KFM金德(03816) - 2024 - 年度财报

Financial Summary Revenue and Total Assets Overview The Group's revenue slightly decreased in FY2024, while total assets showed an upward trend, reflecting an expansion in asset scale despite revenue pressure Revenue Trend (HK$ Thousand) | Year | Revenue (HK$ Thousand) | | :--- | :--- | | 2020 | 986,744 | | 2021 | 406,340 | | 2022 | 612,190 | | 2023 | 605,101 | | 2024 | 589,904 | Total Assets Trend (HK$ Thousand) | Year | Total Assets (HK$ Thousand) | | :--- | :--- | | 2020 | 825,309 | | 2021 | 920,249 | | 2022 | 778,276 | | 2023 | 728,732 | | 2024 | 778,276 | Company Information Board of Directors and Committees The company's Board of Directors comprises executive, non-executive, and independent non-executive directors, supported by audit, remuneration, and nomination committees to ensure robust corporate governance, with changes in the chairman and some committee members during the year - Mr. Zhang Haifeng, a Non-executive Director, resigned as Chairman and a member of the Remuneration Committee on March 1, 2024[5] - Mr. Sun Guohua, an Executive Director, was appointed Chairman of the Board and Chairman of the Nomination Committee on March 1, 2024[5] - Mr. Shen Zeqing, an Independent Non-executive Director, was appointed a member of the Remuneration Committee on March 1, 2024[5] Contact and Listing Information The company's headquarters and principal place of business are in Hong Kong and Suzhou, China, with its registered office in the Cayman Islands; its stock code is 3816, and Shinewing (HK) CPA Limited serves as its auditor - The company's headquarters and principal place of business in Hong Kong are located at Unit C, 31/F, TML Tower, 3 Hoi Shing Road, Tsuen Wan, New Territories, Hong Kong[5] - The company's stock code is 3816, and its website is www.kingdom.com.hk[6](index=6&type=chunk) - The auditor is Shinewing (HK) CPA Limited[6] Chairman's Statement Acquisition of Suzhou Plant The Group completed the acquisition of the Suzhou plant during the year, aiming to enhance resource allocation flexibility and reduce future leasing costs - The Group acquired the company owning the Suzhou plant during the year to increase flexibility in resource allocation and reduce future leasing costs[9] Financial Performance The Group's revenue decreased by 2.5% year-on-year to approximately HK$589.9 million, primarily due to reduced demand in the medical and testing equipment sector, partially offset by growth in networking, data storage, and office automation; gross profit margin improved by 1.1% to 18.2%, and net profit slightly increased to HK$23.1 million FY2024 Financial Performance | Metric | 2024 (HK$ Million) | 2023 (HK$ Million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 589.9 | 605.1 | -2.5% | | Gross Profit Margin | 18.2% | 17.1% | +1.1% | | Net Profit | 23.1 | 22.7 | +1.8% | - Revenue decrease primarily due to reduced demand in the medical and testing equipment sector post-COVID-19, partially offset by increased revenue from the networking and data storage and office automation sectors[11] - Gross profit margin increase primarily attributable to changes in product mix and enhanced production efficiency to control manufacturing costs[11] Outlook Facing global economic uncertainty, deglobalization, and geopolitical tensions, the Group has established a new production base in Malaysia to serve clients, and will continue to optimize operations, strictly control costs, strengthen its financial position, seek new business opportunities, and focus on environmental and social responsibilities - The economic environment faces increased uncertainty due to deglobalization, high interest rates, and global geopolitical tensions[12] - To address the trend of clients relocating their businesses to Southeast Asia, the Group's new production base in Malaysia commenced operations in November 2023[12] - The Group will continue to optimize operations, implement stringent cost control measures, strengthen its financial position, and seek more potential opportunities to expand its customer base and product portfolio[12] Acknowledgements The Chairman extends sincere gratitude to shareholders, investors, business partners, directors, and employees for their trust, support, and efforts - The Chairman expresses heartfelt gratitude to shareholders, investors, business partners, directors, and employees for their trust, support, and efforts[13] Business Review Macroeconomic and Business Environment The global economy is affected by inflation, high interest rates, geopolitical tensions, and deglobalization, with China's economy slowing and material and labor costs rising; the Group acquired the Suzhou plant to reduce leasing costs and established a production base in Malaysia to adapt to supply chain restructuring - The global economy is affected by multiple uncertainties including inflation, high interest rates, Sino-US political tensions, the Russia-Ukraine conflict, and the Middle East crisis[16] - China's economy slowed due to COVID-19 and deglobalization, leading to rising material, labor, and production costs[16] - The Group completed the acquisition of the Suzhou plant, transforming it into a permanent production base to reduce property leasing costs and enhance resource allocation flexibility[16] - To align with clients' supply chain restructuring trends, the Group established an overseas production base in Malaysia, offering supply chain solutions outside China and developing new clients[19] Financial Performance Analysis The Group's revenue decreased by 2.5% year-on-year, mainly due to reduced demand for medical and testing equipment, but gross profit increased by 3.9%, with gross profit margin rising to 18.2%; general and administrative expenses increased due to corporate actions and initial operating costs of the Malaysia base, while finance costs decreased due to reduced borrowings, resulting in a slight increase in net profit to HK$23.1 million Revenue and Gross Profit The Group's revenue was approximately HK$589.9 million, a 2.5% year-on-year decrease, primarily due to reduced demand in the medical and testing equipment sector, partially offset by increased revenue from networking, data storage, and office automation; gross profit increased by 3.9% to HK$107.3 million, with gross profit margin rising by 1.1% to 18.2%, mainly driven by changes in product mix and improved production efficiency Revenue and Gross Profit Overview (HK$ Thousand) | Metric | 2024 (HK$ Thousand) | 2023 (HK$ Thousand) | Change (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 589,904 | 605,101 | (15,197) | -2.5% | | Gross Profit | 107,263 | 103,277 | 3,986 | +3.9% | | Gross Profit Margin | 18.2% | 17.1% | +1.1% | | - Revenue decrease primarily due to reduced demand in the medical and testing equipment sector post-COVID-19, partially offset by increased revenue from the networking and data storage and office automation sectors[17][22] - Gross profit margin increase primarily due to changes in product mix and controlled production costs through enhanced production efficiency and reduced headcount[17][26] Revenue by Geographical Region (2024) | Region | Percentage (%) | | :--- | :--- | | Southeast Asia | 50.1% | | China | 31.2% | | Europe | 12.4% | | North America | 4.1% | Cost of Sales The Group's cost of sales decreased by 3.8% year-on-year to HK$482.6 million, primarily due to reductions in raw material costs, processing fees, and direct labor costs; cost of sales as a percentage of total revenue decreased by 1.1% to 81.8% Cost of Sales Breakdown (HK$ Thousand) | Item | 2024 (HK$ Thousand) | 2024 (%) | 2023 (HK$ Thousand) | 2023 (%) | | :--- | :--- | :--- | :--- | :--- | | Direct Materials | 310,441 | 64.3 | 360,615 | 71.9 | | Direct Labor | 82,141 | 17.0 | 89,362 | 17.8 | | Processing Fees | 22,421 | 4.7 | 35,284 | 7.0 | | Inventory Changes | 26,133 | 5.4 | (20,995) | (4.2) | | Other Direct Expenses | 41,505 | 8.6 | 37,558 | 7.5 | | Total | 482,641 | 100.0 | 501,824 | 100.0 | - Cost of sales decreased by approximately HK$19.2 million or 3.8%, primarily due to reductions in raw material costs, processing fees, and direct labor costs[23] - Cost of sales as a percentage of total revenue was approximately 81.8%, a decrease of approximately 1.1% from 82.9% in the prior year[24] Other Net Income and Expenses Other net income increased to HK$12.0 million, mainly due to gains from derecognition of right-of-use assets and related lease liabilities following an acquisition; distribution and selling expenses slightly increased to HK$6.7 million, while general and administrative expenses rose to HK$83.7 million, primarily impacted by legal and professional fees and initial operating costs of the Malaysia production base; finance costs decreased to HK$6.0 million due to lower average balances of bank borrowings and lease liabilities Other Net Income and Expenses Overview (HK$ Thousand) | Metric | 2024 (HK$ Thousand) | 2023 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Other Net Income | 12,031 | 8,621 | +3,410 | | Distribution and Selling Expenses | 6,668 | 6,270 | +398 | | General and Administrative Expenses | 83,741 | 75,524 | +8,217 | | Finance Costs | 6,015 | 8,527 | -2,512 | - Increase in other net income primarily due to gains from derecognition of right-of-use assets and related lease liabilities following the acquisition[27] - Increase in general and administrative expenses primarily due to legal and professional fees incurred from corporate actions during the year and initial operating costs of the Malaysia production base[29] - Decrease in finance costs primarily due to lower average balances of bank borrowings and lease liabilities compared to the prior year[30] Income Tax and Profit Attributable to Owners of the Company Income tax expense increased to HK$9.5 million; profit attributable to owners of the Company slightly increased to HK$23.2 million, mainly driven by higher gross profit and other net income Income Tax and Profit Attributable to Owners of the Company (HK$ Thousand) | Metric | 2024 (HK$ Thousand) | 2023 (HK$ Thousand) | | :--- | :--- | :--- | | Income Tax Expense | 9,496 | 5,069 | | Profit Attributable to Owners of the Company | 23,238 | 22,666 | - Increase in net profit primarily due to higher gross profit and other net income[32] Liquidity, Financial and Capital Resources The Group's total current assets decreased, but shareholders' equity significantly increased; the gearing ratio rose to 8.2%, mainly due to increased bank borrowings, and capital expenditure grew substantially, primarily for the acquisition of property, plant, and equipment Financial Resources and Liquidity The Group's total current assets decreased from HK$546.9 million in 2023 to HK$431.3 million in 2024, with its proportion of total assets falling from 75.0% to 55.4%; working capital is primarily funded by internal cash flows and bank borrowings Total Current Assets (HK$ Thousand) | Year | Total Current Assets (HK$ Thousand) | Percentage of Total Assets | | :--- | :--- | :--- | | March 31, 2024 | 431,311 | 55.4% | | March 31, 2023 | 546,865 | 75.0% | - The Group generally funds its operations primarily through internally generated cash flows and bank borrowings[36] Capital Structure The Group's bank borrowings increased to HK$49.5 million, and shareholders' equity rose to HK$602.8 million; the gearing ratio increased from 4.4% to 8.2%, mainly due to higher bank borrowings Capital Structure Overview (HK$ Thousand) | Metric | 2024 (HK$ Thousand) | 2023 (HK$ Thousand) | | :--- | :--- | :--- | | Bank Borrowings | 49,500 | 22,686 | | Total Debt | 49,500 | 22,686 | | Shareholders' Equity | 602,798 | 513,118 | | Total Debt to Shareholders' Equity Ratio | 8.2% | 4.4% | - The Group's bank borrowings are denominated in RMB[37] Capital Expenditure and Charges on Assets Capital expenditure on property, plant, and equipment significantly increased to HK$37.7 million during the year, primarily funded by cash flows from operating activities, finance leases, and bank borrowings; as of March 31, 2024, the Group had no bank borrowings secured by its assets - Acquisition of property, plant, and equipment amounted to approximately HK$37.7 million during the year, a significant increase from HK$8.9 million in the prior year[38] - Capital expenditure was funded through cash flows from operating activities, finance leases, and bank borrowings[39] - As of March 31, 2024, the Group had no bank borrowings secured by its assets[40] Foreign Currency Risk and Contingent Liabilities The Group primarily operates in Hong Kong and China, facing foreign exchange risks from RMB and USD, and closely monitors exchange rate fluctuations; as of March 31, 2024, the Group had no significant contingent liabilities and no major future plans for investments and capital assets - The Group primarily operates in Hong Kong and China, with Hong Kong entities exposed to RMB foreign exchange risk and Chinese entities exposed to USD foreign exchange risk[42] - The Group closely monitors foreign currency exchange rate movements to manage its foreign exchange risk[43] - As of March 31, 2024, the Group had no significant contingent liabilities[45] - Save as disclosed, the Group currently has no other significant investment and capital asset plans[46] Employees and Remuneration Policy As of March 31, 2024, the Group had a total of 946 full-time employees, a decrease from the previous year; remuneration packages are determined based on individual qualifications, contributions, performance, and years of service; the Group provides continuous training, maintains good labor relations, and participates in China's social insurance schemes - As of March 31, 2024, the Group had a total of 946 full-time employees (2023: 974 employees)[48] - Remuneration packages are determined based on individual employees' qualifications, contributions to the Group, performance, and years of service[48] - The Group continuously provides training to employees to enhance their skills and product knowledge, maintaining good labor relations with no significant strikes or labor disputes during the year[48][49] Corporate Governance Report Corporate Governance Practices and the Board The Group is committed to high corporate governance standards, adhering to the Listing Rules' Corporate Governance Code except for the combined Chairman and CEO roles; the Board oversees all significant matters, ensures director independence and continuous training, maintains diverse membership, and demonstrated good attendance at meetings and general meetings during the year, complying with the Model Code for Securities Transactions Board Composition and Independence The Board comprises two executive directors and three independent non-executive directors, possessing diverse experience and expertise; Mr. Zhang Haifeng resigned as Chairman during the year, and Mr. Sun Guohua was appointed Chairman; the company ensures the number of independent non-executive directors meets requirements and has received confirmations of their independence - The Board comprises two executive directors and three independent non-executive directors[56] - Mr. Zhang Haifeng resigned as Non-executive Director and Chairman of the Board on March 1, 2024, and Mr. Sun Guohua was appointed Chairman of the Board[56][57] - The Board complies with Listing Rules requirements, with at least one-third independent non-executive directors and at least one possessing appropriate professional accounting qualifications[59] Board Diversity Policy The company has adopted a Board Diversity Policy considering factors such as skills, experience, knowledge, expertise, culture, independence, age, and gender; the current Board maintains an appropriate gender balance and will continue to seek suitable female candidates - The company has adopted a Board Diversity Policy, considering factors such as skills, experience, knowledge, expertise, culture, independence, age, and gender[60] - The Board comprises members of both genders, with Ms. Zhao Yue as the female Independent Non-executive Director, and will continue to identify suitable female candidates[61] - As of March 31, 2024, the male-to-female employee ratio was approximately 2.7 to 1, which the Board considers ideal[63] Appointment, Re-election and Removal of Directors Non-executive directors have no specific term of office, while executive directors have three-year service contracts that automatically renew; according to the company's articles of association, directors must retire by rotation at least once every three years and are eligible for re-election - Non-executive directors' terms commenced on October 13, 2016, with no specific tenure[64] - Executive directors' service contracts are for three years from September 22, 2012, automatically renewable for one year upon expiry[64] - In accordance with the company's articles of association, one-third of the directors must retire by rotation at each annual general meeting, and each director must retire at least once every three years[64] Roles of Chairman and Chief Executive Officer Mr. Sun Guohua concurrently serves as CEO and Chairman of the Board, deviating from the Corporate Governance Code; the Board believes this arrangement facilitates consistent leadership and optimizes operational efficiency, without compromising the Board's independence and balance of power - Mr. Sun Guohua concurrently serves as the company's Chief Executive Officer and Chairman of the Board, deviating from Corporate Governance Code provision C.2.1[66] - The Board believes this arrangement facilitates consistent leadership to advance long-term strategies and further enhances monetization capabilities and operational efficiency[66] - The Board, comprising two executive directors and three independent non-executive directors, possesses strong independence, ensuring a balance of power and authority[68] Continuous Training and Development for Directors The company provides necessary induction and information to newly appointed directors and requires all directors to participate in continuous professional development to update their knowledge and skills; all directors participated in training during the year - Each newly appointed director receives necessary induction and information to ensure a proper understanding of the company's operations and business[69] - Directors are required to participate in continuous professional development to enhance and update their knowledge and skills[70] Directors' Continuous Professional Development Program Categories | Director Name | Continuous Professional Development Program Categories | | :--- | :--- | | Mr. Zhang Haifeng | A, B | | Mr. Sun Guohua | A, B | | Mr. Wong Chi Kwok | A, B | | Mr. Wan Kam To | A, B | | Ms. Zhao Yue | A, B | | Mr. Shen Zeqing | A, B | Board Meetings and General Meeting Attendance During the year, the Board regularly held meetings to review company performance and strategy, convening four Board meetings and one general meeting; all directors maintained high attendance rates - During the year, the company convened four Board meetings and one general meeting[74] Board Meetings and General Meeting Attendance Record | Director Name | Board Meeting Attendance | General Meeting Attendance | | :--- | :--- | :--- | | Mr. Zhang Haifeng | 7/7 | 1/1 | | Mr. Sun Guohua | 7/7 | 1/1 | | Mr. Wong Chi Kwok | 7/7 | 1/1 | | Mr. Wan Kam To | 7/7 | 1/1 | | Ms. Zhao Yue | 7/7 | 1/1 | | Mr. Shen Zeqing | 7/7 | 1/1 | Model Code for Securities Transactions by Directors The company has adopted a Model Code for Securities Transactions by Directors equivalent to Appendix C3 of the Listing Rules and confirms full compliance by all directors during the year - The terms of the company's adopted Model Code for Securities Transactions by Directors are no less exacting than the standards set out in Appendix C3 of the Listing Rules[75] - The Board confirms that, for the current year and up to the date of this annual report, each director has fully complied with the required standards set out in the Model Code and its code of conduct[75] Board Committees The Board has established Audit, Nomination, and Remuneration Committees, each with independent non-executive director participation, to oversee specific areas; each committee has written terms of reference and holds regular meetings to fulfill its responsibilities Audit Committee The Audit Committee comprises three independent non-executive directors, chaired by Mr. Wan Kam To; its primary responsibilities include recommending external auditors, reviewing financial statements, and monitoring internal controls and risk management; during the year, it reviewed the consolidated financial statements and interim condensed consolidated financial statements - The Audit Committee comprises three independent non-executive directors, with Mr. Wan Kam To as Chairman[78] - Its primary responsibilities include providing recommendations to the Board regarding the appointment and removal of external auditors, reviewing financial statements, advising on financial reporting, and monitoring internal control procedures and risk management[78] - The Audit Committee has reviewed the Group's consolidated financial statements for the year ended March 31, 2023, and the interim condensed consolidated financial statements for the six months ended September 30, 2023[81] Nomination Committee The Nomination Committee comprises three independent non-executive directors and one executive director, chaired by the Board Chairman; its responsibilities include reviewing Board structure, assessing independence, and recommending directors; it held one meeting during the year, reviewing the Board Diversity Policy and Nomination Policy - The Nomination Committee comprises three independent non-executive directors and one executive director, with the Chairman of the Board serving as its Chairman[83] - Its primary responsibilities include reviewing the Board's structure, size, and composition, assessing the independence of independent non-executive directors, and making recommendations to the Board regarding director appointments[82] - One meeting was held during the year to review the structure, size, and composition of the Board and its committees, the Board Diversity Policy and its measurable objectives, and to recommend the adoption of a Nomination Policy[85] Remuneration Committee The Remuneration Committee comprises three independent non-executive directors, chaired by Ms. Zhao Yue; its responsibilities include making recommendations on the remuneration policy for directors and senior management; it held one meeting during the year, reviewing the remuneration policy and approving salaries and bonuses for executive directors and senior management - The Remuneration Committee comprises three independent non-executive directors, with Ms. Zhao Yue, an Independent Non-executive Director, as Chairman[87] - Its primary responsibility is to make recommendations on the overall remuneration policy and structure for all directors and senior management of the Group[86] - One meeting was held during the year to review the remuneration policy and approve the salaries and bonuses for executive directors and senior management[92] Nomination Policy The Board adopted a Nomination Policy during the year to outline selection criteria and nomination procedures, ensuring the Board possesses a balanced mix of skills, experience, and diverse perspectives; selection criteria include time commitment, integrity, industry experience, and diversity, while the nomination process involves recommendations from the Nomination Committee and a final decision by the Board at the general meeting - The Board adopted a Nomination Policy during the year, aiming to outline relevant selection criteria and nomination procedures to ensure the Board possesses a balanced mix of skills, experience, and diverse perspectives suitable for the Group's business[94] - Selection criteria include commitment of time to company affairs, reputation for integrity, relevant industry achievements and experience, efficiency in performing Board duties, and diversity in all aspects as set out in the Board Diversity Policy[95] - The nomination process involves recommendations from the Nomination Committee to the Board, with the Board having the final decision on candidates to be put forward for election at the general meeting[96][97] Corporate Governance Functions The Board is responsible for formulating and reviewing corporate governance policies, monitoring director and senior management training, ensuring compliance with laws and regulations, establishing codes of conduct, and reviewing adherence to the Corporate Governance Code - The Board is responsible for formulating and reviewing the Group's corporate governance policies and practices and making recommendations[100] - The Board monitors the training and continuous professional development of directors and senior management, and reviews the Group's policies and practices regarding compliance with relevant laws and regulatory requirements[100] - The Board formulates, reviews, and monitors the codes of conduct and compliance manuals applicable to the Group's directors and employees, and reviews the Group's compliance with the Corporate Governance Code and disclosure requirements in the Corporate Governance Report[100] Financial Reporting and Audit The Board is responsible for preparing true and fair financial statements and presenting a clear assessment to shareholders; external auditor Shinewing (HK) CPA Limited is responsible for the audit; total auditor's remuneration for the year was HK$1.674 million Directors' Responsibilities for Financial Statements Directors acknowledge their responsibility to prepare financial statements for each financial year that give a true and fair view of the company's affairs and results; the Board strives to present shareholders with a clear and unbiased assessment of the Group's performance - Directors acknowledge their responsibility to prepare financial statements for each financial year that give a true and fair view of the state of affairs of the Company and the Group as at the end of the year and of the Group's results and cash flows for the financial year then ended[101] - The Board endeavors to present shareholders with a clear and unbiased assessment of the Group's performance in annual and interim reports, making timely and appropriate disclosures and announcements[101] Auditor's Remuneration For the year ended March 31, 2024, the external auditor and its affiliates provided audit and non-audit services to the Group, totaling HK$1.674 million in remuneration Auditor's Remuneration (HK$ Thousand) | Service Type | Amount (HK$ Thousand) | | :--- | :--- | | Audit Services | 950 | | Non-annual Audit Services - Interim Review Services | 250 | | Non-annual Audit Services - Corporate Actions | 400 | | Non-annual Audit Services - Tax | 74 | | Total | 1,674 | Risk Management and Internal Control The Group has implemented internal control and risk management systems to achieve operational effectiveness, reliable financial reporting, and compliance; the Board is responsible for overseeing and reviewing their effectiveness, with the internal audit department conducting regular independent reviews; during the year, the Board deemed these systems continuously effective and adequate, and adopted an inside information policy and procedures - The Group has implemented internal control and risk management systems aimed at achieving operational effectiveness, reliable financial reporting, and compliance with applicable laws and regulations[102] - The Board is responsible for overseeing the Group's risk management and internal control systems and reviewing their effectiveness[103] - The Group's internal audit department conducts regular independent reviews of the Group's risk management and internal control systems from time to time[103] - For the year ended March 31, 2024, the Board considered these systems to be continuously effective and adequate[105] - The Group has adopted and implemented an inside information policy and procedures to enhance the truthfulness, accuracy, completeness, and timeliness of handling and public disclosure of inside information[105] Shareholders' Rights and Communication Shareholders have the right to requisition extraordinary general meetings, raise inquiries with the Board, and propose resolutions at general meetings; the company maintains effective communication with shareholders and potential investors through annual general meetings, website reports, and press releases Shareholders' Right to Requisition an Extraordinary General Meeting Shareholders holding not less than one-tenth of the paid-up capital of the company carrying the right to vote at general meetings may requisition the directors to convene an extraordinary general meeting, which must be held within two months of the requisition being deposited - Any one or more shareholders holding not less than one-tenth of the paid-up capital of the company carrying the right to vote at general meetings may requisition the directors to convene an extraordinary general meeting[106] - The extraordinary general meeting must be held within two months of the requisition being deposited[106] Procedures for Shareholders to Put Enquiries to the Board Shareholders may submit inquiries and concerns to the Board in writing via the Company Secretary at any time, who will forward them to the Board and/or relevant committees for response - Shareholders may submit inquiries and concerns to the Board in writing via the company's Company Secretary at any time[107] - The Company Secretary will forward shareholders' inquiries and concerns to the Board and/or the relevant Board committee of the company (as applicable) for response[107] Procedures for Shareholders to Propose Resolutions at General Meetings Shareholders wishing to propose a resolution at a general meeting should submit it in writing with contact details to the company's principal place of business, adhering to varying notice period requirements - Shareholders should submit their proposed resolutions, along with detailed contact information, in writing to the company's principal place of business[108] - The notice period depends on the nature of the resolution: not less than 14 clear days for an ordinary resolution and not less than 21 clear days for a special resolution[113] Communication with Shareholders Management maintains effective communication with shareholders and potential investors through annual general meetings, reports posted on the company's and HKEX websites, and press releases; the policy's implementation was effective during the year - Management strives to maintain effective communication with the company's shareholders and potential investors[110] - The company meets with shareholders at annual general meetings, posts interim and annual reports on its website and the HKEX website, and issues press releases on its website[110] - For the year ended March 31, 2024, the Board reviewed the implementation and effectiveness of the aforementioned shareholder communication policy and deemed it effective[111] Constitutional Documents There were no changes to the company's constitutional documents during the year - There were no changes to the company's constitutional documents during the year[112] Environmental, Social and Governance Report About This Report This report aims to disclose the Group's progress and direction in sustainable development to stakeholders, covering the precision metal business at its Suzhou plant in China, and is prepared in accordance with Appendix C2 'Environmental, Social and Governance Reporting Guide' of the Listing Rules Reporting Scope and Board Statement This report covers the Group's precision metal business at its Suzhou plant in China, disclosing ESG performance for the financial year ended March 31, 2024; the Board is committed to integrating environmental factors into business, enhancing employee capabilities, caring for the community, and regularly reviewing ESG management strategies - This report covers the Group's plant in Suzhou, People's Republic of China ("China"), primarily engaged in the manufacturing of precision metal products[115] - This report discloses the Group's management approach and performance in corporate social responsibility, covering the financial year ended March 31, 2024[115] - The Board states that the Group's sustainable development strategy includes integrating environmental factors into business, enhancing employee capabilities, caring for the community, improving corporate social responsibility performance, and increasing transparency[116] Reporting Principles and Materiality Assessment This report is prepared in accordance with Appendix C2 'Environmental, Social and Governance Reporting Guide' of the Listing Rules, adhering to the principles of materiality, quantification, balance, and consistency; management conducted a materiality assessment, identifying key ESG issues such as greenhouse gas emissions, resource utilization, waste management, occupational health and safety, labor relations, customer satisfaction, quality assurance, and data security - This report has been prepared in accordance with the 'Environmental, Social and Governance Reporting Guide' set out in Appendix C2 of the Listing Rules, using four reporting principles (i.e., materiality, quantitative, balance, and consistency) as the basis for preparation[118] - Management conducted a materiality assessment, identifying key ESG issues such as greenhouse gas emissions, efficient resource utilization, waste management, water resources and wastewater management, occupational health and safety, labor relations, labor standards and labor rights, customer satisfaction, quality assurance and product responsibility, data security, and intellectual property protection[121] Environmental Protection The Group strictly complies with China's environmental laws and regulations and is ISO 14001 certified; during the year, CO2 emissions increased by 4.7%, mainly due to new production lines; the company implements energy-saving measures, invests in exhaust gas filtration systems, and systematically manages waste; water consumption decreased by 11.6%, total packaging material usage decreased by 20.2%, and recyclable packaging material usage increased by 8% Emissions Management Business units adhere to Chinese laws on exhaust gas, wastewater discharge, and noise pollution, and obtained ISO 14001 certification in 1998; in FY2024, CO2 emissions were approximately 5,167 tonnes, a 4.7% year-on-year increase, mainly due to a new production line; the company has invested in two exhaust gas filtration systems and systematically classifies, stores, and disposes of waste through authorized companies - Business units adhere to Chinese government laws on exhaust gas, wastewater discharge, and noise pollution, and first obtained ISO 14001 international environmental management system certification in 1998[123] CO2 Emissions (tonnes) | Year | Total Emissions (tonnes) | Change (%) | | :--- | :--- | :--- | | 2024 | 5,167 | +4.7% | | 2023 | 4,937 | | - Increase in CO2 emissions primarily due to the establishment of a new production line by the business unit during the year[123] - The Suzhou business unit invested in two exhaust gas emission filtration systems during the year and implemented systematic waste classification, storage, and disposal or recycling through authorized companies[126] Waste Disposal Volume (tonnes) | Waste Type | 2024 (tonnes) | 2023 (tonnes) | Change (tonnes) | | :--- | :--- | :--- | :--- | | Non-hazardous Waste | 1,479 | 1,777 | -298 | | Hazardous Waste | 24 | 37 | -13 | Resource Utilization Efficiency Business units implement ISO 14001 energy and water saving measures; electricity consumption increased by 2.5%, and direct energy consumption increased by 34.8%, mainly due to a new production line and increased natural gas consumption; water consumption decreased by 11.6%, primarily due to improved water resource control; total packaging material usage decreased by 20.2%, and recyclable packaging material usage increased by 8% to 26% Energy Consumption (kWh) | Energy Type | 2024 (kWh) | 2023 (kWh) | Change (%) | | :--- | :--- | :--- | :--- | | Indirect Energy (Electricity) | 5.83 million | 5.69 million | +2.5% | | Direct Energy (Natural Gas, Gasoline, Diesel) | 2.21 million | 1.64 million | +34.8% | - Increase in electricity consumption primarily due to the establishment of a new production line by the business unit during the year[130] - Increase in direct energy consumption primarily due to increased natural gas consumption for production during the year[130] Water Resources and Packaging Material Usage | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Water Consumption (Thousand tonnes) | 26.0 | 29.4 | -11.6% | | Total Packaging Material Usage (tonnes) | 812 | 1,017 | -20.2% | | Recyclable Packaging Material Usage Rate | 26% | 18% | +8% | - Decrease in water consumption primarily due to better control over water resource usage during the year[132] - Decrease in total packaging material usage and increase in recyclable packaging material usage primarily due to encouraging clients to use recyclable packaging materials for new orders[134] Environmental and Natural Resources Management The Group implements environmental control measures to minimize the impact on natural resources during production, including replacing energy-inefficient equipment, training employees on resource conservation, double-sided printing, and waste sorting and recycling, ultimately achieving significant reductions, reuse, or recycling of metals,