天玺曜11(01010) - 2021 - 年度财报

Company Overview This section provides an overview of the company's fundamental information, including governance, key personnel, and their backgrounds Company Basic Information This chapter provides fundamental information about Tai Rui International Holdings Limited, including board members, committees, and key external service providers, noting frequent board changes during the reporting period - The company's Board of Directors and its committees experienced multiple personnel changes in 2021, including resignations and appointments of executive, non-executive, and independent non-executive directors[4][5] Key External Service Providers | Service Type | Institution Name | | :--- | :--- | | Auditor | Ascent Partners CPA Limited | | Legal Advisor | Li Chi Chung & Co | | Principal Bankers | Bank of Communications (Hong Kong) Limited, Dah Sing Bank Limited | | Hong Kong Share Registrar | Tricor Tengis Limited | Directors and Senior Management Profiles This chapter details the backgrounds and qualifications of the company's executive and independent non-executive directors, CEO, and company secretary, noting their extensive experience and the former chairman's significant indirect shareholding - Mr. Duan Hongtao, appointed Executive Director on April 16, 2021, and resigned on February 14, 2022, indirectly held 75% of the company's shares through Zhongying International and possesses extensive experience in finance, investment, and trade[9] - Mr. Lam Fook Tat, appointed CEO on November 11, 2021, is an experienced entrepreneur who previously served as CFO at Alibaba Pictures Group Limited, with extensive experience in media entertainment and corporate finance[14][17] Five-Year Financial Summary This section presents a concise overview of the group's financial performance and position over the past five years Five-Year Financial Summary The Group's financial performance over the past five years shows a general revenue growth trend, but losses persisted and significantly widened in 2021, with a substantial decline in net assets Five-Year Performance Summary (HKD thousands) | Metric | 2021 | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 105,619 | 92,647 | 74,339 | 60,709 | 36,580 | | Loss before tax | (52,550) | (4,820) | (22,353) | (40,167) | (2,637) | | Loss for the year | (52,840) | (5,553) | (22,714) | (40,187) | (2,686) | Five-Year Assets and Liabilities Summary (HKD thousands) | Metric | 2021 | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | :--- | | Non-current assets | 43,154 | 79,293 | 49,724 | 34,298 | 44,300 | | Net current assets | 19,396 | 28,060 | 51,824 | 84,050 | 116,803 | | Net assets | 62,550 | 107,286 | 95,911 | 118,348 | 161,103 | Letter from the Board This section outlines the Board's review of the past year's business performance, strategic outlook, and significant corporate actions Business Review 2021 was a challenging year marked by COVID-19, leading the Group to restructure by terminating financing lease, money lending, and tea businesses to focus resources on integrated circuits, private jet management, and yacht-related operations - To address challenging conditions, the Group implemented reforms, retaining core businesses, exiting underperforming ones, and seeking new opportunities to enhance revenue[24] - In 2021, the Group terminated its financing lease and money lending businesses in China and Hong Kong, and divested its entire equity in the Chinese tea business, concentrating resources on core operations like yachts[24][25] Business Outlook The Group plans to focus on yacht business development, expanding its Hainan shipyard, establishing a Dutch R&D center, and leveraging the "Bakker" brand to offer high-quality yachts at competitive prices, extending services to luxury yacht charter, entertainment, and tourism - Demand in the yacht industry has surged since 2019, and the Group is expanding its Hainan shipyard and establishing a Dutch R&D center to capture market share[27] - The Group established an R&D headquarters in the Netherlands and acquired the right to use the 224-year-old "Bakker" trademark at a nominal cost, aiming to combine Dutch technology with China's low-cost manufacturing advantages[28][29] - As of the end of 2021, the Group had sold 5 yachts, indicating significant growth potential in the yacht business[32] Equity Changes and Shareholder Support During the year, Zhongying International acquired a 75% controlling stake in the company and provided a total of HKD 200 million in interest-free shareholder loans to support the Group's development, particularly the yacht business - Zhongying International became the company's controlling shareholder, holding approximately 75% of the shares[33] - The company received two interest-free shareholder loans totaling HKD 200 million from controlling shareholder Zhongying International, primarily for general working capital and yacht business development[33] Management Discussion and Analysis This section provides an in-depth review of the Group's operational and financial performance, key risks, and significant corporate transactions Segment Business Review This section reviews the operating performance of each business segment, noting stable growth in integrated circuits and private jet management, strategic focus on yachts with significant post-period sales, subdued real estate investment, and full impairment of the Red Power associate investment Integrated Circuit and Semiconductor Component Design and Sales This segment recorded revenue of approximately HKD 39.5 million, a 27% year-on-year increase, with gross profit of approximately HKD 24.9 million, up 53.7%, despite increasing margin pressure from intense market competition Integrated Circuit Business Financial Performance (HKD millions) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Revenue | 39.5 | 31.1 | | Gross Profit | 24.9 | 16.2 | Private Jet Management The private jet management business improved, recording revenue of approximately HKD 63.8 million, a 9.2% increase from HKD 58.4 million in 2020 - Private jet management business revenue increased from HKD 58.4 million in 2020 to HKD 63.8 million in 2021[38] Yacht Business The yacht business generated HKD 1.9 million in 2021, primarily from yacht management, and despite low current revenue, it is a high-priority strategic business with significant post-period sales agreements signed - Management is optimistic about the long-term potential of the yacht business and is pursuing an aggressive expansion strategy, including expanding the Hainan shipyard and establishing a Dutch R&D center[43] - Post-reporting period, the company achieved significant sales, including one 46-meter yacht for RMB 110 million and four additional 46-meter yachts for USD 60 million[43][44] Real Estate Investment The Group's real estate investment in Saipan, valued at approximately HKD 30.3 million, remained flat with no revenue recorded this year due to the severe impact of COVID-19 on local tourism and the economy - Saipan real estate is valued at approximately HKD 30.3 million, yielding no revenue this year due to the local economic downturn, leading the Group to adopt a passive investment strategy[46] Investment Holding The Group holds unlisted shares in Cornerstone Securities with a fair value of approximately HKD 8.4 million, and its investment in associate Red Power has been fully impaired due to the severe impact of the pandemic on the aviation industry - The investment in associate Red Power was fully impaired due to the severe impact of the COVID-19 pandemic on the global aviation industry and its business and cash flow forecasts[49] Financial Review In 2021, total revenue grew to HKD 105.6 million, but the annual loss widened to HKD 52.8 million due to associate investment impairment and increased yacht business development expenses, while operating expenses rose 46%, and cash and equivalents surged to HKD 86.2 million from shareholder loans, though the gearing ratio sharply increased from 31.9% to 78.8% Key Financial Indicators for 2021 (HKD millions) | Metric | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Revenue | 105.6 | 92.6 | +14.0% | | Operating Expenses | 59.4 | 40.7 | +46.0% | | Loss for the Year | 52.8 | 5.5 | +860% | | Basic Loss Per Share | 14.26 HK cents | 1.58 HK cents | +803% | | Cash and Cash Equivalents | 86.2 | 28.0 | +208% | | Gearing Ratio | 78.8% | 31.9% | +46.9pp | Key Risks and Uncertainties The Group faces multiple risks, including business risks related to macroeconomic, political, and regulatory environments, market price volatility, and demand changes; intense industry competition; strict policy compliance risks for private jet and yacht businesses; and credit risks from customers and investments, with COVID-19 significantly impacting operations - Business Risks: The Group faces risks from changes in macroeconomic, political, social, and regulatory conditions, with market price fluctuations and demand changes for products and services potentially impacting performance[58] - Industry and Policy Risks: All business segments operate in highly competitive industries, and private jet management and yacht businesses must comply with stringent regulatory requirements, where policy changes could increase costs[59][60] - Other Risks: The ongoing COVID-19 pandemic has significantly impacted the Group's operations and may exacerbate other uncertainties, such as credit risk[63] Significant Acquisitions and Disposals On December 31, 2021, the company sold its entire equity in China Zangcha Village Co., Ltd., primarily engaged in the tea business, for USD 650,000 to better focus resources on existing core operations - The Group sold its entire equity in China Zangcha Village Co., Ltd. for USD 650,000 on December 31, 2021[74] Environmental, Social and Governance (ESG) Report This section details the Group's commitment and performance across environmental protection, social responsibility, and corporate governance practices Environmental Protection The Group is committed to environmental protection, adhering to regulations, with minimal industrial waste from office-based operations, and the report details measures and data on emissions, waste, resource use, and climate change efforts to reduce environmental impact through energy conservation and green office practices 2021 Greenhouse Gas Emissions (tonnes of CO2 equivalent) | GHG Emissions | 2021 | 2020 | | :--- | :--- | :--- | | Total | 52.7 | 15.6 | | Scope 1 (Direct Emissions) | 7.2 | 6.8 | | Scope 2 (Energy Indirect Emissions) | 44.1 | 7.8 | | Scope 3 (Other Indirect Emissions) | 1.4 | 1.0 | 2021 Energy Consumption (MWh) | Energy Consumption | 2021 | 2020 | | :--- | :--- | :--- | | Total | 89.48 | 38.21 | | Direct Energy Consumption (Vehicle Fuel) | 26.97 | 24.40 | | Indirect Energy Consumption (Purchased Electricity) | 62.51 | 13.81 | - The Group actively promotes green office practices, implementing measures such as using energy-efficient equipment, paperless operations, double-sided printing, and encouraging public transport use to conserve energy and reduce emissions[115][116] Employee Care and Development The Group values employees as its most precious asset, committed to protecting their rights, offering competitive compensation and benefits, ensuring a safe and healthy work environment, and providing diverse training and development opportunities, with the report detailing employee demographics, turnover, and welfare policies 2021 Employee Composition (Total Employees: 74) | Category | Sub-category | Number (Proportion) | | :--- | :--- | :--- | | By Gender | Male | 47 (64%) | | | Female | 27 (36%) | | By Age Group | < 30 years | 18 (25%) | | | 30-50 years | 41 (55%) | | | > 50 years | 15 (20%) | | By Region | China | 44 (59%) | | | Hong Kong | 30 (41%) | - The Group strictly adheres to labor laws, prohibits child and forced labor, and provides comprehensive employee benefits including pension, medical, unemployment insurance, housing provident fund, as well as additional commercial insurance and annual health checks[123][129] - The Group prioritizes employee health and safety, has established an occupational health and safety management system, and reported no work-related fatalities in the past three years[134][135] Operating Practices This section outlines the Group's policies and practices in supply chain management, product quality, customer data protection, intellectual property, and anti-corruption, highlighting its robust supplier management, ISO9001 certification, strict privacy and IP protection, and integrity-driven anti-corruption reporting mechanism - The Group has established a comprehensive supplier management system, evaluating suppliers for environmental and social risks, promoting green procurement, and engaged with 73 suppliers this year[138][139] - The integrated circuit business is ISO9001 certified, ensuring product quality, with no product recalls due to safety or health reasons and no product or service-related complaints received this year[142][143] - The Group strictly adheres to anti-corruption regulations, implements a commercial bribery prevention management system, and has established a whistleblowing mechanism, with no corruption violations or related lawsuits found this year[147] Directors' Report This section provides an overview of the Group's principal activities, key customer and supplier relationships, board composition, shareholding structure, and compliance status Principal Activities and Customer Suppliers The Group primarily engages in integrated circuit and semiconductor component design and sales, private jet management, and yacht sales and related businesses, with significant customer and supplier concentration, as the largest customer accounted for 61% of sales and the top five suppliers for 61% of total purchases - The Group's principal activities include: (i) design and sale of integrated circuits and semiconductor components; (ii) private jet management; and (iii) yacht sales and other yacht-related businesses[152] Key Customer and Supplier Concentration | Category | Proportion | | :--- | :--- | | Largest Supplier Purchases | 20% | | Top Five Suppliers Total Purchases | 61% | | Largest Customer Sales | 61% | | Top Five Customers Total Sales | 83% | Directors, Equity Structure, and Compliance This section details director changes, their share interests, and major shareholder holdings, noting frequent board changes, Zhongying International's 75% controlling stake, and the company's restoration of public float to the 25% compliance level after a brief shortfall, with the Board confirming adherence to the Corporate Governance Code - The company's Board of Directors experienced multiple changes during the reporting year and up to the report's publication date, involving resignations and appointments of several executive, non-executive, and independent non-executive directors[179] - As of December 31, 2021, Mr. Duan Hongtao, through Zhongying International Holdings Group Limited which he controls, was deemed to hold 277,683,012 shares, representing 75% of the company's issued share capital[196][201] - Following the completion of a general offer, the company's public float temporarily fell to 11.19%, below the 25% required by listing rules, but was restored to the 25% level through a placing on March 3, 2021[204] Corporate Governance Report This section details the company's corporate governance practices, board structure, committee functions, risk management, and shareholder communication policies Corporate Governance Practices and the Board The company strives for high corporate governance, largely complying with the Corporate Governance Code, though noting deviations like the temporary non-separation of Chairman and CEO roles and unspecified terms for non-executive directors, with the six-member Board (three executive, three independent non-executive) meeting listing rule requirements, and the report detailing board meeting attendance and director training - The company complied with most provisions of the Corporate Governance Code, but deviations included: the Chairman and CEO roles were not separated before Mr. Lam Fook Tat's appointment; non-executive directors had no specified terms; and some directors could not attend the AGM due to pandemic isolation measures[214] - As of the reporting date, the Board comprised 3 executive directors and 3 independent non-executive directors, with independent non-executive directors exceeding one-third of the total board members, meeting listing rule requirements[218] Board Committees The Board has established Audit, Remuneration, and Nomination Committees, all composed solely of independent non-executive directors, to assist in fulfilling its duties, with the report detailing each committee's responsibilities, composition, meeting frequency, attendance, and the company's board diversity and nomination policies - The Audit, Remuneration, and Nomination Committees are composed solely of independent non-executive directors, responsible for key governance functions such as financial reporting oversight, remuneration determination, and director nominations[244][249][252] - The company has adopted a board diversity policy considering multiple dimensions including gender, age, experience, and cultural background, with the Nomination Committee responsible for monitoring its implementation[253] Risk Management and Internal Control The Board is responsible for the Group's risk management and internal control systems, aiming to manage rather than eliminate risks, with a COSO-based framework reviewed annually for effectiveness, and this year, an independent external consultant's assessment confirmed the current system's effectiveness and adequacy - The Board confirms its responsibility for the risk management and internal control systems, reviewing their effectiveness at least annually[263] - The company engaged an independent external consulting firm to review its risk management and internal control systems for the year, and based on the assessment report, the Board considers the system effective and appropriate[266] Shareholder Communication and Rights The Group prioritizes effective shareholder communication via reports, website, and general meetings, with this section detailing shareholder rights including attending and requisitioning general meetings, voting, electing directors and auditors, accessing company information, and communication, outlining meeting procedures to safeguard shareholder interests - Shareholders holding not less than 10% of the voting shares have the right to requisition an extraordinary general meeting[273] - The company has adopted a dividend policy, where dividend decisions will comprehensively consider the Group's financial position, liquidity, capital requirements, and future development, among other factors[289][290] Independent Auditor's Report This section presents the auditor's opinion on the financial statements and highlights key audit matters Audit Opinion Ascent Partners CPA Limited, the auditor, believes the consolidated financial statements fairly present the Group's financial position as of December 31, 2021, and its financial performance and cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance disclosure requirements - The auditor issued an unqualified opinion on the Group's consolidated financial statements[296] Key Audit Matters The auditor identified three key audit matters: the assessment of expected credit losses for trade receivables and bills, impairment assessment of loans receivable, and impairment assessment of an investment in an associate, all involving significant amounts and management judgment - Key Audit Matter One: Expected credit losses for trade receivables and bills, involving significant amounts and substantial judgment in determining loss provisions[300] - Key Audit Matter Two: Impairment assessment of loans receivable, totaling HKD 8,718,000, fully impaired at year-end, requiring significant management judgment to determine impairment losses[303] - Key Audit Matter Three: Impairment assessment of an investment in an associate, involving an investment with a carrying amount of HKD 20,315,000 and goodwill of HKD 12,723,000, requiring significant judgment and assumptions in calculating value in use[305] Consolidated Financial Statements This section presents the Group's consolidated financial performance, position, and cash flows for the reporting period Consolidated Statement of Profit or Loss For the year ended December 31, 2021, Group revenue grew 14% to HKD 105.6 million, but the annual loss significantly widened to HKD 52.8 million from HKD 5.5 million last year, primarily due to impairment of an investment in an associate (HKD 20.3 million) and financial asset impairments, resulting in a basic loss per share of 14.26 HK cents Consolidated Statement of Profit or Loss Summary (HKD thousands) | Item | 2021 | 2020 | | :--- | :--- | :--- | | Revenue | 105,619 | 92,647 | | Gross Profit | 35,664 | 23,965 | | Impairment of investment in an associate | (20,315) | – | | Loss before tax | (52,550) | (4,820) | | Loss for the year | (52,840) | (5,553) | | Loss attributable to owners of the Company | (52,840) | (5,495) | | Basic loss per share | (14.26) HK cents | (1.58) HK cents | Consolidated Statement of Financial Position As of December 31, 2021, the Group's net assets significantly decreased by 41.7% to HKD 62.6 million from HKD 107.3 million last year, with total assets at HKD 295 million and total liabilities at HKD 232 million, driven by a substantial increase in current assets from prepayments and a sharp rise in current liabilities due to nearly HKD 200 million in new shareholder loans Consolidated Statement of Financial Position Summary (HKD thousands) | Item | 2021 | 2020 | | :--- | :--- | :--- | | Assets | | | | Non-current assets | 43,154 | 79,293 | | Current assets | 251,890 | 78,275 | | Total assets | 295,044 | 157,568 | | Liabilities and Equity | | | | Current liabilities | 232,494 | 50,215 | | Non-current liabilities | – | 67 | | Total liabilities | 232,494 | 50,282 | | Net assets | 62,550 | 107,286 | | Total equity | 62,550 | 107,286 | Consolidated Statement of Cash Flows For the year ended December 31, 2021, the Group reported a net cash outflow of HKD 132 million from operating activities, primarily due to a significant increase in prepayments, a net cash inflow of HKD 3.3 million from investing activities, and a net cash inflow of HKD 188 million from financing activities, mainly from HKD 200 million in shareholder loans, resulting in a net increase in cash and cash equivalents of HKD 59.6 million and a year-end balance of HKD 86.2 million Consolidated Statement of Cash Flows Summary (HKD thousands) | Item | 2021 | 2020 | | :--- | :--- | :--- | | Net cash flows from operating activities | (132,050) | 23,402 | | Net cash flows from investing activities | 3,313 | 1,770 | | Net cash flows from/(used in) financing activities | 188,351 | (5,536) | | Net increase in cash and cash equivalents | 59,614 | 19,636 | | Cash and cash equivalents at beginning of year | 28,031 | 8,516 | | Cash and cash equivalents at end of year | 86,172 | 28,031 | Notes to the Consolidated Financial Statements (Selected) The notes provide detailed explanations of the financial statements, highlighting the Group's primary businesses in integrated circuits, private jet management, and yachts; revenue segmentation; full impairment of the Red Power associate investment; significant impairment provisions for trade and loan receivables; a HKD 200 million loan from the controlling shareholder; and substantial post-period yacht sales transactions - Operating segment data indicates private jet management as the largest revenue source (HKD 63.8 million), followed by integrated circuit business (HKD 39.5 million), while the headquarters and other segments recorded the largest operating loss (HKD 42.0 million)[465] - The investment in associate Red Power was fully impaired by HKD 20,315,000 this year due to the severe impact of the COVID-19 pandemic on the aviation industry[534][535] - Prepayments include RMB 96,650,000 (approximately HKD 118.9 million) in subcontracting costs paid to external yacht builders[559] - Post-reporting period events disclosed several significant transactions, including the sale of one 46-meter yacht for RMB 110 million and four additional 46-meter yachts for USD 60 million, indicating substantial revenue contribution from the yacht business in the next fiscal year[663]