Corporate Information The report provides key corporate information including the Board of Directors, committee members, company secretary, auditor, bankers, and registered office - The report provides key corporate information including the Board of Directors, committee members, company secretary, auditor, bankers, and registered office457 Financial Highlights In FY2020, the company's revenue increased by 14% year-on-year, but loss attributable to owners expanded by 13%, with basic loss per share widening from 6.63 HK cents to 7.38 HK cents - In FY2020, the company's revenue increased by 14% year-on-year, but loss attributable to owners expanded by 13%, with basic loss per share widening from 6.63 HK cents to 7.38 HK cents11 FY2020 Financial Highlights | Metric | 2020 (HKD thousands) | 2019 (HKD thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 35,348 | 31,023 | +14% | | Loss Attributable to Owners | (24,063) | (21,234) | +13% | | Basic Loss Per Share (HK cents) | (7.38) | (6.63) | +11% | | Total Equity | 322,012 | 349,370 | -8% | | Net Asset Value Per Share (HKD) | 0.99 | 1.07 | -7% | Financial Summary The report presents a summary of performance, assets, and liabilities for the past five financial years, showing fluctuating revenue, increasing losses since 2018, stable total assets, and declining shareholders' equity since 2017 - The report presents a summary of performance, assets, and liabilities for the past five financial years, showing fluctuating revenue, increasing losses since 2018, stable total assets, and declining shareholders' equity since 2017192224 Five-Year Performance Summary (As of December 31) | Metric (HKD thousands) | 2016 | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 28,457 | 28,390 | 26,350 | 31,023 | 35,348 | | (Loss)/Profit for the Year | (19,263) | 11,024 | (12,793) | (21,780) | (25,738) | Five-Year Assets and Liabilities Summary (As of December 31) | Metric (HKD thousands) | 2016 | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 625,516 | 639,116 | 587,191 | 572,675 | 572,298 | | Total Liabilities | (262,218) | (260,427) | (222,049) | (223,305) | (250,286) | | Shareholders' Funds | 363,298 | 378,689 | 365,142 | 349,370 | 322,012 | Management Discussion and Analysis The management discussion and analysis provides insights into the company's operational and financial performance, strategic outlook, and corporate governance practices Operating Review In 2020, the Group's net loss expanded by 18% to HKD 25.74 million due to COVID-19, despite a 14% revenue increase from hotel and property project management businesses, which also led to a 33% decline in gross profit Overall Performance Amidst the COVID-19 pandemic, the Group's net loss increased by 18% to approximately HKD 25.74 million in 2020, primarily due to the absence of fair value gains and disposal gains on investment properties recorded in 2019 FY2020 Key Operating Data Changes | Metric | 2020 (HKD thousands) | 2019 (HKD thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 35,348 | 31,023 | +14% | | Gross Profit | 12,256 | 18,294 (Restated) | -33% | | Administrative Expenses | 28,898 | 36,287 (Restated) | -20% | | Net Loss | 25,738 | 21,780 (Restated) | +18% | - The increase in net loss was primarily due to the absence of HKD 10.8 million in fair value gains and disposal gains on investment properties in 2020 compared to 2019, partially offset by a turnaround in RMB exchange from a loss of HKD 4.375 million to a gain of HKD 5.547 million, government COVID-19 subsidies of HKD 2.167 million, and a HKD 2.402 million increase in income tax expense due to deferred tax asset adjustments2729 Property Investment Business This segment turned from profit to loss, recording a loss of HKD 4.16 million in 2020, mainly due to a 53% year-on-year decrease in total rental income to HKD 4.26 million, with a significant reduction in Hong Kong due to a boutique hotel conversion Property Investment Business Segment Performance | Metric | 2020 (HKD thousands) | 2019 (HKD thousands) | | :--- | :--- | :--- | | Segment Profit/(Loss) | (4,161) | 1,948 | | Total Rental Income | 4,257 | 9,097 | | Of which: Hong Kong | 1,313 | 4,700+ (Partial) | | Of which: Macau | 2,944 | Approx. 2,800 | - Hong Kong rental income significantly decreased, primarily because a boutique hotel that previously contributed HKD 4.7 million in rent was converted to the Group's self-operated hospitality services business at the end of 201936 Hair Styling Business Despite a 16% decline in turnover to HKD 15.24 million due to the pandemic, this segment's net loss significantly narrowed from HKD 0.96 million to HKD 0.022 million, driven by the absence of one-off relocation expenses, rent concessions, and government subsidies Hair Styling Business Segment Performance | Metric | 2020 (HKD thousands) | 2019 (HKD thousands) | | :--- | :--- | :--- | | Turnover | 15,236 | 18,120 | | Segment Net Loss | (22) | (964) | | Retail Product Sales | 834 | Approx. 463 | Hospitality Services Business Commencing operations in late December 2019, this business recorded HKD 8.98 million in turnover and a segment loss of HKD 1.87 million in 2020, adapting to the pandemic by shifting to local clientele and introducing co-living options - This segment commenced operations in late December 2019, recording turnover of HKD 8.976 million and a segment loss of HKD 1.869 million in 202049 - To cope with the pandemic, the Group adopted flexible pricing, focused on local communities, offered accommodation packages and limited-time promotions, and reconfigured facilities to develop co-living businesses for recurring revenue50 Securities Investments As of end-2020, the Group's financial assets at fair value through profit or loss decreased to approximately HKD 69.95 million from HKD 88.84 million, recording an unrealized loss of HKD 11.96 million and dividend income of HKD 2.97 million Securities Investment Portfolio Overview (As of December 31, 2020) | Metric | Amount (HKD thousands) | | :--- | :--- | | Financial Assets at Fair Value Through Profit or Loss | 69,946 | | Unrealized Loss | (11,958) | | Dividend Income | 2,969 | Significant Investment Details: Link REIT (823) | Metric | Value | | :--- | :--- | | Number of Shares Held | 704,583 | | Investment Cost | 66,549 HKD thousands | | 2020 Dividend Income | 2,077 HKD thousands | | 2020 Fair Value Loss | (7,996) HKD thousands | | Fair Value as of December 31, 2020 | 49,744 HKD thousands | | Approximate Percentage of Group's Total Assets | 8.7% | Property Project Management Business Launched in late 2019, this business completed multiple residential property projects in 2020, generating total revenue of HKD 3.91 million and a segment profit of HKD 0.084 million by leveraging the Group's property investment experience - In 2020, the property project management business generated total revenue of HKD 3.908 million and a segment profit of HKD 0.084 million64 Other Business Segments The money lending business segment recorded a private loan during the review period, generating total revenue of HKD 2,000 and a segment loss of HKD 19,000 - The money lending business recorded total revenue of HKD 2,000 and a segment loss of HKD 19,00065 Financial Review As of end-2020, the Group held HKD 119 million in cash and bank balances but had a net current liability of HKD 28.26 million, with the current ratio decreasing from 0.97 to 0.87 times, and the debt-to-equity ratio rising from 3.4% to 5.7% Key Financial Indicators (As of December 31, 2020) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Total Cash and Bank Balances | 118,794 HKD thousands | - | | Net Current Liabilities | 28,256 HKD thousands | 6,135 HKD thousands | | Current Ratio | 0.87 times | 0.97 times | | Debt-to-Equity Ratio | 5.7% | 3.4% | | Total Equity | 322,012 HKD thousands | 349,370 HKD thousands | - Due to the commencement of new hotel and hospitality businesses, the Group's total number of employees increased from 37 in 2019 to 47 in 202075 - The Directors do not recommend the payment of a final dividend for the year ended December 31, 202076 Prospects The Group anticipates Asia to lead global economic recovery post-pandemic, with China's stable growth and the Greater Bay Area initiative providing new impetus for regional business development, while remaining confident in Hong Kong's long-term tourism prospects - The Group believes that China's stable economic growth and the Greater Bay Area initiative will inject new impetus into its business development in the region81 - The Group is confident in the recovery of the tourism industry, viewing it as "not a matter of if but rather when," and will closely monitor market developments to seize opportunities for expansion plans82 - Looking ahead, the Group plans to apply digital technology to enhance operational efficiency and achieve further growth as the economy recovers from the pandemic86 Corporate Social Responsibility The Group is committed to being a responsible community member, earning multiple awards in 2020, including "Caring Company" for 13 consecutive years, "Good MPF Employer" for 6 consecutive years, and certifications as a "Hong Kong Green Organisation" and "Happy Company" - The Group received several social responsibility awards in 2020, including: - "Caring Company" from The Hong Kong Council of Social Service for 13 consecutive years - "Good MPF Employer" from the Mandatory Provident Fund Schemes Authority for 6 consecutive years - Certification as a "Hong Kong Green Organisation" and "Happy Company"93 Directors' Report The Directors' Report provides an overview of the company's principal activities, financial results, share capital, share options, and information on directors and senior management Principal Activities and Results The company's principal business is investment holding, with subsidiaries engaged in property investment, hair styling, securities investment, hotel services, and property project management, with the latter being a new segment in FY2020, and no dividend recommended for the year - The company's principal business is investment holding, with a new property project management business segment added during the year96101 - The Directors do not recommend the payment of a dividend for the financial year ended December 31, 202097102 Share Capital and Share Options During the reporting period, the company's authorized share capital remained unchanged, and no new share options were granted under the 2019 scheme, with Executive Director Ms. Tsang Siu Wan holding 12,548,000 outstanding share options as of year-end - During the review year, the company's authorized share capital remained unchanged, and no new share options were granted115 Outstanding Share Options Held by Director Ms. Tsang Siu Wan (As of December 31, 2020) | Grant Date | Exercise Price (HKD) | Number of Outstanding Options | | :--- | :--- | :--- | | September 14, 2016 | 0.732 | 3,096,000 | | September 19, 2017 | 0.698 | 3,096,000 | | October 3, 2018 | 0.395 | 3,096,000 | | October 16, 2019 | 0.250 | 3,260,000 | | Total | | 12,548,000 | Directors and Senior Management The report provides detailed biographies of executive directors, independent non-executive directors, and senior management, noting the appointment of Ms. Ho Ting Mei as an independent non-executive director and the resignation of Mr. Au Chi Wai on January 1, 2020 - Ms. Ho Ting Mei was appointed as an Independent Non-executive Director on January 1, 2020, and Mr. Au Chi Wai resigned on the same day151 - The report provides detailed personal resumes for Executive Directors Mr. Tsang Siu Mo, Ms. Tsang Siu Wan, Ms. Chu Ming Tak, Independent Non-executive Directors Mr. Hui Yan Kit, Mr. Lau Pui Wing, Ms. Ho Ting Mei, and Senior Management Mr. Kwok Tsz Kit, Ms. Sze Tak On, Ms. Wong Yim Chui165167169172173174177179180 Directors' and Chief Executives' Interests and Short Positions in Shares, Underlying Shares and Debentures As of end-2020, Executive Directors Mr. Tsang Siu Mo and Ms. Tsang Siu Wan jointly held 33% of the company's shares through controlled corporations, with Ms. Tsang Siu Wan also beneficially holding 0.94% of shares and 12,548,000 share options, and Ms. Chu Ming Tak beneficially holding 2.74% of shares Directors' Interests in Company Shares (As of December 31, 2020) | Director Name | Nature of Interest | Number of Shares Held | Approximate Percentage of Total Share Capital | | :--- | :--- | :--- | :--- | | Mr. Tsang Siu Mo | Interest in Controlled Corporation | 107,604,772 | 33.00% | | Ms. Tsang Siu Wan | Beneficial Interest | 3,064,000 | 0.94% | | | Interest in Controlled Corporation | 107,604,772 | 33.00% | | Ms. Chu Ming Tak | Beneficial Interest | 8,930,087 | 2.74% | Substantial Shareholders' Interests Excluding directors, the company's substantial shareholders include ST Investments Holding Limited, which holds 33% of shares through its wholly-owned subsidiaries, and Ms. Szeto Yuk Lin, who holds 15.64% of shares through her controlled corporations Substantial Shareholders' Shareholdings (As of December 31, 2020) | Shareholder Name | Nature of Interest | Number of Shares Held | Approximate Percentage of Total Share Capital | | :--- | :--- | :--- | :--- | | ST Investments Holding Limited | Interest in Controlled Corporation | 107,604,772 | 33% | | Ms. Szeto Yuk Lin | Interest in Controlled Corporation | 50,996,250 | 15.64% | Corporate Governance Report The Corporate Governance Report details the company's adherence to corporate governance principles, including board composition, committee structures, internal controls, and shareholder communication The Board and Management The Board comprises six directors, including three executive and three independent non-executive directors, meeting listing rule requirements and adopting a board diversity policy, though the roles of Chairman and CEO are combined in Mr. Tsang Siu Mo - The Board comprises six directors, with three executive directors and three independent non-executive directors, meeting the Listing Rules' requirements for the number and professional qualifications of independent non-executive directors228232 - The company deviates from the Corporate Governance Code's provision for the separation of Chairman and Chief Executive roles, as Executive Chairman Mr. Tsang Siu Mo concurrently performs the duties of Chief Executive, which the Board believes is in the best interests of the company and its shareholders260 Committees of the Board The company has established Nomination, Remuneration, Executive, and Audit Committees, with the Nomination and Remuneration Committees chaired by independent non-executive directors, and the Audit Committee responsible for reviewing financial reports, internal controls, and risk management systems - The Nomination Committee is chaired by Ms. Ho Ting Mei, with members including two independent non-executive directors and one executive director265 - The Remuneration Committee is chaired by Mr. Hui Yan Kit, with members including two independent non-executive directors and one executive director272 - The Audit Committee comprises three independent non-executive directors, chaired by Mr. Lau Pui Wing, and is responsible for reviewing financial reports and internal control systems289290 Internal Control and Risk Management The Board is responsible for the effectiveness of the Group's internal control system and, having engaged a consultant for internal audit, deemed the risk management and internal control systems satisfactory and effective in safeguarding Group assets as of end-2020 - The Board engaged a consultant to conduct an internal audit and assessed the risk management and internal control systems for 2020 as satisfactory and operating effectively308310 Shareholders' Rights and Investor Relations The company communicates with shareholders through financial reports, announcements, and its website, with annual general meetings providing a forum for interaction, and shareholders holding at least 10% of paid-up capital having the right to requisition an extraordinary general meeting - Shareholders holding not less than one-tenth of the paid-up share capital have the right to requisition an extraordinary general meeting in writing to the Board314 Independent Auditor's Report The Independent Auditor's Report provides the auditor's opinion on the consolidated financial statements and highlights key audit matters Auditor's Opinion and Key Audit Matters The auditor, BDO Limited, issued an unmodified opinion on the company's 2020 consolidated financial statements, affirming their true and fair presentation of the Group's financial position and performance, with the sole key audit matter being the valuation of investment properties - The auditor issued an unmodified opinion, stating that the consolidated financial statements present a true and fair view of the Group's financial position and performance318 - The sole key audit matter is the valuation of investment properties, which management estimated at HKD 130.1 million, and the auditor performed procedures including evaluating the external valuer's competence, assessing valuation methodologies, and sampling input data323324327 Consolidated Financial Statements The Consolidated Financial Statements provide a comprehensive overview of the Group's financial performance, position, equity changes, and cash flows for the reporting period Consolidated Statement of Comprehensive Income In FY2020, the Group's revenue increased by 14% to HKD 35.35 million, but gross profit declined from HKD 18.29 million to HKD 12.26 million due to a significant increase in cost of revenue, resulting in an expanded loss for the year of HKD 25.74 million Consolidated Statement of Comprehensive Income Summary | Metric (HKD thousands) | 2020 | 2019 (Restated) | | :--- | :--- | :--- | | Revenue | 35,348 | 31,023 | | Gross Profit | 12,256 | 18,294 | | Loss Before Income Tax | (23,347) | (20,873) | | Loss for the Year | (25,738) | (21,780) | | Total Comprehensive Income for the Year | (27,358) | (21,319) | Consolidated Statement of Financial Position As of end-2020, the Group's total assets remained stable at HKD 572 million, but total liabilities increased from HKD 223 million to HKD 250 million, leading to a decrease in net assets from HKD 349 million to HKD 322 million, and net current liabilities expanded to HKD 28.26 million Consolidated Statement of Financial Position Summary | Metric (HKD thousands) | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Non-current Assets | 375,288 | 371,697 | | Current Assets | 197,010 | 200,978 | | Total Assets | 572,298 | 572,675 | | Current Liabilities | 225,266 | 207,113 | | Non-current Liabilities | 25,020 | 16,192 | | Total Liabilities | 250,286 | 223,305 | | Net Assets | 322,012 | 349,370 | | Total Equity | 322,012 | 349,370 | Consolidated Statement of Changes in Equity The Group's total equity decreased by HKD 27.36 million from HKD 349 million at the beginning of the year to HKD 322 million at year-end, primarily due to a total comprehensive loss for the year of HKD 27.36 million - Equity attributable to owners of the Company decreased from HKD 345.5 million at the beginning of the year to HKD 319.8 million at year-end, primarily due to a total comprehensive loss for the year of HKD 25.68 million356 Consolidated Statement of Cash Flows In 2020, the Group generated a net cash inflow of HKD 1.49 million from operating activities, a significant improvement from the previous year's net outflow of HKD 115 million, with net cash inflows from investing and financing activities contributing to a HKD 4.46 million net increase in cash and cash equivalents Consolidated Statement of Cash Flows Summary | Metric (HKD thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash From/(Used In) Operating Activities | 1,489 | (114,948) | | Net Cash From Investing Activities | 636 | 71,565 | | Net Cash From/(Used In) Financing Activities | 2,334 | (6,798) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 4,459 | (50,181) | | Cash and Cash Equivalents at End of Period | 26,325 | 21,866 | Notes to the Consolidated Financial Statements The notes provide detailed accounting policies and specific item breakdowns for the financial statements, including segment revenue and performance, bank borrowings, related party transactions, and the impact of COVID-19 Segment Performance (2020) | Segment | Revenue (HKD thousands) | Performance (HKD thousands) | | :--- | :--- | :--- | | Hair Styling | 15,236 | (22) | | Money Lending | 2 | (19) | | Property Investment | 4,257 | (4,161) | | Securities Investment | 2,969 | (9,845) | | Hospitality Services | 8,976 | (1,869) | | Property Project Management | 3,908 | 84 | - As of end-2020, the Group's total bank borrowings amounted to HKD 204 million, all of which were secured and bore floating interest rates, with HKD 196 million classified as current liabilities695699 - The Group engaged in related party transactions with companies controlled by or having significant influence over Directors Mr. Tsang Siu Mo and Ms. Tsang Siu Wan, primarily involving office property leases, car leases, and company secretarial services761764765 Particulars of Investment Properties This section details the Group's investment property portfolio, including commercial and residential properties in Macau, and commercial and residential properties in Sheung Wan and Taikoo Shing, Hong Kong, all held with 100% interest - This section details the Group's investment property portfolio, including commercial and residential properties in Macau, and commercial and residential properties in Sheung Wan and Taikoo Shing, Hong Kong, all held with 100% interest840841
世纪建业(00079) - 2020 - 年度财报