Financial Performance - The company reported a net loss of approximately HKD 13.5 million for the year ended December 31, 2020, compared to a net profit of HKD 9.1 million for the year ended December 31, 2019, representing a decline of about 247%[6]. - Revenue decreased by approximately 14.3% year-on-year due to the impact of the COVID-19 pandemic, leading to delays or cancellations of sales orders and reduced demand from overseas customers[6]. - For the year ended December 31, 2020, the company's revenue decreased by approximately HKD 59.2 million or 14.3% to about HKD 354.2 million compared to HKD 413.4 million for the year ended December 31, 2019[19]. - Gross profit decreased by approximately HKD 36.2 million or 37.6% to about HKD 60.1 million for the year ended December 31, 2020, resulting in a gross margin drop from approximately 23.3% to 17.0%[23]. - The group recorded a net other loss of approximately HKD 7,400,000 for the year ended December 31, 2020, compared to a net other income of approximately HKD 3,700,000 for the year ended December 31, 2019, primarily due to exchange rate fluctuations[25]. - The group recognized an impairment loss of approximately HKD 1,700,000 for trade receivables for the year ended December 31, 2020, based on expected credit losses, considering past losses and the impact of COVID-19[26]. - The group reported a loss of approximately HKD 13,500,000 for the year ended December 31, 2020, compared to a profit of approximately HKD 9,100,000 for the year ended December 31, 2019, primarily due to decreased export sales and profit margin declines caused by COVID-19[32]. - The company reported no significant contingent liabilities as of December 31, 2020[48]. Cost Management - Cost control measures were implemented to reduce operating costs during the pandemic, and short-term subsidies were received from the governments of China and Hong Kong to retain local employees[6]. - Selling and distribution expenses decreased by approximately HKD 6,900,000 or 32.4% to approximately HKD 14,400,000 for the year ended December 31, 2020, mainly due to reduced demand for prototypes and samples caused by COVID-19[27]. - Administrative and other operating expenses decreased by approximately HKD 11,300,000 or 17.1% to approximately HKD 54,800,000 for the year ended December 31, 2020, due to cost control measures and the absence of non-recurring listing expenses[28]. - Net financing costs decreased significantly by approximately HKD 1,300,000 or 68.4% to approximately HKD 600,000 for the year ended December 31, 2020, primarily due to the gradual repayment of bank loans[30]. - Income tax expenses decreased from approximately HKD 4,600,000 for the year ended December 31, 2019, to approximately HKD 1,300,000 for the year ended December 31, 2020, mainly due to the group's business losses[31]. Business Development and Strategy - The company intends to conduct due diligence on target companies in the new energy vehicle sector to explore further business opportunities[8]. - The company will continue to focus on its core eyewear business while seeking new opportunities for business and revenue diversification[8]. - The company anticipates a gradual recovery in the eyewear industry, projecting moderate growth over the next five years[18]. - The company plans to diversify its business and revenue sources by exploring new opportunities, such as entering the new energy vehicle sector[18]. - The company established a showroom and design laboratory in Hong Kong in May 2020, along with a new internal design team to enhance customer relationships and exchange information on market preferences[7]. - A strategic cooperation agreement was signed to establish a joint venture in Jiangxi, China, focusing on the new energy vehicle business, with the joint venture partners having extensive experience in the industry[8]. - The joint venture was officially established in March 2021, although the company has not yet injected capital into it[8]. Corporate Governance - The company is committed to maintaining high standards of corporate governance to protect shareholder interests and enhance corporate value[80]. - The board of directors consists of two executive directors, two non-executive directors, and three independent non-executive directors as of December 31, 2020[84]. - The company has adopted the corporate governance code as per the listing rules, ensuring adherence to all applicable provisions[80]. - The independent non-executive directors meet the requirement of having at least three independent members on the board[93]. - The company has established four committees: audit, remuneration, nomination, and risk management, with clear written terms of reference[103]. - The board retains decision-making authority on significant matters, including policies, strategies, budgets, and major transactions[96]. - The company emphasizes the importance of ethical standards and effective leadership within its governance framework[79]. - The board of directors is collectively responsible for guiding and overseeing the company's affairs, ensuring effective internal controls and risk management systems[96]. Shareholder Information - The company has a significant shareholding structure, with major shareholders holding 343,952,000 shares, representing 68.79% of the total shares[167]. - The board did not recommend the payment of a final dividend for the year ended December 31, 2020, while a dividend of HKD 0.02 per share for the previous year was approved, totaling approximately HKD 10 million[143]. - The company has not made any arrangements for shareholders to waive or agree to waive any dividends[144]. - The company has maintained effective communication with shareholders, particularly through annual general meetings and other shareholder meetings[134]. Risk Management - The company confirmed that there are no significant uncertainties regarding its ability to continue as a going concern[118]. - The company has adopted a dividend policy effective March 23, 2020, with the distribution ratio determined by the Board based on various factors[120]. - The company does not have an internal audit function and will engage external personnel to review its risk management and internal control systems annually[116]. - The Risk Management Committee held one meeting during the year to review the risk management system and assess potential sanction-related risks[115]. - The company appointed an independent internal control consultant to review the effectiveness of its internal control systems, covering financial, operational, and compliance matters[116]. Employee Relations - The company emphasized the importance of maintaining good relationships with employees and provided formal and on-the-job training to enhance their skills and knowledge[49]. - As of December 31, 2020, the company had a total employee benefit expenditure of approximately HKD 84.7 million, down from HKD 111 million in 2019, reflecting a decrease of about 23.8%[49]. Leadership and Experience - The company has over 21 years of experience in eyewear product trade, manufacturing, and design, with a focus on overall business development strategy and major business decisions[61]. - The CEO has over 19 years of experience in the same industry, responsible for significant operational decisions and business management oversight[62]. - The company is led by a board that includes members with extensive experience in accounting, corporate finance, and management, totaling over 40 years in the field[68]. - The management team has a strong educational background, with degrees in accounting and business management from reputable institutions[68]. - The company is positioned for future growth, leveraging the extensive experience of its leadership team in the eyewear market[62].
恒发光学(01134) - 2020 - 年度财报