PROSPEROUSPRINT：AnnualReport2020.pdf

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1、8385_Prosperous Printing_AR20_CR_A01_op.pdf 1 25/3/2021 上午10:04Annual Report 2020 1CHARACTERISTICS OF THE GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED(THE“STOCK EXCHANGE”)GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than ot

2、her companies listed on the Stock Exchange.Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.The greater risk profile and other characteristics of GEM mean that it is a market mo

3、re suited to professional and other sophisticated investors.Given the emerging nature of companies listed on GEM,there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given th

4、at there will be a liquid market in the securities traded on GEM.Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this report,make no representation as to its accuracy or completeness and expressly disclaim any liability

5、whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this report.This report,for which the directors(the“Directors”)of Prosperous Printing Company Limited(the“Company”,together with its subsidiaries,the“Group”)collectively and individually accep

6、t full responsibility,includes particulars given in compliance with the Rules governing the Listing of Securities on the GEM of the Stock Exchange(the“GEM Listing Rules”)for the purpose of giving information with regard to the Company.The Directors,having made all reasonable enquiries,confirm that,t

7、o the best of their knowledge and belief,the information contained in this report is accurate and complete in all material respects and not misleading or deceptive and there are no other matters the omission of which would make any statement herein or this report misleading.Prosperous Printing Compa

8、ny Limited2ContentsCorporate Information3Highlights4Chairmans Statement5Profiles of Directors and Senior Management7Management Discussion and Analysis11Corporate Governance Report19Environmental,Social and Governance Report29Directors Report50Independent Auditors Report60Consolidated Statement of Pr

9、ofit or Loss66Consolidated Statement of Profit or Loss and Other Comprehensive Income67Consolidated Statement of Financial Position68Consolidated Statement of Changes in Equity70Consolidated Statement of Cash Flows71Notes to the Financial Statements72Five-Year Financial Summary146Annual Report 2020

10、3CORPORATE INFORMATIONBOARD OF DIRECTORSExecutive DirectorsMr.Lam Sam Ming(Chairman)Ms.Yao Yuan Ms.Chan Sau PoIndependent non-executive DirectorsMs.Cheung Yin Mr.Wong Hei Chiu Mr.Leung Vincent Gar-GeneAUDIT COMMITTEEMs.Cheung Yin(Chairman)Mr.Wong Hei Chiu Mr.Leung Vincent Gar-GeneREMUNERATION COMMIT

11、TEEMr.Wong Hei Chiu(Chairman)Ms.Cheung Yin Mr.Lam Sam MingNOMINATION COMMITTEEMr.Lam Sam Ming(Chairman)Mr.Wong Hei Chiu Ms.Cheung YinRISK MANAGEMENT COMMITTEEMr.Lam Sam Ming(Chairman)Ms.Chan Sau Po Ms.Yao YuanCOMPANY SECRETARYMr.Chen Kun(Solicitor of HKSAR)AUTHORISED REPRESENTATIVESMr.Lam Sam Ming M

12、s.Chan Sau PoCOMPLIANCE OFFICERMs.Chan Sau PoREGISTERED OFFICE,HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG3/F,Yip Cheung Centre 10 Fung Yip Street Chai Wan Hong KongSHARE REGISTRAR AND TRANSFER OFFICETricor Investor Services Limited Level 22 Hopewell Centre 183 Queens Road East Hong Kon

13、gPRINCIPAL BANKERSBank of China(Hong Kong)Limited Hang Seng Bank Limited The Hongkong and Shanghai Banking Corporation Limited Standard Chartered Bank(Hong Kong)LimitedHONG KONG LEGAL ADVISORJimmie K.S.Wong&PartnersAUDITORCrowe(HK)CPA Limited 9/F Leighton Centre 77 Leighton Road Causeway Bay Hong Ko

14、ngCOMPANYS WEBSITEwww.prosperous-printing-.hkSTOCK CODE8385Prosperous Printing Company Limited4HIGHLIGHTSFINANCIAL HIGHLIGHTS The revenue of the Group was approximately HK$278.9 million for the year ended 31 December 2020 representing a decrease of approximately 39.6%from approximately HK$461.6 mill

15、ion for the year ended 31 December 2019.Such decrease was mainly due to decrease of sales order due to COVID-19 and overall global economic uncertainty.The gross loss was approximately HK$4.4 million for the year ended 31 December 2020,as compared to the gross profit of approximately HK$133.4 millio

16、n for the year ended 31December 2019 primarily due to the decrease in the sales order due to COVID-19 and overall global economic uncertainty.The net loss for the period was approximately HK$100.8 million for the year ended 31 December 2020,as compared to the net profit of approximately HK$18.2 mill

17、ion recorded for the year ended 31 December 2019,which was mainly due to(i)a decline in revenue by approximately 39.6%as a result of COVID-19 and overall global economic uncertainty;(ii)a decrease in profit margin mainly attributable to the aggressive pricing strategy in the challenging business env

18、ironment during the year;and(iii)impairment losses on certain inventories and accounts receivables.The Board does not recommend the payment of a final dividend for the year ended 31 December 2020(for the same period ended 31 December 2019:nil).Annual Report 2020 5CHAIRMANS STATEMENTDear Shareholders

19、,On behalf of the Board of Directors(the“Board”)of the Company,I am pleased to present the annual report of the Company for the year ended 31 December 2020(the“the Year”).Unless otherwise stated,the capitalized terms used in this annual report shall have the same meaning as those used in the prospec

20、tus(“Prospectus”)dated 29 November 2017.BUSINESS REVIEWThe Group is a provider of printing products to Hong Kong-based print brokers with customers in overseas markets and to international publishers mainly located in the United States of America(the“U.S.”),the United Kingdom(the“U.K.”),Australia an

21、d Europe(excluding U.K.).The products comprise mainly books and other paper-related products.Paper and ink are the principal raw materials of the Group.The two production sites were the Shenzhen Factory and the Hong Kong Factory.Each of these factories is a self-functioning printing and production a

22、rm of the Group,and they share the printing workload allocated by the management.The Group experienced sharp decrease in revenue,and such decrease was mainly due to COVID-19 and overall global economic uncertainty.FINANCIAL REVIEWThe revenue of the Group was approximately HK$278.9 million for the ye

23、ar ended 31 December 2020 representing a decrease of approximately 39.6%from approximately HK$461.6 million for the year ended 31 December 2019.The net loss was approximately HK$100.8 million for the year ended 31 December 2020,as compared to the net profit of approximately HK$18.2 million recorded

24、for the year ended 31 December 2019.Such decrease was mainly due to decrease of sales order due to COVID-19 and overall global economic uncertainty.OUTLOOKLooking forward,there are certain risks that the Group will face in further development such as challenges from the uncertainty of economies by r

25、eason of,among others,the U.S.-China trade dispute,COVID-19,an increase in paper cost and technological advancements in publishing and new forms of information dissemination.As a result of COVID-19 and chain effect,the Group considers that the business environment would continue to be challenging in

26、 2021 and will adopt cost-control measures to sustain its business.The Group plans to implement the following business strategies:improving its equipment and the level of automation,expanding customer base and strengthening sales and marketing coverage,and continuing to attract and retain top talent

27、 in the industry.Prosperous Printing Company Limited6CHAIRMANS STATEMENTDuring the Year,the global economy was severely impacted by the outbreak of COVID-19 pandemic(the“Pandemic”).The Pandemic severely affected the demand for print products.Our Groups performance was also adversely affected.For det

28、ails of the financial review and business review,please refer to the section of“Management Discussion and Analysis”in this annual report.Since late-January 2020,the Group has implemented several measures including epidemic prevention and control,cancellation and rescheduling visits of customers in a

29、ccordance with relevant national and local regulations on epidemic prevention and control,to ensure the health and safety of customers and employees.The Groups specific prevention measures include(i)rescheduled the date of resumption of work of the Shenzhen Factory after Chinese New Year to 17 Febru

30、ary 2020;and(ii)requesting each employee to report his/her travel history and any symptoms;and(iii)maintaining a safe and hygienic workplace.The Board pays great attention to the development of the COVID-19 and makes every effort on epidemic prevention and control and daily operation management.With

31、 the vaccination and the global collective efforts to combat the Pandemic,the Group remains cautiously optimistic that the Groups performance will improve in 2021.APPRECIATIONI would like to express my gratitude on behalf of the Group to all customers,suppliers,subcontractors,business partners and p

32、rofessional parties for their support to our business development.I also take this opportunity to thank for the management and employees of the Group for their contribution and commitment throughout the year.Mr.Lam Sam Ming ChairmanHong Kong,31 March 2021Annual Report 2020 7PROFILES OF DIRECTORS AND

33、 SENIOR MANAGEMENTEXECUTIVE DIRECTORSMr.Lam Sam Ming(林三明)(“Mr.Lam”),aged 59,was appointed as our Director on 26 April 1993 and was re-designated as our executive Director on 8 September 2016.He is also the chairman and CEO of our Group and a Controlling Shareholder.Mr.Lam is primarily responsible fo

34、r the overall management and formulation of business strategy of our Group.He also oversees the overall financial and operation functions of our Group.Mr.Lam has over 37 years of experience in the printing industry.Mr.Lam began his career in the printing industry when he was registered as an apprent

35、ice of The Hong Kong Printers Association in September 1976.Prior to founding our Group,Mr.Lam started his career in the industry when he was first employed as an apprentice by Hing Yip Printing Co.Ltd(“HYP”).He spent over 10 years with HYP between January 1983 and March 1993 and his last position a

36、t HYP was a manager of the production department.Mr.Lam established our Group through L&L in December 1992.Since then he has been in charge of the overall business strategies and operation of our Group.Please refer to the section headed“History,Reorganisation and Corporate Structure Our Corporate De

37、velopment”in the Prospectus for further details.Currently,Mr.Lam assumes various directorships in our Group including those in Printplus,Great Wall and Century Sight.Mr.Lam is the spouse of Ms.Yao who is also our executive Director.Mr.Lam was the sole director of Topping Shiny Limited(“Topping Shiny

38、”),which was incorporated in Hong Kong,prior to its dissolution on 17 March 2017.The principal business of Topping Shiny was the provision of personalised photo albums.Topping Shiny was dissolved by way of deregistration under section 750 of the Companies Ordinance.Under this section,an application

39、for deregistration can only be made if(a)all the members of the company agreed to such deregistration;(b)the company has never commenced business or operation,or has ceased to carry on business or ceased operation for more than 3 months immediately before the application;and(c)the company has no out

40、standing liabilities.Mr.Lam has not held any current or past directorships in any publicly listed companies whether in Hong Kong or overseas,during the three years immediately preceding the date of this annual report.As at the date of this annual report,Mr.Lam is interested in 480,000,000 Shares hel

41、d through First Tech,which is wholly and beneficially owned by Mr.Lam.Mr.Lam is a director of First Tech.Ms.Yao Yuan(姚遠)(“Ms.Yao”),aged 44,was appointed as our Director on 10 March 2016 and was re-designated as our executive Director on 8 September 2016.Ms.Yao is primarily responsible for overseeing

42、 and liaising with local officials in relation to our Groups operations in the PRC.She has over 11 years of experience in the management of printing business and operations in the PRC.Prior to joining our Group,Ms.Yao was the general manager and a majority shareholder of Royal Step(SZ)which was our

43、Groups customer and sub-contractor during the Track Record Period(i.e.the three years ended 31 December 2019)and was primarily responsible for the overall management of the company,from 2008 to 2015.Ms.Yao was also the director of Royal Step Printing Company Limited,a company incorporated in Hong Ko

44、ng with limited liability and an Independent Third Party,from 2008 to 2015.Prosperous Printing Company Limited8PROFILES OF DIRECTORS AND SENIOR MANAGEMENTMs.Yao graduated from the University of Qiqihar(齊齊哈爾大學),the PRC,in July 1999 with a practicing diploma in Mechanical Design and Manufacturing(機械設計

45、及製造).Ms.Yao is the spouse of Mr.Lam who is also our executive Director.Ms.Yao has not held any current or past directorships in any publicly listed companies whether in Hong Kong or overseas,during the three years immediately preceding the date of this annual report.As at the date of this annual rep

46、ort,Ms.Yao is deemed to be interested in 480,000,000 Shares held by Mr.Lam,the spouse of Ms.Yao,through First Tech,which is wholly and beneficially owned by Mr.Lam.Ms.Chan Sau Po(陳秀寶)(“Ms.Chan”),aged 47,was appointed as our executive Director and chief financial controller of our Group on 8 Septembe

47、r 2016.Ms.Chan is primarily responsible for corporate financial planning,risk management,investor relations,accounting and treasury management of our Group.Ms.Chan joined our Group in February 1997 and has over 29 years of experience in accounting.Prior to joining our Group,she was employed by Steph

48、en Law&Company,an audit firm,as Audit Senior from September 1991 to February 1997.Ms.Chan obtained her higher diploma in accountancy from the Hong Kong Polytechnic University in 1999.Ms.Chan has not held any current or past directorships in any publicly listed companies whether in Hong Kong or overs

49、eas,during the three years immediately preceding the date of this annual report.INDEPENDENT NON-EXECUTIVE DIRECTORSMs.Cheung Yin(張延)(“Ms.Cheung”),aged 56,was appointed as an independent non-executive Director on15 November 2017.She is currently a financial controller of LWH Advisory Limited,a compan

50、y incorporated in Macau which is principally engaged in provision of various financial services.Since 18 January 2021,Ms.Cheung has been appointed an independent non-executive director of Joyas International Holdings Limited(SGX:E9L)which is listed on the Catalist of Singapore Exchange Limited.She i

51、s a Certified Public Accountant of the Hong Kong Institute of Certified Public Accountants and a Certified Practising Accountant of the CPA Australia.Ms.Cheung obtained a masters degree in Business Administration from the University of Wales,Newport in the United Kingdom in December 2009 and a Bache

52、lors degree in Business(Accountancy)from the Charles Sturt University in Australia in April 1991.Ms.Cheung worked for Coastal Greenland Limited which is listed on the main board of the Stock Exchange as a qualified accountant for the period from April 2004 to June 2007 and senior accounting manager/

53、accounting manager for the period from September 1995 to March 2004.She has over 28 years of experience in accounting,auditing and financial management.Ms.Cheung has not held any current or past directorships in any publicly listed companies whether in Hong Kong or overseas during the three years pr

54、eceding the date of this annual report.Mr.Wong Hei Chiu(黃禧超)(“Mr.Wong”),aged 54,was appointed as an independent non-executive Director on 15 November 2017.Mr.Wong has over 27 years of corporate finance and financial management experience in Hong Kong and the PRC.Mr.Wong is currently an executive dir

55、ector,chief financial officer and company secretary of Kingmaker Footwear Holdings Limited,a listed company on the Main Board of the Stock Exchange Annual Report 2020 9PROFILES OF DIRECTORS AND SENIOR MANAGEMENT(Stock Code:1170).From January 2018 to March 2019,Mr.Wong was an independent non-executiv

56、e director of Vico International Holdings Limited,whose shares are listed on the Main Board of Stock Exchange(stock code:1621).Mr.Wong has worked as the group financial controller and company secretary of Karce International Holdings Company Limited(now known as Jimei International Entertainment Gro

57、up Limited),a company listed on the Main Board of the Stock Exchange(Stock Code:1159)from June 2000 to July 2008;and as the finance director and company secretary of Wah Lee Resources Holdings Limited(now known as Kai Yuan Holdings Limited),a company listed on the Main Board of the Stock Exchange(St

58、ock Code:1215)from June 1996 to December 2000.Mr.Wong was also an independent non-executive director of Hong Wei(Asia)Holdings Company Limited,a company listed on the GEM of the Stock Exchange(Stock Code:8191),during the period from December 2013 to June 2016.Mr.Wong obtained an Executive Diploma in

59、 Corporate Governance and Sustainability Directorship from The Hong Kong Institute of Directors and completed the Prince of Wales Business Sustainability Programme from the University of Cambridge Institute for Sustainability Leadership in 2019.Mr.Wong obtained an Executive Masters degree in Busines

60、s Administration from The Chinese University of Hong Kong in November 2016 and a Bachelors degree in business administration from Lingnan University,Hong Kong in November 1996.He is a Certified Public Accountant(Practising),a fellow member of The Association of Chartered Certified Accountants in the

61、 United Kingdom,a fellow member of The Institute of Chartered Accountants in England and Wales and an associate member of Hong Kong Institute of Certified Public Accountants.Mr.Wong is also a fellow member of the Hong Kong Institute of Directors.Save as disclosed above,Mr.Wong has not held any curre

62、nt or past directorships in any publicly listed companies whether in Hong Kong or overseas during the three years preceding the date of this annual report.Mr.Leung Vincent Gar-Gene(梁家進)(“Mr.Leung”),aged 35,was appointed as an independent non-executive Director on 15 November 2017.Mr.Leung has over 1

63、2 years of experience in auditing,accounting,finance and management.He is currently a director of Gemcoast Limited,a private company in Hong Kong principally engaged in providing financial consultancy services to its clients.He is a member of Chartered Accountants in Australia and New Zealand and is

64、 a member of its Hong Kong Committee.Mr.Leung previously worked for PricewaterhouseCoopers within its financial assurance division in its Sydney and Hong Kong offices from January 2006 to May 2012 and from January 2013 to September 2014 respectively.From June to December 2012,Mr.Leung worked as the

65、group finance manager for Bega Cheese Limited,the shares of which are listed on the Australian Securities Exchange(ASX securities code:BGA).From 12 February 2018 to 22 February 2019,Mr.Leung served as an independent non-executive director of Martin Aircraft Company Limited(“Martin Aircraft”),the sha

66、res of which were listed on the Australian Securities Exchange.On 4 June 2018,Martin Aircraft was delisted because of the low trade volume of its shares,and to save listing and associated costs.Mr.Leung confirmed that the delisting of Martin Aircraft was voluntary,and he was not involved in the day-

67、to-day management of Martin Aircraft.To the best of the Directors knowledge,information and belief having made reasonable enquiries,there was no judgment or findings of fraud,dishonesty,any misconduct or wrongful act on the part of Mr.Leung involved in the delisting of Martin Aircraft.Prosperous Pri

68、nting Company Limited10PROFILES OF DIRECTORS AND SENIOR MANAGEMENTWith effect from 17 July 2020,Mr.Leung had become an independent non-executive director of Samson Paper Holdings Limited(“Samson”),a company incorporated in Bermuda with limited liability,the shares of which are listed on the main boa

69、rd of the Stock Exchange(stock code:731).For details,please refer to the announcement dated 20 July 2020.Mr.Leung obtained a bachelor of commerce degree from The University of New South Wales,Australia in March 2006.Mr.Leung has not held any current or past directorships in any publicly listed compa

70、nies whether in Hong Kong or overseas during the three years preceding the date of this annual report.SENIOR MANAGEMENTOur Board is assisted and supported by our senior management team,which currently comprises four members.The following table sets forth certain information of our senior management:

71、NameAgeDate of joining our GroupPositionMs.Wong Wai Sze(黃慧思)562 August 2010Vice President ManagementMr.Hu Min(胡民)603 October 1993Vice President ProductionMs.Wong Wai Sze(黃慧思)(“Ms.Wong”),aged 56,is the Vice President Management of our Group.She is primarily responsible for overseeing our Groups inter

72、nal audit,information technology affairs,and factory inspections.Ms.Wong has over 28 years of experience in the printing and publishing industry in Hong Kong.She joined our Group in August 2010.Prior to joining our Group,Ms.Wong worked at Regent Publishing Services Limited as a director of operation

73、s from August 1991 to March 2010.Ms.Wong has not held any current or past directorships in any publicly listed companies,whether in Hong Kong or overseas,during the three years immediately preceding the date of this annual report.Mr.Hu Min(胡民)(“Mr.Hu”),aged 60,is the Vice President Production of our

74、 Group.He is primarily responsible for overseeing our Hong Kong Factory and our Shenzhen Factory.Mr.Hu has over 25 years of experience in the printing and publishing industry in Hong Kong.Mr.Hu has not held any current or past directorships in any publicly listed companies,whether in Hong Kong or ov

75、erseas,during the three years immediately preceding the date of this annual report.COMPANY SECRETARYMr.Chen Kun(“Mr.Chen”)has been appointed as the Company Secretary with effect from 1 January 2021.Mr.Chen is a practicing solicitor in Hong Kong and was admitted in November 2011.Mr.Chen received his

76、Bachelor of Laws degree and the Postgraduate Certificate in Laws from the University of Hong Kong.For details,please refer to the announcement dated 31 December 2020.COMPLIANCE OFFICERMs.Chan Sau Po is the compliance officer of our Group.Please refer to the sub-section headed“Board of Directors Exec

77、utive Directors”above for her biographical details.Annual Report 2020 11MANAGEMENT DISCUSSION AND ANALYSISBUSINESS REVIEWThe Group is a provider of printing products to Hong Kong-based print brokers with customers in overseas markets and to international publishers mainly located in the United State

78、s of America(the“U.S.”),the United Kingdom(the“U.K.”),Australia and Europe(excluding U.K.).The products comprise mainly books and other paper-related products.Paper and ink are the principal raw materials of the Group.The two production sites were the factory in Shenzhen(the“Shenzhen Factory”)and th

79、e factory in Hong Kong(the“Hong Kong Factory”).Each of these factories is a self-functioning printing and production arm of the Group,and they share the printing workload allocated by the management.The Groups revenue decreased by approximately 39.6%from approximately HK$461.6 million for the year e

80、nded 31 December 2019,to approximately HK$278.9 million for the year ended 31 December 2020 due to decrease in sales order due to COVID-19 and overall global economic uncertainty.The Group recorded a net loss of approximately HK$100.8 million during the year ended 31 December 2020,as compared to a p

81、rofit of approximately HK$18.2 million during the year ended 31 December 2019,which was mainly due to(i)a decline in revenue by approximately 39.6%as a result of COVID-19 and overall global economic uncertainty;(ii)a decrease in profit margin mainly attributable to the aggressive pricing strategy in

82、 the challenging business environment during the year;and(iii)impairment losses on certain inventories and accounts receivables.During the past years,the Group had been receiving a stable and substantial volume of orders from a major customer on paper products which requires expedite delivery time.T

83、o accommodate the said customers orders which requires expedite delivery time,the Group usually placed orders with subcontractors for manufacture of the paper products before receiving the said customers orders.The Group customarily placed orders based on the sales volume of the previous year with a

84、dvance payments to their subcontractors,and followed this practice in the year 2020.However,due to the unprecedented and unexpected outbreak of COVID-19 pandemic,the said major customer has placed substantially fewer orders than in past years,and accordingly,the Group was not able to sell the produc

85、ts which were already manufactured by the subcontractors.As all the paper products are copyrighted,the Group could not resell to third parties but could only recycle them so as to save storage space,and had suffered losses.During the reporting period,the Group had entered into purchase agreements fo

86、r the purchase of a binding machine and a printing machine for the Hong Kong Factory.For details of the purchase of the printing machine,please refer to the announcements of the Company dated 26 and 27 February 2020.On 29 May 2020,the Group entered into a lease agreement to rent a warehouse in Shenz

87、hen(the“New Shenzhen Warehouse”)with effect from 1 June 2020.The New Shenzhen Warehouse will be mainly for use as warehouse since the Groups existing tenancy of the then warehouse in Shenzhen expired on 31 May 2020.For details,please refer to the announcements dated 29 May 2020 and 5 June 2020.The G

88、roups application for transfer of listing from GEM to Main Board lapsed during the reporting period,and the Directors will evaluate the re-submission of application as and when appropriate.Prosperous Printing Company Limited12MANAGEMENT DISCUSSION AND ANALYSISFUTURE PROSPECTSLooking forward,there ar

89、e certain risks that the Group will face in further development such as challenges from the uncertainty of economies by reason of,among others,COVID-19,the U.S.-China trade dispute,an increase in paper cost and technological advancements in publishing and new forms of information dissemination.Howev

90、er,we remain cautiously optimistic of the prospects and believe that the printing market will be sustainable in a steady and healthy way,and intend to continue to build the Groups competitive strengths so as to increase market share and profitability.To achieve its goal,the Group plans to implement

91、the following business strategies:improving its equipment and the level of automation,expanding customer base and strengthening sales and marketing coverage,and continuing to attract and retain top talent in the industry.In light of the breakout of respiratory illness caused by a novel coronavirus(“

92、COVID-19”)since late-January 2020,the Group has implemented several measures including epidemic prevention and control,cancellation and rescheduling visits of customers in accordance with relevant national and local regulations on epidemic prevention and control,to ensure the health and safety of cu

93、stomers and employees.The Groups specific prevention measures include(i)rescheduling the date of resumption of work of the Shenzhen Factory after Chinese New Year to 17 February 2020;and(ii)requesting the employees who have been to Hubei Province since 22 January 2020 to report for duty upon further

94、 notice from the Group;(iii)requesting each employee to report his/her travel history and any symptoms;and(iv)maintaining a safe and hygienic workplace.The Board pays great attention to the development of the COVID-19 and makes every effort on epidemic prevention and control and daily operation mana

95、gement.Despite that the uncertainty of the COVID-19 still subsists,the Groups Shenzhen Factory has resumed operation on 17 February 2020 and the Group is cautiously optimistic of the full-year performance in 2020.FINANCIAL REVIEWRevenueThe Group generates revenue primarily from the provision of prin

96、ting products to Hong Kong-based print brokers with customers in overseas markets and to international publishers mainly located in the U.S.,U.K.,Australia and Europe(excluding U.K.).The revenue decreased by approximately 39.6%from approximately HK$461.6 million for the year ended 31 December 2019,t

97、o approximately HK$278.9 million for year ended 31 December 2020 due to decrease in sales order due to COVID-19 and overall global economic uncertainty.Annual Report 2020 13MANAGEMENT DISCUSSION AND ANALYSISCost of salesThe cost of sales primarily consists of raw materials and consumables,staff cost

98、s,sub-contracting fees,depreciation and water and electricity.The cost of sales decreased by approximately 13.6%from approximately HK$328.1 million for the year ended 31 December 2019 to approximately HK$283.4 million for the year ended 31 December 2020 which is driven by the decrease in revenue.Gro

99、ss profit and gross profit marginGross profit of approximately HK$133.4 million recorded for the year ended 31 December 2019 and gross loss of approximately HK$4.4 million recorded for the year ended 31 December 2020.The decrease in gross profit was mainly attributable to the aggressive pricing stra

100、tegy in the challenging business environment amid the outbreak of Covid-19.Other incomeOther income mainly consists of the foreign exchange gain/loss,the profit arising from sales of scrap materials and income received from government subsidies.The Group recorded other income of approximately HK$25.

101、4 million during the year ended 31 December 2019 and HK$9.1 million during year ended 31 December 2020.The decrease was due to the exchange loss offset with the increase in the government grant and income from sale of scrap materials recorded during the year ended 31 December 2020.Other expensesOthe

102、r operating expenses primarily consists of professional fee incurred for the proposed transfer of listing from GEM to the Main Board of the Stock Exchange and expenses relating to relocation of Shenzhen Factory recorded as other operating expenses during the year ended 31 December 2019.Our other ope

103、rating expenses amounted to HK$16.7 million for the year ended 31 December 2019 and decreased to HK$nil for the year ended 31 December 2020,which was mainly due to expenses relating to relocation of Shenzhen Factory recorded as other operating expenses during the year ended 31 December 2019 and prof

104、essional fee for the Groups proposed transfer from GEM to Main Board of the Stock Exchange.Prosperous Printing Company Limited14MANAGEMENT DISCUSSION AND ANALYSISAdministrative expensesAdministrative expense primarily consists of staff costs and benefits,directors emoluments and depreciation.The adm

105、inistrative expenses decreased from approximately HK$73.1 million during the year ended 31 December 2019 to HK$67.9 million during the year ended 31 December 2020,which was mainly due to decrease in staff and office expenses.Finance costsThe Group recorded finance costs of approximately HK$8.8 milli

106、on during the year ended 31 December 2019 and HK$7.5 million during the year ended 31 December 2020.The finance costs decreased by approximately 14.8%in the year ended 31 December 2020 as compared to the same period in 2019.The decrease in finance costs was primarily due to decrease in hire-purchase

107、.Income taxIncome tax represents income tax paid or payable by the Group,at the applicable tax rates in accordance with the relevant laws and regulations in each tax jurisdiction the Group operates or domiciles.The Group had no tax payable in other jurisdiction other than Hong Kong and the PRC durin

108、g the year ended 31 December 2019 and 2020.The operations in Hong Kong are subject to the two-tiered profits tax rate regime,which the first HK$2 million of profits of qualifying entity will be taxed at 8.25%and profits above HK$2 million will be taxed at 16.5%.The operations in the PRC are subject

109、to an enterprise income tax rate of 25.0%.The Group recorded income tax of approximately HK$1.3 million during the year ended 31 December 2020(2019:HK$11.9 million).(Loss)/Profit for the periodAs a result of the foregoing,the year ended 31 December 2020 recorded loss of approximately HK$100.8 millio

110、n as compared to profit of approximately HK$18.2 million during the year ended 31 December 2019,which was mainly due to(i)a decline in revenue by approximately 39.6%as a result of COVID-19 and overall global economy uncertainty;(ii)a decrease in profit margin mainly attributable to the aggressive pr

111、icing strategy in the challenging business environment during the year;and(iii)impairment losses on certain inventories and accounts receivables.Annual Report 2020 15MANAGEMENT DISCUSSION AND ANALYSISLiquidity,Financial Resources and Capital StructureAs at 31 December 2020,the Group had net current

112、assets of approximately HK$7.3 million(as at 31 December 2019:net current asset approximately HK$85.7 million),of which the cash and cash equivalents were approximately HK$1.6 million.The Groups current ratio as at 31 December 2020 is 1.0(as at 31 December 2019:1.4).The gearing ratio as at 31 Decemb

113、er 2020 was 0.96(as at 31 December 2019:0.60)which is calculated on the basis of the Groups total bank loans,overdrafts and lease liabilities over the total equity.Total bank borrowings,overdrafts and lease liabilities for the Group amounted to approximately HK$200.2 million as at 31 December 2020(a

114、s at 31 December 2019:approximately HK$181.2 million).As at 31 December 2020,bank loans and overdrafts in the amounts of approximately HK$159.6 million within one year while the amounts of approximately HK$20.1 million are due after one year.The Group adopts centralized financing and treasury polici

115、es in order to ensure the Group funding is utilized efficiently.The Group also regularly monitors its liquidity requirements,its compliance with lending covenants and its relationship with bankers to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from ma

116、jor financial institutions to meet its liquidity requirements in the short and long term.Material uncertainty related to going concernThe Group reported a net loss of approximately HK$100.8 million and operating cash outflow of approximately HK$15.1 million for the year ended 31 December 2020,and as

117、 at 31 December 2020,the Group has bank loans and overdrafts amounting to approximately HK$159.6 million,which are due for repayment during the year ending 31 December 2021.The Groups pledged bank deposits and cash at bank and on hand only amounted to approximately HK$9.1 million and HK$1.6 million,

118、respectively,as at 31 December 2020.These conditions,along with other matters as set forth in Note 2(c)to the financial statements,indicate that a material uncertainty exists that may cast significant doubt on the Groups ability to continue as a going concern.The auditors report is not modified in r

119、espect of this matter.In view of such circumstances,the directors of the Company have given careful consideration to the future liquidity and performance of the Group and its available sources of financing in assessing whether the Group will have sufficient financial resources to continue as a going

120、 concern.The plans and measures undertaken to mitigate the liquidity pressure and to improve the financial position of the Group are summarised in Note 2(c)to the consolidated financial statements.Foreign Currency ManagementWe are exposed to currency risk primarily through our sales and purchases wh

121、ich give rise to receivables,payables and cash balances that are denominated in a foreign currency,i.e.a currency other than the functional currency of the operations to which the transactions relate.The currencies giving rise to this risk are primarily U.S.dollars,Renminbi and GBP.We have not enter

122、ed into or transacted any other financial instruments for hedging purpose during the year ended 31 December 2020.The Directors will determine by reference to the currency risk management policies,assess the exposure to foreign exchange risk,consider whether or not and to what extent the Group should

123、 enter into similar forward foreign exchange contracts and monitor them in line with the Groups currency risk management policies.Prosperous Printing Company Limited16MANAGEMENT DISCUSSION AND ANALYSISCAPITAL EXPENDITUREOur capital expenditure primarily comprised of purchase of property,plant and eq

124、uipment such as machinery for production.Our capital expenditure was funded by internal resources,finance leases and bank borrowings during the year ended 31 December 2020.The following sets forth our Groups capital expenditure as at the dates indicated:As at 31 December20202019HK$000HK$000 Property

125、,plant and equipment219,066236,326Intangible assets550627Deposits for acquisition of property,plant and equipment1,4332,369 221,049239,322 Significant investment,material acquisitions and disposals of subsidiaries,associates and joint venturesThere was no significant investment held by the Group nor

126、 any material acquisition or disposal of subsidiary,associate and joint venture for the year ended 31 December 2020.Future plans for material investments or capital assetsAs at the date of this report,the Board does not have any plan for material investments or additions of capital assets.CHARGE ON

127、GROUP ASSETSAs at 31 December 2020,the bank facilities were secured by bank deposits of the Group,financial assets at fair value through profit or loss,the Groups trade receivables,the Groups property,plant and equipment,the assignment of rental proceeds of the Groups properties situated in Hong Kon

128、g,benefits of key management insurance policies and corporate guarantees from the Company and certain subsidiaries.These banking facilities amounted to HK$312,583,000(2019:HK$329,781,000)as at 31 December 2020.These facilities were utilized to the extent of HK$179,631,000(2019:HK$158,286,000)as at 3

129、1 December 2020.Pledged bank deposits are approximately HK$9.1 million as at 31 December 2020(2019:HK$8.9 million).As at 31 December 2020,the Groups properties and machinery(as included in plant and equipment)with carrying amounts of HK$99,181,000(2019:HK$116,272,000)and HK$5,123,000(2019:HK$5,517,0

130、00),respectively,were pledged as collateral for the Groups banking facilities.Annual Report 2020 17MANAGEMENT DISCUSSION AND ANALYSISCAPITAL STRUCTUREThe Groups shares were successfully listed on GEM on 13 December 2017(“Listing Date”).There has been no change in the capital structure of the Group s

131、ince the Listing Date and up to the date of this report.COMMITMENTSThe capital commitments outstanding as at 31 December 2020 not provided for in the financial statements were HK$4.0 million(2019:HK$2.0 million)for purchase of property,plant and equipment.Treasury policyThe Group adopted a prudent f

132、inancial management approach towards its treasury policies and maintained a healthy liquidity position throughout the Reporting Period.To manage liquidity risk,the Board closely monitors the Groups liquidity position to ensure that the liquidity structure of the Groups assets,liabilities and commitm

133、ents can meet its funding requirements from time to time.Employees and remuneration policyAs at 31 December 2020,the Group had 669(2019:781)employees in total.The staff costs of the Group(including directors emoluments,and management,administrative and operational staff costs)for the year ended 31 D

134、ecember 2020 were approximately HK$76.4 million(2019:HK$93.6 million).The Directors and senior management receive compensation in the form of director fees,salaries,benefits in kind and/or discretionary bonuses with reference to those paid by comparable companies,time commitment and the performance

135、of the Group.The Group also reimburses the Directors and senior management for expenses which are necessarily and reasonably incurred for the provision of services to the Group or executing their functions in relation to the operations of the Group.The Group regularly reviews and determines the remu

136、neration and compensation packages of the Directors and senior management by reference to,among other things,market level of remuneration and compensation paid by comparable companies,the respective responsibilities of the Directors and the performance of the Group.Events after the Reporting PeriodT

137、he Board is not aware of any events after the reporting period that require disclosure.ACHIEVEMENT OF BUSINESS OBJECTIVES AS COMPARED WITH ACTUAL BUSINESS PROGRESSThe Prospectus sets out the business plan up to the six months ended 30 June 2020.An analysis comparing the achievement of business objec

138、tives as set out in the Prospectus with the Groups actual business progress for the period from 1 January 2020 to 30 June 2020 is set out in the 2020 Interim Report of the Company.Prosperous Printing Company Limited18MANAGEMENT DISCUSSION AND ANALYSISUSE OF PROCEEDSBased on the final offer price of

139、HK$0.34 per Offer Share and 200,000,000 Shares offered by the Company,the net proceeds from the GEM Listing received by the Company,after deducting the underwriting fees and commissions and actual expenses paid by the Company in relation to the GEM Listing were approximately HK$34.7 million.Such net

140、 proceeds are intended to be or have been applied in accordance with the proposed applications as set out in the section headed“Use of Proceeds”in the Prospectus.The details of the proposed and actual use of the net proceeds of approximately HK$34.7 million(which is in proportion to the proposed all

141、ocation as disclosed in the Prospectus)are as follows:Proposed use of net proceeds from the GEM ListingFrom GEM Listing to 31 December 2019From 1 January 2020 to 30 June 2020From time to time in the financial years ended 31 December 2018,2019 and 2020(Note 1)TotalUtilised net proceeds from the GEM L

142、isting up to 31 December 2020Remaining proceeds from GEM Listing as at 31 December 2020HK$millionHK$millionHK$millionHK$millionHK$millionHK$million Improve our equipment and the level of automation10.51.411.911.9Repayment of bank borrowings17.017.017.0Expand customer base and strengthen sales and ma

143、rketing coverages1.30.31.93.53.5Attract and retain top talent in the industry1.71.71.7Additional working capital and other general corporate purposes0.60.60.6 Total28.80.35.634.734.7 Note 1:Based on the proposed use of net proceeds from the GEM Listing,the Group will utilise approximately HK$5.6 mil

144、lion of its net proceeds from time to time from 2018 to 2020 for(i)improving the Groups equipment and the level of automation;(ii)expanding customer base and strengthen sales and marketing coverages;and(iii)attracting and retaining top talent in the industry.The Board currently plans to follow the a

145、foresaid initial plan to fully utilise the remaining amount in accordance with the schedule above.DIVIDENDSThe Board does not recommend the payment of a final dividend for the year ended 31 December 2020(for the year ended 31 December 2019:Nil).During the year ended 31 December 2020,there was no arr

146、angement under which any Shareholder waived or agreed to waive any dividend.Annual Report 2020 19CORPORATE GOVERNANCE REPORTINTRODUCTIONPursuant to Rule 18.44(2)of the GEM Listing Rules,the Board is pleased to present the corporate governance report of the Company for the year ended 31 December 2020

147、.The Company has made continued efforts to incorporate the key elements of sound corporate governance in its management structures and internal control procedures.The Company is committed to maintaining a high standard of corporate governance,the principles of which serve to uphold a high standard o

148、f ethics,transparency,responsibility and integrity in all aspects of business,and to ensure that affairs are conducted in accordance with applicable laws and regulations.The Board believes that good and effective corporate governance practices are keys to obtaining and maintaining the trust of the s

149、hareholders of the Company(the“Shareholders”)and other stakeholders,and are essential for encouraging accountability and transparency so as to sustain the success of the Group and to create long-term value for the Shareholders.CORPORATE GOVERNANCE PRACTICEThe Board is responsible for performing the

150、corporate governance duties in the Corporate Governance Code and Corporate Governance Report(the“CG Code”)as set out in Appendix 15 of the GEM Listing Rules,which includes developing and reviewing the Companys policies and practices on corporate governance,training and continuous professional develo

151、pment of Directors,and reviewing the Companys compliance with the code provision in the CG Code and disclosures in this report.The Company has complied with the principles and applicable code provisions of the CG Code for the year ended 31 December 2020,except the deviation from CG Code provision A.

152、2.1 set out below.Chairman and Chief Executive OfficerCode provision A.2.1 of the CG Code stipulates that the roles of chairman and chief executive officer should be separated and should not be performed by the same individual.The division of responsibilities between the chairman and chief executive

153、 officer should be clearly established and set out in writing.Mr.Lam Sam Ming(“Mr.Lam”)is the chairman and the chief executive officer of the Company.Mr.Lam has over 37 years of experience in the printing industry.Mr.Lam established our Group through L&L in December 1992.Since then he has been in ch

154、arge of the overall business strategies and operation of our Group.The Directors are of the view that it would be in the Groups best interest for Mr.Lam to continue performing the two roles in terms of effective management and business development.The Directors further believe that the balance of po

155、wer and authority is adequately ensured by the operations of the Board,which comprises experienced and high-caliber individuals,with three of them being independent non-executive Directors.Based on the above factors,the Board considers that the deviation from the code provision A.2.1 of the CG Code

156、is appropriate.Prosperous Printing Company Limited20CORPORATE GOVERNANCE REPORTDIRECTORS SECURITIES TRANSACTIONSThe Company has adopted Rules 5.48 to 5.67 of the GEM Listing Rules as the code of conduct for securities transactions by the Directors in respect of the Shares(the“Code of Conduct”).Havin

157、g made specific enquiries to all Directors,each of them has confirmed that he/she has fully complied with the required standard of dealings set out in the Code of Conduct during the year ended 31 December 2020.BOARD OF DIRECTORSThe Board meets regularly for considering,reviewing and/or approving mat

158、ters relating to,among others,the financial and operating performance,as well as,the overall strategies and policies of our Company.Additional meetings are held when significant events or important issues are required to be discussed and resolved.The Directors responsibilities include inter alias:To

159、 attend regular Board meetings focusing on business strategy,operational issues and financial performance;To approve annual budgets covering strategy,financial and business performance,key risks and opportunities;To monitor the quality,timeliness,relevance and reliability of internal and external re

160、porting;To consider and approve the consolidated financial statements in quarterly,interim reports,annual reports and announcements;To focus its attention on matters affecting the Companys overall strategic policies,finances and Shareholders;To consider dividend policy and dividend amount;and To rev

161、iew and monitor the corporate governance policies and practices of the Group to ensure compliance with the legal and regulatory requirements.The Company has taken out director liability insurance to cover liabilities arising from legal action against the Directors.Annual Report 2020 21CORPORATE GOVE

162、RNANCE REPORTCompositionThe composition of the Board as at the date of this report is set out as follows.Executive DirectorsMr.Lam Sam Ming(Chairman)Ms.Yao Yuan Ms.Chan Sau PoIndependent non-executive DirectorsMs.Cheung Yin Mr.Wong Hei Chiu Mr.Leung Vincent Gar-GeneMr.Ong Chor Wei resigned as non-ex

163、ecutive director with effect from 16 October 2020.Save for the spousal relationship between Mr.Lam and Ms.Yao Yuan,there is no financial,business,family or other material/relevant relationship among members of the Board.All Directors have distinguished themselves in their field of expertise,and have

164、 exhibited high standards of personal and professional ethics and integrity.The profile of each Director are set out in the section headed“Profile of Directors and Senior Management”of this report.With the various experience of the executive Directors and the independent non-executive Directors(the“

165、INEDs”)and having regard to the nature of the Groups business,the Company recognises the benefits of having a Board with well-balanced experience and qualification to maintain a sustainable business development of the Group in long run.In recognition of the Companys commitment to a well-balanced Boa

166、rd,the nomination committee is entrusted to review the Companys human resources policy and recruitment process to ensure the effectiveness of the policy.Prosperous Printing Company Limited22CORPORATE GOVERNANCE REPORTNUMBER OF MEETINGS AND DIRECTORS ATTENDANCEDuring the Reporting Period and up to th

167、e date of this report,four board meetings were respectively held.The individual attendance record of the Board meetings is set out as follows:Name of DirectorsNumber of Board Meetings attended/eligible to attend Mr.Lam Sam Ming4/4Ms.Yao Yuan4/4Ms.Chan Sau Po4/4Ms.Cheung Yin4/4Mr.Wong Hei Chiu4/4Mr.L

168、eung Vincent Gar-Gene4/4INDEPENDENT NON-EXECUTIVE DIRECTORSIn compliance with Rules 5.05A,5.05(1)and(2)of the GEM Listing Rules,the Company has appointed three INEDs representing at least one-third of the Board and at least one of whom has appropriate professional qualifications,or accounting or rel

169、ated financial management expertise.As such,there is a strong element in the Board to provide independent judgment.In accordance with code provision A.4.1 of the Code,the Company has entered into a letter of appointment with each of the INEDs for initially a fixed term of two years commencing from 1

170、3 December 2019 and will continue thereafter until terminated by either party giving not less than three months written notice to the other party.The Company has received an annual confirmation of independence from each INED pursuant to Rule 5.09 of the GEM Listing Rules.The Company considers the IN

171、EDs to remain independent as at the date of this report.TERMS OF APPOINTMENT AND RE-ELECTION OF DIRECTORSEach executive Director has entered into a service agreement with the Company for initially a fixed term of two years commencing from 13 December 2019 and will continue thereafter until terminate

172、d by either party giving not less than three months written notice to the other party.The service agreements and/or letters of appointment of the Directors are subject to termination in accordance with their respective terms.They can be renewed in accordance with the articles of association of the C

173、ompany(“Articles”)and the applicable GEM Listing Rules.Annual Report 2020 23CORPORATE GOVERNANCE REPORTAs required under the Articles,all Directors are subject to election by the Shareholders at the first general meeting after their appointment by the board of directors.At every annual general meeti

174、ng of the Company at least one-third of the Directors for the time being shall retire from office by rotation,provided that every Director(including those appointed for a specific term)shall be subject to retirement by rotation at least once every three years.A retiring Director shall be eligible fo

175、r re-election thereat.FUNCTIONS OF THE BOARD AND MANAGEMENTThe Board supervises the management of the business and affairs of the Company and ensures that it is managed in the best interests of the Shareholders as a whole while taking into account the interest of other stakeholders.The Board is prim

176、arily responsible for formulating the business strategy,reviewing and monitoring the business performance of the Group,approving the financial statements and annual budgets as well as directing and supervising the management of the Company.Execution of operational matters and the powers thereof are

177、delegated to the management by the Board with clear directions.The Board is regularly provided with management report to give a balanced and understandable assessment of the performance,position,recent development and prospect of the Group in sufficient details.The Board is also responsible for the

178、corporate governance functions under code provision D.3.1 of the CG Code.The Board has reviewed and discussed the corporate governance policy of the Group and is satisfied with the effectiveness of the corporate governance policy.DIRECTORS TRAINING AND PROFESSIONAL DEVELOPMENTTo assist the Directors

179、 continuing professional development,the Company recommends Directors to attend relevant seminars to develop and refresh their knowledge and skills.The Directors also participate in continuous professional development programmes such as external seminars and forums organised by qualified professiona

180、ls,to develop and refresh their knowledge as to the industry and skills in relation to their contribution to the Board.All the Directors understand the importance of continuous professional development and are committed to participate in any suitable training to develop and refresh their knowledge a

181、nd skills.During the year ended 31 December 2020,all the Directors participated in a training seminar regarding directors responsibilities and duties by the Companys legal advisers to ensure that he/she has appropriate understanding of his/her responsibilities and obligations under the GEM Listing R

182、ules and relevant regulatory requirements.Such training seminar was related to corporate governance,connected transactions and directors continuing obligations.The Company has maintained the training record in respect of each Director.There are also arrangements in place for providing continuing bri

183、efing and professional development to Directors by the Company whenever necessary.Prosperous Printing Company Limited24CORPORATE GOVERNANCE REPORTBOARD COMMITTEESThe Board has established four Board committees,namely,the audit committee,the remuneration committee,the nomination committee and the ris

184、k management committee,for overseeing particular aspects of the Companys affairs.All Board committees have been established with respective written terms of reference.All the Board committees should report to the Board on their decisions and works.The practices,procedures and arrangements of conduct

185、 of committee meetings follow in line with,so far as practicable,those of the Board meetings and the respective terms of reference of the committees.All Board committees are provided with sufficient resources to perform their duties and,upon reasonable request,are able to seek independent profession

186、al advice in appropriate circumstance,at the Companys expense.Audit CommitteeThe audit committee was established on 15 November 2017 with its written terms of reference in compliance with the CG Code.The primary duties of the audit committee are to review and supervise our financial reporting proces

187、s and internal control system,nominate and monitor external auditors and to provide advice and comments to the Board on matters related to corporate governance.The audit committee consists of three members,being Ms.Cheung Yin(Chairman),Mr.Wong Hei Chiu and Mr.Leung Vincent Gar-Gene.During the Report

188、ing Period and up to the date of this report,four audit committee meetings were held.The individual attendance record of the meetings of the audit committee is set out as follows:Name of DirectorsNumber of meetings of the audit committee attended/eligible to attend Ms.Cheung Yin(Chairman)4/4Mr.Wong

189、Hei Chiu4/4Mr.Leung Vincent Gar-Gene4/4During the meeting,the audit committee reviewed(i)the Groups audited consolidated financial statements for the year ended 31 December 2020,with a recommendation to the Board for approval;(ii)the Groups financing and accounting policies;and(iii)the Groups intern

190、al control system and risk management functions.Remuneration CommitteeThe remuneration committee was established on 15 November 2017 with its written terms of reference in compliance with the CG Code.The primary duties of the remuneration committee are to make recommendations to the Board on the rem

191、uneration of all Directors and senior management and determine,with delegated responsibilities,the remuneration package of individual Director and senior management.Annual Report 2020 25CORPORATE GOVERNANCE REPORTThe remuneration committee consists of three members,being Mr.Wong Hei Chiu(Chairman),M

192、s.Cheung Yin and Mr.Lam Sam Ming.During the Reporting Period and as at the date of this report,one remuneration committee meeting was held.The Directors and senior management receive compensation in the form of director fees,salaries,benefits in kind and/or discretionary bonuses with reference to th

193、ose paid by comparable companies,time commitment and the performance of the Group.The Group also reimburses the Directors and senior management for expenses which are necessarily and reasonably incurred for the provision of services to the Group or executing their functions in relation to the operat

194、ions of the Group.The Group regularly reviews and determines the remuneration and compensation packages of the Directors and senior management by reference to,among other things,market level of remuneration and compensation paid by comparable companies,the respective responsibilities of the Director

195、s and the performance of the Group.Nomination CommitteeThe nomination committee was established on 31 December 2017 with its written terms of reference in compliance with the code provisions of the CG Code.The primary duties of the nomination committee are to make recommendations to the Board regard

196、ing candidates to fill vacancies on the Board and/or in senior management.The nomination committee consists of three members,being Mr.Lam Sam Ming(Chairman),Mr.Wong Hei Chiu and Ms.Cheung Yin.During the Reporting Period and as at the date of this report,one nomination committee meeting has been held

197、.Risk Management CommitteeThe risk management committee on 15 November 2017 with its written terms of reference by reference to the code provisions of the CG Code.The primary duties of the risk management committee are to assist the Board in overseeing the Groups compliance with laws and regulations

198、 relevant to its business operations and to review the effectiveness of the Groups regulatory compliance procedures and system.The risk management committee consists of three members,being Mr.Lam Sam Ming(Chairman),Ms.Chan Sau Po and Ms.Yao Yuan.During the Reporting Period and as at the date of this

199、 report,one risk management committee meeting has been held.Prosperous Printing Company Limited26CORPORATE GOVERNANCE REPORTINTERNAL CONTROLS AND RISK MANAGEMENTThe Board acknowledges its responsibility for the risk management and internal control systems and reviewing their effectiveness.Such syste

200、ms are designed to manage rather than eliminate the risk of failure to achieve business objectives,and can only provide reasonable and not absolute assurance against material misstatement or loss.The Board has the overall responsibility for evaluating and determining the nature and extent of the ris

201、ks it is willing to take in achieving the Companys strategic objectives,and establishing and maintaining appropriate and effective risk management and internal control systems.The Audit Committee assists the Board in leading the management and overseeing their design,implementation and monitoring of

202、 the risk management and internal control systems.The Company has developed and adopted various risk management procedures and guidelines with defined authority for implementation by key business processes and office functions,including production,procurement,marketing,finance,human resources,inform

203、ation technology.Self-evaluation has been conducted annually to confirm that control policies are properly complied with by each department.All departments conducted internal control assessment regularly to identify risks that potentially impact the business of the Group and various aspects includin

204、g key operational and financial processes,regulatory compliance and information security.The management,in coordination with department heads,assess the likelihood of risk occurrence,provide treatment plans,and monitor the risk management progress.The management has reported to the Board and the Aud

205、it Committee on the effectiveness of the risk management and internal control systems for the year ended 31 December 2020.There being no internal audit unit as the Board does not perceive the cost efficiency to set up one at the present scale of operations of the Company,the Board has invested resou

206、rces to enhance the internal control system and to take active steps in addressing the recommendation of the internal control system review in the management letter from the external auditors during the audit process.During the year ended 31 December 2020,the Board reviewed the effectiveness of the

207、Groups risk management and internal control systems,including the financial,operational and compliance controls,and considered that such systems are effective and adequate.The Company has developed its disclosure policy which provides a general guide to the Companys directors,officers,senior managem

208、ent and relevant employees in handling confidential information,monitoring information disclosure and responding to enquiries.Annual Report 2020 27CORPORATE GOVERNANCE REPORTDIRECTORS AND AUDITORS RESPONSIBILITIES FOR THE CONSOLIDATED FINANCIAL STATEMENTSAll Directors acknowledge their responsibilit

209、ies to prepare the Groups consolidated financial statements for the year ended 31 December 2020 to give a true and fair view of the state of affairs of the Group and of the results and cash flows for that year.The Directors continue to adopt the going concern approach in preparing the consolidated f

210、inancial statements and are not aware of any material uncertainties relating to events or conditions that may cast significant doubt upon the Companys ability to continue as a going concern.The responsibilities of the external auditors about their financial reporting are set out in the independent a

211、uditors report attached to the Companys consolidated financial statements for the year ended 31 December 2020 in this report.AUDITORS REMUNERATIONDuring the year ended 31 December 2020,the Company engaged Crowe(HK)CPA Limited(“Crowe”)as the external auditor.The fees in respect of audit services prov

212、ided by Crowe for the year ended 31 December 2020 amounted to HK$1,250,000.COMPANY SECRETARYMr.Chen Kun,was appointed by the Board as the company secretary of the Company on with effect from 31 December 2020.The biographical details of Mr.Ho are set out in the section headed“Profile of Directors and

213、 Senior Management”of this report.SHAREHOLDERS RIGHTConvening of Extraordinary General Meeting on Requisition by ShareholdersPursuant to Article 74 of the Articles,the Board may,whenever it thinks fit,convene an extraordinary general meeting(“EGM”).EGMs shall also be convened on the requisition of o

214、ne or more Shareholders in accordance with Companies Ordinance(Cap 622,Laws of Hong Kong),which provides(1)the members of a company may request the directors to call a general meeting of the company;(2)the directors are required to call a general meeting if the company has received requests to do so

215、 from members of the company representing at least 5%of the total voting rights of all the members having a right to vote at general meetings;(3)a request(a)must state the general nature of the business to be dealt with at the meeting;and(b)may include the text of a resolution that may properly be m

216、oved and is intended to be moved at the meeting;and(4)requests may consist of several documents in like form;and(5)a request(a)may be sent to the company in hard copy form or in electronic form;and(b)must be authenticated by the person or persons making it.Prosperous Printing Company Limited28CORPOR

217、ATE GOVERNANCE REPORTRight to put enquiries to the BoardFor putting forward any enquiries to the Board,Shareholders may send written enquiries to the Company.Shareholders may send their enquiries or requests in respect of their rights to the Companys principal place of business in Hong Kong.Procedur

218、e for shareholders to put forward proposals at shareholders meetingsThe Companies Ordinance provides that,a company must give notice of a resolution if it has received requests that it do so from:(a)the members of the company representing at least 2.5%of the total voting rights of all the members wh

219、o have a right to vote on the resolution at the annual general meeting to which the requests relate;or(b)at least 50 members who have a right to vote on the resolution at the annual general meeting to which the requests relate.The Companies Ordinance also provides that,the request(a)may be sent to t

220、he company in hard copy form or in electronic form;(b)must identify the resolution of which notice is to be given;(c)must be authenticated by the person or persons making it;and(d)must be received by the company not later than(i)6 weeks before the annual general meeting to which the requests relate;

221、or(ii)if later,the time at which notice is given of that meeting.All request shall be sent to the principal place of business of the Company in Hong Kong or by e-mail to rainbowprosperous- for the attention of the Company Secretary.INVESTOR RELATIONSThe Group uses several formal channels to ensure f

222、air disclosure and comprehensive and transparent reporting of its performance and activities in accordance with GEM Listing Rules.The Companys annual and interim reports and circulars are printed and sent to all Shareholders.Moreover,announcements,circulars,publications and press releases of the Com

223、pany are published on the Companys website(www.prosperous-printing-.hk).The Companys website disseminates corporate information and other relevant financial and non-financial information electronically on a timely basis.The Company acknowledges that general meetings are good communication channel wi

224、th Shareholders and the Directors and the members of the Board committees are encouraged to attend and answer questions raised by Shareholders at the general meetings.The Company is committed to promoting and maintaining effective communication with Shareholders and other stakeholders.The Board is c

225、ommitted to ensuring that the Shareholders are provided with ready,equal and timely access to balanced and understandable information about the Company so as to enable Shareholders to exercise their rights in an informed manner,and to allow Shareholders to engage actively with the Company.During the

226、 Reporting Period,there had been no change in the Companys constitutional documents.Annual Report 2020 29ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORTINTRODUCTIONProsperous Printing Company Limited(the“Company”)and its subsidiaries(the“Group”)are committed to promoting sustainable development and socia

227、l responsibility,which is important to create long-term value for the Groups shareholders,employees and other stakeholders.The Group strives to provide employees with a safe and healthy working environment as well as talent training and development.This report covers environmental,social and governa

228、nce matters of the Group for the year commencing 1 January 2020 to 31 December 2020(“FY2020”)and information comparative figures of the previous year ended 31 December 2019(“FY2019”)have been included for comparison purpose.The Group is a provider of printing products to Hong Kong-based print broker

229、s with customers in overseas markets and to international publishers mainly located in the U.S.,U.K.,Australia and Europe(excluding U.K.).The Groups products comprise mainly books and other paper-related products.Paper and ink are the principal raw materials.Production activities typically involving

230、 information editing,color pantone management,proof reading,printing plates production,offset and digital printing,stitching and binding,quality controls,finished products packaging,warehousing,freight and delivery.This environmental,social and governance report has been prepared in compliance with

231、the Environmental,Social and Governance Reporting Guide set out in Appendix 20 to Rules Governing the Listing of Securities on the GEM of The Stock Exchange of Hong Kong Limited(“GEM Listing Rules”).This report provides information related to the business activities of the production sites and wareh

232、ouse facilities directly controlled by the Group.Data from our customers or suppliers are not included as such data is difficult to verify with available resources.We believe that understanding the views of our stakeholders lays a solid foundation to the long-term growth and success of the Group.We

233、develop multiple channels to a broad spectrum of stakeholders in order to provide them with the opportunity to express their views on our sustainability performance and future strategies.To reinforce mutual trust and respect,we are committed to maintaining enduring communication channels,both formal

234、ly and informally,with stakeholders to enable us to better shape our business strategies in order to respond to their needs and expectations,anticipate risks and strengthen key relationships.We have identified employees,customers,suppliers,business partners,banks,shareholders,government and the comm

235、unity at large as our key stakeholder groups.The information collected through different communication processes serves as an underlying basis for the structure of this ESG Report.The outbreak of the COVID-19 virus in 2019 and characterized by the World Health Organization as pandemic has inadverten

236、tly affected the Groups production and business activities into FY2020.Prosperous Printing Company Limited30ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORT1.Environmental Protection StrategyThe Group is environmental conscious and strives to operate its production processes and facilities that maximizing

237、 our resources efficiently,improving productivity while minimizing the unfavorable impacts,seeking to contribute to the improvement of ecological environment and sustainable development.The Group has to ensure that our operations are compliant with all the relevant environmental rules and regulation

238、s.1.1 Environmental Rules and RegulationsOur printing operations are subject to various environmental rules and regulations,such as,PRC Environmental Protection Law(中華人民共和國環境保護法),PRC Prevention and Control of Environmental Pollution Caused by Solid Waste Law(中華人民共和國固體廢物污染環境防治法),Waste Disposal Ordina

239、nce(Chapter 354 of the Laws of Hong Kong),Air Pollution Control Ordinance(Chapter 311 of the Laws of Hong Kong),Noise Control Ordinance(Chapter 400 of the Laws of Hong Kong)and Water Pollution Control Ordinance(Chapter 358 of the Laws of Hong Kong).The Group is not aware of any material non-complian

240、ce with the relevant laws and regulations that have a significant impact on the Group relating to air and greenhouse gases(“GHG”)emissions,discharges into water and land,generation of hazardous and non-hazardous wastes during FY2020.1.2 Green Production ObjectiveThe Group has to measure,monitor and

241、control the level of emissions of exhaust gases,GHG and generation of hazardous wastes during production and to look for possible improvements for reducing the level of wastes generated from production.1.2.1 Emissions MeasurementsThe Groups emission of exhaust and GHG gases is primarily from purchas

242、ed electricity and fuel used in production,factories and offices.There are other indirect emissions generated,for example,purchased paper,purchased printing plates,paper waste and business travelling.During the offset printing process,chemically tainted water is released through washing of the print

243、ing plates in the prepress production and the cleaning of ink rollers from the printing presses.In the ink application process,there are certain Volatile Organic Compounds(“VOC”)emissions such as benzene,toluene and p-xylene.Though the emissions are considered insignificant,our Hong Kong and Shenzhe

244、n factory installed environmental air filters to minimize the VOC emission.Effluent is generated in our business operation mainly for cleaning,personal consumption of employees and usage in staff quarters.The inspections conducted by external qualified testing companies for collecting and analyzing

245、the emissions of exhaust and GHG gases,effluent discharged from our Shenzhen factory,where the Groups main production facilities are located,have recommenced during FY2020 after their temporary suspension in FY2019.The testing basis and samples collection procedures are conducted according to the pr

246、evailing regulations and procedures as in previous years.Some of the comparative figures of previous FY2019 are not available for comparison purpose.Annual Report 2020 31ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORTDirect emissions of GHG are from production,usage of motor and electrical vehicles,indir

247、ect emission is due to electricity consumption.GHG emissionFY2020FY2019tCO2etCO2e Direct65.64N/AIndirect8,789.60N/ATotal8,855.24N/ATotal production output in ton12,016.5017,142.36tCO2e:Per ton of equivalent carbon dioxide emissionN/A:Not availableTesting results of the GHG emission of our factory co

248、nfirmed full compliance with the required environmental and safety standards in Shenzhen City.The following testing results on the exhaust gases emitted from our Shenzhen factory in FY2020 also confirmed that the density of harmful content such as benzene,toluene,p-xylene and other VOC have been in

249、full compliance with the required environmental and safety standards in Shenzhen City.FY2020FY2019Density (mg/m3)Speed (kg/h)Density (mg/m3)Speed (kg/h)Benzene 苯00N/AN/AToluene 甲苯0.02000.000128N/AN/AP-Xylene 二甲苯0.00670.000040N/AN/AOther VOC0.59290.004537N/AN/AThe contents of the effluent generated f

250、rom our Shenzhen factory have also been collected during FY2020 for testing with the improved results confirmed that we are in full compliance with the required environmental and safety standards in Shenzhen City as indicated below.Testing resultsFY2020FY2019 pH value7.2157.21Suspended matter,mg/L1.

251、503.25Chemical oxygen demand,mg/L8.2514.41Biochemical oxygen demand 5 days,mg/L2.3753.4Ammonia nitrogen,mg/L0.1840.23Chromaticity,times2.002.50Prosperous Printing Company Limited32ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORT 1.2.2 Materials RecyclingThe Group aims to optimize the use of materials reso

252、urces throughout the production process and increasing the recycling use of materials for minimizing wastage.In FY2020,total paper materials used in production were 10,753.09 ton decreased by 26.71%from 14,672.29 ton in FY2019 mainly due to the decrease in production requirement.Papers used in the o

253、ffices are to be printed and written on both sides,documents recorded in soft copy format that facilitate transmission through email is encouraged for reducing the usage of papers.In order to enhance the efficiency and tidiness for our collection of scrap paper materials from production,we have set

254、up centralized mechanical equipment for compression and bundling of scrap papers in our Shenzhen and Hong Kong factories for expediting the process and increase the recycling rate.Other recyclable materials such as carton box,used printing plates and waste metals are separately identified and recycl

255、ed.We are working closely with our printing ink suppliers by returning their plastic ink containers for reuse and reduce wastage.The collection of waste materials in our Shenzhen and Hong Kong factories during FY2020 when compared with FY2019 is as follows:FY2020FY2019Changes(in kg)QuantityQuantityQ

256、uantity%Scrap papers2,002,2482,923,311(921,063)(31.51)Used printing plates130,251138,485(8,234)(5.95)Waste metals0450(450)(100)Sub-total and recycled2,132,4993,062,246(929,747)(30.36)Hazardous wastes313,198(13,195)(99.98)Total2,132,5023,075,444(942,942)(30.66)All scrap papers,used printing plates an

257、d waste metals are recycled and have been disposed to authorized collectors handling recycle of the materials.During FY2020 except for the hazardous wastes,a total of 2,132.50 ton of waste materials,decreased from 3,062.25 ton in FY2019,has been recycled,representing a 99.99%compared with 99.57%in F

258、Y2019 of the waste materials being recycled.During FY2020,the total amount of hazardous wastes generated from our production was equivalent to almost 0%per kg unit of production when compared with 0.08%in FY2019.The non-hazardous wastes generated by the Group during FY2020 that were recycled was equ

259、ivalent to 0.18 per kg unit of production when compared with 0.18 similarly in FY2019.Annual Report 2020 33ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORT 1.2.3 Hazardous Waste ManagementFor the disposal of hazardous wastes generated from production,we strictly follow the PRC Prevention and Control of En

260、vironmental Pollution Caused by Solid Waste Law and engaged independent authorized waste collector for disposal of the hazardous wastes.Our administration department maintains proper records on the amount of hazardous wastes disposed each year.Our employees are required to comply with the following

261、practices and procedures for the proper handling of hazardous wastes:Employees who are required to handle hazardous waste must attended the required training before assigned to their positions Clear instructions and protective equipment are provided to employees handling the wastes Hazardous wastes

262、are stored in rigid containers to avoid spillage and at designated storage areaDuring FY2020,a total of 3.37 ton of hazardous wastes was produced and decreased by 99.97%from 13.20 ton in FY2019 with the majority of the hazardous waste was attributable to the residues generated from treatment of sewa

263、ge water.1.2.4 Shipment of ProductsThe Group encourages our customers to consolidate the shipment volumes and orders if applicable for reducing the numbers of individual shipment that can minimize the times of sea voyages on the environmental impact.The Group is using recyclable pallets for loading

264、products to containers.1.2.5 Environmental Monitoring CostsThe Group has incurred recurrent operating costs for monitoring and management of our internal control system on environmental protection,including engagement of qualified companies to conduct testing on the emissions of exhaust gases and ef

265、fluent during production processes to ensure that we are in full compliance with all the environmental and safety laws and regulations.With our commitment to environmental protection,during FY2020,total direct costs incurred on environmental protection in the treatment of effluent,different types of

266、 testing,installation of tubing for exhaust gases,cleaning of air ventilation facilities for improving air flow efficiency in our Shenzhen factory decreased by 25.22%from HKD2,345,476 in FY2019 to HKD1,753,972 mainly attributable to the maintenance of existing and installation of new treatment facil

267、ities for exhaust gas and effluent in the factory premises.Prosperous Printing Company Limited34ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORT 1.2.6 Management Approach for FY2021(i)Reduce energy consumption and carbon emissions:To monitor and control GHG emission per unit of production output in full c

268、ompliance with the laws and regulations(ii)Recycle materials to minimize waste and conserve resources:To continue promoting the use of digital format data for saving document printing To continue monitoring the efficient collection of scrap paper materials for recycling 1.3 High Performance Producti

269、on ObjectiveThe Group is to achieve high performance production using the necessary materials and avoid using excessive resources causing wastage and environmental unfriendly.1.3.1 Monitoring Resources UsageThe principal raw material used for production is paper and close monitoring on paper usage i

270、n relation to our level of production to ensure no excessive usage.The Groups usage of paper,printing plate,ink,electricity and water during FY2020 and compared with FY2019 is as follows:FY2020FY2019ChangeAmount(HKD)Amount(HKD)Amount(HKD)%Paper57,881,17391,278,189(33,397,016)(36.59)Printing plate4,1

271、83,9167,096,466(2,912,550)(41.04)Printing ink4,238,2793,865,299372,9809.65Electricity charges6,089,9639,329,755(3,239,792)(34.73)Water charges256,949186,38570,56437.86Total production output in(kg)12,016,50017,142,363(5,125,863)(29.90)Average number of employee632793(161)(20.30)The direct energy con

272、sumption in respect of electricity charges during FY2020 for the Group was HKD0.51 per kg of production output compared with HKD0.54 in FY2019.The indirect water consumption during FY2020 for the Group was increased to HKD0.02 per kg of production output from HKD0.01 in FY2019.Annual Report 2020 35E

273、NVIRONMENTAL,SOCIAL AND GOVERNANCE REPORT 1.3.2 Production ManagementWe have been implementing production automation and efficient production management to maximize our resources efficiency and improve our productivity without compromising the quality of our product.Our Shenzhen factory is certified

274、 with Recognition of Excellence as a G7 Master Qualified Facility and also certified as Master Facility Colorspace that our quality on printing and the production facility satisfies globe recognized industry standard.In FY2020,our average production output per employee was 19,013 kg decreased from 2

275、1,617 kg of the previous year mainly due to decrease in production orders.1.3.3 Production AutomationWe are using our self-developed direct refill system for siphoning ink directly from centralized tanks to the individual printing press.This automatic refill system ensures the continuous supply of i

276、nk to the printing presses without stoppage,thus enhancing production efficiency and at the same time,overcame the wastage of ink and time when compared with manually transferred ink from containers to the individual printing presses.The Groups computer-to-plate(CTP)machinery and systems have elimin

277、ated the requirement for the production of ozalids that saved the usage of special papers and chemicals for producing the ozalids.The blueprints of books and paper products can be produced efficiently by the CTP system upon receiving the digital information directly from customers for download direc

278、tly that increase accuracy,shorten lead-time for checking and approval by customers.The Group has been working with an external software company for developing our in-house designed automatic marking system for tracking the movements of work-in-progress(WIP)under different stages in production.Infor

279、mation and the required processing procedures of a production order will be first input to the software system.Information is then updated to the system after the completion of one production process and barcodes will be printed out for attaching to the WIP before passing on to the next department f

280、or handling.A barcode reading machine installed in the next department will record the information on the incoming WIP and similarly after completion,the department is required to update the information in the system and print out the revised barcodes for attaching to the WIP.This system can provide

281、 real time tracking information on the current status of all the production orders.In addition,we have installed digital printing machines both in Hong Kong and the Shenzhen factory for meeting customers orders under quick turnaround time and use less electricity and ink when compared with the tradi

282、tional offset printing presses.The aforementioned automated machineries and system have significantly improved our production efficiency,required less intensive labor and made significant improvements in the quality and consistency of our production.Prosperous Printing Company Limited36ENVIRONMENTAL

283、,SOCIAL AND GOVERNANCE REPORT 1.3.4 Use of Water and ElectricityThe Group is committed to conserving the use of water as a valuable natural resource.We only use water supplied from municipal sources in our Shenzhen factory and do not have any on-site wells.Although water is not directly utilized for

284、 production,the Group has engaged external qualified testing companies to conduct testing on the effluent collected from our Shenzhen factory to ensure our compliance with the required environmental and safety standards.Sprinkler is used on hose for watering plants in the Shenzhen factory.Effluent i

285、s mainly generated from cleaning and the employees living activities in Shenzhen factory.Effluent is collected in a tank for purification treatment before being channeled for flushing the washrooms.We have put up notices at the eye-catching areas to increase the awareness of our employees on conserv

286、ing water.We shall continue managing the usage of water consumption and to maintain and repair the water pipes in Shenzhen Factory for that purpose.Water charges increased by 37.86%to HK$256,949 during FY2020 mainly attributable to frequent cleaning and sanitizing of premises with water and disinfec

287、tant for maintaining hygienic environment under the COVID-19 pandemic.The Group has been using more energy efficient LED lightings for energy savings and notices have been placed at the entrance areas for reminding employees to switch off all lightings,air-conditioning system and electrical applianc

288、es during lunch break and after office hour before leaving.We have been using more telephone and video conferencing for conducting meetings between Hong Kong and Shenzhen offices and with customers for saving the travelling and time required,making contribution to environmental saving.The use of mob

289、ile telecommunication system has become essential after the outbreak of the COVID-19 virus.1.3.5 Management Approach for FY2021(i)Enhance the barcode tracking system,implement suitable automation in production,strengthen the operational management,improve production efficiency and productivity:To in

290、crease production output per worker by 1%To maintain the electricity usage in the level of production output(ii)Monitor water consumption:To continue with water saving campaigns throughout the Group To reduce total water consumption quantity 1.4 Environmental Friendly Materials ObjectiveThe Group ai

291、ms to apply more environmental friendly materials in our production and reducing the usage of materials that are very difficult to recycle.Annual Report 2020 37ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORT 1.4.1 PaperWe encourage our customers to use papers coming from sustainable forestry with Forest

292、Stewardship Council“FSC”label endorsement.We have obtained the FSC Chain-of Custody certification for our usage of the FSC label on our products when certain criteria are met.Product with FSC label affixed provides a confirmation to our customer and the end consumer that the product is originated fr

293、om well-managed forests,controlled sources,reclaimed materials or a mixture of these.During FY2020,the quantity of FSC papers used in our production decreased by 4.53%to 1,561.41 tons when compared with 1,635.42 tons used in FY2019 attributable to the decrease in production orders against customers

294、growing awareness of using environmental friendly papers.1.4.2 Soybean Oil Based InkWe are using soybean oil based ink in our printing presses for all production.Compared to the traditional solvent base ink,the soybean oil based ink is environmental friendly that substantially reduces the emission o

295、f VOC to the atmosphere both in the product itself and during production,which also improves the air quality at our workplace.The Group will continue to use soybean oil based ink going forward.1.4.3 Plastic MaterialWith the growing awareness of the difficulty in recycling plastic materials,we are en

296、couraging our employees to reduce the usage of single use plastic items during production and daily activities,such as plastic holders,utensils,cups,bags,etc.Plastic film has been used in the bulk packaging of finished products when loading on pallets and we are looking for alternative materials and

297、 method for replacing the plastic film if possible.1.4.4 Management Approach for FY2021(i)Usage of environmental friendly materials in our production when applicable and to encourage our customers and employees to be environmental friendly and give more consideration on using sustainable resources.T

298、o continue looking for environmental friendly material for replacing the current plastic film for bulk packaging of finished products when loading on pallets To encourage our customers to use papers with FSC label in their productsProsperous Printing Company Limited38ENVIRONMENTAL,SOCIAL AND GOVERNA

299、NCE REPORT2.Employment StrategyThe Group is to maintain good relationship with employees who are valuable assets,encouraging the employees for personal development,providing the employees with a safe and pleasant working environment.Good relationship with the employees can foster their job satisfact

300、ion,encourage increasing productivity and with a lower turnover rate.The demographics of the Groups employees at the year-end date of FY2020 when compared with FY2019 are as follows:FY2020FY2019ChangesNumberNumberNumber%Number of employees at year end546680(134)(19.71)Male352427(75)(17.56)Female1942

301、53(59)(23.32)Average number of employees during the year632793(161)(20.30)Employees working for Over 5 years365425(60)(14.12)2.1 Competitive Remuneration ObjectiveThe Group considers offering competitive remuneration package is necessary for the attraction and retention of employees.2.1.1 Compensati

302、on and BenefitsAll the employees of the Group are required to enter into employment contracts when enrollment for clearly stating out the terms and conditions,salaries and allowances,benefits and job duties of the employees.A copy of the employee handbook is also provided to each employee in the She

303、nzhen factory when he first joined.The Group complies with all the Labour Law of the PRC and Hong Kong,the Implementing Regulations of the Labour Contract Law of the PRC,Regulations on Paid Annual Leave for Employees,PRC Social Insurance Law and Employment Ordinance in Hong Kong together with other

304、relevant laws and regulations.We provide social insurance,including basic pension insurance,basic medical insurance,work-related injury insurance,unemployment insurance and maternity insurance to our employees in PRC according to PRC Social Insurance Law and MPF according to the Mandatory Provident

305、Scheme Ordinance in Hong Kong.Annual Report 2020 39ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORTThe Group also offers additional employers voluntary contributions to employees in Hong Kong who have completed four years of continuous employment.Additionally,the Group had arranged with a medical service

306、provider in Hong Kong offering those employees who had completed three years of employment for personal health check programs at special discounted rates.The Group adopts an 8-hour working system and voluntary overtime.Overtime is limited to be within statutory limit to protect employees health.In a

307、ddition,the Group prohibits employee to work on a technical task before the relevant employee has received adequate training to safeguard employees safety.The Human Resources Department is monitoring the salaries and remuneration packages offering to employees both in Hong Kong and PRC that the Grou

308、ps remuneration packages are competitive when compared with other employers offering similar job duties and working conditions.Excluding the directors remuneration,the total employees costs incurred by the Group for FY2020 when compared with FY2019 are as follows:FY2020FY2019ChangesAmount(HKD)Amount

309、(HKD)Amount(HKD)%Salaries and allowances84,354,29381,430,0852,924,2083.59Social and retirement benefits12,528,68412,405,856122,8280.99 Total96,882,97793,835,9413,047,0363.25 2.1.2 Employees TurnoverMajority of the Groups employees is working in the Shenzhen factory,and due to the general high mobili

310、ty of employees in Shenzhen City,the turnover rate of new employees who have been employed for less than two years,has been high and in line with general market conditions.The continuous economic development in Shenzhen City has offered various different kinds of job opportunities that downplayed th

311、e attraction for people working in the industrial sector,especially for the younger generation.Out of the resigned employees during FY2020,64.66%were employed for less than 2 years when compared with 83.49%in FY2019.Due to the relocation of the Shenzhen Factory in November 2019,some of the employees

312、 decided to resign and looking for other job opportunities.Prosperous Printing Company Limited40ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORTNumber of employees who resigned in FY2020 and FY2019:FY2020FY2019Change%Less than 2 years of employment172632(460)(72.78)Employees with over 2 years of employmen

313、t94125(31)(24.80)Total employees resigned266757(491)(64.86)In order to attract employees continue working for the Group,competitive remuneration package,good relationship with the employees with promotion prospects are continue to be applicable.The Group continues to pay high regard to the employees

314、 who have serviced the Group over the past years and contribute to the Groups success,additional 1 award was given to employee of the Group who has been employed for over 25 years,additional 3 awards were given to those who have been employed for over 15 years and another 2 additional awards were gi

315、ven to those who have been employed for over 10 years as our token of appreciation for their contributions and hard work.Annual dinners had not been arranged during the year as a result of the health restriction for people gathering and banquet during the outbreak of the COVID-19.2.1.3 Employee Comm

316、unicationOpen communications is an important element in achieving effective workplace management.Proper communication with the employees is very important for the employees to understand the business strategies and future development of the Group.We encourage employees to voice their opinions throug

317、h various communication channels at all levels.We provide suggestion boxes,website,internal newsletters and communication meetings where employees can express their concerns and suggestions.Both the telephone numbers and email addresses of the Shenzhen Factory Manager and the Chief Representative of

318、 the Labour Union are available for all the employees of our Shenzhen factory.Information,opinions and suggestions gathered from the employees are to be followed up by our Human Resources Department for discussion with senior management.The Group encourages the employees to discuss any issues and pr

319、oblems they identified directly with their supervisors.The Group has the whistle-blowing policy whereby an employee can inform the Chairman of the Audit Committee of the Group of any suspected wrong doings and other irregularities that they have identified.Annual Report 2020 41ENVIRONMENTAL,SOCIAL A

320、ND GOVERNANCE REPORT 2.1.4 Management Approach for FY2021(i)Enhance the good relationship with employees through various communication channels and employees activities:To continue encouraging open communications at all levels of the Group and facilitates employees to give their opinions through var

321、ious communication channels To continue providing different types of activities for the employees To maintain the turnover rate of employees with over 2 years of employment below 10%To maintain the number of employees with over 5 years of employment with the Group 2.2 Personal Development and Advanc

322、ement ObjectiveThe Group considers personal development of employee is important for future advancement in career.Learning of new skills and knowledge is necessary for equipping the employee to handle additional job duties not only in his own specialty area,but also in different duty and supervisory

323、 function.2.2.1 Training programsThe Human Resources Department encourages our employees to develop and advance their careers in the Group and organized training courses for the employees.Each new employee of our Shenzhen factory is required to attend 21/2 hours training on employees regulations and

324、 information on counter terrorist,an additional 1 hour training for those handling safety information and precautions on their daily job duties.We have provided internal trainings on industrial safety and fire drill for the employees of our Shenzhen factory to stay alert of fire accident and the pas

325、sages for evacuation in case of emergency.Our employees have also participated in training courses on quality control,information security,hacking activities and social responsibilities.Prosperous Printing Company Limited42ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORTFY2020FY2019Person-timesTotal train

326、ing hoursPerson-timesTotal training hours Orientation programs1752561,3531,682Fire and chemical leakage drills2,2522,2521,4621,462On-the-job trainings1,4351,4521,6181,618Outside trainings1111467467Safety on job resumption00493493Total3,8733,9715,3935,722The total number of times employees participat

327、ed in the training courses decreased from 5,393 in FY2019 to 3,873 in FY2020 and total hours for attending training courses decreased from 5,722 hours to 3,971 hours mainly due to reduced number of employees of the Shenzhen Factory.The average total training hours per total average number of employe

328、e in FY2020 decreased to 6.2 hours when compared with 7.2 hours in FY2019.We encourage our employees to explore their potential talents and offer them opportunities to learn technical and management skills to prepare themselves for taking up leadership roles when ready in supporting our continuous g

329、rowth.2.2.2 Management Approach for FY2021(i)Foster a continuous learning environment and encourage employees to develop and advance their careers in the Group:To meet the training needs of employees,provide training courses for new information and career development To maintain the average training

330、 hours per employee at 5 hours each year 2.3 Respect of Labor and Human Rights ObjectiveThe Group is committed to respect the labor and human rights of all our employees through the following principles as stated in our human resources management policies:Freely Chosen Employment We do not use force

331、d or prison labor.We ensure that the terms of employment are voluntary.Our employees work at the Group of their own free will and are free to resign upon giving reasonable notice under the employment contract.We do not require employees to lodge deposits or hand over passports or work permits as a c

332、ondition of employment.Annual Report 2020 43ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORTNo Child Labor We comply with all appropriate local and international regulations in relation to the restrictions on the employment of child labor.Freedom of Association We allow our employees have the freedom of a

333、ssociation to join any organizations or professional bodies of their own choices.Anti-slavery We are committed to respect and treat our employees with dignity.We do not tolerate any forced labor and we do not accept any physical and financial punishment for employee wrongdoing.Benefits and Wages We ensure that the remuneration and benefits for our employees comply with or exceed the minimum legal