Corporate Structure and Governance - The company completed a mandatory unconditional cash offer on September 9, 2022, making Wan Feng Industrial the controlling shareholder[11]. - The company changed its name from Loto Interactive Limited to Crypto Flow Technology Limited to better reflect its future development direction[11]. - The company has appointed notable figures in the blockchain and digital infrastructure sectors to its board and management team[11]. - The company emphasizes the importance of good corporate governance to protect shareholder interests and has adhered to all corporate governance codes except for the monthly updates to the board, which were not provided this year[77]. - The board consists of six members, with three executive directors and three independent non-executive directors, ensuring a balance of skills and experience necessary for effective leadership[83]. - The roles of Chairman and CEO are held by different individuals to ensure independence and accountability[96]. - The board consists of six directors, three of whom are independent non-executive directors, exceeding the GEM listing rules requirement of at least one-third[88]. - The company has established mechanisms to ensure independent opinions and suggestions are provided to the board, which are reviewed annually[88]. - The board regularly reviews compensation policies, succession plans, internal controls, and risk management systems[92]. - The company has adopted a nomination policy to identify and evaluate candidates for board appointments[111]. - The board's diversity policy has been reviewed and deemed effective in the current year[110]. - The company has appropriate insurance arrangements for potential legal actions faced by directors and officers, with no claims made this year[122]. - The board is responsible for the overall management and control of the company's business, guided by the CEO[123]. - The company received no significant reports of fraud or misconduct affecting its financial statements or operations this year[143]. - The independent auditor's report is included in the annual report, confirming the integrity of the financial statements[148]. - The company is committed to maintaining the highest standards of integrity and ethical behavior in its operations[146]. - The board has taken necessary measures to safeguard the group's assets and prevent fraud[148]. Financial Performance - The total revenue for the year was approximately HKD 29,600,000, a significant increase of HKD 20,900,000 compared to HKD 8,700,000 in the previous year, representing a growth of 240.2%[35]. - Revenue from the ongoing business of the Hong Kong data center was HKD 26,600,000, up from HKD 5,700,000 in the previous year, marking an increase of 466.7%[35]. - The company recorded a loss of approximately HKD 56,900,000 for the year, a reduction of HKD 235,400,000 or 80.5% compared to a loss of HKD 292,300,000 in the previous year[40]. - The lending business contributed approximately HKD 3 million in revenue for the year, with a loan amount of HKD 30 million granted at an interest rate of 10%[26]. - The data processing rental service generated zero revenue this year, down from HKD 1,200,000 in the previous year[38]. - The lending business generated revenue of approximately HKD 3,000,000, unchanged from the previous year[39]. - The company has terminated its operations in China, resulting in no revenue from data center services in that region for the year[22]. - The company’s financial performance analysis is detailed in the consolidated financial statements, with key performance indicators highlighted in the annual report[182]. - The group recorded a capital surplus of HKD 77 million as of December 31, 2022, down from HKD 137 million in 2021[46]. - The company extended the repayment period of a loan agreement worth HKD 30,000,000 for an additional 24 months, maintaining an annual interest rate of 10%[44]. - The total fees paid to the independent auditor for audit services amounted to HKD 880,000, with an additional HKD 230,000 for non-audit services, totaling HKD 1,110,000[160]. Business Operations and Strategy - The company ceased operations of three data centers in Sichuan, China, in 2021, impacting short-term revenue, but has developed an overseas expansion strategy[12]. - The company is optimistic about the stable development of cryptocurrency mining services, leveraging data centers for various mining services[15]. - The company is actively exploring acquisitions and investments in data centers in North America, where energy prices and rents are lower[15]. - The company aims to build a scalable blockchain infrastructure service enterprise, focusing on Web3.0 and metaverse technology and applications[11]. - The company is actively seeking to expand its blockchain and related applications, supported by the Hong Kong government, to enhance its business offerings[16]. - The company is considering the application of blockchain technology and web 3.0 in response to the Hong Kong government's policy declaration on virtual asset development[49]. - The company is actively exploring the development of data centers to align with its overall growth strategy and meet market demand[50]. - The company acknowledges the challenges posed by high inflation and tightening financial policies in the current market environment[11]. - The company has implemented internal control measures to manage risks associated with its lending activities, ensuring compliance with relevant laws and regulations[27]. - The management team is focused on identifying new growth points to achieve long-term sustainable development goals[17]. Risk Management and Compliance - The company is focusing on risk management and compliance in response to tightening regulations in the virtual asset industry[11]. - The lending control team conducts credit risk assessments based on potential clients' financial status and repayment capabilities[28]. - The company has established a process for credit approval that includes independent evaluations and compliance with GEM listing rules[31]. - The company has established a robust internal control and risk management system to safeguard shareholder investments and assets[152]. - The risk management policy provides a framework for identifying and assessing significant business, operational, financial, and compliance risks[153]. - The internal control system aims to protect assets from misappropriation and unauthorized disposal, managing operational risks effectively[156]. - The audit committee has reviewed the effectiveness of the risk management and internal control systems, covering all significant financial, operational, and compliance controls[158]. - The group faces risks related to legal and regulatory compliance as it expands its business into Hong Kong and other overseas markets, which may involve adherence to new applicable laws and regulations concerning data protection and internet information security[183]. - Economic and public health conditions, including the risk of recession and the impact of new COVID-19 variants, may lead to more conservative decision-making by the group and its business partners[186]. - The group relies on a concentrated customer base for its data center and lending businesses, which poses risks if key customers terminate services or experience credit issues[189]. Employee and Stakeholder Relations - The company employed 10 employees as of December 31, 2022, down from 24 in 2021, with total director remuneration of approximately HKD 3.7 million[55]. - Approximately 25% of senior employees, including directors and senior management, are female, while about 50% of all employees are female[107]. - The company recognizes the importance of maintaining strong relationships with employees, customers, and suppliers for its ongoing development[199]. - The board encourages open expression of opinions among directors during meetings[88]. - The company maintains effective communication with shareholders and stakeholders to enhance investor relations and ensure timely access to balanced information[172]. - The board of directors encourages shareholder participation during the annual general meeting, providing a platform for questions and discussions[171]. Environmental and Social Responsibility - The group is committed to environmental sustainability by reducing consumption of electricity, gasoline, diesel, and water, and has not faced any environmental claims or penalties during the year[193].
加幂科技(08198) - 2022 - 年度财报