中国创新投资(01217) - 2019 - 年度财报

Company Information Provides fundamental information about the company Chairman's Statement Outlines the company's strategic direction and investment focus for the year Business Review and Outlook The company, as an investment firm, primarily seeks medium-term capital appreciation through investments in quality listed and unlisted companies, focusing on five key industrial sectors for future growth Unlisted Investment Portfolio as of December 31, 2019 | Company Name | Book Value (HKD) | | :--- | :--- | | Sun Creation Limited | Approx. 69,819,000 | | Weimei Vision Limited | Approx. 83,080,000 | | Lian Guan Future Limited | Approx. 72,650,000 | | Fengtian Huifu Limited | Approx. 22,781,000 | | Guangyuan Starry Sky Limited | Approx. 63,214,000 | - The company's short-term investments in listed companies were active, with total annual sales proceeds of HKD 258 million by the end of 2019, an increase from HKD 234 million in 2018[23] - The company established a development strategy focusing on five industrial sectors: 'New Energy', 'New Light Source', 'New Materials', 'New Health', and 'New Capital', achieving significant project breakthroughs through investments in companies like Sun Creation, Weimei Vision, Lian Guan Future, Fengtian Huifu, and Guangyuan Starry Sky[24][26] Management Discussion and Analysis Provides an in-depth review of the company's financial performance, investment activities, and strategic outlook for the reporting period Overall Performance The company achieved a significant increase in profit attributable to shareholders for the year ended December 31, 2019, primarily driven by fair value gains from investments Key Financial Indicators for 2019 | Indicator | 2019 | 2018 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Profit Attributable to Shareholders | HKD 23.87 Million | HKD 10.17 Million | +134.7% | | Net Asset Value | HKD 700 Million | HKD 684 Million | +2.24% | | Net Asset Value Per Share | HKD 0.0547 | HKD 0.0535 | +2.24% | | Total Investment Income | Approx. HKD 31.97 Million | - | - | Significant Investment Acquisitions and Disposals The company maintained a cautious approach to the securities market in 2019, completing two equity-linked note settlements and acquiring a 25% stake in Fengtian Huifu Co., Ltd - The company successfully settled two equity-linked notes totaling HKD 200 million, with Note 1 generating approximately HKD 11.39 million in total revenue and Note 2 yielding HKD 5 million in interest income[36][37] - On December 20, 2019, the company acquired a 25% equity stake in Fengtian Huifu Co., Ltd. for a consideration of HKD 22.781 million from a subsidiary of China Trends Holdings Limited[39] Investment Portfolio As of the end of 2019, the company's primary investment portfolio comprised five unlisted companies with a total book value of approximately HKD 312 million, representing 44.48% of its net assets Major Unlisted Investment Projects as of December 31, 2019 | Project Name | Headquarters Location | Main Business | Book Value (HKD Thousand) | Percentage of Net Assets (%) | | :--- | :--- | :--- | :--- | :--- | | Lian Guan Overseas | British Virgin Islands | Investment Holding | 72,650 | 10.37% | | Weimei Hong Kong | Hong Kong | Investment Holding | 83,080 | 11.86% | | Sun Hong Kong | Hong Kong | Investment Holding | 69,819 | 9.97% | | Fengtian Hong Kong | Hong Kong | Investment Holding | 22,781 | 3.25% | | Guangyuan Hong Kong | Hong Kong | Investment Holding | 63,214 | 9.03% | | Total | | | 311,544 | 44.48% | - The company's five major unlisted investments (Lian Guan Overseas, Weimei Hong Kong, Sun Hong Kong, Guangyuan Hong Kong, Fengtian Hong Kong) are all investment holding companies, with their primary assets and business operations located in mainland China[41][42][45] Liquidity and Financial Position As of the end of 2019, the company maintained a robust financial position with approximately HKD 12.7 million in cash and bank balances, operating solely on internal resources without any bank financing - As of December 31, 2019, the company held cash and bank balances of approximately HKD 12.701 million, primarily denominated in Hong Kong Dollars[46] - The company operates entirely on its own funds, without any bank financing, resulting in a zero debt-to-asset ratio[46] Employee Information As of the end of 2019, the company maintained 27 full-time and part-time employees, with total annual remuneration significantly decreasing due to the absence of share-based payments Employee and Remuneration Overview | Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Total Employees | 27 persons | 27 persons | | Total Remuneration | Approx. HKD 1.061 Million | Approx. HKD 1.867 Million | | Of which: Share-based Payments | HKD 0 | HKD 0.924 Million | Business Strategy and Key Risks The company's core strategy is to achieve medium to long-term capital appreciation through investments in quality listed and unlisted companies in Hong Kong and China, while navigating various economic, competitive, operational, market, legal, and exchange rate risks - The company's primary investment objective is to achieve medium to long-term capital appreciation, with at least 70% of investments to be made in Hong Kong and China, covering various sectors including information technology, manufacturing, services, and property[64] - The company faces multiple risks, including: - Economic Risk: Business is affected by China's macroeconomic development - Competition Risk: Intense competition in the private equity investment market - Operational Risk: Investee companies may face operational risks due to market changes or erroneous decisions - Market Risk: Stock market fluctuations impact the company's net asset value - Legal and Regulatory Risk: Uncertainties in China's legal system and policy changes may affect investment value - Exchange Rate and Foreign Exchange Risk: RMB exchange rate fluctuations and foreign exchange controls may have an impact[69][70][72][73][74][75][79][80] Corporate Governance Report Details the company's corporate governance practices, board structure, and internal control mechanisms, highlighting compliance and deviations from established codes Corporate Governance Practices The company strives for high corporate governance standards, though deviations occurred in 2019 regarding the chairman and CEO roles, and temporary non-compliance with independent non-executive director requirements, which were later resolved - Mr. Xiang Xin concurrently served as Chairman of the Board and Chief Executive Officer, deviating from the code's requirement for distinct roles; the Board believes this arrangement helps maintain policy continuity and operational stability[82][87] - Due to the resignations of Mr. Chan Wing Kwong and Mr. Li Wing Hang on November 27, 2019, the number of independent non-executive directors decreased to one, temporarily failing to comply with several Listing Rules regarding the composition of the Board and its committees[87][88][92] - The company appointed Ms. An Jing and Mr. Zhang Yu as independent non-executive directors on February 18, 2020, subsequently regaining compliance with the relevant Listing Rules[93] Board of Directors and Committees As of the end of 2019, the Board comprised two executive directors and one independent non-executive director, supported by various committees, with the Board holding four meetings during the reporting period Attendance at Board and Committee Meetings in 2019 | Committee | Number of Meetings | Attendance Rate | | :--- | :--- | :--- | | Board of Directors | 4 | Executive Directors and incumbent Independent Non-Executive Directors all 100% attendance | | Audit Committee | 2 | Incumbent members 100% attendance | | Remuneration Committee | 0 | Not applicable | | Nomination Committee | 0 | Not applicable | - The company has a Board Diversity Policy, ensuring diversity among Board members in terms of gender, age, geographical background, and professional expertise[103] Internal Control and Financial Reporting The Board is responsible for the effectiveness of internal control systems, which are deemed robust, supported by an independent internal compliance officer, with auditors' fees totaling HKD 274,000 - The Board has reviewed and considers the company's internal control systems to be sound and effective during the reporting period[121] - To strengthen internal control, the company established an Internal Compliance Officer position, independent of business operations, reporting directly to the Audit Committee and the Board[122] - For the year ended December 31, 2019, audit fees paid to Evergreen (Hong Kong) CPA Limited amounted to HKD 274,000[129] Biographies of Directors Provides detailed professional and personal backgrounds for each member of the Board of Directors Directors' Report Presents an overview of the company's performance, capital structure, and key corporate events as reported by the Board of Directors Results and Share Capital The company primarily engaged in investment activities with no significant change in business nature, and the Board resolved not to declare any dividends for the year, with distributable reserves totaling approximately HKD 573 million - The Board resolved not to declare any dividends for the year 2019, consistent with 2018[156] - As of December 31, 2019, the company's distributable reserves amounted to approximately HKD 573 million, an increase from HKD 549 million at the end of 2018[160] Directors' and Shareholders' Interests The report details directors' interests in share options, with Chairman Xiang Xin holding approximately 60.39 million options, and identifies Harvest Rise Investments Limited as the largest shareholder with a 29.82% stake Directors' Interests in Share Options (December 31, 2019) | Director Name | Number of Shares | Approximate Percentage of Interest | | :--- | :--- | :--- | | Xiang Xin | 60,394,737 | 0.47% | | Chan Wing Kwong | 30,000,000 | 0.23% | | Zhou Zan | 30,000,000 | 0.23% | | Li Wing Hang | 30,197,368 | 0.24% | Major Shareholders' Shareholding (December 31, 2019) | Shareholder Name | Capacity | Number of Shares Held | Shareholding Percentage | | :--- | :--- | :--- | :--- | | Harvest Rise Investments Limited | Beneficial | 3,817,807,905 | 29.82% | | China Science and Technology Education Foundation | Controlled Corporation Interest | 3,817,807,905 | 29.82% | | Haitong Guotai | Trustee | 2,362,720,000 | 18.46% | | Guotai Investment | Beneficial | 2,362,720,000 | 18.46% | Change of Auditors The company's former auditor, ZHONGHUI ANDA CPA Limited, resigned on January 9, 2020, due to a disagreement over audit fees, leading to the appointment of Evergreen (Hong Kong) CPA Limited as the new auditor on January 21, 2020 - The company's auditor changed from ZHONGHUI ANDA CPA Limited to Evergreen (Hong Kong) CPA Limited due to a failure to agree on audit fees[192] Environmental, Social and Governance Report Outlines the company's commitment and performance in environmental protection, social responsibility, and corporate governance practices Environmental Protection As an investment company, the primary environmental impact stems from office operations, with efforts focused on energy conservation, sustainable paper use, and IT equipment management, resulting in reduced electricity and paper consumption in 2019 Environmental Data Overview for 2019 | Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Electricity Consumption (kWh) | 9,299 | 12,173 | | Greenhouse Gas Emissions (kg CO2e) | 7,439 | 9,617 | | Printing Paper Consumption (A4 sheets) | 8,783 | 14,268 | - The company implements various environmental protection measures, including encouraging electronic communication to reduce business travel, office greening, adopting energy-efficient inkjet printers, establishing energy-saving equipment procurement standards, and promoting smart printing methods[203][207][212] Social Responsibility The company adheres to strict labor standards, providing equal opportunities and a healthy work environment for its 27 diverse employees, emphasizing training, transparent supplier selection, and robust anti-corruption measures - As of the end of 2019, the company had 27 employees, with a male-to-female ratio of approximately 2:1 and a diverse age distribution[230] - The company prioritizes employee development, providing one hour of internal training to all employees weekly, with over 50 hours of training delivered in 2019[241] - The company has established internal control policies and an 'Employee Handbook' to prevent corruption and fraud, and has set up an anonymous reporting channel[249] Independent Auditor's Report Presents the independent auditor's opinion on the financial statements and highlights key audit matters related to the fair value measurement of investments Audit Opinion and Key Audit Matters Evergreen (Hong Kong) CPA Limited issued an unmodified audit opinion on the 2019 financial statements, with key audit matters focusing on the fair value measurement of equity investments at fair value through other comprehensive income and investments at fair value through profit or loss - The auditor believes the financial statements present a true and fair view of the company's financial position and performance in accordance with Hong Kong Financial Reporting Standards, and have been properly prepared in compliance with the Hong Kong Companies Ordinance[262] - Key audit matters include: - Equity investments at fair value through other comprehensive income: Significant balance of HKD 312 million with material impact on financial statements, and fair value measurement involves significant judgment and estimation - Investments at fair value through profit or loss: Significant balance of HKD 360 million with material impact on financial statements, and fair value measurement also involves significant judgment and estimation[268][271] Financial Statements Presents the company's consolidated financial statements, including the statement of profit or loss, financial position, changes in equity, and cash flows for the reporting period Statement of Profit or Loss and Other Comprehensive Income For the year ended December 31, 2019, the company reported revenue of approximately HKD 31.97 million and a profit for the year of HKD 23.87 million, representing a 134.7% increase from the previous year Summary of Statement of Profit or Loss for 2019 | Item (HKD Thousand) | 2019 | 2018 | | :--- | :--- | :--- | | Revenue | 31,968 | (4,895) | | Profit Before Tax | 23,872 | 10,172 | | Profit for the Year | 23,872 | 10,172 | | Total Comprehensive Income for the Year | 15,998 | 9,500 | | Basic Earnings Per Share | 0.186 HK Cents | 0.079 HK Cents | Statement of Financial Position As of December 31, 2019, the company's total assets were HKD 712 million, with total liabilities of HKD 12.17 million, resulting in a net asset value of HKD 700 million, primarily driven by fair value investments Summary of Statement of Financial Position as of December 31, 2019 | Item (HKD Thousand) | 2019 | 2018 | | :--- | :--- | :--- | | Total Non-Current Assets | 315,470 | 297,953 | | Total Current Assets | 396,951 | 386,574 | | Total Current Liabilities | 12,166 | 270 | | Net Asset Value | 700,255 | 684,257 | | Total Equity | 700,255 | 684,257 | Statement of Changes in Equity As of the end of 2019, the company's total equity increased to HKD 700 million, primarily due to the profit for the year, partially offset by a loss from revaluation of equity investments Summary of Changes in Equity for 2019 | Item (HKD Thousand) | Amount | | :--- | :--- | | As at January 1, 2019 | 684,257 | | Total Comprehensive Income for the Year | 15,998 | | As at December 31, 2019 | 700,255 | Statement of Cash Flows In 2019, the company experienced a net decrease in cash and cash equivalents of HKD 175 million, primarily due to net cash outflow from operating activities, with the year-end balance at HKD 12.7 million Summary of Cash Flows for 2019 | Item (HKD Thousand) | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash Flows Used in Operating Activities | (170,810) | (98,435) | | Net Cash Flows (Used in)/From Investing Activities | (2,868) | 30,428 | | Cash Flows Used in Financing Activities | (915) | – | | Net Decrease in Cash and Cash Equivalents | (174,593) | (68,007) | | Cash and Cash Equivalents at Year-End | 12,701 | 187,294 | Five-Year Financial Summary Provides a consolidated overview of the company's financial performance and position over the past five years, highlighting trends in results and balance sheet items Performance and Balance Sheet Trends Over the past five years, the company's performance has shown significant volatility, reflecting its investment business, while net assets have steadily grown from HKD 484 million in 2015 to HKD 700 million in 2019 Five-Year Performance Summary (HKD Thousand) | Year Ended December 31 | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 31,968 | (4,895) | 49,321 | (27,251) | 14,903 | | Profit/(Loss) Before Tax | 23,872 | 10,172 | 37,005 | (54,172) | (138) | Five-Year Assets and Liabilities Summary (HKD Thousand) | As at December 31 | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 712,421 | 684,527 | 674,696 | 637,427 | 484,197 | | Total Liabilities | (12,166) | (270) | (890) | (626) | (216) | | Net Asset Value | 700,255 | 684,257 | 673,806 | 636,801 | 483,981 |