Financial Performance - The company's revenue decreased by approximately 28.1% from about $122.0 million in 2019 to about $87.7 million in 2020, primarily due to the impact of COVID-19 on supply chains and customer orders[23]. - Revenue from online-native customers dropped from approximately $62.0 million in 2019 to about $34.8 million in 2020, a decline of about 43.9%[23]. - Revenue from traditional high-end customers slightly decreased from approximately $52.0 million in 2019 to about $50.0 million in 2020, a decline of about 3.9%, while their revenue share increased from about 42.6% to 57.0%[24]. - The gross profit decreased from approximately $35.7 million in 2019 to about $25.9 million in 2020, a decline of about 27.3%[29]. - The adjusted net profit for 2020 was approximately $0.7 million, with an adjusted net profit margin of about 0.8%[32]. - The company's cash and cash equivalents as of December 31, 2020, were approximately $17.8 million, compared to $17.0 million in 2019[34]. - The current ratio for 2020 was approximately 2.0, down from 2.1 in 2019, indicating a relatively stable financial condition[34]. - The debt-to-equity ratio as of December 31, 2020, was approximately 44.5%, up from 34.1% in 2019[38]. - The gross margin improved from approximately 29.3% in 2019 to about 29.6% in 2020, attributed to business expansion into new product categories and improved operational efficiency[29]. Business Expansion and Strategy - The company maintained profitability during the COVID-19 crisis, outperforming most industry peers due to a light-asset business model and approximately 40% of sales coming from online-native brands and platforms[11]. - The company completed four acquisitions during the review period, including a sweater manufacturer, a functional outerwear manufacturer, a denim manufacturer, and a professional sportswear brand, significantly broadening its product line[12]. - The company is experiencing a resurgence in market share as demand increases with the rollout of vaccines, benefiting from the collapse of weaker competitors[14]. - The company aims to continue its business expansion strategy through active acquisition opportunities, expanding its geographical production range and customer base[15]. - The product line has been significantly expanded to cover the entire wardrobe, allowing the company to provide one-stop services to several clients[16]. - The company is positioning itself as a major player in the fast-growing digital retail space, focusing on small-batch and customized production capabilities[16]. - The company has implemented initiatives such as crowdsourced design and factory-brand matching algorithms as part of its strategy to become a super company in the apparel sourcing industry[16]. Corporate Governance - The company has established a board diversity policy to ensure a balanced mix of skills, experience, and perspectives among board members, enhancing corporate governance and operational effectiveness[65]. - The audit committee held three meetings during the year ended December 31, 2020, with full attendance from all members, focusing on financial reporting, risk management, and internal control systems[69]. - The remuneration committee conducted five meetings to review the company's remuneration policies and structures for directors and senior management, ensuring transparency in the remuneration process[72]. - The nomination committee held three meetings to assess board composition and recommend policies for the nomination and appointment of directors, considering various diversity factors[73]. - The company has appointed three independent non-executive directors, constituting over one-third of the board, ensuring compliance with independence requirements[62]. - The chairman and CEO roles are separated to maintain a clear distinction between board leadership and operational management responsibilities[61]. - The audit committee is responsible for reviewing the company's financial performance and risk management systems, ensuring compliance with corporate governance standards[71]. - The company received annual written confirmations from independent non-executive directors regarding their independence, affirming compliance with listing rules[62]. - The board diversity policy will be regularly reviewed to ensure its effective implementation and alignment with the company's business needs[66]. - The company has established three committees: audit, remuneration, and nomination, each with defined responsibilities and sufficient resources to oversee specific areas[67]. - The company held a total of 4 board meetings, 3 audit committee meetings, and 4 shareholder meetings during the year[79]. - The external auditor, Deloitte, received a total fee of $334,000, which includes $308,000 for audit services and $26,000 for non-audit services[90]. - All directors participated in continuous professional development training, ensuring they are well-informed about their responsibilities under the listing rules[85]. - The company has adopted a nomination policy for directors, ensuring a formal and transparent process for appointment and re-election[81]. - The company has established appropriate insurance coverage for its directors and senior officers against potential legal actions[87]. - The board of directors is responsible for preparing financial statements that fairly reflect the group's business status and performance[92]. - The company has not identified any significant uncertainties that may cast doubt on its ability to continue as a going concern[94]. - The company will continue to monitor and evaluate the skills and experiences of potential new board members[82]. - All directors confirmed compliance with the standard code of conduct regarding securities trading during the reporting period[88]. - The company will hold at least four board meetings annually to discuss financial performance and strategic development[77]. - The company has established a risk management framework involving the board of directors, audit committee, and senior management to oversee risk management and internal control systems[95]. - The board conducts an annual review of the effectiveness of the risk management and internal control systems, ensuring they are adequate and effective as of December 31, 2020[98]. - Independent internal control consultants provide annual internal audit and enterprise risk assessment reports to the audit committee and board for approval[96]. - The company aims to manage risks rather than eliminate them, providing reasonable assurance against significant misstatements or losses[98]. ESG and Sustainability - The ESG report details the company's efforts and achievements in sustainable development and social responsibility during the fiscal year[116]. - The ESG report covers environmental and social performance from January 1, 2020, to December 31, 2020[117]. - The board believes that effective ESG governance principles are crucial for long-term business development and investment value[122]. - The audit committee has engaged third-party ESG professionals to manage the company's ESG performance[122]. - The company actively communicates with stakeholders through various channels to understand their expectations regarding ESG[124]. - The report outlines the main stakeholders, their expectations, and the company's responses and communication channels[126]. - The company emphasizes compliance with emission regulations and engages with local environmental departments[129]. - The total greenhouse gas emissions for the year were 320.3 tons of CO2 equivalent, a decrease of 23.5% from 419.2 tons in the previous year[136]. - Direct emissions (Scope 1) were 13.8 tons of CO2 equivalent, down from 34.5 tons, representing a reduction of 60%[136]. - Indirect emissions from purchased electricity (Scope 2) increased to 271.6 tons of CO2 equivalent, up from 188.2 tons, marking a rise of 44.4%[136]. - Other indirect emissions (Scope 3) decreased significantly to 34.9 tons of CO2 equivalent from 196.5 tons, a reduction of 82.2%[136]. - Non-hazardous waste generated was 112.6 tons, down 39.0% from 184.8 tons in the previous year[140]. - Hazardous waste generated was 27.5 kg, an increase from 21.9 kg, reflecting a rise of 25.6%[140]. - The density of non-hazardous waste per employee was 0.38 tons, down from 0.50 tons[140]. - The company has implemented strict measures to control the use of toxic chemicals in production, aligning with the Greenpeace Detox Campaign[141]. - The company encourages employees to adopt low-carbon lifestyles and reduce waste through various initiatives[141]. - The company adheres to environmental regulations and has not reported any significant violations related to environmental protection laws[133]. - Total energy consumption in Shenzhen office increased to 570.9 MWh in 2020 from 496.0 MWh in 2019, representing a 15% increase[145]. - Direct energy consumption from vehicle fuel decreased significantly to 55.7 MWh in 2020 from 138.9 MWh in 2019, a reduction of approximately 60%[145]. - Indirect energy consumption from purchased electricity rose to 515.2 MWh in 2020, up from 357.1 MWh in 2019, marking a 44% increase[145]. - Total water consumption in Shenzhen office decreased to 1,993.1 cubic meters in 2020 from 2,943.9 cubic meters in 2019, a reduction of about 32%[149]. - Employee water consumption density improved to 6.67 cubic meters per employee in 2020 from 7.94 cubic meters in 2019, indicating better resource efficiency[149]. - The company has implemented energy-saving measures, including the installation of energy-efficient lighting and regular maintenance of air conditioning systems[146]. - The company is actively monitoring climate change trends and has established a task force to address extreme weather events and their potential impacts on operations[152]. - The company promotes water-saving awareness among employees and has adopted water-saving devices, contributing to reduced water usage[149]. Employee Engagement and Welfare - The company recognizes the importance of employee engagement and has established competitive compensation structures to attract and retain talent[155]. - As of December 31, 2020, the company employed a total of 304 employees[161]. - The employee distribution by gender showed that 56% were female and 83% were male in 2020, compared to 33% and 21% in 2019 respectively[162]. - The employee turnover rate was categorized by age, with 74% under 30 years old, 59% between 30 to 50 years old, and 135% over 50 years old in 2020[162]. - The average training hours per employee in 2020 were 3.1 hours for senior staff (91% trained), 7.1 hours for middle staff (61% trained), and 4.3 hours for junior staff (41% trained)[168]. - The company has implemented various training programs, including hardware skills training and case studies on customer service and information security[168]. - The company has maintained a zero fatality rate from workplace injuries over the past three years[170]. - Employee benefits include public holidays, annual leave, and discretionary bonuses, promoting a good work-life balance[174]. Supply Chain and Ethical Practices - The company has established strict supplier selection procedures, prioritizing suppliers with good reputations and compliance with labor laws[176]. - The company is committed to maintaining a safe working environment, adhering to relevant health and safety regulations[170]. - The company actively participates in health programs for female workers to enhance their health awareness and knowledge[164]. - The group has implemented a supplier scorecard system to identify potential risks in the supply chain, including environmental and social risks[178]. - The number of suppliers by region includes 468 (42%) from Hong Kong, 270 (25%) from Europe, 35 (3%) from Asia, 179 (16%) from America, and 149 (14%) from China[179]. - The group has established a quality management system to ensure products meet health and safety requirements, with all raw materials undergoing quality inspection before being accepted[182]. - The group has not recorded any product recalls due to safety and health reasons during the year[182]. - The group donates one piece of clothing for every 1,000 clothing products sold to NGOs and charities, contributing over 2,000 pieces to local communities in Shenzhen[188]. - The group donated a total of RMB 220,000 to the Hong Kong Salvation Army as part of a charitable donation event organized by the Shenzhen Caring Action Committee[188]. - The group prioritizes responsible and environmentally friendly sourcing of raw materials, ensuring compliance with standards such as GOTS, GRS, RDS, and RWS[181]. - The group has not been involved in any legal cases related to bribery, corruption, extortion, or money laundering that significantly impacted the company during the year[186]. - The group emphasizes the importance of protecting intellectual property and requires employees to maintain confidentiality regarding sensitive information[185]. - The group is committed to ethical business practices and has a whistleblowing policy for reporting misconduct[186].

Revenue Performance - Revenue for the first half of 2020 decreased by approximately 33.8% to about $37.1 million from approximately $56.1 million in the same period of 2019[19]. - Revenue from online native customers dropped by about 45.3% to approximately $16.8 million, compared to about $30.8 million in the same period of 2019[20]. - Revenue from traditional high-end customers decreased by about 21.7% to approximately $18.4 million from about $23.5 million in the same period of 2019, while their revenue share increased from approximately 41.8% to 49.5%[21]. - Revenue for the six months ended June 30, 2020, was $37,136,205, a decrease of 33.8% compared to $56,130,818 for the same period in 2019[80]. - Revenue from the United States was $23,926,641, down 44.5% from $43,269,047 in 2019[108]. - Revenue from Europe decreased to $5,665,804, a decline of 22.6% from $7,328,034 in 2019[108]. - Revenue from Greater China increased to $4,716,578, up 37.2% from $3,439,838 in 2019[108]. Profitability and Loss - Gross profit decreased from approximately $16.4 million and a gross margin of 29.2% in the first half of 2019 to about $10.5 million and a gross margin of 28.4% in the review period, representing a decline of approximately 35.7% and 0.8% respectively[26]. - The group reported a net loss of approximately $2.2 million for the six months ended June 30, 2020, compared to a profit of $2.0 million for the same period in 2019, primarily due to COVID-19 related impacts[28]. - The company reported a loss before tax of $2,175,619, compared to a profit of $2,569,147 in the previous year[80]. - The net loss for the period was $2,221,172, compared to a profit of $2,046,473 in 2019, indicating a significant downturn[80]. - Basic loss per share was $(0.35), compared to earnings of $0.43 per share in the prior year[80]. - Total comprehensive loss for the period was $(2,243,033), compared to a total comprehensive income of $2,018,340 in the previous year[80]. Cost Management - Sales cost decreased by approximately 33.1% to about $26.6 million from about $39.7 million in the same period of 2019, with sales cost as a percentage of total revenue slightly increasing to 71.6%[25]. - The company experienced a decrease in sales and distribution expenses to $(6,855,856) from $(7,357,139), a reduction of 6.8%[80]. - Administrative expenses increased to $(5,843,326) from $(5,271,435), reflecting a rise of 10.8%[80]. - Financing costs decreased significantly to $(287,751) from $(531,793), a reduction of 46.0%[80]. Strategic Initiatives - The company acquired accounts receivable, inventory prepayments, and purchase orders from high-end sweater manufacturer Vista Apparels Limited and high-end technical outerwear manufacturer Swiss Levi Co., marking a strategic expansion into the technical apparel market[16]. - The company expects to gain market share during the crisis due to its strong financial position and light asset business model, positioning itself to benefit from industry consolidation opportunities[17]. - The pandemic has created long-term strategic opportunities, with more reasonable valuations and terms for potential acquisitions[16]. - Approximately 50% of the company's sales during the pandemic came from online native brands and platforms, outperforming physical store brands[16]. - The company anticipates that significant acquisition opportunities will continue to emerge as the fashion market remains sluggish due to the pandemic[17]. - The company has successfully cross-sold new product categories to existing customers following the acquisition of Vista, demonstrating the synergy of the acquisition[16]. Financial Position - As of June 30, 2020, the group had cash and cash equivalents of approximately $14.1 million, down from $17.0 million as of December 31, 2019, while the current ratio improved to approximately 2.4 times from 2.1 times in 2019[29]. - The group’s debt-to-equity ratio as of June 30, 2020, was approximately 26.4%, down from 34.1% as of December 31, 2019[30]. - Total liabilities decreased from $29,953,896 to $19,341,028, indicating a reduction of around 35%[82]. - The total equity as of June 30, 2020, was $28,800,437, down from $34,345,929 as of December 31, 2019, representing a decrease of approximately 16%[84]. - Cash and cash equivalents at the end of the period were $14,118,291, compared to $4,659,575 at the end of June 30, 2019[93]. - The company reported a net cash decrease of $(2,886,127) in cash and cash equivalents for the six months ended June 30, 2020[93]. Employee and Operational Metrics - The group employed a total of 287 full-time employees as of June 30, 2020, down from 371 employees as of December 31, 2019, with total employee compensation of approximately $6.5 million, reflecting a growth of about 3.2%[34]. - Total employee costs for the period were $6,483,782, an increase from $6,312,967 in the previous year[116]. - The group recognized new right-of-use assets of approximately $19,000 during the reporting period[124]. Shareholder Information - A total of 588,000 shares were repurchased at a cost of HKD 282,800 during the six months ended June 30, 2020[49]. - The highest repurchase price per share was HKD 0.51, while the lowest was HKD 0.45[49]. - As of June 30, 2020, the company had 640,000,000 shares issued[59]. - The major shareholder, Imaginative Company Limited, holds 305,664,000 shares, representing approximately 47.76% of the company[63]. - Fung Trinity Holdings Limited and its related entities collectively hold 92,224,000 shares, accounting for approximately 14.41%[63]. - The beneficial owner, Dr. Chan Yuk-Mou, holds 24,000,000 shares, which is about 3.75% of the company[58]. - The company has not granted any stock options since the adoption of the stock option plan on October 12, 2019[56]. - The board of directors remains unchanged as of June 30, 2020[50]. Compliance and Regulatory Matters - The company aims to enhance compliance with adopted and ongoing regulations[67]. - The group’s estimated taxable profits in Hong Kong are subject to a two-tiered profits tax rate mechanism, with the first HKD 2 million taxed at 8.25%[113]. - The group’s subsidiary in Qianhai enjoys a reduced tax rate of 15% until 2020[113].

Impact of COVID-19 - The company reported a significant impact from the COVID-19 pandemic, leading to a sharp decline in apparel demand and supply chain disruptions[10]. - The company acknowledges the need for government intervention to support brands, retailers, and factories during the economic downturn[10]. - The company expresses cautious optimism about the long-term outlook despite the current challenges in the apparel supply chain[16]. Online Sales and E-commerce - Approximately 50% of the company's sales are derived from online-native brands and platforms, which have been less affected by the demand shock compared to traditional retail[13]. - The company recognizes the accelerated shift towards e-commerce as consumers adapt to online shopping during lockdowns[13]. - The company plans to allocate more resources to serve the online-native brand segment, anticipating its growth post-crisis[13]. Financial Performance - The company's revenue increased by approximately 5.3% from $115.9 million in 2018 to $122.0 million in 2019, driven by a focus on high-growth potential customers, particularly online-native clients[19]. - Revenue from online-native customers grew by about 15.5% from $53.7 million in 2018 to $62.0 million in 2019, contributing approximately 50.8% to total revenue in 2019[19]. - Revenue from traditional high-end and mid-range customers decreased by approximately 2.3% and 10.7%, respectively, due to a decline in lower-margin orders[20]. - Cost of sales increased by about 0.8% from $85.6 million in 2018 to $86.3 million in 2019, while the cost of sales as a percentage of total revenue decreased from 73.9% to 70.7%[21]. - Gross profit rose by approximately 18.0% from $30.3 million in 2018 to $35.7 million in 2019, with the gross margin increasing from 26.1% to 29.3%[23]. - The net profit for 2019 decreased by approximately 25.1% to $4.8 million, with a net profit margin of 4.0% compared to 5.6% in 2018[25]. - The company maintained a healthy financial position, with cash and cash equivalents increasing to approximately $17.0 million in 2019 from $3.1 million in 2018[29]. - The current ratio improved to approximately 2.1 times in 2019 from 1.4 times in 2018, indicating better liquidity[29]. Corporate Governance - The board consists of three executive directors, one non-executive director, and three independent non-executive directors, ensuring a balance of skills and knowledge[54]. - The company has adopted the corporate governance code and has complied with all applicable provisions since its listing date[52]. - The independent non-executive directors provide independent judgment to mitigate risks arising from conflicts of interest[61]. - The company has received annual written confirmations of independence from all independent non-executive directors, affirming their compliance with independence requirements[61]. - The board adopted a diversity policy on October 12, 2019, emphasizing the importance of diverse skills, experiences, and perspectives for effective corporate governance[63]. - The audit committee, established on October 12, 2019, is responsible for reviewing financial reporting, risk management, and internal control systems[67]. - The audit committee held one meeting during the review year to discuss the financial performance for the year ending December 31, 2019[69]. - The remuneration committee, also formed on October 12, 2019, held two meetings to review the company's remuneration policies and structures[70]. - The nomination committee, established on October 12, 2019, is tasked with reviewing board composition and recommending director nominations[71]. - The company holds at least four board meetings annually to discuss financial performance and strategic development[75]. - Each committee has sufficient resources and reports regularly to the board on their decisions or recommendations[66]. - The company has a formal and transparent process for appointing and removing directors, guided by the nomination committee[79]. - The audit committee consists of three independent non-executive directors, ensuring oversight of financial matters[67]. - The board's diversity policy includes considerations of gender, age, ethnicity, and professional experience in its nominations[63]. - The company has appointed Deloitte as the external auditor, with audit fees totaling $306,000 and non-audit fees of $520,000 for the year ended December 31, 2019, resulting in a total of $826,000[88]. - The board of directors is required to retire and seek re-election at least once every three years, with one-third of the directors rotating annually[80]. - The company has established a risk management framework involving the board, audit committee, and senior management to oversee risk management and internal control systems[93]. - An independent internal control consultant has been engaged to assist the board and audit committee in monitoring the effectiveness of the risk management and internal control systems[93]. - The board believes that the risk management and internal control systems were adequate and effective for the year ended December 31, 2019[96]. - All directors participated in continuous professional development training to ensure they are well-informed about their responsibilities under the listing rules[83]. - The company has adopted a code of conduct for securities trading by directors, confirming compliance since the listing date[86]. - The board has reviewed the effectiveness of the risk management and internal control systems, ensuring they are capable of adapting to business changes and external environment[94]. Employee and Social Responsibility - The total number of full-time employees increased to 371 in 2019 from 331 in 2018, with total employee compensation rising by approximately 17.4% to $11.4 million[34]. - The company recognizes employees as one of its most valuable assets and has implemented a stock option plan to retain qualified employees and acknowledge their contributions[37]. - The company emphasizes work-life balance, organizing events such as Christmas parties and sports competitions for employee interaction[168]. - The company recorded two work-related injuries during the year, resulting in a total of 39 lost workdays[164]. - The company donated 12,845 clothing items to charitable organizations, reflecting its commitment to social responsibility[179]. - The employee turnover rate was 33% for females and 21% for males, with the highest turnover rate of 39% among employees under 30 years old[157]. - The average training hours per employee were 15.1 hours for senior staff, 22.2 hours for middle staff, and 1.6 hours for junior staff, with 100% of senior and middle staff receiving training[161]. - The total number of employees is categorized by gender, employment type, age group, and region[184]. - Employee turnover rate is analyzed by gender, age group, and region[184]. - The number and rate of work-related fatalities are reported[186]. - The number of lost workdays due to work-related injuries is documented[186]. - The percentage of trained employees is divided by gender and employee category[186]. - The average training hours completed per employee are reported by gender and employee category[186]. - The percentage of products recalled due to safety and health reasons is disclosed[186]. - The number of complaints received regarding products and services is noted[186]. - The number of suppliers categorized by region is mentioned[186]. - The company's community investment focus areas and resource allocation are outlined[186]. Environmental Performance - The ESG report details the company's efforts and achievements in sustainable development and social responsibility during the fiscal year ending December 31, 2019[114]. - The ESG report covers environmental and social performance metrics based on operations primarily in Shenzhen, China, for the year 2019[115]. - The company reported no significant violations of environmental laws and regulations during the year, demonstrating its commitment to environmental protection[132]. - The company’s air pollutant emissions from its Shenzhen office included 12.62 kg of nitrogen oxides (NOx), 0.21 kg of sulfur oxides (SOx), and 0.93 kg of particulate matter (PM) for the year[134]. - Total greenhouse gas emissions from the Shenzhen office amounted to 419.22 tons of CO2 equivalent, with Scope 1 direct emissions at 34.47 tons, Scope 2 indirect emissions at 188.22 tons, and Scope 3 other indirect emissions at 196.53 tons[135]. - The density of greenhouse gas emissions per employee was recorded at 1.13 tons of CO2 equivalent[135]. - The total waste generated by the Shenzhen office was 206.70 tons, consisting of 184.80 tons of non-hazardous waste and 21.90 tons of hazardous waste, with densities of 0.50 tons and 0.06 tons per employee respectively[139]. - Total energy consumption for the Shenzhen office was 495.97 MWh, with direct consumption from vehicle fuel at 138.88 MWh and indirect consumption from purchased electricity at 357.09 MWh, resulting in a density of 1.34 MWh per employee[143]. - Total water consumption for the Shenzhen office was 2,943.92 cubic meters, equating to 7.94 cubic meters per employee[148]. Leadership and Management - Dr. Chen holds a PhD in Business Administration from Hong Kong Polytechnic University, obtained in November 2003, and has extensive experience in textile and marketing[193]. - Mr. Li has over 15 years of experience in the manufacturing industry and was appointed as the Group's Chief Financial Officer in January 2015, responsible for financial planning and corporate management[194]. - Mr. Kim, appointed as a non-executive director in March 2019, has significant management experience in the fashion industry, including senior roles at Burberry Group Plc and All Saints Retail Ltd[198]. - Mr. Shi, an independent non-executive director since October 2019, has over 27 years of financial and management experience, previously holding senior positions at Nokia and Philips[200].