2020 INTERIM REPORT 中期報告 g www.e-print.com.hk eprint Group Limited eprint 集 團 有 限 公 司 ( Incorporated in the Cayman Islands with limited liability ) ( 於閱疊群島註冊成立的有限公司 ) Stock Code 股份代號：1884 CONTENTS 目錄 Interim Report 2020 二零二零年中期報告 1 Corporate Information 公司資料 2 | --- | --- | |--------------------------------------------------------------------|--------------------------| | | | | | | | Financial Highlights | 財務摘要 | | Condensed Interim Consolidated Statement of Comprehensive Income | 簡明中期合併綜合收益表 | | Condensed ...

Financial Performance - For the year ended 31 March 2020, eprint Group Limited reported a revenue of HK$365.8 million, a decrease of 10.5% compared to HK$408.7 million in 2019[11]. - The e-print segment revenue decreased by 10.1% to HK$282.3 million, while the e-banner segment revenue decreased by 11.7% to HK$83.5 million[11]. - Operating profit before other losses decreased by 25.8% to HK$15.5 million from HK$20.9 million in the previous year[11]. - The net profit attributable to equity holders of the company decreased by 67.2% to HK$5.7 million, down from HK$17.4 million in 2019[11]. - The gross profit margin improved to 34.8% from 32.7% in the previous year, despite a decrease in overall gross profit[11]. - The Group recorded a profit decrease of 67.2%, primarily due to a fair value loss of approximately HKD 5,300,000 on listed equity investments, which accounted for a profit decrease of about 45.4%[21]. - The profit attributable to equity holders dropped by 67.2% to HK$5.7 million, primarily due to a fair value loss of approximately HK$5.3 million on listed equity investments and a decline in sales volume[30]. - The Group recorded a net loss of HK$8.5 million for the year ended 31 March 2020, an increase in loss of HK$8.2 million compared to a loss of HK$0.3 million for the year ended 31 March 2019[45]. Revenue Breakdown - The paper printing segment's revenue decreased by HK$31.8 million or 10.1%, with advertising printing contributing HK$114.1 million, representing 31.2% of total revenue[30]. - The banner printing segment's revenue decreased by HK$11.0 million or 11.7%, while gross profit only slightly dropped by 5.1% due to cost control measures[30]. - Revenue from the provision of printing and other services decreased by HK$42.9 million or 10.5% during the year ended 31 March 2020[37]. - Revenue from websites increased to HK$192.3 million, representing 52.6% of total revenue, while store revenue decreased to HK$62.0 million, accounting for 16.9%[42]. - The Group's total revenue for the year ended 31 March 2020 was primarily driven by online sales, contributing 52.6% of total revenue, an increase of 7.1% compared to the previous year[45]. Cost Management - The company faced challenges including increased operating costs and the impact of the COVID-19 outbreak, which adversely affected market demand[15][16]. - Subcontracting costs decreased by approximately HK$34.9 million or 24%, from HK$146.2 million in 2019 to HK$111.3 million in 2020 due to strategic changes[17]. - The Group has taken measures to control operating costs and explore various business opportunities to maintain profitability[19]. - Selling and distribution expenses represented 9.1% of revenue for the year ended 31 March 2020, compared to 8.5% for the previous year, with a decrease of HK$1.5 million attributed to reduced staff costs[51]. - Administrative expenses accounted for 22.1% of total revenue for the year ended 31 March 2020, remaining stable at approximately HK$80.8 million compared to the previous year[52]. Cash and Assets - Total assets increased by 5.4% to HK$327.6 million, compared to HK$310.7 million in 2019[11]. - Cash and cash equivalents decreased by 17.9% to HK$101.5 million from HK$123.7 million in the previous year[11]. - The Group's bank balances and cash decreased to HK$101.5 million as at 31 March 2020, a decline of HK$22.1 million compared to HK$123.6 million as at 31 March 2019[60]. - As of 31 March 2020, the Group's bank borrowings were HK$21.2 million, down from HK$25.9 million as of 31 March 2019, representing a decrease of approximately 18.2%[63]. Strategic Initiatives - The Group aims to diversify its business portfolio and explore new business opportunities to improve shareholder value[34]. - The Group's strategy includes diversifying into other industries and nations, as evidenced by previous investments in Sakura Japan Property and e-print Solutions Sdn. Bhd[24]. - The Group maintained a healthy cash balance through effective cash management, which can be utilized for further expansion and investment[24]. - The Group has invested in Top Success Investment Group Limited, which is engaged in finance leasing, providing an opportunity for further business diversification[24]. Governance and Board Structure - The Company complied with the Corporate Governance Code except for the separation of the roles of chairman and chief executive officer, which are held by the same individual[92]. - The Board consists of seven Directors, including two executive Directors, two non-executive Directors, and three independent non-executive Directors[103]. - The Nomination Committee consists of two independent non-executive Directors and one executive Director, focusing on board composition and diversity[140]. - The company emphasizes a formal and transparent procedure for the selection and appointment of Directors to ensure stability[142]. - Independent non-executive Directors have confirmed their independence according to Listing Rules, ensuring a balanced board[134]. Meetings and Professional Development - Five Board meetings were held during the year ended 31 March 2020, allowing Directors to include matters in the agenda and review documents in advance[108]. - All directors participated in continuous professional development through seminars relevant to their roles, ensuring they remain informed and effective[125]. - The Nomination Committee held two meetings during the year ended March 31, 2020, to review board composition and assess the independence of independent non-executive Directors[154]. Audit and Remuneration - The Audit Committee reviewed the audited financial statements for the year ended 31 March 2020, ensuring compliance with applicable accounting standards and Listing Rules[166][174]. - The Remuneration Committee held 2 meetings during the year ended 31 March 2020 to review the remuneration policy and structure for Directors and senior management[160]. - The emolument payable to Directors is determined based on contractual terms and the Group's performance, with details provided in the financial statements[163]. - The Audit Committee comprises three independent non-executive Directors, ensuring oversight of financial reporting and risk management[167]. Dividend Policy - The Company does not have a pre-determined dividend distribution ratio, and past dividend distribution records may not be used as a reference for future dividends[190]. - The Board will continually review the Dividend Policy and reserves the right to update, amend, and modify it at any time[191]. - The declaration and payment of dividends are subject to restrictions under the Companies Law of the Cayman Islands and other applicable laws and regulations[189].

Financial Performance - Revenue for the e-print segment was HK$159,068, and for the e-banner segment was HK$46,090, totaling HK$205,158 for the six months ended September 30, 2019, representing a 0.2% increase from HK$204,789 in the same period of 2018[8]. - Profit for the period attributable to equity holders of the company was HK$5,962, a decrease of 48.0% from HK$11,456 in the previous year[12]. - Basic earnings per share decreased to 1.08 HK cents, down 48.1% from 2.08 HK cents in the same period last year[13]. - Operating profit for the period was HK$7,102, down 44.9% from HK$12,889 in the same period of 2018[10]. - Total comprehensive income for the period was HK$4,876, a decrease of 51.3% from HK$10,022 in the previous year[10]. - Other income for the period was HK$1,297, compared to HK$1,629 in the same period last year[10]. - Total comprehensive income for the period was HK$4,945,000, compared to HK$5,912,000 in the previous year, indicating a decrease of 16.3%[135]. Assets and Liabilities - Total assets increased by 9.3% to HK$339,514 as of September 30, 2019, compared to HK$310,673 as of March 31, 2019[8]. - Current assets rose to HK$180,911,000, compared to HK$142,686,000 in the previous period, indicating a growth of about 26.8%[19]. - Total liabilities increased significantly to HK$108,920,000 from HK$76,155,000, reflecting a rise of approximately 43.0%[19]. - Total equity decreased by 1.7% to HK$230,594 as of September 30, 2019, from HK$234,518 as of March 31, 2019[8]. - Total equity attributable to equity holders of the Company decreased slightly to HK$224,573,000 from HK$228,427,000, a decline of about 1.6%[19]. - Cash and cash equivalents decreased by 11.9% to HK$108,922 as of September 30, 2019, compared to HK$123,664 as of March 31, 2019[8]. - Trade payables amounted to HK$7,699,000, down from HK$9,323,000, indicating a decrease of approximately 17.4%[19]. Cash Flow - For the six months ended September 30, 2019, cash generated from operations was HK$27,793,000, an increase of 76.5% compared to HK$15,747,000 in the same period of 2018[135]. - Net cash generated from operating activities was HK$26,176,000, up from HK$13,346,000, reflecting a significant improvement in operational efficiency[135]. - The company reported a net cash used in investing activities of HK$18,411,000, which is an increase from HK$11,869,000 in the prior year, highlighting increased investment efforts[135]. - The company paid dividends of HK$8,800,000 during the period, a decrease from HK$13,200,000 in the previous year, reflecting a strategic decision to conserve cash[137]. - The company reported a net cash used in financing activities of HK$22,086,000, compared to HK$17,061,000 in the previous year, indicating increased financing costs[137]. Accounting Policies and Standards - The condensed interim consolidated financial information is presented in Hong Kong dollars, with the reporting period ending on September 30, 2019[1]. - The Group's accounting policies are consistent with those used in preparing the financial statements for the year ended March 31, 2019, with the adoption of HKFRS 16 on leases starting from April 1, 2019[143]. - The adoption of new accounting standards and amendments did not have significant impacts on the Group's results and financial position[143]. - The Group has not early adopted any new standards that will become effective for the accounting period beginning on April 1, 2019[149]. - New standards effective from January 1, 2020, include HKFRS 3 (Revised) regarding the definition of a business[150]. Lease Accounting - The Group recognized lease liabilities of HK$46,262,000 as of April 1, 2019, after adopting HKFRS 16, which includes HK$17,013,000 as current liabilities and HK$29,249,000 as non-current liabilities[156]. - Right-of-use assets recognized upon application of HKFRS 16 totaled HK$49,182,000, including HK$44,126,000 related to operating leases and HK$4,448,000 reclassified from property, plant, and equipment[165]. - Lease payments are allocated between the liability and finance cost, with finance costs charged to profit or loss over the lease period[172]. - Payments associated with short-term leases (12 months or less) and leases of low-value assets are recognized as expenses in profit or loss on a straight-line basis[179]. Business Segments - The Company is primarily engaged in providing printing services and solutions for advertisements, bound books, and stationery to a diversified customer base in Hong Kong[1]. - The Group operates in two business segments: paper printing (mainly from the brand "e-print") and banner printing (mainly from the brand "e-banner")[200]. - Performance assessment of operating segments is based on gross profit less selling, distribution, and administrative expenses allocated to each segment[200]. - The Group primarily operates in Hong Kong, with its assets mainly located there, resulting in no geographical segment reporting[200].

Financial Performance - Revenue for the e-print segment was HK$314.1 million, a 1.7% increase from HK$308.8 million in the previous year[11]. - Operating profit before other losses decreased by 38.2% to HK$20.9 million from HK$33.8 million year-on-year[11]. - Profit attributable to equity holders of the company was HK$17.4 million, down 20.9% from HK$22.0 million in the prior year[11]. - Net profit margin decreased to 4.3% from 5.5% year-on-year[11]. - Gross profit margin declined to 32.7% compared to 36.2% in the previous year[11]. - Basic earnings per share fell by 21.2% to 3.16 HK cents from 4.01 HK cents[11]. - The audited profit attributable to equity holders decreased by 20.9% to HK$17.4 million, primarily due to increased operating costs and absence of one-off income from software sales[23]. - Profit for the year attributable to equity holders decreased by HK$4.6 million or 20.9%, from HK$22.0 million in 2018 to HK$17.4 million in 2019, with a net profit margin drop of 1.2%[60]. Revenue Segments - The paper printing segment recorded a slight revenue improvement despite strong competition from digital marketing[13]. - The banner printing segment achieved comparable results to the previous year, indicating successful market penetration and reputation building[13]. - Revenue from printing and other services increased by HK$5.4 million or 1.3%, mainly driven by paper printing services[30]. - The paper printing segment's revenue rose by HK$5.3 million, with advertising printing contributing HK$128.1 million, while the gross profit margin dropped by 3.0% to 32.2%[23]. - The banner printing segment maintained similar revenue levels, but the gross profit margin dropped by 5.1% due to reclassification of delivery charges and increased costs[23]. Assets and Equity - Total assets slightly decreased by 0.2% to HK$310.7 million from HK$311.2 million[11]. - Total equity increased by 1.2% to HK$234.5 million from HK$231.7 million[11]. - As of 31 March 2019, the Group's bank balances and cash increased by HK$34.2 million to HK$123.7 million, primarily due to cash inflow from operating activities[66]. - The Group's current ratio improved to 2.5 as of 31 March 2019, compared to 2.3 as of 31 March 2018, while the gearing ratio decreased to 12.0% from 13.7%[67]. Cash Flow and Investments - Cash and cash equivalents rose by 38.2% to HK$123.7 million from HK$89.5 million[11]. - The Group maintains a healthy cash balance for further expansion and investment opportunities[15]. - The group has diversified investments in bonds issued by listed companies on The Stock Exchange of Hong Kong for capital preservation and higher interest returns compared to bank interest income[50]. Operational Challenges and Strategies - Profit decreased due to the absence of one-off software income from the previous year and increased operational expenses[13]. - The Group anticipates a challenging operating environment in Hong Kong due to global economic uncertainty and rising operating costs[26]. - The management plans to enhance competitiveness through cost control, new business development, and improved value-added services[27]. - The Group plans to adopt a diversification strategy by expanding its product and services portfolio[15]. Corporate Governance - The company complied with the Corporate Governance Code except for the separation of the roles of chairman and CEO, which are held by the same individual[89]. - The board consists of eight directors, including two executive directors, three non-executive directors, and three independent non-executive directors[95]. - The board is responsible for overall strategy, major acquisitions, annual budgets, and significant operational and financial matters[95]. - The Company has established a corporate governance framework to comply with the CG Code and other legal requirements[165]. Board and Committees - The Nomination Committee, established on November 13, 2013, consists of two independent non-executive Directors and one executive Director, focusing on Board composition and diversity[124]. - The Remuneration Committee was established on November 13, 2013, and consists of two independent non-executive Directors and one executive Director[141]. - The Audit Committee reviewed the annual results for the year ended March 31, 2018, and the interim results for the six months ended September 30, 2018, ensuring compliance with applicable accounting standards and Listing Rules[153]. - The Audit Committee is responsible for overseeing the Company's financial reporting system and risk management[156]. Risk Management - The Group has established an enterprise risk management framework to manage various risks faced by the organization[199]. - The Board considers the internal control and risk management systems to be effective and adequate based on findings from the independent review and Audit Committee comments[195]. - The Audit Committee noted that the existing risk management and internal control systems would be reviewed annually[161]. Employee and Shareholder Engagement - The Company provides various employee benefits, including retirement contributions and medical insurance, in compliance with local regulations[84]. - The Company is committed to open communication and reasonable disclosure of information to shareholders[184]. - The general meeting serves as an effective communication channel between the Board and shareholders[184].