进腾集团(02011) - 2019 - 年度财报

Company Information Company Basic Information This section provides basic company information, including board and committee member changes and key corporate details - On November 19, 2019, significant changes occurred in the company's Board of Directors and its committees (Audit, Nomination, Remuneration), with Mr. Zhuang Weidong appointed as Chairman and Mr. Qiu Chuanzhi as President[3][4] Financial Highlights Five-Year Financial Summary This report presents key five-year financial data, highlighting a decline in gross profit margin and shareholder equity, alongside an increase in the gearing ratio in 2019 Five-Year Financial Summary | Metric | 2019 | 2018 | 2017 | 2016 (Restated) | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Profit Margin (%) | 25.7 | 32.4 | 31.2 | 28.9 | 30.2 | | Operating Loss/Profit Margin (%) | -19.1 | -14.6 | -4.5 | 27.2 | 4.5 | | Net Loss/Profit Margin (%) | -21.5 | -16.8 | -24.4 | 15.1 | 2.6 | | Return on Equity (%) | -20.4 | -12.5 | -14.4 | 7.3 | 1.4 | | Total Assets (HKD Thousands) | 338,348 | 330,454 | 380,180 | 405,760 | 368,931 | | Total Equity Attributable to Shareholders (HKD Thousands) | 216,657 | 264,730 | 314,083 | 298,523 | 290,857 | | Gearing Ratio (%) | 29.3 | 12.9 | 11.4 | 21.6 | 15.2 | Consolidated Statement of Profit or Loss Summary In 2019, revenue from continuing operations increased, but gross profit declined, leading to an expanded operating loss and a larger loss attributable to equity holders Consolidated Statement of Profit or Loss Summary | Item (HKD Thousands) | 2019 | 2018 | | :--- | :--- | :--- | | Continuing Operations | | | | Revenue | 205,796 | 197,532 | | Gross Profit | 52,932 | 63,919 | | Operating Loss | (39,255) | (28,872) | | Loss Before Tax | (43,000) | (28,872) | | Loss for the Year | (44,164) | (29,946) | | Loss Attributable to Equity Holders of the Company | (44,180) | (33,177) | Consolidated Statement of Financial Position Summary As of 2019 year-end, total assets slightly increased, non-current assets rose due to right-of-use assets, while current assets and net assets declined Consolidated Statement of Financial Position Summary | Item (HKD Thousands) | December 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 142,345 | 83,397 | | Current Assets | 196,003 | 247,057 | | Total Assets | 338,348 | 330,454 | | Liabilities and Equity | | | | Current Liabilities | 60,671 | 41,396 | | Non-current Liabilities | 38,381 | 1,124 | | Net Assets | 239,296 | 287,934 | | Total Equity Attributable to Equity Holders of the Company | 216,657 | 264,730 | Chairman's Statement Chairman's Statement The Chairman's Statement reviews 2019, highlighting a change in control, continued focus on the zipper business with steady revenue growth despite challenges, and future plans for cost control and strategic investments - In July 2019, the company's control changed, with new major shareholders intending to continue and develop the existing zipper business while exploring other business opportunities[21] - Facing macro challenges such as the US-China trade dispute and the COVID-19 pandemic, the Group focused on strengthening marketing and product innovation, with zipper business revenue reaching approximately HKD 205.8 million in 2019[22] - Looking ahead, the Group will continue to seek attractive investment and acquisition opportunities to enhance profitability and shareholder value, remaining open to exploring new business ventures[22] Management Discussion and Analysis Financial Performance Overview In 2019, the Group's revenue increased, but loss before tax expanded significantly due to lower gross profit, fair value losses, and reduced foreign exchange gains, partially offset by a prior-year impairment reversal Financial Performance Overview | Financial Metric | 2019 | 2018 | | :--- | :--- | :--- | | Revenue | HKD 205.8 million | HKD 197.5 million | | Loss Before Tax | HKD 43 million | HKD 28.87 million | - Loss before tax increased by HKD 14.13 million year-on-year, primarily attributable to: - Decrease in gross profit of approximately HKD 11 million - Increase in fair value loss on financial assets of approximately HKD 22.3 million - Decrease in foreign exchange gains of approximately HKD 6.16 million - New interest expense on lease liabilities of approximately HKD 3.75 million - Dividend income of HKD 9.3 million in the prior year period, which was zero in the current year - These negative impacts were partially offset by an impairment loss of HKD 45 million on other receivables in the prior year period[27] Operational Review This section reviews 2019 operations, noting a revenue increase driven by overseas sales, but a decline in gross profit margin due to increased manufacturing costs, leading to an expanded loss attributable to shareholders Revenue by Product Category (HKD Millions) | Product Category | 2019 | % of Total | 2018 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Zippers and Sliders | 202.22 | 98.3 | 192.97 | 97.7 | | Others | 3.58 | 1.7 | 4.56 | 2.3 | | Total | 205.80 | 100.0 | 197.53 | 100.0 | Revenue by Geographical Location (HKD Millions) | Region | 2019 | % of Total | 2018 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Mainland China | 183.00 | 88.9 | 181.70 | 92.0 | | Overseas | 22.80 | 11.1 | 15.83 | 8.0 | | Total Revenue | 205.80 | 100.0 | 197.53 | 100.0 | - Gross profit decreased by 17.2% from HKD 63.92 million to HKD 52.93 million, with gross profit margin declining from 32.4% to 25.7% - This was primarily due to increased fixed manufacturing overheads and labor costs following the commencement of production at Kaiyi (Guangdong) Jingmen branch in April 2019[35] - Loss attributable to equity holders of the company was approximately HKD 44.18 million, an increase of 33.2% from the HKD 33.18 million loss in 2018[43] Financial Position Analysis This section analyzes the Group's financial position, noting partial fund redemption, a significant increase in inventory, improved trade receivables turnover, initial recognition of right-of-use assets and lease liabilities, and a zero gearing ratio at year-end - The Group redeemed part of its fund investments in 2019, reducing the carrying value of these financial assets to HKD 23.58 million at year-end (end of 2018: HKD 102 million), and recording a fair value change loss of HKD 23.6 million for the year - Subsequent to the reporting period, the remaining fund interests were also redeemed[45][46][47] - Inventory significantly increased by 40.2% from HKD 24.55 million to HKD 34.43 million, primarily due to increased raw material reserves to meet 2020 sales orders - Average inventory turnover days increased from 66 days to 70 days[50][51] - Due to HKD 45 million in sales consideration from the 2017 disposal of a subsidiary remaining uncollected, the Group fully provided for impairment loss in 2018 and obtained a favorable judgment in 2019, but is still evaluating subsequent recovery actions[55][56][58] - Due to the application of HKFRS 16, right-of-use assets of approximately HKD 52.04 million and lease liabilities of approximately HKD 53.58 million were recognized at the end of 2019[61] Liquidity and Capital Resources In 2019, operating cash flow turned negative, while investing cash flow was positive due to fund redemptions, leading to increased cash and cash equivalents at year-end with zero bank borrowings Cash Flow Summary (HKD Millions) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash (Used in)/From Operating Activities | (1.37) | 6.25 | | Net Cash From/(Used in) Investing Activities | 34.61 | (17.08) | | Net Cash Used in Financing Activities | (22.09) | – | | Cash and Cash Equivalents at End of Period | 91.17 | 78.59 | - As of December 31, 2019, the Group had no bank borrowings or bank facilities, and its gearing ratio (total interest-bearing borrowings/total equity) was zero[65] Outlook The Group anticipates severe challenges in the global business environment, particularly from the US-China trade war and COVID-19, impacting 2020 performance, but plans to enhance brand, integrate capacity, and strengthen management to navigate these challenges - The COVID-19 pandemic led to insufficient operation in downstream industries, decreased new orders, and disrupted supply chains and logistics, placing significant pressure on the company's zipper business operating performance in the first half of 2020[93] - The company will adopt four key measures to address challenges: - Enhance brand image and increase market development investment - Integrate production capacity, improve automation, and control costs - Strengthen talent management and improve operational efficiency - Strengthen cash flow management[94] Corporate Governance Report Corporate Governance Practices and Board of Directors The company strives for high corporate governance, largely complying with the code but noting deviations regarding the Chairman/CEO role and a non-executive director's term, with an eight-member board overseeing company leadership - The company complied with all code provisions of the Corporate Governance Code, with some deviations[99] - Deviations include: 1. From January 1, 2019, to November 19, 2019, the Chairman and Chief Executive Officer were the same person (Mr. Wu Hangzheng), deviating from Code Provision A.2.1 2. The appointment of Non-executive Director Ms. Lin Ping had no specific term, deviating from Code Provision A.4.1[106][111] - The Board of Directors currently comprises eight members, including four executive directors, one non-executive director, and three independent non-executive directors, meeting the Listing Rules' requirements for the number and professional qualifications of independent non-executive directors[101][109] Board Committees The Board operates with Audit, Remuneration, and Nomination Committees, primarily composed of independent non-executive directors, which held meetings to fulfill their duties, and the company has adopted diversity and dividend policies - The Audit Committee comprises three independent non-executive directors, held three meetings during the year, and reviewed significant matters including annual and interim financial results and internal control systems[134] - The Remuneration Committee comprises three independent non-executive directors, held two meetings during the year, and reviewed remuneration policies and determined executive directors' remuneration[140] - The Nomination Committee comprises two executive directors and three independent non-executive directors, held two meetings during the year, and reviewed the Board's structure, size, and composition[144] Internal Control and Shareholders' Rights The Board ensures internal control and risk management through external reviews, and the company has established clear shareholder rights mechanisms, including EGM procedures and inquiry channels, fostering effective communication - The Group has not established an internal audit department but appoints an external independent consultant to conduct annual reviews of its internal control system - The Board believes that as of the end of 2019, the Group's risk management and internal control systems were implemented and effective[157][160] - Shareholders holding not less than one-tenth of the company's paid-up capital have the right to request the Board to convene an extraordinary general meeting[164] Environmental, Social and Governance Report Environmental Protection The Group manages environmental matters according to ISO14001 and national regulations, focusing on waste reduction, energy saving, compliant emissions, wastewater reuse, and promoting green practices and reduced packaging - The Group strictly handles hazardous waste (e.g., waste mineral oil, dyes) and non-hazardous waste (e.g., waste packaging, domestic waste), and holds a "Pollutant Discharge Permit" to ensure compliant exhaust gas emissions[178][179] - By installing wastewater treatment and reclaimed water reuse systems, over 10,000 tonnes of wastewater were purified during the reporting period, with treated wastewater reusable for dyeing, washing, and other processes[181] Key Resource Consumption and Emission Data for 2019 | Category | Unit | Total Amount | Intensity (per HKD Million Revenue) | | :--- | :--- | :--- | :--- | | Greenhouse Gas Emissions | Tonnes of CO2e | 10,749 | 53.1 | | Wastewater | Tonnes | 66,552 | 323 | | Hazardous Waste | Tonnes | 7.5 | 0.03 | | Non-hazardous Waste | Tonnes | 126 | 6.1 | | Electricity Consumption | kWh | 12,437,223 | 50,562 | | Water Consumption | Tonnes | 339,611 | 1,650 | Employment and Labor Practices The Group adheres to labor laws, ensuring fair employment, prohibiting child/forced labor, prioritizing employee health and safety through training and drills, and providing professional development for its 816 full-time employees - As of the end of 2019, the Group had 816 full-time employees, an increase from 622 in 2018 - Employees are primarily located in Mainland China (99%), with the 31-40 age group being the largest (48%)[195] - The Group highly values occupational health and safety, implementing a three-tier safety training mechanism and regularly conducting fire drills - In 2019, there were 17 work-related injuries, resulting in 282 lost workdays, with no work-related fatalities[197][199][201] - The Group strictly adheres to labor standards, prohibiting child and forced labor, and safeguarding employee rights through its "Grievance Management Procedure"[204] Operating Practices The Group manages operating practices through supplier evaluation, prioritizing local sourcing, ensuring product quality with ISO 9001 certification and a complaint mechanism, protecting privacy, and implementing an anti-fraud system - The Group has established a comprehensive supply chain management system, evaluating suppliers on quality, price, delivery time, and environmental measures - All suppliers are located in Mainland China[208][209] - The Group's production bases are certified with ISO 9001, OEKO-TEX® STANDARD 100, and TQP quality systems - In 2019, 41 customer complaints were received, a reduction from 70 in 2018, with no product recalls due to health and safety issues[210] - The Group promotes integrity in operations, establishing a whistleblowing system and reward mechanism, and signing integrity agreements with employees and partners to prevent corruption and bribery - No related cases were found in 2019[215][216][217] Community Investment The Group actively fulfills social responsibilities through the "Kaiyi Charity Foundation," providing employee assistance, consistently donating to vulnerable groups, supporting youth, and encouraging community involvement - The Group established the "Kaiyi Charity Foundation" to provide assistance to employees facing financial difficulties (e.g., children's education, critical illness, natural disasters)[219] Biographies of Directors and Senior Management Biographies of Directors and Senior Management This section details the personal biographies of the company's executive, non-executive, and independent non-executive directors, along with senior management, covering their professional backgrounds and other listed company roles - Detailed biographies are provided for four executive directors, including Chairman Mr. Zhuang Weidong and President Mr. Qiu Chuanzhi, one non-executive director, and three independent non-executive directors[222][223][224] - The backgrounds and responsibilities of senior management, including Chief Financial Officer Mr. Qiu Zhichao and zipper business founders Mr. Xu Xipeng and Mr. Xu Xinan, are introduced[231][232] Directors' Report Business and Financial Review The Directors' Report outlines the Group's 2019 zipper business, noting key customer and supplier concentrations, no final dividend recommendation but a special dividend paid in 2020, and distributable reserves of HKD 84.6 million - The Group's principal business is the design, manufacture, and sale of zippers and other garment accessories[235] Key Customer and Supplier Concentration | Category | % of Total Turnover/Purchases (2019) | | :--- | :--- | | Largest Customer | 4.8% | | Top Five Customers | 16.1% | | Largest Supplier | 13.1% | | Top Five Suppliers | 33.5% | - The Board does not recommend a final dividend for 2019 - A special dividend of HKD 0.075 per share was paid on March 3, 2020[240] Directors and Share Capital Matters This section details director changes, share interests, and capital structure, noting significant board changes in November 2019, directors' controlled shareholdings, no listed securities transactions, and the restoration of public float to over 25% by year-end - Multiple changes occurred in the Board of Directors during the year and subsequent to the reporting period, including the appointment and resignation of several directors[255] Directors' Interests in Company Shares (Long Position) (December 31, 2019) | Director Name | Type of Interest | Number of Shares | Approximate % of Interest | | :--- | :--- | :--- | :--- | | Qiu Chuanzhi | Interest in controlled corporation | 133,706,331 | 28.77% | | Zhuang Weidong | Interest in controlled corporation | 130,897,663 | 28.16% | | Lin Ping | Interest in controlled corporation | 83,942,606 | 18.06% | | Mai Rongbin | Interest in controlled corporation | 83,942,606 | 18.06% | - After the offer closed on September 20, 2019, the company's public float decreased to approximately 13.03%, below the 25% required by the Listing Rules - It was subsequently restored to 25% through a placing completed on December 19, 2019[308][309] Independent Auditor's Report Independent Auditor's Report The auditor issued an unmodified opinion on the 2019 consolidated financial statements, highlighting key audit matters including inventory valuation, fair value measurement of financial assets, and impairment assessment of non-financial assets - The auditor issued an unmodified opinion on the consolidated financial statements[315] - Key audit matters include: - Inventory Valuation: Due to the significant net carrying amount of inventory (HKD 34.43 million) and the significant judgment involved in determining the required provision level - Valuation of Financial Assets at Fair Value Through Profit or Loss: Refers to unlisted investment funds, where fair value determination involves significant judgment - Impairment Assessment of Non-financial Assets: Due to the decline in gross profit margin of the zipper business, there may be indications of impairment, and the assessment involves significant judgment regarding future cash flows[317][319][322][336] Consolidated Financial Statements Consolidated Statement of Profit or Loss In 2019, the Group reported HKD 206 million in revenue and HKD 52.93 million in gross profit, but due to other losses and expenses, the loss before tax was HKD 43 million, resulting in a HKD 44.18 million loss attributable to equity holders Key Data from Consolidated Statement of Profit or Loss for the Year Ended 2019 (HKD Thousands) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Revenue | 205,796 | 197,532 | | Gross Profit | 52,932 | 63,919 | | Loss Before Tax | (43,000) | (28,872) | | Loss for the Year | (44,164) | (29,946) | | Loss Attributable to Equity Holders of the Company | (44,180) | (33,177) | | Basic Loss Per Share (HK cents) | (9.5) | (7.1) | Consolidated Statement of Financial Position As of December 31, 2019, the Group's total assets were HKD 338 million, with net assets at HKD 239 million, and significant changes in non-current assets and liabilities due to new lease accounting standards Key Data from Consolidated Statement of Financial Position as of December 31, 2019 (HKD Thousands) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 142,345 | 83,397 | | Current Assets | 196,003 | 247,057 | | Total Assets | 338,348 | 330,454 | | Liabilities and Equity | | | | Current Liabilities | 60,671 | 41,396 | | Non-current Liabilities | 38,381 | 1,124 | | Net Assets | 239,296 | 287,934 | | Total Equity | 239,296 | 287,934 | Consolidated Cash Flow Statement In 2019, operating activities resulted in a net cash outflow, while investing activities generated a net inflow from fund redemptions, leading to a net increase in cash and cash equivalents to HKD 91.17 million at year-end Consolidated Cash Flow Statement for the Year Ended 2019 (HKD Thousands) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash (Used in)/From Operating Activities | (1,372) | 6,247 | | Net Cash From/(Used in) Investing Activities | 34,607 | (17,082) | | Net Cash Used in Financing Activities | (22,086) | – | | Net Increase/(Decrease) in Cash and Cash Equivalents | 11,149 | (10,835) | | Cash and Cash Equivalents at December 31 | 91,174 | 78,587 | Notes to the Consolidated Financial Statements Changes in Accounting Policies This year, the Group adopted new HKFRS, most notably HKFRS 16 "Leases," recognizing HKD 69.2 million in right-of-use assets and lease liabilities on January 1, 2019, significantly impacting financial statement presentation - The Group adopted HKFRS 16 "Leases" effective January 1, 2019, bringing significant changes to lease accounting[373] Impact of Adopting HKFRS 16 on the Statement of Financial Position as of January 1, 2019 (HKD Thousands) | Item | Impact Amount | | :--- | :--- | | Recognition of Right-of-Use Assets | +69,204 | | Recognition of Lease Liabilities (Non-current) | +53,581 | | Recognition of Lease Liabilities (Current) | +15,623 | Segment Reporting The Group manages its business through Mainland China and Overseas zipper segments, with Mainland China contributing most revenue and profit in 2019, while overseas revenue grew significantly Segment Results for 2019 (HKD Thousands) | Item | Zippers - Mainland China | Zippers - Overseas | Total | | :--- | :--- | :--- | :--- | | Revenue from External Customers | 182,992 | 22,804 | 205,796 | | Reportable Segment Profit | 2,318 | 594 | 2,912 | | Reportable Segment Assets | 235,873 | 13,975 | 249,848 | Significant Related Party Transactions The Group engages in ongoing related party transactions, primarily property and plant leases, totaling HKD 14.75 million in rental payments for 2019, and also discloses key management personnel remuneration - The Group has multiple property lease agreements with senior management Mr. Xu Xipeng and Mr. Xu Xinan (or their associated companies), constituting continuing connected transactions[631][632][633] - For the year ended 2019, the total remuneration of key management personnel (including short-term benefits and retirement scheme contributions) was HKD 10.903 million[635] Events After Reporting Period Post-reporting period events include lease renewals, a special dividend payment of HKD 34.86 million, and the redemption of remaining fund investments, with the COVID-19 pandemic's financial impact still being assessed - On March 3, 2020, the company paid a special dividend of HKD 0.075 per share, totaling approximately HKD 34.86 million[666] - On March 25, 2020, the Group redeemed the remaining fund investments, receiving net proceeds of approximately HKD 24.89 million[667] - The COVID-19 pandemic, which erupted in early 2020, impacted business activities in China; the Group has resumed production, but its specific financial impact remains uncertain and is expected to be reflected in the 2020 interim and annual financial reports[667]