亚洲富思(08413) - 2021 - 年度财报

Corporate Overview This section provides an overview of the company's structure, leadership, and foundational business operations Corporate Information This section provides Asia Grocery Distribution Limited's basic corporate information, including board members, committee structures, registered office, principal bankers, and auditors - The company's board of directors comprises three executive directors, one non-executive director, and three independent non-executive directors. Mr. Wong Siu Man serves as Chairman, and Mr. Wong Siu Wah serves as Chief Executive Officer[7] - The company's Audit Committee, Remuneration Committee, and Nomination Committee are all composed of independent non-executive directors, meeting corporate governance requirements[7] Chairman's Statement The Chairman's Statement reviews the operating environment for FY2021, noting that despite COVID-19 challenges to the retail sector, the company expects stable performance due to its long-standing "Hung Fat Ho" brand and solid supplier and customer relationships. The report also highlights the group's expansion into catering services for revenue diversification and expresses gratitude to shareholders, partners, and employees - The Group has operated a food and beverage grocery distribution business in Hong Kong for over 40 years under the local brand "Hung Fat Ho," serving customers including restaurants, hotels, food processors, and wholesalers[11] - Affected by COVID-19, Hong Kong's total retail sales value from April 2020 to March 2021 decreased by approximately 13.9% year-on-year. Despite challenging prospects, with the easing of social distancing measures, local consumer sentiment has improved, and the Group anticipates stable performance in the coming year[11] - To diversify revenue streams, the Group commenced a new business of providing catering services through restaurants in 2021[12] Biographical Details of Directors and Senior Management This section details the personal biographies, industry experience, and roles within the Group for executive directors, non-executive directors, independent non-executive directors, and senior management. The core management team possesses extensive experience in the food and beverage industry and finance - Executive Directors Mr. Wong Siu Man (Chairman) and Mr. Wong Siu Wah (Chief Executive Officer) are brothers and controlling shareholders of the company, responsible for the Group's overall management and development strategy, and daily management and operations, respectively[16][17] - Senior management, such as Ms. Chan Lai Yin (Financial Controller) and Ms. Kwong Hoi Sze (General Manager), possess extensive professional experience in accounting, finance, and procurement, distribution, and operations within the food and beverage industry[32] Management Discussion and Analysis This section provides an in-depth review of the Group's financial performance, liquidity, capital resources, and future outlook Business and Financial Review In FY2021, the Group's total revenue increased by 11.4% year-on-year to HKD 227.7 million, primarily driven by significant sales growth in kitchen and hygiene products (especially masks) and high-value packaged foods (such as cordyceps). However, due to decreased demand from traditional catering clients amidst the pandemic and lower profit margins on newly sold products, the gross profit margin declined from 23.3% to 21.1%. Concurrently, administrative expenses surged due to approximately HKD 15.42 million in equity-settled share-based payments from share option grants, leading to an expanded full-year loss of HKD 14.62 million Revenue by Product Category (HKD thousands) | Product Category | 2021 | 2020 | Change % | | :--- | :--- | :--- | :--- | | Household & Cereal Products | 58,019 | 53,707 | 8.0% | | Packaged Food | 60,076 | 46,809 | 28.3% | | Sauces & Condiments | 41,420 | 43,728 | –5.3% | | Dairy Products & Eggs | 27,052 | 27,684 | –2.3% | | Beverages & Wines | 12,689 | 12,791 | –0.8% | | Kitchen & Hygiene Products | 28,453 | 19,649 | 44.8% | | Total | 227,709 | 204,368 | 11.4% | - Sales of kitchen and hygiene products significantly increased by 44.8% year-on-year, primarily due to immense demand for masks during the COVID-19 pandemic, with mask sales alone contributing approximately HKD 16.13 million in revenue[46] - Packaged food sales grew by 28.3%, mainly driven by the sale of high-value products such as cordyceps and wild ginseng[45] - Despite revenue growth, gross profit only slightly increased to HKD 48.07 million, and the gross profit margin decreased from 23.3% to 21.1%, primarily due to lower profit margins on masks and high-value packaged foods[52] - Loss attributable to owners of the company expanded from HKD 3.57 million last year to HKD 14.62 million, mainly due to approximately HKD 15.42 million in equity-settled share-based payment expenses incurred during the year[62][59] - The Board does not recommend the payment of any dividend for the year ended March 31, 2021[63] Liquidity and Capital Resources As of March 31, 2021, the Group held bank balances and cash of approximately HKD 38.44 million, a decrease from the previous year. The current ratio was 6.7 times, maintaining a healthy level. The Group primarily relies on internal cash flow and proceeds from its listing to fund operations and expansion. The gearing ratio slightly increased to 7.8%, indicating overall stable financial health Liquidity and Capital Structure Indicators | Indicator | March 31, 2021 | March 31, 2020 | | :--- | :--- | :--- | | Bank Balances and Cash | HKD 38,438,000 | HKD 54,001,000 | | Current Ratio | 6.7 times | 8.3 times | | Gearing Ratio | 7.8% | 6.1% | - Trade receivables significantly increased by 95.1% year-on-year to HKD 38.21 million, primarily due to increased sales demand at year-end[67] - The Group's capital comprises only ordinary shares, with issued share capital of HKD 11.62 million as of March 31, 2021, corresponding to 1,162,000,000 ordinary shares[70] Significant Investments and Future Plans During the reporting period, the Group terminated the acquisition agreement for Carty (Shanghai) Biotechnology Co., Ltd., and had no other significant investment, acquisition, or disposal activities. Apart from plans already disclosed in the annual report, the Group currently has no other significant future plans for investments or capital assets - On September 30, 2020, the Group terminated the sale and purchase agreement for the acquisition of Carty (Shanghai) Biotechnology Co., Ltd[82] - For the year ended March 31, 2021, the Group had no significant investments, major acquisitions, or disposals of subsidiaries, associates, and joint ventures[82] Use of Proceeds The Group adjusted the use of net proceeds from its listing to adapt to changing business environments. Funds originally allocated for warehouse leasing and packaging equipment acquisition were reallocated to develop catering services and supplement general working capital. As of the reporting date, approximately HKD 26.95 million in proceeds remained unutilized, primarily planned for rent payments, restaurant business development, ERP system upgrades, and marketing - The Board resolved to reallocate a portion of the unutilized net proceeds to develop new catering services through restaurants and to supplement general working capital[89][95][96] Changes in Use of Net Proceeds and Utilization (HKD thousands) | Intended Use of Net Proceeds | Revised Allocation Amount | Unutilized Amount as at Date of this Annual Report | | :--- | :--- | :--- | | Payment of warehouse lease payments | 3,278 | 2,547 | | Development of catering services through restaurants | 9,000 | 7,186 | | Upgrade of ERP system | 8,330 | 8,149 | | Sales and marketing activities | 4,444 | 4,391 | | General working capital | 5,211 | 4,675 | | Total | 30,263 | 26,948 | Outlook and Risks Looking ahead, the Group maintains reasonable optimism for its core business and will actively manage uncertainties arising from the pandemic. The Group plans to expand its catering business by opening approximately 5 restaurants to achieve vertical integration and cost control. Concurrently, the Group will continue its commitment to becoming a leading food and beverage grocery distributor in Hong Kong, while monitoring key risks such as market competition, talent retention, and customer credit - The Group plans to open approximately 5 restaurants by December 31, 2022, with the first one opened in Tsim Sha Tsui in April 2021, aiming to enhance competitive advantage through vertical expansion[100] - Key risks faced by the Group include market competition, employee commitment and satisfaction, warehouse disruption, customer credit risk, and investment and return on capital[101] Report of the Directors This section outlines the Group's business activities, risk management, dividend policy, board composition, and statutory disclosures Business and Risk Overview During this reporting period, the Group primarily engaged in food and beverage grocery distribution, with no significant changes in business nature. The Group is committed to complying with relevant laws and regulations and maintaining good relationships with employees, customers, and suppliers. The report identifies key risks faced by the Group, including customer loss risk, economic and political risks, financial risks (foreign currency, interest rate, credit, liquidity), and talent attrition risk - The Group's principal business is food and beverage grocery distribution in Hong Kong, with no significant changes in business nature during the year[106] - Key risks and uncertainties include: - Business Risks: Potential inability to retain key customers, inventory and inventory obsolescence risks - Economic and Political Risks: Macroeconomic environment and government policy changes may affect strategy execution - Financial Risks: Exposure to foreign currency, interest rate, credit, and liquidity risks - Personnel Risks: Difficulty in retaining talent in a competitive market[114][115][116][117] Dividends and Reserves The Board does not recommend a dividend for the year ended March 31, 2021. The company has adopted a dividend policy, where payout decisions will consider the Group's financial performance, capital needs, and future development. As of the end of the reporting period, the company's distributable reserves were approximately HKD 23.97 million - The Board does not recommend the payment of any dividend for the year ended March 31, 2021[119] - As of March 31, 2021, the amount of reserves available for distribution to shareholders was approximately HKD 23,972,000[130] Directors and Service Contracts The report lists the directors in office during the reporting period and explains the arrangements for directors' rotation and re-election. All executive, non-executive, and independent non-executive directors have signed three-year service agreements or appointment letters with the company, and there are no service contracts that cannot be terminated without compensation within one year - During the reporting period, Ms. Chan Hoi Yee was appointed as an independent non-executive director on October 12, 2020, and Mr. Wong Ka Ho resigned on the same day[133] - Each executive director, non-executive director, and independent non-executive director has entered into a service agreement or appointment letter with the company for an initial term of three years[139] Interests of Directors and Substantial Shareholders As of March 31, 2021, controlling shareholders Mr. Wong Siu Man and Mr. Wong Siu Wah jointly held 51.88% of the company's shares through their controlled corporation, Yuan Tian Investment Limited. Other than this, no other directors or chief executives held disclosable share interests Directors' Long Positions in the Company's Shares | Name of Director | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Wong Siu Man | Interest in controlled corporation | 602,800,000 | 51.88% | | Mr. Wong Siu Wah | Interest in controlled corporation | 602,800,000 | 51.88% | - The above shares are held by Yuan Tian Investment Limited, which is beneficially owned by Mr. Wong Siu Man and Mr. Wong Siu Wah with 58.38% and 38.92% interests, respectively[149] Share Option Scheme The company adopted a share option scheme on March 27, 2017. During the reporting period, specifically on February 19, 2021, the company granted a total of 112 million share options to Group employees under this scheme, with an exercise price of HKD 0.30 per share. As of the end of the reporting period, all these share options remained unexercised - On February 19, 2021, the company granted a total of 112,000,000 share options to Group employees[169] Details of Share Options Granted | Item | Details | | :--- | :--- | | Exercise Price | HKD 0.30/share | | Validity Period | February 19, 2021 to February 18, 2023 | | Closing Price on Grant Date | HKD 0.32 | | Number of Unexercised Share Options (as of 2021/3/31) | 112,000,000 options | Other Statutory Disclosures This section covers various statutory disclosures. During the reporting period, the Group had no significant connected transactions, and controlling shareholders complied with the non-competition undertaking. The company maintained sufficient public float and did not purchase, sell, or redeem any listed securities. Post-reporting period, on April 30, 2021, the company entered into a non-legally binding memorandum of understanding for a potential acquisition. Additionally, the auditor changed from BDO Limited to Evergreen (Hong Kong) CPA Limited - Controlling shareholders have confirmed compliance with the non-competition undertaking, which has been reviewed and confirmed by independent non-executive directors[163] - The company confirmed that it has maintained a public float of not less than 25%[167] - Subsequent to the reporting period, on April 30, 2021, the company entered into a non-legally binding memorandum of understanding with Beijing Douguo Yangtian Network Technology Co., Ltd. regarding a possible acquisition[186] - Effective May 3, 2021, BDO Limited resigned as auditor, and Evergreen (Hong Kong) CPA Limited was appointed to fill the vacancy[190] Corporate Governance Report This section details the Group's corporate governance practices, including board structure, committee functions, risk management, and shareholder communication The Board The Board is responsible for the Group's overall leadership, strategy formulation, and oversight. During the reporting period, the Board comprised three executive directors, one non-executive director, and three independent non-executive directors, complying with Listing Rules requirements. The roles of Chairman and Chief Executive Officer are held by different individuals, ensuring checks and balances. Clear procedures are in place for director appointment, re-election, and continuous professional development, with detailed records of directors' meeting attendance - The company confirmed compliance with all code provisions of the Corporate Governance Code during the reporting period[194] - The roles of Chairman (Mr. Wong Siu Man) and Chief Executive Officer (Mr. Wong Siu Wah) are clearly separated, with the former leading the Board and the latter responsible for daily management[206] Directors' Meeting Attendance Record (for the year ended 2021/3/31) | Name of Director | Board | Remuneration Committee | Audit Committee | Nomination Committee | General Meeting | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Wong Siu Man | 9/9 | N/A | N/A | N/A | 1/1 | | Mr. Wong Siu Wah | 9/9 | N/A | N/A | N/A | 1/1 | | Mr. Yip Kam Cheong | 9/9 | N/A | N/A | N/A | 1/1 | | Mr. Wong Chun Hung | 9/9 | N/A | N/A | N/A | 1/1 | | Ms. Chan Hoi Yee | 4/4 | N/A | 2/2 | N/A | N/A | | Mr. Ng Fan Kei | 9/9 | 1/1 | 4/4 | 1/1 | 1/1 | | Mr. Wong Siu Bun | 9/9 | 1/1 | 4/4 | 1/1 | 1/1 | | Mr. Wong Ka Ho (resigned) | 5/5 | 1/1 | 2/2 | 1/1 | 1/1 | Board Committees The Group has established three Board committees: Audit, Nomination, and Remuneration, all composed of independent non-executive directors with clear written terms of reference. The Audit Committee oversees financial reporting and internal control systems; the Nomination Committee reviews board structure and director nominations; and the Remuneration Committee determines directors' and senior management's remuneration. Each committee held meetings during the reporting period to fulfill its duties - The Audit Committee, Nomination Committee, and Remuneration Committee are all composed of independent non-executive directors, with the chairpersons also being independent non-executive directors[225][230][236] - The Audit Committee reviewed quarterly, interim, and annual financial statements and recommended the re-appointment of external auditors[226] Fees Paid to Auditors (HKD thousands) | Nature of Service | 2021 | 2020 | | :--- | :--- | :--- | | Audit Services | 650 | 750 | | Non-audit related services | – | 10 | - The company has adopted a Board Diversity Policy and a Nomination Policy to ensure the Board possesses a balanced mix of skills, experience, and diverse perspectives[232][235] Risk Management and Internal Control The Board bears overall responsibility for the Group's risk management and internal control systems. During the reporting period, the Group engaged an independent internal control consultant to review the systems and adopted their optimization recommendations. The Board considers the existing risk management and internal control measures effective and adequate. The Group currently does not have an internal audit function but reviews its necessity annually - The Board has reviewed and deemed the Group's financial, operational, compliance controls, and risk management mechanisms to be adequate[250] - The Group engaged an independent third-party consultant to review its internal control system and implemented optimizations based on their recommendations[251] - Key risks identified by the Group are categorized into four types: - Strategic Risks: Market competition - Operational Risks: Employee commitment and satisfaction, warehouse operation disruption - Financial Risks: Customer credit risk, capital investment and return - Compliance Risks: Regulatory changes[257] Shareholders' Rights and Communication The company clarifies shareholders' rights, including the right of shareholders holding not less than 10% of the paid-up capital to requisition an extraordinary general meeting, and procedures for nominating director candidates. The company maintains communication with shareholders and investors through various channels such as annual reports, interim reports, website announcements, and general meetings to ensure fair information disclosure - Shareholders holding not less than one-tenth of the paid-up capital have the right to requisition the Board to convene an extraordinary general meeting[265] - The company has established multiple communication channels, including corporate communications, website updates, and general meetings, to facilitate effective communication with shareholders[270] Environmental, Social and Governance Report This section details the Group's commitment and performance in environmental protection, social responsibility, and corporate governance Environmental Aspect In terms of environmental aspects, the Group is committed to energy conservation, emission reduction, and efficient resource utilization. During the reporting period, total greenhouse gas emissions were approximately 114.1 tonnes of CO2 equivalent, primarily from electricity consumption. The Group promotes waste reduction at source, prioritizes environmentally friendly or recyclable packaging materials, and implements water and electricity saving measures. There were no significant environmental violations during the reporting period Greenhouse Gas Emissions (tonnes of CO2 equivalent) | Scope | Quantity | | :--- | :--- | | Scope 1 – Direct Emissions | 3.4 | | Scope 2 – Energy Indirect Emissions | 110.7 | | Total GHG Emissions | 114.1 | Resource Utilization | Resource Category | Quantity | Unit | | :--- | :--- | :--- | | Total Energy Consumption | 229.0 | MWh equivalent | | Total Water Consumption | 219.6 | cubic meters | | Total Packaging Material | 49.9 | tonnes | - The Group's total non-hazardous waste generated was 0.67 tonnes, primarily daily office waste[291] Social Aspect On the social front, the Group focuses on employee rights, health and safety, development and training, supply chain management, product responsibility, anti-corruption, and community engagement. As of the end of the reporting period, the Group had 50 employees and strictly complied with labor laws, prohibiting child and forced labor. The Group prioritizes food safety, establishing stringent product quality control and after-sales procedures. Additionally, the Group actively participates in community welfare activities and has received multiple social responsibility-related awards - As of the end of the reporting period, the Group had 50 employees, comprising 27 females and 23 males. 49 were full-time employees[304][305][309] - Regarding health and safety, no work-related injuries, fatalities, or accidents were reported during the period[318] - In terms of product responsibility, the Group strictly adheres to food safety regulations, with no products recalled due to safety or health reasons during the reporting period[333] - The Group maintains a zero-tolerance policy towards corruption, with no related violations or legal cases during the reporting period[336] - The Group actively participates in community affairs, making cash and material donations to organizations such as Lions Club of Hong Kong Peace and Hong Kong Federation of Youth Groups, and organizing volunteer services[340][341] Consolidated Financial Statements and Auditor's Report This section presents the Group's audited consolidated financial statements, including the auditor's report, income statement, balance sheet, cash flow statement, and detailed notes Independent Auditor's Report The auditor, Evergreen (Hong Kong) CPA Limited, issued an unqualified opinion on the Group's consolidated financial statements for the year ended March 31, 2021, deeming them to present a true and fair view of the Group's financial position and performance. The report specifically highlighted two key audit matters: inventory valuation and the assessment of expected credit losses on trade receivables - 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 comply with relevant disclosure requirements[357] - Key audit matters are: - Inventory Valuation: Involves estimates for provisions against slow-moving and obsolete inventory - Provision for Expected Credit Losses on Trade Receivables: Involves significant management judgment and estimates[361] Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended March 31, 2021, the Group recorded revenue of HKD 227.7 million, an 11.4% year-on-year increase. However, due to a significant increase in administrative expenses (especially equity-settled share-based payments), the loss before tax expanded to HKD 14.38 million, with a total loss and comprehensive expenses for the year of HKD 14.62 million Consolidated Statement of Profit or Loss Summary (HKD thousands) | Item | 2021 | 2020 | | :--- | :--- | :--- | | Revenue | 227,709 | 204,368 | | Gross Profit | 48,070 | 47,618 | | Loss Before Tax | (14,376) | (3,280) | | Loss and Total Comprehensive Expense for the Year | (14,618) | (3,573) | | Basic Loss Per Share (HK cents) | (1.26) | (0.31) | Consolidated Statement of Financial Position As of March 31, 2021, the Group's total assets were HKD 124 million, total liabilities were HKD 20.51 million, and net assets were HKD 103.6 million, largely consistent with the previous year. Current assets significantly increased, mainly reflected in the growth of trade receivables, while bank balances and cash decreased Consolidated Statement of Financial Position Summary (HKD thousands) | Item | March 31, 2021 | March 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 13,363 | 11,609 | | Current Assets | 110,700 | 107,311 | | Total Assets | 124,063 | 118,920 | | Liabilities and Equity | | | | Current Liabilities | 16,616 | 12,911 | | Non-current Liabilities | 3,895 | 3,258 | | Total Liabilities | 20,511 | 16,169 | | Net Assets | 103,552 | 102,751 | | Total Equity | 103,552 | 102,751 | Consolidated Statement of Cash Flows For the year ended March 31, 2021, the Group's net cash used in operating activities was HKD 10.62 million, primarily due to a significant increase in trade receivables. Net cash outflow from investing activities was HKD 1.85 million, and net cash outflow from financing activities was HKD 3.10 million. Cash and cash equivalents decreased by HKD 15.56 million, with an ending balance of HKD 38.44 million Consolidated Statement of Cash Flows Summary (HKD thousands) | Item | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | (10,617) | (3,561) | | Net cash used in investing activities | (1,849) | (4,146) | | Net cash used in financing activities | (3,097) | (3,037) | | Net decrease in cash and cash equivalents | (15,563) | (10,744) | | Cash and cash equivalents at beginning of year | 54,001 | 64,745 | | Cash and cash equivalents at end of year | 38,438 | 54,001 | Notes to the Consolidated Financial Statements The notes to the financial statements provide detailed explanations and supplementary information for financial statement items, covering the company's principal accounting policies, accounting estimates, details of various assets and liabilities, revenue composition, related party transactions, share option scheme, capital risk management, and post-reporting period events - Note 5 discloses that all the Group's revenue is derived from Hong Kong, with packaged food and household & cereal products being the two largest revenue sources by product category[570][573] - Note 26 details the terms of the share option scheme and discloses the valuation method and parameters for the 112 million share options granted on February 19, 2021, with an estimated fair value of HKD 15.42 million[660][665] - Note 32 discloses a post-reporting period event: on April 30, 2021, the company entered into a non-legally binding memorandum of understanding for the possible acquisition of Beijing Douguo Information Technology Co., Ltd[711] Financial Summary This section provides a concise overview of the Group's key financial performance and position over the past five fiscal years Five-Year Financial Summary This section provides a summary of the Group's key performance and financial position data for the past five fiscal years. The data shows steady revenue growth over the past five years, but profitability has fluctuated, with losses recorded in the most recent two fiscal years. Total assets and net assets remained relatively stable after significant growth in FY2019 Five-Year Performance Summary (HKD thousands) | For the year ended March 31 | 2021 | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 227,709 | 204,368 | 213,926 | 194,137 | 188,298 | | Loss/Profit Before Tax | (14,376) | (3,280) | 4,931 | 3,821 | 738 | | Loss/Profit for the Year | (14,618) | (3,573) | 3,909 | 2,394 | (1,824) | Five-Year Assets and Liabilities Summary (HKD thousands) | As at March 31 | 2021 | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | :--- | | Non-current Assets | 13,363 | 11,609 | 4,571 | 5,385 | 4,364 | | Current Assets | 110,700 | 107,311 | 110,065 | 106,119 | 51,353 | | Total Net Assets | 103,552 | 102,751 | 106,324 | 102,415 | 33,497 |