至源控股(00990) - 2020 - 年度财报

Company Information The report provides detailed company information, including executive and non-executive directors, committee members, authorized representatives, company secretary, auditor, legal counsel, registered office, principal bankers, and share registrar - The report provides detailed company information, including executive and non-executive directors, committee members, authorized representatives, company secretary, auditor, legal counsel, registered office, principal bankers, and share registrar[6][7][8] Directors' Report This report, presented by Executive Director Mr. Wu Lei, highlights the Group's exceptional financial performance in 2020, emphasizing significant net profit growth driven by strong distribution and trading (especially iron ore) and financial services businesses, alongside investments in human capital and future outlook Key Financial Performance for 2020 | Indicator | 2020 (HKD) | 2019 (HKD) | Change | | :--- | :--- | :--- | :--- | | Group Net Profit | 500,341,000 | 182,910,000 | ▲ 173.5% | | Distribution and Trading Segment Profit (PBT) | 442,945,000 | 171,168,000 | ▲ 158.8% | | Financial Services Segment Profit (PBT) | 99,585,000 | 74,638,000 | ▲ 33.4% | | Group Gross Profit | 627,552,000 | 474,789,000 | ▲ 32.2% | - Gross profit growth was primarily driven by (i) favorable pricing from strong long-term supplier relationships, (ii) significant increase in iron ore prices due to robust Chinese demand and global supply disruptions, and (iii) strong performance in the financial services segment due to increased market volatility[10] - The Group aims to continue expanding its iron ore trading business to meet Chinese market demand and to broaden its financial services platform by introducing new financial products[10] - The Group prioritizes human capital investment, with employee numbers increasing from 69 at the end of 2019 to 78 at the end of 2020, across Hong Kong, Singapore, and China[11] Management Discussion and Analysis The Group's total revenue increased by 41% year-on-year to approximately HKD 16 billion in 2020, with profit for the year surging by 173.5% to HKD 500 million, primarily driven by strong performance in distribution and trading (especially iron ore sales volume and price increases) and financial services (increased demand for commodity derivatives), alongside foreign exchange gains from RMB appreciation Financial and Business Review In 2020, the Group's total revenue increased by 41% year-on-year to approximately HKD 16 billion, with profit for the year surging by 173.5% to HKD 500 million, primarily driven by distribution and trading (especially iron ore sales volume and price increases) and financial services (increased demand for commodity derivatives), alongside foreign exchange gains from RMB appreciation Financial Summary for 2020 | Indicator (HKD thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 15,997,421 | 11,330,882 | | Profit for the year | 500,341 | 182,910 | | Basic earnings per share | 3.77 HK cents | 1.43 HK cents | Revenue by Business Segment and Product for 2020 (HKD thousands) | Business/Product | 2020 Revenue | 2019 Revenue | | :--- | :--- | :--- | | Distribution and Trading | 15,687,666 | 11,134,080 | | - Iron ore | 12,859,655 | 10,177,989 | | - Other commodities | 2,828,011 | 956,091 | | Financial Services | 309,755 | 196,802 | | Total | 15,997,421 | 11,330,882 | - Iron ore sales volume increased from approximately 14.718 million tonnes in 2019 to approximately 16.933 million tonnes in 2020[15] - Other income of approximately HKD 46.05 million was recorded for the year, compared to other losses of HKD 131 million last year, primarily due to a net foreign exchange gain of approximately HKD 28.18 million from RMB appreciation in the current year[15] Future Outlook The Group future will focus on the continued development of its financial services and distribution and trading businesses, expanding financial services to include securities, derivatives trading, market making, asset and fund management, while anticipating strong demand for high-quality iron ore in China, with limited impact from the COVID-19 pandemic - Financial services business will expand into broader areas, including securities and derivatives financial services, futures and derivatives products, market-making services, margin financing, lending, and fund management[18] - A subsidiary of the Group was approved by the Monetary Authority of Singapore as a Registered Fund Management Company in December 2020[21] - In distribution and trading, China's iron ore imports reached a record high of 1.17 billion tonnes in 2020 due to steel industry reforms and increased infrastructure spending, and the Group believes demand will remain strong in 2021[23] - The COVID-19 pandemic had limited impact on the Group's distribution and trading business due to strong Chinese market demand and global supply disruptions supporting iron ore prices[24] Liquidity and Financial Resources As of the end of 2020, the Group maintained a robust financial position with ample liquidity, evidenced by a significant increase in net current assets, no outstanding loans or other borrowings, and a zero gearing ratio, indicating extremely low financial leverage Financial Position Indicators (as of December 31) | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Net current assets | approx. HKD 1.821 billion | approx. HKD 1.293 billion | | Net assets | approx. HKD 1.841 billion | approx. HKD 1.314 billion | | Loans and other borrowings | 0 | approx. HKD 625 million | | Current ratio | 1.84 | 1.38 | | Gearing ratio | 0 | 0.48 | Key Risks and Uncertainties The Group faces key risks including commodity price volatility, foreign exchange fluctuations (especially RMB), counterparty credit and performance risks, interest rate risk, and complex legal, regulatory, and compliance risks inherent in its financial services business - Commodity price risk: The Group's revenue and profit are affected by fluctuations in commodity market prices, which are beyond the Group's control[29] - Foreign exchange fluctuation risk: The Group faces exchange rate risk due to transactions denominated in RMB[30] - Legal, regulatory, and compliance risk: The financial services industry is subject to extensive and evolving regulations, which could lead to legal sanctions, financial losses, or reputational damage[33][34] Report of the Directors This report outlines the Group's principal activities, divided into two main segments: (i) distribution and trading of commodities and related products in Hong Kong, Singapore, and China; and (ii) financial services, including lending, securities and derivatives financial services, market making, margin financing, and fund management in Hong Kong and Singapore Principal Activities and Business Review This report outlines the Group's principal activities, divided into two main segments: (i) distribution and trading of commodities and related products in Hong Kong, Singapore, and China; and (ii) financial services, including lending, securities and derivatives financial services, market making, margin financing, and fund management in Hong Kong and Singapore - The Group primarily operates in two core segments: distribution and trading, and financial services[40] Dividends The Board of Directors does not recommend the payment of any dividend for the year ended December 31, 2020 - No dividends were declared for both the 2020 and 2019 financial years[42] Major Customers and Suppliers The report discloses the concentration of major customers and suppliers for 2020, with the largest customer accounting for 15.9% of total sales and the largest supplier for 27.8% of total purchases, indicating some concentration risk Customer and Supplier Concentration for 2020 | Category | Percentage of Group Total | | :--- | :--- | | Largest customer | 15.9% | | Top five customers combined | 28.0% | | Largest supplier | 27.8% | | Top five suppliers combined | 64.3% | Connected Transactions This section details the Group's continuing connected transactions in 2020, primarily financial services agreements with PSU (a wholly-owned subsidiary of the controlling shareholder) and E&F Resources (a subsidiary-level connected person), and an office lease agreement with PSU, all reviewed by independent non-executive directors and auditors for normal commercial terms and fairness - Service agreements were entered into with Prosperity Steel United Singapore Pte Ltd (PSU), wholly-owned by controlling shareholder Mr. You Zhenhua, for derivatives execution and settlement services; actual transaction value in 2020 was approximately HKD 13.37 million, not exceeding the annual cap of HKD 35 million[63][64][68] - Service agreements were entered into with E&F Resources Pte Limited, a subsidiary-level connected person, for similar financial services; actual transaction value in 2020 was approximately HKD 14.97 million, not exceeding the annual cap of HKD 35 million[69][72][76] - A Group subsidiary entered into a three-year lease agreement with PSU for office premises in Singapore, with lease expenses of approximately HKD 5.83 million paid in 2020[77][78] Biographies of Directors and Senior Management This section provides detailed personal biographies of the company's executive directors, non-executive directors, independent non-executive directors, and senior management (company secretary), including their age, educational background, professional qualifications, and extensive experience in relevant industries - Executive directors such as Mr. Jiang Jiang, Mr. Wu Lei, and Ms. Chen Jing possess over ten years of industry experience in commodity trading, derivatives trading, accounting, and risk management[86] - The independent non-executive directors team comprises individuals with diverse professional backgrounds in accounting, financial management, and shipping management, providing professional and independent advice to the Board[88][89] Corporate Governance Report This report outlines the company's corporate governance practices in 2020, demonstrating adherence to most Code Provisions of the Listing Rules' Corporate Governance Code, while noting deviations regarding the separation of Chairman and CEO roles (due to Chairman vacancy) and the Chairman's absence from the AGM, and detailing the Board's composition, operations, and the responsibilities of its Audit, Remuneration, and Nomination Committees Corporate Governance Practices This report outlines the company's corporate governance practices in 2020, demonstrating adherence to most Code Provisions of the Listing Rules' Corporate Governance Code, while noting deviations regarding the separation of Chairman and CEO roles (due to Chairman vacancy) and the Chairman's absence from the AGM, and detailing the Board's composition, operations, and the responsibilities of its Audit, Remuneration, and Nomination Committees - The Company complied with most Code Provisions of the Corporate Governance Code during the reporting period, with deviations noted for the non-separation of Chairman and Chief Executive Officer roles due to the Chairman position being vacant since April 2016[92] Attendance Record of Board and Committee Meetings in 2020 | Director Name | Board | Audit Committee | Remuneration Committee | Nomination Committee | AGM | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Jiang Jiang | 4/4 | Not applicable | Not applicable | Not applicable | 1/1 | | Mr. Wu Lei | 4/4 | Not applicable | Not applicable | Not applicable | 1/1 | | Ms. Chen Jing | 4/4 | Not applicable | Not applicable | Not applicable | 1/1 | | Mr. Kang Jian | 4/4 | Not applicable | Not applicable | Not applicable | 1/1 | | Mr. Chen Ziming | 4/4 | 2/2 | 2/2 | 1/1 | 1/1 | | Mr. Wu Shiming | 4/4 | 2/2 | 2/2 | 1/1 | 1/1 | | Mr. Liu Song | 4/4 | 2/2 | 2/2 | 1/1 | 1/1 | - The Audit, Remuneration, and Nomination Committees are each composed of three independent non-executive directors, with Mr. Chen Ziming serving as Chairman for all three[102][105][107] - The Board is responsible for the Group's risk management and internal control systems, which an independent consultant deemed effective and adequate as of the end of 2020; the Company does not have an internal audit function but engages external professionals, and the Board will annually review the necessity of this arrangement[113][114] Environmental, Social and Governance Report This ESG report outlines the Group's corporate social responsibility and sustainability efforts and achievements in 2020, covering all Group operations, with environmental KPI data based on key offices in Hong Kong, Shanghai, and Singapore, adhering to HKEX ESG Reporting Guide, and content determined through stakeholder engagement and materiality assessment ESG Report Overview This ESG report outlines the Group's corporate social responsibility and sustainability efforts and achievements in 2020, covering all Group operations, with environmental KPI data based on key offices in Hong Kong, Shanghai, and Singapore, adhering to HKEX ESG Reporting Guide, and content determined through stakeholder engagement and materiality assessment - The report covers the environmental and social performance of all Group operations from January 1 to December 31, 2020[119] - The Board is responsible for overseeing the Group's ESG strategy and reporting, and assessing related risks to ensure effective ESG risk management measures are established[121] Stakeholder Engagement and Material Issues The Group engages with key stakeholders including government, shareholders, customers, and employees through various communication channels to understand their concerns and expectations, identifying environmental compliance, employment compliance, occupational health and safety, operational compliance, and anti-corruption as material ESG issues for the year through materiality assessment Identified Material ESG Issues | Aspect | Material Issues | | :--- | :--- | | Environment | Environmental compliance | | Labor Practices | Employment compliance, Occupational health and safety | | Operating Practices | Operational compliance, Anti-corruption | ESG Performance Summary The report details the Group's environmental protection, employee care, operational compliance, and community engagement initiatives and performance, including emission reduction and waste management, strict labor law compliance, competitive compensation, training, and COVID-19 measures, supply chain management, customer protection, anti-corruption policies, and charitable donations for talent development - Environmentally, as a service-oriented enterprise, the Group's emissions primarily stem from business vehicle use and electricity consumption, with energy-saving and emission reduction measures implemented; waste management adheres to the '3Rs' principle[126][127] - Regarding employees, the Group strictly adheres to labor laws, prohibits child and forced labor, and provides competitive compensation, benefits, and training opportunities; total employees in 2020 were 78, with a turnover rate of 23%[129][130][141] - In response to the COVID-19 pandemic, the Group implemented various control measures, including arranging work-from-home and procuring personal hygiene equipment, to ensure employee health and safety[132] - Operationally, the Group employs a supplier credit rating system for supply chain management and strictly adheres to privacy regulations to protect customer data; an Anti-Bribery and Anti-Corruption Policy has been established, with relevant training provided to employees[133][135][136] Summary of 2020 Environmental Key Performance Indicators (KPIs) | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Total greenhouse gas emissions (kg CO2e) | 53,460 | 59,901 | | Total energy consumption (MWh) | 87 | 32 | | Total non-hazardous waste generated (kg) | 2,753 | 2,586 | Consolidated Financial Statements The notes to the financial statements provide detailed explanations and supplementary information for the primary financial statements, including significant accounting policies, key accounting estimates and judgments, and detailed composition and changes of various items, with key notes covering revenue and segment information, financial instrument risk management, and related party transactions Independent Auditor's Report Auditor ZHONGHUI ANDA CPA Limited issued an unmodified opinion on the Group's consolidated financial statements for the year ended December 31, 2020, affirming a true and fair view of the Group's financial position, performance, and cash flows, with key audit matters highlighted as impairment testing of inventories and recoverability assessment of trade and other receivables - The auditor issued an unmodified audit opinion, stating that the financial statements present a true and fair view[144] - Key audit matters include: - Impairment testing of inventories: due to their significant amount (approximately HKD 767 million) and involvement of management judgment - Recoverability testing of trade and other receivables: due to their significant aggregate amount (approximately HKD 2.175 billion) and involvement of judgment and estimation[147] Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the Group's operating results for 2020, with total revenue of HKD 15.997 billion, a 41.2% year-on-year increase, and profit for the year reaching HKD 500.34 million, a significant 173.5% increase from HKD 183 million in 2019, with profit attributable to equity holders of the Company at HKD 445.98 million Summary of Consolidated Statement of Profit or Loss (for the year ended December 31) | Item (HKD thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 15,997,421 | 11,330,882 | | Gross profit | 627,552 | 474,789 | | Profit before tax | 532,272 | 223,194 | | Profit for the year | 500,341 | 182,910 | | Profit attributable to equity holders of the Company | 445,977 | 145,745 | | Basic earnings per share (HK cents) | 3.77 | 1.43 | Consolidated Statement of Financial Position This statement reflects the Group's financial position as of December 31, 2020, with total assets of HKD 4.011 billion, total liabilities of HKD 2.170 billion, and total equity (net assets) of HKD 1.841 billion, a 40.1% increase from HKD 1.314 billion at the previous year-end, notably with a significant reduction in inventories and full repayment of trust receipt loans Summary of Consolidated Statement of Financial Position (as of December 31) | Item (HKD thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Total assets | 4,011,422 | 4,734,038 | | - Inventories | 766,573 | 2,078,632 | | - Trade and other receivables | 1,032,014 | 490,449 | | - Cash and bank balances | 720,155 | 813,741 | | Total liabilities | 2,169,993 | 3,419,871 | | - Trade and other payables | 498,142 | 1,293,958 | | - Trust receipt loans | — | 625,266 | | Total equity | 1,841,429 | 1,314,167 | | - Equity attributable to equity holders of the Company | 1,669,794 | 1,222,513 | Notes to the Consolidated Financial Statements The notes to the financial statements provide detailed explanations and supplementary information for the primary financial statements, including significant accounting policies, key accounting estimates and judgments, and detailed composition and changes of various items, with key notes covering revenue and segment information, financial instrument risk management, and related party transactions Note 7: Revenue and Segment Information This note details the Group's revenue composition and segment performance, with 'Distribution and Trading' and 'Financial Services' as the two segments; in 2020, distribution and trading contributed the vast majority of revenue (HKD 15.688 billion), while financial services revenue was HKD 310 million, both segments showing significant profit growth with segment profits of HKD 443 million and HKD 99.6 million respectively Segment Results for 2020 (HKD thousands) | Segment | Revenue | Segment Profit | | :--- | :--- | :--- | | Distribution and Trading | 15,687,666 | 442,945 | | Financial Services | 309,755 | 99,585 | | Total | 15,997,421 | 542,530 | - Revenue from one customer in the distribution and trading segment accounted for over 10% of the Group's total revenue, approximately HKD 2.5 billion, indicating a degree of customer concentration[233] Note 35: Transactions with Related Parties This note discloses significant transactions between the Group and related parties in the ordinary course of business, primarily including brokerage and commission income from related parties owned by the ultimate controlling shareholder (HKD 13.37 million) and lease payments to them (HKD 5.83 million) Major Related Party Transactions in 2020 (HKD thousands) | Transaction Content | Related Party Type | Amount | | :--- | :--- | :--- | | Brokerage and commission fee income | Related parties owned by ultimate controlling shareholder | 13,368 | | Brokerage and commission fee income | Certain non-controlling interest holders | 14,968 | | Lease payments | Related parties owned by ultimate controlling shareholder | 5,830 | Five Year Financial Summary This summary presents key financial data for the Group's five fiscal years from 2016 to 2020, clearly reflecting the Group's recent growth trends, particularly the rapid increase in revenue and profitability since 2018, alongside continuous expansion of asset size Five-Year Performance Summary (for the year ended December 31, HKD thousands) | Indicator | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 15,997,421 | 11,330,882 | 4,330,171 | 5,389,307 | 1,581,947 | | Profit/(Loss) before tax | 532,272 | 223,194 | 84,134 | 27,004 | (25,556) | | Profit/(Loss) for the year | 500,341 | 182,910 | 67,137 | 21,349 | (25,937) | Five-Year Assets and Liabilities Summary (as of December 31, HKD thousands) | Indicator | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total assets | 4,011,422 | 4,734,038 | 1,817,070 | 961,479 | 664,462 | | Total liabilities | (2,169,993) | (3,419,871) | (1,091,908) | (344,047) | (462,230) | | Net assets | 1,841,429 | 1,314,167 | 725,162 | 617,432 | 202,232 |