Company Overview - China Fortune Holdings Limited primarily sells and distributes mobile phones and digital products in the People's Republic of China[6]. - The Group was first listed on the GEM Board on February 16, 2000, and successfully transferred to the Main Board on January 26, 2004[6]. - In 2007, the Group acquired Zhuhai Reminda Telecom Equipment Company Limited, enhancing its telecommunications equipment business[7]. - In 2009, the Group entered the natural resource industry by acquiring a Strontium mining site in the PRC[7]. - The corporate culture emphasizes a blend of Western and Eastern management philosophies, aiming to become a leading provider in wireless communication and data products[8]. - The Group's business structure includes telecommunications, resource exploration, and investment activities[21]. - The Group aims for diversified business development through investments, mergers, and acquisitions[21]. - The Group's registered office is located in Bermuda, with a significant operational presence in Hong Kong and mainland China[14][16]. Financial Performance - The Group achieved a record annual sale of 2.1 million sets of mobile phones and a net profit exceeding HK$60 million[25]. - The Group's revenue for the year ended 31 December 2018 increased by approximately 28 times to approximately HK$216.1 million compared to the previous year[56]. - Profit for the year attributable to owners of the Company amounted to HK$7.8 million, a significant recovery from a loss of HK$111.7 million in the previous year[56]. - For the year ended December 31, 2018, the Group recorded total revenue of HK$216.1 million, approximately 28 times higher than the revenue of HK$7.4 million reported in 2017[70]. - The Group's gross profit increased by approximately 6.4 times, from HK$0.3 million in 2017 to HK$2.1 million in 2018[73]. - The gross profit margin decreased from 3.9% in 2017 to 1.0% in 2018 due to increased bargaining power from telecommunications chain stores and mobile carriers[77]. - Other income for the year ended December 31, 2018, was approximately HK$0.9 million, representing a decrease of 11.7% compared to HK$1.0 million in 2017[78]. - The Group had a net gain of HK$23.0 million in 2018, compared to a net loss of HK$38.2 million in 2017, primarily due to recovery of bad debts and write back of interest payables[79]. - Selling and distribution costs were approximately HK$11 thousand in 2018, a decrease of 97.3% compared to HK$0.4 million in 2017[80]. - Administrative expenses amounted to HK$14.9 million, maintaining a similar level compared to HK$14.7 million in the previous year[81]. - The Group's net profit for the year ended December 31, 2018, was HK$7.8 million, a significant improvement from a net loss of HK$111.7 million in the previous year[96][101]. - Basic earnings per share for the year ended December 31, 2018, was HK$0.85, compared to a basic loss per share of HK$12.25 in the previous year[97][102]. Business Development and Strategy - The Group is actively seeking opportunities to diversify its business and enhance shareholder value, focusing on big data, mobile operating systems, and mobile internet[55]. - The Group commenced its franchise retail business in the PRC[44]. - The Group completed the acquisition of 100% shareholdings of Synergy Technologies (Asia) Limited and disposed of 46% shareholdings of Synergy Pacific[29]. - The Group has entered into a joint venture agreement to engage in blockchain technology business, emphasizing its potential applications across various industries[61]. - The Group is pursuing opportunities in blockchain technology and 5G telecommunications networks[151]. Market Environment - The mobile phone market in China had over 1.6 billion subscribers as of the end of 2018, indicating a mature market with intense competition among manufacturers[126]. - The Group's operations faced challenges due to the evolving mobile phone market business model and uncertainties from the US-China trade war[131]. - Customers are expected to shift focus from mobile phone functionality to shopping experience, requiring integrated service platforms in retail channels[132]. - The Group expects uncertainties in the PRC economy, particularly from the US-China trade conflict, to continue affecting consumption and retail segments[151]. - There were over 1.6 billion handset subscribers in the PRC, with an increase of over 90 million subscribers in 2018[151]. - The number of 4G users in the PRC is around 1 billion, with expectations for further growth in the near future[151]. - The mobile internet user base has surpassed 1.1 billion, indicating vast opportunities in mobile applications and commerce[154]. - The demand for related equipment remains strong due to the maturation and upcoming launch of 5G communication networks[154]. Corporate Governance - The Board currently comprises two Executive Directors, one Non-executive Director, and three Independent Non-executive Directors, with independent directors constituting more than one-third of the Board[183]. - The Company has complied with most of the Code Provisions of the CG Code during the year ended 31 December 2018, with some deviations noted[174]. - The Company has adopted the Model Code for Securities Transactions by Directors, ensuring compliance by all Directors for the year ended 31 December 2018[175]. - The Nomination Committee is authorized by the Board to determine the policy for the nomination of Directors and to set out the nomination procedures[188]. - The Board collectively determines the overall strategies of the Company and monitors performance and related risks[189]. - The Company has arranged appropriate insurance cover on directors and officers liability for its directors and officers[190]. - The Board will continuously review and improve corporate governance practices to ensure proper regulation of business activities[178]. - All Non-executive Directors are subject to retirement by rotation in accordance with the Company's Bye-laws[184]. - The Company has received annual confirmations of independence from all Independent Non-executive Directors[186]. - The day-to-day management of the Company is delegated to the Executive Directors and senior management, who are required to report back to the Board[189]. - The Board held seven meetings in 2018 to review the Company's financial and operating performance and discuss future strategies[196]. - All Directors received at least 14 days' notice for regular Board meetings, ensuring they could include matters for discussion in the agenda[196]. - Mr. Lau Siu Ying attended all seven Board meetings as Chairman and Chief Executive Officer[199]. - Independent Non-executive Directors had a strong attendance record, with Dr. Law Chun Kwan attending all seven meetings[199]. - The Company has established a suitable directors and officers liability insurance for its directors and senior management[193]. - The roles of Chairman and Chief Executive Officer are currently held by the same individual, Mr. Lau Siu Ying, which is a deviation from the CG Code[200]. - The Board reviews significant matters including annual and interim financial statements and dividend proposals during meetings[196]. - The Company Secretary maintains all minutes of the Board meetings, which are available for inspection by all Directors[196].