Financial Performance - The group's revenue for the fiscal year 2019 increased by approximately 13.7%, primarily driven by significant contributions from projects in Kunming and Wuhan, China[6]. - Revenue breakdown for 2019: Hong Kong approximately HKD 118.9 million, Macau approximately HKD 11.6 million, and China approximately HKD 81.2 million, compared to HKD 147.6 million, HKD 19.2 million, and HKD 19.5 million in 2018 respectively[10]. - The group's net profit after tax for 2019 was approximately HKD 11.5 million, a decrease of about 28.1% compared to the previous fiscal year, mainly due to lower gross margins and increased selling and distribution expenses[10]. - The group's revenue increased by approximately 13.7% from about HKD 186.3 million in 2018 to about HKD 211.7 million in 2019, primarily due to significant sales growth to clients in China[14]. - The cost of sales rose by approximately 16.6% to about HKD 157.2 million in 2019, compared to about HKD 134.9 million in 2018, with raw material costs and employee costs accounting for approximately 79.2% and 11.1% of total sales costs, respectively[15]. - Gross profit increased by about 6.1% to approximately HKD 54.5 million in 2019, while the overall gross margin decreased from about 27.6% in 2018 to about 25.7% in 2019[17]. - Other income decreased by approximately 63.4% to about HKD 0.7 million in 2019, primarily due to a net foreign exchange loss of about HKD 0.2 million[18]. - Selling and distribution expenses increased by approximately 38.2% to about HKD 10.3 million in 2019, mainly due to increased transportation costs[19]. - Administrative and other expenses decreased by approximately 2.2% to about HKD 28.5 million in 2019, influenced by a reduction in listing expenses[20]. - The impairment loss on trade receivables and contract assets amounted to approximately HKD 0.6 million in 2019[22]. - Financing costs decreased by approximately 72.8% to about HKD 0.1 million in 2019, due to the repayment of bank loans[23]. - The income tax expense decreased by approximately 26.3% to about HKD 4.1 million in 2019, mainly due to a reduction in taxable profits[24]. - The profit attributable to the company's owners increased by approximately 12.8% to about HKD 11.5 million in 2019[25]. Impact of COVID-19 - The group anticipates significant challenges in 2020 due to the impact of the COVID-19 pandemic, which is expected to delay construction projects in China, Hong Kong, and Macau[7]. - The group's production capacity has been directly affected by the pandemic, with all factories in China closed for over a month since the Lunar New Year holiday[11]. - The group expects revenue from its China division in 2020 to be significantly lower than in 2019 due to the anticipated economic downturn caused by the pandemic[11]. - The group plans to maintain competitiveness in the market despite the adverse economic environment, leveraging its strong relationships with customers and suppliers[7]. Operational Developments - The establishment of a new production line in Dongguan has incurred additional costs, including rent, hiring, and depreciation of new machinery[10]. - The group has prioritized resources to complete urgent projects in China, leading to a decline in revenue from Hong Kong and Macau[10]. - The company has completed the installation and testing of new production lines and busbar management systems for low-voltage distribution cabinets[46]. - The company has rented a temporary factory in Humen Town for HKD 1.5 million during the acquisition period of the new factory[52]. - The company has completed the renovation of the temporary factory and is utilizing it for production[46]. - The company has signed a sales agreement for the purchase of machinery and equipment for the new production line[46]. - The company plans to gradually acquire new parts for machinery and equipment to minimize disruption to production capacity[50]. - The company has completed the layout and configuration of the temporary factory based on consultant recommendations[46]. Management and Governance - The company was founded on August 25, 1992, by Mr. Yin Minqiang and Mr. Liang Jiawei, with Mr. Yin currently serving as the Executive Director and Chairman[55]. - Mr. Liang Jiawei, aged 51, is the Executive Director and CEO, overseeing daily operations and business development, with over 27 years of experience in the low-voltage distribution and control equipment industry[57]. - The company has a strong management team with extensive experience, including independent non-executive directors with backgrounds in engineering and finance, ensuring robust corporate governance[61][63]. - The management team emphasizes internal control and corporate governance, with members actively participating in various committees[60][63]. - The company has established subsidiaries in China, including Dongguan Quanda and Guangzhou Quanda, enhancing its operational footprint in the region[55]. - The management team is committed to strategic planning and business development, focusing on expanding market presence and exploring new opportunities[55][57]. - The company has a diverse board composition, including members with qualifications from recognized institutions, contributing to informed decision-making[61][63]. - The company aims to leverage its extensive industry experience to drive growth and innovation in the low-voltage distribution sector[55][57]. - The management's strategic vision includes enhancing operational efficiency and exploring potential mergers and acquisitions to strengthen market position[55][57]. Corporate Governance Practices - The board has adopted corporate governance practices in compliance with the listing rules, ensuring transparency and accountability[70]. - The company has established a clear division of responsibilities between the chairman and the CEO to maintain effective governance[78]. - The management team has extensive experience in finance and engineering, contributing to the company's strategic direction and operational success[66][68]. - The company has appointed three independent non-executive directors, constituting over one-third of the board[79]. - The audit committee held three meetings in the fiscal year 2019 and reviewed the company's annual performance, confirming compliance with applicable accounting standards[90]. - The nomination committee plans to hold at least one meeting annually to review the composition of the board and assess the independence of independent non-executive directors[91]. - The board is responsible for all significant matters, including policy, strategy, budget, internal controls, and risk management[85]. - The company has established three committees: audit committee, remuneration committee, and nomination committee, primarily composed of independent non-executive directors[86]. - The audit committee's main responsibilities include reviewing the financial and internal control mechanisms and assessing the effectiveness of arrangements for employees to report misconduct[87]. - The company ensures that all independent non-executive directors have received annual written confirmations regarding their independence[79]. - The board plans to meet four times a year, with written notices sent to directors at least 14 days in advance[83]. - The nomination committee considers various factors for board diversity, including gender, age, cultural background, and professional qualifications[91]. - The company’s executive directors have service contracts with a fixed term of three years, subject to rotation as per the company's articles[81]. - The company reviewed its annual audited financial statements for the year 2018 and the unaudited interim financial statements for the six months ending June 30, 2019[92]. - The remuneration committee plans to review the company's remuneration policy and structure at least once a year, ensuring transparency and performance-based compensation[96]. - In 2019, the remuneration committee held one meeting to review the compensation packages of executive directors, non-executive directors, independent non-executive directors, and senior management[98]. - The board consists of six members, including two females, reflecting the company's commitment to diversity[105]. - All directors received online training covering various topics, including the latest developments in corporate governance, during the 2019 fiscal year[108]. - The company confirmed that there are no significant uncertainties regarding events or conditions that may cast doubt on its ability to continue as a going concern[109]. - The independent auditor's report on the consolidated financial statements is included in the report, ensuring compliance with auditing standards[110]. - The total fees paid or payable to Deloitte amounted to HKD 1,620,000, with audit services costing HKD 1,300,000 and non-audit services costing HKD 320,000[111]. Shareholder Information - As of December 31, 2019, the company's distributable reserves were approximately HKD 133.7 million, a decrease from HKD 138.8 million as of December 31, 2018[132]. - The top five customers accounted for approximately 69.4% of the total revenue, with the largest customer contributing about 39.4%[134]. - The largest supplier and the top five suppliers represented approximately 18.8% and 48.4% of the total procurement, respectively[135]. - The company has received annual independence declarations from all independent non-executive directors, confirming their independence status[136]. - Both Mr. Yin Mingqiang and Mr. Wu Zhiqiang will retire at the upcoming annual general meeting but are eligible and willing to be re-elected[137]. - The remuneration of directors is determined by the remuneration committee, taking into account the group's operating performance, individual performance, and comparable market data[142]. - As of December 31, 2019, Mr. Liang Jiawei and Mr. Yin Mingqiang each hold 1,350,000,000 shares, representing 75% of the issued share capital[148]. - The company has made appropriate insurance arrangements for the legal liabilities arising from the performance of duties by directors and senior officers[144]. - There are no significant interests held by directors or their associates in any transactions, arrangements, or contracts with the company or its subsidiaries[139]. - The service contracts for executive directors are fixed for three years and are subject to rotation as per the company's articles[140]. - Non-executive and independent non-executive directors have appointment letters fixed for three years and are also subject to rotation[141]. - The company has no arrangements that would allow directors or their associates to benefit from purchasing shares or debt securities of the company or any other entity[146]. - There are no disclosures of interests in competing businesses by directors or their associates as of the report date[145]. - Unique Best holds a beneficial interest of 1,350,000,000 shares, representing 75% of the issued share capital[154]. - WANs Limited, REM Enterprises, and WAN Union also hold a combined interest of 1,350,000,000 shares, each representing 75% of the issued share capital[154]. - The major shareholders, including Mr. Yin Minqiang and Mr. Yin Zhiwei, are considered to have a collective interest in the shares held by Unique Best[157]. - No related party transactions or continuous related party transactions were reported for the fiscal year 2019[158]. - The company confirmed compliance with non-competition commitments by major shareholders during the fiscal year 2019[160]. - There were no management or administrative contracts established or in effect for any significant part of the company's business during the fiscal year 2019[161]. - The company did not enter into any stock-linked agreements that could lead to the issuance of shares during the fiscal year 2019[162]. - No tax exemptions were reported for shareholders due to shareholding[163]. - The company has adopted a stock option plan allowing for the issuance of options to eligible participants, with a maximum of 180,000,000 shares available, representing 10% of the issued share capital as of the report date[166]. - The exercise price for shares under the stock option plan will not be lower than the higher of the closing price on the date of grant or the average closing price over the five trading days preceding the grant[166]. - The company has a dividend policy in place, allowing for the declaration and distribution of dividends to shareholders, while retaining sufficient reserves for future development[167]. Environmental and Sustainability Efforts - The company is committed to sustainable development and has implemented measures to minimize its environmental impact throughout its production processes[183]. - The company has established a stakeholder engagement policy to understand stakeholder needs and ensure their interests are considered in business activities[177]. - The company has maintained compliance with the minimum public float requirements as per listing rules[172]. - The audit committee has reviewed the accounting principles and practices adopted by the group, discussing audit, internal control, and financial reporting matters[173]. - The company has received an unqualified audit opinion from Deloitte for its consolidated financial statements for the fiscal year[174]. - The company actively seeks feedback from stakeholders to enhance its future business and sustainable development efforts[182]. - In 2019, the company reported nitrogen oxides emissions of 61,023.60 kg and sulfur oxides emissions of 303.60 kg, with vehicle emissions showing a slight decrease in nitrogen oxides from 16.21 kg in 2018 to 14.41 kg in 2019[187]. - The total greenhouse gas emissions increased from 21.29 tons in 2018 to 38.5 tons in 2019, primarily due to the purchase of new vehicles[187]. - The company achieved a 12% reduction in overall energy consumption in 2019, while water consumption increased by approximately 40% due to factory demands[195]. - The total electricity consumption in 2019 was 1,015,730 kWh, down from 1,147,337 kWh in 2018, indicating a significant decrease in energy usage[195]. - The total water consumption in 2019 was 24,562.60 cubic meters, compared to 17,679.00 cubic meters in 2018, reflecting a substantial increase[195]. - The company reduced non-hazardous waste by approximately 5%, with industrial waste recorded at 37.52 tons in 2019, down from 39.32 tons in 2018[192]. - The packaging materials used in 2019 included 30 tons of cardboard boxes and 4,000 sheets of foam packaging, showing a decrease in cardboard usage from 41.20 tons in 2018[196]. - The company has implemented various resource-saving measures to optimize resource utilization and reduce waste during production[193]. - The company has signed agreements with authorized wastewater treatment plants to handle generated wastewater, ensuring compliance with environmental regulations[191]. - The company emphasizes the importance of improving manufacturing processes to minimize resource consumption and environmental impact[197]. Workforce and Human Resources - The group employs over 200 staff for professional and technical work, viewing them as the most important asset[199]. - As of December 31, 2019, the group had 255 employees, including 29 office staff, 73 project and engineering personnel, and 153 workers[200]. - The group increased its workforce by approximately 13% in the fiscal year 2019, with local employees decreasing by about 4% and Chinese employees increasing by approximately 18%[200]. - The ratio of Hong Kong to Chinese employees increased from 1:4 to 1:5 compared to the previous year[200]. - The gender ratio remained stable at approximately 1:2 for female to male employees at the end of 2019[200].
全达电器集团控股(01750) - 2019 - 年度财报