Annual Report 2015 年報 Contents 目錄 CORPORATE INFORMATION 02 CHAIRMAN S STATEMENT 報 04 MANAGEMENT DISCUSSION AND ANALYSIS 05 CORPORATE GOVERNANCE REPORT

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1 LEE & MAN HANDBAGS HOLDING LIMITED 理文手袋集團有限公司 (Incorporated in the Cayman Islands with limited liability) ( 於開曼群島註冊成立之有限公司 ) Stock Code 股份代號 :1488 ANNUAL REPORT 2015 年報

2 Annual Report 2015 年報 Contents 目錄 CORPORATE INFORMATION 02 CHAIRMAN S STATEMENT 報 04 MANAGEMENT DISCUSSION AND ANALYSIS 05 CORPORATE GOVERNANCE REPORT 報 10 PROFILE OF DIRECTORS AND SENIOR MANAGEMENT 19 DIRECTORS REPORT 報 22 INDEPENDENT AUDITOR S REPORT 報 30 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 32 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 33 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 34 CONSOLIDATED STATEMENT OF CASH FLOWS 35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 報 STATEMENT OF FINANCIAL POSITION OF THE COMPANY 110 FINANCIAL SUMMARY 111 SCHEDULE OF PROPERTY 112

3 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Corporate Information 公司資料 BOARD OF DIRECTORS Executive directors Ms. Wai Siu Kee (Chairman) Mr. Kung Fang David (formerly known as Mr. Kung Phong) Ms. Lee Man Ching 文 Independent non-executive directors Mr. Heng Victor Ja Wei Mr. So Wing Keung Mr. Tsang Hin Man Terence 文 AUDIT COMMITTEE Mr. Heng Victor Ja Wei (Chairman) Mr. So Wing Keung Mr. Tsang Hin Man Terence 文 REMUNERATION COMMITTEE 02 Mr. Heng Victor Ja Wei (Chairman) Mr. So Wing Keung Mr. Tsang Hin Man Terence 文 NOMINATION COMMITTEE Ms. Wai Siu Kee (Chairman) Mr. Heng Victor Ja Wei Mr. So Wing Keung Mr. Tsang Hin Man Terence 文 COMPANY SECRETARY Ms. Wong Yuet Ming REGISTERED OFFICE Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman, KY Cayman Islands Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman, KY Cayman Islands

4 Annual Report 2015 年報 Corporate Information 公司資料 PRINCIPAL OFFICE 8th Floor, Liven House King Yip Street Kwun Tong Kowloon Hong Kong PRINCIPAL BANKERS Hong Kong: Hang Seng Bank Limited The Hongkong and Shanghai Banking Corporation Limited AUDITORS Deloitte Touche Tohmatsu Certified Public Accountants PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE Royal Bank of Canada Trust Company (Cayman) Limited 4th Floor, Royal Bank House 24 Shedden Road, George Town Grand Cayman KY Cayman Islands Royal Bank of Canada Trust Company (Cayman) Limited 4th Floor, Royal Bank House 24 Shedden Road, George Town Grand Cayman KY Cayman Islands 03 HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE Tricor Secretaries Limited Level 22, Hopewell Centre 183 Queen s Road East Hong Kong WEBSITE

5 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Chairman s Statement 主席報告 BUSINESS REVIEW For the year ended 31 December 2015, the Group recorded revenue of HK$659 million, decreased by 19.4% as compared to last year; and a net profit for the year of about HK$10 million, decreased by 70% as compared to last year. Net profit for the year decreased significantly mainly due to the manufacturers from other countries such as Philippines and Vietnam exporting the products with cheap price, which imposed serious pressure on sales order price. In addition, continuous rising labour costs in China also lead to significant decrease in our Group s profit. PROSPECTS It is anticipated that the coming year will be full of challenges. The rise of USD interest rate, the economic slowdown in Europe and the geopolitical tensions, which resulted in continuous slowdown of global economy and hindered the foreign trade growth of Hong Kong. The above factors coupled with the surging labour costs will weaken the profitability of handbag business 集團 %1,000 70% 集團 手袋 04 In order to strengthen the Group s competitive ability in the market, the Group has decided in 2015 to construct a new factory in Myanmar with total investment of approximately US$12 million. It is planned to commence operation at the end of 2016 and it is anticipated that the Group s average production costs can be reduced as a whole after the commencement of production of the new factory, thus strengthening the ability to receive orders. In addition, the Group has created its own brand in 2015 and has started the handbags retail business. Such business is still in the initial development stage and the management anticipates that it will take some time for the business to become mature. 集團 集團 , 集團 集團 2015, 手袋 理 The above projects will be financed by internal funds and borrowings. The Group possesses sufficient cash and available banking facilities to meet its capital expenditure and working capital requirements. APPRECIATION On behalf of the Board, I would like to extend our sincere gratitude to our shareholders, customers and business partners for their persistent support throughout the year. In addition, I would also like to take this opportunity to thank all colleagues and staff for their persistent contribution to the Group. 集團 集團 集團 集團 On behalf of the Board Wai Siu Kee Chairman Hong Kong, 18 March

6 Annual Report 2015 年報 Management Discussion and Analysis 管理層討論及分析 RESULTS OF OPERATION Revenue and net profit attributable to equity holders of the Group for the year ended 31 December 2015 was HK$659 million and HK$10 million, representing a decrease of 19.4% and 70.0% respectively, as compared to HK$818 million and HK$33 million respectively last year. The basic earnings per share was HK1.2 cents for the year ended 31 December 2015 and HK4.0 cents last year 年 年 年 ,000 年 , % 70.0% 2015 年 年 1.2 年 4.0 Revenue The Group recorded revenue of HK$659 million for the year ended 31 December 2015, decreased by 19.4% as compared to HK$818 million last year 年 年 6.59 年 % Cost of sales The cost of sales decreased from HK$661 million last year to HK$465 million for the year ended 31 December 2015, showing a decrease of approximately 29.6%. Furthermore, the percentage of cost of sales to the total revenue for the year was 70.6%, decreased by 10.2 percentage points as compared to 80.8% for last year. Such decrease was mainly attributable to the re-classification of part of the expenses from cost of sales to administrative expenses due to operational change from processing factory to Wholly Owned Foreign Enterprise in one of the Group s major subsidiary in the PRC during the year. 年 年 年 % 年 70.6% 年 80.8% 10.2 年 05 Selling and distribution costs 及分 Selling and distribution costs incurred for the year ended 31 December 2015 was HK$58 million, increased by HK$21.8 million as compared to HK$36.2 million last year, representing an increase of approximately 60.2%, mainly driven by the expanding retail business 年 年 5,800 年 3,620 2, %

7 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Management Discussion and Analysis 管理層討論及分析 Administrative expenses Administrative expenses incurred for the year ended 31 December 2015 was HK$121.7 million, increased by HK$27 million as compared to HK$94.7 million last year, representing a significantly increase of approximately 28.5%, which was mainly due to the reclassification of part of the expenses from cost of sales to administrative expenses due to operational change from processing factory to Wholly Owned Foreign Enterprise in one of the Group s major subsidiary in the PRC during the year ,1709,470 2, % 集團 公司 有 Finance costs Interest expenses incurred for the year ended 31 December 2015 was HK$1.72 million, which increased by HK$1.13 million as compared to HK$0.59 million last year INVENTORIES, DEBTORS AND CREDITORS TURNOVER 06 The inventory turnover days of the Group was 57 days for the year ended 31 December 2015 which was increased by 7 days as compared to 50 days last year. The average collection period of the Group were 57 days and 55 days respectively for the year ended 31 December 2015 and 2014, which is in line with the normal credit terms of 7 days to 90 days granted by the Group to its customers 集團 集團 790 The Group s creditors turnover days were both 31 days for the year ended 31 December 2015 and 2014, which is in line with the normal credit terms of 7 days to 60 days granted by the suppliers to the group 集團 31 集團 7 60 LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE The total shareholders equity of the Group as at 31 December 2015 was HK$284 million ( : HK$284 million). As at 31 December 2015, the Group had current assets of HK$483 million ( : HK$271 million) and current liabilities of HK$75 million ( : HK$111 million). The current ratio was 6.46 as at 31 December 2015 as compared to 2.45 as at 31 December 集團 集團

8 Annual Report 2015 年報 Management Discussion and Analysis 管理層討論及分析 The Group generally finances its operations with internally generated cash flow and credit facilities provided by its principal bankers in Hong Kong. As at 31 December 2015, the Group had no outstanding bank borrowings ( : HK$26 million). As at 31 December 2015, the Group maintained bank balances and cash of HK$309 million ( : HK$53 million). The Group s net cash-to-equity ratio (cash and cash equivalents net of total borrowings over shareholders equity) was 0.17 as at 31 December 2015 ( : 0.10) 年 , 年 年 The Group possesses sufficient cash and available banking facilities to meet its commitments and working capital requirements. EMPLOYEES At 31 December 2015, the Group had a workforce of approximately 3,000 people. The Group maintains a good relationship with its employees, and provides them with proper training and competitive compensation and incentives. The staffs are remunerated based on their work performance, professional experience and prevailing market situation. Remuneration packages comprise salary and bonuses based on individual merits 年 ,000 07

9 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Management Discussion and Analysis 管理層討論及分析 KEY RISKS AND UNCERTAINTIES Apart from those stated in the Chairman s Statement and Management Discussion and Analysis sections, the Company is exposed to the following key risks and uncertainties which are required to be disclosed pursuant to the Companies Ordinance (Cap 622 Laws of Hong Kong). 理 公司 公司 Risks Relating to Our Industry 1. In recent years, it is common for the Mainland factories to face continuous rising labour costs and difficulties in employing skilled labour. Our Group s responding strategies are to establish new production facilities in the labour intensive, low wages developing regions so as to reduce the production costs; and to create our own brand, develop handbags retail business, thereby reducing its dependency on specific markets. 手 集團 集 手袋 2. Credit Risks Relating to Customers Exposure to bad debts attributable to customers usually intensifies in a time of weak economic performance. To minimize credit risks, the management of the Group has appointed dedicated staff members to handle procedures for determining credit limits, credit approval and other monitoring procedures, to ensure follow-up with all receivables in a timely manner. In addition, the Group reviews the collectability of receivables at the end of a reporting period, to ensure that sufficient impairment losses are provided for in respect of uncollectible monies. For the year ended 31 December 2015, no bad debts were recorded by the Group. 集團 理 限 有 集團 集團 有 3. Liquidity Risks 3. In managing liquidity risks, the Group monitors and maintains cash and cash equivalents at a level which is considered by the management as sufficient, to satisfy the needs arising from the Group s operations and to mitigate the effect of fluctuations of cash flow. The management closely monitors the use of borrowings to ensure that relevant covenants relating to loans are complied with. 理 集團 理 集團 理

10 Annual Report 2015 年報 Management Discussion and Analysis 管理層討論及分析 4. Currency Risks 4. Debts denominated in foreign currencies expose the Group to foreign exchange risks. The Group closely manages and monitors foreign exchange risks to ensure that appropriate measures are taken in a timely manner. The Group will consider entering into forward contracts in respect of foreign currencies to mitigate relevant risks as and when appropriate. ENVIRONMENTAL PROTECTION The Group is required to undertake the responsible for its impact to the environment arising from the business operation. The Group strictly complied with the Chinese local environmental regulations. Handbag processing is a light industry, no substance polluting the environment will be released during the manufacturing process and there is no adverse impact to the surrounding environment. The Group is also committed to implement energy conservation project in recent years and the result is good; not only the power consumption has been significantly reduced, but also reduced the plant overhead costs. 年 09

11 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Corporate Governance Report 企業管治報告 CORPORATE GOVERNANCE PRACTICES The Company is committed to maintaining high standards of corporate governance. The board of directors (the Board ) of the Company believes that sound and reasonable corporate governance practices are essential for the growth of the Group and for safeguarding and maximizing shareholders interests. On 1 April 2012, the Code on Corporate Governance Practices ( Former CG Code ) contained in Appendix 14 to the Rules governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ( Listing Rules ) was amended and renamed as Corporate Governance Code and Corporate Governance Report ( New CG Code ). The Board is committed to complying with the code provisions as stated in the New CG code to the extent that the directors of the Company ( Directors ) consider it is applicable and practical to the Company. 公司 公司 集團 理 公司 公司 文 The Company has complied with New CG Code during the year of 2015, except for the following deviation: 公司 2015 文 10 The Group has an Executive Chairman who also acts as the chief executive officer. The Executive Chairman with the assistance of the Group s senior management team oversees and manages the Group s business. Other functions normally undertaken by a chief executive officer of a company are delegated to members of the Group s senior management team. This structure deviates from the code provision of Code that requires the roles of the chairman and the chief executive officer to be separate and not performed by the same individual. The Directors has considered this matter carefully and decided not to adopt the provision. The Directors believe that the current management structure has been effective in facilitating the operation and development of the Group and its business for a considerable period of time and that the necessary checks and balances consistent with sound corporate governance practices are in place. Accordingly, the Directors do not envisage the Group should change its current management structure. However, the Directors will review the management structure from time to time to ensure it continues to meet these objectives. 集團 有 集團 理 理 集團 理 集團 理 文 集團 理 有 有 有 文 理 有 集團 集團 有 理 理 有

12 Annual Report 2015 年報 Corporate Governance Report 企業管治報告 DIRECTORS SECURITIES TRANSACTIONS The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers ( Model Code ) as set out in Appendix 10 of the Listing Rules as a code of conduct regarding directors securities transactions in All the members of the Board have confirmed, following specific enquiry by the Company that they have complied with the required standard as set out in the Model Code throughout the year ended 31 December The Model Code also applies to other specified senior management of the Group 年 年 年 BOARD OF DIRECTORS Composition and role The Board comprises: Executive director Ms. Wai Siu Kee (Chairman) Mr. Kung Fang David Ms. Lee Man Ching Independent non-executive director Mr. So Wing Keung Mr. Heng Victor Ja Wei Mr. Tsang Hin Man Terence 11 As at 31 December 2015, the Board comprises three executive directors (one of whom is the Chairman) and three independent non-executive directors. The three independent non-executive directors represent more than one-third of the Board. In addition, three of the independent non-executive directors possess appropriate business, professional accounting qualifications and legal expertise 年 The principal focus of the Board is on the overall strategic development of the Group. The Board also monitors the financial performance and the internal controls of the Group s business operations.

13 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Corporate Governance Report 企業管治報告 The independent non-executive directors also serve the important function of ensuring and monitoring the basis for an effective corporate governance framework. The Board considers that each independent non-executive director is independent in character and judgment and that they all meet the specific independence criteria as required by the Listing Rules. The Company has received from each independent non-executive director an annual confirmation or confirmation of his independence pursuant to Rule 3.13 of the Listing Rules. The independent non-executive directors are explicitly identified in all of the Company s corporate communications. 有 有 公司 3.13 公司 有 The Chairman is primarily responsible for drawing up and approving the agenda for each board meeting in consultation with all directors. Notice of at least 14 days have been given to all directors for all regular board meetings and the directors can include matters for discussion in the agenda if necessary. Agenda and accompanying board papers in respect of regular board meetings are sent out in full to all directors within reasonable time before the meeting. Draft minutes of all board meetings are circulated to directors for comment within a reasonable time prior to confirmation. 14 文 理 理 12 Minutes of board meetings and meetings of board committees are kept by duly appointed secretaries of the respective meetings and all directors have access to board papers and related materials, and are provided with adequate information in a timely manner, which enable the Board to make an informed decision on matters placed before it. 有 有 文 有 During the year under review, four full board meetings were held and the individual attendance of each director is set out below: Name of director Number of board meetings attended Ms. Wai Siu Kee 4 Mr. Kung Fang David 4 Ms. Lee Man Ching 文 4 Mr. So Wing Keung 4 Mr. Heng Victor Ja Wei 4 Mr. Tsang Hin Man Terence 文 4

14 Annual Report 2015 年報 Corporate Governance Report 企業管治報告 Each newly appointed Director receives comprehensive, formal and tailored induction on his appointment, so as to ensure that he has appropriate understanding of the business and operations of the Group and that he is fully aware of his responsibilities and obligations under the Listing Rules and relevant regulatory requirements. There are also arrangements in place for providing continuing briefing and professional development to Directors at the Company s expenses whenever necessary. The Company provides regular updates and presentations on changes and developments relating to the Group s business and the legislative and regulatory environments to the Directors at Board meetings or through s. The Directors are committed to complying with Code Provision A.6.5 of the New CG Code which came into effect on 1 April 2012 on Directors training. All Directors have participated in continuous professional development to develop and refresh their knowledge and skills and provided a record of training they received for the year ended 31 December 2015 to the Company. The type of training received is summarized below: 2012 年 4 1 A 年 年 Reading regulatory updates Attending external seminars/programmes 13 管 Name of director Executive directors Ms. Wai Siu Kee P P Mr. Kung Fang David P P Ms. Lee Man Ching P P Independent non-executive directors Mr. So Wai Keung P P Mr. Heng Victor Ja Wei P P Mr. Tsang Hin Man Terence P P

15 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Corporate Governance Report 企業管治報告 AUDIT COMMITTEE The Audit Committee was established in 2011 and its current members include: 2011 Mr. Heng Victor Ja Wei (Chairman) Mr. So Wing Keung Mr. Tsang Hin Man Terence 文 The Board considers that each Audit Committee member has broad commercial experience and there is a suitable mix of expertise in accounting, business and legal on the Audit Committee. The composition and members of the Audit Committee complies with the requirements under Rule 3.21 of the Listing Rules. The new written terms of reference which describe the authority and duties of the Audit Committee were adopted in March 2012 to conform to the provisions of the New CG Code, a copy of which is posted on the Company s website 文 限 文 公司 14 The Audit Committee meets regularly to review the Group s financial reporting and other information to shareholders, the system of internal controls, risk management and the effectiveness and objectiveness of the audit process. The Audit Committee also provides an important link between the Board and the Company s auditors in matters coming within the scope of its terms of reference and keeps under review the independence and objectivity of the auditors. 集團 理 有 公司 The Audit Committee has reviewed with the management the accounting principles and practices adopted by the Group and discussed internal controls and financial reporting matters including a review of the accounts for the year ended 31 December 理 集團 During the year, three Audit Committee meetings were held and the individual attendance of each member is set out below: Name of director Number of attendance Mr. Heng Victor Ja Wei 3 Mr. So Wing Keung 3 Mr. Tsang Hin Man Terence 文 3

16 Annual Report 2015 年報 Corporate Governance Report 企業管治報告 REMUNERATION COMMITTEE The Remuneration Committee was established in 2011 and its current members include: 2011 年 Mr. Heng Victor Ja Wei (Chairman) Mr. So Wing Keung Mr. Tsang Hin Man Terence All members of the Remuneration Committee are independent nonexecutive directors. The Remuneration Committee advises the Board on the Group s overall policy and structure for the remuneration of directors and senior management. The Remuneration Committee ensures that no director or any of his associate is involved in deciding his own remuneration. The new terms of reference of the Remuneration Committee were adopted in March 2012 to conform to the provisions of the New CG Code, a copy of which is posted on the Company s website 年 3 In determining the emolument payable to directors, the Remuneration Committee takes into consideration factors such as salaries paid by comparable companies, time commitment and responsibilities of the directors, employment conditions elsewhere in the Group and the desirability of performance-based remuneration. 15 The Remuneration Committee has met during the year to determine the policy for the remuneration of directors and assess performance of executive directors and certain senior management and all members have attended in the meeting. 年 Auditors Remuneration For the year ended 31 December 2015, the fee payable to the Company s external auditor in respect of audit and non-audit services provided to the Company and its subsidiaries is set out below: 2015 年 年 HK$ 000 Audit services 1,000 Non-audit services 75 1,075

17 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Corporate Governance Report 企業管治報告 NOMINATION COMMITTEE The Nomination Committee was established in March 2012 and its current members include: Ms. Wai Siu Kee (Chairman) Mr. So Wing Keung Mr. Heng Victor Ja Wei Mr. Tsang Hin Man Terence 文 The majority members are independent non-executive directors. The Nomination Committee has the duty of reviewing annually the board structure and composition. 有 The terms of reference of the Nomination Committee were adopted in March 2012 to confirm to the provision of the New CG Code, a copy of which is posted on the Company s website 公司 The Nomination Committee has met during the year to approve and adopt its terms of reference, all members have attended in the meeting. 有 有 16 BOARD DIVERSITY During the year, the Company continued to monitor the board composition with regard to its diversity policy which requires board appointments to be made based on merit and candidates to be considered against an objective criteria, including diversity. In order to maintain an appropriate mix and balance of talent, skills, experience and background on the Board, the Nomination Committee developed measurable objectives to implement this policy and monitored progress towards achieving these objectives during the year ended 31 December 公司 有 The current board composition was also evaluated by reference to, among other things, the age, gender, cultural and educational background and professional experience of each director, against the Company s business model and specific needs. 公司 文 公司 The directors of the Company believes diversity is important to enhance the Board s effectiveness by encouraging a diversity of perspectives and to maintain high standards of corporate governance. The directors of the Company will continue to monitor and develop new objectives for implementing and achieving improved diversity on the Board as and when it considers appropriate with regard to the specific needs of the Company and the market from time to time. 公司 公司 公司 有

18 Annual Report 2015 年報 Corporate Governance Report 企業管治報告 INTERNAL CONTROLS The Board has overall responsibility for the system of internal controls of the Group and for reviewing its effectiveness. The Board is committed to implementing an effective and sound internal controls system to safeguard the interest of shareholders and the Group s assets. The Board has delegated to executive management the implementation of the system of internal controls and reviewing of all relevant financial, operational, compliance controls and risk management function within an established framework. DIRECTORS RESPONSIBILITY STATEMENT The directors are responsible for the preparation of accounts for each financial period which give a true and fair view of the state of affairs of the Group and of the results and cash flow for that period. In preparing the accounts for the year ended 31 December 2015, the directors have selected suitable accounting policies and applied them consistently; adopted appropriate Hong Kong Financial Reporting Standards and Hong Kong Accounting Standards; made adjustments and estimates that are prudent and reasonable; and have prepared the accounts on the going concern basis. The directors are also responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group 年 年 報 17 SHAREHOLDERS RIGHTS The Company has only one class of shares. All shares have the same voting rights and are entitled to the dividend declared. The rights of the shareholders of the Company ( Shareholders ) are set out in Company s Articles of Association. Shareholders of the Company can: (i) convene an extraordinary general meeting; (ii) forward enquiries to the board of directors; (iii) forward proposals at shareholders meetings and (iv) nominate Directors for election. Details of relevant procedures are available on the Company s website. (i) (ii)(iii) (iv)

19 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Corporate Governance Report 企業管治報告 INVESTOR RELATIONS AND COMMUNICATION The Board is committed to providing clear and full information about the Group s performance to shareholders through the publication of interim results and annual results in a timely manner. In addition to dispatching circulars, notices and financial reports to shareholders, additional information is also available to shareholders on the website of the Company. 集團 公司 The annual general meeting provides a useful platform for shareholders to raise comments and exchange views with the Board. Shareholders are encouraged to attend annual general meetings for which the Company gives at least 21 days notice. The Chairman and Directors and external auditors are available to answer questions on the Company s businesses at the meeting. 公司 21 公司 Separate resolutions are proposed at the general meetings on each substantially separate issue, including the election of individual directors. In addition, poll voting procedure is included in the circular to shareholders dispatched together with the annual report. 有 18 CONSTITUTIONAL DOCUMENTS There was no significant change in the Company s constitutional documents for the year ended 31 December 公司 文

20 Annual Report 2015 年報 Profile of Directors and Senior Management 董事及高級管理層簡介 EXECUTIVE DIRECTOR Ms. WAI Siu Kee, aged 71, Chairman and Chief Executive Officer of the Group, who is also one of the founders of our Group. She is also the chairman of Lee & Man Chemical Company Limited (Stock Code: 0746). Ms. Wai has more than 50 years of experience in the manufacturing industry. She is responsible for the development of corporate strategies, corporate planning and overall management of our Group and in particular the marketing and development of the business of our Group. Ms. Wai is the honorary permanent president of the Hong Kong Baptist University Foundation. Ms. Wai is the mother-in-law of Mr. Kung Fang David, the Executive Director and Managing Director of the Group and is the mother of Ms. Lee Man Ching, the Executive Director and Director of Sales of the Group 年 Mr. KUNG Fang David, aged 44, the member of Chinese People s Political Consultative Committee of Jiujiang, an Executive Director and Managing Director of the Group. He joined the Group in 2008 and has over 16 years of experience in business development as well as extensive knowledge in sales and marketing in both PRC and Hong Kong. He is responsible for the management and development of the handbag business of the Group. Mr. Kung is the spouse of Ms. Lee Man Ching, the Executive Director and Director of Sales of the Group and a son-in-law of Ms. Wai Siu Kee, the Group s Chairman 年 16 年 19 Ms. LEE Man Ching, aged 41, an Executive Director and Director of Sales of the Group. She joined the Group in 2007 and has over 17 years of experience in sales and marketing. She is responsible for the merchandising and marketing functions of our Group. Ms. Lee is the daughter of Ms. Wai Siu Kee, the Group s Chairman and the spouse of Mr. Kung Fang David, the Executive Director and Managing Director of the Group 年 17 年

21 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Profile of Directors and Senior Management 董事及高級管理層簡介 INDEPENDENT NON-EXECUTIVE DIRECTORS Mr. SO Wing Keung, aged 64, an Independent Non-Executive Director of the Group. He is the managing director of Sweda Limited. Mr. So obtained a master s degree in materials engineering from the Yanshan University. Currently, Mr. So is the President Honoris Causa of Hong Kong Young Industrialists Council, Honorary President of Hong Kong Watch Manufacturers Association, an alternate member of the General Committee of Federation of Hong Kong Industries, an executive committee member of Hong Kong Electronic Industries Association and the vice-president of The Mirror. 64 集團 Sweda Limited 理 有 20 Mr. HENG Victor Ja Wei, aged 38, an Independent Non-Executive Director of the Group. He is a partner of Morison Heng, Certified Public Accountants. He holds a master of science degree of the Imperial College of Science, Technology and Medicine, the University of London. He is a member of The Association of Chartered Certified Accountants and member of The Hong Kong Institute of Certified Public Accountants. Mr. Heng serves as an independent nonexecutive director in China Fire Safety Enterprise Group Limited (Stock Code: 0445), Matrix Holdings Limited (Stock Code: 1005) and Lee & Man Chemical Company Limited (Stock Code: 0746). He also serves as the company secretary and authorized representative of China Life Insurance Company Limited (Stock Code: 2628). 38 集團 有 理 理 公 公 公 集團有限公司 0445 集團有限公司 1005 理文 有限公司 0746 公司 2628 公司 Mr. TSANG Hin Man Terence, aged 53, an Independent Non- Executive Director of the Group. He was admitted as a solicitor in Hong Kong in 1993 and he is currently the sole proprietor of Tsang & Co., H.M. Mr. Tsang obtained a bachelor s degree in science from the University College London, the University of London. He also holds a bachelor s degree in law from the University of Westminster, United Kingdom. Mr. Tsang serves as an independent non-executive director in Differ Group Holding Company Limited (Stock Code: 8056), China Investment and Finance Group Limited (Stock Code:1226) and as an non-executive director in Winto Group (Holdings) Limited (Stock Code: 8238). 53 集團 1993 文 有 有 理 有 集團 有限公司 8056 集團有限公司 1226 集團 有限公司 8238

22 Annual Report 2015 年報 Profile of Directors and Senior Management 董事及高級管理層簡介 SENIOR MANAGEMENT Mr. NG Yu Hung, aged 61, Senior Manager of the Group. He joined the Group in Mr. Ng has over 37 years of experience in the handbag industry. He is responsible for the marketing and development of the Group s handbag business in the European market. Mr. Ng is the brother of Mr. Ng Yu Kuen, one of the senior management staff of the Group 年 37 年 Mr. CHIU Shun King, aged 53, Production Manager of the Group. He joined the Group in 1984 and has over 30 years of experience in the handbag industry. He is responsible for production planning and overall production management of Gao Bu factory in China 年 30 年 Ms. WONG Yuet Ming, aged 51, Company Secretary of the Group. She is also the executive director, financial controller and company secretary of Lee & Man Chemical Company Limited (Stock Code: 0746). She joined the Group in 2004 and has over 27 years of experience in the field of auditing and accounting. She holds a master s degree in business administration from the University of Surrey, United Kingdom. Ms. Wong is a fellow member of the Association of Chartered Certified Accountants and an associate member of the Hong Kong Institute of Certified Public Accountants. She is responsible for managing and overseeing compliance and reporting obligations of our Group 年 26 年 報 21 Ms. YU Siu Mui, aged 44, Senior Manager of the Group. She joined the Group in 2001 as merchandiser. She graduated from the Chinese University of Hong Kong with a bachelor s degree in business administration in She has over 13 years of experience in marketing and development. She is responsible for the sales and marketing of the Group s business in the United States and European market 年 1994 年 13 年 Mr. NG Yu Kuen, aged 58, Senior Manager of the Group. He joined the Group in 2009 and has over 24 years of experience in administration and management. He is responsible to co-ordinate the production activity in Liu Wu factory in China. Mr. Ng is the brother of Mr. Ng Yu Hung, one of the senior management staff of the Group 年 24 年 Mr. WANG Jian Mei, aged 46, Production Manager of the Group. He joined the Group in 1993 and has over 26 years of experience in the handbag industry. He is responsible for production planning and production management of fashion handbag of Gao Bu factory in China 年 26 年

23 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Directors Report 董事會報告 The directors present their directors report and the audited consolidated financial statements for the year ended 31 December PRINCIPAL ACTIVITIES The Company is an investment holding company. The activities of its principal subsidiaries are set out in note 34 to the consolidated financial statements. 公司 公司 公司 34 RESULTS AND APPROPRIATIONS The results of the Group for the year ended 31 December 2015 are set out in the consolidated statement of profit or loss and other comprehensive income on page 32. 集團 The directors do not recommend the payment of a dividend and propose that the profit for the year be retained. DISTRIBUTABLE RESERVES 22 As at 31 December 2015, the Company s reserve available for distribution to shareholders represented the retained profit of HK$876,000 (2014: HK$11,452,000) 公司 876, ,452,000 FIVE YEAR FINANCIAL SUMMARY A summary of the results and of the assets and liabilities of the Group for the last five years is set out on page 111. 集團 111

24 Annual Report 2015 年報 Directors Report 董事會報告 DIRECTORS The directors of the Company during the year and up to the date of this report were: 年 報 Executive directors 董事 Ms. Wai Siu Kee (Chairman) Mr. Kung Fang, David (formerly known as Mr. Kung Phong) Ms. Lee Man Ching Independent non-executive directors 董事 Mr. Heng Victor Ja Wei Mr. So Wing Keung Mr. Tsang Hin Man Terence In accordance with the provisions of the Company s Articles of Association, Mr. Kung Fang, David and Mr. So Wing Keung will retire at the forthcoming annual general meeting and being eligible, will offer themselves for re-election. 年 The term of office of each of the other independent non-executive directors is the period up to his retirement as required by the Company s Articles of Association. 23 DIRECTORS SERVICE CONTRACTS Ms. Wai Siu Kee, Mr. Kung Fang, David and Ms. Lee Man Ching, have each entered into a service agreement with the Company on 18 May 2014 for an initial term of 3 years, which shall continue thereafter unless and until terminated by either party giving to the other not less than 3 months prior notice in writing or payment of salary in lieu of notice to terminate the service contract 年 年

25 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Directors Report 董事會報告 DIRECTORS INTERESTS IN SHARES AND UNDERLYING SHARES At 31 December 2015, none of the directors and the chief executive, and any of their associates, had any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of part XV of the Securities and Future Ordinance (the SFO )), which had to be notified to the Company and The Stock Exchange of Hong Kong Limited (the Stock Exchange ) pursuant to Divisions 7 and 8 of Part XV of the SFO, or which were required, pursuant to section 352 of the SFO, to be recorded in the register referred to therein or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the Model Code ), to be notified to the Company and the Stock Exchange 公司 團 XV 有 XV7 8 公司 有限公司 352 公司 公司 ARRANGEMENTS TO PURCHASE SHARES OR DEBENTURES 24 The directors of the Company were entitled to participate in a share option scheme adopted by Lee & Man Chemical Company Limited (the LM Share Option Scheme ), details of which are set out in Lee & Man Chemical Company Limited s annual report for the year ended 31 December No share option was granted under the LM Share Option Scheme since its inception. 公司 有 理文 有限公司 理文 有 理文 有限公司 理文 In addition, on 18 May 2011, the Company has also adopted a share option scheme (the Handbag Share Option Scheme ) in which the Company s directors and employees are entitled to participate, details of which are set out in note 28 to the consolidated financial statements. No share option was granted under the Handbag Share Option Scheme since its inception 公司 手袋 公司 有 有 28 手袋 Save as above, during the year neither the Company, its holding company nor any of its subsidiaries and fellow subsidiaries, a party to any arrangements to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. 文 公司 公司 公司 公司 公司 公司 團

26 Annual Report 2015 年報 Directors Report 董事會報告 SUBSTANTIAL SHAREHOLDERS At 31 December 2015, shareholders (other than directors and chief executive of the Company) who had interests and short positions in the shares and underlying shares of the Company which have been disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under section 336 of the SFO were as follows: 2015 年 XV Long positions Ordinary shares of HK$0.10 each of the Company 0.1 Number of Percentage of the issued ordinary issued share capital Name of shareholder Capacity shares held of the Company Full Gold Trading Limited Beneficial owner (note i) 412,750, % ( Full Gold ) i Wise Triumph Limited Beneficial owner 138,300, % 25 Mr. Chen Haining Held by controlled corporation (note ii) 138,300, % ii Notes: (i) The long position of 412,750,000 shares were held by Full Gold which was owned by each of Mr. Lee Wan Keung and Mr. Lee Man Yan as to 55% and 45% respectively. Ms. Wai Siu Kee and Ms. Lee Man Ching are the directors of Full Gold. (i) 412,750,000Full Gold 55% 45% Full Gold (ii) Wise Triumph Limited is wholly owned by Mr. Chen Haining. (ii) Wise Triumph Limited

27 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Directors Report 董事會報告 Other than disclosed above, as at 31 December 2015, the Company has not been notified by any persons (other than directors and chief executives of the Company) who had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provision of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under section 336 of the SFO. 文 公司 公司 公司 有 XV2 3 公司 336 公司 CONNECTED TRANSACTIONS Details of the related party transactions for the year are set out in note 32 to the consolidated financial statements which some are also the discloseable connected transaction pursuant to the Listing Rules. In the opinion of the independent non-executive directors, these transactions entered into by the Group were: 有 32 集團 (i) in the ordinary and usual course of business of the Group; (i) 集團 26 (ii) either (a) on normal commercial terms; or (b) where there was no available comparison, on terms that were fair and reasonable so far as the shareholders of the Company were concerned; (ii) (a)(b) 公司 公 理 (iii) either (a) in accordance with the terms of the agreements; or (b) where there were no such agreements, on terms no less favourable than those available to or from independent third parties; and (iii) (a)(b) (iv) within the relevant cap amounts as agreed by the Stock Exchange. (iv) 有 限 Save as disclosed above, there were no other transactions which need to be disclosed as connected transactions in accordance with the requirements of the Listing Rules. 文

28 Annual Report 2015 年報 Directors Report 董事會報告 DIRECTORS INTEREST IN CONTRACTS OF SIGNIFICANCE Other than as disclosed under the heading Connected transactions, no contracts of significance to which the Company, its holding company or any of its fellow subsidiaries and subsidiaries was a party and in which a director of the Company had a material interest, whether directly and indirectly, subsisted at the end of the year or at any time during the year. 年 年 BUSINESS REVIEW AND PERFORMANCE A review and outlook of the business of the Company and a discussion and analysis of the Group s performance during the year and the material factors underlying its results and financial position are provided in the Chairman s Statement and Management Discussion and Analysis respectively in page 4 and pages 5 to 9 of this Annual Report. 年 年報 4 報 5 9 MAJOR CUSTOMERS AND SUPPLIERS During the year, the aggregate sales attributable to the Group s five largest customers comprised approximately 54% of the Group s total sales and the sales attributable to the Group s largest customer were approximately 21% of the Group s total sales. 年 54% 21% 27 The aggregate purchases during the year attributable to the Group s five largest suppliers were less than 30% of total purchases. 年 30% None of the directors, their associates or any shareholders which, to the knowledge of the directors, owned more than 5% of the Company s issued share capital had any interest in the share capital of any of the five largest customers of the Group. 5%

29 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Directors Report 董事會報告 PURCHASE, SALE OR REDEMPTION OF THE COMPANY S LISTED SECURITIES During the year, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company s listed securities. 公司 公司 公司 PRE-EMPTIVE RIGHTS There are no provision for pre-emptive rights under the Company s Articles of Association, or the laws of the Cayman Islands, which would oblige the Company to offer new shares on a pro-rata basis to existing shareholders. 公司 有 文 公司 有 APPOINTMENT OF INDEPENDENT NON-EXECUTIVE DIRECTORS The Company has received, from each of the independent nonexecutive directors, an annual confirmation of his independence pursuant to Rule 3.13 of the Listing Rules. The Company considers all of the independent non-executive directors are independent 公司 公司 有 28 EMOLUMENT POLICY The emolument policy of the employees of the Group is set up by the Remuneration Committee on the basis of their merit, qualifications and competence. 集團 The emoluments of the directors of the Company are decided by the Remuneration Committee, having regard to the Company s operating results, individual performance and comparable market statistics. 公司 公司 The Company has adopted a share option scheme as an incentive to directors and eligible employees. Details of the scheme are set out in note 28 to the consolidated financial statements. 公司 28

30 Annual Report 2015 年報 Directors Report 董事會報告 SUFFICIENCY OF PUBLIC FLOAT According to the information that is publicly available to the Company and within the knowledge of the directors, the Company has maintained a sufficient public float throughout the year ended 31 December 年 年 PERMITTED INDEMNITY PROVISION The Company has arranged for appropriate insurance cover for Directors and officers liabilities in respect of legal actions against its Directors and senior management arising out of corporate activities. The permitted indemnity provision is in force for the benefit of the Directors as required by the provisions of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong). 622 AUDITOR A resolution will be submitted to the annual general meeting of the Company to re-appoint Messrs. Deloitte Touche Tohmatsu as auditor of the Company. 年 29 On behalf of the Board Ms. Wai Siu Kee CHAIRMAN Hong Kong, 18 March 年 3 18

31 Lee & Man Handbags Holding Limited 理文手袋集團有限公司 Independent Auditor s Report 獨立核數師報告 TO THE MEMBERS OF LEE & MAN HANDBAGS HOLDING LIMITED (incorporated in the Cayman Islands with limited liability) 有限公司 We have audited the consolidated financial statements of Lee & Man Handbags Holding Limited (the Company ) and its subsidiaries (collectively referred to as the Group ) set out on pages 32 to 109, which comprise the consolidated statement of financial position as at 31 December 2015, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information 理文手袋集團有限公司 公司 公司 集團 DIRECTORS RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS 30 The directors of the Company are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. 公司 公 公司 公 有 AUDITOR S RESPONSIBILITY Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to report our opinion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. 公 理 有

32 Annual Report 2015 年報 Independent Auditor s Report 獨立核數師報告 AUDITOR S RESPONSIBILITY (CONTINUED) An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the consolidated financial statements. 報 報 報 報 報 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. OPINION In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2015, and of its financial performance and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance. 報 2015 年 年 報 31 Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 18 March 2016 師 2016 年 3 18