Revenue and Financial Performance - Revenue for the year ended 30 June 2024 was approximately HK$5,847.76 million, representing a 16.15% increase compared to 2023, primarily driven by increased cattle sales[15] - Revenue increased by 16.15% to HK$5,847.76 million, driven by higher cattle sales[19][22] - The company recorded a loss of HK$6.2 million for the year, compared to a profit of HK$8.85 million in 2023, mainly due to loan receivable recoverability issues and fair value losses on financial assets[15] - The Group recorded a loss of HK$18.91 million, up from HK$4.68 million in 2023, primarily due to recoverability issues with loan receivables and fair value losses[22] - Gross profit rose to HK$32.52 million with a gross profit margin of 0.56%, up from 0.20% in 2023[22] - The Group recorded a revenue of approximately HK$5,711.43 million from the trading of fresh produce and agricultural products, accounting for 97.67% of total revenue[23] - The meat processing segment saw a dramatic increase in revenue to approximately HK$132.33 million, contributing 2.26% to total revenue with a gross profit margin of 1.80%[23] - Revenue from loan interest income decreased to approximately HK$4.01 million, accounting for 0.07% of total revenue, with a loss of approximately HK$9.99 million[23] - The Group's heating supply services segment generated a profit of approximately HK$1.66 million in 2024, compared to a loss of HK$3.65 million in 2023, due to a subsidy of HK$1.92 million from the PRC local government[49] - The coal mining and construction services segment recorded a revenue of HK$75.63 million in 2024, down from HK$127.07 million in 2023, and recorded a loss of HK$12.26 million, leading to the discontinuation of the segment[51] - The Group's financial results for the Year are detailed in the consolidated statement of profit or loss and other comprehensive income on pages 81 to 82 of the annual report[174] - A summary of the Group's results, assets, and liabilities for the last five financial years is provided on page 176 of the annual report[174] Loan Receivables and Credit Risk - Impairment losses on loan receivables under the ECL model amounted to approximately HK$8.07 million, while fair value losses on financial assets at FVTPL were approximately HK$10.81 million[15] - Impairment losses under ECL model for loan receivables were HK$8.07 million, reversing from a HK$8.06 million reversal in 2023[19][22] - As of 30 June 2024, the Group had 13 outstanding loans, with balances ranging from HK$1,000,000 to HK$7,000,000 and interest rates from 6.00% to 18.00%[25][26] - The top five borrowers constituted approximately 59.04% of the total principal amount and 59.54% of the Group's loan receivables[27] - The Group's loan portfolio includes 9 individual borrowers and 4 corporate borrowers, with only one loan secured by a second charge on a property in Hong Kong[25] - The senior management conducts face-to-face interviews and preliminary assessments of applicants' repayment ability and creditworthiness[32] - The loan approval process includes document collection, assessment of repayment ability, senior management discussion, and signing of loan agreements[30][31][32] - The senior management conducts credit risk assessments on loan applicants, including client identification, financial and legal due diligence, repayment ability assessment, and creditworthiness assessment[34][37] - Loan terms are determined based on factors such as borrower creditworthiness, loan principal, predicted recoverability, prevailing market interest rates, and pledged asset security[35][38] - The senior management monitors loan repayment status through monthly credit checks, litigation searches, and accounting records, ensuring timely repayments[36][39] - In cases of delinquent loans, the senior management reviews repayment schedules and may initiate legal proceedings to recover outstanding loan principal and interest[41][43] - Global high interest rates have adversely affected the financial positions and repayment abilities of the company's customers, increasing credit risks[42][43] - The company periodically reports overdue loan figures to the Board, which assesses impairment indications and determines impairment loss amounts[44][46] - Expected Credit Loss (ECL) for loan receivables is determined using historical data adjusted for current and forward-looking macroeconomic factors[45][46] - An independent firm of professional valuers conducts valuations on the allowance for ECL on loan receivables, which is cross-examined by independent auditors[45][46] - The Group's loan receivables are classified into three stages: Stage 1 (performing) with ECL of HK$0.04 million, Stage 2 (doubtful) with ECL of HK$0.62 million, and Stage 3 (default) with ECL of HK$21.94 million as of 30 June 2024[47] - Aggregate ECL impairment of the Group as of 30 June 2024 was approximately HK$22.60 million, resulting in an ECL impairment loss of HK$8.07 million after exchange alignment adjustment[47] Business Operations and Strategy - Core business operations included trading of fresh produce, agricultural products, meat production, processing, packaging, delivery, money lending, and heating supply services[16] - The company discontinued its coal mining and construction services during the year[16] - Meat processing is expected to be the major growth driver for the company moving forward[16] - The Group expects meat processing to be a major growth driver in the future[19] - The Group plans to maintain diversified business operations and scale to create more value for shareholders[20] - The Group's meat processing factory began operations in April 2024, focusing on cutting, processing, packing, cooling, and distribution[23] - The Group commenced factory operations in China for cutting, processing, packing, cooling, and distribution, enabling faster response to market demands and enriching the product portfolio with new ready-to-cook and low-temperature processed meat products[53] - The Group plans to continue promoting branded products, developing valuable customers, broadening the customer base, and improving factory operation efficiency to create value for shareholders[54] - The company disposed of its indirect wholly-owned subsidiary, Ordos City Taipu Mining Construction Limited, in March 2024[61] - The company's coal mining and construction services revenue is concentrated among fewer than five customers, with significant risks if key customers face adverse business conditions or terminate relationships[73][76] - The company's coal mining and construction services are provided under management contracts with terms of one to two years, posing risks if contracts are not renewed or new customers are not secured[74][77] - Mining and construction operations face risks such as technical problems, natural disasters, accidents, and equipment failures, which could disrupt operations and damage business reputation[75][78] - The company faces increasing competition from other mining service providers, particularly in Inner Mongolia, which may lead to lower service fees and reduced profit margins[79] - The coal mining and construction services business segment has been disposed of, eliminating related risks[81][83] - The company faces intensified competition from other mining service providers, particularly in the unfavorable coal mining market conditions[82] - The company may need to reduce fees for mining-related services to enhance competitiveness, potentially lowering profit margins[82] - The company will strengthen corporate management and improve service quality to maintain competitiveness and customer relationships[82] - The company is closely monitoring national regulatory policies for the coal industry and changes in mineral resources management policies to ensure normal operations[80][82] - The company's operations are subject to a wide range of PRC laws and regulations, which could increase compliance efforts and operating costs if changed[80][82] - The company will liaise with mine owners to respond to regulatory changes in a timely manner[80][82] Financial Position and Liquidity - The company maintained a strong financial position with bank and cash balances of approximately HK$81.76 million at the end of the year[16] - Bank and cash balances stood at HK$81.76 million at the end of the year[19] - The Group held cash and cash equivalents of approximately HK$81.76 million as of 30 June 2024, with net current assets of HK$323.75 million and a current ratio of 13.40[55] - Cash and cash equivalents held by the company amounted to HK$81.76 million as of June 30, 2024, compared to HK$105.08 million in 2023[60] - The company's net current assets were HK$323.75 million as of June 30, 2024, slightly down from HK$332.45 million in 2023[60] - The current ratio improved significantly to 13.40x as of June 30, 2024, compared to 3.62x in 2023[60] - The company had no bank borrowings as of June 30, 2024, maintaining the same position as 2023[60] - The company had no significant capital commitments as of June 30, 2024, consistent with 2023[62] - No dividends were paid or proposed during the year, maintaining the same position as 2023[67] - The company had no significant contingent liabilities as of June 30, 2024[67] - The company had no pledged or restricted bank deposits as of June 30, 2024, compared to RMB5.00 million pledged and RMB0.50 million restricted in 2023[63] - As of 30 June 2024, the company's distributable reserves amounted to approximately HK$202.45 million, a decrease from HK$275.43 million in 2023[177] Corporate Governance and Board Activities - The Board currently consists of six Directors, including three executive Directors and three independent non-executive Directors, each bringing diverse professional and industry experience to the Group's business development[101] - The Board held nine meetings during the year, with all Directors attending all meetings except for Mr. Luk Chi Shing, who was appointed on 30 August 2024 and attended 0/9 meetings[107] - Mr. Luk Chi Shing, aged 55, joined the Company as an independent non-executive Director on 30 August 2024, bringing over 25 years of experience in auditing, financial management, and corporate mergers and acquisitions[94][95] - The Company has adopted the required standard of dealings as set out in Rules 5.48 to 5.67 of the GEM Listing Rules as the code of conduct for securities transactions by Directors, with all Directors complying throughout the year[99][104] - The Board is committed to maintaining good corporate governance standards, which provide a framework for business strategy formulation, risk management, and enhancing transparency and accountability to shareholders and creditors[97][102] - The company has three independent non-executive directors, representing more than one-third of the Board, with one having appropriate professional qualifications or accounting expertise[113] - The Audit Committee held five meetings during the year, with two attended by the company's independent auditors to exchange views and concerns[119] - The Audit Committee reviewed the Group's quarterly report for the three months ended 30 September 2023, interim report for the six months ended 31 December 2023, and audited annual results for the year ended 30 June 2024[120] - The company has not yet appointed a new chief executive officer following the resignation in January 2021, with duties currently undertaken by executive directors collectively[112] - The company secretary, Mr. Choi Wai Yip, completed not less than 15 hours of relevant professional training during the year[117] - The Board established three committees: Audit Committee, Nomination Committee, and Remuneration Committee, each with defined written terms of reference[118] - All directors participated in continuous professional development, including training courses and internal briefings on corporate governance and regulations[111] - The company maintains an appropriate system to protect shareholders' interests, as ensured by the independent non-executive directors[113] - The company provides independent professional advice to directors at its expense to assist them in fulfilling their duties[109] - The company's Audit Committee made recommendations to the Board and management regarding financial reporting and internal control procedures[120] - The remuneration of the Independent Auditor for audit services for the year ended 30 June 2024 amounted to HK$800,000, a decrease from HK$1,430,000 in 2023[142] - The Remuneration Committee held two meetings during the year to review the company's remuneration policy and recommend specific remuneration packages for Directors and senior management[133] - The Nomination Committee held one meeting during the year to review the structure, size, and composition of the Board and make recommendations on the appointment of Directors[130] - The Remuneration Committee comprises two independent non-executive Directors and one executive Director, responsible for recommending remuneration policies and packages for Directors and senior management[131][132] - The Nomination Committee comprises two independent non-executive Directors and one executive Director, responsible for formulating nomination policies and reviewing Board diversity[127][128] - The company's independent auditor, Confucius International CPA Limited, issued a statement regarding their reporting responsibilities, detailed in the "Independent Auditor's Report" section of the annual report[140] - The Audit Committee is responsible for recommending the appointment, re-appointment, and removal of the independent auditor, as well as approving their remuneration and terms of engagement[141] - Directors are subject to retirement by rotation at least once every three years and are eligible for re-election at the AGM[135] - The company has established a Remuneration Committee with written terms of reference in compliance with the CG Code[131] - The company has established a Nomination Committee with written terms of reference in compliance with the CG Code[126] - Independent auditor's remuneration for audit services for the year ending June 30, 2024, was HKD 800,000, a decrease from HKD 1,430,000 in 2023[145] - The Board is responsible for maintaining sound risk management and internal control systems to safeguard assets and shareholders' interests[146] - A risk management policy has been established to ensure the Group operates in a safe and steady environment[147] - The risk management process includes periodic risk identification, analysis, and annual risk management meetings[148] - The Group engages an independent professional adviser to review the effectiveness of risk management and internal control systems annually[156] - The Board has adopted a Board Diversity Policy to achieve diversity, including increasing the number of female Directors in the coming years[161] - The Nomination Committee reviews the Board Diversity Policy to ensure its continued effectiveness[161] - The Board has adopted a nomination policy for selecting and recommending candidates for directorship[162] - The Nomination Committee recommends candidates based on skills, knowledge, experience, and other relevant criteria[162] - The Board comprises six Directors, including three independent non-executive Directors, promoting critical review and control of the management process[161] - The Board adopted a dividend policy on 8 May 2019, aiming to maintain adequate cash reserves for working capital, future growth, and shareholder value without a pre-determined dividend payout ratio[165][166] - The Board considers factors such as financial condition, liquidity, working capital requirements, debt levels, and market conditions when declaring dividends[167] - The Group has established disclosure procedures for price-sensitive information to ensure timely, fair, and accurate disclosure of inside information[168] - The Company provides shareholders with high standards of financial transparency through quarterly, interim, and annual reports, as well as announcements and circulars on the Stock Exchange website[169] - The Company did not recommend the payment of a dividend for the Year (2023: nil)[174] Shareholding and Corporate Structure - Mr. Xu Gongming is deemed to be interested in 102,719,000 shares held by Redwood Bay Investment Group International Company Limited, representing 27.42% of the company's shareholding[186][188] - Ms. Yan Weiwei is deemed to be interested in 74,474,000 shares held by Star Link Technology Limited, representing 19.88% of the company's shareholding[188] - The company acquired 10,000,000 shares on the Stock Exchange in May 2024 at a total consideration of approximately HK$1,985,000, which were subsequently cancelled in July 2024[72] - The company has a share option scheme allowing the issuance of up to 26,662,511 shares, representing approximately 7.12% of issued shares[192] - No options have been granted under the share option scheme since its adoption[192] - The company's independent auditor changed to Confucius on 20 June 2024, replacing Shinewing (HK) CPA Limited[193] - The company's emolument policy for senior management is based on merit, qualifications, and competence, with director remuneration tied to operating results and individual performance[193] - The company maintains sufficient public float as required by GEM Listing Rules[193] Environmental, Social, and Governance (ESG) - The ESG report scope includes money lending in Hong Kong, fresh agricultural products trading, and food processing in Shenzhen, excluding live cattle trading but including Du Du Fresh Meat Industry[197][199] - The company follows four reporting principles and the latest disclosure requirements of the ESG Reporting Guide under Appendix C2 of the GEM Listing Rules to ensure the ESG report clearly presents the environmental, social, and governance issues of concern to stakeholders[200] - The corporate governance section will be separately presented in the "Corporate Governance Report" section of the annual report[200] - The ESG report includes an index based on the ESG Reporting Guide for reference[200] Risk Factors and Market Conditions - Fluctuations in fresh produce prices could materially and adversely affect the company's profitability, with fresh produce costs expected to account for substantially all of its cost of sales[72] - The company relies on third-party logistics providers for importing fruits and delivering fresh produce, with potential disruptions due to events like COVID-19, which could increase loss rates and affect timely supply[72] - The company's money lending business is exposed to credit risks, with most loans being unsecured, potentially leading to unrecoverable loans if customer financial positions deteriorate[72] - The company's coal mining and construction services revenue is concentrated among fewer than five customers, with significant risks if key customers face adverse business conditions or terminate relationships[73][76] - The company's coal mining and construction services are provided under management contracts with terms of one to two years, posing risks if contracts are not renewed or new customers are not secured[74][77] - Mining and construction operations face risks such as technical problems, natural disasters, accidents, and equipment failures, which could disrupt operations and damage business reputation[75][78] - The company faces increasing competition from other mining service providers, particularly in Inner Mongolia, which may lead to lower service fees and reduced profit margins[79] - The coal mining and construction services business segment has been disposed of, eliminating related
都都控股(08250) - 2024 - 年度财报