菊福堂生物(08217) - 2020 - 年度财报

Company Information The report provides essential company details, including board members, committee structures, company secretary, compliance officer, auditor, principal bankers, registered office, and main business locations - The report provides essential company details, including board members, committee structures, company secretary, compliance officer, auditor, principal bankers, registered office, and main business locations[5][6] Chairman's Statement Mr. Su Kwok Hung, the Chairman, reviewed the financial year ended March 31, 2020, noting a decrease in total revenue due to the completion of several large construction projects Annual Performance Review | Indicator | Year Ended March 31, 2019 (HKD) | Year Ended March 31, 2020 (HKD) | Change (HKD) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | Approx. 432,842,000 | Approx. 354,884,000 | Decrease of approx. 77,958,000 | Primarily due to several large construction projects reaching completion stage | - Outlook: Government commitment to infrastructure investment is expected to maintain stable construction project levels in the coming years, with the Group confident about future prospects due to new project acquisitions that will contribute to sustainable development[10] Management Discussion and Analysis Business Review and Prospects The Group, a Hong Kong civil engineering subcontractor for over 20 years, focuses on road, drainage, structural, and site formation works, planning cost control and overseas expansion despite market challenges - Core Business: The Group primarily undertakes (i) road and drainage works, (ii) structural works, and (iii) site formation works[13] - Future Strategy: Will continue to strengthen competitive advantages in the civil engineering industry, strictly control costs, and evaluate the feasibility of expanding into overseas markets such as Japan and Thailand[14] Principal Investments The Group holds financial assets at fair value through profit or loss, primarily in Wellong Holdings Limited, with total fair value decreasing to HKD 17.10 million as of March 31, 2020 Overview of Principal Investment Portfolio (as of March 31, 2020) | Investment Target | Number of Shares (thousand shares) | Fair Value (thousand HKD) | Approximate Percentage of Total Assets | | :--- | :--- | :--- | :--- | | Wellong Holdings Limited | 381,660 | 10,686 | 5.0% | | Other listed equity securities | Not applicable | 6,410 | 3.0% | | Total | Not applicable | 17,096 | 8.0% | - For the year ended March 31, 2020, principal investments recorded realized and unrealized losses of HKD 330 thousand[15] Financial Review The Group's total revenue significantly decreased, resulting in a gross loss and a substantial increase in annual loss to HKD 55.57 million, primarily due to project completions and impairment losses Key Financial Indicator Changes | Financial Indicator | Year Ended March 31, 2019 (thousand HKD) | Year Ended March 31, 2020 (thousand HKD) | Reason for Change | | :--- | :--- | :--- | :--- | | Revenue | 432,842 | 354,884 | Several large construction projects reached completion stage | | Gross Profit/(Loss) | 1,145 | (20,196) | Certain large construction projects reached completion stage | | Other income or loss | 9,071 (income) | (14,397) (loss) | Primarily includes impairment loss on property, plant and equipment of approximately HKD 4.59 million | | Loss for the year | (6,048) | (55,567) | Net effect of decreased revenue, gross profit, and other losses | - Contract Status: As of March 31, 2020, the Group had 22 contracts on hand with a total contract value of approximately HKD 790 million, a significant decrease from 33 contracts and HKD 1.93 billion in the same period last year[18] Liquidity, Financial Resources and Capital Structure The Group maintains stable liquidity with a current ratio of approximately 1.1 times, low interest-bearing debt, and a gearing ratio of about 0%, ensuring sufficient funds with no significant capital structure changes since listing Liquidity and Capital Structure Indicators (as of March 31, 2020) | Indicator | March 31, 2020 | March 31, 2019 | | :--- | :--- | :--- | | Current Ratio | Approx. 1.1 times | Approx. 1.3 times | | Total Interest-Bearing Debt | Approx. 656,000 HKD | Approx. 891,000 HKD | | Gearing Ratio | Approx. 0% | Approx. 1.1% | - As of the end of the reporting period, the Group had no significant capital commitments or contingent liabilities[36][37] Employees and Remuneration Policy As of March 31, 2020, the Group's employee count decreased to 110, with a corresponding reduction in total staff costs, and remuneration is based on qualifications, position, and seniority, with discretionary bonuses and annual reviews Employee and Cost Changes | Indicator | March 31, 2020 | March 31, 2019 | | :--- | :--- | :--- | | Employee Count | Approx. 110 | 192 | | Total Staff Costs | Approx. 76,356,000 HKD | Approx. 88,149,000 HKD | Final Dividend The Board recommended no final dividend for the year ended March 31, 2020 - No final dividend recommended for the reporting period (2019: HKD nil)[45] Biographies of Directors and Senior Management This section details the personal biographies of the company's executive and independent non-executive directors, including their age, professional experience, academic background, and tenure within the Group - Executive Directors: Mr. Su Kwok Hung (38 years old) and Ms. Yu Xiao (39 years old), both with over ten years of management experience in construction and civil engineering[47][48] - Independent Non-Executive Directors: Mr. Wong Chi Kam (34 years old), Mr. Dai Qian (34 years old), and Mr. Liao Hong Hao (60 years old), with professional backgrounds in audit, accounting, and strategic marketing respectively[50][53][54] Corporate Governance Report Board of Directors The Board, comprising two executive and three independent non-executive directors, formulates the Group's strategy, largely complying with corporate governance codes, and has adopted nomination and board diversity policies Board Meeting Attendance Record During the Reporting Period | Director Name | Position | Meetings Attended/Eligible to Attend | | :--- | :--- | :--- | | Mr. Su Kwok Hung | Executive Director | 8/8 | | Ms. Yu Xiao | Executive Director | 8/8 | | Mr. Wong Chi Kam | Independent Non-Executive Director | 8/8 | | Mr. Dai Qian | Independent Non-Executive Director | 8/8 | | Mr. Liao Hong Hao | Independent Non-Executive Director | 8/8 | - The company has adopted a Board Diversity Policy, considering gender, age, cultural background, professional experience, and other factors in the composition of the Board[69] Board Committees The company has established an Audit Committee, Remuneration Committee, and Nomination Committee to assist the Board in fulfilling its duties, overseeing financial reporting, remuneration policies, and director nominations - Audit Committee: Composed of three independent non-executive directors, with Mr. Wong Chi Kam as Chairman, held 5 meetings during the reporting period, with all members attending all meetings[85][86] - Remuneration Committee: Composed of two independent non-executive directors and one executive director, with Mr. Wong Chi Kam as Chairman, held 2 meetings during the reporting period, with all members attending all meetings[90][91] - Nomination Committee: Composed of Chairman Mr. Su Kwok Hung and two independent non-executive directors, held 1 meeting during the reporting period, with all members attending all meetings[93][95] Internal Control and Risk Management The Board is responsible for establishing, maintaining, and reviewing the Group's risk management and internal control systems, which an external consultant reviewed this year without identifying significant issues - Risk Management Framework: Each department is responsible for identifying and assessing risks, management is responsible for monitoring, and the Board is responsible for reviewing and approving the system's effectiveness[104] - External Review: External internal control consultant, Grand Ming Risk Advisory Services Limited, was engaged for the annual review, and no significant issues were identified[103] Environmental, Social and Governance Report Environmental Protection The Group is committed to environmentally responsible operations, controlling emissions, enhancing resource efficiency, and managing waste, with disclosed greenhouse gas emissions and resource consumption data, ensuring compliance with environmental regulations Greenhouse Gas Emissions | Greenhouse Gas Emission | Unit | Emission Volume | | :--- | :--- | :--- | | Direct Emissions (Scope 1) | tonnes | 280 | | Indirect Emissions (Scope 2) | tonnes | 13 | | Other Indirect Emissions (Scope 3) | tonnes | 38 | | Total | tonnes | 331 | Resource Consumption | Natural Resource | Unit | Consumption Volume | | :--- | :--- | :--- | | Electricity | kWh | 20,659 | | Paper | kg | 890 | | Diesel | litres | 106,175 | | Water | cubic meters | 24 | Employment and Labour Practices The Group values employees, providing a fair work environment and attractive remuneration, emphasizing employment, health and safety, development, and training, with strict adherence to laws and no work-related fatalities - Employee Count: As of March 31, 2020, the Group had approximately 110 employees in Hong Kong, a decrease from 192 last year[133] Work Injury Data | Indicator | Data | | :--- | :--- | | Work-related Fatalities | Zero | | Lost Workdays due to Work Injury | 2,813 | Operating Management and Community The Group prioritizes supply chain management, sustainable partner relationships, strict quality assurance, and anti-corruption, while actively contributing to the community through sponsorships and donations - Supply Chain Management: Prefers sourcing from local suppliers; all suppliers during the reporting period were located in Hong Kong[141] - Anti-Corruption: The Group strictly complies with anti-bribery regulations and has whistleblowing channels, with no notices of violations received during the reporting period[144][145] - Community Contributions: Donations sponsored charitable activities such as the 'LAP DOG 2019 Challenge' during the year[147] Directors' Report Principal Business and Risks This report outlines the Group's civil engineering business, noting no significant changes, and identifies key risks including high client concentration, inaccurate project cost estimates, cash flow mismatch, reliance on senior management, and weather impacts - Client Concentration Risk: During the reporting period, revenue from the top five clients accounted for 93.0% of total revenue, with the largest client accounting for 35.9%[154] - Operational Risks: Include errors in project duration and cost estimation, cash flow mismatch, reliance on senior management and professional personnel, and the impact of adverse weather on outdoor operations[154][158] Share Option Scheme The company adopted a share option scheme in March 2016 to incentivize and retain talent, granting 31,200,000 share options to executive directors, employees, and consultants at an exercise price of HKD 0.404 per share Overview of Share Options Granted (Granted on July 11, 2019) | Participant Category | Number of Share Options | Exercise Price per Share (HKD) | Exercise Period | | :--- | :--- | :--- | :--- | | Executive Directors (2) | 6,240,000 | 0.404 | 5 years | | Employees (5) | 15,600,000 | 0.404 | 5 years | | Consultants (3) | 9,360,000 | 0.404 | 5 years | | Total | 31,200,000 | 0.404 | 5 years | Major Customers, Suppliers and Subcontractors The Group experienced high concentration among its customers, suppliers, and subcontractors during the reporting period, with the largest customer accounting for 35.9% of total revenue, and top five customers collectively accounting for 93.0% Major Business Partner Concentration | Category | Largest Single Proportion | Top Five Total Proportion | | :--- | :--- | :--- | | Customers | 35.9% | 93.0% | | Suppliers | 9.1% | 28.0% | | Subcontractors | 10.0% | 40.0% | Interests of Directors and Major Shareholders in Shares This section discloses the interests of directors and major shareholders in the company's shares as of March 31, 2020, with executive directors Su Kwok Hung and Yu Xiao each holding 3,120,000 shares, and Wellong Investment Limited holding 26.20% of issued share capital Major Shareholder Holdings (as of March 31, 2020) | Shareholder Name/Name | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Wellong Investment Limited | Beneficial owner | 81,757,500 | 26.20% | | Wong Chi Kwok | Interest in controlled corporation | 81,757,500 | 26.20% | | Wong Wing Wah | Interest in controlled corporation | 81,757,500 | 26.20% | Independent Auditor's Report Kaiyuan Xinde Certified Public Accountants Limited issued an unmodified opinion on the Group's consolidated financial statements for the year ended March 31, 2020, highlighting revenue recognition and impairment assessment as key audit matters - Audit Opinion: The auditor believes that the consolidated financial statements present a true and fair view of the Group's financial position and performance in accordance with Hong Kong Financial Reporting Standards and have been properly prepared[207] - Key Audit Matter One: Revenue recognition for construction contracts, which the auditor focused on due to reliance on management's significant judgments and estimates for contract revenue and cost recognition[211] - Key Audit Matter Two: Impairment assessment of property, plant and equipment, identified as a key audit matter due to the significant carrying amounts of site equipment and motor vehicles and the significant management judgment involved in impairment assessment[213] Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended March 31, 2020, the Group's revenue was HKD 355 million, a 18% year-on-year decrease, resulting in a gross loss of HKD 20.20 million and an expanded annual loss of HKD 55.57 million Consolidated Statement of Profit or Loss Summary | Item (thousand HKD) | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 354,884 | 432,842 | | Cost of sales | (375,080) | (431,697) | | Gross (Loss)/Profit | (20,196) | 1,145 | | Operating loss | (56,346) | (6,550) | | Loss before tax | (56,388) | (6,568) | | Loss for the year | (55,567) | (6,048) | | Basic and diluted loss per share (HK cents) | (17.81) | (1.94) | Consolidated Statement of Financial Position As of March 31, 2020, the Group's total assets decreased to HKD 215 million, total liabilities slightly increased to HKD 184 million, and net assets significantly declined to HKD 31.22 million Consolidated Statement of Financial Position Summary | Item (thousand HKD) | March 31, 2020 | March 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Non-current assets | 22,799 | 36,961 | | Current assets | 192,348 | 226,020 | | Total assets | 215,147 | 262,981 | | Liabilities and Equity | | | | Current liabilities | 181,074 | 175,954 | | Non-current liabilities | 2,852 | 4,568 | | Total liabilities | 183,926 | 180,522 | | Net assets | 31,221 | 82,459 | | Total equity | 31,221 | 82,459 | Consolidated Statement of Changes in Equity Total shareholders' equity decreased from HKD 82.46 million to HKD 31.22 million, primarily due to a HKD 55.57 million loss for the year, partially offset by HKD 4.33 million in equity-settled share-based payments Summary of Total Equity Changes | Item (thousand HKD) | Amount | | :--- | :--- | | Balance at April 1, 2019 | 82,459 | | Loss and total comprehensive expenses | (55,567) | | Equity-settled share-based payments recognized | 4,329 | | Balance at March 31, 2020 | 31,221 | Consolidated Statement of Cash Flows The reporting period saw a net cash outflow of HKD 21.04 million from operating activities, a net inflow of HKD 4.04 million from investing activities, and a net outflow of HKD 0.45 million from financing activities, leading to a significant decrease in period-end cash and cash equivalents to HKD 3.82 million Consolidated Statement of Cash Flows Summary | Item (thousand HKD) | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | (21,044) | (76,723) | | Net cash from/(used in) investing activities | 4,035 | (944) | | Net cash used in financing activities | (450) | (251) | | Net decrease in cash and cash equivalents | (17,459) | (77,918) | | Cash and cash equivalents at beginning of period | 21,278 | 99,196 | | Cash and cash equivalents at end of period | 3,819 | 21,278 | Notes to the Consolidated Financial Statements This section provides detailed explanations and supplementary information to the consolidated financial statements, covering company details, accounting policies, critical judgments, and detailed analyses of financial items - First-time adoption of Hong Kong Financial Reporting Standard 16 'Leases': Effective April 1, 2019, the Group applied the new lease standard, recognizing right-of-use assets and lease liabilities, and making corresponding adjustments to accounting policies[243][246] - Revenue Recognition (Note 8): All Group revenue is derived from providing civil engineering and renovation works, recognized over time, with HKD 184 million allocated to remaining performance obligations at period-end[394][399] - Impairment of Property, Plant and Equipment (Note 18): Due to the gross loss recorded during the year, management assessed the impairment of site equipment and motor vehicles, recognizing an impairment loss of HKD 4.59 million[427] - Share-based Payments (Note 32): 31,200,000 share options were granted during the year, and a total expense of approximately HKD 4.33 million was recognized[472][475] Financial Summary This section provides a summary of the Group's key financial data for the past five fiscal years, clearly showing a downward trend in revenue, profitability, and asset size since 2018 Five-Year Financial Summary | Year Ended March 31 (thousand HKD) | 2016 | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Consolidated Results | | | | | | | Revenue | 315,004 | 735,330 | 708,595 | 432,842 | 354,884 | | Profit/(Loss) for the year | 8,391 | 30,549 | (2,892) | (6,048) | (55,567) | | Consolidated Assets and Liabilities | | | | | | | Total assets | 111,364 | 210,928 | 348,315 | 262,981 | 215,147 | | Total liabilities | (84,269) | (104,567) | (244,837) | (180,522) | (183,926) | | Net assets | 27,095 | 106,361 | 103,478 | 82,459 | 31,221 |