31 August 2021
MiLOC Group Limited
(the "Company" or the "Group")
Final audited results for the year ended 31 December 2020
MiLOC Group Limited (AQSE: ML.P), the AQUIS Stock Exchange (Formerly: NEX) quoted pharmaceutical and healthcare group, presents its audited consolidated financial statements for the year ended 31 December 2020.
Key financial highlights:
· Revenue for the year ended 31 December 2020: HK$20,466,164 (2019: HK$15,439,675)
· Profit for the year: HK$6,219,723 (Loss for 2019: HK$40,619,447)
· The basic profit per share for the year: HK$0.11 (Loss for 2019: HK$0.47)
· The Group's cash position as at 31 December 2019: HK$234,118 (2019: HK$86,975)
Chairman's Statement
I am pleased to report the 2020 financial year results for MiLOC Group Limited.
The nature of the Company's operations and its principal activities are to act as the holding company of a group engaged in:
(i) the provision of healthcare services, through and assisted by Traditional Chinese Medicine ("TCM") and medical products
(ii) therapies and consultations through a network of clinics in Hong Kong.
(iii) the sale and distribution of TCM healthcare and skincare products through wholesale outlets and TCM clinics, the Group's retail store in Hong Kong and other non-related TCM retail outlets, as well as directly to customers through the Company's online store.
With the support of various celebrities, the Group continued to invest time and effort on sales and distribution of its TCM Fast-Moving Consumer Goods ("FMCG") which including skin-care, hair-care and body-care products through both online and offline channels.
COVID-19
The outbreak of COVID-19 creates a new and highly unpredictable challenge. We have tested our business continuity plans which have been successfully activated.
The investment in online platforms for selling our products over recent years has resulted in the business being well placed to continue delivering services to our clients without significant disruption and with no increase in operational risk.
The Group has been taking extensive steps to reduce operating costs to the absolute minimum and has brought in new products to the Group - SD Labs products including SDX, SDST and SD Pro, a high performance full protection self-disinfecting coating spray with one spray protects for 90 days or 180 days. SDX is the only and fastest disinfectant that eliminates Covid-19 under 1 minute. The management remain confident that the business can adjust to the challenges it presents.
Review of significant activities
The Group has, over the last few years, invested considerable time and expense in establishing itself and introducing the concept of TCM, and TCM medical products and healthcare to the wider public. The Board believes that the establishment of TCM products will make a very substantial positive contribution to the Group's revenue in long term.
(i) Private Placings
In 2020, the Company raised approximately HK$1.5 million through private placings. The proceeds of these subscriptions have been applied towards several activities of the Company, including the AKFS Plus range of hair products and SDST self-disinfecting products as mentioned above.
(ii) Convertible Bond
On 19 January 2020, the Company entered into an extension agreement for the Convertible
Bond. The maturity date extended to 19 July 2021 and the coupon rate adjusted to seven percent (7%) per annum for the period from 20 January 2020 to 19 October 2020 and seven point five percent (7.5%) per annum for the period from 20 October 2020 to 19 July 2021. All other terms remain unchanged.
(iii) Termination of Endorsement Agreement
The Company's wholly owned subsidiary, MiLOC Pharmaceutical (HK) Limited ("MPHK"), has entered into a termination of the endorsement agreement with BrandKing Worldwide Limited and First Strong Workshop Limited for the AKFS+ haircare products which was signed on 1st July 2016. MPHK has also entered into a termination of the commission agreement which was signed with CN Workshop Limited together with the endorsement agreement on 1st July 2016.
Financial review
(i) Revenue, gross profit and other revenue
The Group's revenue for the year ended 31 December 2020 amounted to HK$20,466,164 which represented an 32.5% increase as compared to the year ended 31 December 2019. It included sales of TCM skincare and haircare products that amounted to approximately HK$15,698,000 (2019: approximately HK$8,389,000) and revenue from its clinic operations that amounted to approximately HK$4,768,000 (2019: approximately HK$7,050,000).
The sales revenue of TCM skincare and hair care products in 2020 has increased as the Group has spent a long time building up sales channels for our TCM products both in Hong Kong and Mainland China. The revenue from the clinic operations decreased by 32.3% as no health seminars was conducted by one of the consultants from Taiwan during COVID-19 pandemic since the beginning of 2020.
The Group's gross profit and gross profit margin for the year ended 31 December 2020 amounted to HK$6,914,739 and 34% (2019: HK$5,242,658 and 34%) respectively. The Group's other revenue for the year ended 31 December 2020 amounted to HK$32,519K, an increase of 12,115.5% compared to the year ended 31 December 2019 because of the Government of the Employment Support Scheme for COVID-19 and reversal of provision of accrued commission and royalty fee.
(ii) Operating expenses
The Group's distribution costs for the year ended 31 December 2020 amounted to HK$16,004,562 which decreased by 44.7% as compared to the year ended 31 December 2019. It was due to the termination of the endorsement agreement of AKFS+ and revised the over provision of royalty fee and commission fee. The Group's administrative expenses for the year ended 31 December 2020 were approximately HK$14,248,000 compared to approximately HK$16,422,000 for the year ended 31 December 2019, a decrease of 13.23% as less travelling expenses occurred during the year.
(iii) Profit and profit per share
The Group's profit for the year amounted to HK$6,219,723 (Loss for 2019: HK$40,619,447). As a result, the Group's basic profit per share for the year was HK$0.11 (Loss for 2019: HK$0.47 ).
The Directors do not recommend the payment of a dividend.
(iv) Balance sheet items
The Group's tangible fixed assets as at 31 December 2020 amounted to HK$365,788 which mainly comprised of leasehold improvements, furniture and fixtures and office equipment. A decrease of approximately HK$297,000 over the balance as at 31 December 2019 mainly due to the depreciation of fixed assets for the year.
The Group's other intangible assets as at 31 December 2020 amounted to HK$3,214,285 which represented a decrease of approximately HK$357,000 compared to approximately HK$3,571,428 as at 31 December 2019 due to an amortisation for the year.
The Group's right-of-use assets and Lease liabilities-right-of-use assets as at 31 December 2020 amounted to HK$2,370,463 and HK$2,679,127 respectively which represented a decrease of approximately HK$3,624,000 and a decrease of approximately HK$711,000 respectively as compared to the year ended 2019. The decrease was due to the depreciation charge for the year.
The Group's inventories as at 31 December 2020 amounted to HK$4,393,462 with a decrease of approximately HK$3,504,000 over the balance as at 31 December 2019.
Inventories mainly consisted of TCM products and healthcare products.
The Group's other receivables and prepayments as at 31 December 2020 amounted to HK$2,111,512 with a decrease of approximately HK$3,000k over the balance as at 31 December 2019 was due to there is prepayment to the manufacturers in 2019.
The Group's trade payables as at 31 December 2020 amounted to HK$7,209,000 with a decrease of HK$1,466,000 over the balance as at 31 December 2019.
The Group's cash and cash equivalents increased from HK$86K as at 31 December 2019 to HK$234K as at 31 December 2020. For details of these movements, please refer to the Group's cash flow statement included in the non-statutory group financial statements.
Outlook
It was a challenging year for many companies over the world, the impact of Covid-19 resulted in the temporary closure of our operation in both Mainland China and Hong Kong for a short period of time. Staffs are working from home from time to time.
In the coming year, the Group will continue to maintain income through the following strategy:
a. to provide medical supplies to our customers over the world;
b. to sell SD Labs products including but not limited to SDST and SD Pro that with one spray can inactivate viruses, and kill bacteria and fungi for 90-180 days. We are the exclusive distributor in Hong Kong. We believe this product will make a substantial contribution to our income in the coming years;
c. to continue to focus on promoting and generate more sales from our online distribution of our FMCG products in China.
d. to launch a special design crushing pen
e. to cut down non-profit making products and to minimize operating costs
The outbreak of COVID-19 has changed the commercial world, with the duration and ultimate impact of the virus not yet known. Our objective is the same as previous year, which is to protect our staff and business, and to ensure we are well placed to resume normal operations if further lockdowns are imposed by the Governments of the locations where we operate and potentially capitalise on opportunities when the virus impact subsides.
The Group will continue to make sure that sufficient working capital is maintained.
On behalf of the Board of Directors, I would like to thanks for our management and staff for their great loyalty and dedication they continue to show through these delicate time. I would also like to extend our utmost appreciation to all our partners, shareholders, customers, business associates and suppliers, for their continue support.
Chow Ching Fung
Chairman
The financial information in this announcement is derived from the Group's audited consolidated financial statements for the year ended 31 December 2020 which are available at the Company's website www.miloc.com.
The Directors of the Company accept responsibility for the contents of this announcement.
For further information, please contact:-
|
MiLOC ONG Ban Poh Michael - Chief Executive Officer Ronnie CHOI - Chief Financial Officer
|
Tel: +852 2110 4221
|
| AQUIS Exchange Corporate Adviser PETERHOUSE CAPITAL LIMITED Guy Miller Mark Anwyl
|
Tel: +44 (0) 20 7469 0930 |
MiLOC Group Limited
Consolidated Statement of Comprehensive Income
For the year ended December 2020
|
|
|
2020 |
|
2019 |
|
| From continuing operations |
|
HK$ |
|
HK$ |
|
|
|
|
|
|
|
|
| Revenue |
|
20,466,164 |
|
15,439,675 |
|
| Cost of sales |
|
(11,562,972) |
|
(10,197,017) |
|
| Impairment loss on inventory |
|
(1,988,453) |
|
- |
|
|
|
|
|
|
|
|
| Gross profit |
|
6,914,739 |
|
5,242,658 |
|
|
|
|
|
|
|
|
| Other revenue |
|
32,519,220 |
|
266,213 |
|
| Distribution costs |
|
(16,004,562) |
|
(28,952,543) |
|
| Administrative expenses |
|
(14,248,318) |
|
(16,422,397) |
|
| Foreign exchange gain/ (loss), net |
|
(159,439) |
|
(36,735) |
|
|
|
|
|
|
|
|
| Adjusted Operating profit / (loss) |
|
9,021,640 |
|
(39,902,804) |
|
| Impairment loss for intangible asset and goodwill |
|
- |
|
(46,127) |
|
| Impairment loss on trade receivable |
|
(2,382,672) |
|
- |
|
|
|
|
|
|
|
|
| Operating profit / (loss) |
|
6,638,968 |
|
(39,948,931) |
|
|
Loss on disposal of subsidiaries |
|
- |
|
(54,908) |
|
| Finance costs |
|
(419,559) |
|
(617,745) |
|
| Interest income |
|
314 |
|
2,137 |
|
| Profit / (loss) before taxation |
|
6,219,723 |
|
(40,619,447) |
|
| Taxation |
|
- |
|
- |
|
|
|
|
|
|
|
|
| Profit / (loss) for the for year |
|
6,219,723 |
|
(40,619,447) |
|
|
|
|
|
|
|
|
| Other comprehensive income / (loss) |
|
|
|
|
|
| Exchange differences arising from translation |
|
(453,717) |
|
20,060 |
|
| Total comprehensive result for the year |
|
5,766,006 |
|
(40,599,387) |
|
|
|
|
|
|
|
|
| Profit / (loss) for the year attributable to: |
|
|
|
|
|
| The equity holders of the parent entity |
|
9,176,764 |
|
(37,707,213) |
|
| Non-controlling interests |
|
(2,957,041) |
|
(2,912,234) |
|
| Profit / (loss) for the for year |
|
6,219,723 |
|
(40,619,447) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive profit / (loss) for the year attributable to: |
|
|
|
|
|
| The equity holders of the parent entity |
|
8,723,047 |
|
(37,687,153) |
|
| Non-controlling interests |
|
(2,957,041) |
|
(2,912,234) |
|
|
|
|
5,766,006 |
|
(40,599,387) |
|
|
|
|
|
|
|
|
| Profit / (loss) per share - from continuing operations (HK$)
|
|
|
|
|
|
| Basic |
|
0.11 |
|
(0.47) |
|
MiLOC Group Limited
Consolidated Statement of Financial Position
As of 31 December 2020
|
|
|
|
|
As at 31 December 2020 |
|
As at 31 December 2019 |
|
|
|
|
|
HK$ |
|
HK$ |
| Assets |
|
|
|
|
|
|
| Non-current assets |
|
|
|
|
|
|
| Fixed assets |
|
|
|
365,788 |
|
662,786 |
| Other intangible assets |
|
|
|
3,214,285 |
|
3,571,428 |
| Right-of-use assets |
|
|
|
2,370,463 |
|
5,994,333 |
|
|
|
|
|
5,950,536 |
|
10,228,547 |
| Current assets |
|
|
|
|
|
|
| Inventories |
|
|
|
4,393,462 |
|
7,897,946 |
| Trade receivables |
|
|
|
376,798 |
|
674,640 |
| Other receivables and prepayments |
|
|
|
2,111,512 |
|
5,111,688 |
| Cash and cash equivalents |
|
|
|
234,118 |
|
86,975 |
|
|
|
|
|
7,115,890 |
|
13,771,249 |
|
Total assets |
|
|
|
13,066,426 |
|
23,999,796 |
|
|
|
|
|
|
|
|
| Equity and liabilities |
|
|
|
|
|
|
| Equity |
|
|
|
|
|
|
| Share capital |
|
|
|
656,981 |
|
652,935 |
| Share premium |
|
|
|
92,908,360 |
|
91,398,425 |
| Retained earnings |
|
|
|
(131,486,449) |
|
(140,209,496) |
| Equity attributable to the parent entity |
|
|
|
(37,921,108) |
|
(48,158,136) |
| Non-controlling interests |
|
|
|
3,949,815 |
|
6,906,816 |
| Total equity |
|
|
|
(33,971,293) |
|
(41,251,320) |
|
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
| Trade payables |
|
|
|
7,209,544 |
|
8,675,949 |
| Other payables and accruals |
|
|
|
28,365,680 |
|
43,113,698 |
| Amounts due to directors |
|
|
|
3,444,748 |
|
2,101,056 |
| Lease liabilities - right-of-use assets |
|
|
|
2,679,127 |
|
3,390,381 |
| Borrowings |
|
|
|
5,338,620 |
|
5,452,172 |
|
|
|
|
|
47,037,719 |
|
62,733,256 |
| Non-current liabilities |
|
|
|
|
|
|
| Lease liabilities - right-of-use assets |
|
|
|
- |
|
2,517,860 |
| Total liabilities |
|
|
|
47,037,719 |
|
65,251,116 |
| Total equity and liabilities |
|
|
|
13,066,426 |
|
23,999,796 |
MiLOC Group Limited
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
|
|
|
As at 31 December 2020 |
|
As at 31 December 2019 |
|
|
|
HK$ |
|
HK$ |
|
|
|
|
|
|
| OPERATING ACTIVITIES |
|
|
|
|
| Cash used in operations |
|
2,448,816 |
|
(18,102,545) |
|
|
|
|
|
|
| INVESTING ACTIVITIES |
|
|
|
|
| Purchase of fixed assets |
|
(42,735) |
|
(129,618) |
| Interest received |
|
314 |
|
2,137 |
|
|
|
|
|
|
| Net cash used in investing activities |
|
(42,421) |
|
(127,481) |
|
|
|
|
|
|
| FINANCING ACTIVITIES |
|
|
|
|
| Issuance of shares |
|
1,513,981 |
|
20,035,994 |
| Proceed received for incorporation of a subsidiary |
|
40 |
|
- |
| Repayment on leases |
|
(3,358,585) |
|
(4,154,957) |
| Interest paid |
|
(403,640) |
|
(365,040) |
|
|
|
|
|
|
| Net cash generated from financing activities |
|
(2,248,204) |
|
15,515,997 |
|
|
|
|
|
|
| Net increase in cash and cash equivalents |
|
158,191 |
|
(2,714,029) |
|
|
|
|
|
|
| Cash and cash equivalents at beginning of year |
|
86,975 |
|
2,754,507 |
| Effects of currency translation on cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents at end of year |
|
234,118 |
|
86,975 |
|
|
|
|
|
|
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