新源万恒控股(02326) - 2020 - 年度财报

Abbreviations This chapter defines key abbreviations used throughout the report, covering corporate entities, regulatory bodies, geographical locations, and currencies - The report defines key abbreviations such as Board, Company, Directors, Group, Hong Kong, Listing Rules, China, Securities and Futures Ordinance, Stock Exchange, HKD, RMB, USD, and %[7] Financial Highlights This section summarizes the company's key financial performance and position for fiscal years 2020 and 2019 FY2020 and FY2019 Financial Highlights (thousand HKD) | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) (Restated) | | :--- | :--- | :--- | | Operating Results (Continuing Operations): | | | | Revenue | 481,124 | 1,113,468 | | Gross Profit | 17,542 | 82,505 | | Loss for the year from continuing operations | (5,847) | (81,198) | | (Loss)/Profit for the year from discontinued operations | (11,503) | 10,526 | | Loss for the year | (17,350) | (70,672) | | (Loss)/Profit for the year attributable to owners of the Company | (16,898) | (70,350) | | Financial Position (as of March 31): | | | | Non-current assets | 45,457 | 218,026 | | Current assets | 761,423 | 820,738 | | Current liabilities | (321,062) | (487,589) | | Net current assets | 440,361 | 333,149 | | Non-current liabilities | (66) | (66) | | Total equity | 485,752 | 551,109 | | Total equity attributable to owners of the Company | 494,071 | 559,336 | | Key Ratio Analysis (Continuing Operations): | | | | Loss per share (HK cents) | (0.080) | (0.334) | | Gross profit margin | 3.6% | 7.4% | | Net loss margin | (1.2%) | (7.3%) | | Current ratio | 2.37 | 1.68 | | Gearing ratio | Zero | 42.4% | - The company's revenue for FY2020 significantly decreased by 56.8%, and gross profit decreased by 78.7%[10][11] - Loss for the year narrowed from 70,672 thousand HKD in 2019 to 17,350 thousand HKD[10][11][13] - Loss per share decreased from 0.334 HK cents to 0.080 HK cents[10][11][13] - The current ratio increased from 1.68 to 2.37, and the gearing ratio decreased from 42.4% to zero, primarily due to the repayment of all outstanding borrowings during the year[10][11][13] Corporate Information This chapter details the company's Board of Directors, committees, key personnel, and contact information, including recent changes Board of Directors The Board of Directors experienced several changes in executive, non-executive, and independent non-executive director appointments and resignations - Executive Director Mr. Sin Lik Man serves as Chairman and Chief Executive Officer; Mr. Li Chun Tung resigned on September 6, 2019; and Ms. Sun Le was appointed on November 15, 2019[20] - Non-Executive Director Mr. Zheng Gang resigned on December 1, 2019; and Ms. Sun Di was appointed on September 6, 2019[17][18] - Independent Non-Executive Directors Mr. Chan Kwong Fat, Mr. Siu Hei Lam, Dr. Ng Tsz Kin, and Dr. Lau Yung Ping resigned; Mr. Cheung Ngai Lam and Mr. Wang Ye were appointed on February 1, 2020[19] Committees Membership of the Audit, Nomination, Remuneration, and Risk Management Committees was adjusted to ensure effective corporate governance - Audit Committee members included Dr. Ng Tsz Kin (Chairman, resigned on March 31, 2020), Mr. Chan Kwong Fat (resigned), Mr. Siu Hei Lam (resigned), Dr. Lau Yung Ping (resigned), Mr. Cheung Ngai Lam (appointed), and Mr. Wang Ye (appointed)[20] - Nomination Committee members included Mr. Wang Ye (Chairman, appointed), Mr. Chan Kwong Fat (resigned), Mr. Siu Hei Lam (resigned), Dr. Ng Tsz Kin (resigned), Mr. Sin Lik Man, and Mr. Cheung Ngai Lam (appointed)[26] - Remuneration Committee members included Mr. Cheung Ngai Lam (Chairman, appointed), Mr. Siu Hei Lam (resigned), Mr. Chan Kwong Fat (resigned), Dr. Ng Tsz Kin (resigned), Mr. Sin Lik Man, and Mr. Wang Ye (appointed)[24] - Risk Management Committee members included Dr. Ng Tsz Kin (Chairman, resigned), Mr. Chan Kwong Fat (resigned), Mr. Siu Hei Lam (resigned), Dr. Lau Yung Ping (resigned), Mr. Li Chun Tung (resigned), Mr. Cheung Ngai Lam (appointed), and Mr. Wang Ye (appointed)[28] Key Personnel and Contacts Changes in Company Secretary and Financial Controller positions, along with updated corporate contact and location details - Company Secretary Mr. Leung Ho Yan resigned on January 1, 2020, and Mr. Hui King Tat was appointed on the same day[32] - Financial Controller Mr. Li Chun Tung resigned on September 6, 2019[32] - The company's auditor is Crowe (HK) CPA Limited, and the stock code is 2326[33] - The principal place of business and head office in Hong Kong changed to Unit 1102, 11/F, Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong, effective July 7, 2020[35][36] Chairman's Statement The Chairman's Statement reviews the Group's business performance, including metal minerals and environmental segments, and outlines future prospects Business Performance The Group's metal minerals business faced challenges from global trade and the pandemic, while its environmental business provided stable revenue - The Group primarily engages in the procurement and sale of metal minerals and related industrial raw materials, as well as the production and sale of industrial products[41][44] - The utility products business of Ningxia Tianyuan Power Generation Co., Ltd. was disposed of during the year[41][44] - Uncertain tariff policies, trade barriers, and the threat of novel coronavirus infection led to a further deterioration in the procurement and sale of metal minerals and related industrial raw materials[42][44] - The environmental business of Ningxia Huaxia Environmental Resources Comprehensive Utilization Co., Ltd. provided stable revenue and profit to the Group, maintaining its profitability[46][47] Prospects The Group is divesting its power business to focus on metal minerals, diversify revenue, control costs, and leverage financing for sustainable growth - Sino-US tariff disputes, economic conflicts, and the coronavirus outbreak negatively impacted the global economic outlook[48][50] - The disposal of the power company aims to realize investments, focus resources on metal minerals and related industrial raw materials, and enhance liquidity to seize future investment opportunities and diversify revenue sources[49][50] - The Board will review management efficiency, revitalize businesses, control operating costs, and leverage public company financing advantages to explore potential and sustainable business opportunities[52][54] Acknowledgements The Chairman expresses sincere gratitude to all shareholders, business partners, directors, and employees on behalf of the Board - The Chairman, on behalf of the Board, extends sincere gratitude to all shareholders, business partners, directors, and staff[53][55] Business Review This chapter provides a detailed review of the Group's operational and financial performance, including changes in revenue and profit from continuing operations, cost control measures, and the impact of discontinued operations Operations Review Continuing operations experienced significant revenue and gross profit declines, while environmental products grew; cost controls reduced expenses, and discontinued operations incurred losses - Continuing operations primarily involve the procurement and sale of metal minerals and related industrial raw materials, as well as the production and sale of industrial products[59][62] Revenue and Gross Profit Changes from Continuing Operations (thousand HKD) | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) (Restated) | Change Rate | | :--- | :--- | :--- | :--- | | Revenue | 481,124 | 1,113,468 | -56.8% | | Gross Profit | 17,542 | 82,505 | -78.7% | - The decrease in revenue and gross profit was primarily due to reduced customer demand in the metal minerals and related industrial raw materials business, global economic uncertainty, and RMB exchange rate fluctuations[61][63] Revenue and Profit Changes by Business Segment (thousand HKD) | Business Segment | 2020 Revenue (thousand HKD) | 2019 Revenue (thousand HKD) | Revenue Change Rate | 2020 Profit (thousand HKD) | 2019 Profit (thousand HKD) | Profit Change Rate | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Metal Minerals and Related Industrial Raw Materials | 350,898 | 1,023,695 | -65.7% | 674 | 48,749 | -98.6% | | Industrial Products | 130,226 | 89,773 | +45.1% | 13,845 | 23,034 | -39.9% | - Other net income turned from a loss of 67,938 thousand HKD in 2019 to an income of 18,860 thousand HKD in 2020, mainly due to foreign currency exchange rate fluctuations (RMB against USD)[66][69] - Administrative expenses decreased by approximately 13.8% to 31,190 thousand HKD, primarily due to cost control measures implemented by management[67][70] - Finance costs significantly decreased by approximately 94.7% to 2,380 thousand HKD, mainly due to reduced use of bill receivable discounting arrangements[73][77] - Discontinued operations recorded a loss of 11,503 thousand HKD for the year, primarily due to increased production costs in the utility products business[80][83] - Loss for the year attributable to owners of the Company narrowed from 70,350 thousand HKD in 2019 to 16,898 thousand HKD, and basic loss per share decreased from 0.334 HK cents to 0.080 HK cents[81][83] Financial Review The Group's liquidity improved with a higher current ratio and zero gearing due to debt repayment; the power company disposal is expected to boost finances Key Financial Position Indicators (thousand HKD) | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Current assets | 761,423 | 820,738 | | Cash and bank balances | 6,093 | 92,373 | | Current liabilities | 321,062 | 487,589 | | Current ratio | 2.37 | 1.68 | | Trade payables | 258,783 | 24,651 | | Trade receivables | 327,523 | 122,656 | | Bills receivable | Zero | 416,115 | | Equity attributable to owners of the Company | 494,071 | 559,336 | | Total borrowings | Zero | 412,557 | | Gearing ratio | Zero | 42% | - The current ratio increased from 1.68 in 2019 to 2.37, and the gearing ratio decreased from 42% to zero, primarily due to the repayment of all outstanding borrowings for the year ended March 31, 2020[86][89][91][92] - Equity attributable to owners of the Company decreased to 494,071 thousand HKD, mainly due to the total comprehensive expenses recorded during the year[88][92] - The Group entered into an agreement on September 11, 2019, to dispose of its entire equity interest in the power company for a total consideration of RMB169,000,000, with the disposal completed in June 2020, expected to improve the Group's financial performance and liquidity[96][99][108] - The Group primarily conducts monetary asset and liability and business transactions in HKD, RMB, and USD, managing foreign exchange risk by incorporating exchange differences into metal mineral trade pricing, and will consider using financial derivatives to hedge risks[98][101] - As of March 31, 2020, the Group had no bank discounted bill advances (2019: 412,557 thousand HKD), and capital commitments amounted to RMB1,840 thousand (approximately 2,009 thousand HKD), primarily for the purchase of machinery and equipment for the power company[103][104][105][106] - As of March 31, 2020, the Group had no significant contingent liabilities[107] - The COVID-19 outbreak had no significant impact on the financial performance for the year ended March 31, 2020, but the Group will continue to monitor its future effects[107][108] Biographical Details of Directors and Senior Management This chapter provides biographical details, including education and professional experience, for the company's directors and company secretary Executive Directors This section details the educational backgrounds and extensive experience of Executive Directors Mr. Sin Lik Man and Ms. Sun Le - Mr. Sin Lik Man (Chairman and Chief Executive Officer) holds a Bachelor of Business Administration (Accounting) from The Hong Kong University of Science and Technology and a Master of Accounting from Curtin University of Technology, Australia; he is a fellow of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants, with over 20 years of experience in financial control, corporate finance, and capital market relations[111][113][114] - Ms. Sun Le (Executive Director) joined the company in November 2019, graduated from Northeast Normal University with a major in Tourism Management, and has accumulated extensive management experience in the trade business sector[117][118] Non-Executive Director This section outlines Non-Executive Director Ms. Sun Di's educational background and professional experience in accounting, auditing, and risk management - Ms. Sun Di (Non-Executive Director) joined the company in September 2019, holds a Bachelor of Arts in German Language and Literature from Beijing Foreign Studies University with a minor in International Economics and Trade, and previously worked at KPMG Huazhen LLP, possessing extensive experience in accounting, auditing, and risk management[119][120][121] Independent Non-Executive Directors This section details the educational backgrounds and professional experience of Independent Non-Executive Directors Dr. Ng, Mr. Cheung, and Mr. Wang - Dr. Ng Tsz Kin (Independent Non-Executive Director) holds a Master of Commerce from Macquarie University, Sydney, and a Doctor of Education from The Education University of Hong Kong; he is a Chartered Accountant in Australia and a Chartered Secretary, previously worked at PricewaterhouseCoopers Hong Kong, and resigned on March 31, 2020[123][124][125][128] - Mr. Cheung Ngai Lam (Independent Non-Executive Director) joined the company in February 2020, is a member of the American Institute of Certified Public Accountants and a Certified Practising Accountant in Australia, holds a Bachelor of Social Sciences from The University of Hong Kong and a Master of Science in Finance from The Hong Kong University of Science and Technology, and currently serves as Chief Financial Officer of China Zhengxing Auto International Co., Ltd[126][127][129] - Mr. Wang Ye (Independent Non-Executive Director) joined the company in February 2020, holds a Bachelor of Laws from Peking University, a Master of Environmental and Resources Protection Law from China University of Political Science and Law, and a Juris Doctor from the University of Southern California, and previously worked as a lawyer at King & Wood Mallesons, Beijing[131][132][134] Company Secretary This section outlines Company Secretary Mr. Hui King Tat's professional background and experience in accounting and auditing - Mr. Hui King Tat (Company Secretary and Authorized Representative) joined the Group's finance and accounting department in July 2015, possesses over 13 years of accounting and auditing experience, obtained a Bachelor's degree in Accounting and Finance from Leeds Metropolitan University in June 2006, and has been a member of the Hong Kong Institute of Certified Public Accountants since January 2014[133][135] Report of the Directors This chapter details the company's principal activities, annual results, dividend policy, AGM, financial information, and director/shareholder interests Principal Activities and Business Review The Company is an investment holding company with subsidiaries in metal minerals, industrial products, and utility products; business details are in other sections - The Company is an investment holding company, and its subsidiaries are primarily engaged in the procurement and sale of metal minerals and related industrial raw materials, the production and sale of industrial products, and the production and sale of utility products[139][144] - Further discussion and analysis of the Group's business are provided in the 'Chairman's Statement' on pages 8 to 10 and the 'Business Review' on pages 11 to 17 of this annual report[140][144] Results and Appropriations The Group's results for the year ended March 31, 2020, are disclosed in the financial statements, with no dividends recommended - The Group's results for the year ended March 31, 2020, are presented in the consolidated statement of profit or loss and consolidated statement of profit or loss and other comprehensive income on pages 60 to 61 of this annual report, respectively[145] - The Board does not recommend the payment of any dividends for the year ended March 31, 2020 (2019: nil)[146] Annual General Meeting The Annual General Meeting is scheduled for August 21, 2020, with share transfer registration suspended from August 18-21 for eligibility - The Company's Annual General Meeting will be held on August 21, 2020[147][148] - To be eligible to attend and vote at the meeting, share transfer registration will be suspended from August 18, 2020, to August 21, 2020 (both dates inclusive)[150][156] Financial and Asset Information This section references the five-year financial summary, changes in property, plant and equipment, share capital, reserves, and distributable reserves - The five-year financial summary is presented on page 208 of this annual report[151][157] - Details of changes in property, plant and equipment are set out in note 15 to the consolidated financial statements[152][158] - Details of changes in share capital are set out in note 28(b) to the consolidated financial statements[153][159] - Details of changes in reserves are set out in note 28(a) to the consolidated financial statements and the consolidated statement of changes in equity, respectively[154][160] - As of March 31, 2020, the Company's distributable reserves amounted to approximately 16,592 thousand HKD (2019: 23,996 thousand HKD)[155][161] Directors and Their Interests This section details director appointments, interests in shares, absence of service contracts or competing interests, and the status of share option schemes - During the reporting period and up to the date of this report, the Board members included Executive Directors Mr. Sin Lik Man, Ms. Sun Le (appointed), Non-Executive Director Ms. Sun Di (appointed), and Independent Non-Executive Directors Mr. Cheung Ngai Lam (appointed), Mr. Wang Ye (appointed)[164][167] - Ms. Sun Le, Ms. Sun Di, Mr. Cheung Ngai Lam, and Mr. Wang Ye will retire by rotation at the forthcoming Annual General Meeting and are eligible for re-election[164][167] - None of the Directors proposed for re-election at the forthcoming Annual General Meeting has entered into any service contract with the Company or any of its subsidiaries which is not determinable by the Company within one year without payment of compensation (other than statutory compensation)[165][168] - As of March 31, 2020, Directors and chief executive had long positions in the Company's shares and underlying shares, with Ms. Sun Le holding 5,040,000,000 shares (23.90%) and Dr. Ng Tsz Kin holding 9,000,000 shares (0.04%)[177] - For the year ended March 31, 2020, no Director or their respective close associates were considered to have interests in any business that competes or is likely to compete, directly or indirectly, with the Group's business[182][183] - For the year ended March 31, 2020, no share options were granted, exercised, cancelled, or lapsed under any share option scheme, and there were no outstanding share options[185][186] Shareholders' Interests This section lists substantial shareholders holding 5% or more of the company's issued share capital as of March 31, 2020 Substantial Shareholders' Shareholdings (as of March 31, 2020) | Shareholder Name/Name | Capacity and Nature of Interest | Number of Shares Held | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Sun Le | Interest in controlled corporation | 5,040,000,000 | 23.90% | | Sheen Success Investments Limited | Beneficial owner | 5,040,000,000 | 23.90% | | Zhou Qiuhong | Interest in controlled corporation | 3,215,322,140 | 15.25% | | Ying Sheng Investment Co., Ltd | Beneficial owner | 3,215,322,140 | 15.25% | Other Corporate Matters This section covers various corporate governance and operational matters, including transactions, policies, compliance, and relationships with stakeholders - The material related party transactions disclosed in note 31 to the consolidated financial statements do not constitute 'connected transactions' or 'continuing connected transactions' subject to any reporting, announcement, or independent shareholders' approval requirements under Chapter 14A of the Listing Rules[197][203] - During the year ended March 31, 2020, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[198][204] - There are no provisions for pre-emptive rights in the Company's bye-laws or the applicable laws of Bermuda[199][205] - The Company has purchased appropriate directors' and officers' liability insurance during the year to provide protection for its Directors and other senior officers[201][207] - Sales to the Group's largest customer and five largest customers accounted for approximately 63.5% and 100% of the Group's total revenue for the year, respectively[215][216] - Purchases from the largest supplier and five largest suppliers accounted for approximately 90.9% and 100% of the Group's total purchases for the year, respectively[215][216] - The Group is committed to environmental protection, strictly complies with laws and regulations related to emissions, and integrates environmental protection concepts with its production and operation systems[213][218] - As of March 31, 2020, the Group had approximately 263 employees and directors (2019: 308), with staff costs amounting to 47,942 thousand HKD (2019: 56,132 thousand HKD)[223][227] - The Group has complied with all applicable code provisions set out in the Corporate Governance Code contained in Appendix 14 to the Listing Rules, except for code provision A.2.1[231][236] - As of the date of this report, at least 25% of the Company's total issued shares were held by the public[232][237] - Crowe (HK) CPA Limited will be proposed for re-appointment as the Company's auditor at the forthcoming Annual General Meeting[241][242] Corporate Governance Report This chapter details the Group's corporate governance framework, Board and committee functions, auditor information, risk management, and shareholder rights Corporate Governance Framework The Board maintains high corporate governance standards, complying with Listing Rules and committing to publish an ESG report - The Board is committed to maintaining high standards of corporate governance, believing that effective corporate governance is crucial for safeguarding shareholders' interests and enhancing stakeholder value[245][250] - For the year ended March 31, 2020, the Board has adopted and complied with all applicable code provisions set out in the Corporate Governance Code contained in Appendix 14 to the Listing Rules[246][251] - The Environmental, Social and Governance Report for the year ended March 31, 2020, will be published on the Company's and the Stock Exchange's websites within three months after the publication of this annual report[247][251] - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules, and all Directors have confirmed compliance with the relevant requirements[248][252] Board of Directors and Meetings The Board, comprising six directors, oversees Group management and strategy, holds regular meetings, and ensures director development, despite the Chairman and CEO roles being combined - The Board is responsible for the overall management, leadership, and control of the Group, with primary duties including formulating long-term corporate strategies, establishing policies and plans, supervising management, evaluating performance, and reviewing financial matters[249][253] - As of the date of this annual report, the Board comprises six Directors, including two Executive Directors, one Non-Executive Director, and three Independent Non-Executive Directors[255][262] - The Company has received annual confirmations of independence from each Independent Non-Executive Director and considers all Independent Non-Executive Directors to be independent[259][263] - The Company provides comprehensive, formal, and tailored induction briefings for new Directors and encourages all Directors to participate in continuous professional development[260][261][263][264] - For the year ended March 31, 2020, the Board held fifteen regular meetings and the 2019 Annual General Meeting[267][268] - The roles of Chairman and Chief Executive Officer are combined and held by Mr. Sin Lik Man; despite deviating from code provision A.2.1, the Board believes this structure provides consistent leadership and ensures that power and authority are not concentrated in one individual[272][273][274][275][277] Board Committees This section details the composition, responsibilities, and activities of the Remuneration, Nomination, Audit, and Risk Management Committees, ensuring effective governance - The Remuneration Committee is primarily responsible for advising the Board on the remuneration policy and structure for Directors and senior management, and for determining the remuneration packages of individual Executive Directors and senior management[289][290] - For the year ended March 31, 2020, the Remuneration Committee held six meetings to review the remuneration packages of Directors[291][292] - The Nomination Committee is primarily responsible for advising the Board on the appointment or re-appointment of Directors, evaluation of the Board's structure, assessment of the independence of Independent Non-Executive Directors, and Board succession matters[295][298] - The Board has adopted a Board Diversity Policy and a Nomination Policy to ensure diversity among Board members and the principle of meritocracy in selection[296][297][298][299] - For the year ended March 31, 2020, the Nomination Committee held six meetings to review the Board's composition and independence, and to consider the re-election of retiring Directors[318][319] - The Audit Committee is primarily responsible for assisting the Board in applying financial reporting and internal control principles, maintaining an appropriate relationship with the auditor, and is also entrusted with corporate governance functions[323][324] - For the year ended March 31, 2020, the Audit Committee held three meetings to review and discuss the audited financial statements, corporate governance compliance, accounting policies, and the effectiveness of the internal control system[325][327][329] - The Risk Management Committee was established on November 23, 2015, and is primarily responsible for reviewing the Group's overall objectives and basic policies for risk and compliance management, internal control and risk management, and internal audit functions[330][331][332] - For the year ended March 31, 2020, the Risk Management Committee held two meetings to identify the Group's operational risks and review the interim review report on risk management and internal control[335][336] Auditor and Auditor's Remuneration This section discloses audit and non-audit service fees paid to the external auditor, Crowe (HK) CPA Limited - The responsibilities of the external auditor, Crowe (HK) CPA Limited, regarding the Company's consolidated financial statements are set out in the 'Independent Auditor's Report' section[336][337] Auditor's Fees (thousand HKD) | Service Type | Fees (thousand HKD) | | :--- | :--- | | Audit Services | 1,040 | | Non-Audit Services | 215 | | Total | 1,255 | Directors' Responsibilities for Financial Reporting The Board is responsible for presenting balanced and clear financial reports, confirming its duty in preparing consolidated financial statements - The Board is responsible for presenting a balanced, clear, and understandable assessment in the annual and interim reports, price-sensitive information announcements, and other financial disclosures[341][344] - The Directors have confirmed their responsibility for preparing the Company's consolidated financial statements for the year ended March 31, 2020[342][345] Corporate Governance Functions The Board delegates corporate governance functions to the Audit and Risk Management Committees, covering policy, training, compliance, and code adherence - The Board has delegated certain corporate governance functions to the Audit Committee and the Risk Management Committee[346] - These functions include formulating and reviewing corporate governance policies, monitoring the training and development of Directors and senior management, reviewing and monitoring compliance with legal and regulatory requirements, establishing codes of conduct and compliance manuals, and reviewing compliance with the Corporate Governance Code[343][346] Risk Management and Internal Control The Board maintains robust risk management and internal control systems, reviewed annually with external consultants, to safeguard assets and shareholder interests - The Board is responsible for maintaining adequate risk management and internal control systems to safeguard the Group's assets and shareholders' interests[348][351] - The Board annually reviews the effectiveness of the risk management and internal control systems, ensuring adequate resources, staff qualifications and experience, training programs, and budget[349][351] - The Group has engaged external consultants to review its risk management and internal control systems, to identify and assess significant operational risks, and to provide recommendations for improvement[355][358] - Guidelines have been established to ensure that Directors, senior management, management, and relevant employees handle and disseminate sensitive and confidential inside information with due care[354][358] Company Secretary Mr. Hui King Tat was appointed Company Secretary on January 1, 2020, and has fulfilled professional training requirements - Mr. Hui King Tat was appointed as the Company Secretary on January 1, 2020[357][360] - Mr. Hui has duly complied with the relevant professional training requirements under Rule 3.29 of the Listing Rules for the year ended March 31, 2020[357][360] Shareholders' Rights This section outlines shareholder rights, including convening meetings, proposing resolutions, nominating directors, and making inquiries to the Board - Shareholders may, by written requisition, request the Board to convene an extraordinary general meeting to address any business transactions specified in the requisition[362][365] - Shareholders holding not less than one-twentieth of the total voting rights of all shareholders or not less than 100 shareholders may, by written request, require the company to circulate notice of a resolution or a statement[363][366] - Shareholders nominating candidates for directorships must send written notice to the Board or the Company Secretary within the specified period[368][371] - Shareholders may at any time submit written inquiries and questions to the Company's principal place of business in Hong Kong, addressed to the Company Secretary[369][372] Dividend Policy The Board's dividend policy balances shareholder profit sharing with retaining reserves for future growth, considering financial health and market conditions - The Board has adopted a dividend policy that allows the Company's shareholders to share in the Company's profits while reserving sufficient funds for the Group's future development[373][379] - Before recommending and declaring dividends, the Board must consider factors such as the Group's general financial position, working capital and debt levels, liquidity, retained earnings and distributable reserves, future cash needs, market conditions, and overall economic conditions[374][375][379] - The Company's declaration and payment of dividends must also comply with any restrictions contained in Bermuda law, the Company's bye-laws, and any applicable laws, rules, and regulations[376][379] Investor Relations and Constitutional Documents The company maintains various communication channels with stakeholders; no changes occurred in constitutional documents during the reporting period - The Company has established multiple communication channels with its shareholders, investors, and other stakeholders, including annual general meetings, annual and interim reports, notices, announcements, circulars, and the Company's website[377][381] - There were no changes to the Company's constitutional documents during the year[378][382] Independent Auditor's Report This chapter presents the independent auditor's opinion on the consolidated financial statements, detailing the audit basis, key matters, and responsibilities Opinion The independent auditor confirms the consolidated financial statements present a true and fair view, complying with HKFRS and Hong Kong Companies Ordinance - In the auditor's opinion, the consolidated financial statements give a true and fair view of the Group's consolidated financial position as of March 31, 2020, and of 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 Ordinance[386][388] Basis for Opinion The audit was conducted under Hong Kong Standards on Auditing, with the auditor maintaining independence and obtaining sufficient evidence - The audit was conducted in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants[387][389] - The auditor is independent of the Group and has fulfilled other ethical responsibilities in accordance with the Code of Ethics for Professional Accountants[387][389] - The auditor believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the audit opinion[387][389] Key Audit Matters The valuation of trade receivables is a key audit matter due to its materiality and the significant management judgment involved - Key audit matters are those matters that, in the auditor's professional judgment, were of most significance in the audit of the consolidated financial statements of the current period[391][392] - The valuation of trade receivables was identified as a key audit matter due to its materiality to the consolidated financial statements and the significant degree of judgment and estimation involved in assessing the recoverability of the debts[393][394] - As of March 31, 2020, trade receivables amounted to approximately 327,523 thousand HKD[394] Responsibilities This section defines the responsibilities of directors for financial statements and other information, and auditors for auditing, risk assessment, and communication - Directors are responsible for all other information in the annual report, and the auditor does not express any form of assurance conclusion on the other information[396][402][403] - Directors are responsible for preparing consolidated financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance, and for internal controls[399][405] - The auditor's objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error[408][412] - The auditor exercises professional judgment and maintains professional skepticism throughout the audit, identifying and assessing the risks of material misstatement, and designing and performing audit procedures[410][413] - The auditor communicates with the Audit Committee regarding the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control[419][423] Financial Statements This chapter presents the Group's consolidated financial statements, including profit or loss, comprehensive income, financial position, equity changes, cash flows, and notes Consolidated Statement of Profit or Loss Continuing operations experienced significant revenue and gross profit declines, but loss narrowed; discontinued operations recorded a loss, reducing total loss Key Data from Consolidated Statement of Profit or Loss (thousand HKD) | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) (Restated) | | :--- | :--- | :--- | | Continuing Operations: | | | | Revenue | 481,124 | 1,113,468 | | Cost of sales | (463,582) | (1,030,963) | | Gross Profit | 17,542 | 82,505 | | Other income/(loss) – net | 18,860 | (67,938) | | Selling and distribution costs | (3,023) | (10,722) | | Administrative expenses | (31,190) | (36,174) | | Other operating expenses | (2,238) | – | | Operating loss | (49) | (32,329) | | Finance costs | (2,380) | (44,632) | | Loss before tax | (2,429) | (76,961) | | Income tax expense | (3,418) | (4,237) | | Loss for the year from continuing operations | (5,847) | (81,198) | | Discontinued Operations: | | | | (Loss)/Profit for the year from discontinued operations | (11,503) | 10,526 | | Total: | | | | Loss for the year | (17,350) | (70,672) | | (Loss)/Profit for the year attributable to owners of the Company | (16,898) | (70,350) | | Basic and diluted loss per share (HK cents) | (0.080) | (0.334) | Consolidated Statement of Profit or Loss and Other Comprehensive Income The Group reported a loss of 17,350 thousand HKD for the year, with total comprehensive expenses of 65,357 thousand HKD due to exchange differences Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income (thousand HKD) | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) (Restated) | | :--- | :--- | :--- | | Loss for the year | (17,350) | (70,672) | | Exchange differences on translation of financial statements of subsidiaries | (48,007) | (52,398) | | Other comprehensive expenses for the year | (48,007) | (52,398) | | Total comprehensive expenses for the year | (65,357) | (123,070) | | Total comprehensive expenses attributable to owners of the Company | (65,265) | (123,107) | | Non-controlling interests | (92) | 37 | Consolidated Statement of Financial Position As of March 31, 2020, the Group saw reduced assets but a significant drop in liabilities, increasing net current assets, while total equity decreased Key Data from Consolidated Statement of Financial Position (thousand HKD) | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Non-current Assets: | | | | Property, plant and equipment | 36,779 | 213,265 | | Right-of-use assets | 8,634 | – | | Prepaid lease payments for land | – | 3,393 | | Total non-current assets | 45,457 | 218,026 | | Current Assets: | | | | Inventories | 35,479 | 48,878 | | Trade receivables and bills | 327,523 | 538,771 | | Prepayments, deposits and other receivables | 170,268 | 140,275 | | Cash and cash equivalents | 6,093 | 92,373 | | Assets held for sale | 222,060 | – | | Total current assets | 761,423 | 820,738 | | Current Liabilities: | | | | Trade payables | 258,783 | 24,651 | | Accruals, deposits and other payables | 22,597 | 42,815 | | Bank discounted bill advances | – | 412,557 | | Lease liabilities | 752 | – | | Liabilities directly associated with assets held for sale | 34,948 | – | | Total current liabilities | 321,062 | 487,589 | | Non-current Liabilities: | | | | Deferred tax liabilities | 66 | 66 | | Equity: | | | | Total equity | 485,752 | 551,109 | | Equity attributable to owners of the Company | 494,071 | 559,336 | | Non-controlling interests | (8,319) | (8,227) | Consolidated Statement of Changes in Equity Total equity decreased from 551,109 thousand HKD to 485,752 thousand HKD, mainly due to the loss for the year and exchange differences Key Data from Consolidated Statement of Changes in Equity (thousand HKD) | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Total equity at beginning of year | 551,109 | 674,179 | | Loss for the year | (17,350) | (70,672) | | Exchange differences on translation of financial statements of subsidiaries | (48,007) | (52,398) | | Total comprehensive expenses for the year | (65,357) | (123,070) | | Total equity at end of year | 485,752 | 551,109 | Consolidated Statement of Cash Flows Net cash from operating activities was 356,565 thousand HKD, while investing and financing activities resulted in outflows, leading to a net decrease in cash Key Data from Consolidated Statement of Cash Flows (thousand HKD) | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Net cash from operating activities | 356,565 | 342,940 | | Net cash used in investing activities | (11,320) | (17,515) | | Net cash used in financing activities | (401,054) | (427,322) | | Net decrease in cash and cash equivalents | (55,809) | (101,897) | | Cash and cash equivalents at beginning of year | 92,373 | 212,545 | | Effect of exchange rate adjustments | (30,457) | (18,275) | | Cash and cash equivalents at end of year | 6,107 | 92,373 | Notes to the Consolidated Financial Statements This section provides detailed notes on accounting policies, HKFRS 16 impact, revenue, expenses, directors' emoluments, EPS, discontinued operations, balance sheet changes, capital, and financial risk management - The Group first applied HKFRS 16 Leases this year, adopting the modified retrospective approach, with the cumulative effect of initial application recognized as an adjustment to the opening equity balance on April 1, 2019, and comparative information not restated[703][704] - The application of HKFRS 16 impacted the Group's financial results, segment results, and cash flows, primarily in lessee accounting, requiring recognition of right-of-use asset depreciation and lease liability interest expense instead of operating lease rental expense[730][734] Revenue Breakdown from Continuing Operations (thousand HKD) | Product Type | 2020 (thousand HKD) | 2019 (thousand HKD) (Restated) | | :--- | :--- | :--- | | Metal Minerals and Related Industrial Raw Materials | 350,898 | 1,023,695 | | Industrial Products | 130,226 | 89,773 | | Total | 481,124 | 1,113,468 | - For the year ended March 31, 2020, the Group's total reportable segment revenue from external customers was 481,124 thousand HKD, and reportable segment profit was 14,519 thousand HKD[769] - Sales to the Group's largest customer and five largest customers accounted for approximately 63.5% and 100% of the Group's total revenue for the year, respectively[215] - As of March 31, 2020, total trade receivables and bills amounted to 327,523 thousand HKD, with a loss allowance of 1,095 thousand HKD recognized[922] - As of March 31, 2020, trade payables were 258,783 thousand HKD, with the majority (181,631 thousand HKD) overdue for 181-360 days[959] - As of March 31, 2020, equity attributable to owners of the Company was 494,071 thousand HKD, comprising share capital of 4,217 thousand HKD and reserves of 489,854 thousand HKD[440] - The Group primarily faces credit risk, liquidity risk, interest rate risk, and currency risk, managed through various policies and instruments, including recognizing expected credit loss provisions for trade receivables, maintaining sufficient cash reserves and bank credit, and using forward foreign exchange contracts to hedge currency risk[1038][1039][1042][1043][1059][1060][1082][1083][1091][1092] - As of March 31, 2020, the Group had unutilized tax losses of 51,652 thousand HKD (indefinitely carried forward) and 40,985 thousand HKD (expiring within five years), but no deferred tax assets were recognized due to unpredictable future profit sources[984][987] - As of March 31, 2020, temporary differences related to undistributed profits of subsidiaries amounted to 57,440 thousand HKD, but no deferred tax liabilities were recognized as the Company controls the dividend policy and no future distribution is expected[986][988] Five-Year Financial Summary This chapter presents the Group's key financial data over the past five years, including revenue, profit/loss, assets, liabilities, and equity Five-Year Financial Summary (thousand HKD) | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) (Restated) | 2018 (thousand HKD) (Restated) | 2017 (thousand HKD) (Restated) | 2016 (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | :--- | | Performance (Continuing Operations): | | | | | | | Revenue | 481,124 | 1,113,468 | 2,225,944 | 1,753,198 | 2,269,381 | | (Loss)/Profit before tax | (2,429) | (76,961) | 274,689 | 58,951 | 215,266 | | Income tax expense | (3,418) | (4,237) | (50,012) | (19,582) | (46,128) | | (Loss)/Profit for the year | (5,847) | (81,198) | 224,677 | 39,369 | 169,138 | | (Loss)/Profit for the year attributable to owners of the Company (Continuing Operations) | (5,395) | (80,876) | 224,339 | 40,469 | 177,716 | | (Loss)/Profit for the year attributable to owners of the Company (Discontinued Operations) | (11,503) | 10,526 | 9,299 | 25,879 | – | | Assets and Liabilities (as of March 31): | | | | | | | Total assets | 806,880 | 1,038,764 | 3,449,563 | 1,864,279 | 3,577,369 | | Total liabilities | (321,128) | (487,655) | (2,775,384) | (1,493,079) | (3,237,553) | | Equity attributable to owners of the Company | 494,071 | 559,336 | 682,443 | 379,253 | 347,048 | - Over the past five years, the company's revenue has been volatile, with a significant decrease in continuing operations revenue in 2020[1181] - Loss for the year significantly narrowed in 2020, but both total assets and total liabilities showed a downward trend[1181]