艾硕控股(08341) - 2022 - 年度财报

Company Information This report details the company's core management, committee members, auditors, registered office, and principal bankers Major Management and Advisory Team | Position | Name/Institution | | :--- | :--- | | Executive Directors | Chan Siu Chung (Chairman), Cheung Hiu Tung, Cheung Hoi Wai | | Independent Non-Executive Directors | Yeung Chun Yu, Lai Wing Sze, Yu Wan Ki | | Chairman of Audit and Risk Management Committee | Yeung Chun Yu | | Chairman of Remuneration Committee | Lai Wing Sze | | Chairman of Nomination Committee | Chan Siu Chung | | Auditor | Evergreen (Hong Kong) CPA Limited | | Stock Code | 8341 | Chairman's Statement and Management Discussion and Analysis Business and Financial Review The Group achieved profitability with a 74.4% revenue increase to HKD 218 million, driven by Hong Kong decoration and renovation projects, and a significant rise in tender amounts supports future revenue 2022 Financial Year Key Financial Indicators | Indicator | 2022 FY (HKD Million) | 2021 FY (HKD Million) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Total Revenue | 218.0 | 125.0 | +74.4% | | Decoration Project Revenue | 190.2 | 107.0 | +77.8% | | Renovation Project Revenue | 27.8 | 18.0 | +54.4% | | Gross Profit | 29.9 | 15.8 | +89.2% | | Administrative Expenses | 24.4 | 22.6 | +8.0% | | Profit/(Loss) Attributable to Owners of the Company | 8.2 | (5.7) | Turned loss into profit | - The Group's core business involves decoration projects for new commercial and residential buildings and renovation projects for existing commercial buildings in Hong Kong[12] - During the reporting period, the company submitted tenders totaling approximately HKD 4.23 billion, a year-on-year increase of approximately 56.4%, and was awarded 7 projects with a total contract value of approximately HKD 119 million[13] - The Board recommended no final dividend for the year ended March 31, 2022[11] Prospects and Outlook The Group remains confident in Hong Kong's decoration and renovation market, supported by government policies and a significant increase in unrecognised contract revenue to HKD 314 million, prompting consideration of future fundraising for expansion - The Group's core competitive advantages include a strong track record, stable customer and supplier relationships, integrated project execution capabilities, and an experienced management team[24] - As of March 31, 2022, unrecognised contract revenue was approximately HKD 314.1 million, a significant increase from HKD 77.1 million in the prior year, primarily contributed by commercial development decoration projects[24] - Management believes that future fundraising activities will be necessary to increase manpower and control construction cost budgets to scale up operations in response to the large number of newly awarded projects[24] - The company is confident in the prospects of the Hong Kong decoration and renovation market, primarily based on expected growth from measures such as the Hong Kong government's increased land supply in the Northern Metropolis[25] Liquidity, Financial Resources and Capital Structure The Group maintains a sound financial position with increased net current assets and net assets, funding operations through business activities and borrowings, while prudently managing liquidity and maintaining a stable capital structure Financial Position Summary (As of March 31, 2022) | Indicator | 2022 (HKD Million) | 2021 (HKD Million) | | :--- | :--- | :--- | | Net Current Assets | 25.7 | 16.5 | | Net Assets | 28.1 | 19.4 | | Bank Balances and Cash | 7.8 | 7.8 | | Pledged Bank Deposits | 0.9 | 1.8 | - The Group's operations are primarily conducted in Hong Kong, with transactions, assets, and liabilities denominated in HKD and USD, resulting in no significant foreign exchange risk exposure[34] - As of March 31, 2022, the Group's headcount was 56 employees, an increase from 37 employees in the prior year[37] Share Capital Reorganisation The company advanced a share capital reorganisation plan, including share consolidation, capital reduction, and share subdivision, which, though not completed by period-end, received shareholder and court approval and became effective post-period - The company proposed to consolidate every 10 shares of USD 0.01 par value into 1 consolidated share of USD 0.1 par value, which was approved at the EGM on April 4, 2022, and became effective on April 7, 2022[39] - Following the share consolidation, the company implemented a capital reduction and share subdivision, reducing the par value of each issued consolidated share from USD 0.1 to USD 0.01 and subdividing unissued consolidated shares into 10 new shares of USD 0.01 par value, effective June 17, 2022[40][41] Biographies of Directors and Senior Management This section details the background, experience, and qualifications of the company's executive directors, independent non-executive directors, senior management, and company secretary - The executive director team is led by the Group's founder, Mr. Chan Siu Chung, who has nearly 25 years of experience in the construction industry and is primarily responsible for the Group's overall strategic development and management[47] - The independent non-executive director team members possess diverse professional backgrounds in accounting, tax advisory, business management, and information technology, providing independent judgment and expertise to the Board[50][51] Corporate Governance Report Board and Committees The company's board, comprising three executive and three independent non-executive directors, largely complied with corporate governance code provisions, with established audit, remuneration, and nomination committees ensuring independent and professional decision-making - During the reporting period, the company complied with the Corporate Governance Code in Appendix 15 of the GEM Listing Rules, with the only deviation being the combined roles of Chairman and Chief Executive Officer held by Mr. Chan Siu Chung, as the company believes the executive director team collectively performs the CEO function, thus no separate position was established[57] - The Board consists of six directors, including three executive directors and three independent non-executive directors, meeting the requirement that independent non-executive directors comprise at least one-third of the Board[59] - The company has established an Audit and Risk Management Committee, a Remuneration Committee, and a Nomination Committee, with clearly defined terms of reference, and independent non-executive directors hold a majority of seats and chairmanships in each committee, ensuring their independent operation[72][75][83] Risk Management and Internal Control The company established an enterprise risk management framework, with the Board overseeing its effectiveness and engaging independent consultants for annual reviews, identifying strategic, operational, and compliance risks, and deeming the current systems effective and appropriate - The Board is responsible for continuously overseeing the Group's risk management and internal control systems and has appointed an independent internal control consultant for evaluation, deeming the Group's internal control and risk management systems effective and appropriate[105][106] Identified Key Risks | Risk Area | Key Risk Description | | :--- | :--- | | Strategic Risk | Low entry barriers in Hong Kong's decoration and renovation industry, increasing competition may lead to reduced profit margins and market share loss | | Operational Risk | Reliance on subcontractors poses risks related to project quality and worker safety, potentially adversely affecting the Group's operations and financial position | | Compliance Risk | Subcontractors' failure to comply with engineering, safety, construction, and environmental regulations may result in fines or remedial actions for the Group | - The Group currently does not have an internal audit function, as the Board believes appointing external independent professionals to perform this function is more cost-effective and will review the need for an internal audit function at least annually[112] Shareholder Relations and Rights The company maintains high transparency, communicating with shareholders through various channels, outlining procedures for shareholder meetings and inquiries, and has adopted a dividend policy considering financial performance and capital needs - The company communicates with shareholders through annual general meetings, annual/interim/quarterly reports, announcements, and circulars, ensuring public and timely information disclosure[94] - Shareholders holding not less than one-tenth of the company's voting share capital have the right to request the Board to convene a general meeting[95] - The company has adopted a dividend policy, where the decision to pay dividends and their amount will consider factors such as the company's financial performance, working capital needs, future expansion plans, and overall economic conditions[101][103] Directors' Report Business Operations and Stakeholder Relations The company, an investment holding company, primarily engaged in Hong Kong decoration and renovation projects, with the Board not recommending a dividend, while maintaining strong stakeholder relationships, implementing environmental measures, and reporting negative distributable reserves - The company's principal activities are providing contracting services in Hong Kong, including interior decoration for new buildings and renovation, alteration, and addition works for existing buildings[115] - The Board did not recommend the payment of a dividend for the reporting period (2021: nil)[117] - The company values its relationships with various stakeholders, having established long-term stable cooperative relationships with major suppliers, subcontractors, and customers[119] Company Distributable Reserves | Item | March 31, 2022 (HKD Thousand) | March 31, 2021 (HKD Thousand) | | :--- | :--- | :--- | | Share Premium | 39,615 | 39,615 | | Accumulated Losses | (93,187) | (88,694) | | Total | (53,572) | (49,079) | Directors' and Shareholders' Interests The report details board members and service contracts, confirming independent non-executive directors' independence, with Chairman Chan Siu Chung holding 14.10% as controlling shareholder, and no competing interests reported by directors or major shareholders, who complied with the non-compete undertaking - Chairman Chan Siu Chung holds 106,000,000 shares through Acropolis Limited and directly holds 6,838,709 share options, totaling approximately 14.10% of the issued share capital[134] - The independent non-executive directors have reviewed and confirmed that the controlling shareholder, Mr. Chan Siu Chung and Acropolis Limited, complied with the terms of the non-compete undertaking during the reporting period[131] - During the reporting period, no director or their associated entities had a significant interest in any material transactions, arrangements, or contracts of the Group[139] Major Customers and Suppliers The Group exhibits high customer and supplier concentration, with the top five customers contributing nearly 80% of total turnover and the largest single customer over one-third, while the top five suppliers accounted for nearly 70% of total purchases, indicating reliance on key partners - The top five customers accounted for approximately 79% of total turnover, with the largest customer accounting for approximately 36%[141] - The top five suppliers accounted for approximately 69% of total purchases, with the largest supplier accounting for approximately 29%[141] Share Option Scheme The company adopted a share option scheme in 2019, granting 20,000,000 new options to directors and employees during the period, while 5,677,420 options lapsed due to employee departures, resulting in 42,709,677 unexercised options at period-end Share Option Movement Summary (As of March 31, 2022) | Item | Number of Share Options | | :--- | :--- | | Unexercised at Beginning of Period | 28,387,097 | | Granted During the Year | 20,000,000 | | Lapsed During the Year | (5,677,420) | | Unexercised at End of Period | 42,709,677 | - During the year, the company granted a total of 20,000,000 share options to directors and employees, with an exercise price of USD 0.01 and valid until July 11, 2024[143][366] Independent Auditor's Report Evergreen (Hong Kong) CPA Limited issued an unmodified opinion on the company's consolidated financial statements as of March 31, 2022, affirming that the statements present a true and fair view of the Group's financial position and performance - Auditor Evergreen (Hong Kong) CPA Limited issued an unmodified opinion on the company's consolidated financial statements as of March 31, 2022, affirming that the statements present a true and fair view of the Group's financial position and performance[155] - The report identified two key audit matters: - Provision for expected credit losses on trade receivables and contract assets: This was a key focus due to significant management judgment involved - Revenue recognition for construction contracts: Revenue recognition relies on estimates of completion progress, where uncertainties and subjectivity can significantly impact financial results[158][163] Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended March 31, 2022, the Group turned losses into profits, with total revenue increasing by 74.4% to HKD 218 million and gross profit by 89.2% to HKD 29.91 million, resulting in an annual profit of HKD 8.16 million compared to a loss of HKD 5.65 million in the prior year Consolidated Statement of Profit or Loss Summary | Indicator (HKD Thousand) | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | 218,014 | 125,049 | | Gross Profit | 29,914 | 15,829 | | Profit/(Loss) Before Tax | 8,162 | (5,654) | | Profit/(Loss) and Total Comprehensive Income/(Loss) for the Year | 8,162 | (5,654) | | Basic Earnings/(Loss) Per Share (HK Cents) | 10.20 | (13.37) | Consolidated Statement of Financial Position As of March 31, 2022, the Group's total assets increased to HKD 116 million, with total liabilities at HKD 87.5 million, while net assets grew by 44.7% from HKD 19.43 million to HKD 28.11 million, and net current assets also improved from HKD 16.5 million to HKD 25.7 million, indicating enhanced liquidity Consolidated Statement of Financial Position Summary | Indicator (HKD Thousand) | March 31, 2022 | March 31, 2021 | | :--- | :--- | :--- | | Total Assets | 115,609 | 88,290 | | Non-Current Assets | 7,344 | 3,355 | | Current Assets | 108,265 | 84,935 | | Total Liabilities | 87,501 | 68,865 | | Current Liabilities | 82,569 | 68,432 | | Non-Current Liabilities | 4,932 | 433 | | Net Assets | 28,108 | 19,425 | | Total Equity | 28,108 | 19,425 | Consolidated Statement of Changes in Equity As of March 31, 2022, the Group's total equity increased to HKD 28.11 million, primarily driven by the HKD 8.16 million profit for the year and HKD 0.52 million reserve recognised from share option grants, with some growth offset by accounting treatment of lapsed share options Equity Movement Summary (HKD Thousand) | Item | Amount | | :--- | :--- | | As at April 1, 2021 | 19,425 | | Profit and Total Comprehensive Income for the Year | 8,162 | | Share Option Grant | 521 | | Lapsed Share Options | - | | As at March 31, 2022 | 28,108 | Consolidated Statement of Cash Flows During the reporting period, the Group experienced a net cash outflow of HKD 19.13 million from operating activities, mainly due to a significant increase in contract assets, while investing activities generated a net cash inflow of HKD 0.74 million, and financing activities resulted in a net cash inflow of HKD 18.31 million, primarily from new bank borrowings, leading to a slight decrease of HKD 0.087 million in cash and cash equivalents to HKD 7.76 million at year-end Consolidated Statement of Cash Flows Summary | Indicator (HKD Thousand) | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (19,133) | (24,324) | | Net Cash From/(Used in) Investing Activities | 735 | (71) | | Net Cash From/(Used in) Financing Activities | 18,311 | (2,544) | | Net Decrease in Cash and Cash Equivalents | (87) | (26,939) | | Cash and Cash Equivalents at Beginning of Year | 7,843 | 34,782 | | Cash and Cash Equivalents at End of Year | 7,756 | 7,843 | Notes to the Consolidated Financial Statements Company Information and Accounting Policies This section outlines the company's basic information, financial statement preparation basis, and significant accounting policies, with the company being an investment holding company whose subsidiaries engage in Hong Kong decoration and renovation projects, and financial statements prepared under Hong Kong Financial Reporting Standards - The company is an investment holding company, whose subsidiaries primarily engage in interior decoration for new commercial and residential buildings and renovation projects for existing commercial buildings in Hong Kong[196] - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants, and new and revised standards mandatorily effective for the current year have been applied[197][199] - Revenue from construction contracts is recognised over time using the input method, based on the proportion of costs incurred to total estimated costs, which involves significant accounting estimates[235][272] - Impairment of trade receivables and contract assets is assessed using the expected credit loss model and a provision matrix[250][274] Revenue and Segment Information Total revenue for the year was HKD 218 million, entirely from Hong Kong customer contracts, with decoration projects contributing HKD 190 million and renovation projects HKD 27.81 million, while unfulfilled performance obligations of approximately HKD 315 million indicate future revenue potential, and customer concentration remains high Revenue by Business Segment (HKD Thousand) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | Decoration Projects | 190,204 | 107,042 | | Renovation Projects | 27,810 | 18,007 | | Total | 218,014 | 125,049 | - As of March 31, 2022, the total transaction price allocated to remaining performance obligations was HKD 314,702 thousand, of which HKD 276,265 thousand is expected to be recognised as revenue within one year[315] - During the year, three major customers contributed over 10% of the Group's total revenue, with Customer 3 being the largest contributor, generating approximately HKD 77.75 million from decoration and renovation projects[321] Key Assets and Liabilities At period-end, the Group's net trade receivables were HKD 34.74 million and net contract assets were HKD 53.26 million, both with expected credit loss provisions, while bank borrowings increased to HKD 28 million, all floating-rate, and right-of-use assets and lease liabilities significantly increased due to new property leases Summary of Major Assets and Liabilities (HKD Thousand) | Item | March 31, 2022 | March 31, 2021 | | :--- | :--- | :--- | | Trade Receivables (Gross carrying amount) | 39,521 | 52,273 | | Provision for Expected Credit Losses | (4,781) | (9,488) | | Trade Receivables (Net carrying amount) | 34,740 | 42,785 | | Contract Assets (Gross carrying amount) | 56,368 | 21,804 | | Provision for Expected Credit Losses | (3,111) | (3,328) | | Contract Assets (Net carrying amount) | 53,257 | 18,476 | | Bank Borrowings | 27,998 | 6,959 | | Lease Liabilities | 7,133 | 3,001 | - Bank borrowings are secured by personal guarantees from Mr. Chan Siu Chung, certain assets held by him, the Group's financial assets, and pledged bank deposits[355] Share Capital and Share Options As of period-end, the company's issued share capital comprised 800 million ordinary shares of USD 0.01 par value, with no changes during the period, while the 2019 share option scheme saw 20 million new options granted at USD 0.01 exercise price and some older options lapsed, resulting in 42.71 million unexercised options at year-end - As of March 31, 2022, the company's authorised share capital was USD 20,000,000 (divided into 2,000,000,000 shares of USD 0.01 par value), and issued and fully paid share capital was USD 8,000,000 (800,000,000 shares)[361] - During the year, the company granted a total of 20,000,000 share options to directors and employees, with an exercise price of USD 0.01 and valid until July 11, 2024[364][366] - As of March 31, 2022, there were 42,709,677 unexercised share options with exercise prices of HKD 0.3135 and USD 0.01 respectively[364] Financial Summary This section provides a five-year financial summary of the Group's key performance indicators and financial position Five-Year Financial Summary (For the year ended March 31) | Indicator (HKD Thousand) | 2022 | 2021 | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | Consolidated Results | | | | | | | Revenue | 218,014 | 125,049 | 199,939 | 88,913 | 96,306 | | Profit/(Loss) Before Tax | 8,162 | (5,654) | (27,422) | (12,496) | (35,300) | | Profit/(Loss) for the Year | 8,162 | (5,654) | (27,422) | (12,439) | (35,245) | | Consolidated Assets and Liabilities | | | | | | | Total Assets | 115,609 | 88,290 | 119,645 | 75,262 | 72,680 | | Total Liabilities | (87,501) | (68,865) | (140,780) | (73,157) | (55,484) | | Net Assets/(Liabilities) | 28,108 | 19,425 | (21,135) | 2,105 | 17,196 |