天机控股(01520) - 2020 - 年度财报

Corporate Information The report details the company's board members, committee chairs and members, and core corporate information including banks, registered office, and auditor - The report details the company's board members, chairs and members of various committees (Audit, Remuneration, Nomination, Corporate Governance), and core corporate information such as principal bankers, registered office, and auditor[5][20][23] Financial Summary This section provides a five-year overview of the company's financial performance, position, and key ratios, highlighting trends in revenue, profit, assets, liabilities, and liquidity Five-Year Performance Overview (As of December 31) | Metric (Thousand HKD) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 114,474 | 158,714 | 203,892 | 325,445 | 368,857 | | Gross Profit | 24,957 | 32,196 | 42,480 | 95,589 | 94,079 | | Loss Before Income Tax | (67,038) | (71,048) | (62,178) | (13,875) | (17,768) | | Loss Attributable to Owners of the Company | (68,115) | (76,680) | (60,032) | (15,632) | (18,769) | Five-Year Financial Position Overview (As of December 31) | Metric (Thousand HKD) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 283,700 | 351,054 | 427,616 | 525,762 | 397,884 | | Total Liabilities | 45,275 | 45,857 | 45,198 | 79,431 | 133,732 | | Shareholders' Equity | 238,425 | 305,197 | 382,418 | 446,331 | 264,152 | Key Ratios for FY2020 | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Current Ratio | 5.27 | 6.26 | | Quick Ratio | 5.00 | 5.91 | | Return on Assets | (24.0%) | (21.8%) | | Return on Equity | (28.6%) | (25.1%) | | Debt-to-Equity Ratio | 2.1% | 2.8% | | Inventory Turnover Days | 49天 | 43天 | | Trade Receivables Turnover Days | 61天 | 48天 | | Trade Payables Turnover Days | 101天 | 30天 | Chairman's Statement The Chairman's Statement reviews the challenging global economic environment of 2020, the company's performance across its business segments, and its outlook for 2021, emphasizing resilience and diversification strategies External Environment Review In 2020, the global economy faced severe challenges due to the COVID-19 pandemic, with public health measures causing significant disruption and deep recessions in most major economies outside China, while Hong Kong's economy contracted by 6.1%, its largest annual decline on record and the first consecutive annual contraction - The COVID-19 pandemic led to drastic changes in global economic activity, with many countries implementing lockdown measures causing sustained and significant economic damage[30] - Hong Kong's economy contracted by 6.1% in 2020, marking its largest annual decline on record and the first time it experienced economic contraction for two consecutive years[31] Performance Review The company's performance was significantly impacted by the macroeconomic environment, with apparel business revenue decreasing by 27.2% due to the pandemic's impact on the US market, and loan financing business revenue declining by 36.7% amidst Hong Kong's weak economy and strict credit controls Revenue Performance by Business Segment | Business Segment | 2020 Revenue (HKD) | 2019 Revenue (HKD) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Apparel Business | 107,053,000 | 146,995,000 | -27.2% | | Loan Financing Business | 7,421,000 | 11,719,000 | -36.7% | - To support clients through the pandemic, the company agreed not to charge interest on outstanding loans for some customers, which also impacted loan business revenue[39] Future Outlook For 2021, the global economic outlook depends on pandemic control, with a gradual rebound expected as vaccinations progress, particularly in the US market, while US-China tensions are not anticipated to escalate significantly under the new US administration, and the company will manage potential impacts and seek new opportunities for revenue diversification - The company anticipates a gradual rebound in the global economy in 2021, particularly favoring the recovery prospects of the US market supported by accommodative monetary and fiscal policies[42] - US-China relations remain an operational risk, but tensions are not expected to escalate significantly, potentially providing a more stable environment for business activities[43] - Facing ongoing uncertainties, the company will take appropriate actions to manage potential impacts and actively seek new business opportunities to diversify revenue streams and create shareholder value[49] Biographical Details of Directors and Senior Management This section provides detailed biographies of the executive directors, independent non-executive directors, and senior management, including their age, positions, professional backgrounds, industry experience, and roles in other listed companies - The report provides detailed biographies of executive directors, independent non-executive directors, and senior management, including information on their age, positions, professional backgrounds, industry experience, and roles in other listed companies[54][60][86] Management Discussion and Analysis This section provides a comprehensive review of the company's operational performance, financial position, liquidity, and capital resources for the reporting period, highlighting key drivers and impacts Business Review and Financial Analysis In 2020, the Group's total revenue decreased by 27.9% to HKD 114.47 million due to the global pandemic, with apparel business revenue down 27.2% and loan financing revenue down 36.7%, yet overall gross margin slightly increased from 20.3% to 21.8% due to product mix optimization, despite goodwill impairment of HKD 22.73 million and expected credit loss provisions of HKD 17.02 million for loan receivables, leading to a narrowed loss attributable to owners of the company by 11.2% to HKD 68.12 million through reduced selling and administrative expenses FY2020 Performance Overview | Metric (Thousand HKD) | 2020 | 2019 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Total Revenue | 114,474 | 158,714 | -27.9% | | Gross Profit | 24,957 | 32,196 | -22.5% | | Gross Profit Margin | 21.8% | 20.3% | +1.5pp | | Goodwill Impairment Loss | (22,734) | (30,290) | N/A | | Provision for Expected Credit Losses on Loan Receivables | (17,021) | (989) | +1621.8% | | Loss Attributable to Owners of the Company | (68,115) | (76,680) | -11.2% | Apparel Operation The apparel business, as the Group's primary revenue source (93.5% of total revenue), saw a 27.2% year-on-year decrease in 2020 to HKD 107.05 million, with OEM product revenue significantly declining by 46.3% while own-brand product revenue grew by 20.4%, leading to an increase in overall gross margin from 13.9% to 16.4% due to a shift towards higher-margin own-brand products Apparel Business Performance by Product Category | Product Category | 2020 Revenue (Thousand HKD) | 2019 Revenue (Thousand HKD) | Year-on-Year Change | 2020 Gross Margin | | :--- | :--- | :--- | :--- | :--- | | OEM Products | 56,205 | 104,760 | -46.3% | 7.4% | | Own-Brand Products | 50,848 | 42,235 | +20.4% | 26.3% | | Total | 107,053 | 146,995 | -27.2% | 16.4% | Money Lending Business Impacted by Hong Kong's economic contraction, loan financing business revenue decreased by 36.7% to HKD 7.42 million, with the company providing interest-free support to some clients during challenging times, and outstanding loan and interest receivables slightly declined by 3.3% from HKD 112.5 million to HKD 108.8 million by year-end - Due to Hong Kong's 6.1% economic contraction and severely dampened business sentiment, loan financing business revenue decreased by 36.7% to HKD 7.421 million[112] - As of the end of 2020, total loan and interest receivables amounted to HKD 108.8 million, a 3.3% decrease from HKD 112.5 million at the end of 2019[112] Financial Position Review As of year-end 2020, the Group's balance sheet showed goodwill reduced to HKD 34.63 million due to impairment, inventory decreased by 20.1% to HKD 11.97 million but turnover days increased from 43 to 49 days, trade receivables decreased by 20.6% but turnover days increased from 48 to 61 days, and trade payables increased by 7.6% with turnover days significantly rising from 30 to 101 days, reflecting extended supplier credit terms - Due to negative expectations for Hong Kong's economic outlook, the company recognized a goodwill impairment of HKD 22.73 million for its loan business, with the year-end goodwill balance at HKD 34.63 million[142] Changes in Key Working Capital Indicators | Metric | End of 2020 | End of 2019 | Change | | :--- | :--- | :--- | :--- | | Inventory (Thousand HKD) | 11,971 | 14,987 | -20.1% | | Inventory Turnover Days | 49天 | 43天 | 增加6天 | | Trade Receivables (Thousand HKD) | 19,136 | 24,099 | -20.6% | | Trade Receivables Turnover Days | 61天 | 48天 | 增加13天 | | Trade Payables (Thousand HKD) | 24,651 | 22,900 | +7.6% | | Trade Payables Turnover Days | 101天 | 30天 | 增加71天 | Liquidity and Financial Resources As of year-end 2020, the Group held cash and bank balances of HKD 78.55 million with a current ratio of 5.27, indicating ample liquidity, while total lease liabilities were HKD 4.98 million and the debt-to-equity ratio (lease liabilities/total equity) decreased from 2.8% to 2.1%, reflecting a sound financial position, with no assets pledged, no significant acquisitions or disposals, and no final dividend proposed during the reporting period Liquidity and Capital Structure | Metric | End of 2020 | End of 2019 | | :--- | :--- | :--- | | Cash and Bank Balances (Thousand HKD) | 78,547 | 104,723 | | Current Ratio | 5.27 | 6.26 | | Debt-to-Equity Ratio | 2.1% | 2.8% | - As of the end of 2020, the Group had no pledged assets or significant contingent liabilities[166][167] - The Board does not recommend the payment of a final dividend for the year ended December 31, 2020[207] Corporate Governance Report This report details the company's adherence to corporate governance principles, the structure and operation of its board committees, and its risk management and internal control systems, ensuring compliance and effective oversight Corporate Governance Structure and Practices The company largely complied with the Corporate Governance Code during the reporting year, though the composition of the Audit, Remuneration, and Nomination Committees temporarily did not fully meet Listing Rules requirements between September 7 and December 2, 2020, due to an independent non-executive director's resignation, which has since been rectified, and the Board maintains four distinct committees—Audit, Remuneration, Nomination, and Corporate Governance—with the Chairman and Deputy CEO roles held by different individuals to ensure effective segregation of duties - Due to the resignation of an independent non-executive director, the composition of the Audit, Remuneration, and Nomination Committees did not fully comply with Listing Rules 3.21, 3.25, and Corporate Governance Code A.5.1 from September 7 to December 2, 2020, but compliance was restored after December 3[213] - The Board has established four committees: Audit, Remuneration, Nomination, and Corporate Governance, to assist in fulfilling its oversight functions[222] Board Committee Operations During the reporting period, all committees convened meetings to fulfill their duties, with the Nomination Committee reviewing board structure and director re-election, the Remuneration Committee reviewing director and senior management remuneration policies, the Corporate Governance Committee reviewing governance practices and the ESG report, and the Audit Committee reviewing financial statements, risk management, and internal control systems while recommending the re-appointment of external auditors - The Nomination Committee reviewed the Board's structure, size, and composition, and made recommendations to the Board regarding the appointment and re-election of directors[256][263] - The Remuneration Committee is responsible for formulating and reviewing the remuneration policies for directors and senior management, ensuring no individual determines their own remuneration[275][282] - The Audit Committee, comprising three independent non-executive directors, oversees the integrity of financial reporting, the effectiveness of risk management and internal control systems, and advises the Board on the appointment of external auditors[293][294] Risk Management and Internal Control The Board is responsible for maintaining sound and effective risk management and internal control systems, which the Group assesses through internal oversight by the Corporate Governance Committee and external review by independent bodies, and for the 2020 fiscal year, the Board conducted an annual review and deemed the systems effective and adequate, with established procedures for handling and disseminating inside information to ensure compliance - The Group's risk management and internal control processes integrate internal oversight (executed by the Corporate Governance Committee) and external review (conducted by independent external bodies)[317][318] - The Board conducted an annual review of the risk management and internal control systems for the 2020 fiscal year, deeming them effective and adequate in terms of resources, staff qualifications, and experience[326][327] Environmental, Social and Governance Report This report outlines the Group's commitment to environmental protection, social responsibility, and ethical governance, detailing initiatives in green operations, employee welfare, and responsible business practices Environmental Protection and Green Operations The Group is committed to green operations, complying with relevant Chinese environmental laws and regulations, and has established an environmental management system comprising 'planning, implementation, checking, and review,' with total greenhouse gas emissions decreasing year-on-year to 327 tonnes of CO2 equivalent during the reporting period, implementing various energy-saving, emission reduction, waste management, and resource utilization measures like using energy-efficient equipment, source reduction, and promoting green office practices to minimize operational environmental impact Greenhouse Gas Emissions (Tonnes of CO2 Equivalent) | Scope | 2020 | 2019 | | :--- | :--- | :--- | | Scope 1: Direct Emissions | 24 | 45 | | Scope 2: Energy Indirect Emissions | 271 | 380 | | Scope 3: Other Indirect Emissions | 32 | 90 | | Total Emissions | 327 | 515 | | Emissions Intensity (Tonnes/Employee) | 1.74 | 1.85 | Waste Generation | Waste Type | 2020 Total Volume | 2020 Intensity (Tonnes/Employee) | | :--- | :--- | :--- | | Non-Hazardous Waste | 348噸 | 1.85 | | Hazardous Waste | 305公斤 | 1.62公斤 | - The Group implemented various measures such as energy conservation, source reduction, efficient resource utilization, and green office practices to integrate environmental concepts into daily operations[419] Social Responsibility and Employee Care The Group adheres to a 'people-oriented' approach, strictly complying with employment laws, prohibiting child and forced labor, and achieving WRAP Gold certification, while offering competitive compensation and benefits, focusing on employee career development and training, prioritizing 'safety first' with protective equipment and regular training, and establishing a COVID-19 prevention and control team to implement various measures ensuring employee health and safety - The Group strictly complies with labor laws, having received Gold-level certification from the Worldwide Responsible Accredited Production (WRAP) organization, affirming its efforts in upholding labor rights[433] - To combat the COVID-19 pandemic, the Group established a prevention and control team, implementing various measures including isolation, staggered dining, enhanced disinfection, and providing flexible work arrangements for Hong Kong employees[458] - During the reporting period, the Group experienced no major safety incidents or casualties, nor any violations of health and safety regulations[457] Operating Practices The Group prioritizes product quality and supply chain management, establishing stringent supplier evaluation and quality management systems that incorporate 'green procurement,' while striving to enhance customer satisfaction and protect client privacy and intellectual property, and in anti-corruption, the Group has developed employee handbooks and relevant policies promoting an integrity culture with a whistleblowing mechanism, reporting no product recalls due to safety or health reasons, nor any violations of intellectual property or anti-corruption regulations during the period - The Group established standardized supplier evaluation and management policies, integrating 'green procurement' principles into its purchasing process by prioritizing products and services with minimal environmental impact[463] - The company strictly adheres to anti-corruption regulations, developing employee handbooks and policies to govern staff conduct and promote integrity[482] - During the reporting year, the company had no products recalled due to safety and health reasons[470] Directors' Report This report details the Group's principal activities, key customer and supplier concentrations, dividend policy, and the interests of directors and major shareholders, confirming compliance with public float requirements Business and Financial Review The Group primarily engages in apparel design, manufacturing, and trading, as well as providing loan financing services, with the largest customer accounting for 44.0% of sales and the top five customers collectively 76.9%, while the largest supplier accounted for 10.8% of purchases and the top five suppliers collectively 40.3%, and the directors do not recommend any final dividend for 2020, with distributable reserves of approximately HKD 244 million at year-end Major Customer and Supplier Concentration (FY2020) | Category | Percentage | | :--- | :--- | | Largest Customer | 44.0% | | Top Five Customers Combined | 76.9% | | Largest Supplier | 10.8% | | Top Five Suppliers Combined | 40.3% | - The directors do not recommend the payment of any final dividend for the year ended December 31, 2020[504] Directors' and Major Shareholders' Interests The report discloses the interests of directors, chief executives, and major shareholders in the company's shares as of December 31, 2020, with New Seres CEFC Investment Fund LP (in liquidation) holding approximately 50.89% as a major shareholder, and Executive Director Ms. Tin Yat Yu Carol (and her controlled corporations) collectively holding approximately 6.77%, confirming the company maintained sufficient public float Directors' and Major Shareholders' Shareholdings (As of December 31, 2020) | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | New Seres CEFC Investment Fund LP (in liquidation) | Beneficial Owner | 860,120,000 | 50.89% | | Tin Yat Yu Carol | Beneficial Owner and Interest in Controlled Corporation | 114,362,000 | 6.77% | | Tang Shu Pui Simon | Beneficial Owner | 5,000,000 | 0.30% | | Hua Zhen | Beneficial Owner | 87,000,000 | 5.15% | - Based on public information and the directors' knowledge, the company maintained a public float of at least 25% as of the reporting date, complying with Listing Rules requirements[599] Independent Auditor's Report This report presents the independent auditor's opinion on the consolidated financial statements and highlights key audit matters, including significant management estimates and judgments related to asset valuations and recoverability Audit Opinion The auditor, BDO Limited, Hong Kong, is of the opinion that the company's consolidated financial statements truly and fairly reflect the Group's consolidated financial position as of December 31, 2020, and its consolidated financial performance and cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards, and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance - The auditor issued an unmodified opinion on the company's 2020 consolidated financial statements, deeming them to present a true and fair view of the company's financial position and operating results[608] Key Audit Matters The auditor identified three key audit matters: 1) inventory valuation, involving significant management estimates for net realizable value; 2) recoverability of trade and loan receivables and interest, requiring subjective judgments on customer creditworthiness and expected credit loss (ECL) estimates; and 3) impairment assessment of non-financial non-current assets, particularly goodwill, where recoverable amounts rely on significant judgments regarding future cash flows, growth rates, and discount rates - Inventory Valuation: Inventory is stated at the lower of cost and net realizable value, with its assessment involving significant management estimates of future market conditions and selling prices; approximately HKD 2.63 million in inventory impairment was recognized in 2020[614] - Recoverability of Receivables: Management exercised subjective judgment in assessing expected credit losses for trade receivables (HKD 19.14 million) and loan and interest receivables (HKD 108.8 million)[621][622] - Impairment Assessment of Non-Current Assets: The impairment assessment of goodwill and intangible assets relies on calculations of Value in Use (VIU) and Fair Value Less Costs of Disposal (FVLCOD), involving significant estimates of future cash flows and discount rates; approximately HKD 22.73 million in goodwill impairment was recognized in 2020[633][635] Consolidated Financial Statements This section presents the Group's comprehensive financial statements, including the statement of comprehensive income, financial position, changes in equity, and cash flows, along with detailed notes explaining accounting policies and key financial items Consolidated Statement of Comprehensive Income For the year ended December 31, 2020, the Group's revenue was HKD 114.47 million, a 27.9% year-on-year decrease, and despite significant goodwill and loan receivable impairments, the loss attributable to owners of the company narrowed from HKD 76.68 million to HKD 68.12 million due to effective cost control, resulting in a total comprehensive loss for the year of HKD 66.77 million after accounting for exchange gains Consolidated Statement of Comprehensive Income Summary (For the Year Ended December 31) | Item (Thousand HKD) | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 114,474 | 158,714 | | Gross Profit | 24,957 | 32,196 | | Loss Before Income Tax | (67,038) | (71,048) | | Loss for the Year Attributable to Owners of the Company | (68,115) | (76,680) | | Total Comprehensive Income for the Year Attributable to Owners of the Company | (66,772) | (77,221) | | Basic and Diluted Loss Per Share (HK Cents) | (4.03) | (4.54) | Consolidated Statement of Financial Position As of December 31, 2020, the Group's total assets were HKD 284 million, total liabilities HKD 45.28 million, and net assets HKD 238 million, with key assets including loan and interest receivables of HKD 109 million, cash and bank balances of HKD 78.55 million, and goodwill of HKD 34.63 million, resulting in net current assets of HKD 188 million Consolidated Statement of Financial Position Summary (As of December 31) | Item (Thousand HKD) | 2020 | 2019 | | :--- | :--- | :--- | | Non-current Assets | 52,096 | 82,586 | | Current Assets | 231,604 | 268,468 | | Total Assets | 283,700 | 351,054 | | Current Liabilities | 43,954 | 42,878 | | Non-current Liabilities | 1,321 | 2,979 | | Total Liabilities | 45,275 | 45,857 | | Net Assets | 238,425 | 305,197 | | Total Equity | 238,425 | 305,197 | Consolidated Statement of Changes in Equity As of December 31, 2020, the Group's total equity decreased from HKD 305 million at the beginning of the year to HKD 238 million, primarily due to a loss of HKD 68.12 million for the year, partially offset by an exchange gain of HKD 1.34 million Summary of Changes in Equity (Thousand HKD) | Item | Balance as at January 1, 2020 | Loss for the Year | Other Comprehensive Income | Balance as at December 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Equity | 305,197 | (68,115) | 1,343 | 238,425 | Consolidated Statement of Cash Flows In 2020, the Group's net cash outflow from operating activities was HKD 20.75 million, primarily due to operating cash outflow before working capital changes and an increase in loan receivables, while investing activities generated a net cash inflow of HKD 4.42 million, and financing activities resulted in a net cash outflow of HKD 6.01 million, mainly for lease liability repayments, leading to a net decrease in cash and cash equivalents of HKD 22.34 million for the year, with an ending balance of HKD 78.55 million Consolidated Statement of Cash Flows Summary (For the Year Ended December 31) | Item (Thousand HKD) | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (20,746) | (41,911) | | Net Cash Generated from Investing Activities | 4,419 | 783 | | Net Cash Used in Financing Activities | (6,012) | (10,172) | | Net Decrease in Cash and Cash Equivalents | (22,339) | (51,300) | | Cash and Cash Equivalents at Beginning of Year | 100,997 | 152,597 | | Cash and Cash Equivalents at End of Year | 78,547 | 100,997 | Notes to the Consolidated Financial Statements The notes to the financial statements elaborate on the company's accounting policies, key accounting judgments and estimates, and provide in-depth analysis of various statement items, with a focus on segment information, revenue recognition, goodwill impairment testing assumptions, financial instrument risk management, and related party transactions - Segment Information: The Group operates in two segments: apparel design, manufacturing, and trading; and loan financing services; in 2020, apparel business revenue was HKD 107 million with a segment loss of HKD 14.65 million, while loan financing business revenue was HKD 7.42 million with a segment loss of HKD 39.23 million[955] - Goodwill Impairment: Goodwill for the loan financing cash-generating unit was tested for impairment using a pre-tax discount rate of 15.6% and a long-term growth rate of 3%, resulting in a recognized goodwill impairment of HKD 22.73 million due to negative outlook[1047][1051] - Loan and Interest Receivables: As of year-end, total loan and interest receivables amounted to HKD 108.8 million, of which HKD 58.9 million was unsecured; due to increased credit risk, total impairment provisions significantly increased from HKD 2.79 million to HKD 19.81 million[1100][1101][1110]