中国环境资源(01130) - 2019 - 年度财报

Corporate Information This section provides fundamental company details including board members, committees, company secretary, auditor, principal office address, share registrar, principal bankers, and stock code - This section provides fundamental company details, including board members, committees, company secretary, auditor, principal office address, share registrar, principal bankers, and stock code[3][5] Management's Report Business and Operation Review The Group's diverse operations faced challenges in metal recycling and biological assets, while motor and accessories business grew, prompting exploration of new ventures like a Nepal hotel project - The Group's diversified businesses include metal recycling, motor and accessories, parking space leasing, money lending, golden flower tea products, securities investment, and green businesses[7] Investment Properties The Group holds two investment properties; redevelopment of the Dongguan industrial property is delayed, while 95 Hong Kong parking spaces provide stable rental income of approximately HK$3.89 million, a slight increase year-on-year - Redevelopment plans for the industrial property in Dongguan are delayed due to new municipal highway planning[9] Investment Properties Rental Income | Property Location | Interest | Business Activity | FY2019 Rental Income (HK$) | FY2018 Rental Income (HK$) | | :--- | :--- | :--- | :--- | :--- | | Dongguan, China | 80% | None | - | - | | Hong Kong | 100% (95 parking spaces) | Leasing for income | Approx. 3,891,000 | Approx. 3,751,000 | Biological Assets Due to environmental factors and cost control, the Group ceased forest maintenance, leading to a HK$72.77 million non-cash loss from the fair value decline of biological assets to HK$263 million - Due to water scarcity, soil degradation, and ecosystem damage, the growth and quantity of biological assets are affected, leading the Group to suspend forest planting maintenance since July 2018[21] Biological Assets Fair Value and Loss | Metric | June 30, 2019 | June 30, 2018 | | :--- | :--- | :--- | | Fair Value of Biological Assets | Approx. HK$262,989,000 | Approx. HK$348,933,000 | | Loss from Fair Value Change | Approx. HK$72,769,000 | Approx. HK$174,687,000 | Plantation Sales Business No revenue was generated from plantation sales, as professional reports indicate extremely high risks for commercial logging and replanting, pending future quota assessment - No revenue was generated from the plantation sales business for the year ended June 30, 2019[21] - A professional report indicates that commercial logging and replanting face extremely high risks, including water resources, natural disasters, complex logging permit application procedures, strict water usage controls, and market price fluctuations[23][28] Metal Recycle Business Metal recycling revenue significantly declined by 75.1% due to slower local infrastructure, rising costs, and stricter import regulations, prompting diversification to other Southeast Asian markets Metal Recycling Business Revenue | Business Segment | FY2019 Revenue (HK$) | FY2018 Revenue (HK$) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Metal Recycling | Approx. 46,001,000 | Approx. 184,570,000 | -75.1% | - The decline in business is primarily due to slower local infrastructure development leading to increased scrap material procurement costs, and stricter import policies for recycled materials in China and Vietnam[40][41] Motor and Motor Accessories Business Motor and accessories revenue grew by 201.9%, driven by stable accessories wholesale; the Group will now focus on this segment over luxury vehicle sales due to economic uncertainty Motor and Motor Accessories Business Revenue | Business Segment | FY2019 Revenue (HK$) | FY2018 Revenue (HK$) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Motor and Motor Accessories | Approx. 66,547,000 | Approx. 22,042,000 | +201.9% | - Due to economic uncertainty, the Group will slow down sales of supercars and motorcycles, focusing instead on the more stable accessories wholesale business[44][46] Money Lending Business The money lending business remained stable, generating approximately HK$2.89 million in interest income with no bad debts, and an outstanding loan principal of HK$23.09 million Money Lending Business Metrics | Metric | June 30, 2019 | June 30, 2018 | | :--- | :--- | :--- | | Loan Interest Income (HK$) | Approx. 2,893,000 | Approx. 1,913,000 | | Loans Receivable Principal (HK$) | Approx. 23,092,000 | Approx. 24,843,000 | Securities Trading and Investment Business Securities investment performed poorly due to market volatility, resulting in a HK$7.25 million net fair value loss, with the portfolio valued at HK$4.88 million Securities Trading and Investment Business Performance | Metric | FY2019 | FY2018 | | :--- | :--- | :--- | | Net Loss from Fair Value Change of Investments (HK$) | Approx. 7,247,000 | Approx. 164,000 | | Period-end Securities Investment Portfolio Size (HK$) | Approx. 4,883,000 | Approx. 1,098,000 | Green Technology and Golden Flower Tea Products Green technology generated no revenue, and golden flower tea products achieved only HK$27,000 in sales due to low market acceptance and penetration - The green technology business generated no revenue this year[58] - Golden flower tea product sales revenue was approximately HK$27,000, with market penetration significantly lower than expected[61] Prospects Management is cautious about Hong Kong's economic outlook due to multiple crises, prompting business diversification efforts, including a new hotel project in Kathmandu, Nepal - Management believes Hong Kong faces a dual blow from the US-China trade war and local socio-political crises, leading to a significant deterioration in the economic environment and severely impacting prospects[62][68] - To address challenges and expand revenue streams, the Group has signed an agreement to operate a hotel in Kathmandu, Nepal, optimistic about the local tourism development prospects[68] Financial Review FY2019 turnover decreased by 43.8% to HK$119 million, and gross profit by 4.8%; the annual loss narrowed to HK$121 million, primarily due to non-cash items like biological asset fair value changes Financial Performance Summary | Financial Metric | FY2019 (HK$) | FY2018 (HK$) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Turnover | Approx. 119,387,000 | Approx. 212,276,000 | -43.8% | | Gross Profit | Approx. 18,384,000 | Approx. 19,303,000 | -4.8% | | Annual Loss | Approx. 121,140,000 | Approx. 160,586,000 | Loss narrowed | | Basic Loss Per Share | 6 HK cents | 9 HK cents | - | | Total Assets | Approx. 785,764,000 | Approx. 919,834,000 | -14.6% | | Net Assets | Approx. 645,929,000 | Approx. 782,955,000 | -17.5% | - The decrease in turnover and gross profit is primarily attributed to reduced revenue from recycled material trading. The annual loss is mainly due to fair value changes in biological assets, impairment provisions for intangible assets, and provisions for trade receivables[71] Significant Investments The Group's listed securities portfolio, valued at HK$4.88 million (0.73% of net assets), recorded a HK$5.69 million net unrealized loss for the year Directors' Long Positions in Company Shares (as of June 30, 2019) | Share Name | Stock Code | Market Value (HK$ Thousand) | Net Unrealized Loss (HK$ Thousand) | Percentage of Portfolio | | :--- | :--- | :--- | :--- | :--- | | China Fortunes Financial Group | 290 | 759 | (667) | 15.6% | | Ding Yi Group Investment | 508 | 592 | (544) | 12.1% | | Wai Chun Group Holdings | 1013 | 2,245 | 224 | 46.0% | | HANG SANG (SIU PO) | 3626 | 617 | (481) | 12.6% | | China Strategic Holdings | 8089 | 670 | (4,226) | 13.7% | | Total | | 4,883 | (5,694) | 100% | Other Matters The Group had 53 employees, no recommended dividends, no currency hedging, and no significant contingent liabilities as of June 30, 2019 - The Board does not recommend any dividend for the year ended June 30, 2019[86] - As of June 30, 2019, the Group had 53 employees[84] Biographical Details of Directors Executive Directors This section details the biographies of five executive directors, including their age, education, professional qualifications, and other listed company appointments Independent Non-Executive Directors This section details the biographies of three independent non-executive directors, covering their age, professional background, committee appointments, and relevant industry experience Report of the Directors Principal Activities and Business Review The company primarily engaged in investment holding and diversified businesses; the Board does not recommend any dividend for the year ended June 30, 2019 - The Board does not recommend any dividend for the year ended June 30, 2019[114] Share Capital and Reserves This section outlines changes in share capital and reserves, with distributable reserves of approximately HK$312.1 million as of June 30, 2019 - As of June 30, 2019, the company's distributable reserves were approximately HK$312,105,000[128] Directors' and Shareholders' Interests This section discloses directors' and major shareholders' interests, with Chairman Mr. Yang Chi Hang holding 14.00% and 125,614,085 share options unexercised Directors' Long Positions in Company Shares (as of June 30, 2019) | Director Name | Capacity | Total Interest (Shares) | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Yang Chi Hang | Beneficial Owner | 285,190,817 | 14.00% | | Mr. Chung Siu Wa | Beneficial Owner | 16,942,817 | 0.83% | | Mr. Chik To Bun | Beneficial Owner | 16,942,817 | 0.83% | | Mr. Wong Po Keung | Beneficial Owner | 16,942,817 | 0.83% | Major Shareholders' Long Positions in Company Shares (as of June 30, 2019) | Shareholder Name | Capacity | Total Interest (Shares) | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Chu Ying Man | Beneficial Owner | 135,000,000 | 6.63% | | Mr. Li Xiao Wu | Beneficial Owner | 117,138,000 | 5.75% | - As of June 30, 2019, under the 2015 Share Option Scheme, 125,614,085 share options remained unexercised, representing 6.17% of the issued shares[150] Continuing Connected Transactions A continuing connected transaction involves leasing a property from a company indirectly owned by the Chairman's mother for HK$176,295 monthly, confirmed compliant by auditors and independent directors - The Group's continuing connected transaction involves leasing a property from a company indirectly 50% owned by the Chairman's mother, with a monthly rent of HK$176,295[157] - The company's auditor and independent non-executive directors confirmed that the transaction was approved by the Board, complied with pricing policies and agreement terms, and did not exceed the annual cap[161][162] Other Statutory Disclosures This section covers statutory disclosures, noting high customer and supplier concentration (top five customers 61.2%, top five suppliers 60.9%), and other policies - Customer concentration is high: the top five customers accounted for 61.2% of total sales, with the largest customer representing 35.7%[189] - Supplier concentration is high: the top five suppliers accounted for 60.9% of total purchases, with the largest supplier representing 45.8%[189] Corporate Governance Report Corporate Governance Practices The company largely complied with the Corporate Governance Code, with deviations including the Chairman/CEO dual role and the Chairman's absence from the 2018 AGM - There is a deviation from the Corporate Governance Code: the roles of Chairman and Chief Executive are held by the same person, which the Board believes provides strong and consistent leadership[212] - Chairman Mr. Yang Chi Hang was unable to attend the Annual General Meeting held on November 12, 2018, due to business travel[212] The Board and its Committees The Board, comprising five executive and three independent non-executive directors, oversees the Group through its Audit, Remuneration, Nomination, and Investment Committees - The Audit Committee, Remuneration Committee, and Nomination Committee are each composed of three independent non-executive directors, with Mr. Wong Tze King serving as Chairman[242][252][260] - The Investment Committee is composed of two executive directors, with Mr. Leung Kwong Choi serving as Chairman[276] Risk Management and Internal Controls The Board maintained effective risk management and internal control systems, engaging an external firm for review of corporate governance and cash handling policies - The Board confirmed that for the financial year ended June 30, 2019, the company maintained effective risk management mechanisms and internal control systems[308] - The Group engaged an external professional consulting firm to conduct an internal control review, focusing on areas such as corporate governance and cash receipt handling policies[307] Accountability, Audit, and Shareholder Relations The Board is responsible for financial reporting, with HK$970,000 paid for audit services; clear procedures are in place for shareholder communication and engagement Auditor's Remuneration | Auditor's Remuneration | Amount (HK$) | | :--- | :--- | | Audit Services | 970,000 | | Interim Results Review Services | 210,000 | - The company has established clear procedures to safeguard shareholders' rights to convene extraordinary general meetings, raise inquiries with the Board, and make suggestions at general meetings[330][331] Independent Auditor's Report Auditor's Opinion The auditor issued an unqualified opinion, confirming the consolidated financial statements fairly present the Group's financial position, performance, and cash flows - The auditor issued a standard unqualified opinion on the financial statements, deeming them "true and fair"[342] Key Audit Matters Key audit matters include fair value assessment of investment properties (HK$277 million) and biological assets (HK$263 million), and impairment testing of intangible assets (HK$98.95 million), all involving significant judgment - Key Audit Matter One: Fair value measurement of investment properties and biological assets, due to their material balances (investment properties approx. HK$277 million, biological assets approx. HK$263 million) and significant judgments and estimates involved[349] - Key Audit Matter Two: Impairment testing of intangible assets, due to their material balance (approx. HK$98.95 million) and significant judgments and estimates involved in the impairment test[352] Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income Turnover decreased by 43.8% to HK$119 million, with the annual loss narrowing to HK$121 million and total comprehensive loss at HK$137 million Consolidated Statement of Profit or Loss Summary (HK$ Thousand) | Item | FY2019 | FY2018 | | :--- | :--- | :--- | | Revenue | 119,387 | 212,276 | | Gross Profit | 18,384 | 19,303 | | Operating Loss | (138,382) | (204,513) | | Loss Before Tax | (139,131) | (205,061) | | Annual Loss | (121,140) | (160,586) | | Total Comprehensive Loss for the Year | (137,026) | (142,756) | Consolidated Statement of Financial Position Total assets decreased to HK$786 million, total liabilities were HK$140 million, and net assets decreased by 17.5% to HK$646 million Consolidated Statement of Financial Position Summary (HK$ Thousand) | Item | June 30, 2019 | June 30, 2018 | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 656,233 | 767,728 | | Current Assets | 129,531 | 152,106 | | Total Assets | 785,764 | 919,834 | | Liabilities and Equity | | | | Current Liabilities | 50,868 | 24,218 | | Non-current Liabilities | 88,967 | 112,661 | | Total Liabilities | 139,835 | 136,879 | | Net Assets | 645,929 | 782,955 | Consolidated Statement of Changes in Equity Total equity attributable to owners decreased to HK$633 million, primarily due to a HK$138 million total comprehensive loss for the year Consolidated Statement of Cash Flows Net cash outflow from operating activities was HK$42.38 million, with a net decrease in cash and cash equivalents of HK$7.60 million, ending at HK$5.55 million Consolidated Statement of Cash Flows Summary (HK$ Thousand) | Item | FY2019 | FY2018 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (42,377) | (74,838) | | Net Cash From Investing Activities | 12,779 | 20,794 | | Net Cash From Financing Activities | 22,000 | 54,133 | | Net Decrease in Cash and Cash Equivalents | (7,598) | 89 | | Cash and Cash Equivalents at Beginning of Year | 13,027 | 13,015 | | Cash and Cash Equivalents at End of Year | 5,551 | 13,027 | Notes to the Consolidated Financial Statements This section details accounting policies, estimates, segment information, and related party transactions, noting that motor and accessories was the only profitable segment - Segment information (Note 8) shows that the trading of recycled metals, property investment, golden flower tea products, securities investment, and plantation products segments all recorded losses, while the financial services segment recorded a profit[602] Five-Year Financial Summary This section presents a five-year summary of the Group's key financial performance and position indicators, offering a historical perspective on revenue, profit/loss, assets, and liabilities Five-Year Financial Data Summary (HK$ Thousand) | Year Ended June 30 | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Results | | | | | | | Turnover | 119,387 | 212,276 | 13,971 | 13,365 | 2,733 | | Loss Before Tax | (139,131) | (205,061) | (38,442) | (86,937) | (84,601) | | Annual Loss | (121,140) | (160,586) | (29,204) | (70,233) | (68,901) | | Assets and Liabilities | | | | | | | Non-current Assets | 656,233 | 767,728 | 882,423 | 835,087 | 801,026 | | Current Assets | 129,531 | 152,106 | 152,136 | 200,491 | 184,770 | | Net Assets | 645,929 | 782,955 | 832,651 | 854,020 | 776,034 |