Impact of COVID-19 - The company reported a significant impact from the COVID-19 pandemic, leading to a sharp decline in apparel demand and supply chain disruptions[10]. - The company acknowledges the need for government intervention to support brands, retailers, and factories during the economic downturn[10]. - The company expresses cautious optimism about the long-term outlook despite the current challenges in the apparel supply chain[16]. Online Sales and E-commerce - Approximately 50% of the company's sales are derived from online-native brands and platforms, which have been less affected by the demand shock compared to traditional retail[13]. - The company recognizes the accelerated shift towards e-commerce as consumers adapt to online shopping during lockdowns[13]. - The company plans to allocate more resources to serve the online-native brand segment, anticipating its growth post-crisis[13]. Financial Performance - The company's revenue increased by approximately 5.3% from $115.9 million in 2018 to $122.0 million in 2019, driven by a focus on high-growth potential customers, particularly online-native clients[19]. - Revenue from online-native customers grew by about 15.5% from $53.7 million in 2018 to $62.0 million in 2019, contributing approximately 50.8% to total revenue in 2019[19]. - Revenue from traditional high-end and mid-range customers decreased by approximately 2.3% and 10.7%, respectively, due to a decline in lower-margin orders[20]. - Cost of sales increased by about 0.8% from $85.6 million in 2018 to $86.3 million in 2019, while the cost of sales as a percentage of total revenue decreased from 73.9% to 70.7%[21]. - Gross profit rose by approximately 18.0% from $30.3 million in 2018 to $35.7 million in 2019, with the gross margin increasing from 26.1% to 29.3%[23]. - The net profit for 2019 decreased by approximately 25.1% to $4.8 million, with a net profit margin of 4.0% compared to 5.6% in 2018[25]. - The company maintained a healthy financial position, with cash and cash equivalents increasing to approximately $17.0 million in 2019 from $3.1 million in 2018[29]. - The current ratio improved to approximately 2.1 times in 2019 from 1.4 times in 2018, indicating better liquidity[29]. Corporate Governance - The board consists of three executive directors, one non-executive director, and three independent non-executive directors, ensuring a balance of skills and knowledge[54]. - The company has adopted the corporate governance code and has complied with all applicable provisions since its listing date[52]. - The independent non-executive directors provide independent judgment to mitigate risks arising from conflicts of interest[61]. - The company has received annual written confirmations of independence from all independent non-executive directors, affirming their compliance with independence requirements[61]. - The board adopted a diversity policy on October 12, 2019, emphasizing the importance of diverse skills, experiences, and perspectives for effective corporate governance[63]. - The audit committee, established on October 12, 2019, is responsible for reviewing financial reporting, risk management, and internal control systems[67]. - The audit committee held one meeting during the review year to discuss the financial performance for the year ending December 31, 2019[69]. - The remuneration committee, also formed on October 12, 2019, held two meetings to review the company's remuneration policies and structures[70]. - The nomination committee, established on October 12, 2019, is tasked with reviewing board composition and recommending director nominations[71]. - The company holds at least four board meetings annually to discuss financial performance and strategic development[75]. - Each committee has sufficient resources and reports regularly to the board on their decisions or recommendations[66]. - The company has a formal and transparent process for appointing and removing directors, guided by the nomination committee[79]. - The audit committee consists of three independent non-executive directors, ensuring oversight of financial matters[67]. - The board's diversity policy includes considerations of gender, age, ethnicity, and professional experience in its nominations[63]. - The company has appointed Deloitte as the external auditor, with audit fees totaling $306,000 and non-audit fees of $520,000 for the year ended December 31, 2019, resulting in a total of $826,000[88]. - The board of directors is required to retire and seek re-election at least once every three years, with one-third of the directors rotating annually[80]. - The company has established a risk management framework involving the board, audit committee, and senior management to oversee risk management and internal control systems[93]. - An independent internal control consultant has been engaged to assist the board and audit committee in monitoring the effectiveness of the risk management and internal control systems[93]. - The board believes that the risk management and internal control systems were adequate and effective for the year ended December 31, 2019[96]. - All directors participated in continuous professional development training to ensure they are well-informed about their responsibilities under the listing rules[83]. - The company has adopted a code of conduct for securities trading by directors, confirming compliance since the listing date[86]. - The board has reviewed the effectiveness of the risk management and internal control systems, ensuring they are capable of adapting to business changes and external environment[94]. Employee and Social Responsibility - The total number of full-time employees increased to 371 in 2019 from 331 in 2018, with total employee compensation rising by approximately 17.4% to $11.4 million[34]. - The company recognizes employees as one of its most valuable assets and has implemented a stock option plan to retain qualified employees and acknowledge their contributions[37]. - The company emphasizes work-life balance, organizing events such as Christmas parties and sports competitions for employee interaction[168]. - The company recorded two work-related injuries during the year, resulting in a total of 39 lost workdays[164]. - The company donated 12,845 clothing items to charitable organizations, reflecting its commitment to social responsibility[179]. - The employee turnover rate was 33% for females and 21% for males, with the highest turnover rate of 39% among employees under 30 years old[157]. - The average training hours per employee were 15.1 hours for senior staff, 22.2 hours for middle staff, and 1.6 hours for junior staff, with 100% of senior and middle staff receiving training[161]. - The total number of employees is categorized by gender, employment type, age group, and region[184]. - Employee turnover rate is analyzed by gender, age group, and region[184]. - The number and rate of work-related fatalities are reported[186]. - The number of lost workdays due to work-related injuries is documented[186]. - The percentage of trained employees is divided by gender and employee category[186]. - The average training hours completed per employee are reported by gender and employee category[186]. - The percentage of products recalled due to safety and health reasons is disclosed[186]. - The number of complaints received regarding products and services is noted[186]. - The number of suppliers categorized by region is mentioned[186]. - The company's community investment focus areas and resource allocation are outlined[186]. Environmental Performance - The ESG report details the company's efforts and achievements in sustainable development and social responsibility during the fiscal year ending December 31, 2019[114]. - The ESG report covers environmental and social performance metrics based on operations primarily in Shenzhen, China, for the year 2019[115]. - The company reported no significant violations of environmental laws and regulations during the year, demonstrating its commitment to environmental protection[132]. - The company’s air pollutant emissions from its Shenzhen office included 12.62 kg of nitrogen oxides (NOx), 0.21 kg of sulfur oxides (SOx), and 0.93 kg of particulate matter (PM) for the year[134]. - Total greenhouse gas emissions from the Shenzhen office amounted to 419.22 tons of CO2 equivalent, with Scope 1 direct emissions at 34.47 tons, Scope 2 indirect emissions at 188.22 tons, and Scope 3 other indirect emissions at 196.53 tons[135]. - The density of greenhouse gas emissions per employee was recorded at 1.13 tons of CO2 equivalent[135]. - The total waste generated by the Shenzhen office was 206.70 tons, consisting of 184.80 tons of non-hazardous waste and 21.90 tons of hazardous waste, with densities of 0.50 tons and 0.06 tons per employee respectively[139]. - Total energy consumption for the Shenzhen office was 495.97 MWh, with direct consumption from vehicle fuel at 138.88 MWh and indirect consumption from purchased electricity at 357.09 MWh, resulting in a density of 1.34 MWh per employee[143]. - Total water consumption for the Shenzhen office was 2,943.92 cubic meters, equating to 7.94 cubic meters per employee[148]. Leadership and Management - Dr. Chen holds a PhD in Business Administration from Hong Kong Polytechnic University, obtained in November 2003, and has extensive experience in textile and marketing[193]. - Mr. Li has over 15 years of experience in the manufacturing industry and was appointed as the Group's Chief Financial Officer in January 2015, responsible for financial planning and corporate management[194]. - Mr. Kim, appointed as a non-executive director in March 2019, has significant management experience in the fashion industry, including senior roles at Burberry Group Plc and All Saints Retail Ltd[198]. - Mr. Shi, an independent non-executive director since October 2019, has over 27 years of financial and management experience, previously holding senior positions at Nokia and Philips[200].
利华控股集团(01346) - 2019 - 年度财报