Speed Apparel Holding Limited 尚捷集團控股有限公 司 (Incorporated in the Cayman Islands with limited liability) Stock Code: 3860 ANNUAL REPORT 2020/2021 Speed Apparel Holding Limited 尚捷集團控股有限公 司 股份代號: 3860 （於開曼群島註冊成立之有限公司） 年 報 2020/2021 | --- | --- | |-------|----------------------------| | | | | | | | | | | | | | | 目錄 | | | | | | | | | 公司資料 | | | 主席報告 | | | 管理層討論與分析 | | | 董事及高級管理層之履歷詳情 | | | 企業管治報告 | | | 環境、社會及管治報告 | | | 董事會報告 | | | 獨立核數師報告 | | | 綜合損益及其他全面收益表 | | | 綜合財務狀況表 | | | 綜合權益變動表 | | | 綜合現金流量表 | | | 綜合財務報表附註 ...

[Financial Highlights](index=2&type=section&id=Financial%20Highlights) For the six months ended September 30, 2020, Speed Apparel Group reported revenue of approximately **HKD 206.3 million**, profit after tax of approximately **HKD 4.4 million**, and basic earnings per share of approximately **HKD 0.9 cents**. The Board does not recommend an interim dividend Financial Highlights for the Six Months Ended September 30, 2020 | Indicator | Amount (million HKD) | | :--- | :--- | | Revenue | 206.3 | | Profit after tax | 4.4 | | Basic earnings per share | 0.9 HK cents | | Interim dividend | Not recommended | [Financial Information](index=3&type=section&id=Financial%20Information) [Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended September 30, 2020, the Group's revenue significantly decreased by **31.8%** to **HKD 206.3 million**, gross profit fell by **49.9%** to **HKD 26.8 million**, profit for the period sharply declined from **HKD 18.7 million** to **HKD 4.4 million**, and basic earnings per share dropped to **HKD 0.9 cents** Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended September 30) | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 206,332 | 302,664 | -31.8% | | Gross profit | 26,845 | 53,580 | -49.9% | | Profit before tax | 4,977 | 22,993 | -78.4% | | Profit for the period | 4,447 | 18,735 | -76.3% | | Basic earnings per share attributable to owners of the Company | 0.9 HK cents | 3.7 HK cents | -75.7% | [Unaudited Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of September 30, 2020, the Group's net current assets increased to **HKD 126.1 million**, total assets less current liabilities increased to **HKD 131.9 million**, and net assets increased to **HKD 131.0 million**, primarily due to changes in inventories, trade receivables, and bank balances within current assets Condensed Consolidated Statement of Financial Position (As of September 30) | Indicator | September 30, 2020 (thousand HKD) | March 31, 2020 (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current assets | 5,760 | 5,847 | -1.5% | | Current assets | 204,510 | 152,532 | +34.1% | | Inventories | 13,932 | 4,587 | +203.7% | | Trade and bills receivables | 116,966 | 23,079 | +406.8% | | Bank and cash balances | 34,788 | 99,503 | -65.0% | | Current liabilities | 78,405 | 30,243 | +159.3% | | Trade and other payables | 75,615 | 27,308 | +176.9% | | Net current assets | 126,105 | 122,289 | +3.1% | | Net assets | 131,001 | 126,530 | +3.5% | [Unaudited Condensed Consolidated Statement of Changes in Equity](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended September 30, 2020, total equity attributable to owners of the Company increased to **HKD 131.0 million**, primarily due to profit for the period of **HKD 4.4 million** and exchange differences of **HKD 24 thousand** Condensed Consolidated Statement of Changes in Equity (For the six months ended September 30) | Indicator | September 30, 2020 (thousand HKD) | April 1, 2020 (thousand HKD) | | :--- | :--- | :--- | | Share capital | 5,000 | 5,000 | | Reserves | 126,001 | 121,530 | | Total equity | 131,001 | 126,530 | | Profit for the period | 4,447 | - | | Exchange differences arising from translation of overseas operations | 24 | - | [Unaudited Condensed Consolidated Statement of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended September 30, 2020, net cash used in operating activities significantly increased to **HKD 63.4 million**, investing activities shifted from net inflow to net outflow, and net cash used in financing activities decreased, resulting in a net decrease in cash and cash equivalents of **HKD 64.6 million** Condensed Consolidated Statement of Cash Flows (For the six months ended September 30) | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Net cash used in operating activities | (63,369) | (4,656) | | Net cash (used in) generated from investing activities | (333) | 6,857 | | Net cash used in financing activities | (861) | (8,676) | | Net decrease in cash and cash equivalents | (64,563) | (6,475) | | Cash and cash equivalents at end of period | 34,788 | 71,079 | [Notes to the Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [General Information](index=7&type=section&id=General%20Information) Speed Apparel Group Holdings Limited, incorporated in the Cayman Islands, primarily provides supply chain management services for knitwear products, with its shares transferred to the Main Board of the Stock Exchange (stock code: 3860) on December 12, 2019 - The Company is an investment holding company, primarily engaged in providing apparel supply chain management services for the sale of knitwear products to customers[29](index=29&type=chunk) - The Company's shares were transferred from GEM to the Main Board of the Stock Exchange on **December 12, 2019**, with stock code **3860**[30](index=30&type=chunk) [Basis of Preparation](index=7&type=section&id=Basis%20of%20Preparation) The interim financial statements are prepared in accordance with Hong Kong Financial Reporting Standards issued by the HKICPA and the Listing Rules of the Stock Exchange, using the historical cost convention, and have been reviewed by the Audit Committee - The interim financial statements are prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[31](index=31&type=chunk) - The interim financial statements are prepared under the historical cost convention and have been reviewed by the Audit Committee of the Company[31](index=31&type=chunk) [Adoption of New and Revised Hong Kong Financial Reporting Standards](index=8&type=section&id=Adoption%20of%20New%20and%20Revised%20Hong%20Kong%20Financial%20Reporting%20Standards) The Group has adopted new and revised Hong Kong Financial Reporting Standards effective from April 1, 2020, which are not expected to have a significant impact on the interim financial statements - The Group has adopted new and revised Hong Kong Financial Reporting Standards effective for the financial year beginning on **April 1, 2020**[33](index=33&type=chunk) - The Directors do not expect the application of these new and revised Hong Kong Financial Reporting Standards to have a significant impact on the interim financial statements[33](index=33&type=chunk) [Revenue](index=8&type=section&id=Revenue) For the six months ended September 30, 2020, the Group's total revenue was **HKD 206.3 million**, a **31.8%** decrease year-on-year, with significant declines in revenue from Japan, the United States, and European markets, and all product categories experiencing reduced revenue despite ladies' wear remaining the primary category [Geographical Information](index=8&type=section&id=Geographical%20Information) Japan, the United States, and Europe are key markets, but all experienced significant revenue declines for the six months ended September 30, 2020 Revenue by Geographical Market (thousand HKD) | Geographical market | 2020 | 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Japan | 102,020 | 141,966 | -28.1% | | United States of America | 64,884 | 97,509 | -33.5% | | Europe | 29,899 | 47,037 | -36.4% | | Hong Kong | 7,567 | 14,017 | -46.0% | | Others | 1,962 | 2,135 | -8.0% | | Total revenue | 206,332 | 302,664 | -31.8% | [Major Products](index=8&type=section&id=Major%20Products) Ladies' wear remains the Group's primary revenue source, accounting for **66.7%** of total revenue, but its revenue同比下降31.6%。男裝和童裝收益也分別下降38.8%和27.3%。新增其他產品（如針織口罩）貢獻3.4百萬港元收益。 Revenue by Product Category (thousand HKD) | Major product | 2020 | 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Ladies' wear | 137,548 | 201,143 | -31.6% | | Men's wear | 45,053 | 73,626 | -38.8% | | Children's wear | 20,287 | 27,895 | -27.3% | | Others | 3,444 | – | N/A | - Other products, including knit masks and beanies, are new revenue sources for the period[35](index=35&type=chunk) [Timing of Revenue Recognition and Sales of Apparel](index=9&type=section&id=Timing%20of%20Revenue%20Recognition%20and%20Sales%20of%20Apparel) All revenue is recognized at a point in time when control of the products is transferred to customers, with the Group generally providing credit terms of **30 to 90 days** - All revenue is recognized at a point in time when products are delivered to customers and control is transferred[38](index=38&type=chunk)[39](index=39&type=chunk) - The Group generally makes sales to customers on credit terms of **30 to 90 days**[39](index=39&type=chunk) [Other Income](index=9&type=section&id=Other%20Income) For the six months ended September 30, 2020, other income increased to **HKD 1.0 million**, primarily driven by **HKD 1.4 million** in government grants, partially offset by exchange losses Other Income Details (thousand HKD) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Government grants | 1,431 | – | | Sample sales income | 293 | 508 | | Net exchange difference (loss) gain | (675) | 266 | | Total other income | 1,049 | 774 | - Government grants were the primary reason for the increase in other income during the period, reaching **HKD 1.4 million**[40](index=40&type=chunk) [Segment Information](index=10&type=section&id=Segment%20Information) The Group operates in a single business segment: apparel trading, with key operating decision-makers monitoring overall revenue, performance, assets, and liabilities, and Hong Kong being the primary business location [Geographical Information (Non-current Assets)](index=10&type=section&id=Geographical%20Information%20(Non-current%20Assets)) As of September 30, 2020, the Group's non-current assets were primarily located in Hong Kong, with new non-current assets added in China Non-current Assets by Geographical Market (thousand HKD) | Geographical market | September 30, 2020 | March 31, 2020 | | :--- | :--- | :--- | | Hong Kong | 4,295 | 4,898 | | Japan | 720 | 949 | | China | 745 | – | | Total non-current assets | 5,760 | 5,847 | [Revenue from Major Customers](index=10&type=section&id=Revenue%20from%20Major%20Customers) For the six months ended September 30, 2020, Customer A and Customer B remained major customers but their revenue contributions significantly decreased, while Customer C emerged as a new major customer Revenue from Major Customers (thousand HKD) | Customer | 2020 | 2019 | | :--- | :--- | :--- | | Customer A | 98,543 | 153,486 | | Customer B | 51,172 | 75,808 | | Customer C | 21,991 | Not applicable * | * Corresponding revenue did not contribute more than **10%** of the Group's revenue during that period [Income Tax Expense](index=11&type=section&id=Income%20Tax%20Expense) For the six months ended September 30, 2020, income tax expense significantly decreased to **HKD 530 thousand**, primarily due to reductions in Hong Kong profits tax and PRC enterprise income tax Income Tax Expense Analysis (thousand HKD) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Hong Kong profits tax | 549 | 4,291 | | PRC enterprise income tax | 3 | (56) | | Deferred tax (credit) expense | (22) | 23 | | Total income tax expense | 530 | 4,258 | - Hong Kong profits tax is calculated at **16.5%**, PRC enterprise income tax at **25%**, and the effective statutory income tax rate for the Japanese subsidiary is approximately **21.36%**[51](index=51&type=chunk) [Dividends](index=12&type=section&id=Dividends) The Board does not recommend the payment of any dividends for the six months ended September 30, 2020, compared to **HKD 8.0 million** in dividends paid during the same period last year - The Board does not recommend the payment of any dividends for the six months ended September 30, 2020[54](index=54&type=chunk) - Dividends of **HKD 8.0 million** were paid for the six months ended September 30, 2019, with none for the current period[54](index=54&type=chunk) [Profit for the Period](index=12&type=section&id=Profit%20for%20the%20Period) Profit for the period is derived after deducting expenses such as staff costs, depreciation, exchange losses, and cost of sales, with total employee benefits expense slightly decreasing and cost of sales significantly declining due to reduced revenue Profit for the Period Deducted (Credited) Items (thousand HKD) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Total employee benefits expense | 10,691 | 11,328 | | Depreciation of property, plant and equipment | 480 | 550 | | Depreciation of right-of-use assets | 918 | 562 | | Net exchange loss (gain) | 675 | (266) | | Cost of inventories recognized as cost of sales | 179,487 | 249,084 | | Commission expenses | 2,597 | 4,035 | | Sample expenses | 4,226 | 6,185 | [Earnings Per Share](index=13&type=section&id=Earnings%20Per%20Share) For the six months ended September 30, 2020, basic earnings per share was **HKD 0.9 cents**, a significant decrease from **HKD 3.7 cents** in the prior year, primarily due to reduced profit for the period Basic Earnings Per Share Calculation (For the six months ended September 30) | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Profit for the period attributable to owners of the Company for basic EPS calculation (thousand HKD) | 4,447 | 18,735 | | Weighted average number of ordinary shares (thousand shares) | 500,000 | 500,000 | | Basic earnings per share attributable to owners of the Company (HK cents) | 0.9 | 3.7 | - Diluted earnings per share is not presented as there were no outstanding potential dilutive ordinary shares[58](index=58&type=chunk) [Property, Plant and Equipment](index=13&type=section&id=Property%2C%20Plant%20and%20Equipment) For the six months ended September 30, 2020, the Group acquired property, plant and equipment of approximately **HKD 0.4 million**, an increase compared to the same period last year - The Group acquired property, plant and equipment of approximately **HKD 0.4 million** (2019: approximately **HKD 0.1 million**)[59](index=59&type=chunk) [Right-of-use Assets](index=13&type=section&id=Right-of-use%20Assets) For the six months ended September 30, 2020, the Group entered into a new lease agreement for its China office, recognizing right-of-use assets and lease liabilities of approximately **HKD 0.9 million** - The Group entered into a new lease agreement for its China office, recognizing right-of-use assets of approximately **HKD 0.9 million** and lease liabilities of approximately **HKD 0.9 million**[60](index=60&type=chunk) [Trade and Bills Receivables](index=14&type=section&id=Trade%20and%20Bills%20Receivables) As of September 30, 2020, trade and bills receivables significantly increased to **HKD 117.0 million**, with the **1 to 30 days** aging category accounting for the largest proportion Aging Analysis of Trade and Bills Receivables (thousand HKD) | Aging | September 30, 2020 | March 31, 2020 | | :--- | :--- | :--- | | 1 to 30 days | 57,484 | 18,152 | | 31 to 60 days | 42,088 | 63 | | Total | 116,966 | 23,079 | - The Group has not made any impairment provision for doubtful debts and grants an average credit period of **30 to 90 days** to long-term customers[63](index=63&type=chunk) [Pledged Bank Deposits](index=14&type=section&id=Pledged%20Bank%20Deposits) Pledged bank deposits of approximately **HKD 8.1 million** are used to secure the Group's bank facilities, remaining largely consistent with the previous period-end - Pledged bank deposits of approximately **HKD 8.1 million** (March 31, 2020: approximately **HKD 8.1 million**) were pledged to banks to secure certain bank facilities granted to the Group[65](index=65&type=chunk) [Trade and Other Payables](index=14&type=section&id=Trade%20and%20Other%20Payables) As of September 30, 2020, trade and other payables significantly increased to **HKD 75.6 million**, with trade payables accounting for **HKD 65.7 million**, primarily concentrated in the **1 to 30 days** aging category Trade and Other Payables Details (thousand HKD) | Item | September 30, 2020 | March 31, 2020 | | :--- | :--- | :--- | | Trade payables | 65,716 | 23,084 | | Accruals and other payables | 9,899 | 4,224 | | Total | 75,615 | 27,308 | Aging Analysis of Trade Payables (thousand HKD) | Aging | September 30, 2020 | March 31, 2020 | | :--- | :--- | :--- | | 1 to 30 days | 44,518 | 16,938 | | 31 to 60 days | 20,732 | 4,018 | | 61 to 90 days | 65 | 1,652 | | Over 90 days | 401 | 476 | | Total | 65,716 | 23,084 | - The credit period for purchases of goods ranges from **30 to 45 days**[69](index=69&type=chunk) [Share Capital](index=15&type=section&id=Share%20Capital) As of September 30, 2020, the Company's authorized share capital was **1,000,000 thousand shares**, and issued and fully paid share capital was **500,000 thousand shares** with a par value of **HKD 0.01** per share, totaling **HKD 5.0 million**, remaining unchanged from the previous period-end Share Capital Details (thousand shares) | Item | Number of shares | | :--- | :--- | | Authorised share capital | 1,000,000 | | Issued and fully paid share capital | 500,000 | - The par value per share is **HKD 0.01**, and the total share capital is **HKD 5.0 million**[70](index=70&type=chunk) [Related Party Disclosures](index=16&type=section&id=Related%20Party%20Disclosures) The Group has lease transactions with Firenze Apparel Limited, wholly owned by Chairman Mr. Chan, and Mr. Chan's wife, Ms. Cheung Hung, provides guarantees for certain finance leases, with key management personnel compensation totaling **HKD 2.91 million** [Related Party Transactions](index=16&type=section&id=Related%20Party%20Transactions) The Group pays **HKD 100,000** per month in lease payments to Firenze Apparel Limited, wholly owned by Chairman Mr. Chan Related Party Transactions (thousand HKD) | Related party name | Nature of transaction | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Firenze Apparel Limited | Lease payments | 600 | 600 | - Firenze Apparel is wholly and beneficially owned by Mr. Chan, the Chairman and Executive Director of the Company[73](index=73&type=chunk) [Pledges and Guarantees Provided by Related Parties](index=16&type=section&id=Pledges%20and%20Guarantees%20Provided%20by%20Related%20Parties) As of September 30, 2020, finance lease payables of approximately **HKD 68,000** were guaranteed by Ms. Cheung Hung, the wife of Mr. Chan - Finance lease payables of approximately **HKD 68,000** (March 31, 2020: approximately **HKD 134,000**) were guaranteed by Ms. Cheung Hung, the wife of Mr. Chan[74](index=74&type=chunk) [Key Management Personnel Compensation](index=16&type=section&id=Key%20Management%20Personnel%20Compensation) For the six months ended September 30, 2020, key management personnel compensation totaled **HKD 2.91 million**, remaining largely consistent with the same period last year Key Management Personnel Compensation (thousand HKD) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Directors' fees | 180 | 180 | | Salaries and other benefits | 2,685 | 2,639 | | Retirement benefit scheme contributions | 45 | 45 | | Total | 2,910 | 2,864 | [Management Discussion and Analysis](index=17&type=section&id=Management%20Discussion%20and%20Analysis) [Introduction](index=17&type=section&id=Introduction) Speed Apparel Group is a Hong Kong-based apparel supply chain management service provider, primarily selling knitwear products and offering one-stop solutions to customers, mainly Japanese and US brands, with all manufacturing outsourced to third-party manufacturers - The Group is an apparel supply chain management service provider in Hong Kong, primarily engaged in the business of selling knitwear products[80](index=80&type=chunk) - It provides one-stop apparel supply chain management solutions, including fashion trend analysis, product design, material sourcing, production management, quality control, and logistics services[80](index=80&type=chunk) - Customers are mainly Japanese and US apparel retail brand owners or sourcing agents, with all manufacturing processes outsourced to third-party manufacturers in China, Thailand, and/or Cambodia[80](index=80&type=chunk) [Business Review](index=17&type=section&id=Business%20Review) Affected by the COVID-19 pandemic, the Group's revenue and profitability sharply declined, with revenue decreasing by **31.8%** year-on-year to **HKD 206.3 million** and gross profit margin falling from **17.7%** to **13.0%**, yet the Group successfully attracted new mid-to-high-end apparel brands and expanded its China office - The COVID-19 pandemic led to global lockdowns, significantly impacting the apparel retail market and causing a substantial decrease in demand for the Group's products[81](index=81&type=chunk) Key Financial Data for Business Review (For the six months ended September 30) | Indicator | 2020 (million HKD) | 2019 (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 206.3 | 302.7 | -31.8% | | Gross profit | 26.8 | 53.6 | -49.9% | | Gross profit margin | 13.0% | 17.7% | -4.7 percentage points | | Total comprehensive income attributable to owners of the Company | 4.5 | 18.6 | -76.0% | - The Group successfully attracted no less than three new mid-to-high-end apparel brands and expanded its China office to facilitate production management[81](index=81&type=chunk) [Financial Review](index=18&type=section&id=Financial%20Review) This section provides a detailed review of the Group's financial performance during the reporting period, including changes in key indicators such as revenue, costs, profits, expenses, and earnings per share, along with their primary causes [Revenue](index=18&type=section&id=Revenue) For the six months ended September 30, 2020, total revenue decreased by **31.8%** to **HKD 206.3 million**, primarily due to reduced purchasing orders from US and Japanese customers, with ladies' wear remaining the main product but all product categories experiencing significant sales volume declines Revenue and Sales Volume by Product Category (For the six months ended September 30) | Product category | 2020 Revenue (thousand HKD) | 2019 Revenue (thousand HKD) | Revenue Change (%) | 2020 Sales Volume (thousand pieces) | 2019 Sales Volume (thousand pieces) | Sales Volume Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Ladies' wear | 137,548 | 201,143 | -31.6% | 2,162 | 3,286 | -34.2% | | Men's wear | 45,053 | 73,626 | -38.8% | 817 | 1,318 | -38.0% | | Children's wear | 20,287 | 27,895 | -27.3% | 361 | 516 | -30.0% | | Others | 3,444 | – | N/A | 111 | – | N/A | | Total | 206,332 | 302,664 | -31.8% | 3,451 | 5,120 | -32.6% | Average Selling Price Per Piece by Product Category (HKD) | Product category | 2020 Average Selling Price | 2019 Average Selling Price | Change (%) | | :--- | :--- | :--- | :--- | | Ladies' wear | 63.6 | 61.2 | +3.9% | | Men's wear | 55.1 | 55.9 | -1.4% | | Children's wear | 56.2 | 54.1 | +3.9% | | Others | 31.0 | – | N/A | | Total Average Selling Price Per Piece | 59.8 | 59.1 | +1.2% | - The decrease in revenue was primarily due to reduced purchasing orders from major US and Japanese customers[90](index=90&type=chunk) [Cost of Sales](index=20&type=section&id=Cost%20of%20Sales) Cost of sales decreased by **27.9%** from **HKD 249.1 million** to **HKD 179.5 million**, a reduction consistent with the decrease in revenue, primarily comprising subcontracting fees, raw materials, and consumables Cost of Sales (For the six months ended September 30) | Indicator | 2020 (million HKD) | 2019 (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Cost of sales | 179.5 | 249.1 | -27.9% | - The decrease in cost of sales was consistent with the decrease in the Group's revenue[97](index=97&type=chunk) [Gross Profit and Gross Profit Margin](index=20&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) Gross profit decreased by **49.9%** to **HKD 26.8 million**, and gross profit margin fell from **17.7%** to **13.0%**, primarily due to the COVID-19 pandemic and competitive pricing offered to a major US customer Gross Profit and Gross Profit Margin (For the six months ended September 30) | Indicator | 2020 (million HKD) | 2019 (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Gross profit | 26.8 | 53.6 | -49.9% | | Gross profit margin | 13.0% | 17.7% | -4.7 percentage points | - The decline in gross profit margin was mainly due to competitive pricing offered to a major US customer[98](index=98&type=chunk) [Interest Income](index=21&type=section&id=Interest%20Income) Interest income significantly increased by **115.2%** from **HKD 0.1 million** to **HKD 0.2 million** Interest Income (For the six months ended September 30) | Indicator | 2020 (million HKD) | 2019 (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Interest income | 0.2 | 0.1 | +115.2% | [Other Income](index=21&type=section&id=Other%20Income) Other income increased to **HKD 1.0 million**, driven by a non-recurring government grant of **HKD 1.4 million** from the Hong Kong Employment Support Scheme, partially offset by reduced sample sales income and exchange losses Other Income (For the six months ended September 30) | Indicator | 2020 (million HKD) | 2019 (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Other income | 1.0 | 0.8 | +25.0% | | Government grants | 1.4 | – | N/A | | Net exchange difference (loss) gain | (0.7) | 0.3 | N/A | [Selling and Distribution Expenses](index=21&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses decreased by **26.0%** to **HKD 13.1 million**, primarily due to reductions in sample costs, logistics expenses, and commission expenses, consistent with the decrease in revenue Selling and Distribution Expenses (For the six months ended September 30) | Indicator | 2020 (million HKD) | 2019 (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Selling and distribution expenses | 13.1 | 17.7 | -26.0% | - The decrease was primarily due to reductions in sample costs, logistics expenses, and commission expenses, consistent with the decrease in revenue[104](index=104&type=chunk) [Administrative Expenses](index=21&type=section&id=Administrative%20Expenses) Administrative expenses decreased by **12.2%** to **HKD 9.9 million**, mainly due to reductions in staff costs and benefits for administrative personnel, overseas and local travel expenses, and bank charges Administrative Expenses (For the six months ended September 30) | Indicator | 2020 (million HKD) | 2019 (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Administrative expenses | 9.9 | 11.3 | -12.2% | - The decrease was primarily due to reductions in staff costs and benefits for administrative personnel, overseas and local travel expenses, and bank charges[105](index=105&type=chunk) [Professional Fees for Transfer of Listing](index=21&type=section&id=Professional%20Fees%20for%20Transfer%20of%20Listing) There were no non-recurring professional fees related to the transfer of listing in the current period, compared to approximately **HKD 2.4 million** recognized in the same period last year - There were no non-recurring professional fees related to the transfer of listing for the six months ended September 30, 2020[105](index=105&type=chunk) - Approximately **HKD 2.4 million** in such expenses was recognized for the six months ended September 30, 2019[105](index=105&type=chunk) [Total Comprehensive Income Attributable to Owners of the Company](index=22&type=section&id=Total%20Comprehensive%20Income%20Attributable%20to%20Owners%20of%20the%20Company) Total comprehensive income attributable to owners of the Company significantly decreased by **76.0%** to **HKD 4.5 million**, and even after adjusting for non-recurring professional fees for transfer of listing last year, the adjusted amount still decreased significantly by **78.7%** Total Comprehensive Income Attributable to Owners of the Company (For the six months ended September 30) | Indicator | 2020 (million HKD) | 2019 (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Total comprehensive income | 4.5 | 18.6 | -76.0% | - Excluding the non-recurring professional fees for transfer of listing in 2019 (**HKD 2.4 million**), the adjusted total comprehensive income still significantly decreased by approximately **78.7%**[108](index=108&type=chunk) [Basic Earnings Per Share](index=22&type=section&id=Basic%20Earnings%20Per%20Share) Basic earnings per share significantly decreased by **75.7%** to **HKD 0.9 cents**, consistent with the decline in profit attributable to owners of the Company Basic Earnings Per Share (For the six months ended September 30) | Indicator | 2020 (HK cents) | 2019 (HK cents) | Change (%) | | :--- | :--- | :--- | :--- | | Basic earnings per share | 0.9 | 3.7 | -75.7% | [Interim Dividend](index=22&type=section&id=Interim%20Dividend) The Board does not recommend the payment of an interim dividend for the six months ended September 30, 2020 - The Board does not recommend the payment of an interim dividend for the six months ended September 30, 2020[110](index=110&type=chunk) [Liquidity and Financial Resources](index=22&type=section&id=Liquidity%20and%20Financial%20Resources) As of September 30, 2020, net current assets increased to **HKD 126.1 million**, but the current ratio decreased from **5.0** to **2.6**, primarily due to a significant increase in current liabilities, with the gearing ratio at zero and the unutilized banking facilities ratio at **100%** Liquidity and Financial Resources (As of September 30) | Indicator | September 30, 2020 (million HKD) | March 31, 2020 (million HKD) | | :--- | :--- | :--- | | Net current assets | 126.1 | 122.3 | | Bank and cash balances | 34.8 | 99.5 | | Current ratio | 2.6 | 5.0 | | Gearing ratio | 0 | 0 | | Unutilized banking facilities ratio | 100.0% | 100.0% | - The decrease in current ratio was primarily due to a **34.1%** increase in current assets and a significant **159.3%** increase in current liabilities, the latter mainly driven by an increase in trade and other payables[111](index=111&type=chunk) [Treasury Policy](index=23&type=section&id=Treasury%20Policy) The Group adopts a prudent treasury policy, managing credit risk through continuous credit assessment, credit limit determination, and monitoring procedures, with the Board closely monitoring cash and cash equivalents to manage liquidity risk - The Group adopts a prudent treasury policy, with credit risk primarily arising from trade and bills receivables[116](index=116&type=chunk) - Management conducts continuous credit assessments of customers and ensures appropriate measures are taken to recover overdue debts[116](index=116&type=chunk) - The Board closely monitors the level of cash and cash equivalents to manage liquidity risk[116](index=116&type=chunk) [Capital Structure](index=23&type=section&id=Capital%20Structure) For the six months ended September 30, 2020, there was no change in the Company's capital structure, with issued share capital of **HKD 5.0 million** divided into **500,000,000** ordinary shares of **HKD 0.01** each - For the six months ended September 30, 2020, there was no change in the Company's capital structure, which consists solely of ordinary shares[117](index=117&type=chunk) - The issued share capital is **HKD 5.0 million**, divided into **500,000,000** shares of **HKD 0.01** each[118](index=118&type=chunk) [Material Investments](index=23&type=section&id=Material%20Investments) As of September 30, 2020, and March 31, 2020, the Group held no material investments - As of September 30, 2020, and March 31, 2020, the Group held no material investments[120](index=120&type=chunk) [Future Plans for Material Investments and Capital Assets](index=23&type=section&id=Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Assets) Other than those disclosed in this report, the Group currently has no other plans for material investments and capital assets - Other than those disclosed in this report, the Group currently has no other plans for material investments and capital assets[121](index=121&type=chunk) [Material Acquisitions or Disposals of Subsidiaries and Affiliated Companies](index=23&type=section&id=Material%20Acquisitions%20or%20Disposals%20of%20Subsidiaries%20and%20Affiliated%20Companies) For the six months ended September 30, 2020, the Group did not acquire or dispose of any subsidiaries or affiliated companies - For the six months ended September 30, 2020, the Group did not acquire or dispose of any subsidiaries or affiliated companies[122](index=122&type=chunk) [Pledge of Assets](index=24&type=section&id=Pledge%20of%20Assets) As of September 30, 2020, pledged bank deposits of approximately **HKD 8.1 million** were pledged to banks to secure certain bank facilities granted to the Group Pledged Assets (thousand HKD) | Item | September 30, 2020 | March 31, 2020 | | :--- | :--- | :--- | | Pledged bank deposits | 8,121 | 8,060 | - Pledged bank deposits are used to secure certain bank facilities granted to the Group[125](index=125&type=chunk) [Contingent Liabilities and Capital Commitments](index=24&type=section&id=Contingent%20Liabilities%20and%20Capital%20Commitments) As of September 30, 2020, the Group had no material contingent liabilities or capital commitments - As of September 30, 2020, the Group had no material contingent liabilities or capital commitments[126](index=126&type=chunk) [Foreign Exchange Risk](index=24&type=section&id=Foreign%20Exchange%20Risk) The Group faces foreign currency risk, but significant changes in the USD to HKD exchange rate are not expected due to the HKD's peg to the USD; the Group currently has no foreign currency hedging policy but will monitor and consider hedging when necessary - The Group faces foreign currency risk, but significant changes in the USD to HKD exchange rate are not expected due to the HKD's peg to the USD[127](index=127&type=chunk) - The Group currently has no foreign currency hedging policy, but management will closely monitor and consider hedging when necessary[127](index=127&type=chunk) [Employees and Remuneration Policy](index=24&type=section&id=Employees%20and%20Remuneration%20Policy) As of September 30, 2020, the Group employed **61** full-time employees, with total staff costs of approximately **HKD 10.7 million**; remuneration is determined based on market terms, individual performance, and qualifications, with year-end bonuses and share options provided to attract and retain talent Number of Employees and Staff Costs (For the six months ended September 30) | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Number of full-time employees | 61 | 59 | | Total staff costs (million HKD) | 10.7 | 11.3 | - Remuneration is determined with reference to market terms and individual employees' performance, qualifications, experience, position, and caliber[128](index=128&type=chunk) - Year-end bonuses and share options are provided to attract and retain employees who contribute to the Group[128](index=128&type=chunk) [Future Prospects](index=25&type=section&id=Future%20Prospects) Due to the COVID-19 pandemic and the US-China trade dispute, the global economy is expected to further deteriorate, leading to reduced demand for the Group's products and adverse impacts on financial performance; the Group will implement cost control measures, expand manufacturer relationships outside China, and actively promote products to address these challenges - The COVID-19 pandemic is expected to lead to further deterioration of the global economy, reduced demand for the Group's products, and adverse impacts on its financial performance and position[132](index=132&type=chunk) - The ongoing US-China trade dispute may result in reduced or terminated purchasing orders from major US customers, prompting the Group to expand manufacturer relationships outside China to mitigate risks[133](index=133&type=chunk) - The Group will continue to develop promotional samples and actively promote products through showrooms, online platforms, business referrals, video conferences, and explore business diversification opportunities[134](index=134&type=chunk) [Other Information](index=26&type=section&id=Other%20Information) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company and its Associated Corporations](index=26&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20and%20its%20Associated%20Corporations) As of September 30, 2020, Mr. Chan Wing Kai, Chairman and Chief Executive Officer, held **75%** of the Company's issued share capital, or **375,000,000** shares, through his wholly-owned Speed Development Co. Ltd Directors' and Chief Executive's Interests | Name of Director | Nature of interest/Capacity | Number of ordinary shares held | Percentage of the Company's issued share capital | | :--- | :--- | :--- | :--- | | Mr. Chan | Interest in controlled corporation | 375,000,000 (L) | 75% | - Mr. Chan holds shares in the Company through Speed Development Co. Ltd., which is wholly and beneficially owned by him[140](index=140&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company](index=27&type=section&id=Substantial%20Shareholders'%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company) As of September 30, 2020, Speed Development held **75%** equity in the Company, and Ms. Cheung Hung (Mr. Chan's spouse) was deemed to hold the same proportion of shares due to spousal interest Substantial Shareholders' Interests | Name of substantial shareholder | Nature of interest/Capacity | Number of ordinary shares held | Percentage of interest in the Company's issued share capital | | :--- | :--- | :--- | :--- | | Speed Development | Beneficial owner | 375,000,000 (L) | 75% | | Ms. Cheung | Spouse interest | 375,000,000 (L) | 75% | - Ms. Cheung is the spouse of Mr. Chan and is deemed under the Securities and Futures Ordinance to have an interest in the Company's shares in which Mr. Chan has an interest[146](index=146&type=chunk) [Share Option Scheme](index=28&type=section&id=Share%20Option%20Scheme) The Company adopted a share option scheme on May 31, 2017, to incentivize eligible employees and selected individuals, valid for **10 years**, but no share options have been granted since its adoption - The Company adopted a share option scheme on **May 31, 2017**, to provide incentives or rewards to eligible employees and other selected individuals[149](index=149&type=chunk) - The maximum number of shares that may be issued under the scheme shall not exceed **30%** of the Company's issued share capital from time to time[150](index=150&type=chunk) - No share options have been granted since the adoption of the scheme, which will be valid for **10 years** from its adoption date[151](index=151&type=chunk) [Directors' Interests in Competing Business](index=29&type=section&id=Directors'%20Interests%20in%20Competing%20Business) The Directors confirm that, for the six months ended September 30, 2020, no Director, controlling shareholder, substantial shareholder, or their close associates held any business or interest that competes with the Group's business - The Directors confirm that no Director, controlling shareholder, substantial shareholder of the Company, or any of their respective close associates had any business or interest that competes or may compete with the business of the Group[155](index=155&type=chunk) [Corporate Governance Practices](index=29&type=section&id=Corporate%20Governance%20Practices) The Company is committed to maintaining good corporate governance practices and has adopted the Corporate Governance Code set out in Appendix 14 of the Listing Rules; despite Mr. Chan holding both Chairman and Chief Executive Officer roles, the Board believes this benefits the Group's management and business development - The Company has adopted the code provisions of the Corporate Governance Code set out in Appendix 14 to the Listing Rules[156](index=156&type=chunk) - Mr. Chan serves as both the Chairman of the Board and the Chief Executive Officer, an arrangement the Board believes benefits the Group's management and business development[156](index=156&type=chunk) [Standard Code for Securities Transactions by Directors](index=29&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company has adopted the Standard Code as the code of conduct for Directors' securities transactions, and all Directors confirmed compliance with the code during the reporting period - The Company has adopted the Standard Code as the code of conduct for Directors' securities transactions[157](index=157&type=chunk) - All Directors confirmed that they have complied with the required standards and the code of conduct for Directors' securities transactions for the six months ended September 30, 2020[157](index=157&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=29&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) For the six months ended September 30, 2020, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the six months ended September 30, 2020, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[158](index=158&type=chunk) [Events After Reporting Period](index=30&type=section&id=Events%20After%20Reporting%20Period) The Group had no material events after September 30, 2020, that could significantly impact its operations and financial performance - The Group had no material events after September 30, 2020, that could significantly impact its operations and financial performance[161](index=161&type=chunk) [Audit Committee](index=30&type=section&id=Audit%20Committee) The Audit Committee, composed of three independent non-executive Directors, is primarily responsible for reviewing financial information, overseeing risk management and internal controls, and has reviewed this report - The Audit Committee is composed of three independent non-executive Directors, with Mr. Kwok Chi Shing as Chairman[162](index=162&type=chunk) - Its primary responsibilities include reviewing financial information, overseeing risk management and internal control systems, and it has reviewed this report[162](index=162&type=chunk) [Company Information](index=31&type=section&id=Company%20Information) [Board of Directors](index=31&type=section&id=Board%20of%20Directors) The Board of Directors comprises Executive Directors Mr. Chan Wing Kai (Chairman and Chief Executive Officer) and Mr. Ng Ming Ho, and Independent Non-executive Directors Ms. Chan Siu Lai, Mr. Kwok Chi Shing, and Mr. Ma Kwok Fai - Executive Directors include Mr. Chan Wing Kai (Chairman and Chief Executive Officer) and Mr. Ng Ming Ho[165](index=165&type=chunk) - Independent Non-executive Directors include Ms. Chan Siu Lai, Mr. Kwok Chi Shing, and Mr. Ma Kwok Fai[165](index=165&type=chunk) [Company Secretary](index=31&type=section&id=Company%20Secretary) The Company Secretary is Ms. Woo Yu Lim - The Company Secretary is Ms. Woo Yu Lim[165](index=165&type=chunk) [Compliance Officer](index=31&type=section&id=Compliance%20Officer) The Compliance Officer is Mr. Chan Wing Kai - The Compliance Officer is Mr. Chan Wing Kai[165](index=165&type=chunk) [Authorised Representatives](index=31&type=section&id=Authorised%20Representatives) The Authorised Representatives are Mr. Chan Wing Kai and Mr. Ng Ming Ho - The Authorised Representatives are Mr. Chan Wing Kai and Mr. Ng Ming Ho[165](index=165&type=chunk) [Audit Committee](index=31&type=section&id=Audit%20Committee) The Audit Committee members include Mr. Kwok Chi Shing (Chairman), Ms. Chan Siu Lai, and Mr. Ma Kwok Fai - The Audit Committee members include Mr. Kwok Chi Shing (Chairman), Ms. Chan Siu Lai, and Mr. Ma Kwok Fai[165](index=165&type=chunk) [Remuneration Committee](index=31&type=section&id=Remuneration%20Committee) The Remuneration Committee members include Ms. Chan Siu Lai (Chairperson), Mr. Kwok Chi Shing, and Mr. Ma Kwok Fai - The Remuneration Committee members include Ms. Chan Siu Lai (Chairperson), Mr. Kwok Chi Shing, and Mr. Ma Kwok Fai[166](index=166&type=chunk) [Nomination Committee](index=31&type=section&id=Nomination%20Committee) The Nomination Committee members include Mr. Ma Kwok Fai (Chairman), Ms. Chan Siu Lai, and Mr. Kwok Chi Shing - The Nomination Committee members include Mr. Ma Kwok Fai (Chairman), Ms. Chan Siu Lai, and Mr. Kwok Chi Shing[166](index=166&type=chunk) [Auditor](index=31&type=section&id=Auditor) The Auditor is ZHONGHUI ANDA CPA Limited - The Auditor is ZHONGHUI ANDA CPA Limited[166](index=166&type=chunk) [Registered Office](index=31&type=section&id=Registered%20Office) The Registered Office is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands - The Registered Office is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands[166](index=166&type=chunk) [Principal Bankers](index=31&type=section&id=Principal%20Bankers) The Principal Bankers are The Hongkong and Shanghai Banking Corporation Limited and Shanghai Commercial Bank Limited - The Principal Bankers are The Hongkong and Shanghai Banking Corporation Limited and Shanghai Commercial Bank Limited[166](index=166&type=chunk) [Company Website](index=31&type=section&id=Company%20Website) The Company Website is www.speedapparel.com.hk - The Company Website is www.speedapparel.com.hk[166](index=166&type=chunk) [Stock Code](index=31&type=section&id=Stock%20Code) The Company's Stock Code is 3860 - The Company's Stock Code is 3860[166](index=166&type=chunk)

Speed Apparel Holding Limited 尚捷集團控股有限公司 Speed Apparel Holding Limited 尚捷集團控股有限公司 (Incorporated in the Cayman Islands with limited liability) Stock Code: 3860 Annual Report 年報 2019/2020 Annual Report Speed Apparel Holding Limited 尚捷集團控股有限公司 股份代號: 3860 （於開曼群島註冊成立之有限公司） 2019/2020 2019/2020 年報 頁次 公司資料 2 主席報告 4 管理層討論與分析 6 董事及高級管理層之履歷詳情 18 企業管治報告 22 環境、社會及管治報告 36 董事會報告 44 獨立核數師報告 54 綜合損益及其他全面收益表 57 綜合財務狀況表 58 綜合權益變動表 60 綜合現金流量表 61 綜合財務報表附註 63 財務概要 102 目錄 公司資料 Section Date 公司資料 董事會 提名委員會 執行董事 陳永啟先生 （主席兼行政總裁） 吳明豪先 ...