[Chairman's Statement](index=3&type=section&id=Chairman's%20Statement) [Business Review and Future Outlook](index=3&type=section&id=Business%20Review%20and%20Future%20Outlook) The Group achieved a significant turnaround, with revenue growing 88.4% to HKD 426.6 million, primarily from financial services Key Performance Indicators for FY2020/2021 | Indicator | Amount (million HKD) | Year-on-Year Change | | :--- | :--- | :--- | | Revenue | 426.6 | +88.4% | | Total Comprehensive Income Attributable to Owners | 200.8 | Turned profitable (loss of 51.4 million HKD in prior period) | - The business structure successfully transformed, with financial services becoming the core revenue source, accounting for **67.6% of total revenue**, and its growth fully offsetting the decline in apparel business revenue[7](index=7&type=chunk) - The Group will focus on building a friendly and aggressive investment platform, maintaining an optimistic outlook on the sustained growth of its financial services business, planning to further develop asset management services through acquisitions of investment managers in Cayman and Singapore and applying for a Hong Kong Type 9 license, while expanding wealth management services via alternative investment and family office platforms[8](index=8&type=chunk) - As of the end of the reporting period, the Group had established **18 limited partnership funds** in Hong Kong, primarily investing in private equity[8](index=8&type=chunk) [Management Discussion and Analysis](index=5&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=5&type=section&id=Business%20Review) The Group successfully shifted its business focus to financial services, driving significant performance growth and diversifying revenue FY2021 Performance Overview | Indicator | Amount (million HKD) | Year-on-Year Growth | | :--- | :--- | :--- | | Revenue | 426.6 | 88.4% | | Gross Profit | 245.5 | 702.5% | | Total Comprehensive Income Attributable to Owners | 200.8 | Turned profitable | [Provision of Licensed Financial Services](index=5&type=section&id=Provision%20of%20Licensed%20Financial%20Services) Licensed financial services achieved explosive growth in its first full year, with segment revenue reaching HKD 288.2 million Licensed Financial Services Segment Performance | Indicator | FY2021 (million HKD) | FY2020 (million HKD) | | :--- | :--- | :--- | | Segment Revenue | 288.2 | 12.9 | | Segment Profit | 178.2 | 3.9 | - During the reporting period, service fees of approximately **HKD 128.6 million** and placement commissions of approximately **HKD 72.4 million** recognized from the acquisition of a Cayman investment manager were the primary reasons for the significant increase in this segment's revenue[12](index=12&type=chunk) Key Operating Data for Licensed Financial Services (as of March 31, 2021) | Indicator | Value | | :--- | :--- | | Number of Securities Brokerage Clients | 197 | | Transaction Volume for Securities Trading and Brokerage Services | Approximately 4.518 billion HKD | | Total Client Assets Under Brokerage Services | Approximately 2.275 billion HKD | | Loans Receivable from Margin Financing Services | Approximately 33.4 million HKD | | Assets Under Management and Advisory Services | Approximately 4.167 billion HKD | [Provision of Lending Services](index=7&type=section&id=Provision%20of%20Lending%20Services) Lending services revenue and profit grew steadily, driven by an increase in loans receivable to HKD 92.8 million Lending Services Segment Performance | Indicator | FY2021 (million HKD) | FY2020 (million HKD) | | :--- | :--- | :--- | | Segment Revenue | 4.9 | 0.6 | | Segment Profit | 2.3 | 0.3 | | Loans Receivable (period-end) | 92.8 | 31.9 | [Provision of Asset Management Services](index=7&type=section&id=Provision%20of%20Asset%20Management%20Services) Asset management, a new segment, recorded a profit of approximately HKD 44.9 million from fair value gains on financial assets - The asset management services segment recorded a profit of approximately **HKD 44.9 million** during the reporting period, primarily from fair value gains on financial assets measured at fair value through profit or loss[13](index=13&type=chunk) [Apparel Product Sales and Provision of Supply Chain Management Solutions to Customers](index=7&type=section&id=Apparel%20Product%20Sales%20and%20Provision%20of%20Supply%20Chain%20Management%20Solutions%20to%20Customers) The apparel business faced severe challenges from the pandemic and trade conflicts, leading to reduced orders and a segment loss - Apparel business segment revenue decreased from **HKD 212.9 million** to **HKD 133.5 million**, a decrease of approximately **37.3%**, and recorded a segment loss of approximately **HKD 5.5 million**[14](index=14&type=chunk) [Financial Review](index=7&type=section&id=Financial%20Review) Strong financial performance this fiscal year saw total revenue grow 88.4% to HKD 426.6 million, with a return to profitability FY2021 Revenue Segment Composition | Business Segment | Revenue (million HKD) | Year-on-Year Growth Rate | | :--- | :--- | :--- | | Licensed Financial Services | 288.2 | +2,132.7% | | Lending Services | 4.9 | +700.3% | | Apparel Business | 133.5 | -37.3% | | **Total** | **426.6** | **+88.4%** | - Cost of sales/services decreased by **7.5%** year-on-year to **HKD 181.1 million**, primarily due to reduced apparel business sales costs aligning with lower revenue, partially offset by a significant increase in financial services costs (e.g., re-referral fees)[15](index=15&type=chunk) - Net other income recorded approximately **HKD 83.0 million**, compared to a net loss of HKD 39.4 million in the prior period, mainly due to sales gains and fair value gains from financial assets measured at fair value through profit or loss[17](index=17&type=chunk) - General and administrative expenses increased by **178.8%** year-on-year to **HKD 100.7 million**, primarily due to increased salary expenses from a rise in employees from **42 to 61**, and share-based payment expenses of approximately **HKD 28.9 million** from share option grants[18](index=18&type=chunk) [Liquidity and Financial Resources](index=9&type=section&id=Liquidity%20and%20Financial%20Resources) The Group's financial position is robust, with net current assets increasing to HKD 287.1 million and cash at HKD 56.2 million Liquidity Indicators (as of March 31) | Indicator | 2021 | 2020 | | :--- | :--- | :--- | | Net Current Assets (million HKD) | 287.1 | 135.8 | | Cash and Cash Equivalents (million HKD) | 56.2 | 50.7 | | Current Ratio | 3.47 | 3.98 | | Bank Borrowings (million HKD) | 0 | 6.4 | | Gearing Ratio | 7.8% | 6.8% | - To strengthen capital, the company issued **HKD 6 million** in principal amount of 5% coupon unlisted bonds to independent third parties[21](index=21&type=chunk) - To pay part of the consideration for the acquisition of Carmel Reserve LLC, the company issued interest-free promissory notes with a principal amount of **USD 3.5 million**, with an outstanding balance of approximately **HKD 22.4 million** at period-end[21](index=21&type=chunk) [Significant Investments](index=10&type=section&id=Significant%20Investments) The Group made two significant investments, including a Cayman private equity fund and Carmel Reserve LLC, both recording fair value gains Details of Significant Investments (as of March 31, 2021) | Investment Project | Investment Type | Fair Value at Period-End (million HKD) | Percentage of Total Assets | Fair Value Gain During Reporting Period (million HKD) | | :--- | :--- | :--- | :--- | :--- | | Cayman Fund | Private Equity Fund | 119.6 | 19.2% | 3.9 | | Carmel Reserve LLC | Real Estate Project (Equity) | 71.2 | 11.3% | 33.2 | - The investment in Carmel Reserve LLC is the Group's first real estate investment, aimed at expanding its investment portfolio and capturing potential future profit distributions[26](index=26&type=chunk) [Employees and Remuneration Policy](index=12&type=section&id=Employees%20and%20Remuneration%20Policy) Full-time employees increased from 42 to 61, leading to a significant rise in total employee benefits expenses to HKD 64.2 million Employee and Remuneration Overview | Indicator | 2021 | 2020 | | :--- | :--- | :--- | | Full-time Employees (period-end) | 61 | 42 | | Total Employee Benefits Expenses (million HKD) | 64.2 | 21.1 | [Biographical Details of Directors and Senior Management](index=12&type=section&id=Biographical%20Details%20of%20Directors%20and%20Senior%20Management) [Directors and Senior Management Background](index=12&type=section&id=Directors%20and%20Senior%20Management%20Background) This section details the diverse professional backgrounds of the company's directors and senior management, particularly in financial services - Executive Director and Chairwoman Ms. Jiang Xinyong previously worked in private banking at JPMorgan Chase, Standard Chartered, and HSBC, and founded DL Family Office[33](index=33&type=chunk) - Executive Director and CEO Mr. Chen Ningdi has over **20 years** of global financial industry experience, founded DL Securities and DL Family Office, and previously worked in HSBC's Global Investment Banking division[34](index=34&type=chunk) - Board members possess diverse professional backgrounds, including finance, accounting, legal, technology, and media, supporting the Group's strategic decision-making[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) [Corporate Governance Report](index=16&type=section&id=Corporate%20Governance%20Report) [Corporate Governance Practices and the Board](index=16&type=section&id=Corporate%20Governance%20Practices%20and%20the%20Board) The company largely complied with corporate governance codes, maintaining a Board with clear roles and separate Chairman and CEO positions - During the reporting period, the company complied with all Code Provisions of the Corporate Governance Code, with the only deviation being Chairwoman Ms. Jiang Xinyong's absence from the Annual General Meeting on September 29, 2020, due to other commitments[40](index=40&type=chunk) - The roles of Chairman and Chief Executive Officer are held separately by Ms. Jiang Xinyong and Mr. Chen Ningdi, ensuring a balance of power and authority[48](index=48&type=chunk) Board Meeting Attendance Record (for the year ended March 31, 2021) | Director Name | Board Meeting Attendance | General Meeting Attendance | | :--- | :--- | :--- | | Ms. Jiang Xinyong | 13/14 | 0/2 | | Mr. Chen Ningdi | 14/14 | 1/2 | | Mr. Chen Guanhua | 12/14 | 0/2 | | Mr. Li Ren | 11/14 | 0/2 | | Mr. Zhang Shize | 11/14 | 2/2 | | Mr. Chen Zhengliang | 12/14 | 1/2 | | Mr. Liu Chun | 9/13 | 0/2 | | Ms. Lu Xuanling (resigned) | 9/10 | 1/1 | [Board Committees](index=20&type=section&id=Board%20Committees) The company established Audit, Remuneration, and Nomination Committees, predominantly composed of independent non-executive directors [Audit Committee](index=20&type=section&id=Audit%20Committee) The Audit Committee, comprising independent non-executive directors, oversees financial reporting, risk management, and internal controls Audit Committee Meeting Attendance Record | Audit Committee Member Name | Attended/Entitled to Attend Meetings | | :--- | :--- | | Mr. Zhang Shize (Chairman) | 1/2 | | Mr. Chen Zhengliang | 2/2 | | Mr. Liu Chun | 2/2 | | Ms. Lu Xuanling (resigned) | 1/1 | - The Audit Committee believes that for the year ended March 31, 2021, the Group's risk management and internal control systems were effective and complied with the Corporate Governance Code[51](index=51&type=chunk) [Remuneration Committee](index=20&type=section&id=Remuneration%20Committee) The Remuneration Committee advises the Board on remuneration policies and structures for directors and senior management Remuneration Committee Meeting Attendance Record | Remuneration Committee Member Name | Attended/Entitled to Attend Meetings | | :--- | :--- | | Mr. Zhang Shize (Chairman) | 2/3 | | Ms. Jiang Xinyong | 3/3 | | Mr. Chen Zhengliang | 3/3 | [Nomination Committee](index=21&type=section&id=Nomination%20Committee) The Nomination Committee reviews Board structure and diversity, advising on director appointments and re-appointments Nomination Committee Meeting Attendance Record | Nomination Committee Member Name | Attended/Entitled to Attend Meetings | | :--- | :--- | | Ms. Jiang Xinyong (Chairman) | 2/2 | | Mr. Zhang Shize | 1/2 | | Mr. Chen Zhengliang | 2/2 | [Accountability and Audit](index=21&type=section&id=Accountability%20and%20Audit) The Board confirms its responsibility for true and fair financial statements, deeming the Group's risk management and internal control systems effective - The Board, with the assistance of the Audit Committee, conducted an annual review of the risk management and internal control systems for the year ended March 31, 2021, deeming them effective and adequate[62](index=62&type=chunk) Auditor's Remuneration (for the year ended March 31, 2021) | Services Provided | Fees Paid/Payable (thousand HKD) | | :--- | :--- | | Audit Services | 1,100 | [Shareholders' Rights](index=24&type=section&id=Shareholders'%20Rights) This report clarifies shareholder rights, including procedures for convening meetings, making inquiries, and proposing directors - Shareholders holding not less than **one-tenth** of the company's paid-up share capital have the right to request the Board to convene an extraordinary general meeting[66](index=66&type=chunk) - Shareholders may nominate director candidates in writing, subject to specific notice periods and procedural requirements[67](index=67&type=chunk) [Directors' Report](index=25&type=section&id=Directors'%20Report) [Principal Activities and Performance Distribution](index=25&type=section&id=Principal%20Activities%20and%20Performance%20Distribution) The Group's principal activities include financial services and apparel business, with the Board approving interim and recommending final dividends - The Group's principal activities include: (i) Licensed Financial Services, (ii) Lending Services, (iii) Apparel Product Sales and Supply Chain Management, and (iv) Asset Management Services[71](index=71&type=chunk) FY2021 Dividend Distribution | Dividend Type | Amount Per Share (HKD) | Total Amount (million HKD) | Status | | :--- | :--- | :--- | :--- | | Interim Dividend | 0.0068 | ~9.5 | Distributed | | Proposed Final Dividend | 0.0358 | ~50.0 | Proposed, subject to Shareholders' Approval | [Major Customers and Suppliers](index=27&type=section&id=Major%20Customers%20and%20Suppliers) The Group exhibits high customer and supplier concentration, with top five customers accounting for 58.92% of revenue Customer and Supplier Concentration (for the year ended March 31, 2021) | Category | Percentage | | :--- | :--- | | Largest Customer as % of Total Revenue | 29.15% | | Top Five Customers as % of Total Revenue | 58.92% | | Largest Supplier as % of Total Cost of Sales | 27.09% | | Top Five Suppliers as % of Total Cost of Sales | 64.94% | [Directors' and Chief Executive's Interests in Shares, Underlying Shares, and Debentures](index=28&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20in%20Shares%2C%20Underlying%20Shares%2C%20and%20Debentures) This section discloses the significant shareholdings of directors, chief executive, and substantial shareholders as of March 31, 2021 Directors' and Chief Executive's Interests in Shares (as of March 31, 2021) | Director Name | Capacity/Nature of Interest | Number of Shares | Approximate Percentage | | :--- | :--- | :--- | :--- | | Ms. Jiang Xinyong | Interest of Spouse / Interest of Controlled Corporation | 530,424,395 / 222,418,000 | 37.98% / 15.93% | | Mr. Chen Ningdi | Interest of Controlled Corporation / Interest of Spouse | 530,424,395 / 222,418,000 | 37.98% / 15.93% | | Mr. Li Ren | Beneficial Owner | 118,892,000 | 8.51% | | Mr. Liu Chun | Beneficial Owner (Share Options) | 3,000,000 | 0.21% | [Share Option Scheme](index=31&type=section&id=Share%20Option%20Scheme) The company's share option scheme granted 107.5 million options and saw 107 million exercised, with 63 million unexercised - During the reporting period, the company granted **107,500,000** share options and **106,976,000** share options were exercised under the share option scheme[92](index=92&type=chunk) - As of March 31, 2021, **63,000,000** share options remained unexercised under the share option scheme, representing approximately **4.5%** of the issued shares[92](index=92&type=chunk)[273](index=273&type=chunk) [Share Award Scheme](index=33&type=section&id=Share%20Award%20Scheme) The company adopted a share award scheme on September 8, 2020, purchasing 12.26 million shares for HKD 17.255 million - The company adopted a share award scheme on September 8, 2020. As of the fiscal year-end, **12,260,000** shares had been purchased for the scheme at a total cost of **HKD 17.255 million**, with no awards yet granted[95](index=95&type=chunk) [Issuance of Securities and Use of Proceeds](index=33&type=section&id=Issuance%20of%20Securities%20and%20Use%20of%20Proceeds) The company raised net proceeds of approximately HKD 60.15 million from a placement of 75.5 million new shares, used for financial services expansion Share Subscription and Use of Proceeds | Item | Details | | :--- | :--- | | Subscriber | CMF Global Quantitative Multi-Asset SPC | | Number of Shares Issued | 75,500,000 | | Subscription Price | HKD 0.80 per share | | Net Proceeds | Approximately 60.15 million HKD | | **Use of Proceeds** | | | Expand Financial Services Business (Subscription of Private Equity Fund) | 50.0 million HKD (Utilized) | | Strengthen Sales and Distribution Network | 10.15 million HKD (Utilized) | [Connected Transactions](index=34&type=section&id=Connected%20Transactions) The Group engaged in several discloseable connected transactions, including an investment in Carmel Reserve LLC and a met profit guarantee - The Group subscribed for a **27.06%** Class B membership interest in Carmel Reserve LLC, an associate of the Chairwoman and CEO, for **USD 5 million** (approximately **HKD 39 million**), which constituted a discloseable and connected transaction, with all compliance procedures completed[104](index=104&type=chunk) - Upon the 2019 acquisition of DL Securities and DL Finance, the vendor (Mr. Chen Ningdi) guaranteed that the target companies' audited after-tax profit for the guarantee period (fiscal year ended December 31, 2020) would be no less than **HKD 6 million**. The report confirms that actual profit exceeded the guaranteed profit, and the vendor fulfilled his obligations[105](index=105&type=chunk) [Independent Auditor's Report](index=36&type=section&id=Independent%20Auditor's%20Report) [Audit Opinion and Key Audit Matters](index=36&type=section&id=Audit%20Opinion%20and%20Key%20Audit%20Matters) The auditor issued an unqualified opinion on the financial statements, highlighting key audit matters including receivables impairment and financial instrument fair value - The auditor issued a standard **unqualified audit opinion**[108](index=108&type=chunk) - Key audit matters include: - **Impairment assessment of receivables**: Involves evaluating expected credit losses (ECL) for trade receivables, bills receivable, other receivables, and loans and interest receivable, due to significant management judgment - **Valuation of share options**: Valuing **107.5 million** granted share options using a binomial option pricing model, involving subjective assumptions - **Assessment of control over structured entities**: Determining if the Group has control over managed structured entities (e.g., funds), involving complex judgments - **Fair value measurement of Level 3 financial instruments**: Valuing financial assets lacking observable market data (e.g., unlisted equity investments), involving subjectivity[110](index=110&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) [Consolidated Financial Statements](index=44&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=44&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) The Group achieved a strong turnaround with revenue of HKD 426.6 million and profit attributable to owners of HKD 200.8 million Consolidated Statement of Profit or Loss Summary (for the year ended March 31) | Indicator (thousand HKD) | 2021 | 2020 | | :--- | :--- | :--- | | Revenue | 426,551 | 226,391 | | Gross Profit | 245,473 | 30,587 | | Operating Profit / (Loss) | 219,854 | (51,618) | | Profit / (Loss) Before Income Tax | 217,792 | (51,861) | | **Profit / (Loss) for the Year** | **200,798** | **(51,409)** | | **Basic Earnings / (Loss) Per Share (HK cents)** | **15.06** | **(4.57)** | [Consolidated Statement of Financial Position](index=45&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of March 31, 2021, total assets grew to HKD 627.9 million, total liabilities were HKD 127.4 million, and total equity increased to HKD 500.6 million Consolidated Statement of Financial Position Summary (as of March 31) | Indicator (thousand HKD) | 2021 | 2020 | | :--- | :--- | :--- | | **Assets** | | | | Non-current Assets | 224,566 | 29,739 | | Current Assets | 403,375 | 181,375 | | **Total Assets** | **627,941** | **211,114** | | **Liabilities** | | | | Current Liabilities | 116,313 | 45,562 | | Non-current Liabilities | 11,071 | 538 | | **Total Liabilities** | **127,384** | **46,100** | | **Net Assets** | **500,557** | **165,014** | | **Equity** | | | | Share Capital | 13,966 | 12,142 | | Total Equity | 500,557 | 165,014 | [Consolidated Statement of Cash Flows](index=47&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Operating activities generated HKD 49.13 million net cash inflow, while investing activities used HKD 114.3 million, resulting in a HKD 33.8 million net increase in cash Consolidated Statement of Cash Flows Summary (for the year ended March 31) | Indicator (thousand HKD) | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash From / (Used in) Operating Activities | 49,125 | (6,270) | | Net Cash (Used in) / From Investing Activities | (114,301) | 19,081 | | Net Cash From Financing Activities | 98,980 | 356 | | **Net Increase in Cash and Cash Equivalents** | **33,804** | **13,167** | | Cash and Cash Equivalents at Beginning of Year | 65,451 | 52,284 | | **Cash and Cash Equivalents at End of Year** | **99,255** | **65,451** | [Notes to the Consolidated Financial Statements](index=48&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, estimates, and breakdowns of financial statement items, providing essential context - Note 5 provides detailed disclosure of the performance, assets, and liabilities of each business segment, indicating that financial services are the absolute performance pillar[211](index=211&type=chunk)[213](index=213&type=chunk)[219](index=219&type=chunk) - Notes 11 and 26 detail the share option scheme and share award scheme, respectively, including grants, exercises, and valuation assumptions[251](index=251&type=chunk)[317](index=317&type=chunk) - Notes 36 and 37 disclose details of significant related party transactions and business combinations during the year, including the investment in Carmel Reserve LLC and acquisitions of DL Family and Four Seasons[347](index=347&type=chunk)[353](index=353&type=chunk) - Note 39 provides a detailed analysis of various financial risks faced by the Group (market risk, credit risk, liquidity risk) and their management strategies, along with fair value hierarchy classifications for financial instruments[382](index=382&type=chunk)[416](index=416&type=chunk) [Financial Summary](index=128&type=section&id=Financial%20Summary) [Five-Year Financial Summary](index=128&type=section&id=Five-Year%20Financial%20Summary) This summary presents key five-year financial data, highlighting the Group's historic performance breakthrough in FY2021 with record high revenue and profit Five-Year Financial Summary (for the year ended March 31) | Indicator (thousand HKD) | 2021 | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Performance** | | | | | | | Revenue | 426,551 | 226,391 | 186,519 | 279,382 | 206,219 | | Profit / (Loss) for the Year | 200,798 | (51,409) | 18,682 | 15,688 | 25,143 | | **Assets and Liabilities** | | | | | | | Total Assets | 627,941 | 211,114 | 180,456 | 115,695 | 90,909 | | Total Liabilities | 127,384 | 46,100 | 9,634 | 33,292 | 29,537 | | Net Assets | 500,557 | 165,014 | 170,822 | 82,403 | 61,372 |

[Cover](index=1&type=section&id=%E5%B0%81%E9%9D%A2) The report's cover page [Company Information](index=2&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) This section provides fundamental company information for Yunshangyi Holdings Limited as of June 28, 2019, including its registered office, principal place of business, board members, committee compositions, principal bankers, and auditor [Chairman's Statement](index=4&type=section&id=%E4%B8%BB%E5%B8%AD%E5%A0%B1%E5%91%8A) The Chairman's Statement reviews the financial performance and challenges for the 2018/2019 fiscal year, noting a decline in revenue and gross profit due to rising production costs, US tariffs, and Brexit, while business with a major Spanish client continued to grow - Financial performance challenged: Revenue and gross profit declined this year due to rising production costs, US trade tariffs, and Brexit[8](index=8&type=chunk) - Core client growth: Despite overall market difficulties, business with a major Spanish fashion retailer achieved continuous growth, becoming a key highlight[8](index=8&type=chunk) - Strategic diversification: To mitigate risks and explore new markets, the Group is considering suitable acquisition and equity investment opportunities, having announced a proposed acquisition of a corporation holding SFC Type 1, 4, and 6 licenses and a money lender's license on March 6, 2019[9](index=9&type=chunk) - Outlook: Future revenue, gross profit, and net profit margins are expected to remain under significant pressure, with the Group focusing on leveraging its supply chain management solutions and actively diversifying its business and revenue streams to address challenges[9](index=9&type=chunk) [Management Discussion and Analysis](index=6&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E5%8F%8A%E5%88%86%E6%9E%90) This section provides an in-depth analysis of the Group's operational and financial performance, liquidity, capital structure, and future outlook [Business Review](index=6&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group primarily engages in apparel product sales and supply chain management solutions, with revenue and gross profit declining by 33.2% and 61.7% respectively this year due to market challenges, while profit attributable to owners increased by 19.1% driven by a positive return of approximately HK$37.8 million from securities investments | Indicator | Change | Reason | | :--- | :--- | :--- | | Revenue | Decreased by approximately 33.2% year-on-year | Challenging global business environment | | Gross Profit | Decreased by approximately 61.7% year-on-year | Challenging global business environment | | Profit attributable to owners of the Company | Increased by approximately 19.1% year-on-year | Primarily due to a positive return of approximately HK$37.8 million from securities investments | [Financial Review](index=6&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%8C) In the current fiscal year, the Group's revenue decreased by 33.2% to HK$186.5 million and gross profit by 61.7% to HK$20.9 million, with gross margin falling from 19.5% to 11.2%, while profit attributable to owners of the Company grew 19.1% to HK$18.7 million, primarily due to positive returns from listed investments | Financial Indicator | FY2019 (HK$ Million) | FY2018 (HK$ Million) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 186.5 | 279.4 | -33.2% | | Cost of Sales | 165.6 | 224.8 | -26.3% | | Gross Profit | 20.9 | 54.6 | -61.7% | | Gross Margin | 11.2% | 19.5% | -8.3pp | | General and Administrative Expenses | 32.3 | 26.5 | +21.9% | | Profit attributable to owners of the Company | 18.7 | 15.7 | +19.1% | - Four major customers accounted for **64.9% of total revenue**, with the largest customer contributing **22.9%**, and sales to a Spanish customer significantly increased despite overall revenue decline[12](index=12&type=chunk) - The increase in general and administrative expenses was primarily due to **share-based payment expenses** arising from the grant of share options under the Company's share option scheme[16](index=16&type=chunk) [Liquidity and Financial Resources](index=7&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90) As of March 31, 2019, the Group maintained a robust financial position with net current assets increasing to HK$110.5 million, cash and bank balances at HK$52.3 million, and a significantly improved current ratio of 12.8 from 3.4, alongside a reduced gearing ratio of 0.06 times from 0.40 times | Indicator | March 31, 2019 | March 31, 2018 | | :--- | :--- | :--- | | Net Current Assets | HK$110.5 Million | HK$77.8 Million | | Cash and Bank Balances | HK$52.3 Million | HK$42.4 Million | | Current Ratio | 12.8 | 3.4 | | Gearing Ratio | 0.06 times | 0.40 times | [Capital Structure and Significant Investments](index=8&type=section&id=%E8%B3%87%E6%9C%AC%E7%B5%90%E6%A7%8B%E8%88%87%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87) This year, the Group successfully raised approximately HK$58.6 million net proceeds through a placement of 123.8 million shares, primarily for seeking acquisition and equity investment opportunities and supplementing working capital, while holding listed securities investments valued at approximately HK$74.8 million as of March 31, 2019, which generated significant unrealized and realized gains - A placement of **123.8 million shares** at HK$0.485 per share was completed on June 1, 2018, raising net proceeds of approximately **HK$58.6 million**[23](index=23&type=chunk) Placement Proceeds Utilization (As of March 31, 2019) | Intended Use | Revised Allocation (HK$ Million) | Utilized (HK$ Million) | Unutilized (HK$ Million) | | :--- | :--- | :--- | :--- | | Procurement and development of own brands | - | - | - | | Enhancement of supply chain and expansion of sales network | - | - | - | | General working capital | 16.1 | 10.1 | 6.0 | | Seeking suitable acquisition and equity investment opportunities | 42.5 | 42.5 | - | | **Total** | **58.6** | **52.6** | **6.0** | Significant Financial Asset Investments (As of March 31, 2019) | Security Name | Investment Cost (HK$ Thousand) | Fair Value (HK$ Thousand) | Unrealized Gain/(Loss) (HK$ Thousand) | Realized Gain (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Deson Group Holdings Limited | 19,940 | 42,130 | 27,640 | 11,529 | | Evergrande Health Industry Group Limited | 9,300 | 9,190 | (110) | - | - Note: The Group sold all its shares in Debao Group Holdings after March 31, 2019, resulting in a loss of **HK$32.9 million** to be recognized in the next fiscal year[27](index=27&type=chunk) - The Company intends to acquire a corporation holding SFC Type 1, 4, and 6 licenses and a money lender's license for a consideration of **HK$42 million**, which constitutes a discloseable and connected transaction[30](index=30&type=chunk) [Human Resources and Compliance](index=10&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B3%87%E6%BA%90%E8%88%87%E5%90%88%E8%A6%8F) As of March 31, 2019, the Group employed 26 full-time staff, a decrease from 33 in the prior year, with total employee benefit expenses amounting to approximately HK$17.3 million, and the Group has complied with all relevant laws and regulations in its principal business operations in Hong Kong | Indicator | March 31, 2019 | March 31, 2018 | | :--- | :--- | :--- | | Number of Full-time Employees | 26 | 33 | | Total Employee Benefit Expenses | HK$17.3 Million | HK$19.2 Million | [Use of Proceeds and Comparison of Business Objectives with Actual Progress](index=11&type=section&id=%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%85%E7%94%A8%E9%80%94%E5%8F%8A%E6%A5%AD%E5%8B%99%E7%9B%AE%E6%A8%93%E8%88%87%E5%AF%A6%E9%9A%9B%E6%A5%AD%E5%8B%99%E9%80%B2%E5%B1%95%E7%9A%84%E6%AF%94%E8%BC%83) This section reviews the utilization of approximately HK$5.1 million raised from the GEM listing on October 7, 2015, confirming that all proceeds have been fully utilized as per the adjusted business strategies outlined in the prospectus, primarily for expanding customer geographical coverage, broadening the manufacturer base, developing design capabilities, diversifying product categories, and supplementing general working capital 2015 Listing Proceeds Utilization | Business Strategy and Objective | Adjusted Allocation (HK$ Thousand) | Actual Utilization (HK$ Thousand) | | :--- | :--- | :--- | | Broaden customer geographical coverage | 1,746 | 1,746 | | Broaden third-party manufacturer geographical base | 802 | 802 | | Develop design and development capabilities | 1,233 | 1,233 | | Broaden product categories | 964 | 964 | | General working capital | 330 | 330 | | **Total** | **5,075** | **5,075** | [Outlook](index=11&type=section&id=%E5%89%8D%E6%99%AF) Looking ahead, the Group anticipates continued pressure on sales and gross margins due to global economic and political uncertainties, but will deepen cooperation with its major Spanish client and actively seek acquisition and equity investment opportunities, particularly in Hong Kong's financial sector, to diversify revenue streams - In core business, sales contracts with the major Spanish client are expected to grow, leading to more cooperation opportunities[38](index=38&type=chunk) - Facing challenges: The US-China trade war and Brexit are expected to continue challenging the Group's gross profit[39](index=39&type=chunk) - Strategic direction: The Group will diversify revenue streams by seeking suitable acquisition and equity investment opportunities, especially in the Hong Kong financial industry, and anticipates completing ongoing acquisitions[39](index=39&type=chunk) [Biographical Details of Directors and Senior Management](index=13&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E9%AB%98%E7%B4%9A%E7%AE%A1%E7%90%86%E5%B1%A4%E5%B1%A5%E6%AD%B7%E8%A9%B3%E6%83%85) This section provides detailed biographical information for the Company's executive directors, non-executive directors, independent non-executive directors, and senior management members, covering their age, academic backgrounds, professional qualifications, and extensive work experience across banking, finance, apparel, legal, and media sectors [Corporate Governance Report](index=18&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%A0%B1%E5%91%8A) This report outlines the Company's corporate governance practices during the reporting period, demonstrating its commitment to maintaining high standards and compliance with the Listing Rules' Corporate Governance Code, detailing the Board's composition and responsibilities, the roles of Chairman and CEO, committee structures, meeting attendance, and key work, alongside director professional development, risk management, internal controls, financial reporting, shareholder rights, and the newly adopted dividend policy [Board and Committees](index=18&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E8%88%87%E5%A7%94%E5%93%A1%E6%9C%83) During the reporting period, the Board held 11 meetings, supported by Audit, Remuneration, and Nomination Committees, all chaired by independent non-executive directors, which regularly convened to fulfill their duties, reviewing annual results, internal controls, director remuneration, and board structure, with a Nomination Policy adopted from January 1, 2019, and the Board affirming that the combined roles of Chairman and CEO, held by Mr. Zhang Lei, contribute to robust leadership in the Group's best interest - The roles of Chairman and Chief Executive Officer are held by the same individual, Mr. Zhang Lei, which deviates from Code Provision A.2.1 of the Corporate Governance Code[55](index=55&type=chunk) Board and Committee Meeting Attendance (FY2019) | Meeting Type | Number of Meetings | | :--- | :--- | | Board Meetings | 11 | | Audit Committee Meetings | 2 | | Remuneration Committee Meetings | 3 | | Nomination Committee Meetings | 3 | - The Audit Committee reviewed the Group's internal control system and deemed it effective and adequate during the reporting period[60](index=60&type=chunk) [Accountability, Audit and Risk Management](index=23&type=section&id=%E5%95%8F%E8%B2%AC%E3%80%81%E5%AF%A9%E6%A0%B8%E8%88%87%E9%A2%A8%E9%9A%AA%E7%AE%A1%E7%90%86) The Board affirms its responsibility for preparing true and fair financial statements, having established a three-tier risk management approach and continuously reviewing internal control systems, which were deemed effective and adequate by the Audit Committee for the year ended March 31, 2019, with audit services fees of HK$1.2 million paid to PricewaterhouseCoopers this year - The Board, through the Audit Committee, conducted an annual review and considered the Group's risk management and internal control systems (covering financial, operational, and compliance controls) to be effective and adequate[71](index=71&type=chunk) Auditor's Remuneration (FY2019) | Service Type | Fee (HK$ Thousand) | | :--- | :--- | | Audit Services | 1,200 | | Non-Audit Services | - | [Shareholders' Rights and Communication](index=24&type=section&id=%E8%82%A1%E6%9D%B1%E6%AC%8A%E5%88%A9%E8%88%87%E6%BA%9D%E9%80%9A) The Company outlines procedures for shareholders to convene extraordinary general meetings, submit inquiries to the Board, and nominate directors, establishing various communication channels including general meetings, annual reports, and the company website, while adopting a dividend policy from January 1, 2019, where dividend distribution is at the Board's discretion based on company performance, cash flow, and other factors - Shareholders holding not less than **10% of the voting rights** have the right to request the Board to convene an extraordinary general meeting[73](index=73&type=chunk) - The Company adopted a dividend policy from January 1, 2019, where dividend distribution is at the Board's sole discretion, subject to the Company's financial performance, cash flow, and future operations, among other factors[80](index=80&type=chunk) [Directors' Report](index=27&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%A0%B1%E5%91%8A) This report covers statutory disclosures for the year ended March 31, 2019, confirming no significant changes in the Group's principal business of investment holding and apparel supply chain management, with no final dividend recommended, and disclosing high customer and supplier concentration, alongside details of directors' and major shareholders' interests, share option scheme movements, and compliance with non-competition undertakings, while maintaining sufficient public float during the year [Results, Dividends and Major Customers](index=27&type=section&id=%E6%A5%AD%E7%B8%BE%E3%80%81%E8%82%A1%E6%81%AF%E8%88%87%E4%B8%BB%E8%A6%81%E5%AE%A2%E6%88%B6) The Group's performance for the year is detailed in the consolidated statement of comprehensive income, with no final dividend recommended by the Board, and high customer and supplier concentration noted, as the largest customer accounted for approximately 23% of total revenue and the top five customers for 73%, while the largest supplier accounted for approximately 26% of total purchases and the top five for 64% - The Directors do not recommend the payment of a final dividend for the year ended March 31, 2019[83](index=83&type=chunk) Customer and Supplier Concentration (FY2019) | Category | Percentage | | :--- | :--- | | Largest customer as % of total revenue | ~23% | | Top five customers as % of total revenue | ~73% | | Largest supplier as % of total purchases | ~26% | | Top five suppliers as % of total purchases | ~64% | [Directors', Shareholders' Interests and Share Option Scheme](index=28&type=section&id=%E8%91%A3%E4%BA%8B%E3%80%81%E8%82%A1%E6%9D%B1%E6%8C%81%E8%82%A1%E5%8F%8A%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) The report details the shareholding interests of directors, chief executives, and major shareholders in the Company, with Chairman Mr. Zhang Lei beneficially holding approximately 32.89% through controlled corporations and personal interests, and 60,000,000 share options granted during the year, including 20,000,000 to directors, leaving 100,000,000 unexercised options at year-end Directors' and Major Shareholders' Interests (As of March 31, 2019) | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held | Percentage | | :--- | :--- | :--- | :--- | | Mr. Zhang Lei | Interests in controlled corporations and beneficial owner | 369,616,000 | 32.89% | | Mr. Chan Ning Dit | Interests in controlled corporations and beneficial owner | 213,738,000 | 19.02% | | DA Equity Partners Limited | Beneficial owner | 119,018,000 | 10.59% | | Mr. Li Ren | Beneficial owner | 101,884,000 | 9.07% | Share Option Scheme Movements (FY2019) | Item | Number of Share Options | | :--- | :--- | | Outstanding as of April 1, 2018 | 40,000,000 | | Granted during the year | 60,000,000 | | Exercised/Cancelled/Lapsed during the year | - | | Outstanding as of March 31, 2019 | 100,000,000 | - Share options granted to Directors during the year include: **10,000,000** to Mr. Zhai Jiawei and **10,000,000** to Ms. Lu Xuanling[108](index=108&type=chunk) [Independent Auditor's Report](index=35&type=section&id=%E7%8D%A8%E7%AB%8B%E6%A0%B8%E6%95%B8%E5%B8%AB%E5%A0%B1%E5%91%8A) PricewaterhouseCoopers, as the Company's independent auditor, issued an unmodified opinion on the consolidated financial statements for the year ended March 31, 2019, affirming that they present a true and fair view of the Group's consolidated financial position, performance, and cash flows in accordance with the disclosure requirements of the Hong Kong Companies Ordinance, with key audit matters highlighted as impairment assessment of receivables and valuation of share options - Audit Opinion: The auditor issued an **unmodified opinion**, stating that the consolidated financial statements present a true and fair view of the Group's financial position and performance[121](index=121&type=chunk) - Key Audit Matters include: - Impairment assessment of receivables: Management exercised **significant judgment** in estimating the recoverability of receivables[124](index=124&type=chunk)[125](index=125&type=chunk) - Valuation of share options: The fair value assessment of share options involved **subjective and difficult-to-determine significant assumptions**[126](index=126&type=chunk) [Consolidated Financial Statements](index=39&type=section&id=%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) This section presents the comprehensive financial statements of the Group, including the statement of comprehensive income, statement of financial position, statement of changes in equity, and statement of cash flows, providing a detailed overview of the Group's financial performance, position, and cash movements for the reporting period [Consolidated Statement of Comprehensive Income](index=39&type=section&id=%E7%B6%9C%E5%90%88%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) For the year ended March 31, 2019, the Group reported revenue of HK$187 million, a 33.2% year-on-year decrease, and gross profit of HK$20.92 million, a significant 61.7% decrease, yet operating profit reached HK$18.82 million due to HK$37.75 million in other income, primarily from securities investments, resulting in a 19.1% increase in profit and total comprehensive income attributable to owners of the Company to HK$18.68 million Consolidated Statement of Comprehensive Income Summary | Item (HK$ Thousand) | 2019 | 2018 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 186,519 | 279,382 | -33.2% | | Gross Profit | 20,918 | 54,584 | -61.7% | | Other Income | 37,753 | - | N/A | | Operating Profit | 18,820 | 20,753 | -9.3% | | Profit attributable to owners of the Company | 18,682 | 15,688 | +19.1% | | Basic Earnings Per Share (HK Cents) | 1.69 | 1.57 | +7.6% | [Consolidated Statement of Financial Position](index=41&type=section&id=%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of March 31, 2019, the Group's total assets increased by 56.0% to HK$180 million from HK$116 million in the prior year, primarily driven by the addition of HK$74.79 million in financial assets at fair value through profit or loss, while total liabilities significantly decreased to HK$9.63 million and total equity rose to HK$171 million, reflecting substantial securities investment activities during the year Consolidated Statement of Financial Position Summary | Item (HK$ Thousand) | March 31, 2019 | March 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Non-current assets | 60,542 | 4,841 | | Current assets | 119,914 | 110,854 | | **Total Assets** | **180,456** | **115,695** | | **Equity and Liabilities** | | | | Total Equity | 170,822 | 82,403 | | Non-current liabilities | 250 | 250 | | Current liabilities | 9,384 | 33,042 | | **Total Liabilities** | **9,634** | **33,292** | | **Total Equity and Liabilities** | **180,456** | **115,695** | [Consolidated Statement of Changes in Equity](index=42&type=section&id=%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) For the year ended March 31, 2019, the Group's total equity increased from HK$82.4 million at the beginning of the year to HK$171 million, primarily driven by a profit of HK$18.68 million for the year, share-based payments (share options) of HK$9.69 million, and proceeds from share placement of HK$60.04 million Summary of Changes in Equity (HK$ Thousand) | Item | Amount | | :--- | :--- | | Balance as of April 1, 2018 | 82,403 | | Profit for the year | 18,682 | | Share-based payment | 9,694 | | Issue of shares under share placement | 60,043 | | **Balance as of March 31, 2019** | **170,822** | [Consolidated Statement of Cash Flows](index=43&type=section&id=%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) This year, the Group experienced a net cash outflow from operating activities of HK$5.77 million, mainly due to working capital changes, and a net cash outflow from investing activities of HK$37.40 million, primarily for additions to financial assets at fair value through profit or loss, while net cash inflow from financing activities was HK$53.08 million, mainly from share placement proceeds, resulting in a net increase in cash and cash equivalents of HK$9.91 million for the year, with an ending balance of HK$52.28 million Consolidated Statement of Cash Flows Summary (HK$ Thousand) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Net cash (used in)/from operating activities | (5,769) | 1,635 | | Net cash used in investing activities | (37,404) | (76) | | Net cash from financing activities | 53,082 | 6,800 | | **Net increase in cash and cash equivalents** | **9,909** | **8,359** | | Cash and cash equivalents at beginning of year | 42,375 | 34,016 | | **Cash and cash equivalents at end of year** | **52,284** | **42,375** | [Notes to the Consolidated Financial Statements](index=44&type=section&id=%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) The notes to the financial statements provide detailed explanations of the basis of preparation, significant accounting policies, accounting estimates and judgments, and supplementary information for each item in the statements, including segment information, revenue breakdown, share-based payment details, financial instrument classification and risk management, significant investments and acquisitions, and related party transactions, which are essential for understanding the Company's financial position and operating results - Note 5: Revenue by geographical region shows Americas, Europe, Asia Pacific, and Middle East accounting for **46.7%**, **38.8%**, **11.7%**, and **2.7%** of total revenue, respectively[251](index=251&type=chunk) - Note 9: Total share-based payment expense recognized for the year due to the grant of share options was **HK$9.694 million**[278](index=278&type=chunk) - Note 17: On March 6, 2019, the Group paid a refundable deposit of **HK$21 million** for a connected acquisition[300](index=300&type=chunk)[301](index=301&type=chunk) - Note 20: On June 1, 2018, the Company issued **123.8 million ordinary shares** through a placement, raising net proceeds of approximately **HK$58.6 million**[312](index=312&type=chunk) [Financial Summary](index=85&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) This section provides a summary of the Group's key performance, assets, and liabilities data for the past five fiscal years (2015 to 2019), indicating that while revenue in FY2019 declined from the previous two years, profit for the year reached a five-year high due to non-operating income, and total assets and net assets also reached their highest levels in five years Five-Year Financial Summary (As of March 31) | Item (HK$ Thousand) | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Results** | | | | | | | Revenue | 186,519 | 279,382 | 206,219 | 155,933 | 140,739 | | Profit for the year | 18,682 | 15,688 | 25,143 | 4,139 | 14,780 | | **Assets and Liabilities** | | | | | | | Total Assets | 180,456 | 115,695 | 90,909 | 52,444 | 46,693 | | Total Liabilities | 9,634 | 33,292 | 29,537 | 16,215 | 22,413 | | Net Assets | 170,822 | 82,403 | 61,372 | 36,229 | 24,280 |