亨利加集团(03638) - 2020 - 年度财报

Company Information Basic Company Information This section provides core company information including basic registration details, board and committee members, main office addresses, legal advisors, auditors, and principal bankers - Chairman and CEO is Mr. Lu Jianming[6] - The Company's auditor is BDO Limited[23] - The Company is listed on the Main Board of the Stock Exchange of Hong Kong, stock code 3638[23] Financial Highlights Five-Year Financial Summary This section summarizes the Group's performance and financial position over the past five financial years, showing a turnaround to profit in FY2020 with significant growth in total assets and liabilities | Metric (Thousand HKD) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Performance | | | | | | | Revenue | 933,638 | 844,552 | 683,410 | 836,542 | 1,206,159 | | Gross Profit | 66,157 | 56,330 | 55,967 | 34,221 | 61,630 | | Profit/(Loss) for the Year | 9,742 | (34,717) | 9,211 | 5,389 | 23,448 | | Profit/(Loss) for the Year Attributable to Owners of the Company | 5,607 | (34,717) | 9,211 | 5,389 | 23,448 | | Financial Position | | | | | | | Total Assets | 1,061,936 | 813,916 | 607,643 | 414,029 | 476,942 | | Total Liabilities | 435,013 | 178,594 | 68,602 | 4,204 | 211,463 | | Total Equity | 626,923 | 635,322 | 539,041 | 409,825 | 265,479 | Chairman's Statement Chairman's Statement The Chairman's Statement highlights the Group's significant achievements this year despite challenges, with total revenue growing to approximately HKD 933.6 million and a successful turnaround to a profit attributable to owners of approximately HKD 5.6 million - This year, the Group achieved a performance turnaround in a challenging macro environment, including the Sino-US trade dispute and the COVID-19 outbreak[26] Financial Highlights | Financial Metric | This Year (approx. HKD) | Prior Year (approx. HKD) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 933.6 million | 844.6 million | Increased by 89 million | | Profit/(Loss) Attributable to Owners of the Company | 5.6 million | (34.7 million) | Turned profitable | - Looking ahead, the Group is confident in its development, will focus on the China Greater Bay Area, and actively seek new business opportunities in financial services or other industries to expand revenue streams[27] Management Discussion and Analysis Business Review and Outlook The Group's computer business revenue grew by 11.6%, while financial services business operating profit turned profitable despite a revenue decrease, with future focus on monitoring the pandemic and seeking new opportunities Computer and Peripheral Products Business Despite challenges, the computer and peripheral products business segment achieved revenue growth to approximately HKD 904 million, an 11.6% increase from the prior year, through effective strategies - Revenue from the computer and peripheral products business segment increased from approximately HKD 810 million to approximately HKD 904 million, an increase of approximately 11.6%[31] - This growth was achieved against the challenging backdrop of the Sino-US trade war, the COVID-19 outbreak, and a global economic slowdown[31] Financial Services Business The financial services business segment's total revenue decreased, but operating profit turned profitable at approximately HKD 14.4 million, driven by profitable securities brokerage and money lending operations Financial Services Business Segment Performance | Financial Services Business Segment | Revenue (Thousand HKD) | Operating Profit/(Loss) (Thousand HKD) | | :--- | :--- | :--- | | 2020 | 29,600 | 14,400 | | - Securities Brokerage Business | 17,500 | 6,100 | | - Advisory Services Business | 0 | (2,400) | | - Money Lending Business | 12,100 | 10,700 | | 2019 | 34,600 | (24,300) | | - Securities Brokerage Business | 10,800 | (25,800) | | - Advisory Services Business | 18,900 | 4,300 | | - Money Lending Business | 4,900 | (2,800) | Outlook Management is confident in the Group's future, committed to steady development, and actively seeking new business opportunities to expand and diversify revenue streams for shareholder value creation - The Group will closely monitor the development of the COVID-19 pandemic and its impact on financial position and operating results[36] - The Group is committed to seeking new business opportunities to further expand and diversify revenue sources, bringing substantial returns to shareholders[36] Financial Review The Group's total revenue increased to HKD 933.6 million, driven by the computer business, with gross profit margin slightly up to 7.1%, and effective cost control leading to a HKD 9.7 million annual profit Financial Performance Summary | Item | 2020 (Thousand HKD) | 2019 (Thousand HKD) | Reason for Change | | :--- | :--- | :--- | :--- | | Total Revenue | 933,600 | 844,600 | Increase in computer and peripheral products business revenue[38] | | Gross Profit Margin | 7.1% | 6.7% | Stable gross profit margin for computer and peripheral products[38] | | General and Administrative Expenses | (Decreased by approx. 10,500) | - | Decrease in employee benefit expenses and goodwill impairment[40] | | Expected Credit Losses on Financial Assets | (Decreased by approx. 32,400) | - | Decrease in expected credit losses on amounts due from cash clients[41] | | Finance Costs | 9,500 | 3,600 | Increase in interest expenses due to higher bank borrowings[44] | | Profit/(Loss) for the Year | 9,700 | (34,700) | Turned profitable due to the above factors[46] | - Profit for the year attributable to owners of the Company was approximately HKD 5.6 million, achieving basic earnings per share of HKD 0.13 cents, compared to a basic loss per share of HKD 0.81 cents last year[47] Liquidity and Financial Resources The Group maintained a sound financial position with approximately HKD 117.7 million in cash and cash equivalents and HKD 626.9 million in net assets as of March 31, 2020, supported by a current ratio of approximately 1.7 Financial Position Indicators (as of March 31) | Financial Position Indicators (as of March 31) | 2020 (Thousand HKD) | 2019 (Thousand HKD) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 117,700 | 201,700 | | Net Assets | 626,900 | 635,300 | | Bank Borrowings Balance | 342,800 | 156,500 | | Net Current Assets | 282,400 | 254,200 | | Current Ratio | Approx. 1.7 | Approx. 2.4* | - The Group adopts a prudent treasury policy, managing credit and liquidity risks through continuous credit assessment and monitoring of liquidity positions[51] Capital Structure and Fundraising Activities The Company's capital consists solely of 4,384,782,000 ordinary shares issued as of March 31, 2020, with no fundraising activities undertaken during the year - The Company's capital comprises only ordinary shares[54] - As of March 31, 2020, the number of issued and fully paid ordinary shares was 4,384,782,000[56] - The Company did not undertake any fundraising activities during the year[55] Employees and Remuneration Policy As of March 31, 2020, the Group had 35 employees, with total staff welfare expenses of approximately HKD 16.6 million, and offers competitive remuneration and incentive schemes - As of March 31, 2020, the Group had 35 employees[62] - For the year ended March 31, 2020, staff welfare expenses (including directors' emoluments) totaled approximately HKD 16.6 million, a decrease from HKD 21.2 million last year[62] Use of Proceeds The Board decided to reallocate the remaining HKD 1.4 million of unused net proceeds from the listing to focus on computer and peripheral products procurement, optimizing financial resource utilization - The Board decided to reallocate the remaining unused net proceeds to focus more on the computer and peripheral products trading business, which the directors believe will help the Company utilize its financial resources more effectively[67][70] Use of Proceeds (Thousand HKD) | Use of Proceeds (Thousand HKD) | Planned Use | Actual Amount Used as of March 31, 2020 | Unused Proceeds as of March 31, 2020 | | :--- | :--- | :--- | :--- | | Increase Market Share | 13,140 | 11,723 | 1,417 | | Enhance R&D and Design Capabilities | 13,860 | 1,885 | 0 | | Strengthen Quality Control and Increase Production Capacity | 5,400 | 2,478 | 0 | | General Working Capital | 3,600 | 3,600 | 0 | | Procurement of Computer and Peripheral Products | - | 14,897 | 0 | | Total | 36,000 | 34,583 | 1,417 | 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, as well as senior management, including their roles, experience, and other public company positions - Mr. Lu Jianming is the Group's founder, Chairman, and CEO, responsible for the Group's overall management, operations, and strategic development[73] - Mr. Wong Kwok Ming is the Group's General Manager, CFO, and Company Secretary, responsible for the Group's overall business and financial management[81] - Non-executive Director Mr. Peng Zhonghui was criticized by the Stock Exchange for his conduct during his previous tenure at another listed company and is required to complete relevant training[75] Directors' Report Principal Business and Results This report reviews the Group's business performance as an investment holding company, with no dividends recommended, noting high customer and supplier concentration, and confirming compliance with laws and regulations - The Company is an investment holding company, with details of its principal subsidiaries listed in notes 15 and 16 to the financial statements[84][85] - The Board does not recommend a final dividend for the year ended March 31, 2020[89] - Customer concentration is high: the largest customer accounted for approximately 44.7% of total sales, and the top five customers accounted for approximately 93.3%[104] - Supplier concentration is high: the largest supplier accounted for approximately 37.1% of total purchases, and the top five suppliers accounted for approximately 85.9%[104] Directors and Equity Interests This section discloses Board members and changes, confirms independent non-executive directors' independence, and details directors' and major shareholders' interests, with Chairman Mr. Lu Jianming and his spouse holding over 58% of the Company's shares - Chairman Mr. Lu Jianming is deemed to be interested in approximately 58.4% of the Company's issued share capital (55.07% through controlled corporations, 3.33% beneficially owned)[117] - Ms. Shen Wei, as Mr. Lu Jianming's spouse, is deemed to have an interest in a total of 58.4% of the shares[121][122] - In addition to the controlling shareholders, BOCOM International Securities Limited and New Bond Financial Group Limited respectively hold approximately 7.91% and 5.27% of the Company's share interests[121] Share Option Scheme and Share Award Scheme This section outlines the Company's share option and share award schemes, noting that 127,901,333 share options lapsed and no options were exercised or awarded shares granted during the year, despite the trustee purchasing 41,484,000 Company shares - For the year ended March 31, 2020, a total of 127,901,333 share options lapsed, and no share options were exercised[128][133] - Under the share award scheme, the trustee purchased 41,484,000 Company shares during the year at a total cost of approximately HKD 21.135 million[136] - For the year ended March 31, 2020, the Company did not grant any awarded shares under the share award scheme[137] Compliance and Governance This section confirms the Group's compliance with non-competition undertakings, directors' securities trading codes, proper disclosure of connected transactions, maintenance of public float, and the Audit Committee's review of financial statements and auditor re-appointment - The controlling shareholder has complied with the non-competition undertaking, as reviewed and confirmed by the independent non-executive directors[144] - The Company confirmed that it maintained a sufficient public float of not less than 25% during the year and up to the date of this report[150] - The Company appointed BDO Limited as the new auditor on February 28, 2020, to fill the vacancy left by the retirement of Ernst & Young[159] Corporate Governance Report Corporate Governance Overview The Board is committed to high corporate governance standards, adopting and complying with the Listing Rules' Corporate Governance Code, establishing a Corporate Governance Committee, and ensuring all directors comply with securities trading codes - The Company has adopted the Corporate Governance Code set out in Appendix 14 of the Listing Rules and complied with its provisions during the year[162] - All directors confirmed compliance with the code of conduct regarding directors' securities transactions during the year[164] The Board The Board, comprising five directors, leads and oversees the Company, with the Chairman and CEO roles combined for strong leadership and efficient decision-making, and all directors engaging in continuous professional development - The Board currently comprises five directors: one executive director, one non-executive director, and three independent non-executive directors[165] - The roles of Chairman and Chief Executive Officer are combined and held by Mr. Lu Jianming, which the Board believes facilitates strong and consistent leadership, enabling effective decision-making[181] - All directors have participated in continuous professional development to enhance their knowledge and skills, in compliance with the Corporate Governance Code[172] Board Committees The Company has established Remuneration, Nomination, Audit, and Corporate Governance Committees, each composed of directors with relevant expertise, to assist the Board in fulfilling its responsibilities through regular meetings and adherence to their terms of reference - The Remuneration Committee, composed of two independent non-executive directors and the Chairman, is responsible for formulating remuneration policies and making recommendations to the Board[186] - The Nomination Committee, composed of two independent non-executive directors and the Chairman, is responsible for reviewing Board composition, nominating directors, and assessing independence[188] - The Audit Committee, composed of three independent non-executive directors, is responsible for reviewing financial statements, monitoring internal control and risk management systems, and advising on auditor appointment[190][194] - The Corporate Governance Committee is responsible for formulating and reviewing corporate governance policies and overseeing director and senior management training and compliance[195] Accountability, Internal Control and Communication with Shareholders The Board is responsible for preparing true and fair financial statements, maintains effective internal control and risk management systems, and communicates with shareholders through various channels, including clear procedures for inquiries and convening meetings - The Board is fully responsible for the Group's internal control and risk management, and considers the systems adopted for the year ended March 31, 2020, to be sound and effective[202][204] - For the year ended March 31, 2020, audit service fees paid to auditor BDO Limited were approximately HKD 1 million, with no non-audit service fees[205] - The Company provides clear procedures guiding shareholders on how to convene extraordinary general meetings and how to submit inquiries to the Board[207][210][211] Environmental, Social and Governance Report Environmental The Group, despite minimal environmental impact, is committed to green operations and 4R principles, complying with all environmental regulations, and reporting on greenhouse gas emissions, waste management, and resource consumption Greenhouse Gas Emissions (FY2020) | Greenhouse Gas Emissions (FY2020) | CO2e Emissions (kg) | | :--- | :--- | | Scope 1 - Direct Emissions | 11,286.8 | | Scope 2 - Indirect Emissions | 45,424.5 | | Scope 3 - Other Indirect Emissions | 17,499.3 | | Total Emissions | 74,210.6 | | Emission Intensity | 2,120.3 kg/employee | Resource Consumption (FY2020) | Resource Consumption (FY2020) | Total Consumption | Intensity (per employee) | | :--- | :--- | :--- | | Electricity | 68,825 kWh | 1,966 kWh | | Water | 52 cubic meters | 1.5 cubic meters | | Paper | 375 kg | 10.7 kg | - The Group's operations did not generate any hazardous waste; non-hazardous waste primarily consisted of paper and solid waste from offices, managed through paperless office initiatives and waste paper recycling[243] Social The Group prioritizes talent, strictly adheres to labor laws, prohibits child and forced labor, provides a safe and healthy work environment, competitive remuneration, and continuous training, fostering a fair and diverse workplace with no work-related fatalities or injuries this year - As of March 31, 2020, the Group employed 35 employees, of whom 94% were in Hong Kong, with an annual turnover rate of 32%[263] - The Group strictly prohibits the employment of child or forced labor and verifies identity documents during recruitment, with no violations found this year[259][267] - The Group provides induction training and diverse on-the-job training to employees to enhance their knowledge and professional skills, supporting their career development[266] - During the year, the Group had no work-related fatalities or injuries, nor any violations of occupational health and safety laws and regulations[264] Operating Practices The Group focuses on long-term supplier relationships and product quality, strictly protecting customer data and intellectual property, enforcing anti-corruption policies with no violations this year, and plans to review its minimal community investment - The Group collaborates with 19 suppliers, 16 of whom are located in Hong Kong, aiming to maintain long-term stable cooperative relationships[271][272] - The Group strictly complies with data privacy regulations and received no complaints regarding violations of customer data and privacy this year[274][275] - The Group formulates and strictly enforces anti-corruption policies, with no legal cases concerning corrupt practices against the Group or employees occurring this year[278] - Community investment contributions were minimal this year as resources were primarily allocated to business expansion, and related policies will be reviewed in the future[279] Independent Auditor's Report Independent Auditor's Report The auditor, BDO Limited, issued an unmodified opinion on the Group's consolidated financial statements for FY2020, highlighting key audit matters such as goodwill and loan impairment assessments, and noting the prior year's audit by a different firm - The auditor issued an unmodified opinion on the consolidated financial statements[282] - Key audit matters include: - Impairment assessment of goodwill: Involves significant judgment on future cash flow forecasts for cash-generating units, particularly assumptions like revenue growth rates, operating profit margins, and discount rates - Impairment assessment of loans receivable and amounts due from cash clients: Involves significant management judgment and estimates regarding credit risk, expected credit loss models, and input selection[287][289] - The report mentioned that the consolidated financial statements for the year ended March 31, 2019, were audited by another independent auditor[284] Consolidated Financial Statements Key Financial Statements This section presents the Group's core financial statements for the year ended March 31, 2020, showing HKD 933.6 million in revenue, a HKD 9.74 million annual profit, and total assets increasing to HKD 1,061.9 million Key Financial Metrics | Metric (Thousand HKD) | 2020 | 2019 | | :--- | :--- | :--- | | Consolidated Statement of Profit or Loss | | | | Revenue | 933,638 | 844,552 | | Gross Profit | 66,157 | 56,330 | | Profit/(Loss) for the Year | 9,742 | (34,717) | | Profit/(Loss) Attributable to Owners of the Company | 5,607 | (34,717) | | Consolidated Statement of Financial Position (as of March 31) | | | | Total Assets | 1,061,936 | 813,916 | | Total Liabilities | 435,013 | 178,594 | | Total Equity | 626,923 | 635,322 | | Consolidated Statement of Cash Flows | | | | Net Cash Flows Used in Operating Activities | (228,521) | (20,889) | | Net Cash Flows Used in Investing Activities | (11,358) | (241,992) | | Net Cash Flows From Financing Activities | 155,577 | 264,330 | Notes to the Consolidated Financial Statements Note 4: Significant Accounting Judgments and Estimates This note explains management's significant judgments in revenue recognition and key estimation uncertainties, including expected credit loss provisions, asset useful lives, income tax, and impairment assessments of non-current assets and goodwill - Management made significant judgments in revenue recognition, particularly in identifying performance obligations and the timing of recognizing revenue from IPO sponsorship services[495] - Key sources of estimation uncertainty include: - Expected Credit Loss (ECL) provisions for trade receivables and other financial assets - Useful lives of property, plant and equipment, and intangible assets - Calculation of current and deferred income tax - Impairment testing of non-current assets and goodwill[499][501][504][505][506] Note 5: Financial Risk Management This note details the Group's financial risk management, covering market, credit, and liquidity risks, managed through exposure monitoring and prudent policies, with a gearing ratio of 22.7% as of the reporting period end - The Group faces foreign currency risk (primarily related to RMB and USD), equity securities price risk, and cash flow interest rate risk[513][517][518] - Credit risk exists in receivables from trading, money lending, and securities businesses; the Group manages this through customer credit assessment and regular review of collateral[521][522][525] - The Group ensures fund availability through prudent liquidity risk management, with a gearing ratio of 22.7% as of March 31, 2020[541][546] Note 6: Revenue and Segment Information This note details the Group's total revenue of HKD 933.6 million, primarily from computer and peripheral products, and its two reportable segments, highlighting high customer concentration with the top four customers accounting for 92% of total revenue Segment Performance (as of March 31, 2020) | Segment (as of March 31, 2020) | Revenue (Thousand HKD) | Adjusted Operating Profit (Thousand HKD) | | :--- | :--- | :--- | | Computer and Peripheral Products Business | 904,005 | 27,763 | | Financial Services Business | 29,633 | 14,366 | | Total | 933,638 | 42,129 | - Customer concentration is very high; for the year ended March 31, 2020, four customers individually accounted for approximately 45%, 23%, 12%, and 12% of the Group's revenue, totaling 92%[572] - The Group's non-current assets are primarily located in Hong Kong (HKD 329 million) and Mainland China (HKD 8.86 million)[573] Note 14: Intangible Assets This note discloses the Group's intangible assets, with a net book value of HKD 53.254 million as of March 31, 2020, primarily goodwill from securities brokerage acquisition, which was tested for impairment and found to require no further impairment this year Intangible Assets (as of March 31, 2020) | Intangible Assets (as of March 31, 2020) | Net Book Value (Thousand HKD) | | :--- | :--- | | Goodwill | 52,013 | | Money Lenders' Licenses | 453 | | Contract Customer Relationships | 788 | | Total | 53,254 | - Goodwill is primarily allocated to the securities brokerage cash-generating unit; management performed an impairment test using key assumptions including revenue growth rates (5%-55.6%), perpetual growth rate (3%), and pre-tax discount rate (16.5%), concluding no impairment was needed[611][615][618] - For the year ended March 31, 2019, a full impairment loss of HKD 4.641 million was recognized for goodwill related to the corporate finance cash-generating unit due to reduced forecast prospects for the corporate finance business[614] Note 39: Directors' Benefits and Interests This note details directors' remuneration, with total emoluments decreasing significantly to approximately HKD 3.223 million for the year ended March 31, 2020, and confirms no directors waived emoluments or received significant loans Directors' Remuneration (For the year ended March 31) | Directors' Remuneration (For the year ended March 31) | 2020 (Thousand HKD) | 2019 (Thousand HKD) | | :--- | :--- | :--- | | Executive Directors | 2,332 | 3,748 | | Non-executive Directors | 400 | 3,683 | | Independent Non-executive Directors | 491 | 562 | | Total | 3,223 | 7,993 | - Executive Director Mr. Lu Jianming's total emoluments for the year were HKD 1,818,000[854] - During the reporting period, no significant loans, transactions, or arrangements were provided to directors, their controlled corporations, or related entities[875][876]