安宁控股(00128) - 2020 - 年度财报

Board Report The company's core businesses are investment holding, securities trading, fashion retail, and resort operations, with detailed reviews in other reports Principal Activities and Business Review The company's core businesses are investment holding, securities trading, fashion retail, and resort operations, with detailed reviews in other reports - The company's principal activities are investment holding and securities trading, with subsidiaries primarily engaged in wholesale and retail fashion, operating resort and club, investment holding, and securities trading[4] - Detailed business review, financial performance analysis, future development outlook, key risks, and significant events are available in the CEO's Report on pages 9 to 34[5] Results, Dividends, and Financial Summary The Group's 2020 performance is detailed in the consolidated income statement, with no dividend recommended and a five-year summary available - The Board does not recommend any dividend for the year ended December 31, 2020[7] - As of December 31, 2020, the company had no reserves available for distribution to shareholders[15] Major Customers and Suppliers The Group has a diversified customer base but concentrated suppliers, with no director interests in top five suppliers - Low customer concentration: The Group's top five customers accounted for less than 10% of total turnover for the year[16] - High supplier concentration: The Group's top five suppliers and largest supplier accounted for approximately 77% and 31% of total purchases for the year, respectively[16] Major Shareholders' Interests and Continuing Connected Transactions Major shareholders indirectly hold 44.28% of shares, with continuing connected office lease transactions reviewed and approved Major Shareholders' Interests | Name | Capacity | Number of Shares Held | Percentage of Issued Shares | | :--- | :--- | :--- | :--- | | Diamond Leaf Limited | Beneficial Owner | 162,216,503 | 9.83% | | Solution Bridge Limited | Beneficial Owner | 408,757,642 | 24.76% | | Parasia Limited | Interest in Controlled Corporation | 570,974,145 | 34.59% | | Sum Ming Limited | Interest in Controlled Corporation | 570,974,145 | 34.59% | | Mr. Chan Wai Tong | Trustee | 730,974,145 | 44.28% | | Mr. Chong Yat Kit | Trustee | 730,974,145 | 44.28% | | Mr. Wong Tak Wai | Trustee | 730,974,145 | 44.28% | - The company entered into office lease agreements with companies controlled by major shareholders. As of the end of 2020, the actual annual payment was HK$3,183,174, not exceeding the annual cap. This transaction was confirmed by independent non-executive directors and auditors as fair, reasonable, and in the overall interest of shareholders[38][39] CEO's Report This report provides an overview of the Group's financial performance, business operations, key risks, liquidity, and future strategies Overview and Financial Review In 2020, profit attributable to shareholders decreased to HK$11.88 million due to COVID-19, but club property rezoning brought a HK$30.31 million revaluation reversal Financial Performance Summary | Financial Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Net Profit Attributable to Shareholders | 11,881 | 46,197 | | Earnings Per Share | 0.72 HK cents | 2.80 HK cents | | Operating Loss/Profit | (16,129) | 49,202 | | Fashion Retail Business Loss | (36,260) | (11,126) | | Club Business Loss | (14,518) | (14,342) | | Investment Segment Profit | 36,933 | 81,062 | - Positive factor: The application to rezone the Tsuen Wan club property from "Sports and Recreation Club" to residential use was approved in September 2020, a significant milestone[50] - Due to rezoning approval, the club property was revalued at its "highest and best" use, resulting in a revaluation deficit reversal of HK$30.308 million, with a property valuation of HK$281 million[58] Business Review The Group's three core businesses showed mixed performance in 2020, with fashion retail and club operations facing challenges, while financial investments performed robustly Retail Fashion COVID-19 severely impacted fashion retail, causing physical store sales to drop 34%, but online business grew 217%, partially offsetting the decline - Impacted by the pandemic, visitor arrivals to Hong Kong plummeted, and the retail market relied solely on local consumption[69] - SWANK's online business sales volume increased by 217% compared to 2019, with its sales mix contribution rising from 3% to 14%[69] - Paule Ka's business was severely hit due to the lack of tourists at its Harbour City store, with overall sales volume decreasing by 25%[71] Operating Resort and Club Riviera Country Club revenue declined 57% to HK$6.24 million due to COVID-19 restrictions, resulting in operating losses despite rezoning approval Riviera Country Club Performance | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 6,239 | 14,617 | | Operating Loss (before impairment) | (13,468) | (14,342) | - Revenue decline primarily due to government-mandated social distancing and other restrictions during the COVID-19 pandemic, leading to cancellations or postponements of banquets and weddings[74] Financial Instrument Investments The investment portfolio, with a HK$672 million carrying value, generated a net gain of HK$54.2 million (6.88% return) through diversified, professionally managed funds Investment Portfolio Metrics | Investment Portfolio Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Total Carrying Value | HK$672 million | HK$695 million | | Percentage of Total Assets | 54.7% | 66.4% | | Net Investment Gain | HK$54.2 million | HK$98.28 million | | Investment Return Rate | 6.88% | - | - Investment strategy: Reduced investments in individual listed shares and corporate bonds, increased investment proportion in unit stock and fixed income fund portfolios managed by professional asset managers, and established two discretionary investment portfolios[76][111] - The investment portfolio is primarily divided into five categories: (A) marketable fund investments; (B) discretionary investment portfolios; (C) direct listed securities investments; (D) corporate bonds; and (E) private equity funds and mezzanine loan funds[77] Key Risks and Uncertainties The Group faces business risks in retail and club operations, financial investment risks, and challenges in strategy, cybersecurity, and talent retention - Retail fashion business risks: Facing risks of suppliers (e.g., Paule Ka) falling into financial distress, supply chain disruptions, and shipping delays[131][132] - Club business risks: Ongoing COVID-19 restrictions, aging facilities, and uncertainties regarding approvals required for rezoning the club land to residential use[133][136] - Financial investment risks: Primarily include market risks (e.g., interest rate, stock price fluctuations), issuer risk, liquidity risk, and foreign exchange risk. The Group manages risks through a diversified investment portfolio and professional asset managers[137][139] Liquidity and Financial Position As of 2020-end, the Group maintained a robust financial position with HK$151 million cash, a 3.0% gearing ratio, and a 16.3x current ratio Financial Position Metrics | Indicator | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Cash and Unpledged Deposits | HK$150,607,000 | HK$124,828,000 | | Total Borrowings | HK$6,617,000 | HK$5,236,000 | | Lease Liabilities | HK$28,012,000 | HK$47,388,000 | | Gearing Ratio | 3.0% | 5.4% | | Current Ratio | 16.3 times | 16.3 times | Outlook and Strategies Future strategies focus on e-commerce for fashion retail, banquet recovery and property rezoning for the club, and a prudent, diversified investment approach - Fashion retail strategy: Reduce physical store network, focus on developing e-commerce channels, including launching its own online sales platform and collaborating with well-known e-commerce platforms, while enhancing customer experience at multi-brand flagship stores[167] - Riviera Club strategy: Banquet and conference business is expected to recover in the second half of 2021. Concurrently, actively execute subsequent government requirements for the land rezoning application[169][172] - Investment strategy: Continue to adopt a prudent attitude, holding diversified securities, and investing across different geographies and industries to balance portfolio risk and return[174] Directors and Senior Management Profile This section details the personal biographies, professional backgrounds, and roles of the company's directors and senior management Directors and Senior Management Profile This section details the personal biographies, professional backgrounds, and roles of the company's directors and senior management - Executive Director and CEO, Mr. David Charles PARKER, has extensive senior management experience in financial services, property development, and hospitality[177] - Non-Executive Chairman, Mr. Leung Wai Choi, has many years of banking experience and is a member of the Institute of Chartered Accountants of Scotland[178] - Senior management includes Chief Financial Officer Mr. Wong Hon Sum, Director of Fashion Retail Buying and Merchandising Ms. Lai Kwok Yee, and Company Secretary Ms. Cheng Pui Man, all possessing deep professional backgrounds in their respective fields[196][197][198] Corporate Governance Report This report outlines the Group's corporate governance framework, including the Board's composition, committee structures, accountability, audit processes, and shareholder communication Board of Directors The Board comprises seven directors, meeting Listing Rules, with separated Chairman and CEO roles, a diversity policy, and regular meetings for strategy and governance - The Board consists of 7 directors, with independent non-executive directors accounting for over one-third, complying with Listing Rules requirements[201][206] - The roles and responsibilities of the Non-Executive Chairman (Mr. Leung Wai Choi) and Chief Executive Officer (Mr. David Charles PARKER) are clearly separated to ensure a balance of power[215] - The Board has adopted a diversity policy, considering gender, age, professional experience, and other factors in its composition[219] Board Committees The Board has five committees with clear mandates, holding meetings to review key financial and operational matters - Audit Committee: Responsible for overseeing financial reporting systems, risk management, and internal controls, held three meetings during the year[235][236] - Investment Committee: Responsible for formulating and reviewing investment strategies and policies, held five meetings during the year[242][243] - Nomination Committee: Responsible for reviewing the Board's structure and composition, and making recommendations on director appointments, held two meetings during the year[244][245] - Remuneration Committee: Responsible for formulating remuneration policies and determining the remuneration of executive directors and senior management, held one meeting during the year[248][249] Accountability and Audit The Board ensures effective risk management and internal controls based on the COSO framework, with an independent internal audit and external auditor RSM Hong Kong - The Board bears overall responsibility for maintaining appropriate and effective risk management and internal control systems, with management responsible for design, implementation, and monitoring[257] - The Group's internal control model is based on the COSO framework and includes an independent internal audit department that reports directly to the Audit Committee[262][270] Auditor's Remuneration | Service Type | Remuneration (HK$ thousand) | | :--- | :--- | | Audit Services | 1,050 | | Tax Services | 55 | | Other Assurance Services | 225 | | Other Reporting Services | 14 | | Total | 1,344 | Shareholder Communication and Rights The company communicates with shareholders via reports, announcements, and AGMs, clarifying rights for convening meetings and proposing resolutions, with a discretionary dividend policy - The company communicates with shareholders through corporate communications, general meetings, and the company website, ensuring information transparent and timely[280] - Shareholders holding at least 5% of the total voting rights can request to convene a general meeting[285] - The company has adopted a dividend policy but has no preset dividend distribution ratio. Whether to pay dividends is at the Board's discretion, based on the company's financial position, future development needs, and other factors[291] Corporate Social Responsibility Report This report details the Group's commitment to environmental sustainability, social responsibility towards employees, and ethical operating practices Environmental Sustainability The Group reduces its environmental impact through managing emissions, waste, and resource use, implementing energy-saving measures, and complying with regulations Greenhouse Gas Emissions (kg CO2e) | Greenhouse Gas Emissions (kg CO2e) | 2020 | 2019 | | :--- | :--- | :--- | | Scope 1 (Direct Emissions) | 174,465 | 342,450 | | Scope 2 (Energy Indirect Emissions) | 694,905 | 975,463 | | Scope 3 (Other Indirect Emissions) | 43,667 | 87,429 | | Total Emissions | 913,037 | 1,405,342 | Resource Consumption | Resource Consumption | Unit | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Electricity | kWh | 1,318,341 | 1,837,933 | | Water | cubic meters | 18,107 | 26,755 | | Diesel | liters | 17,110 | 23,988 | | LPG | kg | 14,964 | 31,545 | - The Group has issued "Environmental Guidelines" covering paper consumption, energy saving, and office stationery use, encouraging employees to practice environmentally friendly behaviors in their daily work[311][312] Social Sustainability The Group prioritizes employees, adhering to labor laws, providing competitive benefits, ensuring health and safety, offering training, and prohibiting child or forced labor - As of December 31, 2020, the Group had 130 employees, of whom 65.4% were female and 34.6% were male. By age, employees over 50 years old accounted for the highest proportion at 48.4%[330][331] - The Group promotes anti-discrimination and equal opportunity principles, ensuring employee decisions are not influenced by irrelevant factors such as gender, race, or age[328] - In response to COVID-19, the Group implemented various measures to protect employee health and safety, including providing masks, conducting temperature checks, and implementing work-from-home arrangements[334] Operating Practices The Group emphasizes sustainable supply chain management, product responsibility, customer data privacy, anti-corruption, and community engagement - Supply chain management: Fashion retail business suppliers are mainly from Europe (53 out of 55), and all 58 suppliers for the club business are located in Hong Kong. The Group selects and evaluates suppliers to ensure they meet quality and social responsibility requirements[347][348][350] - Product and service responsibility: SWANK and Riviera have both implemented a series of anti-epidemic measures to ensure the safety and hygiene of customers and members. During the year, the Group received fewer than five product quality complaints, all of which were resolved[351][353][355] - Anti-corruption: The Group has established a code of conduct to prevent bribery, extortion, fraud, and money laundering, requiring employees to submit annual compliance declarations. An internal whistleblowing policy is also in place to protect whistleblowers[361][364] Independent Auditor's Report RSM Hong Kong issued an unqualified opinion on the 2020 consolidated financial statements, highlighting fair value of club property and inventory provisions as key audit matters Independent Auditor's Report RSM Hong Kong issued an unqualified opinion on the 2020 consolidated financial statements, highlighting fair value of club property and inventory provisions as key audit matters - Auditor's Opinion: We are of the opinion that the consolidated financial statements give a true and fair view of the consolidated financial position of your Group as at 31 December 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[368] - Key Audit Matter 1: Fair value of club property. Due to rezoning approval obtained during the year, the property's highest and best use changed to residential, and its fair value assessment involves significant judgment and estimation[370][372][373] - Key Audit Matter 2: Inventory provision. The assessment of inventory provision involves judgment and estimation based on current market conditions and past experience regarding inventory age and estimated net realizable value[370][377] Financial Statements This section presents the Group's consolidated financial statements, including the statement of profit or loss, financial position, cash flows, and detailed explanatory notes Consolidated Statement of Profit or Loss For 2020, revenue was HK$105 million, with an operating loss of HK$16.13 million, but a HK$30.31 million property revaluation reversal led to a HK$11.88 million profit Consolidated Statement of Profit or Loss | Item | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 104,977 | 131,841 | | Gross Profit | 65,558 | 87,388 | | Operating Profit/(Loss) | (16,129) | 49,202 | | Profit Before Tax | 11,783 | 46,157 | | Profit for the Year | 11,783 | 46,157 | | Profit Attributable to Owners of the Company | 11,881 | 46,197 | Consolidated Statement of Financial Position As of 2020-end, total assets increased to HK$1.229 billion, with net assets at HK$1.171 billion, driven by club property revaluation Consolidated Statement of Financial Position | Item | December 31, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | | :--- | :--- | :--- | | Non-Current Assets | 439,501 | 228,401 | | Property, Plant and Equipment | 288,084 | 69,212 | | Current Assets | 789,011 | 819,838 | | Financial Assets at Fair Value Through Profit or Loss | 593,481 | 627,148 | | Cash and Bank Balances (including time deposits) | 150,607 | 124,828 | | Total Assets | 1,228,512 | 1,048,239 | | Current Liabilities | 48,367 | 50,383 | | Non-Current Liabilities | 9,573 | 28,012 | | Total Liabilities | 57,940 | 78,395 | | Net Assets | 1,170,572 | 969,844 | | Equity Attributable to Owners of the Company | 1,171,126 | 970,495 | Consolidated Statement of Cash Flows In 2020, net cash from operations was HK$68.05 million, with net outflows from investing and financing, resulting in a HK$15.14 million cash increase Consolidated Statement of Cash Flows | Item | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 68,050 | 24,332 | | Net Cash Used in Investing Activities | (33,162) | (707) | | Net Cash Used in Financing Activities | (19,752) | (19,944) | | Net Increase in Cash and Cash Equivalents | 15,136 | 3,681 | | Cash and Cash Equivalents at December 31 | 140,022 | 124,828 | Notes to the Consolidated Financial Statements These notes detail accounting policies, key judgments, and financial data, highlighting investment business profitability and related party transactions - Segment information: Investment business is the main source of profit (HK$36.93 million profit), while wholesale and retail fashion business (HK$36.26 million loss) and operating resort and club business (HK$14.52 million loss) both recorded losses[573] - Revenue composition: Sales of fashion and accessories revenue was HK$68.61 million, a 28% year-on-year decrease; resort and club business revenue was HK$6.24 million, a 57% year-on-year decrease; investment-related dividend and interest income was HK$30.12 million, a 36% year-on-year increase[581] - Related party transactions: During the year, office lease expenses, property management fees, and air conditioning fees totaling HK$3.181 million were paid to related companies controlled by major shareholders[683] Five-Year Financial Summary This section provides a summary of the Group's key financial data for five consecutive fiscal years from 2016 to 2020 Five-Year Financial Summary This section provides a summary of the Group's key financial data for five consecutive fiscal years from 2016 to 2020 Five-Year Financial Summary | Item (HK$ thousand) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Results | | | | | | | Revenue | 104,977 | 131,841 | 142,110 | 159,450 | 167,119 | | Profit/(Loss) Attributable to Owners of the Company | 11,881 | 46,197 | (73,097) | (6,505) | (3,935) | | Assets and Liabilities | | | | | | | Total Assets | 1,228,512 | 1,048,239 | 952,107 | 1,033,188 | 1,052,142 | | Total Liabilities | (57,940) | (78,395) | (28,336) | (35,024) | (39,048) | Company Information This section provides basic company information for ENM Holdings Limited, including board members, auditor, registered office, and stock code Company Information This section provides basic company information for ENM Holdings Limited, including board members, auditor, registered office, and stock code - Company Name: ENM Holdings Limited[1] - Stock Code: 00128 (The Stock Exchange of Hong Kong Limited)[696] - Auditor: RSM Hong Kong[696]