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中国派对文化(01532) - 2019 - 年度财报

Financial Highlights The group experienced a 13.6% revenue decrease in FY2019, with improved gross profit margin, but significant impairment losses and fair value losses led to a substantial increase in loss attributable to equity holders Key Financial Performance The Group's FY2019 revenue decreased by 13.6%, with an improved gross profit margin, but loss attributable to equity holders significantly increased due to impairment losses and fair value losses on financial assets FY2019 Key Financial Data Comparison with FY2018 | Metric | 2019 (RMB Thousand) | 2018 (RMB Thousand) | Change Percentage | | :--- | :--- | :--- | :--- | | Revenue | 316,064 | 365,903 | (13.6%) | | Gross Profit | 83,401 | 76,711 | 8.7% | | Loss for the Year Attributable to Equity Holders of the Company | (72,205) | (11,735) | 515.3% | | Gross Profit Margin | 26.4% | 21.0% | 5.4% | | Net Loss Margin | (22.8%) | (3.2%) | 19.6% | | Adjusted Profit Before Income Tax | 15,564 | 11,416 | 36.3% | - Adjusted profit before income tax (excluding impairment losses on property, plant and equipment and investment properties, and fair value losses on financial assets at fair value through profit or loss) increased by 36.3%, primarily due to an improved gross profit margin42 Corporate Information The company's corporate structure includes a board of directors and committees, with its registered office in the Cayman Islands and primary operations in Jiangxi, China Board of Directors and Committees The company's Board of Directors comprises executive, non-executive, and independent non-executive directors, supported by audit, remuneration, and nomination committees to ensure robust corporate governance - The Board of Directors includes Mr. Lin Xinfu (Chairman), Mr. Ma Zhijun, Mr. Peng Zhencheng (Executive Directors), Ms. Chen Sheng (Non-executive Director), and Mr. Zheng Jinmin, Mr. Chen Wenhua, Ms. Peng Shu (Independent Non-executive Directors)44 - Mr. Zheng Jinmin chairs the Audit Committee, Mr. Chen Wenhua chairs the Remuneration Committee, and Ms. Peng Shu chairs the Nomination Committee44 Company Details The company is registered in the Cayman Islands, with its headquarters and principal place of business in Jiangxi Province, China, and an operating location in Hong Kong, trading under stock code 1532 - Mr. Zhuang Wenhong serves as Company Secretary, with the registered office in the Cayman Islands and China headquarters located in Yichun Economic and Technological Development Zone, Jiangxi Province44 - Tricor Investor Services Limited is the Hong Kong share registrar, and Grant Thornton Hong Kong Limited serves as the auditor4647 Chairman's Statement The Chairman's statement reviews the 2019 revenue decline and gross margin improvement, while outlining strategies for diversification and expansion amidst the challenging 2020 economic outlook Chairman's Business Review In 2019, the company's revenue decreased by 13.6% due to reduced customer orders from consumers shifting to online shopping and macroeconomic uncertainties; however, gross profit margin improved from 21.0% to 26.4% by enhancing R&D capabilities - Revenue decreased by 13.6% from RMB 365.9 million in 2018 to RMB 316.1 million in 20195254 - Gross profit margin increased from 21.0% in 2018 to 26.4% in 2019, primarily due to enhanced R&D capabilities and the provision of high-quality one-stop solutions5354 - Loss attributable to owners of the Company increased by 515.3% from approximately RMB 11.7 million in 2018 to approximately RMB 72.2 million in 20195355 Chairman's Prospects Facing business environment uncertainties from the COVID-19 pandemic in early 2020, the company is committed to business diversification, expanding revenue streams, and achieving business expansion through intellectual property collaborations, supply chain integration, and mergers and acquisitions - The outbreak of the COVID-19 pandemic in early 2020 adversely affected the manufacturing industry and the company's business operations, with a full recovery of the industrial chain expected to take time6163 - The company will achieve business diversification and expand revenue sources by collaborating with other intellectual property owners, partnering with upstream and downstream industry companies, and pursuing mergers, industrial integration, and business expansion6264 Directors' Business Review and Management Discussion and Analysis This section provides a comprehensive review of the Group's business performance, key financial indicators, operational strategies, and risk factors for the reporting period Key Performance Indicators This section outlines the company's key financial and operating indicators for FY2019, showing decreased revenue, expanded losses, but improved gross profit margin, alongside a decline in net current assets and current ratio, and an increase in the gearing ratio FY2019 Key Performance Indicators Comparison with FY2018 | Metric | 2019 (RMB Thousand) | 2018 (RMB Thousand) | Change Percentage | | :--- | :--- | :--- | :--- | | Revenue | 316,064 | 365,903 | (13.6%) | | Gross Profit | 83,401 | 76,711 | 8.7% | | Operating Loss | (69,845) | (10,046) | 595.3% | | Loss for the Year Attributable to Equity Holders of the Company | (72,205) | (11,735) | 515.3% | | Return on Total Assets | (12.9%) | (2.0%) | 10.9% | | Net Current Assets | 9,642 | 30,665 | (68.6%) | | Total Liabilities | 141,516 | 97,870 | 44.6% | | Current Ratio | 106.8% | 131.3% | (24.5%) | | Gearing Ratio | 23.2% | 14.1% | 9.1% | | Cash Generated from Operations | 46,988 | 45,268 | 3.8% | | Capital Expenditure | 64,037 | 40,963 | 56.3% | | Basic Loss Per Share (RMB Cents) | (8.04) | (1.35) | 495.6% | Business Review The Group primarily designs, develops, produces, sells, and markets cosplay products and lingerie, mainly for export; in 2019, total revenue decreased by 13.6%, with Contract Manufacturing Services (CMS) revenue down 20.7% and Original Brand Manufacturing (OBM) revenue slightly up 2.1%, while gross profit margin increased due to enhanced R&D capabilities and premium one-stop solutions - The Group primarily engages in the design, development, production, sales, and marketing of cosplay products (including costumes and wigs) and non-cosplay apparel (mainly lingerie), primarily exporting to over 20 countries and regions worldwide6970 FY2019 Revenue by Operating and Reportable Segment | Segment | 2019 (RMB Thousand) | Percentage of Total | 2018 (RMB Thousand) | Percentage of Total | Revenue Change Percentage | | :--- | :--- | :--- | :--- | :--- | :--- | | CMS Business | 199,770 | 63.2% | 251,960 | 68.9% | (20.7%) | | OBM Business | 116,294 | 36.8% | 113,943 | 31.1% | 2.1% | | Total | 316,064 | 100.0% | 365,903 | 100.0% | (13.6%) | - The decrease in revenue was primarily due to consumers' continued shift to online shopping platforms and a significant reduction in customer order volume, size, and timing caused by increased macroeconomic uncertainty535480 - Gross profit margin increased from 21.0% in 2018 to 26.4% in 2019, attributed to enhanced R&D capabilities and the provision of premium one-stop solution services with higher unit selling prices535480 - Loss attributable to equity holders of the Company increased from approximately RMB 11.7 million in 2018 to approximately RMB 72.2 million in 2019, primarily due to an impairment loss of RMB 18.7 million recognized upon reclassification of a center as investment property, and a fair value loss of approximately RMB 60.5 million on financial assets at fair value through profit or loss79 - Excluding the aforementioned impairment losses and fair value losses, the Group's profit before income tax would have been approximately RMB 15.6 million, representing a 36.3% increase from 20188486 Principal Risks and Uncertainties The Group faces multiple risks and uncertainties from global economic and macroeconomic conditions, foreign currency exchange rate fluctuations, and changes in movie and anime character trends, all of which could adversely impact its business, financial position, and growth prospects - Global economic and macroeconomic conditions: The COVID-19 pandemic outbreak adversely affected global economic activities; with over 90% of the Group's revenue derived from overseas sales, it is susceptible to economic conditions, consumer spending, infectious disease outbreaks, and monetary environments8587 - Foreign currency exchange rate fluctuations: A significant portion of revenue is denominated in USD; appreciation of RMB against USD or substantial exchange rate volatility could adversely affect profit margins, costs, profitability, and net assets89 - Changes in movie and anime character trends and popularity: Some cosplay products in the CMS business are influenced by the popularity of anime characters, and shifts in market demand could lead to reduced orders and decreased revenue90 Our Business Strategies The Group will continue to focus on business expansion by enhancing R&D capabilities, expanding OBM business in the China market, seeking intellectual property collaborations, and strengthening upstream and downstream supply chain cooperation to improve production efficiency and customer base - Further enhance R&D capabilities9398 - Expand OBM business in the China market to enlarge the customer base9398 - Seek cooperation with other intellectual property owners for new business ventures9398 - Seek collaboration with upstream and downstream industry companies to further enhance productivity9398 Law and Regulation The Group is committed to complying with laws and regulations related to workplace quality, product safety, and environmental protection, holding multiple international certifications to ensure employee health and safety, product standards, and environmentally friendly production processes - Workplace quality: Committed to promoting equal opportunities for all employees, providing a safe working environment, and complying with labor laws, with no material non-compliance identified9596100 - Product safety: All products comply with US ASTM standards, European EN71 and REACH standards, and safety production standardization certificates, holding multiple certifications including ISO9001:2008, ISO14001:2004, and OHSAS 18001:2007, with no material non-compliance identified in 2019103105 - Environmental protection: Committed to protecting the environment, maintaining high environmental standards, and complying with applicable laws and regulations, with no material non-compliance identified in 2019 regarding air and greenhouse gas emissions, or discharges to water and land104106 Financial Review The Group's revenue decreased in 2019, but gross profit margin improved; other income declined, and selling and administrative expenses slightly decreased. Concurrently, impairment losses on property, plant and equipment and investment properties were recognized, and finance costs increased. Liquidity indicators deteriorated, capital expenditure rose, but the outlook for future capacity expansion remains conservative FY2019 Revenue and Gross Profit Margin by Business Segment | Business | 2019 Revenue (RMB Thousand) | Gross Profit Margin | 2018 Revenue (RMB Thousand) | Gross Profit Margin | Revenue Change Percentage | | :--- | :--- | :--- | :--- | :--- | :--- | | CMS Business | 199,770 | 26.6% | 251,960 | 21.2% | (20.7%) | | OBM Business | 116,294 | 26.4% | 113,943 | 20.5% | 2.1% | | Total | 316,064 | 26.4% | 365,903 | 21.0% | (13.6%) | - CMS business revenue decreased by 20.7%, primarily impacted by global economic uncertainty following escalating US-China trade tensions, declining overseas sales, and consumers shifting to online shopping platforms111113 - OBM business revenue slightly increased by 2.1%, mainly due to increased demand for OBM cosplay costumes offsetting the decline in demand for wigs and lingerie112114 - Gross profit margin increased from 21.0% in 2018 to 26.4% in 2019, primarily attributed to enhanced R&D capabilities, enabling the provision of premium one-stop solution services at higher unit selling prices117119 - Other income decreased by approximately RMB 3.9 million to RMB 5.3 million, mainly due to unrecognized interest income from financial assets at fair value through profit or loss and reduced government grants118120 - Net impairment loss on property, plant and equipment was approximately RMB 12.9 million, and impairment loss on investment properties was approximately RMB 18.7 million125128 - Finance costs increased by approximately RMB 1.5 million to RMB 6.7 million, primarily due to higher average loan balances and increased interest expenses on bank and other short-term borrowings126128 - Total bank balances and cash were approximately RMB 78.8 million (an increase of 4.4%), net current assets were approximately RMB 9.6 million (a decrease of 68.6%), the current ratio was 106.8% (a decrease of 24.5%), and the gearing ratio was 23.2% (an increase of 9.1%)66130134 - Capital expenditure was approximately RMB 64.0 million, primarily for the construction and renovation of new factory buildings at the Yichun production plant and the R&D, service, and experience center at the Yiwu production plant132135 - Bank loans are secured by right-of-use assets (RMB 10.2 million), buildings (RMB 129.6 million), and investment properties (RMB 20.7 million)136142 - As of December 31, 2019, the number of employees was approximately 914 (2018: 974), with total staff costs of approximately RMB 77.5 million (2018: RMB 91.1 million)139145 Investment Review The CSG convertible bonds subscribed by the company recorded a fair value loss of approximately RMB 60.5 million in FY2019 due to project funding delays, pending license approvals, and the issuer's interest default - The CSG convertible bonds (total principal of HKD 70 million) subscribed by Unlock Bound Investments Limited (a subsidiary of the Company) defaulted in FY2019 due to the issuer's failure to pay interest150151152 - The project development plan was delayed due to unexpected delays in investor funding acquisition and the delayed transfer of theme park licenses150152 - In light of the above reasons, a fair value loss of approximately RMB 60.5 million on financial assets at fair value through profit or loss was recorded during the financial period79152 Corporate Governance Report This report details the Group's commitment to high corporate governance standards, including board structure, committee functions, and other governance practices Compliance with CG Code The company is committed to high standards of corporate governance and complies with the Corporate Governance Code in Appendix 14 of the Listing Rules, with the exception of the Chairman and Chief Executive Officer roles being held by the same individual, an arrangement the Board believes is in the Group's best interest - The company has applied and complied with the principles and applicable provisions of the Corporate Governance Code, except for code provision A.2.1 where Mr. Lin Xinfu holds both the Chairman and Chief Executive Officer positions155157 - The Board believes that Mr. Lin's dual role ensures leadership consistency and effective strategic planning for the Group, and the existing Board (including a sufficient number of non-executive and independent non-executive directors) adequately ensures a balance of power155157167170 The Board of Directors The Board of Directors is responsible for the company's leadership and control, formulating overall strategy, and reviewing operational and financial performance; it comprises seven directors, including three executive, one non-executive, and three independent non-executive directors, ensuring independent judgment and diverse perspectives - The Board of Directors comprises seven directors, including three executive directors, one non-executive director, and three independent non-executive directors162163 - Independent non-executive directors consistently met Listing Rules requirements throughout FY2019, constituting one-third of the Board, and providing independent judgment and opinions167170 - All directors participate in continuous professional development to enhance knowledge and skills; in 2019, one annual general meeting and seven Board meetings were held177178182183 Board Committees The Board has established Nomination, Remuneration, and Audit Committees to oversee specific aspects of company affairs, ensuring professional and transparent corporate governance, with each committee having clear terms of reference and independent operating mechanisms - The Nomination Committee comprises two independent non-executive directors and one non-executive director, responsible for reviewing Board structure, identifying qualified director candidates, assessing independence, and advising on director appointments and succession planning187189 - The company has adopted a Board Diversity Policy, considering diversity aspects such as gender, age, cultural and educational background, experience, ethnicity, skills, and knowledge in Board appointments193194 - The Remuneration Committee comprises one independent non-executive director (Chairman), one executive director, and one independent non-executive director, responsible for advising on the remuneration policy and structure for directors and senior management258259261 - The Audit Committee comprises three independent non-executive directors, primarily responsible for recommending the appointment, remuneration, and terms of engagement of external auditors, reviewing the Group's interim and annual reports, and overseeing the financial reporting system and risk management and internal control procedures271272276 Other Governance Aspects The company has a Company Secretary, with the Board fulfilling corporate governance functions and establishing a dividend policy; auditor remuneration is transparent, the Board is responsible for financial statements, and risk management and internal control systems are in place. The company adheres to non-competition undertakings and prioritizes communication with shareholders and investors - Mr. Zhuang Wenhong, the Company Secretary, has received no less than 15 hours of relevant professional training290 - The company has adopted a dividend policy, allowing the Board to declare dividends at its discretion, but no dividends were paid or proposed for 2019292294 FY2019 Auditor's Remuneration | Service Nature | Amount (HKD Thousand) | | :--- | :--- | | Audit Services | 1,020 | | Non-Audit Services | 240 | | Total | 1,260 | - The Board is responsible for assessing and determining risks, and overseeing the design, implementation, and monitoring of risk management and internal control systems; the annual review conducted by an independent qualified accountant in 2019 found no material deficiencies304305310313 - In FY2019, the company's products were not sold to any sanctioned countries or sanctioned individuals312314 - The controlling shareholder has confirmed compliance with the non-competition undertaking319320 - The company maintains effective communication with shareholders and investors through channels such as annual general meetings, the company website, and email321322 Directors and Senior Management This section introduces the Group's executive, non-executive, and independent non-executive directors, along with key senior management personnel, highlighting their diverse expertise and roles Executive Directors The Group's Executive Directors include Mr. Lin Xinfu, Chairman and CEO, along with Mr. Ma Zhijun and Mr. Peng Zhencheng, all possessing extensive experience in anime derivative product manufacturing and sales, financial investment, and corporate banking - Mr. Lin Xinfu (37 years old) is the Chairman, Executive Director, and Chief Executive Officer, having joined the Group in 2006, responsible for sales and foreign trade activities, with over twelve years of experience in anime derivative product manufacturing and sales335338 - Mr. Ma Zhijun (43 years old) is an Executive Director, with over nineteen years of experience in commercial banking, fixed income markets, and mergers and acquisitions336338 - Mr. Peng Zhencheng (43 years old) is an Executive Director, with over sixteen years of experience in direct investment and corporate banking, also serving as an executive director and independent non-executive director for other listed companies337 Non-Executive Director Ms. Chen Sheng, as a Non-Executive Director, possesses over twenty-five years of compliance experience and is responsible for overseeing the Group's corporate governance - Ms. Chen Sheng (47 years old) is a Non-Executive Director and a member of the Nomination Committee, with over twenty-five years of compliance experience, responsible for overseeing the Group's corporate governance340341345346 Independent Non-executive Directors Independent Non-executive Directors include Mr. Chen Wenhua, Mr. Zheng Jinmin, and Ms. Peng Shu, who bring profound professional backgrounds in economics, accounting, and law, providing independent opinions to the company - Mr. Chen Wenhua (52 years old) is an Independent Non-executive Director, holding a Ph.D. in Economics and over twenty-five years of experience in the education sector342343348349 - Mr. Zheng Jinmin (48 years old) is an Independent Non-executive Director and Chairman of the Audit Committee, a Certified Public Accountant in China, with over twenty years of accounting experience344345350351 - Ms. Peng Shu (47 years old) is an Independent Non-executive Director and Chairman of the Nomination Committee, holding a Ph.D. in International Law and over eighteen years of experience in the legal industry354355359360 Senior Management Senior management includes Mr. Zhuang Wenhong, Company Secretary and Financial Controller, and Mr. Xu Chengwu, Financial Manager, both possessing extensive experience in auditing, finance, financial management, and taxation - Mr. Zhuang Wenhong (41 years old) is the Company Secretary, with over eighteen years of auditing and financial experience, also serving as financial controller and company secretary for other listed companies356361362 - Mr. Xu Chengwu (50 years old) is the Financial Manager, with over twenty-five years of financial and tax experience, responsible for the Group's financial planning, management, and internal control matters357358363364 Report of the Directors This report provides an overview of the Group's business, financial performance, capital and remuneration policies, stakeholder relationships, and directors' compliance for the year Overview and Financial Performance The company, an investment holding company, has subsidiaries primarily engaged in the design, development, production, sales, and marketing of cosplay products and lingerie; in FY2019, the Group recorded a loss, and the Board does not recommend paying any dividends - The Company is an investment holding company, with its subsidiaries primarily engaged in the design, development, production, sales, and marketing of cosplay products (including costumes and wigs) and lingerie368376 - The Group recorded a loss in FY2019, and the Directors do not recommend the payment of any dividends for the year ended December 31, 2019369378 Subsequent Events The COVID-19 pandemic outbreak in early 2020 adversely affected the Group's business operations and the global economy; the Group has implemented cost control measures and will continue to assess the pandemic's impact on its financial position and operating results - COVID-19 spread globally in early 2020, adversely affecting business operations, manufacturing, and the global economy392399 - As of the date of this annual report, the related financial impact has not yet been estimated, but the Group has implemented a series of cost control measures (such as negotiating with suppliers for more discounts/favorable terms) to minimize expenses392399 Capital and Remuneration The company's distributable reserves were approximately RMB 156.4 million in 2019; employee remuneration policy is based on performance, qualifications, and capabilities, and is regularly reviewed. The Group has a share option scheme to incentivize employees, but no share options were granted or exercised in 2019 - As of December 31, 2019, the Company's distributable reserves were approximately RMB 156.4 million403410 - The remuneration policy for the Group's employees (including key management personnel) is determined by management based on performance, qualifications, and capabilities, and is reviewed and recommended by the Remuneration Committee408415 - The company has adopted a share option scheme to recognize and reward employee contributions, but no share options were granted or exercised in 2019, and there were no outstanding share options at year-end417443454457 Customer and Supplier Relationships The Group maintains long-term business relationships with customers in over 20 countries and regions worldwide, with the top five customers accounting for 33.1% of total sales; concurrently, the Group sources raw materials from over 70 suppliers, with the top five suppliers representing 35.8% of total purchases - The Group's top five customers accounted for approximately 33.1% of total revenue in FY2019, with the largest customer contributing approximately 12.1%418421 - The Group's purchases from its top five suppliers accounted for approximately 35.8% of total purchases in FY2019, with the largest supplier contributing approximately 8.3%419422 - The company maintains long-term business relationships with customers from over 20 countries and regions worldwide, with the top five customers having an average business relationship exceeding seven years141147 Directors' Interests and Compliance Board members meet independence requirements and comply with the standard code for securities transactions; controlling shareholder Mr. Chen Shengbi and his spouse Ms. Li Zhiping hold 41.42% of the company's shares. The company maintains sufficient public float, and financial statements are reviewed by the Audit Committee - The company has received independence confirmations from each independent non-executive director and considers all independent non-executive directors to be independent individuals428434 - Directors have complied with the standard code for securities transactions by directors of listed issuers439442 FY2019 Major Shareholders' Long Positions in Shares and Underlying Shares | Name of Major Shareholder | Nature of Interest | Number of Ordinary Shares | Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Chen Shengbi | Interest in controlled corporation | 371,859,000 | 41.42% | | Master Professional Holdings Limited | Beneficial owner | 371,859,000 | 41.42% | | Ms. Li Zhiping | Interest of spouse | 371,859,000 | 41.42% | | Mr. Lin Shixin | Beneficial owner | 78,563,000 | 8.75% | - The company has maintained a sufficient public float as required by the Listing Rules throughout 2019 and up to the date of this report463469 - The Audit Committee has reviewed the Group's consolidated financial statements for the year ended December 31, 2019465471 Environmental, Social and Governance Report This report outlines the Group's performance in environmental management and social responsibility for FY2019, adhering to ESG reporting guidelines and demonstrating commitment to sustainable development About the Report and ESG Governance This report covers the Group's performance in environmental management and social responsibility for FY2019, prepared in accordance with the HKEX ESG Reporting Guide; the Board oversees ESG strategy and risk management, actively engaging with stakeholders to enhance sustainable development - The ESG report covers the Group's core business performance in environmental management and social responsibility for FY2019, prepared in accordance with Appendix 27 "Environmental, Social and Governance Reporting Guide" of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited488489492493 - The Board is responsible for overseeing the formulation and reporting of the Group's ESG strategy, as well as assessing and determining ESG-related risks, with regular independent evaluations conducted498504 - The Group engages with stakeholders (including government, shareholders, partners, customers, employees, and communities) through various effective communication channels to understand their requirements and expectations for corporate sustainable development499500505506 Environment and Resources The Group is committed to improving environmental quality and resource efficiency, strictly complying with environmental regulations and holding ISO14001 certification. In 2019, the Group's greenhouse gas emissions and energy consumption increased, but both hazardous and non-hazardous waste generation and packaging material usage decreased. The Group also actively promotes environmental protection through energy-saving measures and solar power generation systems - The Group strictly complies with relevant environmental laws and regulations, including the "Environmental Protection Law of the People's Republic of China" and the "Energy Conservation Law of the People's Republic of China," and has obtained GB/T24001-2016/ISO14001:2015 Environmental Management System certification515516 FY2019 Wastewater Discharge Data | Metric | Discharge Concentration | Execution Standard Value | | :--- | :--- | :--- | | pH | 7.257.38 | 6-9 | | Suspended Solids (mg/L) | 34.537.5 | 400 | | Chemical Oxygen Demand (mg/L) | 25.127.5 | 500 | | Ammonia Nitrogen (mg/L) | 0.150.20 | 25 | | Animal and Vegetable Oils (mg/L) | 0.09~0.11 | 100 | FY2019 Exhaust Gas Emission Data Comparison with FY2018 | Metric | 2019 (Kilograms) | 2018 (Kilograms) | | :--- | :--- | :--- | | Nitrogen Oxides | 78 | 34 | | Sulfur Oxides | 0.06 | 0.07 | | Particulate Matter | 4 | 3 | FY2019 Greenhouse Gas Emission Data Comparison with FY2018 | Metric | 2019 (Tonnes of CO2 equivalent) | 2018 (Tonnes of CO2 equivalent) | | :--- | :--- | :--- | | Total Greenhouse Gas Emissions | 690 | 495 | | Scope 1: Direct Emissions | 27 | 18 | | Scope 2: Energy Indirect Emissions | 640 | 457 | | Scope 3: Other Indirect Emissions | 23 | 20 | | Greenhouse Gas Emissions per Square Meter of Floor Area (Tonnes of CO2 equivalent/sqm) | 0.02 | 0.01 | FY2019 Waste Generation Data Comparison with FY2018 | Waste Type | 2019 | 2018 | | :--- | :--- | :--- | | Hazardous Waste Generated (Tonnes) | 0.19 | 0.73 | | Hazardous Waste Generated per Square Meter of Floor Area (Kilograms/sqm) | 0.005 | 0.02 | | Non-hazardous Waste Generated (Tonnes) | 95 | 103 | | Non-hazardous Waste Generated per Square Meter of Floor Area (Tonnes/sqm) | 0.002 | 0.003 | FY2019 Resource Usage Data Comparison with FY2018 | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Total Energy Consumption (MWh) | 1,531 | 1,167 | | Direct Energy Consumption (MWh) | 83 | 72 | | Indirect Energy Consumption (MWh) | 1,448 | 1,095 | | Energy Consumption per Square Meter of Floor Area (MWh/sqm) | 0.04 | 0.03 | | Total Water Consumption (Cubic meters) | 42,704 | 33,505 | | Water Consumption per Square Meter of Floor Area (Cubic meters/sqm) | 1.07 | 0.84 | FY2019 Packaging Material Usage Data Comparison with FY2018 | Packaging Material Type | 2019 | 2018 | | :--- | :--- | :--- | | Total Packaging Material Used (Tonnes) | 38 | 77 | | Total Plastic Products Used (Tonnes) | 22 | 44 | | Plastic Packaging Material Used per Product (Kilograms/product) | 0.01 | 0.01 | | Total Paper Products Used (Tonnes) | 16 | 33 | | Paper Packaging Material Used per Product (Kilograms/product) | 0.01 | 0.01 | - Jiangxi Party's solar power generation system generated 230 MWh in 2019, reducing greenhouse gas emissions by approximately 121 tonnes of CO2 equivalent, accounting for 18% of its total emissions551 Employment and Labor Practice The Group values employees as precious assets, strictly adheres to labor laws, provides equal opportunities, competitive compensation, and generous benefits. The Group highly prioritizes occupational health and safety, fosters employee development through diverse training, and strictly prohibits child and forced labor - The Group strictly complies with the "Labor Law of the People's Republic of China" and the "Labor Contract Law of the People's Republic of China," implementing principles of open recruitment, fair competition, and merit-based hiring, and signing labor contracts with all employees552557 - Competitive remuneration is provided, determined by internal salary policies and employee work performance, and reviewed and adjusted annually based on local market levels, overall benefits, and individual performance appraisal results557 - The Group prioritizes employee occupational health and safety, complies with relevant laws and regulations, and has obtained GB/T28001-2011/OHSAS18001:2007 Occupational Health and Safety Management System certification556558 - In 2019, the Group recorded no significant cases of work-related fatalities or injuries561563 - The Group provides diverse and appropriate training, including knowledge training, management skills training, specialized skills/qualification training, and implements training internalization, encouraging employees to share acquired knowledge566568 - The Group strictly prohibits any form of child and forced labor, complies with the "Labor Law of the People's Republic of China" and the "Provisions on the Prohibition of Child Labor," and has established child labor rescue protocols; no child or forced labor was employed in 2019567569572573 Operational Practice Adhering to the "quality wins" principle, the Group implements strict supply chain management and product responsibility systems to ensure product quality and safety. Concurrently, it actively invests in product R&D and technological innovation, takes measures to protect intellectual property and customer privacy, and has established comprehensive anti-corruption mechanisms to uphold integrity in operations - The Group implements a supplier management system, evaluating suppliers' business, manufacturing capabilities, and product quality to establish a qualified supplier list, categorize them, assess their performance monthly, and review annually573574 - The Group requires key suppliers to comply with environmental and product safety regulations and sign a code of business conduct, ensuring their adherence to national laws and respect for employee rights, strictly prohibiting child labor, forced labor, or severe violations of labor laws574579 - The Group complies with the "Product Quality Law of the People's Republic of China" and has obtained ISO9001:2015 Quality Management System certification, implementing quality control from raw material procurement to finished product dispatch577579580 - In 2019, the Group had no products recalled for safety and health reasons, nor did it receive any complaints regarding products and services584586 - The Group actively promotes product and technological R&D and innovation; in 2019, Jiangxi Party obtained three invention patents related to wigs and costumes and initiated R&D projects for graphene application and fully automatic stitching technology585586 - The Group strictly adheres to various confidentiality systems, requiring employees to sign non-disclosure agreements, committing not to disclose trade secrets or customer resources, and prohibiting engagement in competitive activities for two years after leaving employment589591 - The Group operates with "law-abiding integrity and quality service" as its core business philosophy, complies with anti-corruption laws and regulations, implements anti-bribery, anti-corruption, and anti-extortion control procedures, and provides commitment letters and training for key personnel and business partners; no cases of integrity law violations occurred in 2019590592593 Community Investment The Group since its establishment has actively fulfilled its corporate social responsibility, focusing on employee well-being, providing financial assistance, and organizing diverse activities. Concurrently, it continuously donates to earthquake-stricken areas and disadvantaged communities, and supports youth football development and educational assistance programs - The Group adheres to the "people-oriented" principle, providing financial and other forms of assistance to employees facing family difficulties, and organizing employee activities such as company annual meetings, mountain clean-ups, and visits to nursing homes596597 - Continuously donates to earthquake-stricken areas and disadvantaged communities, funds the establishment of a youth football development foundation, visits elderly in nursing homes, and conducts educational assistance activities596597 Prospects The Group will continuously improve its management systems and institutional frameworks, integrate green concepts into product manufacturing, and apply environmentally friendly materials and technologies to reduce negative environmental impact, while collaborating with all sectors of society to contribute to the industry's sustainable development - In the future, the Group will continuously improve its management systems and institutional frameworks, focusing more on integrating green concepts into product manufacturing and applying environmentally friendly materials and technologies in its operations596597 - The Group will collaborate with all sectors of society, contributing to the industry's sustainable development while adhering to national and industrial policies596597 Independent Auditor's Report This report presents the independent auditor's opinion on the Group's consolidated financial statements and highlights key audit matters for the reporting period Opinion The auditor believes that the Group's consolidated financial statements truly and fairly present its financial position as of December 31, 2019, and its financial performance and cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance - The consolidated financial statements truly and fairly present the Group's consolidated financial position as of December 31, 2019, and its consolidated financial performance and consolidated cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants, and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance602603 Key Audit Matters The auditor identified three key audit matters: the valuation of financial assets at fair value through profit or loss, the impairment assessment of property, plant and equipment and investment properties, and inventory valuation, all involving significant management judgments and assumptions - Valuation of financial assets at fair value through profit or loss: Involves unlisted convertible bonds that defaulted due to non-payment of interest and project delays, requiring significant management judgment and assumptions in determining fair value605606 - Impairment assessment of property, plant and equipment and investment properties: Impairment indicators arose on December 31, 2019; management valued cash-generating units based on an independent professional valuer's assessment of value in use, involving significant judgments on utilization rates, discount rates, inflation rates, sales growth rates, and market rents609610 - Valuation of inventories: As of December 31, 2019, inventories net of nil provision amounted to RMB 24,271,000; Directors made significant judgments regarding the provision for obsolete inventories611612 Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the Group's financial performance, including revenue, expenses, and comprehensive income, for the reporting period Financial Results Summary In FY2019, the Group's revenue decreased, and gross profit increased, but the loss for the year significantly expanded due to substantial increases in impairment losses on property, plant and equipment, investment properties, and fair value losses on financial assets at fair value through profit or loss FY2019 Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Revenue | 316,064 | 365,903 | | Cost of Sales | (232,663) | (289,192) | | Gross Profit | 83,401 | 76,711 | | Other Income | 5,254 | 9,160 | | Selling Expenses | (8,198) | (10,291) | | Net Impairment Loss on Property, Plant and Equipment | (12,913) | (24,410) | | Impairment Loss on Investment Properties | (18,671) | - | | Fair Value Loss on Financial Assets at Fair Value Through Profit or Loss | (60,524) | (2,281) | | Administrative and Other Operating Expenses | (58,194) | (58,935) | | Operating Loss | (69,845) | (10,046) | | Finance Costs | (6,699) | (5,229) | | Loss Before Income Tax | (76,544) | (15,275) | | Income Tax Credit | 4,339 | 3,540 | | Loss for the Year | (72,205) | (11,735) | | Total Comprehensive Expense for the Year | (72,826) | (7,533) | | Basic Loss Per Share (RMB Cents) | (8.04) | (1.35) | Consolidated Statement of Financial Position This statement provides a snapshot of the Group's assets, liabilities, and equity as of the reporting date, reflecting changes in its financial structure Financial Position Summary As of December 31, 2019, the Group's total assets and net assets both decreased, while total liabilities and short-term borrowings significantly increased, leading to a substantial reduction in net current assets FY2019 Key Data from Consolidated Statement of Financial Position | Metric | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Non-current Assets | 410,041 | 461,844 | | Property, Plant and Equipment | 362,865 | 381,223 | | Investment Properties | 20,754 | - | | Financial Assets at Fair Value Through Profit or Loss | 1,969 | 62,263 | | Deferred Tax Assets | 13,393 | 6,103 | | Current Assets | 151,158 | 128,535 | | Inventories | 24,271 | 21,944 | | Trade and Other Receivables | 41,349 | 27,630 | | Bank Balances and Cash | 78,761 | 75,417 | | Current Liabilities | 141,516 | 97,870 | | Trade and Other Payables | 44,112 | 28,070 | | Short-term Borrowings | 94,697 | 69,370 | | Net Current Assets | 9,642 | 30,665 | | Total Assets | 561,199 | 590,379 | | Total Liabilities | 141,516 | 97,870 | | Net Assets | 419,683 | 492,509 | | Total Equity | 419,683 | 492,509 | Consolidated Statement of Changes in Equity This statement details the changes in the Group's total equity, including losses, foreign currency translation differences, and reserve movements, for the reporting period Equity Changes Summary In FY2019, the Group's total equity decreased due to the loss for the year and exchange differences on translating foreign operations, despite transfers to statutory reserves FY2019 Consolidated Statement of Changes in Equity Summary | Metric | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Balance at January 1 | 492,509 | 441,305 | | Loss for the Year | (72,205) | (11,735) | | Exchange differences on translating foreign operations | (621) | 4,202 | | Total Comprehensive Expense for the Year | (72,826) | (7,533) | | Transfer to statutory reserve | - | - | | Balance at December 31 | 419,683 | 492,509 | Consolidated Statement of Cash Flows This statement presents the Group's cash flows from operating, investing, and financing activities, highlighting changes in cash and cash equivalents for the reporting period Cash Flow Summary In FY2019, the Group's net cash generated from operating activities decreased, net cash outflow from investing activities was primarily for property, plant and equipment acquisition, and net cash from financing activities contributed due to increased bank borrowings, but the overall net increase in cash and cash equivalents declined FY2019 Key Data from Consolidated Statement of Cash Flows | Metric | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 38,788 | 45,268 | | Net Cash Used in Investing Activities | (57,019) | (57,019) | | Net Cash Generated from Financing Activities | 21,866 | 58,644 | | Net Increase in Cash and Cash Equivalents | 3,635 | 9,033 | | Cash and Cash Equivalents at Year End | 78,761 | 75,417 | - Net cash generated from operating activities decreased by 2.2% from RMB 45,268 thousand in 2018 to RMB 38,788 thousand in 20195355 - Net cash used in investing activities primarily included the acquisition of property, plant and equipment of approximately RMB 58,196 thousand653 - Net cash generated from financing activities primarily stemmed from proceeds from bank borrowings of RMB 109,800 thousand, partially offset by repayment of bank borrowings of RMB 84,800 thousand654 Notes to the Consolidated Financial Statements This section provides detailed explanatory notes to the consolidated financial statements, covering general information, significant accounting policies, critical estimates, segment data, and financial risk management General Information The company was incorporated in the Cayman Islands, listed on the Hong Kong Stock Exchange, and primarily engages in the design, development, production, sales, and marketing of cosplay products and lingerie; Mr. Chen Shengbi is the ultimate controlling shareholder - The Company was incorporated in the Cayman Islands on February 12, 2015, and its shares were listed on the Hong Kong Stock Exchange on October 16, 2015659664 - The Company is an investment holding company, with its subsidiaries primarily engaged in the design, development, production, sales, and marketing of cosplay products (including costumes and wigs) and lingerie660664 - As of December 31, 2019, the Directors considered Mr. Chen Shengbi to be the ultimate controlling shareholder of the Company660664 Summary of Significant Accounting Policies This section details the Group's significant accounting policies used in preparing the consolidated financial statements, covering basis of preparation, consolidation, foreign currency translation, property, plant and equipment, investment properties, intangible assets, financial instruments, impairment, inventories, cash and cash equivalents, contract liabilities, share capital, leases, revenue recognition, government grants, employee benefits, borrowing costs, income tax accounting, and related parties - The consolidated financial statements are prepared on a historical cost basis, except for financial assets at fair value through profit or loss, and are presented in RMB670 - The Group's consolidated financial statements include the income and expenses of subsidiaries from the date the Group obtains control until the date it ceases to control the subsidiary678 - Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, with depreciation provided on a straight-line basis over their estimated useful lives697698 - Investment properties are initially measured at cost and subsequently stated at cost less subsequent accumulated depreciation and any accumulated impairment losses709710 - Financial assets are classified as at amortized cost, fair value through profit or loss, or fair value through other comprehensive income, determined by the business model and contractual cash flow characteristics727728731 - Revenue primarily derives from the sale of wigs, costumes, and other products (including cosplay costumes, lingerie, and others), recognized when control of the asset is transferred802806812 - Income tax comprises current tax and deferred tax, with deferred tax calculated using the liability method for temporary differences827830 Adoption of New and Amended HKFRSs The Group first adopted HKFRS 16 "Leases" in FY2019, applying the modified retrospective approach with a cumulative effect adjustment to the opening equity balance, but without restating comparative information. Other issued but not yet effective amendments are not expected to have a significant impact - The Group first adopted HKFRS 16 "Leases" on January 1, 2019, applying the modified retrospective approach with a cumulative effect adjustment to the opening equity balance, without restating comparative information109865869 HKFRS 16 Transition Impact (January 1, 2019) | Metric | Amount (RMB Thousand) | | :--- | :--- | | Increase in right-of-use assets | 293 | | Decrease in prepaid land lease payments (current assets) | (293) | - Issued but not yet effective Hong Kong Financial Reporting Standards (such as amendments to HKAS 1 and HKAS 8 "Definition of Material") are not expected to have a significant impact on the consolidated financial statements917920921924 Critical Accounting Estimates and Judgements In preparing financial statements, the Group involves significant estimates and judgments in key areas such as impairment assessments of property, plant and equipment, investment properties, right-of-use assets, and trademarks, net realizable value of inventories, valuation of financial assets at fair value through profit or loss, and impairment assessment of trade and other receivables - Impairment assessment of property, plant and equipment, investment properties, right-of-use assets/prepaid land lease payments, and trademarks: Involves significant management estimates and judgments regarding future cash flows, discount rates, sales growth rates, and market rents929930933 - Net realizable value of inventories: Based on estimated selling prices less costs to complete and sell, referencing current market information and past experience; these estimates may vary significantly with market conditions936939 - Valuation of financial assets at fair value through profit or loss (unlisted convertible bonds): Determined using valuation techniques, involving significant judgments on unobservable inputs such as recovery rates943945 - Impairment estimate for trade and other receivables: Provisions are made based on assumptions of default risk and expected loss rates, derived from historical data, current market conditions, and forward-looking estimates944945 Segment Information The Group's operating segments include wigs, costumes and others, and plant leasing. In 2019, revenue from external customers primarily came from the costumes and others segment, with the United States being the largest overseas market, and a single customer contributing 12% of revenue - The Group has identified three reportable segments: wigs, costumes and others (including cosplay costumes, lingerie, and others), and plant leasing864109861 FY2019 Revenue by Operating and Reportable Segment | Segment | Revenue (RMB Thousand) | | :--- | :--- | | Wigs | 110,954 | | Costumes and Others | 205,110 | | Plant Leasing | - | | Total | 316,064 | FY2019 Revenue by Geographical Location | Region | Revenue (RMB Thousand) | | :--- | :--- | | China | 18,518 | | United States | 117,138 | | Germany | 8,302 | | United Kingdom | 11,817 | | Australia | 26,936 | | Netherlands | 11,023 | | Japan | 39,520 | | Brazil | 15,015 | | Israel | 17,308 | | Others | 50,487 | | Total | 316,064 | - In FY2019, the Group's revenue from a single customer was approximately RMB 38,096,000, accounting for 12% of total revenue120990 Revenue The Group's revenue primarily derives from the sales of wigs, costumes, and other products, with total revenue of RMB 316,064 thousand in 2019, of which CMS business contributed RMB 199,770 thousand and OBM business contributed RMB 116,294 thousand FY2019 Revenue by Product Category | Product Category | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Wigs | 110,954 | 145,223 | | Costumes and Others | 205,110 | 220,680 | | Total | 316,064 | 365,903 | FY2019 Revenue by Business Model | Business Model | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Contract Manufacturing Services Business | 199,770 | 251,960 | | Original Brand Manufacturing Business | 116,294 | 113,943 | | Total | 316,064 | 365,903 | Other Income Total other income in FY2019 amounted to RMB 5,254 thousand, a decrease from RMB 9,160 thousand in 2018, primarily due to unrecognized interest income from financial assets at fair value through profit or loss and reduced government grants FY2019 Other Income Details | Item | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Exchange gain, net | 2,080 | 1,997 | | Interest income | 269 | 267 | | Interest income from financial assets at fair value through profit or loss | - | 3,020 | | Government grants | 259 | 2,352 | | Rental income from operating leases of plant and machinery | 1,609 | 1,426 | | Rental income from operating leases of investment properties | 516 | - | | Income related to net lease investments | 482 | - | | Others | 39 | 98 | | Total | 5,254 | 9,160 | - The decrease in other income was mainly due to no interest income recognized from financial assets at fair value through profit or loss during the year (as interest defaulted) and reduced government grants recognized during the year118120 Finance Costs Total finance costs in FY2019 amounted to RMB 6,699 thousand, an increase from RMB 5,229 thousand in 2018, primarily due to higher average loan balances and increased interest expenses on bank and other short-term borrowings FY2019 Finance Costs Details | Item | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Interest on bank and other short-term borrowings | 6,635 | 4,668 | | Finance charges on lease liabilities | 64 | - | | Interest on convertible bonds | - | 561 | | Total | 6,699 | 5,229 | - The increase in finance costs was mainly due to higher average loan balances in 2019, with interest expenses on bank and other short-term borrowings increasing by approximately RMB 1.9 million126128 Loss Before Income Tax Loss before income tax in FY2019 was RMB 76,544 thousand, a significant increase from RMB 15,275 thousand i