Annual Report 2020 Corporate Information
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Contents Corporate Information 2–3 Chairman’s Statement 4–5 Management Response and The Board’s Plans/ Actions to Disclaimer Opinion 6–8 Management Discussion and Analysis 9–23 Corporate Governance Report 24–39 Environmental, Social and Governance Report 40–63 Biographical Details of Directors and Senior Management 64–68 Report of Directors 69–84 Independent Auditor’s Report 85–88 Consolidated Statement of Profit or Loss and Other Comprehensive Income 89 Consolidated Statement of Financial Position 90–91 Consolidated Statement of Changes in Equity 92 Consolidated Statement of Cash Flows 93–94 Notes to the Consolidated Financial Statements 95–179 Financial Summary 180 CORPORATE INFORMATION BOARD OF DIRECTORS AUDIT COMMITTEE Executive Directors: Mr. Lau Kwok Fai Patrick (Chairman) Ms. Feng Xuelian Mr. Chan Yuk Sang Mr. Ng Kin Siu (Chief executive officer) Mr. Wan Chi Wai Anthony Mr. Gao Yunhong (re-designated as non-executive Director on 20 February 2020) REMUNERATION COMMITTEE Mr. Wang Jing (Chairman) Mr. Wan Chi Wai Anthony (Chairman) (appointed on 20 February 2020 and Mr. Gao Yunhong resigned on 26 November 2020) Mr. Chan Yuk Sang Non-executive Director: NOMINATION COMMITTEE Mr. Gao Yunhong (re-designated as Ms. Feng Xuelian non-executive Director on 20 February 2020) Mr. Chan Yuk Sang Mr. Wan Chi Wai Anthony Independent non-executive Directors: Mr. Lau Kwok Fai Patrick Mr. Chan Yuk Sang Mr. Wang Jing (Chairman) Mr. Wan Chi Wai Anthony (appointed on 20 February 2020 and Mr. Lau Kwok Fai Patrick resigned on 26 November 2020) Mr. Gao Yunhong (resigned on 20 February 2020) COMPANY SECRETARY Mr. Lee Chi Yung AUDITORS (appointed on 18 May 2020) HLB Hodgson Impey Cheng Mr. Yu Tsz Ngo Certified Public Accountants (resigned on 18 May 2020) 31/F, Gloucester Tower The Landmark CORPORATE DEVELOPMENT ADVISER 11 Pedder Street Mr. Zhang Huaqiao Central, Hong Kong HONG KONG LEGAL ADVISER REGISTERED OFFICE Ince & Co Cricket Square, Hutchins Drive 4404–10, 44th Floor P.O. Box 2681 One Island East Grand Cayman, KY1-1111 18 Westlands, Taikoo Place Cayman Islands Hong Kong HEAD OFFICE AND PRINCIPAL PLACE AUTHORISED REPRESENTATIVES OF BUSINESS IN HONG KONG Mr. Ng Kin Siu Room 3601, China Resources Building Mr. Lee Chi Yung 26 Harbour Road (appointed on 18 May 2020) Wanchai Mr. Yu Tsz Ngo Hong Kong (resigned on 18 May 2020) 02 STEERING HOLDINGS LIMITED • ANNUAL REPORT 2020 CORPORATE INFORMATION PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE Conyers Trust Company (Cayman) Limited Cricket Square, Hutchins Drive P.O. Box 2681 Grand Cayman, KY1-1111 Cayman Islands HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE Tricor Investor Services Limited Level 54, Hopewell Centre 183 Queen’s Road East Hong Kong PRINCIPAL BANKERS China Merchants Bank Bank of Communications The Hongkong and Shanghai Banking Corporation Limited WEBSITE ADDRESS www.steering.com.hk STOCK CODE 01826 STEERING HOLDINGS LIMITED • ANNUAL REPORT 2020 03 CHAIRMAN’S STATEMENT Dear Shareholders, On behalf of the board (the “Board”) of Directors (the “Directors”) of Steering Holdings Limited (the “Company”), it is my pleasure to present the audited financial statements of the Company and its subsidiaries (collectively referred to as the “Group”) for the year ended 31 December 2020. RESULTS During the year under review, due to the outbreak of coronavirus disease, the economies of China and Hong Kong slowed down, which lowered the revenue of the Group by 63.4% from HK$1,293.3 million for the corresponding period in 2019 to approximately HK$473.9 million. During the year under review, the Group recorded a gross loss of approximately HK$10.0 million as compared to a gross profit of approximately HK$585.6 million for the corresponding period in 2019. As a result of the above reasons, together with the impairment losses under expected credit loss model, net of reversal of approximately HK$311.1 million during the year under review, the Group recorded a net loss of approximately HK$429.5 million for the year under review as compared to a net profit of approximately HK$116.6 million for the corresponding period in 2019. BUSINESS REVIEW AND PROSPECT The year 2020 was a challenging year for the Group. Faced with the outbreak of the coronavirus disease, the China-US trade dispute and the significant slowing down of the economy of China, all segments of the Group were affected and it is anticipated that such impact will last until 2021. Notwithstanding these difficult circumstances, the Group possesses extraordinary talents and ample market experience in China and Hong Kong, which will allow us to improve our business performance and financial condition by leveraging existing resources to overcome challenges. In addition, the Group will enhance communication with its stakeholders, including banks, substantial shareholders and potential investors in Hong Kong and China to ensure the prompt availability of future funding, if needed. The Group is also considering undergoing merger and acquisition to accelerate business development, subject to sufficient financial resources. Financial information and technology services segment In the past few years, to diversify business and income source, the Group has been exploring the Chinese market to increase its shareholder’s value. However, during the year under review, the development of the loan facilitation industry was seriously affected by the rapidly changing business environment and the weakened consumer sentiment in China, leading to a plunge in the usage of financial information and technology services in the first half of 2020. In July 2020, the China Banking and Insurance Regulatory Commission promulgated the Interim Measures for the Administration of Internet Loans issued by Commercial Banks (《商業銀行互聯網貸款管理暫行辦法》), which defined the contents and areas of internet loans and improved risk management, management of compliance organization, consumer protection and regulatory measures during and after the transaction process. Such interim measures provide a direction for the compliance matters of the loan facilitation business. Therefore, the Group decided to reposition its loan facilitation business, which was suspended in the fourth quarter of 2020, to review the impact of the new policy on the Group while continuing to recover account receivables and prepayment from the said business. The Group will continue to monitor the development of Chinese policy and reposition its existing business model. In order to reduce the Group’s dependency on the Chinese consumer market, the Group has expanded its platform’s services to consumer debt management, through which the Group provides services to borrowers and credit services providers as a financial intermediary. In the fourth quarter, the Group has commenced preparation work for the relevant business. If the Group fully implements such a repositioning strategy, it is anticipated that the Group’s cash flow and liquidity position will be improved. 04 STEERING HOLDINGS LIMITED • ANNUAL REPORT 2020 CHAIRMAN’S STATEMENT Construction segment Due to the impact on the financial information and technology services segment of the Group, the financing banks have tightened the credit facility limits for the construction segment. Accordingly, the operation of the contracting and consultancy services suffered from substantial impact; coupled with economic downturn, lower income was recorded for the year under review. During the year under review, the Group disposed of two subsidiaries operating non-core business to mitigate the cashflow pressure on the operation of the contracting and consultancy services. In addition, the Company restructured the operation of contracting and consultancy services and disposed of the building consultancy business by signing a memorandum of understanding in October 2020. The formal sales and purchase agreement was signed in January 2021 and the transaction was completed in February 2021. We will concentrate resources for the development of the contracting business for the construction segment after restructuring. The Company will consider streamlining the existing Group structure by disposing of its non-core business in order to solidify the financial position of the Group. Looking forward, it is the Group’s long term development strategy to focus on the Chinese market and develop a financial information and technology services business while maintaining our strong footprint in the construction segment in Hong Kong. Also, the Group will leverage its talents and technological capabilities to collaborate with different strategic alliances to provide high value-added services to its customers in the PRC and Hong Kong. A NOTE OF APPRECIATION On behalf of the Board, I wish to take this opportunity to express our gratitude to our shareholders, clients, business partners and suppliers who trust and remain faithful to the Group. I would also like to express our sincere gratitude and appreciation to the management and staff for their commitment and contribution to the continued success of the business throughout the years. Feng Xuelian Executive Director Hong Kong, 30 March 2021 STEERING HOLDINGS LIMITED • ANNUAL REPORT 2020 05 MANAGEMENT RESPONSE AND THE BOARD’S PLANS/ACTIONS TO DISCLAIMER OPINION The Group carried out its loan facilitation business (the “Loan Facilitation business”) in the PRC through Shanghai Faye Yu Technology Company Limited (“Shanghai Faye Yu”) and its non-wholly owned subsidiaries (collectively, the “Shanghai Faye Yu Group”). The Group established Shanghai Faye Yu in April