信越控股(06038) - 2020 - 年度财报

Company Overview Corporate Information This section provides the company's basic information, including board members, committee compositions, and key operational details - The company primarily engages in platform facade and curtain wall engineering in Hong Kong with over 20 years of experience, providing one-stop services[3] - Mr Li Chi Hung serves as the Chairman of the Board and Chief Executive Officer, with various committees chaired by key board members[6] Chairman's Statement The Chairman reviews a challenging 2020, highlighting a record-high contract value on hand despite pandemic-related revenue delays - Revenue for 2020 was lower than expected due to the pandemic and construction delays by other contractors[9] - The Group adopted a prudent bidding strategy, securing new projects worth approximately HK$635 million and achieving a record-high value of uncompleted contracts[9] - The Board of Directors recommends a final dividend of 1.1 HK cents per share for the year 2020[11] Directors and Senior Management This section details the backgrounds, experiences, and primary responsibilities of the company's directors and senior management - Executive Director, Chairman, and CEO Mr Li Chi Hung, a co-founder of the Group, has over 23 years of experience in the Hong Kong construction industry[137] - The senior management team possesses extensive industry experience in construction, design, project management, and finance, with an average experience of over 20 years[144][145][148] Management Discussion and Analysis Financial Review The Group's revenue declined in 2020 due to project delays, but gross margin improved and its financial position remained solid Key Financial Indicators for FY2020 | Indicator | 2020 (HK$ million) | 2019 (HK$ million) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Total Revenue | 243.4 | 299.8 | -18.8% | | Design and Build Projects Revenue | 232.9 | 285.3 | -18.4% | | Repair and Maintenance Services Revenue | 10.5 | 14.5 | -27.6% | | Gross Profit | 63.2 | 69.5 | -9.0% | | Gross Profit Margin | 26.0% | 23.2% | +2.8pp | | Profit for the Year | 23.3 | 26.4 | -11.7% | | Administrative and Other Operating Expenses | 39.3 | 38.4 | +2.3% | - The decrease in revenue was mainly due to the progress delay of a major project caused by other contractors[17] - The increase in gross profit margin was primarily attributable to more effective project cost management[21] - The decrease in profit for the year was mainly due to lower gross profit, partially offset by government subsidies related to the pandemic of approximately HK$3.6 million[26] - As of the end of 2020, the Group maintained a healthy gearing ratio of 0.5% with cash and cash equivalents of approximately HK$149 million, an increase of HK$20.7 million year-on-year[29] Prospects and Outlook The Group holds a strong project pipeline with an estimated remaining contract value of HK$780 million, demonstrating a successful business strategy Major Projects on Hand as at 31 December 2020 | No. | Project Type | Location | Expected Completion | Est. Remaining Contract Value (HK$ million) | | :--- | :--- | :--- | :--- | :--- | | 1 | Platform Facade | Kai Tak, Kowloon | Dec 2022 | 291.4 | | 2 | Platform Facade | Kwun Tong, Kowloon | Jun 2022 | 218.2 | | 3 | Platform Facade | Taikoo, Hong Kong | Dec 2021 | 197.8 | | 4 | Platform Facade | Tin Shui Wai, N.T. | Jun 2021 | 58.6 | | 5 | Platform Facade | Yuen Long, N.T. | Jun 2021 | 14.1 | | Total | | | | 780.1 | - After the reporting date, the Group was bidding for 7 large-scale platform facade projects with a total estimated contract value exceeding HK$285.6 million[20] Principal Risks and Uncertainties The Group faces risks from market conditions, project bidding uncertainty, and reliance on a few major customers for revenue - The Group's operations are subject to overall economic and market risks, which may affect industry competitiveness and project profitability[53] - Business risks include the inability to continuously secure new project orders and a heavy reliance on a few major customers[53] Employees and Remuneration Policies The Group's workforce and employee benefit expenses both increased in 2020, reflecting growth in headcount and average remuneration Employee and Remuneration Overview | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Total Employees (Year-end) | 103 people | 100 people | | Total Employee Benefit Expenses | HK$57.6 million | HK$51.7 million | Corporate Governance Report Corporate Governance Practices The company complied with most Corporate Governance Code provisions, with the deviation of the Chairman and CEO roles being held by the same person - The company complied with most provisions of the Corporate Governance Code in 2020, with the only deviation being the combined role of Chairman and CEO held by Mr Li Chi Hung[58] - The Board believes this arrangement is beneficial for management, and the strong independent composition of the Board ensures a balance of power[58] Board and Committees The Board leads the Group's business and has established four committees to oversee specific functions including audit, nomination, and risk - The Board has established four committees: Audit, Nomination, Remuneration, and Risk Management to oversee specific functions[68] - The committees are responsible for reviewing financial reporting, nominating directors, recommending remuneration policies, and overseeing the risk management system[72][73][74][75] Risk Management and Internal Control The Board, assisted by the Risk Management Committee, deems the Group's risk management and internal control systems effective and adequate - The company has engaged an external independent consultant for an annual review of its internal control system as it has no internal audit department[80] - The 2020 internal control review covered project budgeting, tendering, cash flow management, and the risk management function[80] - Based on the review, the Board considers the Group's risk management and internal control systems to be effective and adequate[80] Auditor's Remuneration Total fees paid to the auditor, BDO Limited, for 2020 amounted to HK$630,000, entirely for audit services Auditor's Remuneration for FY2020 | Service Type | Fee (HK$ thousand) | | :--- | :--- | | Audit services | 630 | | Non-audit services | – | | Total | 630 | Report of the Directors Results and Dividends The Board recommends a final dividend of 1.1 HK cents per share for the year ended 31 December 2020, representing a payout ratio of 47.2% - The Board recommends a final dividend of 1.1 HK cents per share for 2020, totaling HK$11 million[92] - The proposed dividend payout ratio is approximately 47.2%[92] Share Option Scheme During the reporting period, 2,750,000 share options lapsed under the scheme, with no options exercised or cancelled - In 2020, a total of 2,750,000 share options lapsed, including 1,500,000 from a former executive director and 1,250,000 from other participants[102][107] - As of the end of 2020, all granted share options had lapsed, leaving no outstanding options[107] Disclosure of Interests The controlling shareholder, Cheung Mau Limited, holds a 75% stake in the company and is controlled by two directors acting in concert - The controlling shareholder, Cheung Mau Limited, holds 750,000,000 shares, representing 75% of the issued share capital[120][121] - Cheung Mau is owned 75% by Mr Li Chi Hung (Executive Director) and 25% by Mr Leung Ping Kwan (Non-executive Director), who are parties acting in concert[120][124] Major Customers and Suppliers The Group exhibits very high customer concentration, with its top five customers accounting for 97.9% of total revenue in 2020 - High customer concentration: The top five customers accounted for 97.9% of total revenue, with the largest single customer contributing 48.9%[125] - Relatively lower supplier concentration: The top five suppliers accounted for 56.5% of total purchases, with the largest single supplier at 14.8%[126] Environmental, Social and Governance Report ESG Governance and Strategy The Group's ESG strategy focuses on sustainability, with governance overseen by the Board and implemented by a dedicated ESG working group - The report is prepared in accordance with the HKEX's ESG Reporting Guide, covering the Group's Hong Kong operations for the 2020 financial year[157][158] - The Board oversees ESG matters and has delegated daily execution to an ESG working group composed of internal and external experts[163][165] Social Aspect The Group is committed to fair employment, employee well-being, health and safety, and community support through charitable donations - The Group adheres to a fair employment policy, opposes all forms of discrimination, and has a zero-tolerance policy for child and forced labor[176][177] - In response to COVID-19, the company implemented measures such as work-from-home arrangements and relaxed private car usage to protect employee health[197][200][201] - In 2020, the Group donated approximately HK$149,000 to various charitable organizations to support vulnerable communities[206][207] Environmental Aspect The Group aims to reduce its environmental footprint, achieving a significant reduction in waste despite an increase in energy consumption in 2020 Environmental Performance Indicators for 2020 | Key Performance Indicator | 2020 | 2019 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Total Energy Consumption (kWh) | 214,592 | 184,527 | +16% | | - Electricity (kWh) | 173,684 | 145,658 | +19% | | - Petrol (litres) | 4,221 | 4,010 | +5% | | Total GHG Emissions (tonnes CO2-e) | 108.2 | 104.8 | +3.2% | | - GHG Emission Intensity (tonnes CO2-e/employee) | 1.071 | 1.075 | -0.4% | | Total Non-hazardous Waste (tonnes) | 3.2 | 3.8 | -16% | | - Non-hazardous Waste Intensity (tonnes/employee) | 0.031 | 0.039 | -20% | - The increase in electricity and petrol consumption was mainly due to more overtime work and relaxed use of company vehicles during the pandemic[216][217] - Despite increased energy consumption, the amount of non-hazardous waste was significantly reduced through the implementation of a paperless system[227] Operating Practices The Group prioritizes quality and safety through ISO 9001:2015 compliance, responsible sourcing, and a zero-tolerance anti-corruption policy - The Group's business operations comply with the ISO 9001:2015 quality standard, ensuring high-quality construction works for clients[244] - The Group practices responsible sourcing, considering suppliers' social responsibility performance and conducting rigorous assessments of subcontractors[248] - The Group has a zero-tolerance policy towards corruption and bribery, with no related legal cases during the reporting period[253][254][255] Independent Auditor's Report Audit Opinion The auditor issued an unqualified opinion, stating the financial statements give a true and fair view of the Group's financial position and performance - The auditor issued an unqualified opinion on the Group's consolidated financial statements for the year 2020[286] Key Audit Matters The key audit matter was the recognition of contract revenue, which involves significant management judgment in estimating total contract costs - The key audit matter was the recognition of contract revenue, contract assets and contract liabilities[290][291] - This matter was critical because revenue recognition relies on estimates of total contract costs, which involve significant management judgment and uncertainty[291] - The auditor's procedures included assessing controls, testing budget costs, evaluating the reasonableness of budgeting, and recalculating the percentage of completion[292][293][294] Consolidated Financial Statements Consolidated Statement of Comprehensive Income The Group recorded revenue of HK$243 million and profit for the year of HK$23.3 million, with basic earnings per share of 2.3 HK cents Consolidated Statement of Comprehensive Income Summary (For the year ended 31 December) | Item (HK$ thousand) | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 243,399 | 299,756 | | Gross Profit | 63,170 | 69,452 | | Profit before income tax | 27,670 | 31,233 | | Profit for the year | 23,299 | 26,366 | | Total comprehensive income for the year | 23,294 | 26,356 | | Basic earnings per share (HK cents) | 2.3 | 2.6 | Consolidated Statement of Financial Position As of 31 December 2020, the Group's total assets stood at HK$349 million, with total equity increasing to HK$237 million Consolidated Statement of Financial Position Summary (As at 31 December) | Item (HK$ thousand) | 2020 | 2019 | | :--- | :--- | :--- | | Assets | | | | Non-current assets | 19,386 | 5,700 | | Current assets | 329,553 | 286,247 | | Total assets | 348,939 | 291,947 | | Liabilities and Equity | | | | Current liabilities | 100,938 | 63,188 | | Non-current liabilities | 11,128 | 1,180 | | Total liabilities | 112,066 | 64,368 | | Total equity | 236,873 | 227,579 | Consolidated Statement of Changes in Equity Total equity increased to HK$237 million, driven by the profit for the year, partially offset by dividends paid - Total equity increased from HK$227,579 thousand at the beginning of the year to HK$236,873 thousand at year-end[316] - The change in equity was mainly affected by: - Profit for the year: +HK$23,299 thousand - Dividends paid: -HK$14,000 thousand[316] Consolidated Statement of Cash Flows The Group's cash and cash equivalents increased by HK$20.7 million during the year, reaching a balance of HK$149 million Consolidated Statement of Cash Flows Summary (For the year ended 31 December) | Item (HK$ thousand) | 2020 | 2019 | | :--- | :--- | :--- | | Net cash from operating activities | 40,434 | 60,285 | | Net cash used in investing activities | (2,924) | (428) | | Net cash used in financing activities | (16,821) | (28,078) | | Increase in cash and cash equivalents | 20,689 | 31,779 | | Cash and cash equivalents at end of year | 149,157 | 128,467 | Notes to the Consolidated Financial Statements Note 5 Key sources of estimation uncertainty This note discloses key judgments and estimates, with major uncertainties in construction contract revenue recognition and credit loss provisions - The recognition of construction contract revenue depends on estimates of total contract costs, which require periodic review and revision by management[438] - The provision for expected credit losses on trade receivables and contract assets requires management judgment, especially when assessing significant increases in credit risk[443][444] Note 7 Revenue This note details the composition of revenue, with design and build projects contributing the majority of the HK$243 million total Revenue Breakdown (HK$ thousand) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Design and build projects | 232,855 | 285,255 | | - Platform facade and related works | 159,406 | 142,634 | | - Curtain wall works | 73,449 | 142,621 | | Repair and maintenance services | 10,544 | 14,501 | | Total | 243,399 | 299,756 | - The total amount of remaining performance obligations (i.e., order book) to be recognized in the future is HK$823 million[451] Note 36 Financial risk management This note outlines the Group's management of key financial risks, including credit, interest rate, currency, and liquidity risks - Credit risk: Significant customer concentration risk exists, with approximately 97% of trade receivables from the top five customers in 2020[593] - Interest rate risk: Arises mainly from floating-rate bank borrowings, with a 1% rate change impacting annual profit by approximately HK$4,000[595][598] - Liquidity risk: Managed by monitoring liquidity needs and maintaining sufficient cash reserves and financing facilities[606][612] Five-Year Financial Summary Five-Year Financial Summary The Group's revenue and profit have declined from their 2018 peak, while total assets and equity have shown consistent growth over five years Five-Year Results Summary (For the year ended 31 December, HK$ thousand) | Indicator | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 243,399 | 299,756 | 365,436 | 315,751 | 273,912 | | Gross Profit | 63,170 | 69,452 | 86,995 | 99,505 | 90,523 | | Profit for the year | 23,299 | 26,366 | 36,939 | 52,267 | 50,077 | Five-Year Assets, Liabilities and Equity Summary (As at 31 December, HK$ thousand) | Indicator | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total assets | 348,939 | 291,947 | 302,498 | 274,608 | 163,655 | | Total liabilities | 112,066 | 64,368 | 83,479 | 66,523 | 80,708 | | Total equity | 236,873 | 227,579 | 219,019 | 208,085 | 82,947 |