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Public company info - Virtual Mind Holding Company Limited , 01520.HK

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Virtual Mind Holding Company Limited, 01520.HK - Company Profile
Chairman Tin Yat Yu Carol
Share Issued (share) 1,690,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Apparel
Corporate Profile Business Summary: The Group is principally engaged in designing, manufacturing and trading of apparels and loan financing business. Performance for the year: Revenue of the Group for the year ended 31 December 2019 decreased by approximately 22.2% or HK$45,178,000 to approximately HK$158,714,000 (2018: HK$203,892,000). Gross profit for the year ended 31 December 2019 was approximately HK$32,196,000 (2018: HK$42,480,000), representing a decrease of approximately HK$10,284,000 or 24.2% as compared to the corresponding period in 2018. The loss attributable to the owners of the Company for the year ended 31 December 2019 was approximately HK$76,680,000 (2018: HK$60,032,000), representing an increase in loss attributable to the owners of the Company of approximately HK$16,648,000 or 27.7%. Business Review APPAREL OPERATION Revenue from apparel operation is principally derived from the sales of apparel products. The Group’s products can be classified into two categories, namely, private label products and own brand products. Private label products are those designed and manufactured under the private labels owned or specified by the Group’s customers, while own brand products are those designed and manufactured under the Group’s proprietary labels. Trade disputes between China and the United States has intensified in 2019, before showing some signs of stabilisation towards the end of the year. The twists and turns of the trade tensions between China and the United States have not only curbed international trade activities, but have also taken a toll on business atmosphere among exporters with China production bases. The group's apparel products are manufactured in China and most of The group's apparel products are exported to the United States. Prolonged and intensified trade frictions lead to a slowdown on demand for China apparel products. Customers from the United States increased their demands for the apparel products to be manufactured from nonChina production bases, or requested suppliers of China production bases to absorb all or most of the tariff imposed by the United States. The group's apparel operation is unavoidably affected by this complex and unfavourable external environment. There was a decline of the orders by the key customers of the Group in 2019. On the other hand, we successfully found new customers and received orders from those new customers during the year. Although the orders from new customers cannot fully compensate the decline of orders of existing key customers, this alleviated certain adverse impact on the Group arisen from tariff. The group's apparel operation remained the largest contributor to the Group’s business, accounting for 92.6% of total revenue. The revenue from apparel operation for 2019 was approximately HK$146,995,000 (2018: HK$187,041,000), declined by approximately 21.4%. APPAREL OPERATION — PRIVATE LABEL PRODUCTS Revenue from certain major private label customers dropped in 2019, resulting in the revenue from private label products for the year ended 31 December 2019 decreased by approximately 16.3% to approximately HK$104,760,000 (2018: HK$125,227,000). Private label products continued to be the core business of the Group, contributing 71.3% (2018: 67.0%) of the total revenue from apparel operation in 2019. The gross profit derived from private label products decreased by 8.1% to approximately HK$8,405,000 for the year ended 31 December 2019 (2018: HK$9,149,000) and the gross profit margin increased to approximately 8.0% in 2019, compared with approximately 7.3% in 2018. APPAREL OPERATION — OWN BRAND PRODUCTS Own brand products accounted for 28.7% (2018: 33.0%) of the total revenue from apparel operation for the year 2019. For the year 2019, revenue from own brand products decreased by approximately 31.7% to approximately HK$42,235,000 (2018: HK$61,814,000) and gross profit decreased by 26.8% to approximately HK$12,072,000 (2018: HK$16,480,000). The gross profit margin for own brand products increased from approximately 26.7% in 2018 to approximately 28.6% in 2019. MONEY LENDING OPERATION The group's money lending operation primarily offers loans to individual consumers and small businesses in Hong Kong. The Hong Kong economy went through a difficult year in 2019. Amid elevated trade tensions between China and the United States, coupled with local social campaign that dealt a heavy blow to Hong Kong, the Hong Kong economy declined by 1.2% for 2019, the first annual economic contraction since 2009. As we focus on individual consumers and small businesses in Hong Kong, our money lending business is closely bound up with the Hong Kong economy. Revenue from money lending operation contracted by approximately HK$5,132,000 or approximately 30.5%, from approximately HK$16,851,000 for the year ended 31 December 2018 to approximately HK$11,719,000 for the year ended 31 December 2019. The decrease in revenue of money lending operation was mainly due to (i) weak demand for our loan services for the reporting period as a result of fragile Hong Kong economy, and (ii) we did not re-enter into a new agreement with a major customer, which contributed revenue of approximately HK$5,499,000 in 2018, after the old loan agreement expired in the second half of 2018. The group's loans and interest receivables increased by approximately 6.8%, from approximately HK$105,339,000 as at 31 December 2018 to approximately HK$112,501,000 as at 31 December 2019. Prospects: Although China and the United States signed Phase One trade deal in January 2020, trade disputes between the two largest economies are far from fully settled. We expect the trade negotiations will continue over periods. The rise of trade protectionism in the United States has weighed on global economic sentiment, and caused negative impact on our apparel operation. The challenges to our apparel operation arisen from the trade tensions between China and the United States is likely to continue in 2020. Other than the trade disputes, an outbreak of a respiratory illness caused by the COVID-19 coronavirus was identified in January 2020. Since the outbreak of epidemic, the China government has taken various emergency public health measures and other actions to prevent its spread, including extending the Chinese New Year holiday and restricting the resumption of work. The Group’s production base is located in Jiaxing of Zhejiang Province. The Group has not established production base in regions seriously affected by the epidemic, such as Hubei Province. Following the resumption of operation of the Group’s factory in February 2020, The group's workers have gradually returned to work. We expect the temporary suspension of the Group’s factory in China will not significantly affect the Group’s ability to deliver its orders for the whole year, as The group's production peak season starts in mid-second quarter of each year. However, the epidemic has now becoming a global health emergency which was later characterised as a pandemic. If the pandemic cannot be contained globally, we believe this may cause severe disruptions to the global economy, the Group’s business may also be affected. We will continue to closely monitor in this regard and react actively to its impacts on the operation and financial position of the Group. Facing the grave and complicated environment, we will continue to steer The group's business with prudent operation strategy. We may adopt further cost-cutting measures to reduce The group's operation costs. Whilst the Group is dedicated to improving the performance of its existing businesses amid the challenges and uncertainties ahead, the Group will continue to cautiously explore and assess potential business opportunities with a view to enhancing returns to shareholders in the years to come.

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