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Public company info - Sun Cheong Creative Development Holdings Limited , 01781.HK

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Sun Cheong Creative Development Holdings Limited, 01781.HK - Company Profile
Chairman -
Share Issued (share) 540,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Furniture & Household Goods
Corporate Profile Business Summary: The principal activities of the Group is designing, developing, manufacturing and selling plastic household products. Performance for the year: For the Current Year, revenue of the Group amounted to approximately HK$21.5 million, representing a decrease of approximately HK$238.9 million or 91.7% as compared with approximately HK$260.4 million in 2019. For the year ended 31 December 2020, loss of the Group and loss for the year attributable to owners of the Company amounted to approximately HK$75.9 million, representing decrease of approximately HK$221.5 million as compared with approximately HK$297.4 million in 2019. Business Review During the year ended 31 December 2020, the group manufacture and sell plastic and other household products to various customers. The Year 2020 was full of challenges as the Company continued to experience an extraordinarily difficult business and operating environment, both through the continued internal impairments from 2019, and through the global economy being severely impacted by lockdowns, supply chain disruptions, and spread of the COVID-19 pandemic. During the year, the Group’s revenue amounted to approximately HK$21.5 million for the year ended 31 December 2020 (“Current Year”), representing a decrease of approximately 91.7% compared with the year ended 31 December 2019 (“Last Year”). The Group’s overall gross profit margin increased from a gross loss margin of around 0.8% to a gross profit margin of around 11.3% in the Current Year. Net loss for the year was recorded at approximately HK$75.9 million (2019: loss of approximately HK$297.4 million). The significant loss during the year was mainly attributable to continued assets impairment due to the Company’s internal restructuring, the de-consolidation of certain subsidiaries, as well as the global impact of COVID-19 on sales and manufacturing across all industries. As stated in the group’s 2019 report, Mr. Tong who at the material time was the principal shareholder, Chairman of the Company, and the legal representative of the Company’s onshore subsidiaries, left the Company abruptly, and without a transition plan; this departure and failure on the part of Mr. Tong had put the Company into a financial crisis, the effects of which continue to significantly impact the Company today. Further to Mr. Tong’s actions at the material time, he was unable to supply the books and records due in large part to employee disputes (among other factors) and therefore the new management was not able to act swiftly to mitigate the impact of Mr. Tong’s actions and those of litigants such as employees and creditors. Taking into account the inability of the Group’s access the factory due to litigation from employee disputes in 2020, and the aforementioned departure of Mr. Tong, and the professional advice received at the material time (as disclosed in the group’s 2019 report), the Directors were compelled to decide to de-consolidate the subsidiaries, Shenzhen Xincang Plastic Article Co., Ltd. and Foshan Haichang New Materials Technology Co., Ltd. In 2020, Joint Provisional Liquidators have been appointed for financial restructuring. The Group has maintained its business operation with limited resources. Even though the U.S. market only accounts for less than 25.5% of the group’s total revenue, the continued decline of the exchange rate of the Australian dollar against the US dollar has created unprecedented difficulties for the Group, the consequence of the trade war between the U.S. and China heavily burdened the Group’s income. In addition to the impact of internal financial and structural issues that have continued from 2019, the COVID-19 pandemic has significantly impacted the Company and entire industry’s operations. Large scale lockdowns and border control measures in China from early 2020 created obstacles for manufacturers. As the pandemic swept through the rest of the world, clients were also impacted through lockdowns and other movement restrictions. Whilst some of the restrictions have eased in 2021, cascading effects of logistics and supply chain bottlenecks, recent energy crisis in China, scarcity of raw materials and the inability to deliver goods in a cost effective or timely manner continues to affect not only the Company but the manufacturing sector at large. Management is optimistic that these constraints will gradually disappear in 2022, coinciding with the group’s planned sales and production growth as it ramps up through the year. Prospects: As of the date of this announcement, the management of the Company is actively working on a debt restructuring plan including but not limited to, liaising actively with the creditors, engaging independent financial advisors and soliciting investors to obtain adequate funding support. To that end, the Company has entered into a funding agreement and restructuring agreement with One Oak Tree Limited on 17 September 2021 and 8 November 2021, respectively, and has been granted leave by the Hong Kong and Cayman courts to propose a scheme of arrangement to its creditors. For details, please refer to the Company’s announcement date 17 September 2021 and 8 November 2021, respectively. With a core focus on household products made from plastic, the Company has leveraged (i) its skills and experience in plastic household products manufacturing; and (ii) the resources of its newly recruited management personnel in the industries and expanded its product offerings to cover household products in the home appliances and wellness sectors. It is important for the Company to reduce its financial risk by expanding its product offerings to capture the ever-changing demand of the global household goods market. The group continue to foresee that the global economy is constrained by supply chain and logistics bottlenecks, as well as the volatile demand resulting from the COVID-19 pandemic. However, with the increased time spent at home by the average consumer, the demand for the group’s products has strengthened through 2021, and this is a trend the group expect to capitalise on in 2022.

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