远东控股国际(00036) - 2020 - 年度财报

Group Information This section provides fundamental details about Far East Holdings International Limited, including its registration, key personnel, and the composition of its Board and various committees Company Basic Information Far East Holdings International Limited is a Hong Kong-listed company (stock code: 36), with its registered office at 9/F, Wing Hang Commercial Building, 110-116 Queen's Road Central, Hong Kong - Far East Holdings International Limited (stock code: 36) is a listed company incorporated in Hong Kong[1][5] - The company's registered office is located at Room 904, 9/F, Wing Hang Commercial Building, 110-116 Queen's Road Central, Central, Hong Kong[5] - This annual report is printed on environmentally friendly paper, with the English version prevailing in case of any discrepancy[3] Board and Committee Composition The company's Board of Directors, comprising executive and independent non-executive directors, includes audit, remuneration, nomination, and investment committees, with changes in leadership during the reporting period - The Board members include Executive Directors Mr. Pang Chun Pong (Chairman, appointed on February 26, 2021) and Mr. Shang Guangzu, and Independent Non-executive Directors Ms. Qu Shan, Mr. Wong Kui Sing, and Mr. Mak Ka Wing[5] - The company has an Audit Committee (chaired by Ms. Qu Shan), a Remuneration Committee (chaired by Mr. Wong Kui Sing), a Nomination Committee (chaired by Mr. Mak Ka Wing), and an Investment Committee (chaired by Mr. Pang Chun Pong)[5] - Dr. Wong Yun Kuen resigned as Chairman and Executive Director on December 23, 2020[5] Management Discussion and Analysis This section provides an overview of the Group's financial performance, liquidity, capital structure, significant investments, risk factors, discontinued operations, and future business outlook Company Performance Overview The Group reported revenue of approximately HK$37.3 million in FY2020, a 6.05% decrease, but achieved a profit attributable to owners of HK$93.4 million, reversing the previous year's loss due to fair value gains on investments FY2020 Company Performance Overview | Indicator | 2020 (HK$ Thousand) | 2019 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 37,300 | 39,700 | -6.05% | | Profit/(Loss) attributable to owners | 93,400 | (132,300) | Turned to profit | | Total comprehensive income/(expense) | 56,600 | (153,500) | Turned to profit | | Fair value gains/(losses) on investments held for trading | 146,600 | (106,800) | Turned to profit | | Fair value losses on investment properties | (102,100) | (89,400) | Loss widened | | Basic earnings/(loss) per share (continuing operations) | 8.29 HK cents | (13.68) HK cents | Turned to profit | Liquidity and Capital Structure As of December 31, 2020, the Group's cash and bank balances significantly decreased, while the gearing ratio improved to 90.14%, with no material changes in equity structure or significant foreign exchange risks FY2020 Liquidity and Capital Structure | Indicator | Dec 31, 2020 (HK$ Thousand) | Dec 31, 2019 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and bank balances | 14,700 | 37,300 | -60.59% | | Gearing ratio | 90.14% | 109.6% | -17.75% | | Total number of ordinary shares issued | 1,089,118,593 | 1,089,118,593 | 0% | | Contingent liabilities | Nil | Nil | - | | Capital commitments | Nil | Nil | - | Significant Investments and Risk Factors The Group's significant investments are primarily in trading investments, which saw substantial fair value gains in 2020, though they face equity price volatility risks that management actively monitors FY2020 Significant Investments Overview | Indicator | Dec 31, 2020 (HK$ Thousand) | Dec 31, 2019 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Investments held for trading | 278,600 | 149,400 | +86.48% | | Percentage of total assets | 14.9% | 7.9% | +7.0 percentage points | | Fair value gains/(losses) on investments held for trading | 146,600 | (106,800) | Turned to profit | - The Group faces equity price risk from fair value fluctuations of investments held for trading, with management closely monitoring market conditions and regularly reviewing risks[20] - During the review year, the Group did not undertake any significant acquisitions or disposals[21] Discontinued Operations and Dividend Policy The Group decided to discontinue Jiangsu Lvbin's garment manufacturing business in October 2019 due to declining performance, and the Board does not recommend a final dividend for 2020 - Jiangsu Lvbin, a 51%-owned subsidiary, entered into an agreement with Haimen Municipal People's Government on October 14, 2019, to recover its state-owned land use rights and decided to cease its garment manufacturing business[22] - The Board does not recommend a final dividend for 2020 (2019: nil)[23] Employees, Environment, and Compliance As of December 31, 2020, the Group employed approximately 7 staff in Hong Kong, offering competitive remuneration and promoting environmental protection, with no significant legal or regulatory violations identified during the year FY2020 Employee Overview | Indicator | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Number of employees (Hong Kong) | Approx. 7 | 11 (Hong Kong and China) | - The Group offers competitive remuneration packages based on industry practice and individual employee performance, with potential year-end discretionary bonuses[24] - The Group is committed to environmental protection and sustainable development by promoting eco-friendly practices such as reusing single-sided printed paper and double-sided printing[25] - During the review year, the company was not aware of any significant non-compliance with relevant laws and regulations[26] Business and Financial Review: Property Investment As of December 31, 2020, the Group's investment property portfolio was valued at approximately HK$1.553 billion, with rental income of HK$37.3 million, a decrease primarily due to the pandemic and rental concessions FY2020 Property Investment Overview | Indicator | Dec 31, 2020 (HK$ Thousand) | Dec 31, 2019 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Carrying amount of investment property portfolio | 1,552,800 | 1,672,600 | -7.28% | | Rental income | 37,300 | 39,700 | -6.05% | FY2020 Rental Income Detailed Analysis | Property Location | 2020 (HK$ Thousand) | 2019 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | 9/F, Wing Hang Commercial Building, Central, Hong Kong | 1,255 | 1,795 | (30.1%) | | 10/F, Wing Hang Commercial Building, Central, Hong Kong | 1,741 | 1,669 | 4.3% | | Workshop 5, 4/F, Foo Ka Industrial Building, Aberdeen, Hong Kong | 360 | 360 | - | | Commercial podium, Wellington Plaza, Wellington Street, Hong Kong | 33,897 | 35,909 | (5.6%) | - The decrease in rental income was primarily due to the company changing its registered office in April 2020 and occupying two leased units, as well as offering rental concessions to tenants affected by the COVID-19 pandemic[33][34][37] - Management will continue to review the investment property portfolio, seek potential acquisition and/or disposal opportunities, and plans to diversify the tenant mix in Q2 2021 to mitigate pandemic impacts[30][37] Business and Financial Review: Securities Investment The Group's securities investments performed strongly in 2020, recording a fair value gain of approximately HK$146.6 million, primarily from unrealized gains, with total trading investments increasing to HK$278.6 million FY2020 Securities Investment Overview | Indicator | 2020 (HK$ Thousand) | 2019 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Fair value gains/(losses) on investments held for trading | 146,600 | (106,800) | Turned to profit | | Unrealized gains | 146,200 | - | - | | Realized gains | 400 | - | - | | Dividend income | - | 3,200 | -100% | | Total investments held for trading | 278,600 | 149,400 | +86.48% | | Number of investment portfolio items | 20 | 24 | -4 items | Dec 31, 2020 Investments Held for Trading Details | Company Name/(Stock Code) | Equity Percentage (%) | Carrying Amount (HK$ Thousand) | Gain/(Loss) (HK$ Thousand) | Fair Value (HK$ Thousand) | Percentage of Total Investments Held for Trading (%) | Percentage of Total Group Assets (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | China Evergrande New Energy Vehicle Group Limited (708) | 0.09 | 62,704 | 181,010 | 243,714 | 87.5 | 13.0 | | Others | - | 86,662 | (34,775) | 34,869 | 12.5 | 1.9 | | Total | - | 149,366 | 146,235 | 278,583 | 100.0 | 14.9 | - During the review year, the Group sold 1,230,000 shares of Evergrande Health Group, realizing a gain of approximately HK$1.5 million[45] - China Evergrande New Energy Vehicle Group Limited primarily engages in health management and new energy vehicle businesses, and the Group believes its business expansion will create value for shareholders[44] Business Outlook The COVID-19 pandemic is expected to continue adversely impacting property and securities investments, potentially leading to reduced rental income and fair value declines, with management closely monitoring the portfolio and balancing risks - The COVID-19 pandemic is expected to continue to adversely affect the Group's property and securities investments[47] - Tenants may request rent concessions, leading to reduced rental income in 2021, and the fair value of investment properties and investments held for trading may also decline[47] - Management will closely monitor the investment portfolio, prudently seize opportunities, and balance the Group's investment risks[47] Biographical Details of Directors This section provides biographical information for the company's executive and independent non-executive directors, highlighting their professional backgrounds, experience, and roles within the company and its committees Executive Directors This section introduces Mr. Pang Chun Pong, appointed in February 2021 with extensive experience in audit, finance, investment, and media, and Mr. Shang Guangzu, who joined in 2015, serving as Company Secretary, Authorized Representative, Executive Director, and CFO with over 15 years of experience in corporate governance, M&A, audit, and financial management - Mr. Pang Chun Pong joined the Group in February 2021 as Chairman and Executive Director, bringing extensive experience in auditing, financial management, investment, and media industries[51] - Mr. Shang Guangzu joined the Group in 2015, serving as Company Secretary, Authorized Representative, Executive Director, and Chief Financial Officer, with over 15 years of experience in corporate governance, M&A, auditing, and financial management[53] Independent Non-executive Directors This section introduces three Independent Non-executive Directors: Ms. Qu Shan, Mr. Wong Kui Sing, and Mr. Mak Ka Wing, each with extensive professional backgrounds in accounting, finance, investment, and law, holding key committee positions, with a past disclosure regarding Mr. Wong Kui Sing's public criticism - Ms. Qu Shan joined in 2014, possessing over 20 years of experience in accounting and finance for listed companies, and serves as the Chairman of the Audit Committee[57] - Mr. Wong Kui Sing joined in 2017, with over 20 years of experience in finance and investment, and serves as the Chairman of the Remuneration Committee[58] - Mr. Mak Ka Wing joined in 2017, is a solicitor admitted to the High Court of Hong Kong and a managing partner of a law firm, with over 20 years of legal experience, and serves as the Chairman of the Nomination Committee[64] - Mr. Wong Kui Sing was publicly criticized by the Stock Exchange's Listing Committee for failing to use his best endeavors to procure China Oil and Gas Group to comply with the Listing Rules of the Stock Exchange[63] Directors' Report This report details the company's business review, financial performance, asset position, board composition, director interests, corporate governance, and auditor information for the year Business Review and Financial Performance The company's principal business is investment holding, with no significant changes during the year, and its performance and financial position for the year ended December 31, 2020, are disclosed in the consolidated financial statements, with no dividend recommended - The company's principal business is investment holding, with no significant changes during the year[70] - The Group's results and financial position for the year ended December 31, 2020, are disclosed in the consolidated financial statements on pages 47 to 108[71] - The Board does not recommend the payment of a dividend for the year[72] Financial Summary and Asset Position A summary of the Group's results, assets, and liabilities for the past five financial years is on page 109, with distributable reserves of approximately HK$122.88 million as of December 31, 2020, and no charitable donations or listed securities transactions during the year - A financial summary of the Group's past five financial years is presented on page 109 of this annual report[73] - Details of the Group's investment properties and property, plant and equipment as of December 31, 2020, are set out in notes 19 and 20 to the consolidated financial statements[74] FY2020 Distributable Reserves | Indicator | Dec 31, 2020 (HK$ Thousand) | Dec 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Retained profits | 122,880 | 123,102 | - During the year, the Group made no charitable donations, nor did it purchase, sell, or redeem any of the company's listed securities[76][77] Board Members and Interests Disclosure Biographical details of directors are on pages 8-10, with no director or their associates having competing interests during the year, and all directors are subject to retirement by rotation and re-election, with no disclosable interests in the company's shares or debentures - Biographical details of the directors are set out on pages 8 to 10 of this annual report[81] - During the year, none of the directors or their respective associates had any interests in any business that competes or is likely to compete with the Group's business[82] - Mr. Shang Guangzu and Ms. Qu Shan are subject to retirement by rotation at the forthcoming annual general meeting and are eligible for re-election[83] - Mr. Pang Chun Pong will hold office until the annual general meeting and is eligible for re-election[83] - As of December 31, 2020, no director or chief executive of the company or their associates had any disclosable interests or short positions in the shares, underlying shares, or debentures of the company or any of its associated corporations[89] Directors' Service Contracts and Indemnity Mr. Shang Guangzu has a service agreement with no fixed term, while other directors have one-year appointments; the company maintains directors' and officers' liability insurance, and no arrangements were made during the year for directors to acquire benefits through company shares or debentures - Mr. Shang Guangzu has entered into a service agreement with the company for no fixed term, terminable by either party with at least one month's written notice[88] - Mr. Pang Chun Pong, Ms. Qu Shan, Mr. Wong Kui Sing, and Mr. Mak Ka Wing were appointed to the Board for a term of one year according to their respective letters of appointment[88] - The company has arranged appropriate directors' and officers' liability insurance covering directors and senior officers of the company[90] - During the year, neither the company nor any of its subsidiaries entered into any arrangements enabling directors to acquire benefits by purchasing shares or debentures of the company or any other body corporate[91] Management Contracts and Major Shareholders No management contracts existed during the review year, and as of December 31, 2020, no major shareholders held disclosable interests in the company's share capital, with all independent non-executive directors confirmed as independent - During the review year, no contracts concerning the management and administration of the whole or any substantial part of the company's business were entered into or existed[96] - As of December 31, 2020, the register of major shareholders disclosed no persons holding disclosable interests or short positions in the company's share capital[97] - The company has received annual confirmations of independence from each independent non-executive director and considers all independent non-executive directors to be independent[98] Major Customers and Suppliers The Group's top five and largest customers accounted for approximately 100% and 91% of total revenue, respectively, while the top five and largest suppliers accounted for approximately 76% and 63% of total operating lease costs, with no directors or shareholders holding interests in these parties FY2020 Customer and Supplier Concentration | Indicator | Percentage of Total Revenue | Percentage of Total Operating Lease Costs | | :--- | :--- | :--- | | Five largest customers | Approx. 100% | - | | Largest customer | Approx. 91% | - | | Five largest suppliers | - | Approx. 76% | | Largest supplier | - | Approx. 63% | - At no time during the year did any director, close associate of a director, or shareholder (known by the directors to own more than 5% of the company's issued shares) have any interest in the Group's five largest suppliers or customers[100] Corporate Governance and Audit Committee The company is committed to maintaining high corporate governance standards, with details in the Corporate Governance Report; the Audit Committee held two meetings to review financial reporting, accounting principles, risk management, and internal controls, and approved the Group's 2020 annual results - The company is committed to maintaining the highest standards of corporate governance practices, with relevant information detailed in the 'Corporate Governance Report' on pages 35 to 42 of this annual report[101] - The Audit Committee held two meetings during the review year, primarily responsible for reviewing the accounting principles and practices adopted by the Group, auditing, risk management and internal control systems, and financial reporting matters[102] - The Audit Committee has reviewed the Group's final results for the year ended December 31, 2020, and considers their preparation to be in compliance with relevant accounting standards, rules, and regulations[102] Public Float and Remuneration Policy The company confirms sufficient public float of at least 25% of its issued shares, with employee remuneration determined by the Remuneration Committee based on performance and qualifications, and director remuneration by the Board based on company performance and market data - The company confirms that there is sufficient public float, representing at least 25% of the company's issued shares[106] - The Group's employee remuneration policy is determined by the company's Remuneration Committee based on employee performance, qualifications, and capabilities[108] - Directors' remuneration is determined by the Board based on the company's operating results, individual performance, and comparable market data[109] Auditor and Acknowledgements BDO Limited has served as the company's auditor since November 30, 2017, and will retire and be eligible for re-election at the upcoming AGM; the Board extends sincere gratitude to all stakeholders for their support - BDO Limited has been appointed as the company's auditor since November 30, 2017[110] - The auditor will retire at the forthcoming annual general meeting and is eligible for re-election[110] - The Board sincerely thanks the Board, management, all staff, customers, suppliers, business partners, and shareholders for their support[111] Environmental, Social and Governance Report This report outlines the Group's sustainable development strategies and performance across environmental, social, and governance aspects, including employee care, operational practices, environmental protection, and community engagement Report Overview and Management Statement This fifth ESG report for Far East Holdings International Limited covers FY2020, detailing the Group's sustainable development strategies and performance in employment, operations, environment, and community investment, emphasizing risk management and ESG integration amid COVID-19 challenges - This is Far East Holdings International Limited's fifth ESG report, covering the period from January 1 to December 31, 2020[121] - The report covers the Group's core businesses of securities investment and property investment, accounting for 100% of total revenue from continuing operations[122] - The management statement emphasizes the importance of identifying and managing business operational risks amidst COVID-19 challenges, committing to integrate ESG factors into risk management and investment decisions[130] ESG Governance and Risk Compliance The Board oversees the Group's sustainable development, meeting annually on ESG matters, supported by effective risk management and internal control systems, with the Audit Committee identifying key ESG risks and no violations of relevant laws and regulations during the review year - The Board is fully responsible for overseeing the Group's sustainable development matters, holding at least one meeting annually to discuss ESG issues[135] - The Group has effective risk management and internal control systems, with the Audit Committee responsible for identifying key ESG risks and providing mitigation recommendations[136] - The Group has established internal control manuals and policies to guide the development of measures to reduce risks to an appropriate level[136] - During the review year, no violations of relevant laws and regulations occurred[139] Stakeholder Engagement and Materiality Assessment The Group engages key stakeholders through various channels and, in 2020, commissioned an independent consultant to identify six material sustainable development issues: employment, health and safety, labor standards, anti-corruption, resource use, and product responsibility - The Group maintains communication with key stakeholders, including management, employees, shareholders, investors, regulators, and the community, through general meetings, interviews, surveys, and daily operations[145] FY2020 Material Sustainable Development Issues | No. | Material Issue | | :--- | :--- | | 1 | Employment | | 2 | Health and Safety | | 3 | Labor Standards | | 4 | Anti-corruption | | 5 | Resource Use | | 6 | Product Responsibility | Caring for Employees The Group fosters an inclusive work environment, guided by employee and internal control manuals, offering competitive compensation, group insurance, and retirement plans, ensuring compliance with labor standards, prohibiting child and forced labor, and prioritizing employee safety during the pandemic, with all employees receiving training - The Group regulates employment, health and safety, training and development, and labor standards through its 'Employee Handbook' and 'Internal Control Manual'[148] - The company provides competitive remuneration, group insurance plans, and retirement provisions, ensuring compliance with working hours and leave regulations[153] - The Group is committed to providing a fair and inclusive work environment, strictly prohibiting any form of discrimination or harassment, and forbidding child and forced labor[153] - During the COVID-19 pandemic, the Group maintained operations in accordance with health department guidelines and distributed masks and sanitizing products to ensure employee safety[155] - This year, all employees received training, and the company has a mentorship program to help new employees adapt, encouraging participation in external professional training courses[162] Operating Practices The Group upholds strong corporate governance and business integrity, with anti-corruption, supply chain management, and data privacy policies outlined in its internal control and employee manuals, promoting transparent operations, preventing illicit activities, and prioritizing sustainable suppliers - The Group's commitments to anti-corruption, supply chain management, and data privacy are outlined in its 'Internal Control Manual' and 'Employee Handbook'[163] - The Group is committed to transparent business operations, avoiding illegal activities such as bribery, extortion, fraud, and money laundering, and has established a whistleblowing mechanism[164][165] - The Group places great importance on protecting client confidential information, requiring all employees to sign confidentiality agreements, with the Chief Financial Officer serving as the privacy and confidentiality officer[169] - In supplier selection, the Group focuses on price, reputation, product safety, environmental performance, and social responsibility, prioritizing suppliers offering sustainable products and materials[171] - During the review year, the Group primarily procured office supplies and professional services from 26 Hong Kong suppliers[172] Environmental Protection The Group's 'Green Office Policy' aims to mitigate environmental impact, with total energy consumption decreasing by 47.4% in 2020 due to reduced gasoline use, though electricity consumption increased; total GHG emissions decreased by 46.5%, and the Group plans to acquire electric vehicles and integrate ESG factors into investment strategies - The Group is committed to mitigating environmental impact in its daily operations through its 'Green Office Policy,' covering resource management, emissions, and natural resource utilization[178] FY2020 Energy Consumption Overview | Category | Energy | 2020 (MWh) | 2019 (MWh) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Direct Energy | Gasoline | 34.0 | 80.4 | -57.7% | | Indirect Energy | Electricity | 13.2 | 9.3 | +41.9% | | Total Energy Consumption | | 47.2 | 89.7 | -47.4% | - The decrease in gasoline consumption was primarily due to the sale of a vehicle in February 2020, while increased electricity consumption resulted from using split-type air conditioners after relocating to a new office in April 2020[181] FY2020 Greenhouse Gas Emissions | Scope | Emission Source | 2020 (tonnes CO2e) | 2019 (tonnes CO2e) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Scope 1: Direct GHG Emissions | Fossil fuel combustion — Gasoline | 9.8 | 23.2 | –57.8% | | | Equipment and system emissions | 0.6 | 0.6 | - | | | Scope 1 Subtotal | 10.4 | 23.8 | –56.3% | | Scope 2: Energy Indirect GHG Emissions | Purchased electricity | 10.7 | 7.5 | +42.7% | | | Scope 2 Subtotal | 10.7 | 7.5 | +42.7% | | Scope 3: Other Indirect GHG Emissions | Waste paper disposal | 5.0 | 17.5 | –71.4% | | | Freshwater and wastewater treatment | 0.01 | Not applicable | Not applicable | | | Air travel | Not applicable | Not applicable | Not applicable | | | Scope 3 Subtotal | 5.0 | 17.5 | –71.4% | | Total GHG Emissions | | 26.1 | 48.8 | –46.5% | - The Group plans to purchase an electric vehicle and replace existing vehicles to reduce air emissions, and encourages employees to avoid business travel[191] - The Group will consider incorporating environmental, social, and governance factors into its investment strategy to create value and long-term investment returns[193] Social Investment As a responsible enterprise, the Group supports vulnerable communities and local needs, providing 37.5 hours of volunteer service in 2020 to organizations like the Hong Kong Performing Artistes Guild Charity Foundation and the Senior Citizen Home Safety Association FY2020 Social Investment Overview | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Volunteer hours | 37.5 hours | 111 hours | - The Group supports the Hong Kong Performing Artistes Guild Charity Foundation Limited and the Senior Citizen Home Safety Association, participating in community programs such as home visits and outings for the elderly[197] ESG Performance Summary This chapter provides detailed FY2020 ESG performance data, showing improvements in environmental metrics like significant reductions in total GHG and NOx emissions, with a total of 7 employees and 100% training completion FY2020 Environmental Key Performance Indicators | Environmental Key Performance Indicator | 2020 | 2019 | 2018 | Unit | | :--- | :--- | :--- | :--- | :--- | | Nitrogen Oxides (NOx) | 1.5 | 4.2 | 4.2 | kg | | Sulfur Oxides (SOx) | 0.1 | 0.1 | 0.1 | kg | | Respirable Suspended Particulates (RSP) | 0.1 | 0.3 | 0.3 | kg | | Total GHG Emissions Scope 1 & 2 | 21.1 | 31.3 | 32.2 | tonnes CO2e | | Total GHG Emissions Scope 1, 2 & 3 | 26.1 | 48.8 | 42.9 | tonnes CO2e | | GHG Emissions Intensity | 3.7 | 7.0 | 6.1 | tonnes CO2e / employee | | Total Hazardous Waste | 0.003 | 0.002 | 0.004 | tonnes | | Total Non-hazardous Waste | 0.121 | 0.103 | 0.095 | tonnes | | Total Energy Consumption | 47.2 | 89.7 | 89.8 | MWh | | Water Consumption | 13.1 | - | 24.0 | cubic meters | FY2020 Social Performance Overview | Employee Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Total number of employees | 7 | 7 | | Number of new hires | 0 | 0 | | Total employee turnover | 0 | 0 | | Number of work-related fatalities/injuries | 0 | 0 | | Number of employees trained | 7 | 7 | | Employee training rate | 100% | 100% | | Total training hours | 880 | 1,880 | | Average training hours per employee | 125.7 | 268.6 | | Number of suppliers (location) | 26 (Hong Kong: 100%) | 26 (Hong Kong: 100%) | Corporate Governance Report This report details the company's adherence to corporate governance principles, including board responsibilities, composition, director appointments, professional development, risk management, internal controls, committee structures, and communication with shareholders Compliance with Corporate Governance Code The company complied with all Corporate Governance Code provisions for FY2020, except for code provision A.2.1 (separation of Chairman and CEO roles), as daily operations are collectively managed by executive directors, and all directors confirmed compliance with securities dealing standards - The company complied with all code provisions of the Corporate Governance Code set out in Appendix 14 of the Listing Rules for the year ended December 31, 2020, except for code provision A.2.1 (separation of roles of Chairman and Chief Executive Officer)[235] - The company does not have a formal Chief Executive Officer, and the daily operations of the Group's business are collectively managed by the Executive Directors, with the Board believing the current structure ensures a balance of power and responsibilities[235] - All directors have confirmed that they have complied with the requirements set out in the Model Code for securities transactions throughout the review year[236] Board Responsibilities and Composition The Board is responsible for long-term strategy, management oversight, and performance review, comprising two executive and three independent non-executive directors with diverse experience, free from significant relationships, and covered by appropriate liability insurance - The Board's primary responsibilities include formulating long-term corporate strategies, overseeing the Group's management, reviewing its performance, and assessing its achievement of objectives regularly set by the Board[237] - The Board comprises two Executive Directors and three Independent Non-executive Directors, all three of whom possess rich and extensive experience and skills in finance, regulation, and business[241] - There are no relationships among Board members, including financial, business, family, or other material/relevant relationships[242] - The company has procured appropriate and sufficient insurance to cover directors' legal liabilities arising from corporate activities[244] Directors' Appointment, Re-election, and Independence Board members are subject to retirement by rotation and re-election per the Articles of Association, with newly appointed directors serving until the next AGM; all independent non-executive directors have confirmed their independence and are considered to remain independent - In accordance with Article 73 of the Articles of Association, one-third of the directors then in office must retire at the company's annual general meeting[243] - Directors appointed to fill a casual vacancy or as an addition to the Board shall hold office only until the next annual general meeting of the company and shall then be eligible for re-election[243] - The company has received annual confirmations of independence from each independent non-executive director in accordance with Rule 3.13 of the Listing Rules and considers all independent non-executive directors to remain independent[245] Board Meetings and Professional Development The Board regularly meets to review financial and operational performance, and approve strategies; five Board meetings and one general meeting were held in FY2020, with directors engaging in continuous professional development, and Mr. Pang Chun Pong serving as Chairman with executive directors collectively managing daily operations - The Board regularly holds meetings to review the Group's financial and operating performance, and to consider and approve the Group's overall strategies and policies[246] FY2020 Board Meeting and General Meeting Attendance Record | Director | Attended/Eligible to Attend Board Meetings | Attended/Eligible to Attend General Meetings | | :--- | :--- | :--- | | Mr. Pang Chun Pong | 0/0 | 0/0 | | Dr. Wong Yun Kuen | 5/5 | 1/1 | | Mr. Shang Guangzu | 5/5 | 1/1 | | Ms. Qu Shan | 2/2 | 1/1 | | Mr. Wong Kui Sing | 5/5 | 1/1 | | Mr. Mak Ka Wing | 2/5 | 1/1 | - Directors participated in continuous professional development during the year ended December 31, 2020, through internal briefings, presentations, participation in professional bodies, and reading materials relevant to their directorships[252] - The role of Chairman is held by Mr. Pang Chun Pong, and the company does not have a designated Chief Executive Officer, with daily management handled collectively by the Executive Directors[253] Risk Management and Internal Control The Board is responsible for maintaining effective risk management and internal control systems, reviewed through the Audit Committee, and confirmed their effectiveness; auditor remuneration was approximately HK$0.55 million, and directors confirmed responsibility for preparing the consolidated financial statements on a going concern basis - The Board is fully responsible for maintaining sound and effective risk management and internal control systems for the Group[259] - The Board reviews the Group's risk management through the Audit Committee and is satisfied that the Group's internal control systems are effective[259] FY2020 Auditor Remuneration | Item | 2020 (HK$ Thousand) | 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Audit services fees | 550 | 600 | - Directors confirm their responsibility for preparing the Group's consolidated financial statements for the year ended December 31, 2020, and that they are prepared on a going concern basis[261] Board Committees The Board has established Audit, Remuneration, Nomination, and Investment Committees, each with defined written terms of reference and chaired by independent non-executive or executive directors, holding regular meetings to fulfill their respective duties, such as reviewing financial statements, setting remuneration policies, assessing director independence, and evaluating investment projects - The Board has established an Audit Committee, Remuneration Committee, Nomination Committee, and Investment Committee to oversee various aspects of the Group's affairs[266] - The Audit Committee is primarily responsible for reviewing accounting principles, auditing, risk management and internal control systems, and financial reporting matters[267] - The Remuneration Committee is primarily responsible for formulating the Group's remuneration policy and structure for all directors and senior management of the company[273] - The Nomination Committee's primary responsibilities include formulating matters related to Board membership and monitoring the implementation of the Board diversity policy[279] - The Investment Committee is primarily responsible for reviewing and evaluating any proposed investment projects of the Group and monitoring the Group's investments[282] Corporate Governance Functions and Company Secretary The Board performs corporate governance functions, reviewing policies, training, and compliance, while Company Secretary Mr. Shang Guangzu confirmed completing over 15 hours of professional training during the review year - The Board is responsible for performing the functions set out in code provision D.3.1 of the Corporate Governance Code, having reviewed the company's corporate governance policies and practices, training for directors and senior management, legal and regulatory compliance policies, etc[284] - Company Secretary Mr. Shang Guangzu confirmed having received no less than 15 hours of professional training during the review year[288] Communication with Shareholders and Dividend Policy The Board prioritizes clear, timely, and effective communication with shareholders and investors through annual reports, interim reports, announcements, and circulars; the company has no predetermined dividend payout ratio, with decisions based on operating results, financial position, future outlook, and legal/tax factors - The Board recognizes the importance of clear, timely, and effective communication with shareholders and investors, striving to maintain high transparency[289] - The company provides shareholders with up-to-date business developments and financial performance information through annual reports, interim reports, announcements, circulars, and its company website[289][294] - The company does not have any predetermined dividend payout ratio, and the Board will consider operating results, financial position, future outlook, legal, and tax factors when deciding whether to recommend a dividend[290] Shareholder Rights and Investor Relations Procedures for shareholders to convene general meetings, propose resolutions, and make inquiries are detailed in the Articles of Association and on the company website; the company believes high transparency is crucial for investor relations and provides an effective communication platform via its corporate website - Procedures for shareholders to convene general meetings, propose resolutions at general meetings, and make inquiries to the Board are set out in the Articles of Association and on the company's website[291][292][293] - The company believes that maintaining a high level of transparency is key to fostering investor relations and has established policies to disclose corporate information to shareholders and public investors openly and timely[294] - The company's corporate website (http://www.0036.com.hk) provides an effective communication platform for the public and shareholders[294] Independent Auditor's Report This report presents the auditor's opinion on the consolidated financial statements, highlights key audit matters, and clarifies the responsibilities of both directors and the auditor Auditor's Opinion and Basis BDO Limited audited Far East Holdings International Limited's consolidated financial statements for FY2020, opining they fairly reflect the Group's financial position, performance, and cash flows in accordance with HKFRS and the Hong Kong Companies Ordinance, with the audit conducted under HKSA and the auditor maintaining independence and ethical responsibilities - The auditor is of the opinion that the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at December 31, 2020, and of its consolidated financial performance and consolidated cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in compliance with the Hong Kong Companies Ordinance[299] - The audit was conducted in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants[300] - The auditor is independent of the Group and has fulfilled other ethical responsibilities in accordance with the 'Code of Ethics for Professional Accountants'[300] Key Audit Matter: Valuation of Investment Properties The valuation of investment properties is a key audit matter due to its significance and judgment involved in fair value determination; as of December 31, 2020, investment properties were valued at HK$1.5528 billion, representing 83% of total assets, with a HK$102.1 million revaluation loss, and the auditor assessed the valuers' expertise, methods, and assumptions - The valuation of investment properties was identified as a key audit matter due to its significance to the consolidated financial statements as a whole and the significant judgment involved in determining fair value[304] FY2020 Investment Property Overview | Indicator | Dec 31, 2020 (HK$ Thousand) | | :--- | :--- | | Investment property carrying amount | 1,552,800 | | Percentage of total Group assets | Approx. 83% | | Investment property revaluation loss | 102,100 | - Auditor procedures included assessing the valuers' expertise, understanding valuation methods and assumptions, inquiring about data sources and the reasonableness of key assumptions, and checking the arithmetic accuracy of the calculations[305] Directors' and Auditor's Responsibilities Directors are responsible for preparing true and fair consolidated financial statements in accordance with HKFRS and the Hong Kong Companies Ordinance, and for implementing necessary internal controls; the auditor aims to obtain reasonable assurance that the financial statements are free from material misstatement and communicates audit plans and findings to the Audit Committee - Directors are responsible for preparing consolidated financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards and the requirements of the Hong Kong Companies Ordinance, and for implementing such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements[310] - The auditor's objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error[312] - The auditor communicates with the Audit Committee regarding the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that the auditor identifies during the audit[321] Consolidated Financial Statements This section presents the Group's consolidated financial statements, including the statement of profit or loss and other comprehensive income, statement of financial position, statement of changes in equity, and statement of cash flows Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended December 31, 2020, the Group's revenue from continuing operations was HK$37.253 million, a decrease from the prior year, but achieved a profit attributable to owners of HK$93.439 million, reversing a HK$132.314 million loss in 2019, with total comprehensive income turning positive at HK$56.646 million FY2020 Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary | Indicator | 2020 (HK$ Thousand) | 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue from continuing operations | 37,253 | 39,733 | | Profit/(Loss) for the year from continuing operations | 57,088 | (185,657) | | Profit for the year from discontinued operations | 6,154 | 32,738 | | Profit/(Loss) for the year | 63,242 | (152,919) | | Total comprehensive income/(expense) for the year | 56,646 | (153,466) | | Profit/(Loss) for the year attributable to owners of the company | 93,439 | (132,314) | | Profit/(Loss) for the year attributable to non-controlling interests | (30,197) | (20,605) | | Basic earnings/(loss) per share from continuing operations (HK cents) | 8.29 | (13.68) | | Basic earnings per share from discontinued operations (HK cents) | 0.29 | 1.53 | Consolidated Statement of Financial Position As of December 31, 2020, the Group's total non-current assets were HK$1.57025 billion, total current assets HK$303.826 million, and net assets increased to HK$1.192347 billion, with total current liabilities at HK$494.529 million, largely comprising bank borrowings FY2020 Consolidated Statement of Financial Position Summary | Indicator | Dec 31, 2020 (HK$ Thousand) | Dec 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Non-current assets | 1,570,250 | 1,672,820 | | Investment properties | 1,552,800 | 1,672,600 | | Current assets | 303,826 | 218,214 | | Investments held for trading | 278,583 | 149,366 | | Bank balances and cash | 14,589 | 33,911 | | Current liabilities | 494,529 | 520,724 | | Bank borrowings | 472,135 | 492,662 | | Acceptance bills | 187,200 | 213,200 | | Net assets | 1,192,347 | 1,157,110 | | Equity attributable to owners of the company | 731,453 | 644,179 | | Non-controlling interests | 460,894 | 512,931 | Consolidated Statement of Changes in Equity For the year ended December 31, 2020, equity attributable to owners increased from HK$644.179 million to HK$731.453 million, primarily due to a HK$93.439 million profit for the year, while non-controlling interests decreased from HK$512.931 million to HK$460.894 million due to losses and repayments FY2020 Consolidated Statement of Changes in Equity Summary | Item | Balance at Jan 1, 2020 (HK$ Thousand) | Profit/(Loss) for the year (HK$ Thousand) | Other comprehensive income for the year (HK$ Thousand) | Repayment to non-controlling interests on derecognition of a subsidiary (HK$ Thousand) | Dividends paid to non-controlling interests (HK$ Thousand) | Balance at Dec 31, 2020 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Equity attributable to owners of the company | 644,179 | 93,439 | (6,165) | - | - | 731,453 | | Non-controlling interests | 512,931 | (30,197) | (431) | (17,721) | (3,688) | 460,894 | | Total | 1,157,110 | 63,242 | (6,596) | (17,721) | (3,688) | 1,192,347 | Consolidated Statement of Cash Flows For the year ended December 31, 2020, net cash from operating activities significantly decreased to HK$39.143 million, with net cash from investing activities at HK$11.414 million, and net cash used in financing activities at HK$69.193 million, resulting in a net decrease in cash and cash equivalents of HK$18.636 million FY2020 Consolidated Statement of Cash Flows Summary | Item | 2020 (HK$ Thousand) | 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Net cash from operating activities | 39,143 | 344,997 | | Net cash from/(used in) investing activities | 11,414 | (130,338) | | Net cash used in financing activities | (69,193) | (185,519) | | Net (decrease)/increase in cash and cash equivalents | (18,636) | 29,140 | | Cash and cash equivalents at end of year | 14,589 | 33,911 | Notes to the Consolidated Financial Statements This section provides detailed explanations of the Group's accounting policies, key judgments, segment reporting, revenue, expenses, financial instruments, and other relevant financial information General Information and Adoption of Accounting Standards Far East Holdings International Limited is an investment holding company, with subsidiary businesses detailed in Note 39; the Group adopted new/revised HKFRS effective January 1, 2020, with no significant impact on accounting policies, and no material impact is expected from standards issued but not yet effective - The company is an investment holding company, and the principal activities of its subsidiaries are set out in Note 39 to the consolidated financial statements[354] - The Group has adopted new/revised Hong Kong Financial Reporting Standards effective January 1, 2020, which had no significant impact on the Group's accounting policies[355] - New/revised Hong Kong Financial Reporting Standards issued but not yet effective are not expected to have a significant impact on the Group's financial statements[357] Significant Accounting Policies The Group's consolidated financial statements are prepared under HKFRS and the Hong Kong Companies Ordinance, primarily on a historical cost basis, except for fair value measurement of investment properties and financial instruments, covering policies for business combinations, subsidiaries, PPE, leases, financial assets/liabilities, impairment, revenue recognition, income tax, foreign currency, and employee benefits - The financial statements have been prepared in accordance with all Hong Kong Financial Reporting Standards and the provisions of the Hong Kong Companies Ordinance regarding the preparation of financial statements[362] - Except for investment properties and financial instruments measured at fair value, the financial statements are prepared on a historical cost basis[363] - The Group accounts for business combinations using the acquisition method and measures non-controlling interests at fair value or as a proportionate share of the acquiree's identifiable net assets[366] - Investment properties are measured at cost and subsequently at fair value, with any changes in fair value recognized in profit or loss[383] - The Group classifies its debt instruments into three measurement categories: amortized cost, fair value through other comprehensive income, or fair value through profit or loss[401] - The Group recognizes impairment losses for expected credit losses on rental receivables and other receivables, financial assets measured at amortized cost, and debt investments measured at fair value through other comprehensive income[406] - Revenue from contracts with customers is recognized when control of the goods or services is transferred to the customer at an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods or services[435] Key Accounting Judgments and Estimation Uncertainties The Group makes judgments, estimates, and assumptions for asset and liability carrying amounts, with fair value measurement of investment properties being a key estimation uncertainty, categorized into three levels based on observable inputs, and applied to both investment properties and investments held for trading - In applying the accounting policies, the Group is required to make judgments, estimates, and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources[469] - The fair value measurement of investment properties is a key estimation uncertainty with a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year[475] - The observability of inputs used in fair value measurements is categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (directly or indirectly observable inputs), and Level 3 (unobservable inputs)[475] - The Group measures investment properties and investments held for trading at fair value[476] Segment Reporting The Group has three reportable segments: property investment, securities investment, and the discontinued industrial segment; in 2020, property investment generated HK$37.253 million in revenue, and securities investment recorded HK$146.558 million in fair value gains, with no segment asset/liability analysis presented as the chief operating decision maker reviews on a consolidated basis - The Group has three reportable segments: property investment, securities investment, and industrial (discontinued operations)[485] FY2020 Segment Revenue and Results | Segment | External Revenue (HK$ Thousand) | Segment Results (HK$ Thousand) | | :--- | :--- | :--- | | Property Investment | 37,253 | (78,644) | | Securities Investment | - | 146,558 | | Industrial (Discontinued Operations) | - | 5,045 | | Consolidated | 37,253 | 72,959 | - The segment results for the securities investment segment include fair value gains or losses on investments held for trading, dividend income from investments held for trading, and administrative expenses directly attributable to the securities investment segment[497] - As the chief operating decision maker reviews the Group's overall assets and liabilities on a consolidated basis, assets or liabilities are not allocated to operating segments[505] - The Group's five largest customers and largest customer accounted for approximately 100% and 91% of total revenue, respectively, during the review year[511] Revenue and Other Gains and Losses In 2020, the Group's revenue primarily comprised HK$37.253 million in investment property rental income from continuing operations, with other income including interest and government grants; net other gains and losses were HK$50.417 million, mainly influenced by unrealized fair value gains on trading investments and fair value losses on investment properties FY2020 Revenue Overview | Item | 2020 (HK$ Thousand) | 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Total rental income from investment properties (continuing operations) | 37,253 | 39,733 | | Sales of goods (discontinued operations) | - | 3,555 | | Total Revenue | 37,253 | 43,288 | FY2020 Other Income | Item | 2020 (HK$ Thousand) | 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Interest income from banks and financial institutions | 2 | 7 | | Interest income from corporate bonds | 674 | 750 | | Government grants | 216 | - | | Miscellaneous income | 14 | 165 | | Total | 906 | 922 | FY2020 Net Other Gains and Losses | Item | 2020 (HK$ Thousand) | 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Unrealized fair value gains/(losses) on investments held for trading | 146,233 | (95,568) | | Realized fair value gains/(losses) on investments held for trading | 367 | (11,277) | | Fair value losses on investment properties | (102,100) | (89,400) | | Gain on derecognition of a subsidiary | 5,717 | - | | Total | 50,417 | (197,362) | Finance Costs and Income Tax Expense In 2020, the Group's total finance costs were HK$21.699 million, mainly from bank borrowings and acceptance bills; total income tax expense was HK$2.396 million, primarily Hong Kong profits tax at 16.5% and China corporate income tax at 25% FY2020 Finance Costs | Item | 2020 (HK$ Thousand) | 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Interest expense on lease liabilities | 1 | 18 | | Interest on bank borrowings | 11,820 | 13,563 | | Interest on acceptance bills | 9,878 | 8,316 | | Total | 21,699 | 21,897 | FY2020 Income Tax Expense | Item | 2020 (HK$ Thousand) | 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Hong Kong profits tax | 1,904 | 1,954 | | China corporate income tax | 512 | - | | Total tax expense for the year from continuing operations | 2,396 | 1,954 | | Total tax (credit)/expense for the year from discontinued operations | (1,109) | 4,735 | | Total | 1,287 | 6,689 | - Hong Kong profits tax is calculated at a rate of 16.5% on estimated assessable profits, while the tax rate for Chinese subsidiaries is 25%[527] Discontinued Operations The Group decided to discontinue Jiangsu Lvbin's garment manufacturing business on October 14, 2019, with its deregistration completed on April 27, 2021; in 2020, discontinued operations recorded a profit of HK$6.154 million, mainly from net other gains and losses - Jiangsu Lvbin Silk Garment Co., Ltd., a 51%-owned subsidiary, decided to cease its garment manufacturing business on October 14, 2019, and its deregistration was completed on April 27, 2021[533] FY2020 Discontinued Operations Overview | Item | 2020 (HK$ Thousand) | 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | - | 3,555 | | Profit for the year | 6,154 | 32,738 | | Net cash used in operating activities | (156) | (4,221) | | Net cash (used in)/from investing activities | (14,295) | 23,536 | | Net cash used in financing activities | (7,525) | (13) | | Net cash (outflow)/inflow | (21,976) | 19,315 | Directors' Remuneration and Employee Costs In 2020, the Group's total directors' remuneration was HK$2.614 million, with highe