(Formerly known as Kakiko Group Limited) (Incorporated in the Cayman Islands with members’ limited liability) Stock code: 2225 ANNUAL REPORT 2019 Contents Contents Page Corporate Information 2 Chairman’s Statement 4 Management Discussion and Analysis 5 Biographical Details of Directors and Senior Management 13 Corporate Governance Report 18 Report of the Directors 33 Environmental, Social and Governance Report 45 Independent Auditor’s Report 58 Consolidated Statement of Profit or Loss and Other Comprehensive Income 65 Consolidated Statement of Financial Position 66 Consolidated Statement of Changes in Equity 68 Consolidated Statement of Cash Flows 69 Notes to the Consolidated Financial Statements 71 Four Years Financial Summary 151 Annual Report 2019 01 Corporate Information Corporate Information BOARD OF DIRECTORS Nomination Committee Executive Directors Mr. Chen Guobao (Chairman) (appointed on 19 July 2019) Mr. Chen Guobao (Chairman) Mr. Li Yunping (appointed on 19 July 2019) (appointed on 19 July 2019) Mr. Yan Jianjun (appointed on 19 July 2019) Mr. Wang Zhenfei (Chief Executive Officer) Mr. Fan Yimin (appointed on 19 July 2019) (appointed on 19 July 2019) Mr. Lau Kwok Fai Patrick Mr. Kuah Ann Thia (resigned on 19 July 2019) Mr. Lam Raymond Shiu Cheung Ms Dolly Hwa Ai Kim (resigned on 19 July 2019) (also known as Ms. Dolly Ke Aijin) Mr. Ong Shen Chieh (resigned on 19 July 2019) (resigned on 19 July 2019) Remuneration Committee Non-executive Director Mr. Yan Jianjun (Chairman) (appointed on 19 July 2019) Mr. Yang Fu Kang (Deputy Chairman) Mr. Wang Zhenfei (appointed on 19 July 2019) (appointed on 19 July 2019) Mr. Jiang Jiangyu (appointed on 19 July 2019) Mr. Li Yunping (appointed on 19 July 2019) Mr. Fan Yimin (appointed on 19 July 2019) Mr. Wang Huasheng (appointed on 19 July 2019) Mr. Lau Kwok Fai Patrick Mr. Jiang Jiangyu (appointed on 19 July 2019) Mr. Ong Shen Chieh (resigned on 19 July 2019) Mr. Lu Yong (resigned on 19 July 2019) Mr. Lam Raymond Shiu Cheung (resigned on 19 July 2019) Independent Non-executive Directors COMPANY SECRETARY Mr. Yan Jianjun (appointed on 19 July 2019) Mr. Fan Yimin (appointed on 19 July 2019) Mr. Wong Man Yiu (appointed on 1 November 2019) Mr. Lau Kwok Fai Patrick Mr. Cheung Ka Chun (appointed on 28 June 2019 Mr. Ong Shen Chieh and resigned on 1 November 2019) (also known as Mr. Wang Shengjie) Mr. Chan Yip Wang (appointed on 2 March 2019 (resigned on 19 July 2019) and resigned on 28 June 2019) Mr. Lam Raymond Shiu Cheung Mr. Kwok Siu Man (resigned on 2 March 2019) (resigned on 19 July 2019) AUTHORISED REPRESENTATIVES Audit Committee Mr. Wang Zhenfei Mr. Yan Jianjun (Chairman) Mr. Wong Man Yiu (appointed on 19 July 2019) Mr. Yang Fu Kang (appointed on 19 July 2019) INDEPENDENT AUDITOR Mr. Wang Huasheng (appointed on 19 July 2019) Mr. Fan Yimin (appointed on 19 July 2019) Foo Kon Tan LLP Mr. Lau Kwok Fai Patrick (a principal member of HLB International) Mr. Ong Shen Chieh (resigned on 19 July 2019) Public Accountants and Mr. Lam Raymond Shiu Cheung Chartered Accountants, Singapore (resigned on 19 July 2019) 24 Raffles Place #07-03 Clifford Centre Singapore 048621 (Partner-in-charge: Mr. Toh Kim Teck) 02 Jinhai International Group Holdings Limited Corporate Information LEGAL ADVISER HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE As to Hong Kong law Wan & Tang Boardroom Share Registrars (HK) Limited Solicitors of Hong Kong Room 2103B, 21/F 23/F, Somptueux Central 148 Electric Road 52 Wellington Street North Point, Hong Kong Central, Hong Kong PRINCIPAL BANKERS REGISTERED OFFICE Shanghai Pudong Development Bank Co. Ltd. Vistra (Cayman) Limited – Hong Kong Branch P. O. Box 31119 30/F, SPD Bank Tower Grand Pavilion, Hibiscus Way 1 Hennessy Road 802 West Bay Road, Grand Cayman Hong Kong KY1-1205 Cayman Islands DBS Bank Ltd HEADQUARTERS AND PRINCIPAL 12 Marina Boulevard PLACE OF BUSINESS IN SINGAPORE Marina Bay Financial Centre Tower 3 Singapore 018982 21B Senoko Loop Singapore 758171 OCBC Bank Ltd 65 Chulia Street PRINCIPAL PLACE OF BUSINESS IN OCBC Centre HONG KONG Singapore 049513 Room 2503, Cosco Tower United Overseas Bank Limited 183 Queen’s Road Central 1 Tampines Central 1 Sheung Wan, Hong Kong #02-03 UOB Tampines Centre Singapore 529539 PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE LISTING INFORMATION Ocorian Trust (Cayman) Limited Place: Main Board of The Stock Exchange of PO Box 1350 Hong Kong Limited Clifton House Stock code: 2225 75 Fort Street Board lot: 5,000 shares Grand Cayman KY1-1108 Cayman Islands COMPANY WEBSITE https://www.jin-hai.com.hk/ Annual Report 2019 03 Chairman’s Statement Chairman’s Statement On behalf of the Board of Directors (the “Board”), I am pleased to present the annual report of Jinhai International Group Holdings Limited (the “Company”) and its subsidiary corporations (collectively, the “Group”) for the financial year ended 31 December 2019 (the “Year” or “FY2019”). YEAR IN REVIEW FY2019 was a bittersweet year for the Group as the global economy was laden with uncertainties arising from the US-China trade war and the industry continues to remain competitive. Against this backdrop, the Singapore economy was not spared with a real GDP growth rate of just 0.7% year-on-year as compared to 3.4% recorded a year ago. Notwithstanding these adverse factors, the construction sector in Singapore recorded a 2.6% year-on-year growth on the back of increased demand. The Group posted a 9.4% increase in revenue to approximately S$51.9 million for FY2019, driven mainly by an increase in construction demand and the charge-out rate of foreign workers under its manpower outsourcing segment. This has led to a significant improvement in profit before taxation for the Year under review. LOOKING AHEAD Several unprecedented events have dampened market sentiments as we enter into 2020. Besides geopolitical tensions and a weakening global economy, the emergence of the COVID-19 pandemic has become one of the biggest disruptors, creating uncertainty and placing global economic and social resilience to the test. The near-term outlook for the construction sector in Singapore is bleak as the lockdowns and travel restrictions implemented by other countries disrupted the supply chain, adversely affecting some construction projects. The degree of impact of the pandemic on the Group’s business and financial performance cannot be determined now as the pandemic may persist for quite some time before it subsides. The Board is monitoring the situation closely and will keep shareholders informed of material developments as and when they arise. A NOTE OF APPRECIATION On behalf of the Board, I would like to express my heartfelt appreciation to our shareholders, customers, business associates, management and staff for the continuing and unwavering support through the years. Chen Guobao Chairman and Executive Director Hong Kong, 30 March 2020 04 Jinhai International Group Holdings Limited Management Discussion and Analysis Management Discussion and Analysis BUSINESS REVIEW AND OUTLOOK The Group is a Singapore-based service provider and mainly provides manpower outsourcing and ancillary services to building and construction contractors in the Republic of Singapore (“Singapore”). To a lesser extent, the Group also provides dormitory services, IT services and construction ancillary services (which comprise warehousing services, cleaning services and building maintenance works) in Singapore. The Group commenced the business of providing manpower outsourcing services in Singapore in 2006. For the Year under review, the Group recorded revenue of approximately S$51.9 million, an increase of approximately 9.4% over the previous year, benefiting from the recovery in Singapore’s construction demand in 2019. In addition, gross profit increased by approximately 39.3% to approximately S$12.4 million in FY2019 from approximately S$8.9 million in FY2018, while gross profit margin increased from approximately 18.7% in FY2018 to approximately 23.8% in FY2019. In January 2020, the Building and Construction Authority of Singapore projected the total construction demand to range between S$28 billion and S$33 billion in 2020, of which public sector construction demand is expected to reach between S$17.5 billion and S$20.5 billion. This is about 60% of the projected demand for 2020. Public sector construction demand is expected to be spurred by major infrastructure projects, such as the Integrated Waste Management Facility, infrastructure works for Changi Airport Terminal 5, Jurong Region MRT Line and Cross Island MRT Line. Although this may potentially translate into greater business opportunities for the Group, we remain cautious and expect to face some headwinds in 2020 given the recent outbreak of the novel coronavirus (the “Coronavirus”) which affected the demand for manpower for construction works due to construction projects schedule delays amidst disruption to construction materials supply. On the other hand, it is expected that the supply of manpower for construction works may be affected as a result of increased sick leave due to health advisories on medical leave of up to 5 days for workers with respiratory symptoms and unfounded fears of the Coronavirus. Under such circumstances, the Group has taken proactive steps to minimise any negative economic impact on its manpower outsourcing business in Singapore. The aforesaid impact which was beyond the control of the Group, may adversely affect the financial results of the Group for the six months ending 30 June 2020. The Board will continue to assess the impact of the Coronavirus on the Group’s business operations and financial performance and closely monitor the Group’s exposure to the risks and uncertainties in connection with the Coronavirus. SIGNIFICANT EVENT In May 2019, Full Fortune International Co., Ltd (“Full Fortune”) agreed to acquire 632,500,000 shares of the Company, representing approximately 51.42% of the issued share capital of the Company as at the date of the joint announcement dated 31 May 2019 from the then shareholders of the Company at a total consideration of approximately HK$257.1 million.