创辉珠宝(08537) - 2022 - 年度财报

CHAIRMAN'S STATEMENT CHAIRMAN'S STATEMENT The Chairman outlines the Group's vertically integrated jewelry business model, its key product lines, and future plans for expansion and social media marketing to drive long-term growth - The Group is a vertically integrated jeweler headquartered in Hong Kong, selling its own products through a network of seven retail stores under the 'CRANSON' brand[18] - Key products include gem-set jewelry and gold jewelry products manufactured in Shenzhen and Guangdong, China, alongside wholesale operations and trade in recycled gold products[19] - The Group plans to expand its jewelry design collections and retail network and explore social media marketing to pursue sustainable long-term growth once the economic environment improves[20] MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL REVIEW In FY2022, the Group's total revenue grew by 5.5% year-on-year to HK$107.3 million, driven by gold jewelry sales, but the annual loss widened from HK$0.28 million to HK$7.68 million due to reduced government subsidies and fair value losses on financial assets Revenue Total revenue for the fiscal year increased by 5.5% to HK$107.3 million, primarily driven by a 43.8% surge in gold jewelry sales, while retail business revenue grew by 13.4% Total Revenue | Indicator | FY2022 (HK$ million) | FY2021 (HK$ million) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | 107.3 | 101.7 | +5.5% | Revenue by Product | Revenue by Product | FY2022 (HK$ million) | FY2021 (HK$ million) | YoY Change | | :--- | :--- | :--- | :--- | | Gem-set jewellery products | 51.8 | 54.0 | -4.1% | | Gold jewellery products | 37.4 | 26.0 | +43.8% | | Trade in recycled gold products | 18.1 | 21.7 | -16.6% | Revenue by Business Channel | Revenue by Business Channel | FY2022 (HK$ million) | FY2021 (HK$ million) | YoY Change | | :--- | :--- | :--- | :--- | | Retail business | 78.0 | 68.8 | +13.4% | | Wholesale business | 11.2 | 11.2 | 0.0% | | Trade in recycled gold products | 18.1 | 21.7 | -16.6% | Gross Profit and Other Income/Loss Gross profit for the fiscal year rose by 5.0% to HK$29.2 million with a stable gross margin, but other income fell sharply due to the absence of prior-year government subsidies, and an other net loss was recorded due to fair value losses on financial assets Gross Profit and Gross Profit Margin | Indicator | FY2022 (HK$ million) | FY2021 (HK$ million) | YoY Change | | :--- | :--- | :--- | :--- | | Gross Profit | 29.2 | 27.8 | +5.0% | | Gross Profit Margin | 27.2% | 27.3% | -0.1pp | - Other income decreased significantly from HK$5.6 million to HK$1.0 million, mainly because the HK$4.2 million government anti-epidemic fund subsidy received in the prior year was not available this year[45] - An other net loss of HK$1.8 million was recorded, compared to a net gain of HK$1.3 million last year, primarily due to a HK$2.3 million fair value loss on financial assets at FVTPL[46] Expenses, Taxation and Dividend During the fiscal year, selling and distribution costs decreased while general and administrative expenses increased, and the Group recorded an income tax credit due to higher pre-tax losses in Hong Kong, with the Board recommending no dividend Expense Items | Expense Item | FY2022 (HK$ million) | FY2021 (HK$ million) | YoY Change | | :--- | :--- | :--- | :--- | | Selling and distribution costs | 21.3 | 22.0 | -3.2% | | General and administrative expenses | 14.7 | 12.7 | +15.7% | | Finance costs | 1.1 | 1.3 | -15.4% | - An income tax credit of HK$1.4 million was recorded for the year, up from HK$1.0 million last year, due to increased pre-tax losses in Hong Kong[54] - The Board does not recommend the payment of any dividend for the year ended 31 March 2022[55] LIQUIDITY AND FINANCIAL RESOURCES AND TREASURY POLICY As of 31 March 2022, the Group maintained a stable financial position with total assets of HK$129.2 million, a current ratio of 1.99, and believes its financial resources are sufficient for its operations under a prudent treasury policy Key Financial Position Indicators | Indicator | 31 March 2022 (HK$ million) | 31 March 2021 (HK$ million) | | :--- | :--- | :--- | | Total assets | 129.2 | 136.2 | | Total liabilities | 56.2 | 55.3 | | Shareholders' equity | 73.0 | 80.9 | | Total interest-bearing borrowings | 28.3 | 31.3 | Key Financial Ratios | Ratio | 31 March 2022 | 31 March 2021 | | :--- | :--- | :--- | | Current ratio | 1.99 times | 1.96 times | | Gearing ratio | 38.8% | 38.7% | - The Group adopts a prudent treasury policy with centralized treasury activities, and cash is generally held in Hong Kong dollars with major licensed banks in Hong Kong[66] - As of 31 March 2022, the Group had 85 employees (2021: 90 employees)[85] PRINCIPAL RISKS AND UNCERTAINTIES and OUTLOOK The Group faces key risks including raw material price volatility and economic challenges from COVID-19, but plans to expand its product lines, retail network, and social media marketing for future growth - The Group's principal risks include: - Fluctuation in prices of jewelry raw materials - Uncertainty in the renewal of retail store leases - Sustainability of profitability - Liquidity risk from a high gearing ratio - Impact of the economic downturn caused by COVID-19 on product demand[93] - Looking ahead, the Group plans to expand its jewelry design collections, enlarge its retail network, and explore extending marketing activities to social media as the economic environment improves[95] BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT This section details the professional backgrounds and responsibilities of the executive directors, independent non-executive directors, and senior management, highlighting the extensive industry experience of the founding family members and the diverse expertise of the independent directors - The executive director team primarily consists of founding family members, including Chairman and CEO Mr. Fu Town Kong, Ms. Cheung Lai Yuk responsible for procurement, and Ms. Fu Wan Ling overseeing overall strategy and administration, all with over 20 years of experience in the jewelry industry[99][101][104] - The independent non-executive director team, comprising Mr. Chan Cheong Tat, Mr. Chan Tsz Ming, and Mr. Wong Wing Keung, provides independent oversight with their profound professional backgrounds in taxation, accounting, auditing, and law[113][120][123] - Senior management includes Mr. Weng Kam Keung, Head of Wholesale and Retail, who has over 20 years of experience in the jewelry industry and is responsible for overseeing the Group's wholesale and retail operations[130] CORPORATE GOVERNANCE REPORT BOARD AND COMMITTEES The Board comprises six members, including three independent non-executive directors, and has established Audit, Remuneration, and Nomination Committees, with the only deviation from the Corporate Governance Code being the combined role of Chairman and CEO - The Board consists of six members: three executive directors (Mr. Fu Town Kong, Ms. Cheung Lai Yuk, Ms. Fu Wan Ling) and three independent non-executive directors (Mr. Chan Cheong Tat, Mr. Wong Wing Keung, Mr. Chan Tsz Ming), meeting the requirement for INEDs to comprise over one-third of the Board[144][153] - The Company deviates from the Corporate Governance Code's provision that the roles of Chairman and CEO should be separate, with Mr. Fu Town Kong holding both positions; the Board believes this arrangement is in the Group's best interest due to his extensive experience and the presence of sufficient checks and balances[136][137] Board Committees | Committee | Chairman | Members | | :--- | :--- | :--- | | Audit Committee | Mr. Chan Tsz Ming (INED) | Mr. Chan Cheong Tat (INED), Mr. Wong Wing Keung (INED) | | Remuneration Committee | Mr. Chan Tsz Ming (INED) | Mr. Fu Town Kong (ED), Mr. Wong Wing Keung (INED) | | Nomination Committee | Mr. Fu Town Kong (ED) | Mr. Chan Cheong Tat (INED), Mr. Wong Wing Keung (INED) | INTERNAL CONTROLS AND RISK MANAGEMENT The Board confirms its responsibility for the effectiveness of the Group's internal control and risk management systems, which it reviewed and deemed effective, and currently does not have an internal audit function due to the Group's size - The Board acknowledges its responsibility for the effectiveness of the internal control and risk management systems and, having reviewed them during the year, considers them effective in financial, operational, compliance, and risk management aspects[205][206] - Given the scale of the Group's operations, an internal audit function has not been established; the Board considers the existing monitoring mechanisms adequate and will continuously review the need for such a department[207] - The Group utilizes a POS system as its primary IT platform to support business operations, effectively recording sales and inventory changes to help management assess the performance of each retail store and market demand[219][220] SHAREHOLDER RELATIONS AND OTHER POLICIES The company has established a dividend policy based on multiple factors and has clear procedures for shareholders to convene general meetings, with no significant changes to its constitutional documents during the reporting period - The Company's dividend policy states that the Board will consider multiple factors when declaring dividends, including financial performance, retained earnings, capital expenditure needs, liquidity, and the overall economic environment[225][226] - To protect shareholder rights, shareholders holding not less than one-tenth of the Company's paid-up share capital have the right to make a written request for the Board to convene a special general meeting[227][229] REPORT OF DIRECTORS Business and Financial Overview This section outlines the Group's principal activities in jewelry retail, wholesale, and recycled gold trading, confirms no dividend recommendation for the year, and discloses a relatively dispersed customer and supplier base - The Group is principally engaged in the retail business of its proprietary brand 'CRANSON', supplemented by jewelry wholesale and trade in recycled gold products[243] - The Board does not recommend the payment of any final dividend for the year ended 31 March 2022[257] - For the year ended 31 March 2022, the five largest customers accounted for approximately 5% of total revenue, while the five largest suppliers accounted for approximately 18% of total purchases[263] Share Capital and Incentive Schemes This section details the Company's equity incentive plans, noting that while shares have been purchased for the Share Award Scheme, none have been granted, and no options have been granted under the Share Option Scheme, while confirming compliance with the public float requirement - The Company adopted a Share Award Scheme on 19 March 2021; as of 31 March 2022, the trustee had purchased 9,470,000 shares for the scheme, but no awarded shares have been granted yet[321][322][323] - The Company adopted a Share Option Scheme on 6 March 2019, but no options have been granted, exercised, cancelled, or lapsed from its adoption to 31 March 2022[340] - Based on public information and to the knowledge of the Directors, the Company has maintained a public float of not less than 25%, in compliance with the GEM Listing Rules[361] ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT Environmental The Group is committed to sustainable development, managing emissions through filtration and energy-saving measures, and has disclosed detailed consumption data for energy, water, and packaging materials, while also monitoring climate-related operational risks Greenhouse Gas Emissions | Greenhouse Gas Emissions (tCO2e) | FY2022 | FY2021 | | :--- | :--- | :--- | | Scope 1 (Direct Emissions) | 7.64 | - | | Scope 2 (Indirect Emissions) | 135.15 | - | | Total Emissions | 142.79 | 169.09 | | Emission Intensity (tCO2e/employee) | 1.68 | 1.88 | Resource Consumption | Resource Consumption | FY2022 | FY2021 | | :--- | :--- | :--- | | Total energy consumption (kWh) | 291,081.39 | 340,002.24 | | Total water consumption (m³) | 984.50 | 1,175.84 | | Total packaging material (tonnes) | 0.59 | 0.64 | Non-hazardous Waste Generation | Non-hazardous Waste Generation (tonnes) | FY2022 | FY2021 | | :--- | :--- | :--- | | Paper | 0.40 | 0.41 | | Ink Cartridges | 3.55 | 3.16 | | Waste Batteries | 0.07 | 0.09 | | Total | 4.02 | 3.66 | Social The Group values its 85 employees, ensuring compliance with labor laws, providing a safe work environment with zero work-related fatalities or lost days, managing its supply chain responsibly, and upholding policies on product quality, anti-corruption, and community investment Employee Distribution (as of 31 March 2022) | Employee Distribution (as of 31 March 2022) | Number/Ratio | | :--- | :--- | | Total Number | 85 | | By Gender | Male: 33%, Female: 67% | | By Age | Below 30: 13%, 30-50: 41%, 51 and above: 46% | | By Region | Hong Kong: 70%, China: 30% | - In the past three years (for the years ended 31 March 2020, 2021, and 2022), the Group had no work-related fatalities or serious injuries, and there were no lost days due to work injury[523] - During the reporting period, all employees received training, with male employees averaging approximately 12 hours of training and female employees averaging approximately 13 hours[540] - The Group collaborates with approximately 20 suppliers, all from China, and has implemented stringent environmental and social risk management processes[547] - During the reporting period, there were no concluded legal cases regarding corrupt practices brought against the Company or its employees[575] INDEPENDENT AUDITOR'S REPORT INDEPENDENT AUDITOR'S REPORT The independent auditor, Grant Thornton Hong Kong Limited, issued an unmodified opinion on the consolidated financial statements for the year ended 31 March 2022, identifying 'valuation of inventories' as a key audit matter due to its material balance and the significant management judgment involved - The auditor concluded that the consolidated financial statements give a true and fair view of the Group's consolidated financial position as of 31 March 2022, and of its financial performance and cash flows for the year in accordance with Hong Kong Financial Reporting Standards, issuing an unmodified opinion[606] - The key audit matter was the valuation of inventories, as the carrying amount of HK$59,634,000 represents approximately 46% of the Group's total assets, and its valuation involves significant management judgment in determining provisions for inventories[613] CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 March 2022, the Group's revenue increased by 5.5% to HK$107.3 million, but the loss for the year widened to HK$7.68 million from HK$0.28 million in the prior year, resulting in a basic and diluted loss per share of 1.02 HK cents Key P&L Items | Item (HK$'000) | FY2022 | FY2021 | | :--- | :--- | :--- | | Revenue | 107,344 | 101,702 | | Gross profit | 29,154 | 27,769 | | Loss before tax | (9,065) | (1,244) | | Loss for the year | (7,683) | (280) | | Basic and diluted loss per share (HK cents) | (1.02) | (0.04) | CONSOLIDATED STATEMENT OF FINANCIAL POSITION As of 31 March 2022, the Group's total assets stood at HK$129.2 million and total liabilities at HK$56.2 million, with inventories and bank borrowings being the largest components of assets and liabilities, respectively Key Balance Sheet Items | Item (HK$'000) | 31 March 2022 | 31 March 2021 | | :--- | :--- | :--- | | Non-current assets | 36,377 | 30,006 | | Current assets | 92,791 | 106,228 | | Of which: Inventories | 59,634 | 61,568 | | Of which: Bank balances and cash | 20,572 | 32,021 | | Total assets | 129,168 | 136,234 | | Current liabilities | 46,592 | 54,192 | | Of which: Bank borrowings | 28,295 | 31,324 | | Non-current liabilities | 9,626 | 1,101 | | Total liabilities | 56,218 | 55,293 | | Net assets | 72,950 | 80,941 | CONSOLIDATED STATEMENT OF CASH FLOWS For the fiscal year, the Group generated HK$6.88 million in net cash from operating activities, while net cash used in investing and financing activities led to a decrease in cash and cash equivalents to HK$20.57 million at year-end Key Cash Flow Items | Item (HK$'000) | FY2022 | FY2021 | | :--- | :--- | :--- | | Net cash generated from operating activities | 6,883 | 1,267 | | Net cash used in investing activities | (3,407) | (8,374) | | Net cash used in financing activities | (14,927) | (4,296) | | Net decrease in cash and cash equivalents | (11,451) | (11,403) | | Cash and cash equivalents at beginning of year | 32,021 | 43,429 | | Cash and cash equivalents at end of year | 20,572 | 32,021 | FINANCIAL SUMMARY FINANCIAL SUMMARY This section provides a five-year summary of the Group's key financial data, showing a declining revenue trend since FY2019 and consecutive pre-tax losses in the last three years Five-Year Financial Summary | Item (HK$'000) | 2022 | 2021 | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 107,344 | 101,702 | 119,869 | 175,589 | 173,020 | | (Loss)/profit before tax | (9,065) | (1,244) | (6,854) | 3,908 | 8,012 | | (Loss)/profit for the year | (7,683) | (280) | (5,484) | 2,223 | 4,835 | | Total assets | 129,168 | 136,234 | 137,335 | 157,471 | 138,196 | | Total liabilities | (56,218) | (55,293) | (55,730) | (69,692) | (84,813) | | Total equity | 72,950 | 80,941 | 81,605 | 87,779 | 53,383 |