旅橙文化(08627) - 2019 - 年度财报

Company Information Essential corporate information for Orange Tour Culture Holdings Limited, including board members, committee structure, company secretary, auditor, registered office, principal place of business, share registrar, principal bankers, company website, and stock code - Executive Directors include Mr. Zhou Yang (Chairman) and Ms. Song Ruiqing (Chief Executive Officer)[5] - Independent Non-Executive Directors are Mr. He Youguo, Mr. Ye Guancheng, and Mr. Huang Jianye[5] - The Company Secretary is Mr. Peng Weizheng, and the Auditor is UHY CPA Limited[5] - The company's stock code is 8627[5] Financial Highlights Overview of Orange Tour Culture Holdings Limited's key financial performance from 2016 to 2019, including trends in revenue, profit, assets, and liabilities Selected Items from Consolidated Statement of Comprehensive Income (RMB in thousands) | Metric | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | | Revenue | 60,998 | 53,358 | 40,877 | 34,913 | | Other Income | 153 | 309 | 108 | 42 | | Project Costs | (22,117) | (19,959) | (12,235) | (10,353) | | Profit Before Income Tax | 15,109 | 11,361 | 16,357 | 12,782 | | Profit for the Year | 8,879 | 6,307 | 12,254 | 9,540 | Selected Items from Consolidated Statement of Financial Position (RMB in thousands) | Metric | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | | Total Non-current Assets | 556 | 5,323 | 630 | 660 | | Total Current Assets | 111,253 | 53,678 | 58,654 | 27,798 | | Total Assets | 111,809 | 59,001 | 59,284 | 28,458 | | Total Liabilities | 19,266 | 14,934 | 25,148 | 10,330 | | Total Equity | 92,543 | 44,067 | 34,136 | 18,128 | Chairman's Statement Chairman Mr. Zhou Yang reviewed the company's FY2019 performance, highlighting the successful GEM listing as a significant milestone and outlining future business expansion and brand enhancement strategies - The company's shares were successfully listed on GEM of the Hong Kong Stock Exchange on November 14, 2019, marking a significant milestone for the company's development[12] - FY2019 revenue increased by 14.3% year-on-year to approximately RMB 61.0 million, primarily due to an increase in project volume and the undertaking of larger projects[13] - Profit attributable to shareholders increased from approximately RMB 6.3 million in FY2018 to approximately RMB 8.9 million in FY2019, with basic earnings per share increasing by 35.2% to RMB 1.42 cents[13] - Future strategies include optimizing and integrating resources, conducting marketing activities to enhance brand awareness, forming strategic alliances with other businesses, and expanding into new markets[14] Management Discussion and Analysis Management discussed FY2019 operations, financial performance, future strategies, key risks, ESG performance, and the potential impact of the COVID-19 pandemic on future results - The company successfully listed on GEM of the Stock Exchange on November 14, 2019, with net proceeds of approximately HKD 27.2 million, aiming to improve financial position and overall competitiveness[20] - Future business strategies include establishing new branch offices in Wuxi and Beijing, building sales and marketing teams, increasing marketing efforts, and setting up an in-house multimedia production and design team[21] - As of December 31, 2019, the company had no significant contingent liabilities, guarantees, or pending litigations, and no material foreign exchange risk[46][47] - As of December 31, 2019, the Group employed 60 staff, with total staff costs of approximately RMB 12.0 million[77] - The outbreak of the COVID-19 pandemic is expected to have an adverse impact on the full-year financial results for 2020, and the company will continue to assess and take appropriate measures[78] Business Review and Outlook The Group, an Yixing City marketing services company with over 13 years of experience, successfully listed on GEM and plans business expansion through new branches, enhanced sales teams, and in-house production capabilities - The Group primarily provides event management services and design and production services, with over 13 years of experience in China's marketing services industry[20] - Net proceeds from the listing, approximately HKD 27.2 million, will be used for business expansion plans, including establishing new branch offices in Wuxi and Beijing, building sales and marketing teams, and setting up an in-house multimedia production and design team[20][21] Financial Review Detailed review of FY2019 revenue, cost, and profit changes, noting revenue growth driven by event management and design services, alongside increased listing and operating expenses Revenue Breakdown (RMB in thousands) | Service Type | 2019 | Proportion | 2018 | Proportion | | :--- | :--- | :--- | :--- | :--- | | Event Management Services | 39,227 | 64.3% | 36,280 | 68.0% | | Design and Production Services | 21,771 | 35.7% | 17,078 | 32.0% | | Total Revenue | 60,998 | 100% | 53,358 | 100% | - Revenue increased by 14.3% year-on-year to approximately RMB 61.0 million, with event management services growing by 8.1% and design and production services by 27.5%[25][28] - Project costs increased by 10.8% to approximately RMB 22.1 million, broadly in line with revenue growth[29] - Employee benefit expenses increased by 7.5% to approximately RMB 12.0 million, primarily due to an increase in the number of employees[30] - Other operating expenses increased by 67.4% to approximately RMB 4.1 million, mainly due to increased project scale and post-listing compliance costs[31] - Profit for the year in FY2019 increased to RMB 8.9 million, with basic and diluted earnings per share of RMB 1.42 cents[36][37] Liquidity and Financial Resources The Group is primarily funded by operating cash and equity contributions, maintaining a robust financial position with significantly increased cash and cash equivalents and no interest-bearing debt - As of December 31, 2019, cash and cash equivalents were approximately RMB 37.5 million, a significant increase from RMB 26.9 million in 2018[40] - As of December 31, 2019, total equity was approximately RMB 92.5 million, with no interest-bearing debt[40] - The asset-liability ratio for FY2019 was 0.1% (2018: nil)[42] Business and Strategies as Stated in Prospectus vs. Actual Progress Comparison of prospectus business objectives with actual progress as of December 31, 2019, showing advancements in new branch and sales team establishment, but potential delays in multimedia team recruitment and fund utilization due to the pandemic Comparison of Business Objectives and Actual Progress (As of December 31, 2019) | Business Objectives and Strategies | Planned Use (HKD in millions) | Actual Use (HKD in millions) | Actual Business Progress | | :--- | :--- | :--- | :--- | | Establish new branch offices in Wuxi and Beijing | 0.2 | 0.2 | General Manager hired for Wuxi branch, property leased and renovation commenced | | Establish sales and marketing team and enhance marketing | 0.7 | 0.3 | Eight additional employees hired, promotional activities being prepared | | Establish in-house multimedia production and design team | 0.1 | – | Still seeking suitable candidate for General Manager | | General working capital | 2.6 | 0.3 | – | - Given the outbreak of the novel coronavirus (COVID-19) pandemic, the marketing services industry has been adversely affected, and the Group's expansion plans may be delayed to mitigate risks associated with utilizing net proceeds from the listing[67] Key Risks and Uncertainties The Group faces credit concentration risk, managed by prudent treasury policies, emphasizes compliance with laws and environmental policies, maintains good stakeholder relations, and notes COVID-19 as a significant post-period uncertainty - There is credit concentration risk, with 21% of 2019 trade receivables from the largest customer and 49% from the top five customers[69] - The Board adopts prudent policies to manage cash balances and liquidity to address liquidity risk[72][43] - The Group complies with all applicable laws, regulations, and environmental policies, with no significant violations identified[73][74] - The outbreak of the COVID-19 pandemic has adversely affected China's economy and the Group's operations, potentially impacting the full-year financial results for 2020[78] Biographical Details of Directors and Senior Management Detailed biographies of the company's executive directors, independent non-executive directors, senior management, and company secretary, showcasing their extensive experience and professional backgrounds - Mr. Zhou Yang (Chairman and Executive Director), 39, oversees Group management, business operations, and market strategies, with management experience in life insurance and bio-environmental sectors[81] - Ms. Song Ruiqing (Chief Executive Officer and Executive Director), 40, manages business design and creativity, market positioning, and administrative departments, with over 18 years of experience in the marketing industry[82] - Mr. He Youguo (Independent Non-Executive Director), 46, has over 20 years of experience in banking and financial services, holds a Bachelor of Accountancy and a Master of Chinese Business Law, and is a Fellow of the Association of Chartered Certified Accountants[85] - Mr. Sun Weiqian (Financial Controller), 32, is responsible for financial team management, treasury, financial reporting, and tax matters, previously serving as a manager at Deloitte Touche Tohmatsu[93] - Mr. Peng Weizheng (Company Secretary), 31, is responsible for compliance and company secretarial matters, previously serving as a manager at KPMG[95] Environmental, Social and Governance Report The report details the Group's ESG policies, measures, and performance, covering environmental protection, employment practices, supply chain, product responsibility, anti-corruption, and community investment, aiming for sustainable development - The Group is committed to sustainable development across economic, social, and environmental aspects, adopting the Environmental, Social and Governance Reporting Guide in Appendix 20 of the GEM Listing Rules as its reporting standard[98][100] - The report covers the period from January 1, 2019, to December 31, 2019, encompassing operations at its Yixing City, China headquarters and Hong Kong business[99] - In FY2019, greenhouse gas emissions were 47 kg CO2e, electricity consumption was 28,769 kWh, and daily waste discharge was 13,520 kg[115][118][123] - As of December 31, 2019, the Group had 60 full-time employees, with 93.3% based in China and 6.7% in Hong Kong[124] - The Group actively participates in community activities, such as the '2019 Yixing International Marathon' and the '3rd Liangxi Characteristic Book Fair for Reading Pleasure', and sponsors volunteer activities[144][145][148] Environmental Protection The Group is committed to environmental protection, managing energy consumption, GHG emissions, and waste through policy, employee awareness, sustainable measures, and compliance with environmental laws - The Group's principal operations have a minor environmental impact, yet it remains committed to environmental protection by complying with regulations, setting targets, continuously improving management systems, and raising employee awareness[108] - In FY2019, greenhouse gas emissions were 47 kg CO2e, electricity consumption was 28,769 kWh, and daily waste discharge was 13,520 kg[115][118][123] - Waste management implements the 4-R principles (Reduce, Reuse, Replace, and Recycle), encouraging the use of eco-friendly materials and reducing unnecessary business travel[121][113] Employment and Labor Practices The Group values talent and employee development, offering competitive compensation and training, maintaining a healthy and safe work environment, and strictly prohibiting child and forced labor - The Group is committed to maintaining open, fair, and just recruitment and human resources policies, covering equal opportunities, diversity, and anti-discrimination[124] - As of December 31, 2019, the Group had 60 full-time employees, with 93.3% based in China and 6.7% in Hong Kong[124] - The Group provides a healthy, comfortable, and safe working environment, develops emergency plans, and prohibits smoking, alcohol consumption, and drug abuse in the workplace[127] - The Group provides continuous training, including on-the-job training, skills training, and pre-employment training, to cultivate talent[128][129] - The Group strictly complies with relevant laws and regulations to prevent child or forced labor[133] Operating Practices The Group manages its supply chain through strict vendor selection, ensures product quality, protects customer data, and implements anti-corruption policies and whistleblowing mechanisms to uphold high business ethics - The Group has established a supplier selection mechanism, prioritizing environmentally and socially responsible suppliers, and may conduct on-site inspections[134] - The Group is committed to providing the highest standards of event management and design and production services, complying with relevant laws and regulations, and ensuring advertisements are free from false or misleading information[135] - The Group strictly complies with the Personal Data (Privacy) Ordinance, ensuring proper retention and access control of customer and supplier data[136] - The Group upholds high standards of business ethics, has established a 'Code of Conduct' to prevent bribery, fraud, corruption, and conflicts of interest, and maintains a whistleblowing policy[139][140] Community Investment The Group actively engages in community activities and sponsorships, collaborating with local governments and non-profits on events like the Yixing International Marathon and Liangxi Book Fair, and sponsoring volunteer attire to give back to society - The Group actively participates in community engagement, collaborating with local non-profit organizations to host charitable events[141] - Participated in and co-organized the '2019 Yixing International Marathon', attracting 15,000 participants, aiming to highlight the integration of community modernization and civilization[144] - Co-organized the '3rd Liangxi Characteristic Book Fair for Reading Pleasure', showcasing over 5,000 books and 24 cultural experience activities[145] - Sponsored the Yixing City Women's Federation's 'Women's Federation Volunteer Activities', providing volunteer attire valued at RMB 14,828[148] Report of the Directors The Directors' Report covers the Group's principal activities, annual results, corporate reorganization, share capital and reserves changes, share option scheme, related party transactions, key customer and supplier information, board composition, and corporate governance statement - The company's principal activities are providing event management services and design and production services[152] - The Directors do not recommend the payment of a final dividend for FY2019[155] - In FY2019, revenue from the largest customer accounted for approximately 13% of total revenue, and the top five customers collectively accounted for approximately 37%; project costs from the largest supplier accounted for approximately 20% of total project costs, and the top five suppliers collectively accounted for approximately 73%[171] - As of December 31, 2019, Mr. Zhou Yang and Ms. Song Ruiqing each held 52.5% of the company's shares through controlled corporate interests[199] - As of the reporting date, at least 25% of the issued share capital was held by the public, meeting the public float requirement[212] Corporate Reorganization To prepare for GEM listing, the company was incorporated in the Cayman Islands on April 13, 2018, and underwent reorganization to streamline its structure, becoming the holding company for existing subsidiaries - The company was incorporated in the Cayman Islands on April 13, 2018, and underwent reorganization for GEM listing, with the Company becoming the holding company for all subsidiaries within the Group[154] Share Capital and Reserves The report discloses changes in the company's share capital and reserves for the year, noting distributable reserves to shareholders of approximately RMB 16.6 million as of December 31, 2019 - As of December 31, 2019, the company's distributable reserves to shareholders amounted to approximately RMB 16.6 million[163] Share Option Scheme The company conditionally adopted a share option scheme on October 21, 2019, but as of December 31, 2019, no options were granted, exercised, expired, or lapsed - The company adopted a share option scheme on October 21, 2019, in compliance with the GEM Listing Rules[164] - As of December 31, 2019, there were no outstanding share options under the share option scheme[165] Non-Competition Undertaking and Conflicts of Interest Controlling shareholders signed a non-competition deed, pledging not to engage in activities competing with the Group's core business and granting the Group a right of first refusal for business opportunities to avoid conflicts of interest - The controlling shareholders have entered into a non-competition deed, undertaking not to directly or indirectly engage in activities competing with the Group's core business[185] - The controlling shareholders undertake to inform the Group of any potential competing business opportunities and grant the Group a right of first refusal[186] - In FY2019, none of the Directors, controlling shareholders, or their close associates engaged in any business competing with the Group's business or had any other conflicts of interest[187] Directors' and Chief Executive's Interests in Shares Disclosure of directors' and chief executive's interests in company shares as of December 31, 2019, with Mr. Zhou Yang and Ms. Song Ruiqing holding 52.5% through controlled corporations Directors' and Chief Executive's Long Positions in Shares (As of December 31, 2019) | Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Zhou | Interest in controlled corporation | 420,000,000 | 52.5% | | Ms. Song | Interest in controlled corporation/Spouse's interest | 420,000,000 | 52.5% | Interests of Substantial Shareholders and Other Persons in Shares Disclosure of interests in company shares by substantial shareholders and other persons, excluding directors and chief executive, as of December 31, 2019, including QY, SRU Investment Limited, and DHSH (BVI) Limited and their associates Substantial Shareholders' and Other Persons' Long Positions in Shares (As of December 31, 2019) | Name/Entity | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | QY | Beneficial owner | 420,000,000 | 52.5% | | SRU Investment Limited | Beneficial owner | 120,000,000 | 15.0% | | Mr. Fan Yajun | Interest in controlled corporation | 120,000,000 | 15.0% | | Ms. Zhou Jianyuan | Spouse's interest | 120,000,000 | 15.0% | | DHSH (BVI) Limited | Beneficial owner | 60,000,000 | 7.5% | | Mr. He Shengxi | Interest in controlled corporation | 60,000,000 | 7.5% | | Ms. Li Sze Man | Spouse's interest | 60,000,000 | 7.5% | Corporate Governance Report Details the company's corporate governance practices, including board structure, diversity, nomination and remuneration policies, director training, committee functions, company secretary duties, auditor's remuneration, shareholder rights, risk management, internal controls, insider information policy, and investor relations - The company adopted the Corporate Governance Code in Appendix 15 of the GEM Listing Rules and has complied with all applicable code provisions[218] - The Board comprises two executive directors and three independent non-executive directors, with independent non-executive directors constituting more than one-third of the Board members[221][224] - The Board has adopted a Board Diversity Policy and a Nomination Policy to ensure a balanced board with diverse skills, experience, knowledge, and perspectives[225][233] - The roles of Chairman and Chief Executive Officer are segregated, with Mr. Zhou Yang serving as Chairman and Ms. Song Ruiqing as Chief Executive Officer[247] - The Board has established an Audit Committee, Remuneration Committee, and Nomination Committee, each with clear written terms of reference[251] - The company has reviewed its risk management and internal control systems and considers them to be effective and adequate[267][268] - The company has an insider information disclosure policy to ensure proper handling and dissemination of inside information, and has established various channels for communication with shareholders[272][279] Board Diversity Policy The Board adopted a diversity policy to enhance its performance quality by considering gender, age, cultural and educational background, professional experience, skills, knowledge, and length of service - The Board Diversity Policy aims to enhance the quality of Board performance by considering diverse aspects such as gender, age, cultural and educational background, professional experience, skills, knowledge, and length of service[227][228] Nomination Policy The nomination policy guides the Nomination Committee in director selection, appointment, and re-appointment, ensuring a balanced board with diverse skills, experience, knowledge, and perspectives, considering independence, integrity, and potential contributions - The Nomination Policy aims to ensure the Board possesses a balanced mix of skills, experience, knowledge, and diverse perspectives suitable for the company's business requirements[235] - Selection criteria include diversity (gender, age, cultural background, etc.), sufficient time commitment, qualifications, independence, reputation for integrity, and commitment to shareholder value[236] Dividend Policy The company's dividend policy aims to share profits with shareholders while retaining sufficient reserves for continuous growth, with payout decisions considering financial performance, distributable reserves, operational and liquidity needs, and future development plans - The dividend policy aims to allow shareholders to participate in company profits while retaining sufficient reserves to support the Group's continuous growth[242] - Dividend decisions will consider financial performance, distributable reserves, operating and liquidity requirements, and current and future development plans[242] Board Committees The Board established Audit, Remuneration, and Nomination Committees, each with clear terms of reference, responsible for overseeing specific matters and reporting to the Board - The Board has established an Audit Committee, Remuneration Committee, and Nomination Committee to monitor specific areas of the company's affairs[251] - The Audit Committee is responsible for reviewing financial information, internal control and risk management systems, and communicating with external auditors[253] - The Remuneration Committee is responsible for making recommendations to the Board on the remuneration policy and structure for Directors and senior management[256] - The Nomination Committee is responsible for reviewing and assessing the Board's composition and the independence of independent non-executive directors, and for making recommendations on new director appointments[257] Risk Management and Internal Control The Board oversees and annually reviews the effectiveness of risk management and internal control systems, including risk identification, assessment, and mitigation, with internal control reviews conducted by independent consultants - The Board is responsible for overseeing internal control, financial control, and risk management systems, and reviews their effectiveness at least once annually[267] - Risk management procedures include identifying, assessing, and mitigating key and significant risks[268] - An independent consulting firm has reviewed the internal control system, and the Audit Committee and Board consider it to be effective and adequate[268] - The company currently has no internal audit function but reviews annually whether one is required[271] Independent Auditor's Report Independent auditor UHY CPA Limited issued an unqualified opinion on Orange Tour Culture Holdings Limited's FY2019 consolidated financial statements, detailing the basis for opinion, key audit matters (trade receivables impairment), and respective responsibilities of directors and auditor - The auditor issued an unqualified opinion on the Group's FY2019 consolidated financial statements, deeming them to present a true and fair view of the financial position, performance, and cash flows[283] - A key audit matter was the impairment assessment of trade receivables, due to its reliance on management judgment and subjective assumptions[288] - The auditor evaluated the Group's methodology, data, and assumptions for calculating expected credit losses, and challenged management's assessment of the recoverability of long-outstanding and overdue trade receivables[288] Consolidated Financial Statements Presents the Group's consolidated statement of comprehensive income, statement of financial position, statement of changes in equity, and statement of cash flows for the year ended December 31, 2019, as core financial performance and position data Consolidated Statement of Comprehensive Income For the year ended December 31, 2019, the Group reported revenue of RMB 60,998 thousand, profit for the year of RMB 8,879 thousand, and basic and diluted earnings per share of 1.42 cents Consolidated Statement of Comprehensive Income (RMB in thousands) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Revenue | 60,998 | 53,358 | | Other Income | 153 | 309 | | Project Costs | (22,117) | (19,959) | | Profit Before Income Tax | 15,109 | 11,361 | | Income Tax | (6,230) | (5,054) | | Profit for the Year | 8,879 | 6,307 | | Other Comprehensive Loss (Exchange differences) | (433) | (384) | | Total Comprehensive Income | 8,446 | 5,923 | | Basic and Diluted Earnings Per Share (cents) | 1.42 | 1.05 | Consolidated Statement of Financial Position As of December 31, 2019, the Group's total assets were RMB 111,809 thousand, total liabilities RMB 19,266 thousand, and total equity RMB 92,543 thousand Consolidated Statement of Financial Position (RMB in thousands) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Total Non-current Assets | 556 | 5,323 | | Total Current Assets | 111,253 | 53,678 | | Total Assets | 111,809 | 59,001 | | Total Current Liabilities | 19,266 | 14,934 | | Total Liabilities | 19,266 | 14,934 | | Share Capital | 5,616 | 6 | | Reserves | 86,927 | 44,061 | | Total Equity | 92,543 | 44,067 | Consolidated Statement of Changes in Equity For the year ended December 31, 2019, the Group's total equity increased from RMB 44,067 thousand at the beginning of the year to RMB 92,543 thousand, primarily due to profit for the year and share issuance from the share offer Consolidated Statement of Changes in Equity (RMB in thousands) | Metric | Share Capital | Share Premium | Statutory Reserve | Exchange Reserve | Other Reserves | Retained Profits | Total Equity | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance at January 1, 2018 | 22,000 | – | 2,263 | – | 410 | 9,463 | 34,136 | | Total comprehensive income for 2018 | – | – | – | (384) | – | 6,307 | 5,923 | | Balance at December 31, 2018 | 6 | – | 3,780 | (384) | 26,412 | 14,253 | 44,067 | | Total comprehensive income for 2019 | – | – | – | (433) | – | 8,879 | 8,446 | | Issue of shares from share offer | 1,404 | 38,626 | – | – | – | – | 40,030 | | Capitalization issue of shares | 4,206 | (4,206) | – | – | – | – | – | | Transfer to statutory reserve | – | – | 1,849 | – | – | (1,849) | – | | Balance at December 31, 2019 | 5,616 | 34,420 | 5,629 | (817) | 26,412 | 21,283 | 92,543 | Consolidated Statement of Cash Flows For the year ended December 31, 2019, net cash used in operating activities was RMB (7,482) thousand, net cash used in investing activities RMB (23,693) thousand, net cash from financing activities RMB 42,188 thousand, and cash and cash equivalents at year-end RMB 37,466 thousand Consolidated Statement of Cash Flows (RMB in thousands) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | (7,482) | (8,050) | | Net cash used in investing activities | (23,693) | (4,023) | | Net cash from/(used in) financing activities | 42,188 | (9,643) | | Net increase/(decrease) in cash and cash equivalents | 11,013 | (21,716) | | Cash and cash equivalents at end of year | 37,466 | 26,886 | Notes to the Consolidated Financial Statements Notes to the consolidated financial statements provide detailed explanations and supplementary information on amounts presented, covering accounting policies, significant judgments and estimates, segment information, asset and liability composition, equity changes, related party transactions, cash flow details, financial risk management, and post-reporting period events - The Group's principal activities are providing event management services and design and production services[327] - The consolidated financial statements are prepared using merger accounting principles, as if the reorganization had commenced at the earliest period presented[329] - In 2019, the Group first applied HKFRS 16 (Leases), leading to the recognition of right-of-use assets and lease liabilities, and adjustments to the presentation of financial statements[337][342] - Revenue is recognized upon completion of the contract period or when the customer is satisfied with the services and signs a confirmation, as services are customized and involve personal preferences[387][388][417] - The expected credit loss provision for trade receivables is a significant accounting estimate, based on aging, customer creditworthiness, and past experience[421] - As of December 31, 2019, net trade receivables were RMB 39,825 thousand, with an expected credit loss provision of RMB 1,142 thousand[468][477] - As of December 31, 2019, bank balances and cash totaled RMB 37,466 thousand, of which RMB 30,000 thousand was in time deposits[319][482] - As of December 31, 2019, trade payables were RMB 2,819 thousand, and contract liabilities were RMB 733 thousand[484] - As of December 31, 2019, the Company's issued share capital comprised 800,000,000 shares with a par value of USD 0.001 each, amounting to RMB 5,616 thousand[496] - As of December 31, 2019, the Company's distributable reserves to shareholders amounted to approximately RMB 16.6 million[163] - As of December 31, 2019, the ultimate controlling shareholders were Mr. Zhou Yang and Ms. Song Ruiqing, with the immediate and ultimate holding company being QY Investment Holding Limited[546] - The outbreak of the COVID-19 pandemic has adversely impacted the Group's business operations, potentially affecting full-year financial results for 2020, with ongoing assessment[548] General Information Orange Tour Culture Holdings Limited was incorporated in the Cayman Islands on April 13, 2018, listed on GEM of the Hong Kong Stock Exchange on November 14, 2019, and primarily provides event management and design services - The Company was incorporated in the Cayman Islands on April 13, 2018, and listed on GEM of the Hong Kong Stock Exchange on November 14, 2019[326] - The Group's principal activities are providing event management services and design and production services[327] Group Reorganization and Basis of Preparation and Presentation The Group reorganized for listing, preparing consolidated financial statements using merger accounting principles as if the current structure always existed, presented on a historical cost basis, with all significant intra-group transactions eliminated - The Group underwent reorganization in preparation for listing, with the Company becoming the holding company on June 25, 2018[328][329] - The consolidated financial statements are prepared using merger accounting principles, as if the reorganization had commenced at the earliest period presented[329] - The consolidated financial statements are prepared on a historical cost basis and presented in RMB[332] Application of New and Revised Hong Kong Financial Reporting Standards The Group first applied HKFRS 16 (Leases) in FY2019, leading to recognition of right-of-use assets and lease liabilities and adjustments to financial statement presentation, with no significant overall impact on financial performance or position - The Group first applied HKFRS 16 (Leases) on January 1, 2019, leading to the recognition of right-of-use assets and lease liabilities[337] Impact of HKFRS 16 Application (RMB in thousands) | Metric | Carrying Amount at December 31, 2018 (HKAS 17) | Adjustment | Carrying Amount at January 1, 2019 (HKFRS 16) | | :--- | :--- | :--- | :--- | | Right-of-use assets | – | 223 | 223 | | Current liabilities - Lease liabilities | – | 109 | 109 | | Non-current liabilities - Lease liabilities | – | 114 | 114 | - The adoption of HKFRS 16 resulted in significant changes to the presentation of cash flows in the consolidated statement of cash flows, but the total cash flow remained unaffected[346] Summary of Significant Accounting Policies Outlines the Group's significant accounting policies for consolidated financial statements, covering consolidation, property, plant and equipment, financial instruments, non-financial asset impairment, leases, cash and cash equivalents, revenue recognition, income tax, employee benefits, provisions, foreign currency, related party transactions, and segment reporting - The consolidated financial statements include the Company and its subsidiaries forming the Group, with the reorganization accounted for under merger accounting principles[354] - Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, with depreciation calculated on a straight-line basis[357][359] - Financial assets include trade and other receivables, amounts due from shareholders, time deposits, and bank balances and cash, measured at amortized cost with recognition of expected credit loss provisions[360][362] - Revenue is recognized when control over goods or services is transferred to the customer; for event management and design and production services, revenue is recognized upon completion of the contract period or customer satisfaction[382][387][388] - Income tax comprises current and deferred tax, provided for using the liability method[394] - Employee benefits include salaries, bonuses, paid annual leave, and contributions to retirement benefit schemes[402][403] - The Group identifies operating segments and prepares segment information, with its principal operating segments being the provision of event management services and design and production services[413][426] Critical Accounting Judgments and Estimates Preparing consolidated financial statements involves management's significant judgments and estimates regarding revenue recognition, trade receivables expected credit loss provisions, and income tax provisions, based on past experience and best knowledge of future conditions - Revenue recognition is a significant judgment, as services are customized and highly involve personal preferences, with revenue recognized upon contract completion or customer satisfaction[417] - The expected credit loss provision for trade receivables requires a significant degree of estimation and judgment, based on aging, customer creditworthiness, and past write-off experience[421] - Income tax provisions involve significant judgment, based on estimates of taxes potentially due, and final tax outcomes may differ from initial recorded amounts[422] Revenue and Other Income For FY2019, the Group's total revenue was RMB 60,998 thousand, primarily from event management services (RMB 39,227 thousand) and design and production services (RMB 21,771 thousand), with other income including exchange differences and interest income Revenue and Other Income Breakdown (RMB in thousands) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Revenue | | | | Event management services | 39,227 | 36,280 | | Design and production services | 21,771 | 17,078 | | Total Revenue | 60,998 | 53,358 | | Other Income | | | | Exchange differences | 42 | 169 | | Interest income | 93 | 140 | | Gain on disposal of property, plant and equipment | 18 | – | | Total Other Income | 153 | 309 | Profit Before Income Tax FY2019 profit before income tax was RMB 15,109 thousand, with major deductions including project costs (RMB 22,117 thousand), employee benefit expenses (RMB 11,984 thousand) and listing expenses (RMB 6,870 thousand) Major Deductions from Profit Before Income Tax (RMB in thousands) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Auditor's remuneration | 1,786 | 1,056 | | Net expected credit loss provision for trade receivables | 666 | 360 | | Project costs | 22,117 | 19,959 | | Employee benefit expenses | 11,984 | 11,143 | | Listing expenses | 6,870 | 8,048 | Trade and Other Receivables As of December 31, 2019, total trade and other receivables were RMB 43,787 thousand, with net trade receivables of RMB 39,825 thousand and an expected credit loss provision of RMB 1,142 thousand Trade and Other Receivables (RMB in thousands) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Trade receivables (at cost) | 40,967 | 19,981 | | Less: Expected credit loss provision | (1,142) | (476) | | Trade receivables, net | 39,825 | 19,505 | | Prepayments | 3,666 | 2,483 | | Deposits and other receivables | 296 | 1,056 | | Total | 43,787 | 25,322 | Aging Analysis of Trade Receivables (By due date, RMB in thousands) | Aging | 2019 | 2018 | | :--- | :--- | :--- | | Less than 1 month | 12,512 | 8,061 | | Over 1 month but within 3 months | 11,772 | 6,399 | | Over 3 months but within 6 months | 10,776 | 2,647 | | Over 6 months but within 1 year | 4,629 | 1,996 | | Over 1 year | 136 | 402 | | Total | 39,825 | 19,505 | Trade and Other Payables As of December 31, 2019, total trade and other payables were RMB 15,556 thousand, primarily comprising trade payables, accrued expenses and other payables, other taxes payable, and contract liabilities Trade and Other Payables (RMB in thousands) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Trade payables | 2,819 | 3,060 | | Accrued expenses and other payables | 9,094 | 8,716 | | Other taxes payable | 2,910 | 1,947 | | Contract liabilities | 733 | 277 | | Total | 15,556 | 14,000 | Aging Analysis of Trade Payables (By invoice date, RMB in thousands) | Aging | 2019 | 2018 | | :--- | :--- | :--- | | Within 1 month | 1,879 | 2,029 | | Over 1 month but less than 3 months | 811 | 440 | | Over 3 months but less than 1 year | 62 | 364 | | Over 1 year | 67 | 227 | | Total | 2,819 | 3,060 | Share Capital Details changes in company share capital, including incorporation, share split, authorized capital increase, capitalization issue, and shares issued during the share offer, resulting in 800,000,000 issued and fully paid shares totaling RMB 5,616 thousand as of December 31, 2019 Share Capital Movements (RMB in thousands) | Movement | Number of Ordinary Shares (thousands) | Amount (RMB in thousands) | | :--- | :--- | :--- | | Issued and fully paid at December 31, 2018 | 1,000 | 6 | | Capitalization issue of shares | 599,000 | 4,206 | | Shares issued from share offer | 200,000 | 1,404 | | Issued and fully paid at December 31, 2019 | 800,000,000 | 5,616 | - On October 21, 2019, the authorized share capital increased to USD 2,000,000, divided into 2,000,000,000 shares of USD 0.001 each[500] - The share offer involved the issuance of 200,000,000 ordinary shares for a total consideration of HKD 55,000,000, with the balance of proceeds after deducting listing expenses credited to the share premium account[501] Interests in Subsidiaries Discloses information on subsidiaries directly or indirectly held by the company, including OTBVI, Orange Tour Hong Kong, Yixing Tianxi, Wuxi Orange Tour, and Yixing Orange Tour, primarily engaged in investment holding, event management, and design services Interests in Subsidiaries (As of December 31, 2019) | Name of Subsidiary | Place and Date of Incorporation | Issued/Registered Capital | Group's Equity Interest | Principal Activities | | :--- | :--- | :--- | :--- | :--- | | OTBVI | British Virgin Islands, April 6, 2018 | USD 1,000 | 100% | Investment holding | | Orange Tour Hong Kong | Hong Kong, February 5, 2018 | HKD 1,000 | 100% | Investment holding | | Yixing Tianxi | China, June 20, 2018 | HKD 20,500,000 | 100% | Investment holding | | Wuxi Orange Tour | China, May 30, 2014 | RMB 40,000,000 | 100% | Event management and design and production services | | Yixing Orange Tour | China, November 13, 2014 | RMB 2,000,000 | 100% | Event management and design and production services | Commitments As of December 31, 2019, the Group had no contracted but unprovided capital expenditure, and operating lease commitments were RMB 127 thousand, primarily for short-term leases due within one year - As of December 31, 2019, the Group had no contracted but unprovided capital expenditure (2018: RMB 11,654 thousand)[515] - As of December 31, 2019, operating lease commitments amounted to RMB 127 thousand, all due within one year[516] Related Party Transactions Aside from amounts due from shareholders and key management compensation, the Group had no other significant related party transactions in the ordinary course of business, with total key management compensation amounting to RMB 4,174 thousand - Aside from amounts due from shareholders and key management compensation, the Group did not engage in other significant related party transactions[520] Key Management Personnel Compensation (RMB in thousands) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Salaries, allowances and benefits in kind | 2,476 | 2,226 | | Discretionary bonuses | 1,308 | 1,831 | | Retirement benefit scheme contributions | 390 | 401 | | Total | 4,174 | 4,458 | Financial Risk Management and Fair Value of Financial Instruments The Group faces credit and liquidity risks, managed by depositing funds with reputable financial institutions and maintaining highly liquid assets; carrying amounts of all financial assets and liabilities do not significantly differ from their fair values - The Group faces credit risk and liquidity risk, which the Board monitors and mitigates periodically[529] - As of December 31, 2019, 78% of bank deposits were placed with reputable financial institutions in China[530] - The Group manages liquidity risk by maintaining appropriate levels of highly liquid assets and sufficient committed funding facilities[531] - The carrying amounts of all financial assets and liabilities do not significantly differ from their fair values[537] Events After the Reporting Period The COVID-19 pandemic significantly impacted China's economy and the Group's operations, potentially affecting FY2020 financial results, with ongoing assessment and mitigation measures - The outbreak of the 2019 novel coronavirus (COVID-19) pandemic has had a profound adverse impact on China's economy and the Group's operations[548] - The Directors anticipate that weak marketing activities will adversely affect the Group's operations, potentially impacting the full-year financial results for 2020[548] - The Group will continue to assess the impact of the pandemic and closely monitor risks and uncertainties, taking appropriate measures as necessary[548] Statement of Financial Position of the Company As of December 31, 2019, the Company's total assets and total equity were RMB 22,197 thousand, a significant improvement from the 2018 deficit, primarily due to the share offer Statement of Financial Position of the Company (RMB in thousands) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Non-current assets - Investments in subsidiaries | 6 | 6 | | Total current assets | 22,820 | 2,284 | | Total current liabilities | 629 | 11,108 | | Net assets/(liabilities) | 22,197 | (8,818) | | Share capital | 5,616 | 6 | | Reserves/(Deficit) | 16,581 | (8,824) | | Total equity/(deficit) | 22,197 | (8,818) | Company's Equity Movements (RMB in thousands) | Item | Share Premium | Exchange Reserve | Accumulated Losses | Total Reserves | | :--- | :--- | :--- | :--- | :--- | | December 31, 2018 | – | (389) | (8,435) | (8,824) | | Loss for the year | – | – | (8,706) | (8,706) | | Issue of shares from share offer, net of listing expenses | 38,626 | – | – | 38,626 | | Capitalization issue of shares | (4,206) | – | – | (4,206) | | December 31, 2019 | 34,420 | (698) | (17,141) | 16,581 |