Financial Performance - The company reported a net loss after tax of approximately HK$160 million for the year ended December 31, 2019, primarily due to increased legal and professional fees, interest expenses of approximately HK$14 million from HK$1 billion guaranteed notes, and net realized losses from the sale of listed equity of approximately HK$80 million [15]. - The net loss attributable to shareholders for the Year under Review was approximately HK$159 million, an increase of approximately 36% compared to the previous financial year [57]. - The company reported total net realized losses from sales of listed equity investments of approximately HK$80 million and unrealized losses of approximately HK$28 million for the Year under Review [45]. - The group had bank balances amounting to approximately HK$734 million as of December 31, 2019, compared to approximately HK$104 million in 2018, indicating improved liquidity [60]. - The current ratio as of December 31, 2019, was approximately 112 times, significantly higher than approximately 14 times in 2018 [60]. - The gearing ratio was 196.6% as of December 31, 2019, compared to 6.5% in 2018, reflecting increased leverage due to the issuance of guaranteed notes [61]. Business Strategy and Development - The company plans to focus its resources on developing its new core business in integrated financial services, while minimizing resources allocated to the computer graphic imaging (CGI) business until significant improvements are observed [15]. - The company expects significant improvement in the performance of its core integrated financial services business segment in the coming year [26]. - The company has begun a stride towards full-fledged financial services with additional capital injection, staff recruitment, and new licenses obtained from the SFC [30]. - The management believes that the brokerage services will significantly contribute to the group's operations and profits in the foreseeable future [30]. - The company will continuously review its strategy in the securities investments and proprietary trading business due to the global business slowdown [19]. Investments and Acquisitions - The company executed a term sheet for the potential acquisition of Les Ambassadeurs Club Limited in May 2019, with a sale and purchase agreement finalized in July 2019 [32]. - The Company is acquiring the Target Company for £122,000,000 (approximately HK$1,206.1 million), which will be settled in cash [35]. - The Target Company operates Les Ambassadeurs Club, a private members club in London, providing high-end casino and luxury services to wealthy individuals [35]. - The Acquisition is classified as a very substantial acquisition and a reverse takeover, requiring shareholder approval at a special general meeting [35]. Film Investments - The company has invested approximately HK$12.1 million in the development of three films out of a total expected investment of about HK$20.4 million for six films, with one film having been staged from October 2019 [17]. - The company is entitled to share a certain percentage of income generated from the films based on the proportion of investment amounts as specified in the agreement [17]. - The Company has invested approximately HK$12.1 million in the movie business during the Year under Review, with a total budgeted investment of HK$20.4 million across six films [43]. Human Resources - John & Wong Securities Company Limited, a wholly-owned subsidiary, is actively recruiting additional personnel to expand its services, with plans for further recruitment [20]. - The Group employed 37 employees as of December 31, 2019, compared to 27 employees in 2018, reflecting a 37% increase in workforce [71]. - Total staff cost for the Year under Review, including Director's emoluments, amounted to approximately HK$19 million, up from approximately HK$17 million in 2018, representing a 11.76% increase [71]. - John & Wong, a wholly-owned subsidiary, received an additional capital injection of HK$128 million to expand its brokerage services and began generating profit for the Group [48]. Governance and Compliance - The company has complied with the Corporate Governance Code and the code provisions set out in Appendix 14 to the Listing Rules during the year under review [104]. - The Board of Directors consists of three executive Directors and five independent non-executive Directors, bringing diverse industry expertise and a wide range of skills to the Group [107]. - The company has adopted the Model Code for Securities Transactions by Directors, with all Directors confirming full compliance throughout the year [105]. - The Board consists of three executive directors and five independent non-executive directors, ensuring a high level of independence with at least one-third being independent [113]. - The independent non-executive directors play a crucial role in maintaining high standards of financial reporting and safeguarding shareholder interests [113]. Risk Management and Internal Control - The Board is responsible for establishing and maintaining effective risk management and internal control systems [170]. - An independent review of the Company's risk management and internal control systems was conducted during the year, covering financial, operational, and compliance controls [171]. - The risk management system includes identifying significant risks, introducing controls to manage those risks, and monitoring the effectiveness of these measures [176]. - The internal control system ensures unauthorized access and confidentiality of inside information, supported by a disclosure policy [178]. - The Board has implemented measures for internal audit functions and conducted an independent review of risk management systems based on risk parameters [179]. Financial Reporting and Audit - The Directors acknowledge their responsibility for preparing the financial statements in accordance with Hong Kong Financial Reporting Standards [189]. - During the Year under Review, remuneration for audit and non-audit services provided by Crowe was approximately HK$1,300,000 and HK$4,240,000 respectively [186]. - The Audit Committee has been notified of the nature and service charges of Crowe and considered that such services have no adverse effect on the independence of the external auditor [186]. - The Audit Committee recommended the re-appointment of external auditors based on their performance, fees, and terms of engagement [153]. Shareholder Communication - The Board recognizes the importance of good and effective communication with its shareholders through various formal channels [198]. - The Company's annual general meeting serves as a valuable forum for the Board to communicate directly with shareholders [199].
元汇集团(00585) - 2019 - 年度财报