Financial Performance - The company recorded revenue of approximately HKD 94.5 million for the year, a decrease of about 12.6% from HKD 108.2 million in the previous year due to the impact of COVID-19 and conservative purchasing attitudes from customers [9]. - The gross profit decreased from approximately HKD 19.0 million in the previous year to about HKD 16.4 million, with the gross profit margin slightly increasing from 17.6% to approximately 17.4% [19]. - The loss attributable to the owners of the company decreased from approximately HKD 17.0 million in the previous year to HKD 16.7 million, a reduction of HKD 0.3 million, primarily due to government subsidies related to employment support [19]. - Total revenue for the year ended March 31, 2021, was approximately HKD 94.5 million, a decrease of about 12.6% from HKD 108.2 million in 2020 [22]. - Total sales volume for the year was 895,299 units, down from 1,038,310 units in the previous year, representing a decrease of approximately 13.8% [23]. - The average selling price of jackets increased by 24.0% to HKD 205.4, while T-shirts saw a decrease of 18.0% to HKD 58.2 [25]. - Cost of sales decreased by approximately 12.4% to about HKD 78.1 million from HKD 89.2 million in the previous year [27]. - Other income increased significantly to approximately HKD 2.8 million from HKD 0.2 million, primarily due to government subsidies [29]. - Administrative expenses decreased by about 5.1% to HKD 26.4 million from HKD 27.9 million, attributed to reductions in salaries and professional fees [32]. - The company reported a loss before tax of HKD 16,724,000, slightly improved from a loss of HKD 16,900,000 in 2020 [188]. - Net loss for the year was HKD 16,691,000, compared to a net loss of HKD 16,991,000 in the prior year, indicating a 1.8% improvement [188]. Business Strategy and Market Position - The company established a representative office in Melbourne, Australia, to capitalize on growth opportunities in the Australian market [10]. - The company plans to invest more resources in developing sustainable clothing products to meet the demand for sustainability, particularly in Australia and Europe [13]. - The company aims to mitigate global travel restrictions by establishing representative offices in its three main markets: the United States, Europe, and Australia [13]. - The company does not own its own brand and produces all products according to specifications and requirements provided by customers [17]. - The company’s revenue primarily comes from providing clothing supply chain management services, including product development and logistics arrangements [17]. - The company’s main customers are primarily European, American, and Australian clothing retail brands [17]. - The company is focused on diversifying its business and financial risks in response to the challenges posed by the COVID-19 pandemic [13]. Corporate Governance - The company has adopted and complied with the corporate governance code as per GEM Listing Rules Appendix 15, ensuring transparency and accountability [71]. - The board believes that the dual role of the chairman and CEO held by Mr. Leung provides strong and consistent leadership, benefiting the company's business outlook [71]. - The company has established an insider information policy and regularly reminds directors and employees to comply with all related policies [73]. - The board consists of executive directors and independent non-executive directors, ensuring a balanced governance structure [73]. - The company has a compliance officer to oversee adherence to regulatory requirements and internal policies [69]. - The company has a financial director with over 20 years of experience in accounting, auditing, and taxation, enhancing financial oversight [65]. - The operations director has over 27 years of marketing experience in the apparel industry, contributing to strategic business management [66]. - The company has a company secretary with extensive experience in accounting and finance, ensuring proper governance practices [68]. - The company has maintained good corporate governance policies and procedures since its listing, which is essential for effective management and business growth [70]. - The company has confirmed that all directors have complied with the required standards for securities trading during the year [72]. - The board has appointed at least three independent non-executive directors, constituting over one-third of the board, with at least one possessing appropriate professional qualifications or expertise in accounting or related financial management [75]. - The board held a total of 5 meetings during the year to review the group's financial and operational performance, with all executive directors attending all meetings [76]. - The audit committee, consisting of three independent non-executive directors, held six meetings to review the financial reporting process and discuss audit and internal control matters [81]. - The remuneration committee conducted two meetings to review and subsequently approve the remuneration of executive directors and senior management [85]. - The company has established three board committees (audit, remuneration, and nomination) to oversee specific aspects of the group's affairs and assist in executing its responsibilities [80]. - The board is responsible for the overall management of the company, ensuring high levels of corporate governance and compliance with legal and regulatory requirements [77]. - All directors participated in continuous professional development programs to enhance their knowledge and skills relevant to their roles [78]. Risk Management and Compliance - The company has established an internal control system to safeguard shareholder investments and assets, ensuring effective and efficient operations while minimizing risks [103]. - The board has engaged an external consultant for independent internal control reviews, which will be conducted annually and reported to the audit committee and management [103]. - The company has implemented measures to ensure compliance with corporate governance codes and regulations [97]. - The group faces significant credit risk from customers and relies on several major clients without long-term contracts, which could adversely affect business and financial performance [128]. - The group is exposed to intense competition from manufacturers in South Asia and Southeast Asia, which may negatively impact profitability and financial performance if not managed effectively [128]. - A substantial portion of the group's suppliers are located in China, making the business vulnerable to any adverse changes in China's economic, political, or social conditions [128]. - The group has established stable, long-term relationships with suppliers and has maintained a reliable strategic partnership with major clients over the years [127]. - The group has complied with relevant laws and regulations that significantly impact its business operations [126]. Shareholder Information - The group reported a total trade receivables value of approximately HKD 23,014,000, with an expected credit loss provision of HKD 1,137,000 [173]. - The management assesses the recoverability of trade receivables based on various factors, including customer credit status and historical settlement records [173]. - The group has approximately HKD 10,370,000 available for distribution to ordinary shareholders as retained earnings as of March 31, 2021 [137]. - As of March 31, 2021, the company has 280,000,000 shares held by major shareholders, representing approximately 70% of the issued share capital [148]. - The major shareholders, Mr. Leung and Ms. Tam, each hold a 50% beneficial interest in Giant Treasure Development Limited, which owns the 280,000,000 shares [148]. - The company has confirmed that there were no other interests or short positions held by directors or major executives in the company or its affiliates as of March 31, 2021 [149]. - The company has maintained a public float of at least 25% of its total issued share capital as of the report date [157]. - The company has adopted a dividend policy that considers financial conditions, capital and debt levels, future cash needs, and market conditions when deciding on dividend payments [115]. - The company does not recommend paying dividends for the current year, indicating a focus on capital management [121]. Audit and Financial Reporting - The audit committee reviewed the consolidated financial statements for the year ended March 31, 2021, and confirmed compliance with applicable reporting standards and GEM listing rules [164]. - The independent auditor for the year was Guo Wei CPA Limited, which will be proposed for reappointment at the upcoming annual general meeting [165]. - Revenue recognition for apparel supply chain management services was identified as a key audit matter due to its significant impact on the overall financial performance [170]. - The financial statements were prepared in accordance with Hong Kong Financial Reporting Standards, reflecting a true and fair view of the group's financial position as of March 31, 2021 [167]. - The audit opinion confirms that the financial statements do not contain any material misstatements due to fraud or error [180]. - The board is responsible for ensuring the financial statements are free from material misstatement and for maintaining adequate internal controls [178]. - The expected credit loss assessment involves significant management judgment and estimation, which is closely monitored by the auditors [173]. - The group has a maximum credit period of 90 days for trade receivables, which is regularly evaluated by management [173]. - The audit procedures included sampling sales transactions to assess the appropriateness of revenue recognition timing [171].
爱世纪集团(08507) - 2021 - 年度财报