乙德投资控股(06182) - 2024 - 年度财报

Chairman's Statement The Chairman's report details a net loss of approximately HKD 36.7 million due to economic headwinds, yet expresses optimism for future growth from public projects and policy shifts - The Group recorded a net loss of approximately HKD 36.7 million this year due to economic downturn, rising inflation, and continuous interest rate hikes[7] - The Group's core business, the 'Ten-Year Hospital Development Plan,' achieved new progress, securing a large public project and another hospital project for the continued supply and installation of gypsum block products[8] - The Chairman remains optimistic about long-term business growth, primarily due to the government's removal of property cooling measures and opportunities from major development plans like Kau Yi Chau Artificial Islands and the Northern Metropolis[9] Management Discussion and Analysis Business Review and Market Outlook The Group's revenue declined to HKD 102.5 million with a net loss of HKD 36.7 million amid market slowdown, yet secured major hospital projects and remains confident in the construction industry's long-term prospects Annual Performance Overview | Metric | Year Ended March 31, 2024 (Million HKD) | Year Ended March 31, 2023 (Million HKD) | | :--- | :--- | :--- | | Revenue | Approx. 102.5 | Approx. 189.4 | | Net Loss | Approx. 36.7 | Approx. 23.2 | - The Group was awarded a project with a contract value of approximately HKD 142.5 million and another hospital supply and installation project valued at approximately HKD 29.7 million under the 'Ten-Year Hospital Development Plan'[15] - The Group's demountable partition system business made progress, securing three public utility projects with a total contract value of approximately HKD 67.0 million[17] Financial Review Total revenue declined 45.9% to HKD 102.5 million, with gross profit at HKD 9.4 million and margin at 9.2%, leading to an expanded net loss of HKD 36.7 million due to reduced revenue, absent subsidies, and increased impairment Revenue Total revenue decreased by 45.9% to HKD 102.5 million, driven by a 41.3% decline in construction contracts and a 76.9% drop in building material sales Revenue by Business Segment | Business Segment | FY2024 (Million HKD) | FY2024 (%) | FY2023 (Million HKD) | FY2023 (%) | | :--- | :--- | :--- | :--- | :--- | | Construction Contracts | 96.9 | 94.5 | 165.2 | 87.2 | | Sales of Building Materials | 5.6 | 5.5 | 24.2 | 12.8 | | Total | 102.5 | 100.0 | 189.4 | 100.0 | - Revenue from timber flooring construction contracts decreased by approximately HKD 58.3 million to approximately HKD 43.4 million due to a slowdown in construction progress caused by the property market downturn[23] - Revenue from sales of gypsum block products decreased from approximately HKD 22.1 million to approximately HKD 4.8 million due to intense competition and budget constraints[24] Gross Profit and Gross Margin Gross profit decreased by 37.7% to HKD 9.4 million, while gross margin slightly increased from 8.0% to 9.2%, influenced by the higher margin of building material sales Gross Profit and Gross Margin Performance | Metric | FY2024 | FY2023 | Change | | :--- | :--- | :--- | :--- | | Gross Profit | Approx. 9.4 Million HKD | Approx. 15.1 Million HKD | -37.7% | | Gross Margin | Approx. 9.2% | Approx. 8.0% | +1.2pp | Expenses, Costs, and Losses Other income decreased due to absent government subsidies, administrative expenses rose 13.0% to HKD 38.2 million, and finance costs increased 52.9% to HKD 5.2 million, expanding net loss to HKD 36.7 million - Other income decreased from HKD 4.2 million to HKD 1.1 million, primarily due to the absence of government 'Employment Support Scheme' wage subsidies this year[30] - Administrative expenses increased by 13.0% to HKD 38.2 million, mainly due to an increase in asset impairment provisions of approximately HKD 5.4 million[32] - Finance costs increased by 52.9% to HKD 5.2 million due to rising interest rates[33] - Net loss increased from HKD 23.2 million to HKD 36.7 million, primarily attributable to reduced revenue and gross profit[35] Liquidity and Financial Resources Review Total equity decreased to HKD 92.4 million and net current assets to HKD 35.8 million, yet cash increased, bank borrowings decreased, and solvency ratios improved, with bank financing secured by properties, insurance, and deposits Key Financial Ratios | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Gearing Ratio | 51.5% | 57.4% | | Current Ratio | 1.7 | 1.5 | Assets and Liabilities (As at March 31) | Metric | 2024 (Million HKD) | 2023 (Million HKD) | | :--- | :--- | :--- | | Total Equity | 92.4 | 129.1 | | Net Current Assets | 35.8 | 70.5 | | Cash and Cash Equivalents | 29.7 | 24.8 | | Bank Borrowings | 52.2 | 64.5 | - As at March 31, 2024, the Group's bank financing was secured by properties with a net book value of approximately HKD 47.8 million, life insurance policies of approximately HKD 6.7 million, and pledged bank deposits of approximately HKD 8.6 million[45] Key Risks and Uncertainties The Group faces risks including cash flow volatility, inaccurate project estimates, non-fixed profit margins, reliance on new projects, foreign currency and interest rate risks, credit risk from contract assets, and high customer concentration - Cash flow pattern volatility: Net cash outflows may occur during initial construction phases due to upfront payments for materials and subcontractors, while client progress payments have a time lag[49] - Interest rate risk: As at March 31, 2024, approximately HKD 52.2 million of the Group's interest-bearing bank borrowings are at floating rates and are not hedged, meaning rising interest rates will increase interest expenses[55] - Credit risk: Contract assets with a net book value of approximately HKD 64.1 million constitute the largest credit risk, and the Group has appointed an independent professional valuer to assess expected credit losses[56][57] - Customer concentration risk: The top five customers accounted for approximately 66.3% of total revenue this year (2023: 72.4%), with the largest customer accounting for approximately 25.3% (2023: 32.0%)[58] Employees and Remuneration Policy As of March 31, 2024, the Group had 30 employees with total staff costs of approximately HKD 18.7 million, with remuneration based on market levels, performance, and benefits Employee and Cost Overview | Metric | As at March 31, 2024 | As at March 31, 2023 | | :--- | :--- | :--- | | Total Full-time and Part-time Employees | 30 | 34 | | Total Staff Costs | Approx. 18.7 Million HKD | Approx. 19.3 Million HKD | Biographies of Directors and Senior Management Biographies of Directors and Senior Management This section details the professional backgrounds, qualifications, and industry experience of the Group's executive, non-executive, and independent non-executive directors, and senior management, including key familial relationships - Executive Director Mr. Lo Wing Cheong is the Group's founder, Chairman, and Chief Executive Officer, with over forty years of experience in the Hong Kong construction industry[65] - Non-Executive Director Mr. Li Pui Ho, appointed in September 2023, possesses over ten years of experience in accounting, auditing, and corporate finance, and is the son-in-law of Chairman Mr. Lo Wing Cheong[66][67] - Senior management includes Mr. Ho Shing Chak (Technical Advisor), Ms. Lo Pui Ying (Chief Operating Officer and daughter of the Chairman), and Mr. Chow Wing Wo (Financial Controller), all possessing extensive experience in construction, management, and finance[76][78][79] Corporate Governance Report Corporate Governance Practices The Group generally complied with the Corporate Governance Code, with one deviation where the Chairman and CEO roles are combined, which the Board believes facilitates swift decision-making without compromising accountability - The company has adopted and complied with the Corporate Governance Code, with one deviation: the roles of Chairman and Chief Executive Officer are combined and held by the same individual, Mr. Lo Wing Cheong[84] - The Board believes that Mr. Lo Wing Cheong holding both positions facilitates swift and effective decision-making and execution, and that the balance of power, accountability, and independent decision-making are not compromised given the participation of non-executive and independent non-executive directors[84] Board of Directors The Board, comprising 2 executive, 1 non-executive, and 3 independent non-executive directors, held 7 meetings, ensuring diverse skills and compliance with Listing Rules through proper appointment and re-election processes - The Board of Directors comprises 6 members: 2 executive directors (Lo Wing Cheong, Fung Pik Mei), 1 non-executive director (Li Pui Ho), and 3 independent non-executive directors (Shu Wah Tung, Tam Wai Tak, Tam Wing Lok)[88] - The company has complied with the Listing Rules regarding the number of independent non-executive directors (at least three and comprising at least one-third of the Board) and their professional qualifications[91] Board Meeting Attendance (Annual) | Director Category | Board Meetings | Remuneration Committee | Audit Committee | Nomination Committee | Annual General Meeting | | :--- | :--- | :--- | :--- | :--- | :--- | | Executive Directors | 7/7 | 2/2 | Not Applicable | 2/2 | 1/1 | | Non-Executive Directors | 3/3, 4/4 | Not Applicable | 1/1, 2/2 | Not Applicable | 1/1 | | Independent Non-Executive Directors | 7/7 | 2/2 | 3/3 | 2/2 | 1/1 | Board Committees The company has Audit, Remuneration, and Nomination Committees, each with a majority of independent non-executive directors, overseeing financial reporting, remuneration policies, and Board structure and diversity, respectively - The Audit Committee is chaired by Mr. Shu Wah Tung, with members including three independent non-executive directors and one non-executive director, holding three meetings during the year to review financial statements and internal control systems[106][107] - The Remuneration Committee is chaired by Mr. Tam Wing Lok, with members including three independent non-executive directors and one executive director, holding two meetings during the year to review remuneration packages[108] - The Nomination Committee is chaired by Mr. Lo Wing Cheong, with a majority of independent non-executive directors, holding two meetings during the year to review Board structure, diversity policy, and director nominations[109][112] - The company has adopted a Board Diversity Policy with measurable objectives, such as at least one female director and at least one-third independent non-executive directors, all of which were met during the reporting period[111][113][114] Risk Management and Internal Control The Board oversees the Group's risk management and internal control systems, which were independently reviewed by Zhonghui Anda Risk Management Limited this year and deemed effective and adequate - The Board of Directors is responsible for overseeing the Group's risk management and internal control systems, conducting annual effectiveness reviews[119] - This year, the Group appointed Zhonghui Anda Risk Management Limited (Zhonghui) as an independent consultant to assist with risk assessment and internal control review[122] - Based on Zhonghui's review findings and recommendations, the Board considers the Group's internal control and risk management systems to be effective and adequate[122] Communication with Shareholders and Investor Relations The company prioritizes effective shareholder communication via its website and AGMs, outlining shareholder rights for meetings and inquiries, and disclosing a dividend policy based on financial performance and funding needs - The company has adopted a shareholder communication policy and maintains communication platforms such as its website (www.kwantaieng.com) and Annual General Meetings[126] - Shareholders holding not less than 10% of the paid-up share capital have the right to request an Extraordinary General Meeting[128] - The company has adopted a dividend policy, where dividend decisions consider various factors including financial performance, shareholder interests, and funding needs, but without a predetermined dividend payout ratio[132][133] Directors' Report Business and Financial Summary The Directors' Report summarizes the Group's building material sales and installation business, noting a loss for the period, no final dividend recommendation, distributable reserves of HKD 82.0 million, and high customer concentration - The Board does not recommend the payment of a final dividend for the year ended March 31, 2024[137] - As at March 31, 2024, the company's distributable reserves were approximately HKD 82.0 million[139] - High customer concentration: The top five customers accounted for 66.3% of total revenue, with the largest customer accounting for 25.3%[147] Directors and Interests Disclosure This section details director appointments and re-elections, discloses directors' and substantial shareholders' interests, including controlling shareholders Mr. Lo Wing Cheong and Ms. Fung Pik Mei holding 73.5% through Helios, and confirms no significant director interests in material contracts - Mr. Li Pui Ho, Mr. Shu Wah Tung, and Mr. Tam Wai Tak will retire by rotation and offer themselves for re-election at the upcoming Annual General Meeting[154] Directors' and Substantial Shareholders' Long Positions in Shares | Shareholder Name/Entity | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Lo Wing Cheong | Interest in controlled corporation | 588,000,000 | 73.50% | | Ms. Fung Pik Mei | Interest in controlled corporation | 588,000,000 | 73.50% | | Helios Enterprise Holding Limited | Beneficial owner | 588,000,000 | 73.5% | Share Option Scheme The company adopted a ten-year share option scheme in December 2017 to incentivize contributors, detailing its terms and conditions, with no options granted as of the reporting period - The Share Option Scheme was adopted on December 19, 2017, with a ten-year validity, aiming to incentivize participants who contribute to the Group[166] - Since the adoption of the Share Option Scheme, no share options have been granted, exercised, cancelled, or lapsed as of the end of the reporting period[166] - The maximum number of share options that may be granted under the Share Option Scheme is 80,000,000, representing 10% of the total issued shares[166][172] Environmental, Social and Governance Report Stakeholder Engagement and Materiality Assessment The Group conducted a materiality assessment through stakeholder engagement, identifying key ESG issues for the year, including service quality, data protection, workplace safety, employee health, and product environmental attributes - Through communication with internal and external stakeholders, the Group identified the most material ESG issues for the year, covering three main categories: operating practices, employment practices, and environment[192][194] - The most material ESG aspects include: * Ensuring service and product quality * Protecting customer personal data * Providing a safe working environment * Ensuring employee occupational health and safety * Focusing on enhancing the environmental elements of products Environment The Group, ISO 14001:2015 certified, significantly reduced greenhouse gas emissions this period, implementing energy, water, and waste management measures, promoting eco-friendly products, and developing climate change mitigation plans Greenhouse Gas Emissions (tonnes of CO2e) | Scope | 2024 (tonnes of CO2e) | 2023 (tonnes of CO2e) | | :--- | :--- | :--- | | Scope 1 (Direct Emissions) | 21.8 | 17.2 | | Scope 2 (Energy Indirect Emissions) | 43.8 | 41.5 | | Scope 3 (Other Indirect Emissions) | 188.9 | 2,070.6 | | Total Emissions | 254.5 | 2,129.3 | - Total greenhouse gas emissions significantly decreased, primarily due to fewer shipments of gypsum block products from Germany, leading to a substantial reduction in Scope 3 emissions[200] - The Group's timber flooring, timber doors, and furniture products are FSC-certified, while its gypsum block products received a Platinum rating under the Hong Kong Green Building Council's HK G-PASS[209] Employment and Labor Practices The Group maintains an equal, safe, and healthy work environment for its 30 employees (60% female), with an OHSAS 18001 certified system, reporting 2 work-related injuries and no fatalities, while prohibiting child/forced labor and offering training Workforce Composition (As at March 31, 2024) | Category | Breakdown | Number of Employees | | :--- | :--- | :--- | | Total Employees | | 30 | | By Gender | Male | 12 | | | Female | 18 | | By Employment Type | Full-time | 29 | | | Part-time | 1 | Health and Safety Data | Metric | FY2024 | FY2023 | | :--- | :--- | :--- | | Lost Workdays Due to Work Injury | None | None | | Number of Work-Related Fatalities | None | None | | Number of Work-Related Injuries | 2 | 2 | - The Group strictly complies with the Employment Ordinance, prohibiting child and forced labor, and verifies identity documents during recruitment[222] Operating Practices The Group maintains stringent supply chain management, holds ISO 9001:2015 certification for product quality, protects intellectual property and customer data, and adheres to clear codes of conduct and anti-corruption guidelines, with no related legal cases - The Group conducts annual performance evaluations for suppliers and subcontractors, covering environmental, health, and safety systems[223] - The Group has established an integrated management system, with its supplied and installed timber flooring, gypsum block, and timber door products having obtained ISO 9001:2015 certification since 2017[225] - The Group has established strict codes of conduct and anti-corruption guidelines, with no legal cases involving bribery, extortion, fraud, or money laundering reported during the period[231] Independent Auditor's Report Independent Auditor's Report Auditor Shinewing (Hong Kong) CPA Limited issued an unmodified opinion on the consolidated financial statements, highlighting key audit matters related to construction contract accounting and expected credit loss recognition for contract assets and trade receivables - The auditor issued an unmodified opinion on the consolidated financial statements[235] - Key Audit Matter One: Accounting for construction and engineering service contracts, involving significant management judgment and estimation regarding overall contract outcomes and stage of completion[238][240] - Key Audit Matter Two: Recognition of expected credit losses (ECL) for contract assets and trade receivables, considered a key audit matter due to the high level of management judgment required for estimation and the material amounts involved[238][244] Consolidated Financial Statements Key Financial Statements The Group reported revenue of HKD 102.5 million (down 45.9%) and a net loss of HKD 36.72 million, with total assets at HKD 169.5 million, total liabilities at HKD 77.18 million, and total equity at HKD 92.37 million, resulting in a net cash increase of HKD 4.93 million FY2024 Key Financial Data (Consolidated) | Metric | Amount (Thousand HKD) | | :--- | :--- | | Consolidated Statement of Profit or Loss: | | | Revenue | 102,540 | | Loss Before Tax | (36,654) | | Loss for the Year | (36,717) | | Consolidated Statement of Financial Position (Period-end): | | | Total Assets | 169,542 | | Total Liabilities | 77,176 | | Total Equity | 92,366 | | Consolidated Statement of Cash Flows: | | | Net Cash from Operating Activities | 24,288 | | Net Cash Used in Investing Activities | (701) | | Net Cash Used in Financing Activities | (18,660) | Notes to the Consolidated Financial Statements The notes detail accounting policies, key estimates, and financial item specifics, covering revenue recognition, financial instrument risk management, segment information, increased contract asset impairment, secured floating-rate bank borrowings, and director/executive remuneration - Revenue recognition: Revenue from construction contracts is recognized over time, with progress measured based on the input method (proportion of costs incurred to estimated total costs)[290][292] - Financial risks: The Group is primarily exposed to currency risk from RMB and Euro, and interest rate risk from floating-rate bank borrowings; credit risk mainly arises from contract assets and trade receivables[363][369][372] - Contract assets: As at March 31, 2024, the net book value of contract assets was HKD 64.074 million, with impairment losses recognized during the year amounting to HKD 5.887 million, a significant increase from HKD 0.367 million last year[453][458] - Bank borrowings: As at March 31, 2024, total bank borrowings amounted to HKD 52.21 million, all of which are secured and bear interest at floating rates[467] Five-Year Financial Summary Five-Year Financial Summary This summary presents the Group's key financial data from 2020 to 2024, showing revenue decline and consecutive losses in 2023-2024, with total assets and equity also trending downwards after 2022 Five-Year Performance Summary (Thousand HKD) | Year Ended March 31 | 2024 | 2023 | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 102,540 | 189,429 | 337,372 | 311,754 | 157,046 | | Loss for the Year / Profit for the Year | (36,717) | (23,206) | 13,742 | 11,300 | (23,820) | Five-Year Assets and Liabilities Summary (Thousand HKD) | As at March 31 | 2024 | 2023 | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 169,542 | 231,158 | 252,691 | 233,327 | 213,641 | | Total Liabilities | 77,176 | 102,075 | 96,402 | 76,780 | 68,394 | | Total Equity | 92,366 | 129,083 | 156,289 | 156,547 | 145,247 |