Business Performance and Strategy - The group reported a stable collection of waste electrical and electronic products during the reporting period, positively influenced by the Hong Kong government's consumption voucher scheme[6]. - The group's CMDS (Confidential Material Destruction Services) business segment remains a significant source of revenue, with plans for more aggressive strategies to enhance business performance[6]. - The hazardous waste treatment project in mainland China has achieved new milestones, with cautious optimism regarding growth potential despite intense competition[7]. - The group has suspended its production of household paper products, with the board reviewing the direction of this business segment[7]. - The company aims to provide long-term value to shareholders by actively building a solid pipeline of new projects[7]. - The group will continue to monitor developments in recycling regulations and adjust services to explore new revenue opportunities while improving environmental outcomes[7]. - The economic activities of the group have increased post-pandemic, contributing positively to business operations[6]. - The group emphasizes the importance of adapting to customer expectations for increased waste recycling and compliance with evolving regulations[7]. - The company is committed to closely monitoring market developments to identify opportunities for expanding its service offerings[7]. - The company is a major solid waste solution provider in Hong Kong, specializing in waste collection, recycling, and treatment services[26]. - The hazardous waste treatment project in Lianyungang, Jiangsu Province has been fully operational, enhancing the total processing capacity[26]. - A second hazardous waste treatment plant in Kaifeng, Henan Province commenced operations in January 2023[26]. - The company is diversifying its waste management and recycling business, expanding into mainland China[26]. - The recent waste management policy measures by the Hong Kong government, such as the producer responsibility scheme, present new opportunities for the recycling industry[27]. - The company maintains a cautiously optimistic outlook on the potential recovery of processing volumes post-pandemic[27]. Financial Performance - For the fiscal year ending March 31, 2023, the company reported a loss attributable to equity shareholders of HKD 39,800,000, an increase of HKD 12,200,000 compared to the previous fiscal year[28]. - Operating segment performance improved by HKD 2,426,000 or 30.8%, attributed to government subsidies of HKD 2,600,000 received during the fiscal year[32]. - The company's net corporate expenses increased by HKD 7,941,000 or 20.1%, primarily due to a foreign exchange loss of HKD 4,200,000, compared to a foreign exchange gain of HKD 2,000,000 in the previous year[28]. - The company recorded a gross profit of HKD 25,000,000, a decrease of HKD 200,000 or 0.6% from the previous fiscal year, with a slight decline in gross margin from 59.7% to 59.0%[43]. - Revenue from the recycling paper business increased by HKD 1,800,000 or 9.2%, despite a 3.2% decrease in sales volume, due to a 12.8% increase in product prices[35]. - The joint venture with Eurogreen Group contributed revenue of HKD 12,300,000, an increase of HKD 1,800,000 or 17.4% compared to the previous fiscal year[38]. - CMDS service revenue slightly decreased by HKD 100,000 or 0.6% to approximately HKD 15,800,000, with expectations for steady recovery in the upcoming periods[36]. - The company recognized an impairment loss of HKD 16,700,000 for property, plant, and equipment in its joint venture, leading to a share of joint venture losses of HKD 8,200,000[40]. - As of March 31, 2023, the company had cash and cash equivalents of approximately HKD 74,400,000, a decrease from HKD 76,500,000 in the previous year[49]. - The current ratio as of March 31, 2023, was 9.7, down from 11.4 in the previous year, indicating a decrease in liquidity[49]. - The group recorded a net foreign exchange loss of HKD 4,200,000 for the year ended March 31, 2023, compared to a foreign exchange gain of HKD 2,000,000 in 2022, primarily due to the depreciation of the Renminbi[50]. - Capital expenditure related to the headquarters in Tseung Kwan O, Hong Kong, was approximately HKD 1,700,000 for the fiscal year[51]. - As of March 31, 2023, the group had capital commitments of approximately HKD 600,000, mainly related to the acquisition of IT infrastructure[51]. - The group employed 98 staff members as of March 31, 2023, with total employee costs amounting to HKD 40,400,000, down from HKD 44,700,000 in the previous fiscal year[60]. Sustainability and Compliance - The group has implemented a solar system expansion with an additional 430 solar panels on the rooftop, enhancing its sustainability efforts[58]. - The group is committed to providing effective waste management services while adhering to environmental laws and regulations, with no known violations reported during the reporting period[58]. - The group collaborates with NGOs to provide free waste collection services, aiming to expand this service in the future[67]. - The company remains optimistic about sales recovery despite uncertainties related to COVID-19 variants and other pandemic situations[68]. - The company anticipates stable revenue from high-quality confidential material destruction services and efficient logistics fleet[68]. - The joint ventures in e-waste and hazardous waste management are expected to provide stable income sources[68]. - Continuous investment in technology, infrastructure, and talent development is planned to enhance capabilities and maintain competitive advantage[68]. - The company emphasizes its commitment to sustainability and strong relationships with stakeholders to address future challenges[68]. Corporate Governance - The company reported no dividend distribution for the fiscal year ending March 31, 2023, consistent with the previous year[79]. - The distributable reserves as of March 31, 2023, were approximately HKD 376.44 million, down from HKD 420.29 million in 2022[83]. - The company's remuneration policy for directors and senior management is based on their experience, responsibilities, and overall market conditions[101]. - As of March 31, 2023, there were no significant transactions or contracts involving directors that had a direct or indirect interest related to the group's business[102]. - As of March 31, 2023, no directors or senior management held any shares or bonds in the company that required disclosure under the Securities and Futures Ordinance[103]. - The company has a share option scheme adopted on March 11, 2010, which allows for the issuance of options to employees, including executive and non-executive directors[109]. - The total number of options granted under the share option scheme cannot exceed 10% of the total issued shares immediately following the completion of the IPO and capitalization issue[109]. - Any options granted to directors or major shareholders require prior approval from independent non-executive directors[110]. - If options granted to major shareholders exceed 0.1% of the issued shares or have a total value exceeding HKD 5,000,000, shareholder approval is required[110]. - The exercise price for options granted under the scheme is determined by the board and cannot be lower than the higher of the par value of the shares or the closing price on the day of the offer[111]. - The company has not established any arrangements that would allow directors to acquire rights to profit from the purchase of shares or bonds[106]. - There were no rights granted to directors or their family members to profit from the acquisition of shares or bonds during the fiscal year ending March 31, 2023[106]. - A total of 157,850,000 share options were granted under the share option scheme, with 152,150,000 options accepted by the grantees[112]. - The exercise price for each share option is HKD 0.128, and the options can be exercised from September 7, 2017, to September 6, 2022[112]. - As of March 31, 2023, no share options were granted, exercised, or cancelled[112]. - The board proposed a new share option scheme to be presented at the 2023 annual general meeting for shareholder approval[114]. - Cheng Yu Tung Family (Holdings) Limited and its affiliates hold a combined 56.86% of the company's issued share capital, totaling 2,742,514,028 shares[117]. - Chow Tai Fook Capital Limited, a controlled entity, also holds 56.86% of the company's shares, indicating significant ownership concentration[117]. - The total procurement price paid by Xinmin to Tianeng under the manufacturing and supply agreement was HKD 192,000, with an annual cap of HKD 8,600,000[125]. - The manufacturing and supply agreement is effective from April 1, 2021, to March 31, 2024, covering various paper products[121]. - Independent non-executive directors reviewed the related party transactions and confirmed compliance with regulations[125]. - The share option scheme has expired, and no shares can be issued under it as of the report date[112]. Risk Management - The total audited net income of Lianyungang Greenrun Environmental Technology Co., Ltd. during the agreement period was approximately RMB 69,123,780, which is below the RMB 90,000,000 threshold[128]. - The company is entitled to receive approximately RMB 4,258,749 from Dugong Limited due to the shortfall in net income, equivalent to about HKD 4,868,000[128]. - The largest customer accounted for 29% of the company's sales, while the top five customers combined represented 49%[133]. - The largest supplier accounted for 19% of the company's purchases, with the top five suppliers together making up 46%[135]. - The company has confirmed that it has sufficient public float, with over 25% of its issued shares held by the public[134]. - The audit committee, composed of three independent non-executive directors and two non-executive directors, reviewed the audited financial statements for the year ending March 31, 2023[138]. - The company has maintained compliance with the corporate governance code throughout the fiscal year ending March 31, 2023[142]. - The company has not entered into any management or administrative contracts for its overall business during the year[132]. - The company has not received any dividends or distributions from the target company during the reporting year[128]. - The company will closely monitor the payment of the agreed amount from Dugong based on future dividend declarations[128]. - The board consists of seven directors, including two executive directors, two non-executive directors, and three independent non-executive directors[145]. - The roles of Chairman and CEO are held by different individuals to ensure a balance of power, with Zheng Zhiming as Chairman and Lin Jingsheng as CEO[146]. - The board has complied with listing rules by appointing at least three independent non-executive directors, constituting at least one-third of the board[149]. - Independent non-executive directors confirmed their ability to dedicate sufficient time to fulfill their duties and responsibilities[151]. - The attendance record for board meetings shows that Lin Jingsheng and Tan Ruijian attended 100% of the meetings[156]. - The company has established formal and informal channels to ensure the board receives independent opinions and information[150]. - The nomination committee is responsible for reviewing board composition and assessing the independence of independent non-executive directors[155]. - The company has a whistleblowing policy allowing employees to report misconduct confidentially to the audit committee[150]. - The term for directors is three years, with one-third of the directors required to retire and seek re-election at each annual general meeting[153]. - The company will publish a circular detailing the re-election of retiring directors in conjunction with the annual report[155]. - The board of directors received training to ensure understanding of the company's operations and regulatory responsibilities[159]. - The audit committee, consisting of five members, reviewed financial statements and compliance with accounting principles[164]. - The remuneration committee established transparent procedures for determining director and senior management compensation[170]. - The company adopted a whistleblowing policy for confidential reporting of misconduct by employees and stakeholders[169]. - The executive committee, led by Mr. Lin, oversees the execution of strategic plans and daily operations[163]. - The audit committee held two meetings with external auditors without the presence of executive directors[169]. - The company provided training for directors on corporate governance and compliance with legal regulations[167]. - The audit committee reviewed the effectiveness of the company's risk management and internal control systems[167]. - The remuneration committee reviewed the company's governance practices and made recommendations for improvements[171]. - The board committees are authorized to seek independent professional advice as needed[162]. - The company established a nomination committee consisting of four members, including independent non-executive directors, to review board composition and develop nomination procedures[173]. - The nomination committee reviewed and discussed the remuneration policies for directors and senior management, including performance bonuses and recommendations for executive director contracts[174]. - The board diversity policy aims to enhance gender diversity, with a target to appoint at least one female board member by the end of 2024[182]. - As of March 31, 2023, 75.5% of the company's employees were male, reflecting the nature of the business[182]. - The company has implemented a code of conduct for employees regarding securities trading, adhering to standards to prevent insider trading[186]. - The board is responsible for preparing financial statements in accordance with statutory requirements and applicable accounting standards, ensuring no significant doubts about the company's going concern[187]. - The company has purchased appropriate liability insurance for its directors and officers to cover costs and liabilities arising from their duties[183]. - The nomination committee is tasked with monitoring the effectiveness of the board diversity policy and setting measurable targets for diversity[175]. - The company recognizes the importance of anti-corruption measures as part of good corporate governance and has established relevant policies[186]. - The external auditor, KPMG, received a total fee of HKD 1,940,000 for the annual audit and HKD 478,000 for non-audit services, which mainly included the review of interim reports and tax advisory services[190]. - The board is responsible for assessing the nature and extent of risks the group is willing to accept to achieve strategic and business objectives, with reviews conducted at least annually[191]. - The group employs both qualitative and quantitative risk management methods to evaluate risks that may hinder the achievement of business objectives, focusing on strategic, operational, market, financial, and legal compliance risks[194]. - The internal audit function independently evaluates the effectiveness of the group's risk management and internal control systems, reporting significant findings directly to the audit committee every six months[200]. - The internal audit department assesses the accuracy and effectiveness of the group's financial activities and data, ensuring compliance with regulatory guidelines and laws[200].
综合环保集团(00923) - 2023 - 年度财报