Cryptocurrency Mining and Data Centers - The cryptocurrency mining market faced challenges and opportunities in 2023, with the company optimizing its data centers to enhance efficiency and maintain competitiveness [8]. - The company successfully constructed and commissioned its first data center in Indiana, USA, within six months, achieving approximately 90% capacity sold and stable operations for three months [8]. - The company has ceased operations of its data center in mainland China after selling related companies, focusing on maintaining existing operations in Hong Kong [8]. - The US data center, which commenced operations in December 2023, is expected to generate revenue of around HKD 4,000,000 in its first year [16]. - The Hong Kong data center generated revenue of approximately HKD 18,000,000 since its operation began in November 2021 [16]. - The total revenue from data center services and leasing for the year was approximately HKD 22,000,000, a decrease of about HKD 4,600,000 compared to the same period last year, primarily due to cryptocurrency market volatility and supply chain issues [17]. - The US data center has a maximum processing capacity of approximately 11 megawatts [16]. - The Hong Kong data center has a maximum processing capacity of approximately 1,400 kilowatts [16]. Financial Performance and Revenue - The group recorded total revenue of approximately HKD 25,200,000 for the year, a decrease of HKD 4,400,000 compared to HKD 29,600,000 in 2022 [32]. - Revenue from the big data center services segment was approximately HKD 22,000,000, down HKD 4,600,000 from HKD 26,600,000 in the same period of 2022 [32]. - The lending business generated revenue of approximately HKD 3,200,000 for the year [22]. - The lending business generated revenue of approximately HKD 3,200,000, an increase of HKD 200,000 from HKD 3,000,000 in 2022 [33]. - The group recorded a loss of approximately HKD 30,500,000 for the year, a reduction of 46.4% compared to a loss of HKD 56,900,000 in the same period of 2022 [34]. - Gross profit from the big data center services increased by approximately HKD 4,200,000 due to impacts from cryptocurrency market volatility and supply chain issues [34]. Lending Activities and Risk Management - A provision of approximately HKD 8,700,000 was made for loans due to a decrease in the valuation of mortgaged assets [21]. - The company extended the repayment date of a loan amounting to HKD 30,000,000 by an additional 24 months, maintaining an annual interest rate of 10% [18]. - The company has implemented internal control measures to manage risks associated with its lending activities [23]. - The lending monitoring team conducts credit risk assessments based on various financial documents and client evaluations [24]. - The group operates a lending business in Hong Kong, facing risks from borrower defaults, making credit assessment and collateral management critical [173]. Market Outlook and Strategic Initiatives - The company remains optimistic about the future of the cryptocurrency mining industry, anticipating improvements in efficiency and sustainability as the ecosystem matures [9]. - The company acknowledges the increasing acceptance of cryptocurrency as a legitimate asset, driven by growing institutional investor interest [7]. - The company aims to leverage partnerships and innovations to explore the potential of blockchain technology across various industries [11]. - The group plans to invest resources in blockchain technology and Web 3.0 applications, following the Hong Kong government's policy declaration on virtual assets [48]. - The group is developing data centers overseas, particularly in North America and Southeast Asia, to expand its big data center business [49]. Corporate Governance and Board Structure - The company has adhered to all corporate governance codes as per GEM listing rules, except for the monthly updates to the board, which were not consistently provided [72]. - The board consists of six members, with three executive directors and three independent non-executive directors, ensuring a balance of skills and experience [77]. - The independent non-executive directors represent over one-third of the board, complying with GEM listing rules [83]. - The board is responsible for leading and controlling the group, ensuring the best interests of shareholders and stakeholders are considered [85]. - The company has established three board committees: audit committee, nomination committee, and remuneration committee, each with defined responsibilities and sufficient resources [112]. Diversity and Inclusion - The board has adopted a diversity policy, emphasizing the importance of gender diversity, with currently 25% of senior staff being female and 33% of all employees being female [96]. - The board consists of six members, including one female director, and aims to avoid a single gender in its composition [96]. - The company aims to enhance its board's gender diversity by actively seeking female candidates [96]. - The nomination committee is responsible for identifying and evaluating candidates for board positions [99]. Shareholder Communication and Engagement - The company emphasizes the importance of effective communication with shareholders and stakeholders to strengthen investor relations [156]. - The company maintains effective communication with shareholders through various channels, ensuring equal and timely access to information [155]. - The board of directors encourages shareholder participation and welcomes questions during the annual general meeting [154]. - The company has established multiple channels for ongoing communication with shareholders, including printed reports and online access [157]. Risk Factors and Compliance - The group faces risks related to economic and public health conditions, including potential disruptions from pandemics or natural disasters, which may lead to conservative decision-making [166]. - The group relies heavily on stable electricity supply and pricing for its data center operations, with high electricity costs impacting performance [168]. - Customer concentration risk exists, as the group's data center services depend on a small number of clients, which could adversely affect business performance if contracts are terminated [170]. - Poor management of accounts receivable could lead to cash flow risks, affecting the group's ability to meet financial obligations [171]. - The group has not faced any significant environmental claims, lawsuits, or penalties during the year, indicating compliance with environmental policies [175]. Financial Management and Reporting - The company reviewed its financial performance and reports quarterly [25]. - The audit committee conducted a review of the effectiveness of the internal audit function [25]. - The independent auditor's report confirms the integrity of the group's consolidated financial statements, with audit fees totaling HKD 2,238,000, including HKD 908,000 for audit services and HKD 1,330,000 for non-audit services [143]. - The board is responsible for ensuring that the financial statements reflect the true and fair view of the company's performance and cash flows [131]. - The company has implemented a clear process for selecting and recommending candidates for board positions, ensuring independence and conflict of interest considerations [104].
加幂科技(08198) - 2023 - 年度财报