菊福堂生物(08217) - 2021 - 年度财报

Corporate Overview Corporate Information This section provides the company's basic information, including Board members, committee compositions, company secretary, registered office, principal place of business, auditor, and principal bankers - The Board of Directors comprises Executive Directors Mr. So Kwok Hung (Chairman) and Ms. Yu Xiao, and three Independent Non-executive Directors Mr. Wong Chi Kin, Ms. Lau Yin Hing, and Mr. Liu Hong Hao[7] - The company's auditor is K.Y. Sun & Co. Certified Public Accountants Limited[8] Chairman's Statement Chairman's Statement The Chairman, Mr. So Kwok Hung, reviews the fiscal year ended March 31, 2021, noting a significant revenue decline due to project completions and COVID-19, but expresses confidence in future prospects with newly secured projects Annual Total Revenue Change | Fiscal Year | Total Revenue (Approx.) | | :--- | :--- | | Year ended March 31, 2020 | HK$354,884,000 | | Year ended March 31, 2021 | HK$168,300,000 | - The substantial decrease in total revenue was mainly due to: 1) the completion phase of several large-scale construction projects; and 2) the negative impact of the COVID-19 pandemic on Hong Kong's construction industry, leading to temporary site suspensions[11] - Looking ahead, the government's commitment to annual capital works expenditure exceeding HK$100 billion in the coming years is expected to maintain a stable level of construction projects, and the Group is confident in its future prospects due to recently secured projects[12] Management Discussion and Analysis Business Review and Prospects With over 21 years of civil engineering subcontracting experience in Hong Kong, the Group's business covers roads, drainage, structural works, site formation, and renovation, and it plans to explore overseas markets like Japan and Thailand to enhance shareholder returns - The Group is principally engaged in four types of civil engineering services: (i) road and drainage works; (ii) structural engineering; (iii) site formation works; and (iv) fitting-out and renovation works[16] - To enhance shareholder returns, the Group plans to assess the feasibility of obtaining civil engineering licenses and commencing business in other countries such as Japan and Thailand[17] Major Investments The Group holds financial assets at fair value through profit or loss, primarily in Hong Kong-listed equity securities, with a total fair value of approximately HK$32.133 million, representing 19.7% of total assets as of March 31, 2021 Overview of Major Listed Equity Securities Investments (as of March 31, 2021) | Major Investment | Realised and Unrealised Gain (HK$'000) | Fair Value (HK$'000) | Approx. % of Total Assets | | :--- | :--- | :--- | :--- | | Wui Loong Holdings Limited | 3,435 | 14,121 | 8.7% | | Other listed equity securities | - | 18,012 | 11.0% | | Total | - | 32,133 | 19.7% | Financial Review This fiscal year, the Group's total revenue significantly decreased to HK$168 million, recording a gross loss of HK$2.283 million, yet the annual loss narrowed substantially from HK$55.567 million to HK$13.13 million, mainly due to effective control of administrative expenses, increased other income from government subsidies, and higher income tax credits Financial Performance Summary | Financial Metric | FY2021 (HK$'000) | FY2020 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Revenue | 168,300 | 354,884 | ↓ 52.6% | | Gross Loss | (2,283) | (20,196) | Loss narrowed | | Other Income | 8,034 | 851 | ↑ 844% | | Administrative & Other Operating Expenses | (8,667) | (18,549) | ↓ 53.3% | | Loss for the Year | (13,130) | (55,567) | Loss narrowed | - The decrease in revenue was mainly due to the completion of several large construction projects and the impact of the COVID-19 pandemic, with contracts on hand decreasing from 22 (totaling approx. HK$790 million) to 7 (totaling approx. HK$477 million)[22] - The significant increase in other income was primarily from a government subsidy of approximately HK$6.413 million related to the Employment Support Scheme provided by the Hong Kong Government[29] - The reduction in administrative expenses was mainly attributable to decreases in depreciation, staff costs, and share-based payment expenses[34] Liquidity, Financial Resources, and Capital Structure As of March 31, 2021, the Group's liquidity ratio improved from 1.1 to 1.3 times, total interest-bearing debt increased to approximately HK$12.411 million, and the gearing ratio was about 50%, with its capital base strengthened by a share placement raising net proceeds of approximately HK$5.1 million - The current ratio increased from approximately 1.1 times as of March 31, 2020, to approximately 1.3 times as of March 31, 2021[40] - The gearing ratio (interest-bearing borrowings and lease liabilities / total equity) was approximately 50%, compared to approximately 2% in the prior year[40] - In September 2020, the company completed a placement of 62,400,000 ordinary shares, raising net proceeds of approximately HK$5.1 million, which were fully used for the Group's general working capital and to improve its cash position[42] Employees, Remuneration Policy, and Dividends As of March 31, 2021, the Group's employee count decreased from 110 to approximately 67, with a corresponding drop in total staff costs, and the Board has recommended not to declare a final dividend for the reporting period Employee and Cost Changes | Metric | As of March 31, 2021 | As of March 31, 2020 | | :--- | :--- | :--- | | Number of Employees | Approx. 67 | 110 | | Total Staff Costs | Approx. HK$40,294,000 | Approx. HK$76,356,000 | - The Board recommended no final dividend for the reporting period, consistent with the previous year[52] Biographical Details of Directors and Senior Management Biographical Details of Directors and Senior Management This section details the personal resumes of the company's executive and independent non-executive directors, including their age, professional experience, academic background, and roles within the Group - Executive Director Mr. So Kwok Hung, aged 39, has over fifteen years of experience in the construction industry and is responsible for the Group's overall management and supervision[54] - Executive Director Ms. Yu Xiao, aged 40, has over ten years of experience in the civil engineering and real estate construction industry and holds a bachelor's degree in civil engineering[55] - Independent Non-executive Director Mr. Wong Chi Kin is a certified public accountant with over seven years of experience in auditing and accounting[57] Corporate Governance Report Corporate Governance Practices and the Board The Group is committed to high standards of corporate governance, complying with the GEM Listing Rules' code provisions during the period with only one deviation regarding an INED's absence from the AGM - During the reporting period, the company complied with all applicable provisions of the Corporate Governance Code, with one deviation: Independent Non-executive Director Mr. Dai Qian was unable to attend the AGM on September 28, 2020, due to other commitments[66] - The Board consists of five directors, including two Executive Directors (Mr. So Kwok Hung, Ms. Yu Xiao) and three Independent Non-executive Directors (Mr. Wong Chi Kin, Mr. Liu Hong Hao, Ms. Lau Yin Hing), in compliance with Listing Rules requirements[70] - The company has adopted a board diversity policy, considering factors such as gender, age, cultural background, and professional experience in director selection[76] Board Committees The Board has established Audit, Remuneration, and Nomination Committees to assist in its duties, with each committee having met and fulfilled its responsibilities during the reporting period Board Committee Composition and Chairmanship | Committee | Chairman | Membership Composition | | :--- | :--- | :--- | | Audit Committee | Mr. Wong Chi Kin | 3 Independent Non-executive Directors | | Remuneration Committee | Mr. Wong Chi Kin | 2 Independent Non-executive Directors, 1 Executive Director | | Nomination Committee | Mr. So Kwok Hung | 1 Executive Director, 2 Independent Non-executive Directors | - The Audit Committee held 4 meetings during the reporting period to review financial reports and discuss internal control matters[92][94] - The Remuneration and Nomination Committees each held 2 meetings during the reporting period, fulfilling their respective terms of reference[97][103] Internal Control and Risk Management The Board is responsible for establishing, maintaining, and reviewing the Group's risk management and internal control systems, with an annual review by an external consultant finding no material issues - The Board is directly responsible for the Group's risk management and internal control systems and reviews their effectiveness with the assistance of the Audit Committee[111] - The Group has engaged an external internal control consultant for an annual review, which covered civil engineering procedures and identified no issues with a material impact on financial, operational, or compliance matters[111] Shareholder Rights and Communication The report outlines procedures for shareholders to convene special general meetings and propose resolutions, and details the Group's dividend policy and communication channels with investors - Shareholders holding not less than one-tenth of the paid-up capital carrying voting rights may make a written request for the Board to convene a special general meeting[116] - The company has adopted a dividend policy, but dividend payments are not guaranteed and are at the full discretion of the Board, based on multiple factors including financial performance and capital requirements[119][120][124] Environmental, Social and Governance (ESG) Report Environmental Aspect The Group is committed to environmentally friendly operations and compliance with relevant regulations, implementing various measures for energy saving, waste management, and resource efficiency, with no major environmental non-compliance incidents reported Environmental Performance Indicators (For the year ended March 31, 2021) | Key Performance Indicator | Quantity | Unit | | :--- | :--- | :--- | | Total GHG Emissions | 1,254.4 | tonnes of CO2e | | GHG Intensity | 7.45 | tonnes of CO2e/million revenue | | Total Energy Consumption | 5,055.4 | MWh equivalent | | Energy Intensity | 30.04 | MWh equivalent/million revenue | | Water Consumption | 25 | m³ | - The Group has implemented policies and measures to promote energy conservation and emission reduction, including paperless meetings, regular maintenance of construction machinery for fuel efficiency, and dust control measures on-site[136] - During the reporting period, the Group identified no non-compliance with laws and regulations that have a significant impact on the Group relating to air and GHG emissions, noise control, water and land discharge, or waste generation[140] Social Aspect The Group values its employees and is committed to providing a fair, safe, and healthy work environment, strictly adhering to labor laws and recording zero work-related fatalities, though 705 workdays were lost due to work injuries - As of March 31, 2021, the Group had approximately 67 employees in Hong Kong[146] Health and Safety Data (FY2021) | Indicator | Quantity | | :--- | :--- | | Number of work-related fatalities | Zero | | Lost days due to work injury | 705 | - The Group strictly complies with the Employment Ordinance and verifies the identity and registration of construction workers before hiring to prevent child and forced labor[154] Operational Practices and Community The Group emphasizes supply chain management with all suppliers based in Hong Kong, implements strict quality assurance, upholds high ethical standards against corruption, and actively participates in community activities - The Group has implemented assessment procedures for 232 suppliers, all of whom were located in Hong Kong during the reporting period to reduce the carbon footprint[156] - The Group strictly complies with anti-corruption regulations and received no notices of non-compliance regarding corruption or money laundering during the reporting period[158][161] - During the year, the Group donated HK$3,000 to the charity "Ming Kin Association" to support the Hong Kong construction industry[163][164] Report of the Directors Principal Business and Risks The Group is principally engaged in providing civil engineering services, with no significant changes in the nature of its business, and faces key risks including high customer concentration, project cost misestimation, and reliance on key management personnel - The Group's principal risks include: - High customer concentration: The five largest customers accounted for 99.8% of total revenue - Inaccurate project cost estimation could impair profitability - Cash flow mismatch risk - Reliance on senior management and professional talent - Outdoor operations are subject to weather conditions[173][178] Share Capital and Share Option Scheme The company's share capital structure changed during the period due to a share placement, and a total of 56,160,000 share options were outstanding under its incentive scheme as of the period end - As of March 31, 2021, the company's reserves available for distribution to shareholders amounted to approximately HK$1,951,000[182] - As of the reporting date, 56,160,000 share options had been granted under the Share Option Scheme; during the period, 31,200,000 new options were granted while 6,240,000 lapsed[187][188] Major Stakeholder Relationships The Group maintains long-term stable relationships with its major customers, suppliers, and subcontractors, though concentration levels for all three were high during the reporting period Major Business Partner Concentration | Category | Largest Share (FY2021) | Top Five Combined Share (FY2021) | | :--- | :--- | :--- | | Customers | 66.3% | 99.8% | | Suppliers | 10.3% | 33.9% | | Subcontractors | 19.8% | 62.3% | Disclosure of Directors' Interests This section discloses the interests of directors and the chief executive in the company's shares, which, as of March 31, 2021, consisted solely of unlisted options under the Share Option Scheme Directors' Long Positions in Shares and Underlying Shares of the Company (Unlisted Options) | Director's Name | Number of Underlying Shares | Percentage of Issued Share Capital | | :--- | :--- | :--- | | So Kwok Hung | 6,240,000 | 1.67% | | Yu Xiao | 6,240,000 | 1.67% | | Wong Chi Kin | 3,120,000 | 0.83% | | Liu Hong Hao | 3,120,000 | 0.83% | | Lau Yin Hing | 3,120,000 | 0.83% | - As of the end of the reporting period, no substantial shareholder (other than a director) had an interest or short position that was discloseable under the Securities and Futures Ordinance[215] Independent Auditor's Report Independent Auditor's Report The auditor, K.Y. Sun & Co., issued an unmodified opinion on the consolidated financial statements, stating they give a true and fair view, and highlighted revenue recognition for construction work and impairment assessment of PPE as key audit matters - The auditor opined that the consolidated financial statements give a true and fair view of the Group's financial position and performance in accordance with HKFRSs and have been properly prepared in compliance with the Hong Kong Companies Ordinance (unmodified opinion)[228] - Key audit matters included: 1. Recognition of construction works: Revenue and cost recognition relies on management's estimation of contract outcomes, involving significant judgment 2. Impairment assessment of property, plant and equipment: Determining the recoverable amount of cash-generating units involves significant management judgment, particularly in forecasting cash flows and applying appropriate discount rates[233][235] Consolidated Financial Statements Financial Statements Summary The Group's total revenue was HK$168 million, a 52.6% year-on-year decrease, and while recording a gross loss of HK$2.283 million, the loss for the year narrowed significantly to HK$13.13 million, with a basic loss per share of 3.78 HK cents Key Financial Data (Consolidated) | Indicator (HK$'000) | FY2021 | FY2020 | | :--- | :--- | :--- | | Consolidated Statement of Profit or Loss | | | | Revenue | 168,300 | 354,884 | | Gross Loss | (2,283) | (20,196) | | Loss for the year | (13,130) | (55,567) | | Basic loss per share (HK cents) | (3.78) | (17.81) | | Consolidated Statement of Financial Position (at year end) | | | | Total Assets | 163,205 | 215,147 | | Total Liabilities | 138,445 | 183,926 | | Net Assets | 24,760 | 31,221 | | Consolidated Statement of Cash Flows | | | | Net cash inflow/(outflow) from operating activities | 28,544 | (21,044) | | Net cash inflow from investing activities | 4,386 | 4,035 | | Net cash outflow from financing activities | (21,177) | (450) | Notes to the Consolidated Financial Statements (Selected) The notes provide detailed explanations for key financial data, including revenue breakdown, PPE impairment details, trade receivables aging analysis, share capital changes, and related party transactions Note 8. Revenue All of the Group's revenue is derived from contracts with customers and recognized over time, with the provision of civil engineering services being the primary source, accounting for 98.3% of total revenue Revenue by Service Type (HK$'000) | Service Type | FY2021 | FY2020 | | :--- | :--- | :--- | | Provision of civil engineering services | 165,505 | 300,578 | | Provision of fitting-out and renovation services | 2,795 | 54,306 | | Total | 168,300 | 354,884 | Note 18. Property, Plant and Equipment Due to two consecutive years of gross losses, management conducted an impairment assessment on property, plant and equipment, resulting in an impairment loss of HK$2.621 million for the year - An impairment loss of HK$2,621,000 (2020: HK$4,590,000) was recognised for property, plant and equipment during the year[436][440] - The impairment assessment was based on a value-in-use calculation, using a pre-tax discount rate of 14.2% and a long-term growth rate of 3%[440] Note 22. Trade and Other Receivables At the end of the reporting period, net trade receivables stood at HK$67.86 million, with a significant portion of approximately HK$52.182 million aged over 90 days, and the Group has made a credit loss provision of HK$6.636 million Aging Analysis of Trade Receivables (Net of Allowance, HK$'000) | Aging | 2021 | 2020 | | :--- | :--- | :--- | | 0 to 30 days | 13,609 | 77,510 | | 31 to 60 days | 2,069 | 245 | | 61 to 90 days | – | 8,714 | | Over 90 days | 52,182 | 28,859 | | Total | 67,860 | 115,328 | Note 30. Share Capital During the reporting period, the company's share capital underwent two significant changes: a "4-into-1" share consolidation and the completion of a placement of 62,400,000 new shares - In March 2020, the company consolidated every four shares of HK$0.01 each into one consolidated share of HK$0.04[481] - In September 2020, the company completed a placement of 62,400,000 new shares at a price of HK$0.085 per share, raising net proceeds of approximately HK$5.066 million[481] Financial Summary Five-Year Financial Summary This section provides key performance and financial position data for the Group's past five fiscal years, showing a continuous decline in revenue since 2017 and pre-tax losses in the last three years Five-Year Financial Data Overview (For the year ended March 31, HK$'000) | Indicator | 2017 | 2018 | 2019 | 2020 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Consolidated Results | | | | | | | Revenue | 735,330 | 708,595 | 432,842 | 354,884 | 168,300 | | Profit/(Loss) before tax | 37,976 | (2,673) | (6,568) | (56,388) | (15,510) | | Consolidated Assets and Liabilities | | | | | | | Total Assets | 210,928 | 348,315 | 262,981 | 215,147 | 163,205 | | Total Liabilities | (104,567) | (244,837) | (180,522) | (183,926) | (138,445) | | Net Assets | 106,361 | 103,478 | 82,459 | 31,221 | 24,760 |