Financial Performance - The total revenue for the year ended December 31, 2018, was approximately HKD 145,251,000, a decrease of about 22% compared to HKD 186,789,000 in 2017[7]. - The net loss attributable to shareholders for the year was approximately HKD 36,424,000, compared to a loss of HKD 11,408,000 in 2017, with a basic loss per share of HKD 0.1114[7]. - The revenue from toy products decreased by approximately 25% to about HKD 127,581,000, with a loss of approximately HKD 17,393,000 due to reduced demand from a major customer amid the US-China trade dispute[15]. - Distribution costs decreased by approximately 14% to HKD 3,168,000[7]. - Financial expenses increased by approximately 254% to about HKD 124,000 due to the utilization of bank financing during the year[7]. - The company did not recommend the payment of a final dividend for the year ended December 31, 2018[9]. - The total current assets amounted to HKD 107,948,000 as of December 31, 2018, compared to HKD 144,105,000 in 2017, indicating a decrease in liquidity[18]. - The equity attributable to shareholders decreased from HKD 196,579,000 in 2017 to HKD 158,311,000 in 2018[22]. - The group’s cash and bank balances were approximately HKD 73,946,000 as of December 31, 2018, down from HKD 103,498,000 in 2017[18]. - The company did not declare an interim dividend during the year and does not recommend a final dividend for the year ended December 31, 2018[161]. Corporate Governance - The company has adopted the corporate governance code as per the latest amendments of the Hong Kong Stock Exchange, effective from August 29, 2013, with further revisions on December 20, 2018[40]. - The board consists of six directors, all experienced professionals, responsible for setting the overall business development goals and long-term strategies of the company[44]. - The company has complied with the corporate governance code, except for the lack of formal appointment letters for certain directors, which management believes is not necessary as the directors are aware of their appointment arrangements[41]. - The board held a total of four regular meetings and three special meetings during the year, ensuring effective oversight of the company's financial and operational performance[50]. - The company has maintained a minimum of three independent non-executive directors on the board, with at least one possessing appropriate professional qualifications in accounting or related financial management[49]. - The company’s management team includes individuals with over 21 years of experience in auditing, corporate finance, governance, and financial management[37]. - The company’s independent non-executive directors play a crucial role in ensuring high standards of financial and mandatory reporting[49]. - The company’s governance practices aim to enhance transparency and maintain trust with employees, business partners, shareholders, and investors[40]. - The board is responsible for evaluating the effectiveness of management policies and monitoring management performance[42]. - The company has established a service contract with its financial director, effective from September 3, 2018, continuing until terminated with one month's notice[37]. Risk Management and Internal Controls - The company has established and maintained an effective risk management and internal control system, with management responsible for its design and execution[138]. - No significant risks were identified in the risk assessment conducted for the year ended December 31, 2018[141]. - The internal control system is aligned with the COSO 2013 framework, which aims to achieve operational effectiveness, reliable financial reporting, and compliance with applicable laws[141]. - The internal audit function operates independently and evaluates the risk management and internal control systems through discussions and operational efficiency tests[144]. - The board is responsible for the effectiveness of the risk management and internal control systems, ensuring they are audited regularly[144]. - The audit committee is responsible for ensuring effective risk management and internal controls, as well as overseeing the external auditor's work scope and effectiveness[127]. - The audit committee currently includes independent non-executive directors, with Liu Shuren serving as the chairman and possessing professional accounting qualifications[129]. - The audit committee held two meetings during the year to discuss the accuracy of the financial statements for the year ended December 31, 2018[131]. - The audit committee reviewed the compliance with statutory and regulatory requirements, as well as the development of accounting standards and their impact on the company[132]. Shareholder Relations - The company ensures effective communication with shareholders and considers their opinions in board discussions[59]. - The company has maintained sufficient public float during the year ended December 31, 2018[190]. - The company’s major shareholders include Mr. Zhai Jun with 125,297,040 shares (38.33%) and Fresh Choice Holdings Limited with 119,297,041 shares (36.49%) as of December 31, 2018[180][181]. - Mr. Gao Xiaorui holds 119,297,041 shares, representing approximately 36.49% of the company's issued share capital[174]. - The company has not entered into any significant transactions or arrangements with directors that would create a direct or indirect material interest[179]. Employee and Board Diversity - The group employed approximately 860 full-time employees as of December 31, 2018, an increase from 832 in 2017[23]. - The company aims to maintain a balanced board in terms of skills, experience, and diversity[90]. - The board diversity policy was adopted on August 29, 2013, and revised on December 20, 2018, emphasizing the importance of a diverse board for achieving strategic goals and sustainable development[111]. - The company recognizes the benefits of a diverse board and aims to attract new perspectives to enhance decision-making capabilities[111]. Strategic Initiatives - The company plans to relocate its production facility from Shenzhen to Zhongshan, which may incur short-term relocation costs but is expected to yield long-term synergies[8]. - The company is actively seeking merger and acquisition opportunities to acquire new businesses or assets that will bring additional value and new revenue sources[8]. - The company has adopted a share option scheme as a reward for its directors and eligible employees[188]. - The company is committed to environmental sustainability and has implemented green office measures[192].
PERFECTECH INTL(00765) - 2018 - 年度财报