, commencing from the date

when the products are put into commercial production.

LEASES

The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or

contains, a lease if the contract conveys the right to control the use of an identified asset for a period of

time in exchange for consideration.

Group as a lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term

leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and

right-of-use assets representing the right to use the underlying assets.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 185

Annual Report 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

LEASES (Continued)

Group as a lessee (Continued)

(a) Right-of-use assets

Right-of-use assets are recognised at the commencement date of the lease (that is the date the

underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated

depreciation and any impairment losses, and adjusted for any remeasurement of lease liabilities.

The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs

incurred, and lease payments made at or before the commencement date less any lease incentives

received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease

terms and the estimated useful lives of the assets as follows:

Leasehold land 10-50 years

Buildings 1-10 years

Plant and machinery 3-6 years

Motor vehicles 1-5 years

Furniture and fixtures 2-5 years

If ownership of the leased asset transfers to the Group by the end of the lease term or the cost

reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life

of the asset.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

186

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

LEASES (Continued)

Group as a lessee (Continued)

(b) Lease liabilities

Lease liabilities are recognised at the commencement date of the lease at the present value of lease

payments to be made over the lease term. The lease payments include fixed payments (including in-

substance fixed payments) less any lease incentives receivable, variable lease payments that depend

on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease

payments also include the exercise price of a purchase option reasonably certain to be exercised by

the Group and payments of penalties for termination of a lease, if the lease term reflects the Group

exercising the option to terminate the lease. The variable lease payments that do not depend on

an index or a rate are recognised as an expense in the period in which the event or condition that

triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing

rate at the lease commencement date because the interest rate implicit in the lease is not readily

determinable. After the commencement date, the amount of lease liabilities is increased to reflect

the accretion of interest and reduced for the lease payments made. In addition, the carrying amount

of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in

lease payments (e.g., a change to future lease payments resulting from a change in an index or rate)

or a change in assessment of an option to purchase the underlying asset.

The Group applies the short-term lease recognition exemption to its short-term leases that have a

lease term of 12 months or less from the commencement date and do not contain a purchase option.

It also applies the recognition exemption for leases of low-value assets to leases of office equipment

and laptop computers that are considered to be of low value.

Lease payments on short-term leases and leases of low-value assets are recognised as an expense

on a straight-line basis over the lease term.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 187

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2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

INVESTMENTS AND OTHER FINANCIAL ASSETS

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair

value through other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual

cash flow characteristics and the Group’s business model for managing them. With the exception of

trade receivables that do not contain a significant financing component or for which the Group has

applied the practical expedient of not adjusting the effect of a significant financing component, the

Group initially measures a financial asset at its fair value plus in the case of a financial asset not at

fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant

financing component or for which the Group has applied the practical expedient are measured at

the transaction price determined under IFRS 15 in accordance with the policies set out for “Revenue

recognition” below.

In order for a financial asset to be classified and measured at amortised cost or fair value through other

comprehensive income, it needs to give rise to cash flows that are solely payments of principal and

interest (“SPPI”) on the principal amount outstanding. Financial assets with cash flows that are not SPPI

are classified and measured at fair value through profit or loss, irrespective of the business model.

The Group’s business model for managing financial assets refers to how it manages its financial assets

in order to generate cash flows. The business model determines whether cash flows will result from

collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and

measured at amortised cost are held within a business model with the objective to hold financial assets

in order to collect contractual cash flows, while financial assets classified and measured at fair value

through other comprehensive income are held within a business model with the objective of both

holding to collect contractual cash flows and selling. Financial assets which are not held within the

aforementioned business models are classified and measured at fair value through profit or loss.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date

that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases

or sales of financial assets that require delivery of assets within the period generally established by

regulation or convention in the marketplace.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

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NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

INVESTMENTS AND OTHER FINANCIAL ASSETS (Continued)

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortised cost (debt instruments)

Financial assets at amortised cost are subsequently measured using the effective interest method and

are subject to impairment. Gains and losses are recognised in the statement of profit or loss when the

asset is derecognised, modified or impaired.

Financial assets at fair value through other comprehensive income (debt instruments)

For debt investments at fair value through other comprehensive income, interest income, foreign

exchange revaluation and impairment losses or reversals are recognised in the statement of profit or loss

and computed in the same manner as for financial assets measured at amortised cost. The remaining fair

value changes are recognised in other comprehensive income. Upon derecognition, the cumulative fair

value change recognised in other comprehensive income is recycled to the statement of profit or loss.

Financial assets designated at fair value through other comprehensive income (equity instruments)

Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity

investments designated at fair value through other comprehensive income when they meet the definition

of equity under IAS 32 Financial Instruments: Presentation and are not held for trading. The classification

is determined on an instrument-by-instrument basis.

Gains and losses on these financial assets are never recycled to the statement of profit or loss. Dividends

are recognised as other income in the statement of profit or loss when the right of payment has been

established, it is probable that the economic benefits associated with the dividend will flow to the Group

and the amount of the dividend can be measured reliably, except when the Group benefits from such

proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in

other comprehensive income. Equity investments designated at fair value through other comprehensive

income are not subject to impairment assessment.

NOTES TO FINANCIAL STATEMENTS

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2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

INVESTMENTS AND OTHER FINANCIAL ASSETS (Continued)

Subsequent measurement (Continued)

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair

value with net changes in fair value recognised in the statement of profit or loss.

This category includes derivative instruments and equity investments which the Group had not

irrevocably elected to classify at fair value through other comprehensive income. Dividends on equity

investments classified as financial assets at fair value through profit or loss are also recognised as other

income in the statement of profit or loss when the right of payment has been established, it is probable

that the economic benefits associated with the dividend will flow to the Group and the amount of the

dividend can be measured reliably.

A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated

from the host and accounted for as a separate derivative if the economic characteristics and risks are

not closely related to the host; a separate instrument with the same terms as the embedded derivative

would meet the definition of a derivative; and the hybrid contract is not measured at fair value through

profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognised in

the statement of profit or loss. Reassessment only occurs if there is either a change in the terms of the

contract that significantly modifies the cash flows that would otherwise be required or a reclassification

of a financial asset out of the fair value through profit or loss category.

DERECOGNITION OF FINANCIAL ASSETS

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial

assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial

position) when:

• the rights to receive cash flows from the asset have expired; or

• the Group has transferred its rights to receive cash flows from the asset, or has assumed an

obligation to pay the received cash flows in full without material delay to a third party under a

“pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and

rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks

and rewards of the asset, but has transferred control of the asset.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

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NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

DERECOGNITION OF FINANCIAL ASSETS (Continued)

When the Group has transferred its rights to receive cash flows from an asset or has entered into a

pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards

of ownership of the asset. When it has neither transferred nor retained substantially all the risks

and rewards of the asset nor transferred control of the asset, the Group continues to recognise the

transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also

recognises an associated liability. The transferred asset and the associated liability are measured on a

basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the

lower of the original carrying amount of the asset and the maximum amount of consideration that the

Group could be required to repay.

IMPAIRMENT OF FINANCIAL ASSETS

The Group recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held

at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows

due in accordance with the contract and all the cash flows that the Group expects to receive, discounted

at an approximation of the original effective interest rate. The expected cash flows will include cash

flows from the sale of collateral held or other credit enhancements that are integral to the contractual

terms.

General approach

ECLs are recognised in two stages. For credit exposures for which there has not been a significant

increase in credit risk since initial recognition, ECLs are provided for credit losses that result from

default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures

for which there has been a significant increase in credit risk since initial recognition, a loss allowance is

required for credit losses expected over the remaining life of the exposure, irrespective of the timing of

the default (a lifetime ECL).

At each reporting date, the Group assesses whether the credit risk on a financial instrument has

increased significantly since initial recognition. When making the assessment, the Group compares the

risk of a default occurring on the financial instrument as at the reporting date with the risk of a default

occurring on the financial instrument as at the date of initial recognition and considers reasonable and

supportable information that is available without undue cost or effort, including historical and forward-

looking information. The Group considers that there has been a significant increase in credit risk when

contractual payments are more than 30 days past due.

NOTES TO FINANCIAL STATEMENTS

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2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

IMPAIRMENT OF FINANCIAL ASSETS (Continued)

General approach (Continued)

The Group considers a financial asset in default when contractual payments are 90 days past due.

However, in certain cases, the Group may also consider a financial asset to be in default when internal or

external information indicates that the Group is unlikely to receive the outstanding contractual amounts

in full before taking into account any credit enhancements held by the Group. A financial asset is written

off when there is no reasonable expectation of recovering the contractual cash flows.

Financial assets at amortised cost are subject to impairment under the general approach and they are

classified within the following stages for measurement of ECLs except for trade receivables and contract

assets which apply the simplified approach as detailed below.

Stage 1 – Financial instruments for which credit risk has not increased significantly since initial

recognition and for which the loss allowance is measured at an amount equal to

12-month ECLs

Stage 2 – Financial instruments for which credit risk has increased significantly since initial

recognition but that are not credit-impaired financial assets and for which the loss

allowance is measured at an amount equal to lifetime ECLs

Stage 3 – Financial assets that are credit-impaired at the reporting date (but that are not

purchased or originated credit-impaired) and for which the loss allowance is measured

at an amount equal to lifetime ECLs

Simplified approach

For trade receivables and contract assets that do not contain a significant financing component or

when the Group applies the practical expedient of not adjusting the effect of a significant financing

component, the Group applies the simplified approach in calculating ECLs. Under the simplified

approach, the Group does not track changes in credit risk, but instead recognises a loss allowance based

on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on

its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the

economic environment.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

192

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NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

FINANCIAL LIABILITIES

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or

loss, and loans and borrowings, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, net of

directly attributable transaction costs.

The Group’s financial liabilities include trade and bills payables, other payables, derivative financial

instruments and interest-bearing bank loans and other borrowings.

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and

financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing

in the near term. This category also includes derivative financial instruments entered into by the Group

that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated

embedded derivatives are also classified as held for trading unless they are designated as effective

hedging instruments. Gains or losses on liabilities held for trading are recognised in the statement of

profit or loss. The net fair value gain or loss recognised in the statement of profit or loss does not include

any interest charged on these financial liabilities.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 193

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2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

FINANCIAL LIABILITIES (Continued)

Subsequent measurement (Continued)

Financial liabilities at fair value through profit or loss (Continued)

Financial liabilities designated upon initial recognition as at fair value through profit or loss are

designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. Gains or losses

on liabilities designated at fair value through profit or loss are recognised in the statement of profit or

loss, except for the gains or losses arising from the Group’s own credit risk which are presented in other

comprehensive income with no subsequent reclassification to the statement of profit or loss. The net fair

value gain or loss recognised in the statement of profit or loss does not include any interest charged on

these financial liabilities.

Financial liabilities at amortised cost (loans and borrowings)

After initial recognition, interest-bearing bank loans and other borrowings are subsequently measured

at amortised cost, using the effective interest rate method unless the effect of discounting would be

immaterial, in which case they are stated at cost. Gains and losses are recognised in the statement

of profit or loss when the liabilities are derecognised as well as through the effective interest rate

amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees

or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is

included in finance costs in the statement of profit or loss.

Put option over non-controlling interests

During the process of acquiring the majority equity interests of subsidiaries, the Group provides the non-

controlling shareholder with the right to dispose of its equity interests to the Group. The equity interests

in the subsidiaries held by the non-controlling shareholder shall be recognised as non-controlling

interests in the consolidated financial statements of the Group. At the same time, for the put option,

the Group shall assume the obligations to redeem in cash the equity interests in the subsidiaries held by

the non-controlling shareholder. The present value of the amount payable at the time of redemption of

such put option shall be deducted from equity (other than non-controlling interests) and is recognised

as a financial liability of the Group. Such financial liability shall be re-measured at the present value

of the amount payable upon redemption in the subsequent period, with changes recognised in the

consolidated statement of profit or loss.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

194

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

DERECOGNITION OF FINANCIAL LIABILITIES

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or

expires.

When an existing financial liability is replaced by another from the same lender on substantially different

terms, or the terms of an existing liability are substantially modified, such an exchange or modification is

treated as a derecognition of the original liability and a recognition of a new liability, and the difference

between the respective carrying amounts is recognised in the statement of profit or loss.

OFFSETTING OF FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are offset and the net amount is reported in the statement of

financial position if, and only if, there is a currently enforceable legal right to offset the recognised

amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities

simultaneously.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 195

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2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING

Initial recognition and subsequent measurement

The Group uses derivative financial instruments, such as forward currency contracts, to hedge its foreign

currency risk. Such derivative financial instruments are initially recognised at fair value on the date on

which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives

are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

Any gains or losses arising from changes in fair value of derivatives are taken directly to the statement

of profit or loss, except for the effective portion of cash flow hedges, which is recognised in other

comprehensive income and later reclassified to profit or loss when the hedged item affects profit or loss.

For the purpose of hedge accounting, hedges are classified as:

• fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or

liability or an unrecognised firm commitment; or

• cash flow hedges when hedging the exposure to variability in cash flows that is either attributable

to a particular risk associated with a recognised asset or liability or a highly probable forecast

transaction, or a foreign currency risk in an unrecognised firm commitment; or

• hedges of a net investment in a foreign operation.

At the inception of a hedge relationship, the Group formally designates and documents the hedge

relationship to which the Group wishes to apply hedge accounting, the risk management objective and

its strategy for undertaking the hedge.

The documentation includes identification of the hedging instrument, the hedged item, the nature of

the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge

effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the

hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the

following effectiveness requirements:

• There is “an economic relationship” between the hedged item and the hedging instrument.

• The effect of credit risk does not “dominate the value changes” that result from that economic

relationship.

• The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the

hedged item that the Group actually hedges and the quantity of the hedging instrument that the

Group actually uses to hedge that quantity of hedged item.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

196

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NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING (Continued)

Initial recognition and subsequent measurement (Continued)

Hedges which meet all the qualifying criteria for hedge accounting are accounted for as follows:

Cash flow hedges

The effective portion of the gain or loss on the hedging instrument is recognised directly in other

comprehensive income in the cash flow hedge reserve, while any ineffective portion is recognised

immediately in the statement of profit or loss. The cash flow hedge reserve is adjusted to the lower of

the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the

hedged item.

The amounts accumulated in other comprehensive income are accounted for, depending on the nature

of the underlying hedged transaction. If the hedged transaction subsequently results in the recognition

of a non-financial item, the amount accumulated in equity is removed from the separate component of

equity and included in the initial cost or other carrying amount of the hedged asset or liability. This is not

a reclassification adjustment and will not be recognised in other comprehensive income for the period.

This also applies where the hedged forecast transaction of a non-financial asset or non-financial liability

subsequently becomes a firm commitment to which fair value hedge accounting is applied.

For any other cash flow hedges, the amount accumulated in other comprehensive income is reclassified

to the statement of profit or loss as a reclassification adjustment in the same period or periods during

which the hedged cash flows affect the statement of profit or loss.

If cash flow hedge accounting is discontinued, the amount that has been accumulated in other

comprehensive income must remain in accumulated other comprehensive income if the hedged future

cash flows are still expected to occur. Otherwise, the amount will be immediately reclassified to the

statement of profit or loss as a reclassification adjustment. After the discontinuation, once the hedged

cash flow occurs, any amount remaining in accumulated other comprehensive income is accounted for

depending on the nature of the underlying transaction as described above.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 197

Annual Report 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING (Continued)

Initial recognition and subsequent measurement (Continued)

Current versus non-current classification

Derivative instruments that are not designated as effective hedging instruments are classified as current

or non-current or separated into current and non-current portions based on an assessment of the facts

and circumstances (i.e., the underlying contracted cash flows).

• Where the Group expects to hold a derivative as an economic hedge (and does not apply hedge

accounting) for a period beyond 12 months after the end of the reporting period, the derivative is

classified as non-current (or separated into current and non-current portions) consistently with the

classification of the underlying item.

• Embedded derivatives that are not closely related to the host contract are classified consistently

with the cash flows of the host contract.

• Derivative instruments that are designated as, and are effective hedging instruments, are classified

consistently with the classification of the underlying hedged item. The derivative instruments are

separated into current portions and non-current portions only if a reliable allocation can be made.

INVENTORIES

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted

average basis, and in the case of work in progress and finished goods, comprises direct materials, direct

labour and an appropriate proportion of overheads. Net realisable value is based on estimated selling

prices less any estimated costs to be incurred to completion and disposal.

CASH AND CASH EQUIVALENTS

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash

on hand and demand deposits, and short term highly liquid investments that are readily convertible into

known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity

of generally within three months when acquired.

For the purpose of the consolidated statement of financial position, cash and cash equivalents comprise

cash on hand and at banks, including term deposits, which are not restricted as to use.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

198

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NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

PROVISIONS

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a

past event and it is probable that a future outflow of resources will be required to settle the obligation,

provided that a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognised for a provision is the present value

at the end of the reporting period of the future expenditures expected to be required to settle the

obligation. The increase in the discounted present value amount arising from the passage of time is

included in finance costs in the statement of profit or loss.

The Group provides for warranties in relation to the sale of certain products for general repair of

defected occurring during the warranty period. Provisions for these assurance-type warranties granted

by the Group are recognised based on sales volume and past experience of the level of repairs and

returns, discounted to their present values as appropriate.

A contingent liability recognised in a business combination is initially measured at its fair value.

Subsequently, it is measured at the higher of (i) the amount that would be recognised in accordance with

the general policy for provisions above; and (ii) the amount initially recognised less, when appropriate,

the cumulative amount of income recognised in accordance with the policy for revenue recognition.

INCOME TAX

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or

loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid

to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively

enacted by the end of the reporting period, taking into consideration interpretations and practices

prevailing in the countries in which the Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of the

reporting period between the tax bases of assets and liabilities and their carrying amounts for financial

reporting purposes.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 199

Annual Report 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

INCOME TAX (Continued)

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• when the deferred tax liability arises from the initial recognition of an asset or liability in a

transaction that is not a business combination and, at the time of the transaction, affects neither the

accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, joint

ventures and an associate when the timing of the reversal of the temporary differences can be

controlled and it is probable that the temporary differences will not reverse in the foreseeable

future.

Deferred tax assets are recognised for all deductible temporary differences, and the carryforward of

unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is

probable that taxable profit will be available against which the deductible temporary differences, and

the carryforward of unused tax credits and unused tax losses can be utilised, except:

• when the deferred tax asset relating to the deductible temporary differences arises from the initial

recognition of an asset or liability in a transaction that is not a business combination and, at the time

of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, joint

ventures and an associate, deferred tax assets are only recognised to the extent that it is probable

that the temporary differences will reverse in the foreseeable future and taxable profit will be

available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced

to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or

part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end

of each reporting period and are recognised to the extent that it has become probable that sufficient

taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period

when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been

enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable

right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax

liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity

or different taxable entities which intend either to settle current tax liabilities and assets on a net basis,

or to realise the assets and settle the liabilities simultaneously, in each future period in which significant

amounts of deferred tax liabilities or assets are expected to be settled or recovered.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

200

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

GOVERNMENT GRANTS

Government grants are recognised at their fair value where there is reasonable assurance that the grant

will be received and all attaching conditions will be complied with. When the grant relates to an expense

item, it is recognised as income or deduction of expense on a systematic basis over the periods that the

costs, for which it is intended to compensate, are expensed.

REVENUE RECOGNITION

Revenue from contracts with customers

Revenue from contracts with customers is recognised when control of goods or services is transferred

to the customers at an amount that reflects the consideration to which the Group expects to be entitled

in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated

to which the Group will be entitled in exchange for transferring the goods or services to the customer.

The variable consideration is estimated at contract inception and constrained until it is highly probable

that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when

the associated uncertainty with the variable consideration is subsequently resolved.

When the contract contains a financing component which provides the customer with a significant

benefit of financing the transfer of goods or services to the customer for more than one year, revenue

is measured at the present value of the amount receivable, discounted using the discount rate that

would be reflected in a separate financing transaction between the Group and the customer at contract

inception. When the contract contains a financing component which provides the Group with a

significant financial benefit for more than one year, revenue recognised under the contract includes the

interest expense accreted on the contract liability under the effective interest method. For a contract

where the period between the payment by the customer and the transfer of the promised goods or

services is one year or less, the transaction price is not adjusted for the effects of a significant financing

component, using the practical expedient in IFRS 15.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 201

Annual Report 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

REVENUE RECOGNITION (Continued)

Revenue from contracts with customers (Continued)

(a) Sale of goods

Revenue from the sale of goods is recognised at the point in time when control of the asset is

transferred to the customer, generally on delivery of the goods.

Some contracts for the sale of goods provide customers with rights of return and volume rebates.

The rights of return and volume rebates give rise to variable consideration.

(i) Rights of return

For contracts which provide a customer with a right to return the goods within a specified

period, the expected value method is used to estimate the goods that will not be returned

because this method best predicts the amount of variable consideration to which the Group will

be entitled. The requirements in IFRS 15 on constraining estimates of variable consideration are

applied in order to determine the amount of variable consideration that can be included in the

transaction price.

(ii) Volume rebates

Retrospective volume rebates may be provided to certain customers once the quantity of

products purchased during the period exceeds a threshold specified in the contract. Rebates

are offset against amounts payable by the customer. To estimate the variable consideration

for the expected future rebates, the most likely amount method is used for contracts with a

single-volume threshold and the expected value method for contracts with more than one

volume threshold. The selected method that best predicts the amount of variable consideration

is primarily driven by the number of volume thresholds contained in the contract. The

requirements on constraining estimates of variable consideration are applied and a refund

liability for the expected future rebates is recognised.

(b) Rendering of testing services

Revenue from the rendering of testing services is recognised at the point in time when the service is

rendered.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

202

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

REVENUE RECOGNITION (Continued)

Other income

Interest income is recognised on an accrual basis using the effective interest method by applying the

rate that exactly discounts the estimated future cash receipts over the expected life of the financial

instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Dividend income is recognised when the shareholders’ right to receive payment has been established, it is

probable that the economic benefits associated with the dividend will flow to the Group and the amount

of the dividend can be measured reliably.

CONTRACT LIABILITIES

A contract liability is recognised when a payment is received or a payment is due (whichever is earlier)

from a customer before the Group transfers the related goods or services. Contract liabilities are

recognised as revenue when the Group performs under the contract (i.e., transfers control of the related

goods or services to the customer).

SHARE-BASED PAYMENTS

The Company operates a share option scheme for the purpose of providing incentives and rewards to

eligible participants who contribute to the success of the Group’s operations. Employees (including

directors) of the Group receive remuneration in the form of share-based payments, whereby employees

render services in exchange for equity instruments (“equity-settled transactions”).

The cost of equity-settled transactions with employees is measured by reference to the fair value at

the date at which they are granted. The fair value is determined by an external valuer using a binomial

model, further details of which are given in note 32 to the financial statements.

The cost of equity-settled transactions is recognised in employee benefit expense, together with a

corresponding increase in equity, over the period in which the performance and/or service conditions

are fulfilled. The cumulative expense recognised for equity-settled transactions at the end of each

reporting period until the vesting date reflects the extent to which the vesting period has expired and

the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or

credit to the statement of profit or loss for a period represents the movement in the cumulative expense

recognised as at the beginning and end of that period. Where shares are forfeited due to a failure by the

employee to satisfy the service conditions, any expenses previously recognised in relation to such shares

are reversed effective the date of the forfeiture.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 203

Annual Report 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

SHARE-BASED PAYMENTS (Continued)

Service and non-market performance conditions are not taken into account when determining the

grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the

Group’s best estimate of the number of equity instruments that will ultimately vest. Market performance

conditions are reflected within the grant date fair value. Any other conditions attached to an award, but

without an associated service requirement, are considered to be non-vesting conditions. Non-vesting

conditions are reflected in the fair value of an award and lead to an immediate expensing of an award

unless there are also service and/or performance conditions.

For awards that do not ultimately vest because non-market performance and/or service conditions

have not been met, no expense is recognised. Where awards include a market or non-vesting condition,

the transactions are treated as vesting irrespective of whether the market or non-vesting condition is

satisfied, provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if

the terms had not been modified, if the original terms of the award are met. In addition, an expense is

recognised for any modification that increases the total fair value of the share-based payments, or is

otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation,

and any expense not yet recognised for the award is recognised immediately. This includes any award

where non-vesting conditions within the control of either the Group or the employee are not met.

However, if a new award is substituted for the cancelled award, and is designated as a replacement

award on the date that it is granted, the cancelled and new awards are treated as if they were a

modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of

earnings per share.

OTHER EMPLOYEE BENEFITS

Retirement benefits

Pursuant to the relevant regulations, the Group’s subsidiaries which operate in Mainland China participate

in a local municipal government retirement benefit scheme, whereby the Group is required to contribute

a certain percentage of the basic salaries of their employees to the scheme to fund the retirement

benefits. The local municipal government undertakes to assume the retirement benefit obligations of all

existing and future retired employees of the Group. The only obligation of the Group with respect to the

scheme is to pay the ongoing required contributions under the scheme mentioned above. Contributions

under the scheme are charged to the statement of profit or loss as incurred. There are no provisions

under the scheme whereby forfeited contributions may be used to reduce future contributions.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

204

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

OTHER EMPLOYEE BENEFITS (Continued)

Pension schemes

The Group operates a defined contribution Mandatory Provident Fund retirement benefit scheme (the

“MPF Scheme”) under the Mandatory Provident Fund Schemes Ordinance for all of its employees.

Contributions are made based on a percentage of the employees’ basic salaries and are charged to the

statement of profit or loss as they become payable in accordance with the rules of the MPF Scheme. The

assets of the MPF Scheme are held separately from those of the Group in an independently administered

fund. The Group’s employer contributions vest fully with the employees when contributed into the MPF

Scheme.

The employees of the Group’s subsidiaries which operate in Mainland China are required to participate in

a central pension scheme operated by the local municipal government. These subsidiaries are required

to contribute part of its payroll costs to the central pension scheme. The contributions are charged

to the statement of profit or loss as they become payable in accordance with the rules of the central

pension scheme.

The Group’s U.S. operations and most other non-U.S. subsidiaries have separate defined contribution

plans. The purpose of these defined contribution plans is generally to provide additional financial

security during retirement by providing employees with an incentive to make regular savings. The

Group’s contributions to the plans are based on employee contributions or compensation.

Termination benefits

Termination benefits are recognised at the earlier of when the Group can no longer withdraw the offer of

those benefits and when the Group recognises restructuring costs involving the payment of termination

benefits.

Defined benefit plans

The costs of providing benefits under the defined benefit plans are determined using the projected unit

credit actuarial valuation method.

Remeasurements arising from defined benefit plans, comprising actuarial gains and losses, the effect of

the asset ceiling (excluding amounts included in net interest on the net defined benefit liability) and the

return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are

recognised immediately in the consolidated statement of financial position with a corresponding debit

or credit to retained profits through other comprehensive income in the period in which they occur.

Remeasurements are not reclassified to the consolidated profit or loss in subsequent periods.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 205

Annual Report 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

OTHER EMPLOYEE BENEFITS (Continued)

Defined benefit plans (Continued)

Past service costs are recognised in profit or loss at the earlier of:

• the date of the plan amendment or curtailment; and

• the date that the Group recognises restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The

Group recognises the following changes in the net defined benefit obligation under “cost of sales” and

“administrative expenses” in the consolidated statement of profit or loss by function:

• service costs comprising current service costs, past-service costs, gains and losses on curtailments

and non-routine settlements

• net interest expense or income

BORROWING COSTS

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,

i.e., assets that necessarily take a substantial period of time to get ready for their intended use or sale,

are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases

when the assets are substantially ready for their intended use or sale. Investment income earned on the

temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted

from the borrowing costs capitalised. All other borrowing costs are expensed in the period in which they

are incurred.

Borrowing costs consist of interest and other costs that an entity incurs in connection with the

borrowing of funds.

DIVIDENDS

Final dividends are recognised as a liability when they are approved by the shareholders in a general

meeting. The Board did not recommend the payment of any dividend for the years ended 31 December

2022 and 2021.

Interim dividends are simultaneously proposed and declared, because the Company’s memorandum

and articles of association grant the directors the authority to declare interim dividends. Consequently,

interim dividends are recognised immediately as a liability when they are proposed and declared.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

206

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

FOREIGN CURRENCIES

These financial statements are presented in HK$, which is the Company’s functional currency. Each

entity in the Group determines its own functional currency and items included in the financial statements

of each entity are measured using that functional currency. Foreign currency transactions recorded by

the entities in the Group are initially recorded using their respective functional currency rates prevailing

at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are

translated at the functional currency rates of exchange ruling at the end of the reporting period.

Differences arising on settlement or translation of monetary items are recognised in the statement of

profit or loss with the exception of monetary items that are designated as part of the hedge of the

Group’s net investment of a foreign operation. These are recognised in other comprehensive income until

the net investment is disposed of, at which time the cumulative amount is reclassified to the statement

of profit or loss. Tax charges and credits attributable to exchange differences on those monetary items

are also recorded in other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated

using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair

value in a foreign currency are translated using the exchange rates at the date when the fair value

was measured. The gain or loss arising on translation of a non-monetary item measured at fair value is

treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation

difference on the item whose fair value gain or loss is recognised in other comprehensive income or

profit or loss is also recognised in other comprehensive income or profit or loss, respectively).

In determining the exchange rate on initial recognition of the related asset, expense or income on the

derecognition of a non-monetary asset or non-monetary liability relating to an advance consideration,

the date of initial transaction is the date on which the Group initially recognises the non-monetary

asset or non-monetary liability arising from the advance consideration. If there are multiple payments

or receipts in advance, the Group determines the transaction date for each payment or receipt of the

advance consideration.

The functional currencies of certain overseas subsidiaries and a joint venture are currencies other than

the HK$. As at the end of the reporting period, the assets and liabilities of these entities are translated

into the presentation currency of the Company at the exchange rates prevailing at the end of the

reporting period and their statements of profit or loss are translated into HK$ at the exchange rates that

approximate to those prevailing at the dates of the transactions.

The resulting exchange differences are recognised in other comprehensive income and accumulated

in the cumulative exchange realignment. On disposal of a foreign operation, the component of other

comprehensive income relating to that particular foreign operation is recognised in the statement of

profit or loss.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 207

Annual Report 2022

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

FOREIGN CURRENCIES (Continued)

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the

carrying amounts of assets and liabilities arising on acquisition are treated as assets and liabilities of the

foreign operation and translated at the closing rate.

For the purpose of the consolidated statement of cash flows, the cash flows of overseas subsidiaries

and a joint venture are translated into HK$ at the exchange rates ruling at the dates of the cash flows.

Frequently recurring cash flows of overseas subsidiaries and a joint venture which arise throughout the

year are translated into HK$ at the weighted average exchange rates for the year.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group’s financial statements requires management to make judgements, estimates

and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and

their accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these

assumptions and estimates could result in outcomes that could require a material adjustment to the

carrying amounts of the assets or liabilities affected in the future.

JUDGEMENTS

Significant judgement in determining the lease term of contracts with renewal options

The Group has several lease contracts that include extension and termination options. The Group

applies judgement in evaluating whether or not to exercise the option to renew or terminate the lease.

That is, it considers all relevant factors that create an economic incentive for it to exercise either the

renewal or termination. After the commencement date, the Group reassesses the lease term if there is a

significant event or change in circumstances that is within its control and affects its ability to exercise or

not to exercise the option to renew or to terminate the lease (e.g., construction of significant leasehold

improvements or significant customisation to the leased asset).

ESTIMATION UNCERTAINTY

The key assumptions concerning the future and other key sources of estimation uncertainty at the end

of the reporting period, that have a significant risk of causing a material adjustment to the carrying

amounts of assets and liabilities within the next financial year are described below.

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation

of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in

use requires the Group to make an estimate of the expected future cash flows from the cash-generating

units and also to choose suitable discount rates in order to calculate the present value of those cash

flows. The carrying amount of goodwill as at 31 December 2022 was approximately HK$2,631,379,000

(2021: HK$2,812,866,000). Further details are given in note 16.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

208

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued)

ESTIMATION UNCERTAINTY (Continued)

Provision for expected credit losses on trade receivables

The Group uses a provision matrix to calculate ECLs for trade receivables. The provision rates are based

on days past due for groupings of various customer segments that have similar loss patterns (i.e., by

geography, product type, customer type and rating, and coverage by letters of credit and other forms of

credit insurance).

The provision matrix is initially based on the Group’s historical observed default rates. The Group will

calibrate the matrix to adjust the historical credit loss experience with forward-looking information.

For instance, if forecast economic conditions (i.e., gross domestic product) are expected to deteriorate

over the next year which can lead to an increased number of defaults in the manufacturing sector, the

historical default rates are adjusted. At each reporting date, the historical observed default rates are

updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation among historical observed default rates, forecast economic conditions

and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and

forecast economic conditions. The Group’s historical credit loss experience and forecast of economic

conditions may also not be representative of a customer’s actual default in the future. The information

about the ECLs on the Group’s trade receivables is disclosed in note 20 to the financial statements.

Impairment of non-financial assets (other than goodwill)

The Group assesses whether there are any indicators of impairment for all non-financial assets (including

the right-of-use assets) at the end of each reporting period. Indefinite life intangible assets are tested

for impairment annually and at other times when such an indicator exists. Other non-financial assets are

tested for impairment when there are indicators that the carrying amounts may not be recoverable. An

impairment exists when the carrying value of an asset or a cash-generating unit exceeds its recoverable

amount, which is the higher of its fair value less costs of disposal and its value in use. The calculation of

the fair value less costs of disposal is based on available data from binding sales transactions in an arm’s

length transaction of similar assets or observable market prices less incremental costs for disposing

of the asset. When value in use calculations are undertaken, management must estimate the expected

future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to

calculate the present value of those cash flows.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 209

Annual Report 2022

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued)

ESTIMATION UNCERTAINTY (Continued)

Leases – Estimating the incremental borrowing rate

The Group cannot readily determine the interest rate implicit in a lease, and therefore, it uses an

incremental borrowing rate (“IBR”) to measure lease liabilities. The IBR is the rate of interest that the

Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary

to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR

therefore reflects what the Group “would have to pay”, which requires estimation when no observable

rates are available (such as for subsidiaries that do not enter into financing transactions) or when it

needs to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not

in the subsidiary’s functional currency). The Group estimates the IBR using observable inputs (such as

market interest rates) when available and is required to make certain entity-specific estimates (such as

the subsidiary’s stand-alone credit rating).

Deferred tax assets

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable

profit will be available against which the losses can be utilised. Significant management judgement

is required to determine the amount of deferred tax assets that can be recognised, based upon the

likely timing and the level of future taxable profits together with future tax planning strategies. The

carrying value of deferred tax assets relating to recognised tax losses at 31 December 2022 was

HK$78,971,000 (2021: HK$29,616,000). The amount of unrecognised tax losses at 31 December 2022 was

HK$45,673,000 (2021: HK$23,568,000). Details of unrecognised tax losses as at the end of the reporting

period are contained in note 29.

Write-down of inventories

The Group’s inventories are stated at the lower of cost and net realisable value. The Group writes down

its inventories based on estimates of the realisable value with reference to the age and conditions of

the inventories, together with the economic circumstances on the marketability of such inventories.

Inventories will be reviewed annually for write-down, if appropriate.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

210

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued)

ESTIMATION UNCERTAINTY (Continued)

Useful lives and residual values of items of property, plant and equipment

In determining the useful lives and residual values of items of property, plant and equipment, the Group

has to consider various factors, such as technical or commercial obsolescence arising from changes or

improvements in the production and provision of services, or from a change in the market demand for

the product or service output of the asset, expected usage of the asset, expected physical wear and

tear, care and maintenance of the asset, and legal or similar limits on the use of the asset. The estimation

of the useful life of the asset is based on the experience of the Group with similar assets that are used

in a similar way. Additional depreciation is made if the estimated useful lives and/or residual values of

items of property, plant and equipment are different from previous estimation. Useful lives and residual

values are reviewed at the end of each of the year based on changes in circumstances. Further details of

the property, plant and equipment are set out in note 14 to the consolidated financial statements.

Provisions

Provisions for product warranties granted by the Group on its products are recognised based on sales

volume and past experience of the level of repairs and returns, discounted to their present values as

appropriate.

The Group also makes provision for product liabilities which is based on estimated future costs to be

incurred in claims. There are significant estimates included in the projection, which are the discount rate

used and assessment on the possibility of outcome of the claims based on historical experience.

Defined benefit plans

The Group operates and maintains defined retirement benefit plans. The cost of providing the benefits in

the defined retirement benefit plans is actuarially determined by utilising various actuarial assumptions

and using the projected unit credit method. These assumptions include, without limitation, the selection

of discount rates and healthcare trend rates.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 211

Annual Report 2022

4. OPERATING SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their products and

services and has four reportable operating segments as follows:

(a) the strollers and accessories segment, which engages in the research, design, manufacture and sale

of strollers and accessories under the Group’s own brands and third parties’ brands;

(b) the car seats and accessories segment, which engages in the research, design, manufacture and sale

of car seats and accessories under the Group’s own brands and third parties’ brands;

and home textile products; and

(d) the “others” segment, which engages in the research, design, manufacture and sale of other

children’s products under the Group’s own brands and third parties’ brands.

Management monitors the results of the Group’s operating segments separately for the purpose of

making decisions about resource allocation and performance assessment. Segment performance is

evaluated based on reportable segment revenue.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

212

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

4. OPERATING SEGMENT INFORMATION (Continued)

Year ended 31 December 2022

Strollers and

accessories

Car seats and

accessories

Non-durable

products

Others

Consolidated

(HK$’000)

Segment revenue

Sales to external customers 3,313,938 3,190,042 799,695 988,477 8,292,152

Segment results 1,383,169 1,312,367 396,174 264,171 3,355,881

Other income and gains 165,429

Corporate and other unallocated expenses (3,429,044)

Other expenses (2,437)

Finance income 42,971

Finance costs (other than interest on lease liabilities) (126,901)

Share of profits and losses of joint ventures (4,621)

Share of profits and losses of an associate (85)

Profit before tax 1,193

Other segment information:

Impairment losses recognised in the statement of

profit or loss, net

7,881 4,584 3,500 1,413 17,378

Depreciation and amortisation 207,428 184,493 46,129 44,024 482,074

NOTES TO FINANCIAL STATEMENTS

GOODBABY 213

Annual Report 2022

4. OPERATING SEGMENT INFORMATION (Continued)

Year ended 31 December 2021

Strollers and

accessories

Car seats and

accessories

Non-durable

products

Others

Consolidated

(HK$’000)

Segment revenue

Sales to external customers 3,704,420 3,230,932 1,393,976 1,362,809 9,692,137

Segment results 1,593,134 1,396,589 615,444 390,061 3,995,228

Other income and gains 80,800

Corporate and other unallocated expenses (3,911,977)

Other expenses (7,266)

Finance income 35,074

Finance costs (other than interest on lease liabilities) (81,316)

Share of profits and losses of joint ventures 1,277

Share of profits and losses of an associate (8)

Profit before tax 111,812

Other segment information:

Impairment losses recognised in the statement of

profit or loss, net 883 2,844 4,262 (575) 7,414

Depreciation and amortisation 197,267 189,596 62,302 51,183 500,348

GOODBABY

NOTES TO FINANCIAL STATEMENTS

214

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

4. OPERATING SEGMENT INFORMATION (Continued)

GEOGRAPHICAL INFORMATION

(a) Revenue from external customers

European

market

North America

market

Mainland China

market

Other overseas

markets

Total

(HK$’000)

Year ended 31 December 2022

Segment revenue:

Sales to external customers 3,124,784 3,011,209 1,616,200 539,959 8,292,152

Year ended 31 December 2021

Segment revenue:

Sales to external customers 3,526,418 3,148,253 2,515,295 502,171 9,692,137

The revenue information above is based on the locations of the customers.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 215

Annual Report 2022

4. OPERATING SEGMENT INFORMATION (Continued)

GEOGRAPHICAL INFORMATION (Continued)

(b) Non-current assets

2022

2021

(HK$’000)

Mainland China 5,156,734 5,536,212

North America 1,016,219 989,234

Europe 993,336 1,089,176

7,166,289 7,614,622

The non-current asset information above is based on the locations of the assets excluding deferred

tax assets, other non-current assets, investments in joint ventures and an investment in an associate.

INFORMATION ABOUT TWO MAJOR CUSTOMERS

During the year ended 31 December 2022, revenue from sales to the two major third-party customers

were HK$982,117,000 and HK$942,188,000, respectively (2021: one major customer amounting to

HK$979,716,000). The revenue from sales to the customers were derived from sales by the strollers and

accessories, car seats and accessories and others segments, including sales to a group of entities which

are known to be under common control with the customers.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

216

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

5. REVENUE, OTHER INCOME AND GAINS

An analysis of revenue is as follows:

2022

2021

(HK$’000)

Revenue from contracts with customers

Sale of goods 8,258,811 9,657,536

Rendering of testing services 33,341 34,601

8,292,152 9,692,137

REVENUE FROM CONTRACTS WITH CUSTOMERS

(i) Disaggregated revenue information

For the year ended 31 December 2022

Segments

Strollers and accessories

Car seats and accessories

Non-durable products

Others

Total

HK$’000

Type of goods or services

Sale of goods 3,313,938 3,190,042 799,695 955,136 8,258,811

Rendering of testing services – – – 33,341 33,341

Total revenue from contracts with customers 3,313,938 3,190,042 799,695 988,477 8,292,152

Timing of revenue recognition

Goods transferred at a point in time 3,313,938 3,190,042 799,695 955,136 8,258,811

Services transferred at a point in time – – – 33,341 33,341

Total revenue from contracts with customers 3,313,938 3,190,042 799,695 988,477 8,292,152

Revenue from contracts with customers

External customers 3,313,938 3,190,042 799,695 988,477 8,292,152

NOTES TO FINANCIAL STATEMENTS

GOODBABY 217

Annual Report 2022

5. REVENUE, OTHER INCOME AND GAINS (Continued)

REVENUE FROM CONTRACTS WITH CUSTOMERS (Continued)

(i) Disaggregated revenue information (Continued)

For the year ended 31 December 2021

Segments

Strollers and accessories

Car seats and accessories

Non-durable products

Others

Total

HK$’000

Type of goods or services

Sale of goods 3,704,420 3,230,932 1,393,976 1,328,208 9,657,536

Rendering of testing services – – – 34,601 34,601

Total revenue from contracts with customers 3,704,420 3,230,932 1,393,976 1,362,809 9,692,137

Timing of revenue recognition

Goods transferred at a point in time 3,704,420 3,230,932 1,393,976 1,328,208 9,657,536

Services transferred at a point in time – – – 34,601 34,601

Total revenue from contracts with customers 3,704,420 3,230,932 1,393,976 1,362,809 9,692,137

Revenue from contracts with customers

External customers 3,704,420 3,230,932 1,393,976 1,362,809 9,692,137

GOODBABY

NOTES TO FINANCIAL STATEMENTS

218

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

5. REVENUE, OTHER INCOME AND GAINS (Continued)

REVENUE FROM CONTRACTS WITH CUSTOMERS (Continued)

(i) Disaggregated revenue information (Continued)

The following table shows the amounts of revenue recognised in the current reporting period that

were included in the contract liabilities at the beginning of the reporting period and recognised from

performance obligations satisfied in previous periods:

2022

2021

(HK$’000)

Revenue recognised that was included in contract liabilities at the beginning of the reporting period:

Sale of goods 124,755 146,226

(ii) Performance obligations

Information about the Group’s performance obligations is summarised below:

Sale of goods

The performance obligation is satisfied upon delivery of goods and payment is generally due with

90 days from delivery.

Rendering of testing services

The performance obligation is satisfied upon completion of service and short-term advances are

normally required before rendering the services.

The transaction prices allocated to the remaining performance obligations (unsatisfied or partially

satisfied) as at 31 December 2022 are as follows:

2022

2021

(HK$’000)

Amounts expected to be recognised as revenue:

Within one year 122,868 124,755

All the remaining performance obligations are expected to be satisfied within one year.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 219

Annual Report 2022

5. REVENUE, OTHER INCOME AND GAINS (Continued)

OTHER INCOME AND GAINS

2022

2021

(HK$’000)

Other income and gains:

Government grants (note (a)) 43,513 53,144

Net foreign exchange gain 41,987 –

Gain on disposal of fixed assets (note (b)) 22,342 –

Gain on sales of scrap materials (note (c)) 10,518 10,890

Compensation income (note (d)) 9,711 7,225

Service fee income 6,660 1,344

Fair value gains, net:

Gains on call/put options over non-controlling interests 10,010 2,640

Derivative instruments – transactions not qualifying as hedges 12,470 1,249

Gain on wealth investment products 103 841

Others 8,115 3,467

Total 165,429 80,800

Note (a): The amount represents subsidies received from local government authorities in connection with certain

financial support to local business enterprises. These government subsidies mainly comprised subsidies for

export activities, subsidies for development and other miscellaneous subsidies and incentives for various

purposes.

Note (b): The amount represents the gain on disposal of building, machinery and other fixed assets.

Note (c): The amount represents the gain on sales of aluminium, plastics, cloth and other scrap materials.

Note (d): The amount represents the compensation received from customers due to cancellation of orders and suppliers

as a result of defective products or shipment delay in the normal course of business.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

220

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

6. FINANCE INCOME

2022

2021

(HK$’000)

Interest income on bank deposits 42,971 35,074

7. FINANCE COSTS

2022

2021

(HK$’000)

Interest on bank loans, overdrafts and other loans 126,901 81,316

Interest on lease liabilities 11,005 9,278

137,906 90,594

NOTES TO FINANCIAL STATEMENTS

GOODBABY 221

Annual Report 2022

8. PROFIT BEFORE TAX

The Group’s profit before tax is arrived at after charging/(crediting):

Notes

2022

2021

(HK$’000)

Cost of inventories sold 4,918,149 5,681,016

Cost of services provided 18,122 15,893

Depreciation of property, plant and equipment 14 298,236 304,586

Depreciation of right-of-use assets 15(a) 117,284 130,443

Amortisation of intangible assets 17 66,554 65,319

Research and development costs 406,964 418,866

Lease payments not included in the measurement of lease liabilities 15(c) 26,487 32,861

Auditors’ remuneration 9,182 9,072

Employee benefit expense (including directors’ remuneration):

Wages, salaries and other benefits 1,686,616 1,728,891

Share option expense 15,187 35,540

Pension scheme costs (defined benefit plans) (including administrative expense) 89 89

Pension scheme contributions* 100,617 100,989

1,802,509 1,865,509

Net foreign exchange (gain)/loss (41,987) 4,861

Impairment of trade receivables 20 9,346 4,474

Provision of inventories 8,032 2,940

Product warranties and liabilities 45,253 85,246

Fair value gains, net:

Derivative instruments – transactions not qualifying as hedges (12,470) (1,249)

Gains on call/put options over non-controlling interests (10,010) (2,640)

Gain on wealth investment products (103) (841)

(Gain)/loss on disposal of items of property, plant and equipment (22,342) 114

Loss on disposal of intangible assets 49 200

Bank interest income (42,971) (35,074)

* There are no forfeited contributions that may be used by the Group as the employer to reduce the existing level of

contributions.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

222

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

9. DIRECTORS’ REMUNERATION

Directors’ and chief executive’s remuneration for the year, disclosed pursuant to the Listing Rules,

section 383(1)(a), (b), (c) and (f) of the Hong Kong Companies Ordinance and Part 2 of the Companies

(Disclosure of Information about Benefits of Directors) Regulation, is as follows:

2022

2021

(HK$’000)

Fees 3,121 3,770

Other emoluments:

Salaries, allowances and benefits in kind 26,557 28,292

Performance-related bonuses 17 8,686

Equity-settled share option expenses 10,112 19,982

Pension scheme contributions 408 360

37,094 57,320

40,215 61,090

(A) INDEPENDENT NON-EXECUTIVE DIRECTORS

The fees paid to independent non-executive directors during the year were as follows:

2022

2021

(HK$’000)

Chiang Yun 408 311

Shi Xiaoguang 313 311

Jin Peng 235 233

Iain Ferguson Bruce 196 466

So Tak Young 190 –

1,342 1,321

There were no other emoluments payable to the independent non-executive directors in 2022 (2021:

Nil).

NOTES TO FINANCIAL STATEMENTS

GOODBABY 223

Annual Report 2022

9. DIRECTORS’ REMUNERATION (Continued)

(B) EXECUTIVE DIRECTORS AND NON-EXECUTIVE DIRECTORS

2022

Fees

Salaries,

allowances and

benefits in kind

Performance-

related bonuses

Equity-settled

share option

expenses

Pension scheme

contributions

Total

remuneration

(HK$’000)

Executive directors:

Song Zhenghuan – 3,479 – – – 3,479

Michael, Qu Nan – 3,256 17 635 98 4,006

Martin Pos – 11,909 – 5,468 – 17,377

Liu Tongyou – 3,982 – 801 155 4,938

Xia Xinyue – 3,931 – 3,125 155 7,211

– 26,557 17 10,029 408 37,011

Non-executive directors:

Eric, Ho Kwok Yin 235 – – – – 235

Fu Jinqiu 1,544 – – 83 – 1,627

1,779 – – 83 – 1,862

GOODBABY

NOTES TO FINANCIAL STATEMENTS

224

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

9. DIRECTORS’ REMUNERATION (Continued)

(B) EXECUTIVE DIRECTORS AND NON-EXECUTIVE DIRECTORS (Continued)

2021

Fees

Salaries,

allowances and

benefits in kind

Performance-

related bonuses

Equity-settled

share option

expenses

Pension scheme

contributions

Total

remuneration

(HK$’000)

Executive directors:

Song Zhenghuan – 3,606 – – – 3,606

Michael, Qu Nan – 3,232 768 752 68 4,820

Martin Pos – 13,253 5,522 11,500 – 30,275

Liu Tongyou – 4,127 1,008 948 146 6,229

Xia Xinyue – 4,074 1,388 6,571 146 12,179

– 28,292 8,686 19,771 360 57,109

Non-executive directors:

Eric, Ho Kwok Yin 661 – – 113 – 774

Fu Jinqiu 1,788 – – 98 – 1,886

2,449 – – 211 – 2,660

NOTES TO FINANCIAL STATEMENTS

GOODBABY 225

Annual Report 2022

10. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees during the year included three directors (2021: three), details of whose

remuneration are set out in note 9 above. Details of the remuneration of the remaining two (2021: two)

non-directors, highest paid employees for the year are as follows:

2022

2021

(HK$’000)

Salaries, allowances and benefits in kind 8,854 9,791

Performance related bonuses 1,323 1,942

Pension scheme contributions 264 260

10,441 11,993

The number of non-directors, highest paid employees whose remuneration fell within the following

bands is as follows:

Number of employees

2022

2021

HK$4,000,001 to HK$4,500,000 11

HK$6,000,001 to HK$7,000,000 1–

HK$7,000,001 to HK$8,000,000 –1

No amounts were paid by the Group to of the directors or highest paid employees as an inducement to

join or upon joining the Group or as compensation for loss of office (2021: None).

11. INCOME TAX

The Company and its subsidiaries incorporated in the Cayman Islands and the British Virgin Islands

(“BVI”), respectively, are exempted from taxation.

Hong Kong profits tax has been provided at the rate of 16.5% (2021: 16.5%) on the estimated assessable

profits arising in Hong Kong during the year, except for one subsidiary of the Group which is a qualifying

entity under the two-tiered profits tax rates regime. The first HK$2,000,000 (2021: HK$2,000,000) of

assessable profits of this subsidiary are taxed at 8.25% and the remaining assessable profits are taxed at

16.5%.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

226

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

11. INCOME TAX (Continued)

State income tax and federal income tax of the Group’s subsidiary in the United States have been

provided for at the rates of state income tax and federal income tax on the estimated assessable profits

of the subsidiary during the year. The state income tax rates are 1% to 12% in the respective states in

which the subsidiary operates, and the federal income tax rate was lowered to 21% effective from 1

January 2018, as a result of U.S. tax reform enacted in December 2017.

The Group’s subsidiary registered in Japan is subject to income tax based on the taxable income at rates

ranging from 15% to 23.2% on a progressive basis.

The Group’s subsidiaries registered in Germany are subject to corporation tax based on the taxable

income at the rate of 15.825% and trade income tax on the taxable income at rates ranging from 12.95%

to 17%.

The Group’s subsidiaries registered in Denmark are subject to income tax based on the taxable income

at the rate of 22%.

The Group’s subsidiary registered in the Czech Republic is subject to income tax based on the taxable

income at the rate of 19%.

The Group’s subsidiary registered in Canada is subject to Federal income tax based on the taxable

income at the rate of 15% and provincial and territorial income tax at rates ranging from 8% to 16%.

The Group’s subsidiary registered in the United Arab Emirates is subject to income tax at the rate of 0%.

However, the federal UAE CIT will be introduced from June 2023. The standard tax rate is 9%.

All of the Group’s subsidiaries registered in the People’s Republic of China (the “PRC”), which only have

operations in Mainland China, are subject to PRC enterprise income tax (“EIT”) on the taxable income as

reported in their PRC statutory accounts adjusted in accordance with relevant PRC income tax laws, at

the rate of 25%.

Pursuant to relevant tax rules under the EIT Law and with the approval from the relevant tax authorities

in the PRC, two of the Group’s subsidiaries, Goodbaby Child Products Co., Ltd. (“GCPC”) and EQO

Testing and Certification Services Co., Ltd. (“EQTC”), are qualified as “High and New Technology

Enterprises” and are entitled to a preferential tax rate of 15% from 2020 to 2022.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 227

Annual Report 2022

11. INCOME TAX (Continued)

The major components of income tax expense of the Group are as follows:

2022

2021

(HK$’000)

Current – income tax

Charge for the year 48,366 38,516

Deferred income tax (note 29) (87,301) (54,265)

Income tax credit reported in the statement of profit or loss (38,935) (15,749)

A reconciliation of the tax expense applicable to profit before tax at the statutory rates to the tax

expense at the effective tax rates for the year is as follows:

2022

2021

(HK$’000)

Profit before tax 1,193 111,812

Expected income tax based on different rates applicable to profits in the countries covered (10,921) 3,782

Temporary difference and tax losses utilized from prior years (15,152) –

Temporary difference and tax losses not recognised 4,371 4,115

Tax credit arising from additional deduction of R&D expenditures of PRC subsidiaries (14,910) (29,140)

Tax effect on non-taxable income (11,141) (1,164)

Tax effect on non-deductible expenses 8,818 6,658

Income tax credit (38,935) (15,749)

12. DIVIDENDS

The Board did not recommend the payment of any dividend for the years ended 31 December 2022 and

2021.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

228

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

13. EARNINGS PER SHARE

The calculation of basic earnings per share is based on the profit for the year attributable to ordinary

equity holders of the parent, and the weighted average number of ordinary shares of 1,668,031,166 in issue

during the year (2021: 1,668,027,659).

The calculation of the diluted earnings per share amount is based on the profit for the year attributable

to ordinary equity holders of the parent. The weighted average number of ordinary shares used in the

calculation is the number of ordinary shares in issue during the year, as used in the basic earnings per

share calculation, and the weighted average number of ordinary shares assumed to have been issued

at no consideration on the deemed exercise or conversion of all dilutive potential ordinary shares into

ordinary shares.

The calculation of earnings per share is based on:

2022

2021

(HK$’000)

Earnings

Profit attributable to ordinary equity holders of the parent, used in the basic earnings per share calculation 33,487 123,817

Number of shares

2022

2021

Weighted average number of ordinary shares in issue during the year used in the basic earnings per share calculation 1,668,031,166 1,668,027,659

Effect of dilution – weighted average number of ordinary shares:

Share options – 1,738,426

Total 1,668,031,166 1,669,766,085

NOTES TO FINANCIAL STATEMENTS

GOODBABY 229

Annual Report 2022

14. PROPERTY, PLANT AND EQUIPMENT

31 DECEMBER 2022

Buildings and land

Plant and machinery

Motor vehicles

Furniture and fixtures

Leasehold improvements

Construction in progress

Total

(HK$’000)

At 31 December 2021 and at 1 January 2022:

Cost 647,267 1,303,059 25,086 375,930 327,761 87,358 2,766,461

Accumulated depreciation and impairment (427,570) (871,929) (18,283) (251,897) (165,151) – (1,734,830)

Net carrying amount 219,697 431,130 6,803 124,033 162,610 87,358 1,031,631

At 1 January 2022, net of accumulated depreciation 219,697 431,130 6,803 124,033 162,610 87,358 1,031,631

Additions 5,374 46,087 36 34,192 126,802 118,659 331,150

Disposals (8,120) (287) (53) (871) (549) – (9,980)

Depreciation provided during the year (39,115) (129,435) (3,485) (50,628) (75,573) – (298,236)

Transfers 8,961 98,185 281 15,810 10,132 (133,369) –

Exchange realignment (12,261) (26,096) (369) (7,536) (16,696) (5,608) (68,566)

At 31 December 2022, net of accumulated

depreciation and impairment

174,536 419,584 3,213 115,000 206,726 67,040 986,099

At 31 December 2022:

Cost 596,979 1,333,220 22,682 382,844 426,842 67,040 2,829,607

Accumulated depreciation and impairment (422,443) (913,636) (19,469) (267,844) (220,116) – (1,843,508)

Net carrying amount 174,536 419,584 3,213 115,000 206,726 67,040 986,099

GOODBABY

NOTES TO FINANCIAL STATEMENTS

230

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

14. PROPERTY, PLANT AND EQUIPMENT (Continued)

31 DECEMBER 2021

Buildings and land

Plant and machinery

Motor vehicles

Furniture and fixtures

Leasehold improvements

Construction in progress

Total

(HK$’000)

At 31 December 2020 and at 1 January 2021:

Cost 628,895 1,265,590 23,745 545,931 301,499 61,489 2,827,149

Accumulated depreciation (379,271) (822,313) (15,890) (434,318) (141,872) – (1,793,664)

Net carrying amount 249,624 443,277 7,855 111,613 159,627 61,489 1,033,485

At 1 January 2021, net of accumulated depreciation 249,624 443,277 7,855 111,613 159,627 61,489 1,033,485

Additions 2,908 45,482 486 64,597 74,100 126,933 314,506

Disposals (167) (3,701) (53) (2,337) (2,822) (130) (9,210)

Depreciation provided during the year (39,721) (136,435) (2,649) (59,402) (66,379) – (304,586)

Transfers 4,461 82,919 931 13,146 750 (102,207) –

Exchange realignment 2,592 (412) 233 (3,584) (2,666) 1,273 (2,564)

At 31 December 2021, net of accumulated

depreciation and impairment

219,697 431,130 6,803 124,033 162,610 87,358 1,031,631

At 31 December 2021:

Cost 647,267 1,303,059 25,086 375,930 327,761 87,358 2,766,461

Accumulated depreciation and impairment (427,570) (871,929) (18,283) (251,897) (165,151) – (1,734,830)

Net carrying amount 219,697 431,130 6,803 124,033 162,610 87,358 1,031,631

At 31 December 2022, certain of the Group’s machinery with a net carrying amount of approximately

HK$2,347,000 (2021: HK$5,834,000) was pledged to secure a bank loan granted to the Group (note 28).

NOTES TO FINANCIAL STATEMENTS

GOODBABY 231

Annual Report 2022

15. LEASES

THE GROUP AS A LESSEE

The Group has lease contracts for various items of plant and machinery, motor vehicles and other

equipment used in its operations. Lump sum payments were made upfront to acquire the leased land

from the owners with lease periods of 10 to 50 years, and no ongoing payments will be made under the

terms of these land leases. Leases of plant and machinery generally have lease terms between 3 and 6

years. Buildings generally have lease term between 1 and 10 years. Furniture and fixtures generally have

lease terms between 2 and 5 years, while motor vehicles generally have lease terms between 2 and 5

years. Other equipment generally has lease terms of 12 months or less and/or is individually of low value.

Generally, the Group is restricted from assigning and subleasing the leased assets outside the Group.

(a) Right-of-use assets

The carrying amounts of the Group’s right-of-use assets and the movements during the year are as

follows:

Leasehold land

Buildings

Plant and machinery

Motor vehicles

Furniture and fixtures

Total

(HK$’000)

As at 1 January 2021 48,514 189,641 1,741 16,690 258 256,844

Additions – 194,741 2,249 10,647 6,071 213,708

Depreciation charge (1,624) (113,093) (1,630) (10,131) (3,965) (130,443)

Exchange realignment 862 (3,054) 13 (1,272) (109) (3,560)

As at 31 December 2021 and 1 January

2022

47,752 268,235 2,373 15,934 2,255 336,549

Revision of a lease term arising from a

change in the non-cancellable period of

a lease

– (750) – – – (750)

Additions – 123,196 128 10,267 3,467 137,058

Depreciation charge (1,557) (101,978) (970) (9,071) (3,708) (117,284)

Exchange realignment (4,433) (19,480) 3 (970) (141) (25,021)

As at 31 December 2022 41,762 269,223 1,534 16,160 1,873 330,552

GOODBABY

NOTES TO FINANCIAL STATEMENTS

232

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

15. LEASES (Continued)

THE GROUP AS A LESSEE (Continued)

(b) Lease liabilities

2022

2021

(HK$’000)

Carrying amount at 1 January 300,904 218,777

New leases 137,058 213,708

Revision of a lease term arising from a change in the non-cancellable period of a lease (1,677) –

Covid-19-related concessions from lessors – (97)

Interest expense 11,005 9,278

Payments (125,996) (136,174)

Exchange realignment (21,122) (4,588)

Carrying amount at 31 December 300,172 300,904

Analysed into:

Current portion 102,936 98,979

Non-current portion 197,236 201,925

2022

2021

(HK$’000)

Interest on lease liabilities 11,005 9,278

Depreciation charge of right-of-use assets 117,284 130,443

Expense relating to short-term leases 25,366 30,966

Variable lease payments not included in the measurement of lease liabilities 1,121 1,857

Covid-19-related rent concessions from lessors – (97)

Expense relating to leases of low-value assets –38

At end of year 154,776 172,485

(d) The total cash outflow for leases is disclosed in note 34(c) to the financial statements.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 233

Annual Report 2022

16. GOODWILL

(HK$’000)

Cost and net carrying amount at 1 January 2021 2,763,595

Exchange realignment 49,271

Cost and net carrying amount at 31 December 2021 and 1 January 2022 2,812,866

Exchange realignment (181,487)

Cost and net carrying amount at 31 December 2022 2,631,379

IMPAIRMENT TESTING OF CASH-GENERATING UNITS (“CGU”)

Goodwill is allocated to the following CGU for impairment testing:

2022

2021

(HK$’000)

Manufacture and export of stroller-related products unit 14,002 15,301

Evenflo unit 614,291 614,425

Columbus unit 185,359 196,832

NICAM unit 5,005 5,315

Oasis Dragon unit 1,812,722 1,980,993

2,631,379 2,812,866

Trademarks with indefinite useful lives are allocated to the following CGU for impairment testing:

2022

2021

(HK$’000)

Evenflo unit 137,713 137,743

Columbus unit 327,456 347,725

Oasis Dragon unit 1,173,210 1,282,116

1,638,379 1,767,584

GOODBABY

NOTES TO FINANCIAL STATEMENTS

234

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

16. GOODWILL (Continued)

IMPAIRMENT TESTING OF CASH-GENERATING UNITS (“CGU”) (Continued)

Manufacture and export of stroller-related products unit

The recoverable amount of the manufacture and export of stroller-related products unit has been

determined based on a value in use calculation using cash flow projections based on financial budgets

covering a five-year period approved by senior management. The growth rate used to extrapolate the

cash flows of manufacture and export of stroller-related products unit beyond the five-year period is 2.3%

(2021: 2.5%). The pre-tax discount rate applied to the cash flow projections as at 31 December 2022 was

16.7% (2021: 16.5%).

Evenflo unit

The recoverable amount of the Evenflo unit has been determined based on a value in use calculation

using cash flow projections based on financial budgets covering a five-year period approved by senior

management. The growth rate used to extrapolate the cash flows of the Evenflo unit beyond the five-

year period is 2.0% (2021: 2.0%). The pre-tax discount rate applied to the cash flow projections as at 31

December 2022 was 12.2% (2021: 12.9%).

Columbus unit

The recoverable amount of the Columbus unit has been determined based on a value in use calculation

using cash flow projections based on financial budgets covering a five-year period approved by senior

management. The growth rate used to extrapolate the cash flows of Columbus unit beyond the five-

year period is 2.0% (2021: 1.2%). The pre-tax discount rate applied to the cash flow projections as at 31

December 2022 was 16.3% (2021: 16.8%).

NICAM unit

The recoverable amount of the NICAM unit has been determined based on a value in use calculation

using cash flow projections based on financial budgets covering a five-year period approved by senior

management. The growth rate used to extrapolate the cash flows of NICAM unit beyond the five-

year period is 2.0% (2021: 1.2%). The pre-tax discount rate applied to the cash flow projections as at 31

December 2022 was 16.9% (2021: 12.9%).

Oasis Dragon unit

The recoverable amount of the Oasis Dragon unit has been determined based on a value in use

calculation using cash flow projections based on financial budgets covering a five-year period approved

by senior management. The growth rate used to extrapolate the cash flows of Oasis Dragon unit beyond

the five-year period is 2.3% (2021: 2.5%). The pre-tax discount rate applied to the cash flow projections as

at 31 December 2022 was 14.8% (2021: 14.8%).

NOTES TO FINANCIAL STATEMENTS

GOODBABY 235

Annual Report 2022

16. GOODWILL (Continued)

KEY ASSUMPTIONS USED IN THE VALUE IN USE CALCULATION

Assumptions were used in the value in use calculation of the above cash-generating units for each

reporting date. The following describes each key assumption on which senior management has based its

cash flow projections to undertake impairment testing of goodwill:

“Budgeted gross margins” — The basis used to determine the value assigned to the budgeted

gross margins is the average gross margins achieved in the year

immediately before the budget year, increased for expected

efficiency improvements and expected market development.

“Discount rate” — The discount rate used is before tax and reflects specific risks

relating to the relevant unit.

The values assigned to key assumptions are consistent with external information sources.

17. OTHER INTANGIBLE ASSETS

31 DECEMBER 2022

Trademarks

Computer software

Non-compete agreement

Customer relationship

Patents

Total

(HK$’000)

At 31 December 2021 and at 1 January 2022:

Cost 1,816,735 137,532 7,297 590,187 77,956 2,629,707

Accumulated amortisation (36,676) (70,505) (7,221) (192,952) (40,798) (348,152)

Net carrying amount 1,780,059 67,027 76 397,235 37,158 2,281,555

At 1 January 2022, net of accumulated

amortisation

1,780,059 67,027 76 397,235 37,158 2,281,555

Additions 1,595 27,364 – – 7,577 36,536

Disposals – (49) – – – (49)

Amortisation provided during the year (2,059) (20,527) (72) (38,313) (5,583) (66,554)

Exchange realignment (128,446) (4,724) (4) (27,474) (4,269) (164,917)

At 31 December 2022, net of accumulated

depreciation

1,651,149 69,091 – 331,448 34,883 2,086,571

At 31 December 2022:

Cost 1,684,976 167,168 6,848 546,304 81,097 2,486,393

Accumulated amortisation (33,827) (98,077) (6,848) (214,856) (46,214) (399,822)

Net carrying amount 1,651,149 69,091 – 331,448 34,883 2,086,571

GOODBABY

NOTES TO FINANCIAL STATEMENTS

236

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

17. OTHER INTANGIBLE ASSETS (Continued)

31 DECEMBER 2021

Trademarks

Computer

software

Non-compete

agreement

Customer

relationship

Patents

Total

(HK$’000)

At 31 December 2020 and at 1 January 2021:

Cost 1,801,992 110,534 7,785 575,172 77,718 2,573,201

Accumulated amortisation (32,438) (54,481) (7,710) (153,856) (37,580) (286,065)

Net carrying amount 1,769,554 56,053 75 421,316 40,138 2,287,136

At 1 January 2021, net of accumulated

amortisation 1,769,554 56,053 75 421,316 40,138 2,287,136

Additions 698 36,648 – 8,713 2,977 49,036

Disposals – (200) – – – (200)

Amortisation provided during the year (2,979) (18,281) – (39,507) (4,552) (65,319)

Exchange realignment 12,786 (7,193) 1 6,713 (1,405) 10,902

At 31 December 2021, net of accumulated

depreciation

1,780,059 67,027 76 397,235 37,158 2,281,555

At 31 December 2021:

Cost 1,816,735 137,532 7,297 590,187 77,956 2,629,707

Accumulated amortisation (36,676) (70,505) (7,221) (192,952) (40,798) (348,152)

Net carrying amount 1,780,059 67,027 76 397,235 37,158 2,281,555

18. OTHER LONG-TERM ASSETS

Other long-term assets represent a deposit for insurance over one year of HK$11,197,000 (2021:

HK$11,294,000).

19. INVENTORIES

2022

2021

(HK$’000)

Raw materials 273,698 341,062

Work in progress 20,176 59,372

Finished goods 1,608,135 2,002,367

1,902,009 2,402,801

NOTES TO FINANCIAL STATEMENTS

GOODBABY 237

Annual Report 2022

20. TRADE RECEIVABLES

2022

2021

(HK$’000)

Trade receivables 1,040,037 1,282,135

Impairment of trade receivables (42,709) (34,725)

997,328 1,247,410

The Group’s trading terms with its customers are mainly on credit, except for new customers, where

payment in advance is normally required. The credit period is up to three months. Each customer has a

maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables and

has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by

senior management. In view of the aforementioned and the fact that the Group’s trade receivables relate

to a large number of diversified customers, there is no significant concentration of credit risk. The Group

does not hold any collateral or other credit enhancements over its trade receivable balances. Trade

receivables are non-interest-bearing.

An aging analysis of the trade receivables of the Group, based on the invoice date net of provision, is as

follows:

2022

2021

(HK$’000)

Within 3 months 906,679 1,171,109

3 to 6 months 33,004 39,751

6 months to 1 year 28,719 30,388

Over 1 year 28,926 6,162

997,328 1,247,410

GOODBABY

NOTES TO FINANCIAL STATEMENTS

238

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

20. TRADE RECEIVABLES (Continued)

The movements in the loss allowance for impairment of trade receivables are as follows:

2022

2021

(HK$’000)

At beginning of year 34,725 31,484

Impairment losses, net 9,346 4,474

Exchange realignment (1,362) (1,233)

At end of year 42,709 34,725

An impairment analysis is performed at each reporting date using a provision matrix to measure

expected credit losses. The provision rates are based on days past due for groupings of various

customer segments with similar loss patterns (i.e., by geographical region, product type, customer type

and rating, and coverage by letters of credit or other forms of credit insurance). The calculation reflects

the probability-weighted outcome, the time value of money and reasonable and supportable information

that is available at the reporting date about past events, current conditions and forecasts of future

economic conditions. Generally, trade receivables are written off if past due for more than one year and

are not subject to enforcement activity.

Set out below is the information about the credit risk exposure on the Group’s trade receivables using a

provision matrix:

AS AT 31 DECEMBER 2022

Within 3 months

3 to 6 months

6 months to 1 year

Over 1 year

Total

Expected credit loss rate 0.34% 4.01% 8.76% 55.11% 4.11%

Gross carrying amount (HK$’000) 909,740 34,383 31,478 64,436 1,040,037

Expected credit losses (HK$’000) 3,061 1,379 2,759 35,510 42,709

NOTES TO FINANCIAL STATEMENTS

GOODBABY 239

Annual Report 2022

20. TRADE RECEIVABLES (Continued)

AS AT 31 DECEMBER 2021

Within 3 months

3 to 6 months

6 months to 1 year

Over 1 year

Total

Expected credit loss rate 0.09% 4.13% 7.80% 82.69% 2.71%

Gross carrying amount (HK$’000) 1,172,121 41,465 32,958 35,591 1,282,135

Expected credit losses (HK$’000) 1,012 1,714 2,570 29,429 34,725

21. PREPAYMENTS AND OTHER RECEIVABLES

2022

2021

(HK$’000)

Prepayments 147,112 141,958

Other receivables 308,540 341,787

Value added tax (“VAT”) recoverable 104,304 99,581

Income tax receivable 12,248 58,625

572,204 641,951

The above balances are unsecured, interest-free and have no fixed terms of repayment.

The financial assets included in the above balances relate to receivables for which there was no recent

history of default and past due amounts. As at 31 December 2022 and 2021, the loss allowance was

assessed to be minimal.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

240

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

22. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

2022

2021

(HK$’000)

Call options over non-controlling interests with an expiration date within one year 28,519 10,606

Wealth investment products – 7,218

28,519 17,824

The above call options were classified as financial assets at fair value through profit or loss as their

expiration date is within one year.

The above wealth investment products were mandatorily classified as financial assets at fair value

through profit or loss as their contractual cash flows are not solely payments of principal and interest.

They were placed with licensed financial institution in Mainland China and can be redeemed at any time.

23. CASH AND CASH EQUIVALENTS

Notes

2022

2021

(HK$’000)

Cash and bank balances 956,567 1,094,479

Time deposits (i) 1,113,100 1,154,409

2,069,667 2,248,888

Less: Pledged deposits for:

Certain standby letter of credit and guarantee 28(b) (798,515) (812,666)

Long term bank loans – (330,316)

Accrued interest of pledged deposits and time deposits (i) (42,902) (18,493)

Non-pledged time deposits with original maturity of more than three months when acquired (ii) (302,258) –

Other restricted bank balances (4,031) –

Cash and cash equivalents 921,961 1,087,413

Note (i): The time deposits held by the Group as of 31 December 2022 bear interest at 2.70% to 3.91% per annum

with a duration of 36 months. These deposits are measured at amortised cost and interest income from

these time deposits is measured using the effective interest rate method.

Note (ii): The time deposits were pledged for long term bank loans which have been prepaid in 2022. The Group has

released the pledge in March 2023.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 241

Annual Report 2022

23. CASH AND CASH EQUIVALENTS (Continued)

At the end of the reporting period, the cash and bank balances of the Group denominated in Renminbi

(“RMB”) amounted to HK$767,917,000 (2021: HK$803,784,000), included in which is cash-in-transit

of HK$23,390,000. The RMB is not freely convertible into other currencies, however, under Mainland

China’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of

Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through

banks authorised to conduct foreign exchange business.

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term time deposits

are made for varying periods between one day and three months, depending on the immediate cash

requirements of the Group. The bank balances and time deposits are deposited with creditworthy banks

with no recent history of default.

24. DERIVATIVE FINANCIAL INSTRUMENTS

2022

Assets

Liabilities

(HK$’000)

Forward currency contracts

– designated as hedging instruments 15,361 44,098

2021

Assets

Liabilities

(HK$’000)

Forward currency contracts

– designated as hedging instruments 40,546 4,260

GOODBABY

NOTES TO FINANCIAL STATEMENTS

242

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

24. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

CASH FLOW HEDGE – FOREIGN CURRENCY RISK

Forward currency contracts are designated as hedging instruments in respect of forecasted routine

intragroup sales in foreign currencies. The forward currency contract balances vary with the levels of

expected foreign currency sales and changes in foreign exchange forward rates.

Hedge ineffectiveness can arise from:

• Differences in the timing of the cash flows of the forecasted sales and purchases and the hedging

instruments

• Different interest rate curves applied to discount the hedged items and hedging instruments

• The counterparties’ credit risks differently impacting the fair value movements of the hedging

instruments and hedged items

• Changes to the forecasted amounts of cash flows of hedged items and hedging instruments

The Group holds the following foreign exchange forward contracts:

Maturity

Less than 3

months

3 to 6 months

6 to 9 months

9 to 12 months

1 to 2 years

Total

As at 31 December 2022

Foreign currency forward contracts (highly

probable forecasted sales)

Notional amounts (HK$’000) 116,951 191,019 101,357 – – 409,327

Average forward rate (US$/RMB) 6.5669 6.8989 6.9782 – –

Foreign currency forward contracts (highly

probable forecasted sales)

Notional amounts (HK$’000) 432,088 249,282 257,591 235,987 – 1,174,948

Average forward rate (EUR/RMB) 7.1082 7.2135 7.2396 7.2545 –

Foreign currency forward contracts (highly

probable forecasted sales)

Notional amounts (HK$’000) 39,719 37,494 30,352 26,781 8,927 143,273

Average forward rate (GBP/EUR) 1.0662 1.1604 1.1547 1.1494 1.1457

Foreign currency forward contracts (highly

probable forecasted sales)

Notional amounts (HK$’000) 5,334 4,846 5,256 5,317 1,673 22,426

Average forward rate (CHF/EUR) 1.0024 1.0339 1.0374 1.0408 1.0429

NOTES TO FINANCIAL STATEMENTS

GOODBABY 243

Annual Report 2022

Maturity

Less than 3

months

3 to 6 months

6 to 9 months

9 to 12 months

1 to 2 years

Total

Foreign currency forward contracts (highly

probable forecasted sales)

Notional amounts (HK$’000) 20,778 – – – – 20,778

Average forward rate (EUR/JPY) 132.77 – – – –

Foreign currency forward contracts (highly

probable forecasted sales)

Notional amounts (HK$’000) 29,389 8,792 8,792 8,792 21,101 76,866

Average forward rate (JPY/EUR) 0.0075 0.0074 0.0074 0.0074 0.0074

Foreign currency forward contracts (highly

probable forecasted sales)

Notional amounts (HK$’000) 1,924 – – – – 1,924

Average forward rate (EUR/CHF) 0.9449 – – – –

Foreign currency forward contracts (highly

probable forecasted sales)

Notional amounts (HK$’000) 1,655 – – – – 1,655

Average forward rate (NOK/EUR) 0.0987 – – – –

Foreign currency forward contracts (highly

probable forecasted sales)

Notional amounts (HK$’000) 1,723 – – – – 1,723

Average forward rate (EUR/NOK) 10.1272 – – – –

Foreign currency forward contracts (highly

probable forecasted sales)

Notional amounts (HK$’000) 7,231 – – – – 7,231

Average forward rate (SEK/EUR) 0.0934 – – – –

Foreign currency forward contracts (highly

probable forecasted sales)

Notional amounts (HK$’000) 32,399 – – – – 32,399

Average forward rate (CAD/US$) 0.7990 – – – –

Foreign currency forward contracts (highly

probable forecasted sales)

Notional amounts (HK$’000) 23,825 23,666 23,535 23,410 – 94,436

Average forward rate (EUR/US$) 1.0463 1.0533 1.0592 1.0649 –

24. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

The Group holds the following foreign exchange forward contracts (Continued):

GOODBABY

NOTES TO FINANCIAL STATEMENTS

244

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

24. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

The impacts of the hedging instruments on the statement of financial position are as follows:

Notional

amounts

Carrying

amounts

Line item in

the statement

of financial

position

(HK$’000)

As at 31 December 2022

Foreign currency forward contracts 457,540 15,361

Derivative financial

instruments (assets)

Foreign currency forward contracts 1,529,446 (44,098)

Derivative financial

instruments (liabilities)

The impacts of the hedged items on the statement of financial position are as follows:

Change in fair

value used

for measuring

hedge

ineffectiveness

for the year

Hedging reserve

(HK$’000)

As at 31 December 2022

Highly probable forecast sales (5,939) (22,798)

The effects of the cash flow hedge on the statement of profit or loss and the statement of

comprehensive income are as follows:

Total hedging

gains/(losses)

recognised in

other

comprehensive

income

Hedge

ineffectiveness

recognised in

profit or loss

Line item

in the

statement of

profit or loss

Amounts

reclassified

from other

comprehensive

income to profit or

loss

Line item (gross

amount) in the

statement of profit

or loss

Gross amounts Tax effects Total Gross amounts Tax effects Total

(HK$’000) (HK$’000)

As at 31 December 2022

Highly probable forecast sales (56,530) 8,105 (48,425) 12,470

Other income

and gains

30,066 (4,439) 25,627 Revenue

NOTES TO FINANCIAL STATEMENTS

GOODBABY 245

Annual Report 2022

25. TRADE AND BILLS PAYABLES

An aging analysis of the trade and bills payables as at the end of the reporting period, based on the

invoice date, is as follows:

2022

2021

(HK$’000)

Within 3 months 858,407 1,368,263

3 to 12 months 300,273 261,248

1 to 2 years 7,687 3,297

2 to 3 years 1,173 3,074

Over 3 years 2,113 751

1,169,653 1,636,633

The trade and bills payables are non-interest-bearing and normally settled on terms of 60 to 90 days.

The carrying amounts of the trade and bills payables approximate to their fair values due to their short

term maturity.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

246

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

26. OTHER PAYABLES AND ACCRUALS

Notes

2022

2021

(HK$’000)

Other payables (a) 204,819 245,568

Contract liabilities (b) 122,868 124,755

Accruals 456,751 534,704

784,438 905,027

(a) Other payables are non-interest-bearing and repayable on demand, including a put options over non-controlling

interests which was HK$14,583,000(2021: HK$6,487,000).

(b) Details of contract liabilities are as follows:

31 December

2022

31 December

2021

(HK$’000)

Short-term advances from customers

Sale of goods 122,456 124,591

Rendering of testing services 412 164

122,868 124,755

Contract liabilities include short-term advances received to deliver goods and render testing services. The increase

in contract liabilities in 2022 was mainly due to the increase in short-term advances from customers in relation to

the sale of goods.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 247

Annual Report 2022

27. PROVISION

Product

warranties and

liabilities

(HK$’000)

Balance at 1 January 2021 118,106

Additional provision 85,246

Amounts utilised (47,581)

Exchange realignment (2,898)

Balance at 31 December 2021 and 1 January 2022 152,873

Additional provision 45,253

Amounts utilised (93,588)

Exchange realignment (3,076)

Balance at 31 December 2022 101,462

Portion classified as current liabilities 72,167

Non-current portion 29,295

The Group provides warranties to its customers on certain of its products, under which faulty products

are repaired or replaced. The amount of the provision for the warranties is estimated based on sales

volumes and past experience of the level of repairs and returns. The estimation basis is reviewed on

an ongoing basis and revised where appropriate. As at 31 December 2022, the amount of product

warranties was HK$42,107,000.

In addition, the Group estimates future cash outflows in relation to the indemnity provided to its

customers for damages or injuries caused in connection with the use of the Group’s sold products. The

amount of cash outflows is estimated based upon an annual review by the management of the Group

with patterns of past experience of how the Group discharged its obligation. As at 31 December 2022,

the amount of product liabilities was HK$59,355,000.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

248

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

28. INTEREST-BEARING BANK LOANS AND OTHER BORROWINGS

As at 31

December 2022

As at 31

December 2021

Maturity HK$’000 Maturity HK$’000

Current

Bank overdrafts – secured

Note (a) and

Note (b)

2023 217,974 2022 301,238

Bank overdrafts – unsecured Note (a) 2023 1,503 2022 156

Current portion of long-term bank loans – unsecured 2023 – 2022 489,357

Current portion of long-term bank loans – secured Note (b) 2023 364,481 –

Bank borrowings – secured Note (b) 2023 290,139 2022 334,013

Bank borrowings – unsecured 2023 307,856 2022 97,872

Promissory note Note (c) – 2022 468

1,181,953 1,223,104

Non-current

Bank borrowings – secured Note (b) 2024-2025 1,691,450 2023-2024 2,294,380

Bank borrowings – unsecured 2024-2025 481,375 –

2,172,825 2,294,380

Total 3,354,778 3,517,484

Note (a): The bank overdraft facilities amounted to HK$361,458,000 of which HK$219,477,000 had been utilised as at

the end of the reporting period. The bank overdraft facilities are revolving facilities with no termination date.

Note (b): As at 31 December 2022, certain of the Group’s bank loans are secured by:

(i) standby letters of credit and letters of guarantee from certain banks issued by a subsidiary of the Group;

(ii) the guarantee from the Company;

(iii) certain machinery amounting to HK$2,347,000; and

As at 31 December 2021, certain of the Group’s bank loans are secured by:

(i) standby letters of credit and letters of guarantee from certain banks issued by a subsidiary of the Group;

(ii) the guarantee from the Company;

(iii) certain machinery amounting to HK$5,834,000; and

(iv) the pledge of certain of the Group’s time deposits amounting to HK$330,316,000.

Note (c): The promissory note was issued by the US government authority.

Note (d): The effective interest rates of the bank loans and other borrowings range from 0.63% to 6.18% (2021: 0.59% to

3.1%).

NOTES TO FINANCIAL STATEMENTS

GOODBABY 249

Annual Report 2022

28. INTEREST-BEARING BANK LOANS AND OTHER BORROWINGS (Continued)

2022

2021

(HK$’000)

Analysed into:

Bank loans and overdrafts repayable:

Within one year 1,181,953 1,223,104

In the second year 2,139,241 220,062

In the third year 33,584 2,074,318

3,354,778 3,517,484

GOODBABY

NOTES TO FINANCIAL STATEMENTS

250

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

29. DEFERRED TAX

The movements in deferred tax assets and liabilities of the Group during the year are as follows:

DEFERRED TAX ASSETS:

Write-down of inventories

Leases

Accruals

Losses available for offsetting

against future taxable profits

Unrealised profit

Others

Total

(HK$’000)

As at 1 January 2021 11,389 33,520 34,691 12,275 60,589 21,017 173,481

Credited/(charged) to profit or

loss (note 11)

1,695 21,489 13,377 17,523 16,943 4,741 75,768

Credited to other

comprehensive income

– – – – – 611 611

Exchange realignment (620) (592) 321 (182) (8) (394) (1,475)

As at 31 December 2021 and

1 January 2022

12,464 54,417 48,389 29,616 77,524 25,975 248,385

Credited/(charged) to profit or

loss (note 11)

(2,392) 14,620 (18,015) 51,586 16,090 27,629 89,518

Charged to other

comprehensive income

– – – – – (309) (309)

Exchange realignment (565) (3,460) (821) (2,231) (1,835) (414) (9,326)

As at 31 December 2022 9,507 65,577 29,553 78,971 91,779 52,881 328,268

NOTES TO FINANCIAL STATEMENTS

GOODBABY 251

Annual Report 2022

29. DEFERRED TAX (Continued)

DEFERRED TAX LIABILITIES:

Withholding tax on

undistributed profits

Depreciation

Leases

Other intangible assets

Others

Total

(HK$’000)

At 1 January 2021 19,721 29,387 31,154 560,658 4,833 645,753

Charged/(credited) to profit or loss

(note 11)

– (448) 21,179 (8,340) 9,112 21,503

Charged to other comprehensive

income

––––2,559 2,559

Exchange realignment 1,202 2,875 (426) 1,732 (982) 4,401

At 31 December 2021 and 1

January 2022

20,923 31,814 51,907 554,050 15,522 674,216

Charged/(credited) to profit or loss

(note 11)

– 6,964 14,678 (13,761) (5,664) 2,217

Credited to other comprehensive

income

––––(3,975) (3,975)

Exchange realignment (995) (2,383) (3,379) (40,296) (33) (47,086)

At 31 December 2022 19,928 36,395 63,206 499,993 5,850 625,372

Pursuant to the EIT Law, a 10% withholding tax is levied on dividends declared to foreign investors

from the foreign investment enterprises established in Mainland China. The requirement is effective

from 1 January 2008 and applies to earnings generated after 31 December 2007. A lower withholding

tax rate may be applied if there is a tax treaty between Mainland China and the jurisdiction of the

foreign investors. The Group is therefore liable to withholding taxes on dividends distributed by those

subsidiaries established in Mainland China in respect of earnings generated from 1 January 2008. The

applicable tax rate of the Group is 10%.

Pursuant to the Board resolutions of GCPC and its subsidiaries, all of which are directly or indirectly

controlled by GBHK, profits earned by the aforesaid subsidiaries in 2022 will not be appropriated to

GBHK in 2021 and onwards. Hence, the deferred tax liability arising from the withholding tax on profits

generated by the aforesaid companies in the current year is not applicable as of 31 December 2022.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

252

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

29. DEFERRED TAX (Continued)

At 31 December 2022, other than the amount recognised in the consolidated financial statements,

deferred tax has not been recognised for withholding taxes that would be payable on the unremitted

earnings that are subject to withholding taxes of the Group’s subsidiaries established in Mainland China.

In the opinion of the directors, it is not probable that these subsidiaries will distribute such remaining

earnings in the foreseeable future. The aggregate amount of temporary differences associated with

investments in subsidiaries in Mainland China for which deferred tax liabilities have not been recognised

was HK$2,637,669,000 at 31 December 2022 (2021: HK$2,312,696,000).

There are no income tax consequences attaching to the payment of dividends by the Company to its

shareholders.

For presentation purposes, certain deferred tax assets and liabilities within the same tax jurisdiction

have been offset in the consolidated statement of financial position. The following is an analysis of the

deferred tax balances of the Group for financial reporting purposes:

2022

2021

(HK$’000)

Reflected in the consolidated statement of financial position:

– Deferred tax assets 67,413 85,109

– Deferred tax liabilities 364,517 510,940

Deferred tax assets have not been recognised in respect of the following items:

2022

2021

(HK$’000)

Tax losses 45,673 22,232

The Group has tax losses arising in Germany of HK$26,090,000 (2021: HK$2,724,000) that are available

indefinitely for offsetting against future taxable profits of the companies in which the losses arose.

The Group has tax losses arising in Hong Kong of HK$14,212,000 (2021: HK$74,000) that are available

indefinitely for offsetting against future taxable profits of the companies in which the losses arose. The

Group also has tax losses arising in Mainland China of HK$5,371,000 (2021: HK$19,434,000) that will

expire in five to ten years for offsetting against future taxable profits. Deferred tax assets have not been

recognised in respect of the above item as it is not considered probable that taxable profits will be

available against which the above item can be utilised.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 253

Annual Report 2022

30. OTHER LIABILITIES

Included in other liabilities is employee compensation of HK$1,934,000 (2021: HK$2,129,000) of overseas

subsidiaries.

31. SHARE CAPITAL

As at 31

December 2022

As at 31

December 2021

(HK$’000)

Issued and fully paid:

1,668,031,000 (2021: 1,668,031,000) ordinary shares 16,680 16,680

A summary of movements in the Company’s share capital is as follows:

Number of

shares in issue

Share capital

Share premium

Total

(’000) (HK$’000) (HK$’000) (HK$’000)

At 1 January 2021 1,668,023 16,680 3,320,401 3,337,081

Share options exercised 8 – 10 10

At 31 December 2021 and 1 January 2022 1,668,031 16,680 3,320,411 3,337,091

At 31 December 2022 1,668,031 16,680 3,320,411 3,337,091

SHARE OPTIONS

Details of the Company’s share option scheme and the share options issued under the scheme are

included in note 32 to the financial statements.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

254

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

32. SHARE OPTION SCHEME

The share option scheme adopted by the Company on 5 November 2010 (the “2010 Share Option

Scheme”) was terminated and a new one was adopted by the Company following the termination of the

2010 Share Option Scheme on the annual general meeting of the Company held on 25 May 2020 (the

“2020 Share Option Scheme”).

The purpose of the share options schemes is to motivate the eligible participants to optimise their

performance efficiency for the benefit of the Group; and attract and retain or otherwise maintain on-

going business relationship with the eligible participants whose contributions are or will be beneficial

to the long-term growth of the Group. Eligible participants of the share option schemes include full-

time or part-time employees, executives or officers of the Company or any of its subsidiaries, any

Directors (including non-executive and independent non-executive Directors) of the Company or

any of its subsidiaries and advisers, consultants, suppliers, customers, agents and such other persons

who in the sole opinion of the Board will contribute or have contributed to the Company or any of its

subsidiaries as described in the share option schemes. The 2010 Share Option Scheme and the 2020

Share Option Scheme both have a term of 10 years. Upon termination of the 2010 Share Option Scheme

mentioned above, no further options may be granted thereunder but the provisions of the 2010 Share

Option Scheme shall remain in force to the extent necessary to give effect to the exercise of any options

granted prior to the termination.

The maximum number of share options originally permitted to be granted under the 2010 Share Option

Scheme is an amount equivalent, upon their exercise, to 10% of the shares of the Company in issue as at

28 May 2018. The maximum number of share options currently permitted to be granted under the 2020

Share Option Scheme is an amount equivalent, upon their exercise, to 10% of the shares of the Company

in issue as at 25 May 2020.The maximum number of shares issuable under share options to each eligible

participant under the 2010 Share Option Scheme and 2020 Share Option Scheme within any 12-month

period is limited to 1% of the shares of the Company in issue as at the date on which the share options

are granted to the relevant eligible participants. Any further grant of share options in excess of this limit is

subject to shareholders’ approval in a general meeting.

Share options granted to a Director, chief executive or substantial shareholder of the Company, or to

any of their associates, are subject to approval in advance by the independent non-executive Directors.

In addition, any share options granted to a substantial shareholder or an independent non-executive

Director of the Company, or to any of their associates, in excess of 0.1% of the shares of the Company in

issue on the date of such grant or with an aggregate value (based on the closing price of the Company’s

shares at the date of grant) in excess of HK$5 million, within any 12-month period, are subject to

shareholders’ approval in advance in a general meeting.

The offer of a grant of share options may be accepted within 30 days from the date of offer, upon

payment of a nominal consideration of HK$1 in total by the grantee. The exercise period of the share

options granted is determinable by the Directors, and commences after a vesting period determined by

the Directors and ends on a date which shall not be later than ten years from the date upon which the

share options are deemed to be granted and accepted.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 255

Annual Report 2022

32. SHARE OPTION SCHEME (Continued)

The exercise price of share options is determinable by the directors, but may not be less than the higher

of (i) the closing price of the Company’s shares as quoted on the Stock Exchange on the date of offer

of the share options; (ii) the average closing price of the Company’s shares as quoted on the Stock

Exchange for the five trading days immediately preceding the date of offer; and (iii) the nominal value of

the Company’s shares.

Share options do not confer rights on the holders to dividends or to vote at shareholders’ meetings.

On 19 June 2020, the Board announced that the Company shall allow holders of the existing share

options (the “Existing Share Options”) granted on 28 August 2017, 27 March 2018, 28 May 2018 and 23

May 2019 under the 2010 Share Option Scheme to exchange their Existing Share Options for new share

options to be granted under the 2020 Share Option Scheme. As at 19 June 2020, none of the above

share options was vested.

A total of 96,650,000 Existing Share Options were cancelled under the 2010 Share Option Scheme and

replaced by a total of 26,084,500 new share options with an exercise price of HK$0.96 per share under

the 2020 Share Option Scheme (the “Replacement Options).

The exchange ratio of the Replacement Options to Existing Share Options were based on their fair

values on the modification date, i.e. 19 June 2020.

(A) 2010 SHARE OPTION SCHEME

The following share options were outstanding under the Scheme during the year:

Weighted

average

exercise price

Number of

options

HK$ per share ’000

At 1 January 2021 3.984 109,080

Forfeited during the year 3.750 (2,400)

At 31 December 2021 and 1 January 2022 3.989 106,680

Forfeited during the year 3.750 (2,810)

At 31 December 2022 3.996 103,870

No share options were exercised or cancelled during the years ended 31 December 2022 (2021: nil).

GOODBABY

NOTES TO FINANCIAL STATEMENTS

256

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

32. SHARE OPTION SCHEME (Continued)

(A) 2010 SHARE OPTION SCHEME (Continued)

The exercise prices and exercise periods of the share options outstanding as at the end of the

reporting period are as follows:

2022

Number of options

Exercise price

Exercise period

’000 HK$ per share

7,327 3.58 29 September 2017 to 28 September 2024

8,826 3.58 29 September 2018 to 28 September 2024

8,126 3.58 29 September 2019 to 28 September 2024

3,267 3.75 7 October 2018 to 6 October 2025

3,267 3.75 7 October 2019 to 6 October 2025

3,267 3.75 7 October 2020 to 6 October 2025

6,300 4.54 27 September 2020 to 27 March 2028

9,450 4.54 27 September 2021 to 27 March 2028

15,750 4.54 27 September 2022 to 27 March 2028

720 5.122 28 May 2021 to 27 May 2028

1,080 5.122 28 May 2022 to 27 May 2028

1,800 5.122 28 May 2023 to 27 May 2028

6,970 3.75 23 May 2022 to 22 May 2029

10,395 3.75 23 May 2023 to 22 May 2029

17,325 3.75 23 May 2024 to 22 May 2029

103,870

NOTES TO FINANCIAL STATEMENTS

GOODBABY 257

Annual Report 2022

32. SHARE OPTION SCHEME (Continued)

(A) 2010 SHARE OPTION SCHEME (Continued)

2021

Number of options

Exercise price

Exercise period

’000 HK$ per share

7,594 3.58 29 September 2017 to 28 September 2024

9,092 3.58 29 September 2018 to 28 September 2024

8,393 3.58 29 September 2019 to 28 September 2024

3,267 3.75 7 October 2018 to 6 October 2025

3,267 3.75 7 October 2019 to 6 October 2025

3,267 3.75 7 October 2020 to 6 October 2025

6,300 4.54 27 September 2020 to 27 March 2028

9,450 4.54 27 September 2021 to 27 March 2028

15,750 4.54 27 September 2022 to 27 March 2028

720 5.122 28 May 2021 to 27 May 2028

1,080 5.122 28 May 2022 to 27 May 2028

1,800 5.122 28 May 2023 to 27 May 2028

7,340 3.75 23 May 2022 to 22 May 2029

11,010 3.75 23 May 2023 to 22 May 2029

18,350 3.75 23 May 2024 to 22 May 2029

106,680

(B) 2020 SHARE OPTION SCHEME

Weighted

average

exercise price

Number of

options

HK$ per share ’000

At 1 January 2021 0.969 31,627

Forfeited during the year 0.988 (2,200)

Exercised during the year 0.960 (8)

At 31 December 2021 and 1 January 2022 0.966 29,419

Granted and accepted during the year 1.042 675

Forfeited during the year 0.969 (1,663)

At 31 December 2022 0.943 28,431

GOODBABY

NOTES TO FINANCIAL STATEMENTS

258

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

32. SHARE OPTION SCHEME (Continued)

(B) 2020 SHARE OPTION SCHEME (Continued)

No share options were exercised or cancelled during the years ended 31 December 2022 and the

weighted average share price at the date of exercise for share options exercised during the year

ended 31 December 2021 was HK$1.80 per share.

The exercise prices and exercise periods of the above share options outstanding at the end of the

reporting period are as follows:

2022

Number of options

Exercise price

Exercise period

’000 HK$ per share

93 0.96 28 August 2020 to 27 August 2027

93 0.96 28 August 2021 to 27 August 2027

93 0.96 28 August 2022 to 27 August 2027

2,108 0.96 27 September 2020 to 27 March 2028

3,161 0.96 27 September 2021 to 27 March 2028

5,268 0.96 27 September 2022 to 27 March 2028

180 0.96 28 May 2021 to 27 May 2028

270 0.96 28 May 2022 to 27 May 2028

430 0.96 28 May 2023 to 27 May 2028

2,483 0.96 23 May 2022 to 22 May 2029

3,594 0.96 23 May 2023 to 22 May 2029

5,991 0.96 23 May 2024 to 22 May 2029

798 1.01 11 December 2023 to 10 December 2030

1,198 1.01 11 December 2024 to 10 December 2030

1,996 1.01 11 December 2025 to 10 December 2030

135 1.042 16 June 2025 to 15 June 2032

202 1.042 16 June 2026 to 15 June 2032

338 1.042 16 June 2027 to 15 June 2032

28,431

NOTES TO FINANCIAL STATEMENTS

GOODBABY 259

Annual Report 2022

32. SHARE OPTION SCHEME (Continued)

(B) 2020 SHARE OPTION SCHEME (Continued)

2021

Number of options

Exercise price

Exercise period

’000 HK$ per share

280 0.96 28 August 2020 to 27 August 2027

93 0.96 28 August 2021 to 27 August 2027

93 0.96 28 August 2022 to 27 August 2027

2,174 0.96 27 September 2020 to 27 March 2028

3,262 0.96 27 September 2021 to 27 March 2028

5,316 0.96 27 September 2022 to 27 March 2028

216 0.96 28 May 2021 to 27 May 2028

324 0.96 28 May 2022 to 27 May 2028

540 0.96 28 May 2023 to 27 May 2028

2,564 0.96 23 May 2022 to 22 May 2029

3,846 0.96 23 May 2023 to 22 May 2029

6,409 0.96 23 May 2024 to 22 May 2029

860 1.01 11 December 2023 to 10 December 2030

1,291 1.01 11 December 2024 to 10 December 2030

2,151 1.01 11 December 2025 to 10 December 2030

29,419

GOODBABY

NOTES TO FINANCIAL STATEMENTS

260

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

32. SHARE OPTION SCHEME (Continued)

The fair value of the share options granted during the year ended 31 December 2022 was HK$337,500,

of which the Group recognised share option expenses of HK$22,000.

The fair value of equity-settled share options granted was estimated as at the date of grant using a

binomial tree model, taking into account the terms and conditions upon which the options were granted.

The following table lists the inputs to the model used:

Share options

granted on

16 June 2022

Fair value under binomial model (HKS) 337,500

Dividend yield (%) 0.00

Spot stock price (HK$ per share) 1.042

Historical volatility (%) 46.73

Risk-free interest rate (%) 3.342

Expected life of options (year) 10

The risk-free rate for periods within the contractual life of the option is based on the yield of Hong Kong

Exchange Fund Notes.

The expected life of the options is based on the historical data over the past three years and is not

necessarily indicative of the exercise patterns that may occur. The expected volatility reflects the

assumption that the historical volatility is indicative of future trends, which may also not necessarily be

the actual outcome.

No other feature of the options granted was incorporated into the measurement of fair value.

The Group overall recognised a share option expense of HK$15,187,000 (2021: HK$35,540,000) for the

year ended 31 December 2022.

At the end of the reporting period, the Company had 103,870,000 and 28,431,300 share options

outstanding under the 2010 Share Option Scheme and 2020 Share Option Scheme, respectively. The

exercise in full of the outstanding share options would, under the present capital structure of the

Company, result in the issue of 132,301,300 additional ordinary shares of the Company and additional

share capital of HK$1,323,010 and share premium of HK$440,563,000 (before issue expenses).

At the date of approval of these financial statements, the Company had 103,270,000 and 28,149,500

share options outstanding under the 2010 Share Option Scheme and 2020 Share Option Scheme

respectively, which represented approximately 6.19% and 1.69% of the Company’s shares in issue as at

that date.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 261

Annual Report 2022

33. RESERVES

The changes in the reserves of the Group during the year have been disclosed in the consolidated

statement of changes in equity of the Group.

STATUTORY RESERVE FUNDS

Statutory reserve funds comprise:

(i) Reserve fund

PRC laws and regulations require wholly – foreign-owned enterprises (“WFOE”) to provide for the

reserve fund by appropriating a part of the net profit (based on the entity’s statutory accounts)

before dividend distribution. Each subsidiary being WFOE is required to appropriate at least 10% of

its net profit after tax to the reserve fund until the balance of this fund reaches 50% of its registered

capital. The reserve fund can only be used, upon approval by the relevant authority, to offset

accumulated losses or increase capital.

(ii) Enterprise expansion fund

In accordance with the relevant regulations and the articles of association of the Group’s PRC

subsidiaries, appropriations from net profit should be made to the enterprise expansion fund, after

offsetting accumulated losses from prior years, and before profit distributions to the investors

for the subsidiaries registered in the PRC as foreign invested companies. The percentages to be

appropriated to the enterprise expansion fund are determined by the boards of directors of the

subsidiaries.

(iii) Statutory surplus reserve

In accordance with the PRC Company Law and the articles of association of the Group’s PRC

subsidiaries, a subsidiary registered in the PRC as a domestic company is required to appropriate

10% of its annual statutory net profit (after offsetting any prior years’ losses) to the statutory surplus

reserve. When the balance of this reserve fund reaches 50% of the entity’s capital, any further

appropriation is optional. The statutory surplus reserve can be utilised to offset prior years’ losses or

to increase capital. However, the balance of the statutory surplus reserve must be maintained at a

minimum of 25% of the capital after these usages.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

262

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

33. RESERVES (Continued)

MERGER RESERVE

As at 31 December 2022, the merger reserve represents the following:

(i) In 2001, the Group acquired GCPC from GCPC’s then shareholders through the issue of the

Company’s shares to GCPC’s then shareholders. The difference between the nominal value of the

Company’s share of the paid-up capital of GCPC and the par value of the Company’s shares issued

amounting to HK$108,281,000 was recognised in the merger reserve account.

(ii) In 2007, Geoby Electric Vehicle Co., Ltd. (“GPCL”) was established to take over certain operations

from the Group and the net asset value of the discontinued operation over the consideration

received amounting to HK$1,362,000 was recognised as a deemed distribution in the merger reserve

account.

(iii) The Group acquired the wooden products and E-car businesses through acquiring a 100% equity

interest in PCPC in June 2010 and this acquisition was accounted for using the pooling of interests

method. Prior to the establishment of PCPC on 5 November 2008, the wooden products and E-car

businesses were carried out by a fellow subsidiary, GPCL. Upon establishment, PCPC acquired all

the assets and liabilities related to the wooden products and E-car businesses from GPCL at their

respective book values and continued the wooden products and E-car businesses afterwards.

Accordingly, the retained earnings of HK$11,357,000 in respect of the wooden products and E-car

businesses generated prior to the establishment of PCPC were capitalised in the merger reserve

account in 2008.

(iv) In 2010, the Group disposed of its equity interests in Goodbaby (China) Commercial Co., Ltd.

(“GCCL”), Shanghai Goodbaby Fashion Co., Ltd. (“SHFS”), Shanghai Online Service Co., Ltd.

(“SGOL”), Ricky Bright Limited (“RCBL”), Mothercare Goodbaby China Retail Limited (“MGCR”)

and Mothercare-Goodbaby Retailing Co., Ltd. (“MGRL”) to G-Baby Holdings Limited (“GBHL”) for

a consideration of HK$287,936,000 in aggregate. The consideration over the net asset value of the

discontinued operations amounting to HK$35,699,000 was recognised as a deemed contribution in

the merger reserve account.

HEDGING RESERVE

The hedging reserve comprises the effective portion of the cumulative net gain or loss on the hedging

instruments used in cash flow hedges pending subsequent recognition of the hedged cash flows in

accordance with the accounting policy adopted for cash flow hedges.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 263

Annual Report 2022

34. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

(A) MAJOR NON-CASH TRANSACTIONS

During the year, the Group had non-cash additions to right-of-use assets and lease liabilities of

HK$137,058,000 (2021: HK$213,708,000) and HK$137,058,000 (2021: HK$213,708,000), respectively,

in respect of lease arrangements for plant and equipment.

During the year, the Group had reclassified pledged time deposits amounting to HK$302,258,000

(2021: nil) to time deposit, due to the settlements of related bank borrowings.

(B) CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES:

2022

Interest-

bearing bank

loans and other

borrowings

Lease liabilities

(HK$’000)

At 1 January 2022 3,517,484 300,904

Changes from financing cash flows (88,320) (125,996)

New leases – 137,058

Interest expense 20,769 11,005

Revision of a lease term arising from a change in the non-cancellable period of a lease – (1,677)

Foreign exchange realignment (95,155) (21,122)

3,354,778 300,172

2021

Interest-

bearing bank

loans and other

borrowings

Lease liabilities

(HK$’000)

At 1 January 2021 2,772,604 218,777

Changes from financing cash flows 741,779 (126,896)

New leases – 213,708

Interest expense – 9,278

Interest paid classified as operating cash flows – (9,278)

Covid-19-related rent concessions from lessors – (97)

Foreign exchange realignment 3,101 (4,588)

3,517,484 300,904

GOODBABY

NOTES TO FINANCIAL STATEMENTS

264

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

34. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)

The total cash outflow for leases included in the statement of cash flows is as follows:

2022

2021

(HK$’000)

Within operating activities 26,487 42,139

Within financing activities 125,996 126,896

152,483 169,035

35. CONTINGENT LIABILITIES

In the ordinary course of business, the Group may from time to time be involved in legal proceedings

and litigations. The Group records a liability when the Group believes that it is both probable that a

loss has been incurred by the Group and the amount can be reasonably estimated. With respect to the

Group’s outstanding legal matters, notwithstanding that the outcome of such legal matters is inherently

unpredictable and subject to uncertainties, the Group believes that, based on its current knowledge,

the amount or range of reasonably possible loss will not, either individually or in the aggregate, have a

material adverse effect on the Group’s business, financial position, results of operations, or cash flows.

36. PLEDGE OF ASSETS

Details of the Group’s assets pledged for business operation are included in notes 14, 23 and 28 to the

financial statements.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 265

Annual Report 2022

37. COMMITMENTS

The Group had the following capital commitments as at 31 December:

2022

2021

(HK$’000)

Contracted but not provided for:

Property plant and equipment 3,768 10,012

Capital contributions payable to an associate 4,478 9,787

8,246 19,799

38. RELATED PARTY TRANSACTIONS AND BALANCES

(A) NAME AND RELATIONSHIP

Name of related party Relationship with the Group

Mr. Song Zhenghuan (“Mr. Song”) Director and one of the ultimate shareholders of

the Company

Goodbaby Group Co., Ltd. (“GGCL”) Controlled by Mr. Song and his spouse

Goodbaby China Holdings Limited (“CAGB”) Controlled by Mr. Song and his spouse

Goodbaby Group Pingxiang Co., Ltd. (“GGPX”) Wholly owned by GGCL

Suzhou Goodbaby Qingtao Technology Service

Co., Ltd. (“GCQT”)

Joint venture

Goodbaby Mechatronics s.r.o. (“GBMS”) Joint venture

Kunshan Goodbaby Tommee Tippee Child

Products Co., Ltd. (“GCTP”)

Joint venture

GOODBABY

NOTES TO FINANCIAL STATEMENTS

266

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

38. RELATED PARTY TRANSACTIONS AND BALANCES (Continued)

(B) RELATED PARTY TRANSACTIONS

In addition to the transactions and balances disclosed elsewhere in these financial statements, the

Group had the following material transactions with related parties during the year:

2022

2021

(HK$’000)

Sales of goods to related parties (note (a))

CAGB and its subsidiaries

1,112 7,817

GCQT 309 –

1,421 7,817

Purchase of goods from related parties (note (b))

GCQT 57 714

Service charge from a related party (note (c))

GCQT 7,300 568

Note (a): The sales of goods to the related parties were made according to the prices and terms agreed with the

related parties.

Note (b): The purchase of goods from the related party was made according to the prices and terms agreed with

the related party.

Note (c): The service charge from the related party was made according to the prices and terms agreed with the

related party.

The related party transactions marked with # above also constitute continuing connected transactions

as defined in Chapter 14A of the Listing Rules which are exempted from the independent shareholders’

approval, but subject to the reporting, annual review and announcement requirements of the Listing

Rules.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 267

Annual Report 2022

38. RELATED PARTY TRANSACTIONS AND BALANCES (Continued)

The amounts due from related parties are unsecured, interest-free and repayable in 120 days.

2022

2021

(HK$’000)

Amounts due from related parties:

GCQT 2,503 574

CAGB and its subsidiaries – 6,201

2,503 6,775

Lease liabilities due to a related party (note (a)):

GGPX 38,517 49,525

Amounts due to related parties:

GCTP 448 489

GBMS 282 115

730 604

Note (a): The Group has entered into lease agreements in respect of certain warehouse and plant from GGPX. At

31 December 2022, the Group recognised right-of-use assets of HK$37,765,000 and lease liabilities of

HK$38,517,000. The transactions were made according to the prices and terms agreed with the related

parties.

(D) COMPENSATION OF KEY MANAGEMENT PERSONNEL OF THE GROUP

2022

2021

(HK$’000)

Short term employee benefits 40,090 51,797

Equity-settled share option expense 8,501 24,501

Post-employment benefits 791 737

Total compensation paid to key management personnel 49,382 77,035

Further details of directors’ remuneration are included in note 9 to the financial statements.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

268

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

39. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

The carrying amounts and fair values of the Group’s financial instruments, other than those with carrying

amounts that reasonably approximate to fair values, are as follows:

Carrying amounts Fair values

2022

2021

2022

2021

(HK$’000)

Financial assets

Derivative financial instruments 15,361 40,546 15,361 40,546

Pledged deposits, non-current portion 829,430 1,152,021 829,430 1,152,021

Time deposits, non-current portion 302,258 – 302,258 –

Financial assets at fair value through profit or loss – call options over non-

controlling interests 28,519 10,606 28,519 10,606

Financial assets at fair value through profit or loss – wealth investment products – 7,218 – 7,218

1,175,568 1,210,391 1,175,568 1,210,391

Financial liabilities

Derivative financial instruments 44,098 4,260 44,098 4,260

Interest-bearing bank loans and other borrowings 3,354,778 3,517,484 3,354,064 3,509,513

3,398,876 3,521,744 3,398,162 3,513,773

Management has assessed that the fair values of cash and cash equivalents, the current portion of

pledged deposits, time deposits, trade receivables, financial assets included in prepayments, other

receivables, current interest-bearing bank loans and other borrowings, trade and bills payables, other

liabilities, and financial liabilities included in other payables and accruals approximate to their carrying

amounts largely due to the short term maturities of these instruments. The carrying amount of the non-

current interest-bearing bank loans and other borrowings of the Group approximates to their fair value

because the loans have a floating interest rate.

NOTES TO FINANCIAL STATEMENTS

GOODBABY 269

Annual Report 2022

39. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

(Continued)

The finance manager of each subsidiary of the Group is responsible for determining the policies and

procedures for the fair value measurement of financial instruments. The Group’s finance manager

reports directly to the chief financial officer and the audit committee. At each reporting date, the finance

department analyses the movements in the values of financial instruments and determines the major

inputs applied in the valuation. The valuation is reviewed and approved by the chief financial officer. The

valuation process and results are discussed with the audit committee twice a year for interim and annual

financial reporting.

The fair values of the financial assets and liabilities are included at the amount at which the instrument

could be exchanged in a current transaction between willing parties, other than in a forced or liquidation

sale.

The Group invests in unlisted investments, which represent wealth management products issued by

banks in Mainland China. The Group has estimated the fair value of these unlisted investments by using

a discounted cash flow valuation model based on the market interest rates of instruments with similar

terms and risks.

The Group enters into derivative financial instruments with various counterparties, principally financial

institutions with high credit ratings. Derivative financial instruments, i.e., forward currency contracts, are

measured using valuation techniques similar to forward pricing and swap models, using present value

calculations. The models incorporate various market observable inputs including the credit quality of

counterparties, foreign exchange spot and forward rates and interest rate curves. The carrying amounts

of forward currency contracts are the same as their fair values.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

270

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

39. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

(Continued)

FAIR VALUE HIERARCHY

The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments:

Assets measured at fair value:

Fair value measurement using

31 December

2022

Quoted prices

in active markets

Level 1

Significant

observable inputs

Level 2

Significant

unobservable

inputs Level 3

(HK$’000)

Derivative financial instruments 15,361 – 15,361 –

Financial assets at fair value through profit or loss – call options over non-

controlling interests 28,519 – – 28,519

43,880 – 15,361 28,519

Fair value measurement using

31 December

2021

Quoted prices

in active markets

Level 1

Significant

observable inputs

Level 2

Significant

unobservable

inputs Level 3

(HK$’000)

Derivative financial instruments 40,546 – 40,546 –

Financial assets at fair value through profit or loss – wealth investment products 7,218 – 7,218 –

Financial assets at fair value through profit or loss

– call options over non-controlling interests 10,606 – – 10,606

58,370 – 47,764 10,606

NOTES TO FINANCIAL STATEMENTS

GOODBABY 271

Annual Report 2022

39. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

(Continued)

FAIR VALUE HIERARCHY (Continued)

Assets measured at fair value: (Continued)

The movements in fair value measurements in Level 3 during the year are as follows:

2022

2021

(HK$’000)

At 1 January 10,606 1,716

Remeasurement recognised in other income/(expenses) 18,443 9,407

Exchange realignment (530) (517)

At 31 December 28,519 10,606

During the year ended 31 December 2022, there were no transfers between Level 1 and Level 2 fair value

measurements, and no transfers into and out of Level 3 fair value measurements.

During the year ended 31 December 2021, there were no transfers between Level 1 and Level 2 fair value

measurements, and no transfers into and out of Level 3 fair value measurements.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

272

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

39. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

(Continued)

FAIR VALUE HIERARCHY (Continued)

Liabilities measured at fair values:

Fair value measurement using

31 December

2022

Quoted prices

in active markets

Level 1

Significant

observable inputs

Level 2

Significant

unobservable

inputs Level 3

(HK$’000)

Derivative financial instruments 44,098 – 44,098 –

Interest-bearing bank loans and other borrowings 3,354,064 – 3,354,064 –

3,398,162 – 3,398,162 –

Fair value measurement using

31 December

2021

Quoted prices

in active markets

Level 1

Significant

observable

inputs Level 2

Significant

unobservable

inputs Level 3

(HK$’000)

Derivative financial instruments 4,260 – 4,260 –

Interest-bearing bank loans and other borrowings 3,509,513 – 3,509,513 –

3,513,773 – 3,513,773 –

NOTES TO FINANCIAL STATEMENTS

GOODBABY 273

Annual Report 2022

40. FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each of the categories of financial instruments as at the end of the reporting

period are as follows:

FINANCIAL ASSETS

As at 31 December 2022

Financial

assets at fair

value through

profit or loss

Financial assets

at amortised

cost

Total

(HK$’000)

Trade receivables – 997,328 997,328

Financial assets included in prepayments and other receivables (note 21) – 425,092 425,092

Financial assets at fair value through profit and loss 28,519 – 28,519

Due from related parties – 2,503 2,503

Derivative financial instruments 15,361 – 15,361

Other long-term assets (note 18) – 11,197 11,197

Pledged deposits – 845,448 845,448

Time deposits – 302,258 302,258

Cash and cash equivalents – 921,961 921,961

43,880 3,505,787 3,549,667

As at 31 December 2021

Financial

assets at fair

value through

profit or loss

Financial assets

at amortised

cost

Total

(HK$’000)

Trade receivables – 1,247,410 1,247,410

Financial assets included in prepayments and other receivables (note 21) – 499,993 499,993

Financial assets at fair value through profit and loss 17,824 – 17,824

Due from related parties – 6,775 6,775

Derivative financial instruments 40,546 – 40,546

Other long-term assets (note 18) – 11,294 11,294

Pledged deposits – 1,161,475 1,161,475

Cash and cash equivalents – 1,087,413 1,087,413

58,370 4,014,360 4,072,730

GOODBABY

NOTES TO FINANCIAL STATEMENTS

274

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

40.

FINANCIAL INSTRUMENTS BY CATEGORY (Continued)

FINANCIAL LIABILITIES

As at 31 December 2022

Financial

liabilities at fair

value through

profit or loss

Financial

liabilities at

amortised cost

Total

(HK$’000)

Financial liabilities included in other payables and accruals (note 26) – 204,819 204,819

Trade and bills payables – 1,169,653 1,169,653

Interest-bearing bank loans and other borrowings – 3,354,778 3,354,778

Lease liabilities – 300,172 300,172

Derivative financial instruments 44,098 – 44,098

Due to related parties – 730 730

44,098 5,030,152 5,074,250

As at 31 December 2021

Financial

liabilities at fair

value through

profit or loss

Financial

liabilities at

amortised cost

Total

(HK$’000)

Financial liabilities included in other payables and accruals (note 26) – 245,568 245,568

Trade and bills payables – 1,636,633 1,636,633

Interest-bearing bank loans and other borrowings – 3,517,484 3,517,484

Lease liabilities – 300,904 300,904

Derivative financial instruments 4,260 – 4,260

Due to related parties – 604 604

4,260 5,701,193 5,705,453

NOTES TO FINANCIAL STATEMENTS

GOODBABY 275

Annual Report 2022

41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial liabilities, other than derivatives, comprise interest-bearing bank loans

and other borrowings, trade and bills payables, other payables and other liabilities. The main purpose

of these financial liabilities is to raise finance for the Group’s operations. The Group has various financial

investments such as trade and other receivables, cash and cash equivalents and amounts due from

related parties, which arise directly from its operations.

The Group also enters into derivative transactions, primarily forward currency contracts. The purpose is

to manage the currency risk arising from the Group’s operations.

It is, and has been throughout the year, the Group’s policy that no trading in derivatives for speculative

purposes shall be undertaken.

The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk,

credit risk and liquidity risk. The board of directors reviews and agrees policies for managing each of

these risks which are summarised below.

INTEREST RATE RISK

Interest rate risk is the risk that fair value or future cash flows of a financial instrument will fluctuate

because of changes in market interest rates.

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s

bank borrowings with floating interest rates. The interest rates and terms of repayment of borrowings

are disclosed in note 28.

The Group has not used any interest swaps to hedge its exposure to interest rate risk. The following

table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of

loans and borrowings. With all other variables held constant, the Group’s profit before tax is affected

through the impact on floating rate borrowings as follows:

Increase/

decrease in

interest rate

(Decrease)/

increase in profit

before tax

(HK$’000)

Year ended 31 December 2022 +5%/–5% (6,895)/6,895

Year ended 31 December 2021 +5%/–5% (4,530)/4,530

A reasonably possible change of 5% in the interest rates with all other variables held constant has no

impact on the Group’s equity other than retained earnings.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

276

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

FOREIGN CURRENCY RISK

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will

fluctuate because of changes in foreign exchange rates.

The Group has transactional currency exposure. Such exposure arises from sales or purchases by

operating units in currencies other than the units’ functional currencies. The Group requires its operating

units to use foreign currency forward contracts to eliminate the foreign currency exposures on any

individual transactions, for which payment is anticipated more than three months after the Group has

entered into a firm commitment for a sale or purchase. The foreign currency forward contracts must be

in the same currency as the hedged item. It is the Group’s policy not to enter into forward contracts until

a firm commitment is in place.

The Group manages its foreign currency risk by entering into foreign currency forward contracts to

hedge its exposure to fluctuations on the translation into RMB of its foreign operations of sales in the

US$ or EUR and the translation into EUR of its foreign operations of sales in various currencies, as

described in note 23. It is the Group’s policy to ensure that the net exposure is kept to an acceptable

level by buying or selling foreign currencies at a fixed rate where necessary to address short term

imbalances. Management will continue to monitor foreign exchange exposure and will continue to

consider hedging significant foreign currency exposure by using financial instruments such as foreign

currency forward contracts.

The operating units’ functional currencies of the Group are RMB, EUR and US$, while the currencies

which have significant transactional currency exposures are US$ and EUR. The Group’s exposure to

foreign currency changes for all other currencies is not material. The following table demonstrates

the sensitivity at the end of the reporting period to a reasonably possible change in the US$ and EUR

exchange rates against RMB, with all other variables held constant, of the Group’s profit before tax (due

to changes in the fair value of monetary assets and liabilities).

NOTES TO FINANCIAL STATEMENTS

GOODBABY 277

Annual Report 2022

41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

FOREIGN CURRENCY RISK (Continued)

Increase/

(decrease) in

exchange rate

Increase/

(decrease) in

profit before tax

% (HK$’000)

Year ended 31 December 2022

If US$ strengthens against RMB 5% 9,027

If US$ weakens against RMB (5%) (9,027)

If EUR strengthens against RMB 5% 26,325

If EUR weakens against RMB (5%) (26,325)

Year ended 31 December 2021

If US$ strengthens against RMB 5% 23,866

If US$ weakens against RMB (5%) (23,866)

If EUR strengthens against RMB 5% 26,395

If EUR weakens against RMB (5%) (26,395)

CREDIT RISK

The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all

customers who wish to trade on credit terms are subject to credit verification procedures. In addition,

receivable balances are monitored on an ongoing basis and the Group’s exposure to bad debts is

not significant. For transactions that are not denominated in the functional currency of the relevant

operating unit, the Group does not offer credit terms without the specific approval of the Head of Credit

Control.

Maximum exposure and year-end staging

The tables below shows the credit quality and the maximum exposure to credit risk based on the Group’s

credit policy, which is mainly based on past due information unless other information is available without

undue cost or effort, and year-end staging classification as at 31 December.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

278

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

CREDIT RISK (Continued)

The amounts presented are gross carrying amounts for financial assets and the exposure to credit risk

for the financial guarantee contracts.

As at 31 December 2022

12-month ECLs

Lifetime ECLs

Stage 1

Stage 2

Stage 3

Simplified

approach

Total

(HK$’000)

Trade receivables* – – – 997,328 997,328

Financial assets included in prepayments and other

receivables

– Normal** 308,540 – – – 308,540

Pledged deposits

– Not yet past due 845,448 – – – 845,448

Time deposits

– Not yet past due 302,258 – – – 302,258

Cash and cash equivalents

– Not yet past due 921,961 – – – 921,961

2,378,207 – – 997,328 3,375,535

NOTES TO FINANCIAL STATEMENTS

GOODBABY 279

Annual Report 2022

41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

CREDIT RISK (Continued)

As at 31 December 2021

12-month ECLs

Lifetime ECLs

Stage 1

Stage 2

Stage 3

Simplified

approach

Total

(HK$’000)

Trade receivables* – – – 1,247,410 1,247,410

Financial assets included in prepayments and other

receivables

– Normal** 341,787 – – – 341,787

Pledged deposits

– Not yet past due 1,161,475 – – – 1,161,475

Cash and cash equivalents

– Not yet past due 1,087,413 – – – 1,087,413

2,590,675 – – 1,247,410 3,838,085

* For trade receivables to which the Group applies the simplified approach for impairment, information based on

the provision matrix is disclosed in note 20 to the financial statements.

** The credit quality of the financial assets included in prepayments and other receivables is considered to be

“normal” when they are not past due and there is no information indicating that the financial assets had a

significant increase in credit risk since initial recognition. Otherwise, the credit quality of the financial assets is

considered to be “doubtful”.

Further quantitative data in respect of the Group’s exposure to credit risk arising from trade receivables

are disclosed in note 20 to the financial statements.

Concentrations of credit risk are managed by customer and geographical region. There are no significant

concentrations of credit risk within the Group as the customer bases of the Group’s trade receivables are

widely dispersed in different regions.

GOODBABY

NOTES TO FINANCIAL STATEMENTS

280

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

LIQUIDITY RISK

The Group monitors its exposure to liquidity risk by monitoring the current ratio, which is calculated by

comparing the current assets with the current liabilities.

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the

use of interest-bearing loans. The Group’s policy is that all the borrowings should be approved by the

chief financial officer.

The tables below summarise the maturity profile of the Group’s financial liabilities at the end of each

reporting period based on contractual undiscounted payments:

31 December 2022

On demand

Less than 3

months

3 to 12 months

1 to 5 years

Over 5 years

Total

(HK$’000)

Interests-bearing bank loans and other borrowings – 256,688 1,026,847 2,230,724 – 3,514,259

Lease liabilities – 29,161 88,616 204,776 – 322,553

Trade and bills payables 858,407 311,246 – – – 1,169,653

Derivative financial instruments – 24,170 19,928 – – 44,098

Due to related parties 730 ––––730

Other payables 204,819 ––––204,819

1,063,956 621,265 1,135,391 2,435,500 – 5,256,112

31 December 2021

On demand

Less than 3

months

3 to 12 months

1 to 5 years

Over 5 years

Total

(HK$’000)

Interests-bearing bank loans and other borrowings – 289,595 996,467 2,363,934 – 3,649,996

Lease liabilities – 29,754 69,224 197,567 4,358 300,903

Trade and bills payables 1,368,265 268,368 – – – 1,636,633

Derivative financial instruments – 1,175 2,785 300 – 4,260

Due to related parties 604 ––––604

Other payables 245,568 ––––245,568

1,614,437 588,892 1,068,476 2,561,801 4,358 5,837,964

NOTES TO FINANCIAL STATEMENTS

GOODBABY 281

Annual Report 2022

41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit

profile and healthy capital ratios in order to support its business and maximise shareholders’ value.

The Group manages its capital structure and makes adjustments to it in light of changes in economic

conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment

to shareholders, return capital to shareholders or issue new shares. No changes were made in the

objectives, policies or processes for managing capital during the year.

The Group monitors capital using a gearing ratio, which is net debt divided by capital plus net debt. Net

debt includes interest-bearing bank loans and other borrowings, trade and bills payables, other payables

and accruals, and less monetary assets, including cash and cash equivalents, pledged time deposits and

financial assets at fair value through profit and loss. Capital represents equity attributable to owners of

the parent and less hedging reserve.

The gearing ratios at the end of the reporting periods were as follows:

2022

2021

(HK$’000)

Trade and bills payables 1,169,653 1,636,633

Other payables and accruals 784,438 905,027

Interest-bearing bank loans and other borrowings 3,354,778 3,517,484

Less: Monetary assets 2,069,667 2,256,106

Net debt 3,239,202 3,803,038

Equity attributable to owners of the parent 5,516,678 6,060,951

Less: Hedging reserve (11,404) 11,394

Adjusted capital 5,528,082 6,049,557

Capital and net debt 8,767,284 9,852,595

Gearing ratio 37% 39%

GOODBABY

NOTES TO FINANCIAL STATEMENTS

282

Annual Report 2022

NOTES TO FINANCIAL STATEMENTS

31 DECEMBER 2022

42. STATEMENT OF FINANCIAL POSITION OF THE COMPANY

Information about the statement of financial position of the Company at the end of the reporting period is

as follows:

2022

2021

(HK$’000)

NON-CURRENT ASSETS

Investments in subsidiaries 3,820,263 3,845,098

Total non-current assets 3,820,263 3,845,098

CURRENT ASSETS

Other receivables 345 336

Due from subsidiaries 769,457 649,076

Cash and cash equivalents 6,534 6,035

Total current assets 776,336 655,447

CURRENT LIABILITIES

Accrued expenses 71 –

Due to a subsidiary 1,627,849 1,448,219

Total current liabilities 1,627,920 1,448,219

NET CURRENT LIABILITIES (851,584) (792,772)

TOTAL ASSETS LESS CURRENT LIABILITIES 2,968,679 3,052,326

Net assets 2,968,679 3,052,326

EQUITY

Share capital 16,680 16,680

Reserves (note) 2,951,999 3,035,646

Total equity 2,968,679 3,052,326

NOTES TO FINANCIAL STATEMENTS

GOODBABY 283

Annual Report 2022

42. STATEMENT OF FINANCIAL POSITION OF THE COMPANY (Continued)

Note:

A summary of the Company’s reserves is as follows:

premium

Share option

reserve

Accumulated

losses

Total

(HK$’000)

Balance at 31 December 2020 and 1 January 2021 3,320,401 156,865 (368,972) 3,108,294

Loss for the year – – (108,196) (108,196)

Share issue expenses 10 (2) – 8

Equity-settled share option arrangements – 35,540 – 35,540

Balance at 31 December 2021 and 1 January 2022 3,320,411 192,403 (477,168) 3,035,646

Loss for the year – – (98,834) (98,834)

Equity-settled share option arrangements – 15,187 – 15,187

As at 31 December 2022 3,320,411 207,590 (576,002) 2,951,999

43. EVENTS AFTER THE REPORTING PERIOD

There are no significant events after the end of the reporting period.

44. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the board of directors on 28 March

2023.

GOODBABY

FIVE YEAR FINANCIAL SUMMARY

284

Annual Report 2022

FIVE YEAR FINANCIAL SUMMARY

A summary of the results and of the assets, liabilities and non-controlling interests of the Group for the last

five financial years, as extracted from the published audited financial statements and restated/reclassified as

appropriate, is set out below.

Year ended 31 December

2022

2021

2020

2019

2018

(HK$’000)

Results

Revenue 8,292,152 9,692,137 8,304,967 8,777,142 8,629,115

Cost of sales (4,936,271) (5,696,909) (4,636,930) (4,996,484) (4,967,782)

Gross profit 3,355,881 3,995,228 3,668,037 3,780,658 3,661,333

Other income and gains 165,429 80,800 90,048 74,116 98,303

Selling and distribution expenses (2,072,449) (2,476,241) (2,131,438) (2,274,966) (2,208,873)

Administrative expenses (1,345,590) (1,426,458) (1,145,615) (1,170,329) (1,207,135)

Other expenses (2,437) (7,266) (50,972) (19,544) (16,803)

Operating Profit 100,834 166,063 430,060 389,935 326,825

Finance Income 42,971 35,074 5,956 4,543 3,867

Finance Costs (137,906) (90,594) (114,068) (141,856) (123,576)

Share of profits and losses of a joint venture (4,621) 1,277 (1,143) 339 407

Share of profits and losses of an associate (85) (8) (105) (131) –

Profit before tax 1,193 111,812 320,700 252,830 207,523

Income tax credit/(expense) 38,935 15,749 (62,780) (50,262) (40,692)

Profit for the year 40,128 127,561 257,920 202,568 166,831

Attributable to:

Owners of the parent 33,487 123,817 256,574 202,194 163,764

Non-controlling interests 6,641 3,744 1,346 374 3,067

40,128 127,561 257,920 202,568 166,831

ASSETS, LIABILITIES AND NON-CONTROLLING INTERESTS

As at 31 December

2022

2021

2020

2019

2018

(HK$’000)

Total assets 11,714,695 13,171,712 11,868,787 10,876,962 10,618,485

Total liabilities (6,157,042) (7,074,208) (6,087,218) (5,790,828) (5,655,379)

Non-controlling interests (40,975) (36,553) (32,125) (48,661) (48,386)

5,516,678 6,060,951 5,749,444 5,037,473 4,914,720

A Leading Juvenile

Products Company

Goodbaby International Holdings Limited

(Incorporated in the Cayman Islands with limited liability)

www.gbinternational.com.hk

Stock Code: 1086