丰盛生活服务(00331) - 2020 - 年度财报

Financial Highlights Financial Highlights In FY2020, the company's revenue decreased by 10.0% to HKD 4.882 billion, while profit attributable to shareholders slightly increased by 0.7% to HKD 310 million, with basic earnings per share remaining at HKD 0.68 Key Financial Data for FY2020 | Metric | 2020 (Million HKD) | 2019 (Restated, Million HKD) | Change % | | :--- | :--- | :--- | :--- | | Revenue | 4,882.1 | 5,422.7 | -10.0% | | Gross Profit | 760.4 | 769.5 | -1.2% | | Profit Attributable to Company Shareholders | 309.6 | 307.4 | +0.7% | | Basic Earnings Per Share | 0.68 HKD | 0.68 HKD | 0.0% | - The Board recommended a final dividend of 14.4 HK cents per share, bringing the total annual dividend to 27.2 HK cents per share, a 23.6% increase from last year, with a payout ratio of 45.7%[6] Revenue by Region (For the year ended June 30) | Region | 2020 (Million HKD) | 2019 (Million HKD) | | :--- | :--- | :--- | | Hong Kong | 4,171.0 | 4,430.4 | | Mainland China | 382.3 | 792.6 | | Macau | 328.8 | 199.7 | Major Milestones and Accolades Major Milestones and Accolades During FY2019-2020, FSE Services Group and its subsidiaries received extensive recognition across various fields, including corporate governance, facility management, corporate social responsibility, and talent development - The company received the '2019 Listed Company of the Year Award' from the Hong Kong Stock Analysts' Association for the fourth consecutive year, affirming its high transparency and sustainable business performance[14] - Multiple properties managed by the Group's Urban Group received awards in the 'IFMA Asia Pacific Awards of Excellence 2019' and the Hong Kong Institute of Facility Management's 'Excellence in Facility Management Awards', demonstrating its outstanding capabilities in property and facility management[18][19] - The Group demonstrated outstanding performance in corporate social responsibility, winning awards in both the volunteer team and corporate categories of the '10th Hong Kong Outstanding Corporate Citizen Awards'[22] - FSE Engineering Group was recognized and upgraded to 'Super MD (Manpower Development)' by the Employees Retraining Board for its continuous achievements in talent training and development[33] Chairman's Statement Chairman's Statement Chairman Dr. Henry Cheng highlights the Group's resilient performance in FY2020 despite COVID-19 and social unrest, attributing success to cost management, business diversification, and the strategic acquisition of property and facility management businesses - The Group's laundry services were impacted by reduced tourist numbers due to COVID-19 and social unrest, while some E&M engineering projects faced delays from work suspensions and funding deferrals[35] - The successful acquisition of Urban Group and P&T (property and facility management services) in December 2019 contributed HKD 81 million in profit, accounting for 26.2% of the Group's total profit, effectively diversifying revenue streams[35] - Despite challenges, the Group's profit attributable to shareholders reached HKD 309.6 million in FY2020, with a proposed full-year dividend of 27.2 HK cents per share, representing a 23.6% increase year-on-year[35] - Looking ahead, the Group is optimistic about increased infrastructure investment by the Hong Kong government, development in the Greater Bay Area, and the long-term potential of the Macau market, leveraging its strengths in E&M engineering and property management to expand business[36][38][39][41] Board of Directors and Senior Management Board of Directors and Senior Management This section details the backgrounds of FSE Services Group's Board of Directors and senior management team, comprising professionals with diverse expertise in corporate governance, finance, law, and engineering - This report provides detailed personal resumes, professional backgrounds, and key responsibilities of the company's Board members (including executive, non-executive, and independent non-executive directors) and senior management[42][54] Corporate Governance Report Corporate Governance Structure The company maintains high corporate governance standards, complying with all code provisions, with a diverse 12-member Board supported by five specialized committees and a clear separation of Chairman and CEO roles - The company has complied with all code provisions set out in Appendix 14 of the Listing Rules, 'Corporate Governance Code', during the year[59] - The Board comprises 12 directors, including 6 executive, 2 non-executive, and 4 independent non-executive directors, demonstrating diversity in age and expertise such as financial accounting, law, E&M engineering, and general management[62][63] - The Board has established five key committees: Executive, Audit, Risk Management, Remuneration, and Nomination Committees, to assist in fulfilling its responsibilities[72] Risk Management and Internal Control The Board is responsible for the Group's risk management and internal control systems, reviewed semi-annually, addressing key risks such as COVID-19, social instability, economic shifts, labor shortages, currency fluctuations, and operational challenges - The Board is collectively responsible for maintaining sound risk management and internal control systems, reviewed semi-annually, covering financial, operational, and compliance controls[87] - The Group has identified and is monitoring several key risks, including: - COVID-19: Impacting global economy and Group operations - Social and Political Instability: Hong Kong's social conditions potentially affecting financial performance - Global Economy and Government Policies: Construction markets in Hong Kong, Macau, and Mainland China influenced by policies and economic trends - Labor Shortage: Aging workforce and rising labor costs in the construction industry - Currency Fluctuations: RMB exchange rate volatility posing risks to HKD-reported results - Other Risks: Including material price volatility, safety incidents, project delays, contract renewals, environmental regulations, and cybersecurity[94][95][96][97][98] Shareholder Rights This section outlines core shareholder rights and communication mechanisms, including the shareholder communication policy, procedures for convening extraordinary general meetings by shareholders holding at least 10% voting shares, and processes for shareholder inquiries and proposals - The company has established a shareholder communication policy, ensuring timely disclosure of information to shareholders through various channels, including interim and annual reports, announcements, and circulars[105] - Shareholders holding not less than one-tenth of the company's paid-up share capital have the right to request the Board to convene an extraordinary general meeting[106] Management Discussion and Analysis Business Review This fiscal year, the Group's operations were divided into E&M Engineering and Environmental Services, and Integrated Property and Facility Services, with E&M maintaining market leadership, cleaning services growing due to pandemic-related demand, laundry services severely impacted, and newly acquired property management businesses performing robustly - E&M Engineering and Environmental Services: - Total contract value awarded in FY2020 was HKD 4.578 billion, including 8 large projects exceeding HKD 100 million each - As of June 30, 2020, total outstanding contracts amounted to HKD 7.681 billion[113][114] - Integrated Property and Facility Services: - Cleaning Services (Wellcome): Awarded service contracts totaling HKD 1.571 billion, with increased demand for disinfection and cleaning post-COVID-19 - Laundry Services (New China Laundry): Business severely impacted by social unrest and COVID-19 in Hong Kong, leading to a sharp decline in laundry volume - Property and Facility Management (Urban Group and P&T): Awarded 20 service contracts with a total value of HKD 1.063 billion[115][116][118] Financial Review In FY2020, total revenue decreased by 10.0% to HKD 4.882 billion, primarily due to lower E&M engineering revenue, yet gross profit remained stable at HKD 760 million, and profit attributable to shareholders slightly increased by 0.7% to HKD 310 million, with a robust financial position and zero net gearing Revenue by Business Segment (For the year ended June 30) | Business Segment | 2020 (Million HKD) | % of Total Revenue | 2019 (Restated, Million HKD) | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | E&M Engineering and Environmental Services | 3,085.5 | 63.2% | 3,736.9 | 68.9% | | Integrated Property and Facility Services | 1,796.6 | 36.8% | 1,685.8 | 31.1% | | Total | 4,882.1 | 100.0% | 5,422.7 | 100.0% | Gross Profit by Business Segment (For the year ended June 30) | Business Segment | 2020 Gross Profit (Million HKD) | Gross Profit Margin % | 2019 Gross Profit (Restated, Million HKD) | Gross Profit Margin % | | :--- | :--- | :--- | :--- | :--- | | E&M Engineering and Environmental Services | 434.9 | 14.1% | 462.1 | 12.4% | | Integrated Property and Facility Services | 325.5 | 18.1% | 307.4 | 18.2% | | Total | 760.4 | 15.6% | 769.5 | 14.2% | - Profit attributable to shareholders slightly increased by 0.7% to HKD 309.6 million, primarily due to reduced general and administrative expenses and income tax, partially offset by a slight decrease in gross profit, asset impairment in laundry business, and acquisition-related costs; net profit margin improved from 5.7% to 6.3%[131] - As of June 30, 2020, the Group's cash and bank balances stood at HKD 700.9 million, total borrowings at HKD 463.2 million, and net gearing ratio remained at 0%[133] - In October 2019, the company entered into a financing agreement for the acquisition of the target group (property and facility management business) for a total consideration of HKD 743.4 million, paid through cash and issuance of convertible preference shares[140] Outlook The Group holds a cautiously optimistic outlook for its business segments, with E&M engineering benefiting from government infrastructure investments, cleaning services seeing increased demand, laundry services facing a challenging recovery, and property management poised for growth due to market demand for independent professional services - E&M Engineering and Environmental Services: The Hong Kong government's long-term housing strategy, 10-year hospital development plan, major infrastructure projects like Kai Tak Sports Park, and Greater Bay Area development will provide continuous business opportunities for this segment[150][151][153] - Cleaning Services: The COVID-19 pandemic has increased demand for professional disinfection services, and government job creation schemes may bring additional contracts; the Group plans to introduce innovative technologies like robotics to enhance efficiency[156] - Laundry Services: The outlook for laundry business remains bleak and uncertain due to the severe impact of the pandemic on tourism and hospitality sectors; the company will focus on key clients and strictly control costs[158] - Property and Facility Management Services: Increased market demand for professional management companies independent of property developers, coupled with the implementation of the Property Management Services Ordinance, presents significant development opportunities for Urban Group and P&T with their strong professional teams[159][160] Report of the Directors Report of the Directors This statutory report by the Board for FY2020 covers the Group's principal activities, performance, distributions, reserve movements, key customer and supplier information, director changes and interests, related party transactions, and compliance with the controlling shareholder's non-compete undertaking - The Board recommended a final dividend of 14.4 HK cents per share, bringing the total annual dividend to 27.2 HK cents per share, equivalent to a payout ratio of 45.7%[167] - For the year, the Group's top five customers accounted for 38.6% of total revenue, with the largest customer contributing 15.3%; the top five suppliers accounted for 8.5% of total purchases[174] - The report details continuing connected transactions with New World Development Group, NWS Holdings Limited, and other related parties, confirming all transactions were conducted in the ordinary course of business on normal commercial terms and reviewed by independent non-executive directors[201][247] - The controlling shareholder confirmed compliance with the non-compete undertaking, and independent non-executive directors found no breaches upon review[248] Independent Auditor's Report Independent Auditor's Report PricewaterhouseCoopers issued an unqualified opinion on FSE Services Group's consolidated financial statements for the year ended June 30, 2020, affirming their fair presentation and compliance with accounting standards, with 'Revenue Recognition for Engineering Contracts' highlighted as a key audit matter due to significant management judgment - The auditors believe the consolidated financial statements fairly and accurately reflect the Group's consolidated financial position as of June 30, 2020, and its financial performance and cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards[256] - A key audit matter is 'Revenue Recognition for Engineering Contracts', considered most significant due to its reliance on management's substantial judgments in estimating total contract revenue, total contract costs, and percentage of completion[258][259] Consolidated Financial Statements Consolidated Statement of Profit or Loss The Consolidated Statement of Profit or Loss presents the company's operating results for FY2020, showing revenue of HKD 4.882 billion, gross profit of HKD 760 million, and profit attributable to company shareholders of HKD 309.6 million, largely consistent with the prior year Consolidated Statement of Profit or Loss Summary (For the year ended June 30) | Metric (Thousand HKD) | 2020 | 2019 (Restated) | | :--- | :--- | :--- | | Revenue | 4,882,119 | 5,422,713 | | Gross Profit | 760,376 | 769,465 | | Operating Profit | 367,019 | 363,081 | | Profit Before Income Tax | 363,474 | 368,591 | | Profit for the Year | 309,589 | 307,448 | | Profit Attributable to Company Shareholders | 309,563 | 307,374 | Consolidated Statement of Financial Position The Consolidated Statement of Financial Position as of June 30, 2020, shows total assets of HKD 3.191 billion and total liabilities of HKD 2.747 billion, with total equity decreasing to HKD 445 million due to the acquisition of property and facility management businesses, while net current assets remain robust at HKD 438 million Consolidated Statement of Financial Position Summary (As of June 30) | Metric (Thousand HKD) | 2020 | 2019 (Restated) | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 546,726 | 529,960 | | Current Assets | 2,644,523 | 2,422,925 | | Total Assets | 3,191,249 | 2,952,885 | | Equity and Liabilities | | | | Total Equity | 444,716 | 854,334 | | Non-current Liabilities | 540,297 | 61,264 | | Current Liabilities | 2,206,236 | 2,037,287 | | Total Liabilities | 2,746,533 | 2,098,551 | | Total Equity and Liabilities | 3,191,249 | 2,952,885 | Consolidated Statement of Cash Flows The Consolidated Statement of Cash Flows for FY2020 shows strong net cash generated from operating activities of HKD 469 million, net cash used in investing activities of HKD 614 million primarily for acquisitions, and net cash from financing activities of HKD 287 million, resulting in a net increase in cash and cash equivalents of HKD 142 million Consolidated Statement of Cash Flows Summary (For the year ended June 30) | Metric (Thousand HKD) | 2020 | 2019 (Restated) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 469,450 | 207,575 | | Net Cash Used in Investing Activities | (614,200) | (24,092) | | Net Cash Generated From/(Used In) Financing Activities | 287,064 | (130,300) | | Net Increase in Cash and Cash Equivalents for the Year | 142,314 | 53,183 | | Cash and Cash Equivalents at Beginning of Year | 562,205 | 514,126 | | Cash and Cash Equivalents at End of Year | 700,946 | 562,205 | Five-Year Financial Summary Five-Year Financial Summary This section provides a comprehensive overview of the Group's key financial data and ratios for the past five fiscal years (2016-2020), indicating relatively stable revenue, steady growth in profit attributable to shareholders, healthy return rates, and a consistent zero net gearing ratio Five-Year Financial Data Summary (For the year ended June 30) | Metric (Thousand HKD) | 2016 | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 4,904,824 | 5,294,225 | 5,400,547 | 5,422,713 | 4,882,119 | | Profit Attributable to Shareholders | 276,764 | 283,623 | 293,050 | 307,374 | 309,563 | | Total Assets | 3,379,191 | 3,316,630 | 2,826,685 | 2,952,885 | 3,191,249 | | Total Liabilities | 2,272,017 | 2,112,257 | 2,049,752 | 2,098,551 | 2,746,533 | | Total Equity | 1,107,174 | 1,204,373 | 776,933 | 854,334 | 444,716 | Five-Year Key Ratios | Ratio | 2016 | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Return on Assets | 8.2% | 8.6% | 10.4% | 10.4% | 9.7% | | Return on Equity | 25.0% | 23.6% | 37.7% | 36.0% | 69.6% | | Current Ratio (times) | 1.4 | 1.3 | 1.1 | 1.2 | 1.2 | | Net Gearing Ratio | 0% | 0% | 0% | 0% | 0% |