Financial Performance - In 2023, the Group recorded a loss due to lower gross profit margins and higher expenses compared to a more substantial loss in 2022[14]. - The revenue from the Group's corrugated packaging business continued to decline compared to 2022, primarily due to sluggish post-pandemic economic recovery in Mainland China[12]. - The Group's revenue decreased by HK$200 million in 2023, representing a fall of 47.1% from HK$424.4 million in 2022 to HK$224.4 million in 2023[33]. - The net loss for the year decreased from HK$192.7 million in 2022 to HK$100.8 million in 2023, representing a reduction in loss by HK$91.9 million[44]. - The gross profit increased from HK$7.4 million in 2022 to HK$13.9 million in 2023, with the gross profit margin improving from 1.7% to 6.2%[35]. - Selling and distribution costs reduced by 33.6% from HK$18.8 million in 2022 to HK$12.5 million in 2023[37]. - Administrative expenses decreased by 48.0% from HK$90.5 million in 2022 to HK$47.0 million in 2023[37]. - Finance costs decreased from HK$6.2 million in 2022 to HK$3.6 million in 2023 due to lower borrowing levels[43]. Debt and Capital Management - The Group maintained low bank borrowings at the end of the financial year, continuing a track record of close to "zero" bad or doubtful debts[14]. - As of December 31, 2023, the Group's bank balances and cash were HK$47.3 million, down from HK$110.8 million in 2022[45]. - Bank borrowings decreased from HK$98.1 million at December 31, 2022, to HK$72.8 million at December 31, 2023[45]. - The current ratio decreased from 1.7 in 2022 to 0.84 in 2023, primarily due to a bank loan of HK$52.4 million due for repayment in 2024[47]. - The group aims to maintain low debt levels and a healthy balance sheet while focusing on price rising power, production efficiency, and reducing raw material wastage to achieve profitability in the foreseeable future[55][59]. Operational Challenges - The business environment for the corrugated packaging industry is expected to remain challenging due to geopolitical tensions and sluggish global and domestic demand[21]. - The Group's corrugated packaging revenue relies mainly on Chinese domestic sales, which have been affected by shrinking demand in the industry[12]. - The business environment for the corrugated packaging industry remains challenging due to slower-than-expected economic recovery and geopolitical tensions[55][59]. Internal Controls and Governance - The Company has adopted the Corporate Governance Code as the basis for its governance practices, ensuring compliance with all provisions except for C.2.1, D.3.3, and E.1.2[139]. - The Company has established a corporate governance framework and policies to enhance oversight on business conduct[138]. - The Group is committed to regular evaluations of the effectiveness and efficiency of its internal control system and risk management[98]. - Enhanced internal control measures have been implemented at both the entity and activity levels, and these will continue in the current year[89]. - The Group has strengthened internal control measures at both corporate and operational levels, including enhanced review and monitoring procedures for approvals, payments, and tax treatments[98]. Tax Matters - The group has lodged appeals against tax-related decisions, and management believes it is probable that the taxation authority will accept their objections, leading to no provision for corporate income tax being made[67]. - The management's assessment of contingent liabilities related to tax matters remains uncertain, with ongoing appeals affecting the recognition of tax obligations[66][67]. - The company expects the court decision regarding the audit issues to be released before December 31, 2024, which will resolve the uncertainties related to the Decisions and the Tax Matter Notice[70]. - The company's management believes it is improbable that the group will have to pay the relevant tax amounts due to ongoing appeals and the lack of final decisions from the courts[74]. - The audit committee has reviewed the audit issues and agrees that no provision should be made under relevant Hong Kong Accounting Standards until an irrevocable court decision is made[74]. Corporate Governance - The Board of Directors consists of five members, including two Executive Directors and three Independent Non-executive Directors[147]. - The Company has independent non-executive directors with extensive experience in various industries, including packaging and manufacturing[125][129]. - The Company is committed to maintaining high corporate governance standards to safeguard shareholder interests and enhance corporate value[136]. - The Company has implemented a code of conduct for Directors' dealings in securities, ensuring strict adherence[144]. - The Company has established a Nomination Committee to identify suitable candidates for directorship, ensuring independent views are available to the Board[153]. Management and Workforce - The workforce as of December 31, 2023, was approximately 246 full-time staff, down from 360 in 2022[57][60]. - Mr. Tsui Yung Wai, the General Manager, has over 28 years of experience in the corrugated packaging industry[127]. - The Company provided new directors with onboarding training and legal advice to ensure they understand their responsibilities under listing rules and regulations[180].
合丰集团(02320) - 2023 - 年度财报