Business Expansion and Acquisitions - The company expanded its business in Singapore by acquiring several preschool institutions, increasing its presence in a key overseas market[13]. - In 2019, the company opened 22 wholly-owned dance centers in Hong Kong to enhance its competitive advantage and brand image[13]. - The acquisition of Ability Education Pty Limited added two colleges in Sydney and Melbourne, focusing on English intensive courses for international students, which diversifies revenue sources[14]. - The company operates seven preschool institutions in Singapore as of the end of 2019, aiming to establish its own early childhood education brand and curriculum[13]. - The company has partnered with Chatsworth East Asia (BVI) Ltd to establish kindergarten operations in Hong Kong and Singapore, leveraging Chatsworth's experience in the education sector[14]. - The group plans to open and/or acquire more dance centers in densely populated residential areas in Hong Kong to strengthen its market leadership[16]. - The group aims to accelerate its expansion in Singapore, Australia, and other overseas markets to diversify and broaden its revenue sources[16]. - The group completed the acquisition of Ability Education, which operates two colleges in Sydney and Melbourne, contributing to its expansion in the Australian education market[20]. - The group is actively seeking further investment opportunities in the education sector to drive growth[14]. Financial Performance - Total revenue increased from approximately HKD 76.5 million in 2018 to approximately HKD 128.7 million in 2019, primarily driven by contributions from the early childhood education business of about HKD 30.9 million and the college business of about HKD 15.2 million[22]. - The group recorded a significant increase in other income from approximately HKD 12.7 million in 2018 to approximately HKD 31.2 million in 2019, mainly due to management fee income and interest income[24]. - The group recorded a loss attributable to shareholders of approximately HKD 98.8 million for the year ended December 31, 2019, compared to a loss of approximately HKD 53.5 million in 2018, primarily due to increased costs and fair value losses[26]. - The group’s goodwill and intangible assets amounted to HKD 83.6 million and HKD 13.3 million, respectively, as of December 31, 2019, reflecting acquisitions made in 2018 and 2019[27]. - As of December 31, 2019, the group's total cash and bank balances were approximately HKD 76.2 million, an increase from HKD 55 million in 2018[29]. - The current ratio as of December 31, 2019, was approximately 0.64, down from 1.22 as of December 31, 2018[29]. - The group had outstanding bank and other borrowings of HKD 5.5 million and issued corporate bonds of HKD 71 million as of December 31, 2019[29]. - The group reported financial investments of HKD 49.6 million as of December 31, 2019, compared to HKD 3.6 million in 2018[36]. Corporate Governance - The board of directors consists of seven members, including two executive directors, two non-executive directors, and three independent non-executive directors[52]. - The roles of the chairman and the CEO are clearly separated, with Zhao Jiale serving as chairman and Qin Zhi'ang as CEO as of December 31, 2019[58]. - The company has adopted a board diversity policy, considering various measurable aspects such as gender, age, ethnicity, knowledge, and tenure when appointing board members[60]. - The board's diversity policy aims to enhance the quality of performance by ensuring a diverse composition of board members[60]. - The board of directors held a total of 12 meetings in 2019, with attendance rates for executive directors at 100%[69]. - The company is committed to high standards of corporate governance, aligning with the interests of stakeholders and enhancing business growth and corporate culture[49]. - The board regularly reviews its governance practices to comply with tightening regulatory requirements and meet the increasing expectations of shareholders and stakeholders[49]. - The Audit Committee held a total of five meetings during the year, reviewing quarterly and annual financial results[75]. - The company appointed KPMG as its auditor following the resignation of Deloitte, effective January 8, 2020[75]. - The Remuneration Committee is responsible for recommending appropriate policies regarding the remuneration of directors and senior management, considering factors such as comparable company salaries and performance-based pay[78]. - The Nomination Committee is tasked with reviewing the board's structure and recommending suitable candidates for directorship, ensuring alignment with the company's strategic goals[79]. - All independent non-executive directors confirmed their independence in accordance with GEM Listing Rules, and the company considers them to be independent[81]. - The company has established three board committees: Audit Committee, Remuneration Committee, and Nomination Committee, each with defined terms of reference[72]. - The Audit Committee is composed of three independent non-executive directors, with the chairman possessing appropriate professional qualifications and experience in accounting[75]. - The company ensures adequate insurance coverage for directors and senior management against legal actions arising from their duties[80]. - The board is responsible for ensuring compliance with corporate governance policies and legal regulations[72]. - The company has a policy for the rotation of directors, requiring one-third of the board to retire at each annual general meeting[81]. - The independent auditor's fee for audit services was approximately HKD 2,640,000 for the year ended December 31, 2019, compared to HKD 2,400,000 in 2018[87]. - Non-audit service fees incurred during the year were approximately HKD 29,000, down from HKD 91,000 in 2018[87]. - The board has reviewed the internal control systems and believes that appropriate procedures are in place to safeguard the group's assets and ensure compliance with relevant laws and regulations[86]. - The internal control system aims to assist management in achieving business objectives and provides reasonable assurance against material misstatements or losses[86]. - The company secretary participated in no less than 15 hours of relevant professional training during the year[88]. - The company has established multiple channels for communication with shareholders and investors, including annual general meetings and a dedicated website[98]. - The board is responsible for establishing, maintaining, and reviewing the internal control system to protect shareholder investments and group assets[85]. - The company encourages all directors to participate in ongoing professional development seminars to stay updated on regulatory developments[84]. - The risk management and internal control systems are reviewed annually, and the group believes these systems are effective and sufficient[90]. Environmental and Social Responsibility - Total energy consumption increased by 84% to 815,899 kWh in 2019 from 444,390 kWh in 2018[115]. - Water consumption surged by 6,243% to 3,806 cubic meters in 2019 from 60 cubic meters in 2018[116]. - Total greenhouse gas emissions rose by 112% to 596,905 kg in 2019 from 280,991 kg in 2018[111]. - Nitrogen oxides emissions decreased by 92% to 1,008 grams in 2019 from 12,863 grams in 2018[108]. - The number of facilities increased by 16% to 36 in 2019 from 31 in 2018[115]. - The annual emission intensity was 16,580 kg CO2 equivalent per facility in 2019, up from 9,064 kg CO2 equivalent per facility in 2018[111]. - Non-hazardous waste generated was 5 tons in 2019, up from 3 tons in 2018[113]. - The company implemented energy-saving measures, including installing energy-efficient lighting systems[107]. - The company has committed to enhancing information collection to improve environmental performance and sustainability disclosures[107]. - The company aims to integrate economic, social, and environmental welfare into its business decisions for sustainable development[102]. - The company encourages employees to participate in community activities, promoting a low-carbon and sustainable lifestyle through initiatives like Green Monday[143]. - Donations were made to various charitable organizations, including Bo Ai Hospital and the Green Monday Foundation[144]. - The company is committed to community engagement across various activities, from community service to environmental initiatives[145]. - Students have the opportunity to participate in meaningful activities that promote positive energy[146]. Employee and Workforce Development - The company employed a total of 526 employees as of December 31, 2019, up from 268 in 2018, indicating a growth of 96.3% in workforce size[122]. - The employee age distribution shows that 60% of employees are aged between 30-50 years in 2019, compared to 32% in 2018, reflecting a significant shift towards a more experienced workforce[123]. - The company reported a zero injury rate for employees in 2019, with no work-related deaths or lost workdays due to injuries, maintaining a strong safety record[131][133]. - The employee turnover rate for those under 30 years old decreased from 15% in 2018 to 10% in 2019, indicating improved retention among younger employees[126]. - The company has implemented various air quality improvement measures, including regular maintenance of air handling units and monitoring of dust and microbial levels[121]. - The company has not identified any non-compliance with labor and employment laws during the year, demonstrating adherence to legal standards[130]. - The company emphasizes equal opportunities in hiring, training, and promotion, ensuring no discrimination based on gender, race, or other factors[137]. - The company conducted various training programs, including team-building and sales skills training, to enhance employee development and service quality[134]. Compliance and Risk Management - The company has a strict internal control process for procurement, ensuring compliance with legal regulations and maintaining high standards for suppliers[138]. - The company has not reported any non-compliance with data privacy regulations, ensuring the confidentiality of student information[139]. - The company has established procedures to handle relationships with students, parents, and business partners, emphasizing integrity and compliance with relevant laws and regulations[141]. - No instances of non-compliance with anti-corruption or money laundering laws were reported during the year[142]. Strategic Management and Leadership - The executive team includes experienced individuals with backgrounds in education and management, contributing to the company's strategic direction[148][150][153]. - The company has not reported any board positions held by its executives in other listed companies over the past three years[149][151][155]. - The independent non-executive director has over 21 years of experience in auditing and financial accounting, currently serving as company secretary and financial director for another listed company[157]. - The company maintains a focus on ethical practices and community involvement as part of its corporate governance strategy[141][145]. - The company primarily engages in investment holding activities, with its subsidiaries focusing on adult education training services[172]. - The board presented the audited consolidated financial statements for the year ending December 31, 2019[171]. - Dr. Yuan has over 25 years of experience in brand building and marketing management, previously serving as CEO of a fashion brand planning company[164]. - Mr. Zhai has over 13 years of professional experience in auditing, accounting, corporate finance, and financial management[161]. - Ms. Chan has approximately 15 years of experience in management and marketing, overseeing the operations of SDM Jazz & Ballet Academy[164]. - Mr. Yu has extensive management and business development experience, particularly in the automotive, insurance, and financial sectors[168]. - The company has not disclosed any other directorships held by its directors in listed companies over the past three years[161][162][165][166][169]. - The company aims to expand its market presence through strategic planning and operational management[168]. - The management team is focused on enhancing overall operational efficiency and organizational effectiveness[168]. - The company is committed to developing new products and technologies to strengthen its market position[168]. Shareholder Returns and Dividends - The company did not recommend the distribution of a final dividend for the year ended December 31, 2019, consistent with the previous year[175]. - The company will continue to review its financial position and capital requirements annually to determine future dividend recommendations[176]. - The total number of share options granted or agreed to be granted under the share option scheme since its adoption is 35,410,000 and 44,090,000 respectively[181]. - The maximum number of shares that may be issued upon exercise of all options granted under the share option scheme shall not exceed 10% of the total issued shares immediately following the completion of the company's share listing[185]. - The company granted a total of 24,787,000 and 10,623,000 share options at exercise prices of HKD 1.10 and HKD 1.00 respectively on October 4 and October 11, 2019[186]. - The company proposed to seek shareholder approval to update the share option scheme limit, allowing for a total of 35,410,000 shares to be issued upon exercise of options[185]. - The exercise price for any specific share option granted under the share option scheme must be at least the higher of the closing price on the date of grant or the average closing price for the five trading days preceding the grant[191]. - The share option scheme is valid for a period of 10 years from the date of adoption, unless terminated earlier by the company at a general meeting or by the board[191]. - The company has issued a circular regarding the proposed update of the share option scheme limit to shareholders on December 18, 2019[186]. - The company will continue to assess its financial condition and capital needs to inform future strategic decisions[176]. - As of December 31, 2019, the company had 35,410,000 unexercised share options available under the share option scheme[193]. - The company did not redeem any of its shares during the year, nor did it or any of its subsidiaries purchase or sell any listed securities[195]. - The sales from the top five customers accounted for approximately 0.5% of the total sales for the year ended December 31, 2019, with the largest customer contributing about 0.1%[200]. - Rental payments accounted for approximately 31.9% of total revenue for the year ended December 31, 2019, compared to 32.5% in 2018[200]. - As of December 31, 2019, the company had no distributable reserves according to the Cayman Islands Companies Law[199].
SDM教育(08363) - 2019 - 年度财报