MiLOC Group Limited - Final Results to 31 December 2021 and Board Roles
01/08/2022 07:00
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RNS Number : 3469U MiLOC Group Limited 01 August 2022
01 August 2022
MiLOC Group Limited
(the "Company" or the "Group")
Final audited results for the year ended 31 December 2021 and Directorate
Changes
Board Roles
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 2021.
The Company also announces that Dr. Chow Ching Fung has ceased to be an
Executive Director and Chairman of the Company, and Dr. Chow Ching will become
a Non-Executive Director with immediate effect. Mr. Ivor Colin Shrago who is
currently a Non-Executive Director of the Company becomes the Non-Executive
Chairman.
Dr. Chow has served as an Executive Director and Chairman of the Company since
March 2010. Due to health issue, Dr. Chow decided to change his role to a
Non-Executive role, with the consent of the Board.
The Company's new Chairman, Mr. Ivor Shrago said:
"I'd like to thank Dr.Chow for all his work since the time of his
appointment. In particular, I would like to recognise the role Dr. Chow has
played in the past years to provide professional Traditional Chinese Medical
services to every patient of the Company and to introduce all the excellent
FMCG products with TCM ingredients to the Company.
Looking forward, the Company will continue to act in the best interests of our
shareholders."
Key financial highlights:
· Revenue for the year ended 31 December 2021: HK$4,939,527
(2020: HK$20,466,164)
· Loss for the year: HK$9,455,585 (Profit for 2020: HK$6,219,723)
· The basic loss per share for the year: HK$0.06 (Profit per
share for 2020: HK$0.11)
· The Group's cash position as at 31 December 2021: HK$435,836
(2020: HK$234,118)
Chairman's Statement
I am pleased to report the 2021 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.
COVID-19
The outbreak of COVID-19 continues and creates highly unpredictable
challenges. However the Board, as separately reported, has determined to
follow strategies that it believes will provide the Group with a secure
financial base.
The investment in online platforms for selling products over recent years has
resulted in the business being well placed to deliver services and products to
its customers 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 continued to explore for new products to be sold by
the Group. The management remain confident that the business can adjust to the
challenges it presents.
Review of significant activities
(i) Private Placings
In 2021, the Company raised approximately HK$3.6 million through private
placings. The proceeds of these subscriptions have been used for general
working capital purposes.
(ii) Convertible Bond
On 19 July 2021, the Company entered into an extension agreement for the
Convertible Bond. The maturity date was extended to 19 January 2023 and the
coupon rate adjusted to seven point five percent (7.5%) per annum for the
period from 20 July 2021 to 19 April 2022 and eight point five percent (8.5%)
per annum for the period from 20 April 2022 to 19 January 2023. All other
terms remain unchanged.
(iii) Suspension of Clinic Activities
Due to the covid-19 pandemic in Hong Kong, following the suspension of the
Traditional Chinese Medicine Centre ("TCM Centre") since October 2021, the
Company decided to officially close the TCM Centre in June 2022 (Please refer
to announcement made on 13 June 2022 about business restructuring).
(iv) 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 Master Kingdom Limited (Artist's Management Company), a company
incorporated in Hong Kong, which is owned by Mr. Koo Tin-lok, an entertainer
in Hong Kong (the "Artist"), and received the agreement on 12 January 2022.
The termination of the Endorsement Agreement was for the KooCool+ bodycare
products, which was signed and announced on 21st January 2019.
Due to the outbreak of Covid-19, the Company's operation faces challenges like
other companies worldwide. The Company, the Artist and the Artist's Management
Company mutually agreed that the Company would stop selling with the Artist's
endorsement on 31 May 2021. MPHK has also entered into a termination of the
commission agreement which was signed with CN Workshop Limited together with
the Endorsement Agreement on 21st January 2019.
Financial review
(i) Revenue, gross profit and other revenue
The Group's revenue for the year ended 31 December 2021 amounted to
HK$4,939,527 which represented a 75.9% decrease as compared to the year ended
31 December 2020. It included sales of TCM skincare and haircare products that
amounted to approximately HK$2,955,000 (2020: approximately HK$15,698,000) and
revenue from its clinic operations that amounted to approximately HK$1,985,000
(2020: approximately HK$4,768,000).
The sales revenue of TCM skincare and hair care products in 2021 has
significantly decreased as the Company has stopped selling KooCool+ products
since 31 May 2021 and AKFS+ products since November 2021. The revenue from the
clinic operations decreased by 58.4% as the Clinic operations has suspended
since September 2021 due to COVID-19 pandemic since the beginning of 2020.
The Group's gross loss and gross loss margin for the year ended 31 December
2021 amounted to HK$213,957 and 4% ( gross profit and gross profit margin for
2020: HK$6,914,739 and 34%) respectively. The Group's other revenue for the
year ended 31 December 2021 amounted to HK$2,498,000, and a decrease of 92%
compared to the year ended 31 December 2020 because of the large amount of
reversal of provision of accrued commission and royalty fee last year.
(ii) Operating expenses
The Group's distribution costs for the year ended 31 December 2021 amounted to
HK$402,676 which decreased by 97.5% as compared to the year ended 31 December
2020. 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 2021 were approximately
HK$11,254,000 compared to approximately HK$14,248,000 for the year ended 31
December 2020, a decrease of 21% and less rental expenses occurred during the
year.
(iii) Profit and profit per share
The Group's loss for the year amounted to HK$9,455,585 (Profit for 2020:
HK$6,219,723). As a result, the Group's basic loss per share for the year was
HK$0.06 (Profit per share for 2020: HK$0.11).
The Directors do not recommend the payment of a dividend.
(iv) Balance sheet items
The Group's tangible fixed assets as at 31 December 2021 amounted to HK$53,872
which mainly comprised leasehold improvements, furniture and fixtures and
office equipment. A decrease of approximately HK$312,000 over the balance as
at 31 December 2020, was mainly due to the depreciation of fixed assets for
the year.
The Group's other intangible assets as at 31 December 2021 amounted to
HK$2,857,142 which represented a decrease of approximately HK$357,000 compared
to approximately HK$3,214,285 as at 31 December 2020 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 2021 amounted to HK$185,826 and HK$348,808 respectively which
represented a decrease of approximately HK$2,185,000 and a decrease of
approximately HK$2,330,000 respectively as compared to the year ended 2020.
The decrease was due to the depreciation charge for the year.
The Group's inventories as at 31 December 2021 amounted to HK$Nil with a
decrease of approximately HK$4,373,000 over the balance as at 31 December
2020. This was mainly due to the disposal and write off of inventories during
the year after the termination of endorsement agreements for KooCool+ and
AKFS+ products.
The Group's other receivables and prepayments as at 31 December 2021 amounted
to HK$976,100 with a decrease of approximately HK$1,135,000 over the balance
as at 31 December 2020 was due to rental deposit returned in 2021.
The Group's trade payables as at 31 December 2021 amounted to HK$4,835,437
with a decrease of HK$2,374,000 over the balance as at 31 December 2020.
The Group's cash and cash equivalents increased from HK$234,000 as at 31
December 2020 to HK$436,00 as at 31 December 2021. For details of these
movements, please refer to the Group's cash flow statement included in the
non-statutory group financial statements.
Outlook
The Company faced different challenges during the year 2021, not only because
of the continuous impact of Covid-19 but also because of the termination of
our endorsements with the haircare and body-care products. Nevertheless, the
Company remains positive about its transformation to a more diversified Group
with various innovative products to be released to the market.
In the coming year, the Group will continue to maintain income through the
following strategy:
a. to continue to focus on promoting and generate more sales from our
online distribution of the Crushmetric series of products, including but not
limited to the Crushmetric SwitchPens which was launched and the Crushmetric
Chairs to be launched soon;
b. to launch a drink with special designed crushing can;
c. 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 continue to contribute income in the coming years;
d. to cut down non-profit making products and to minimize operating
costs.
The outbreak of COVID-19 and the restrictions imposed by the local Governments
in both mainland China and Hong Kong remains uncertain to the Company.
However, the Board believes that the Group can cope with it with flexible
policies including but not limited to working from home office and continue to
do its business through online channels. The Board's objective is the same as
previous year, which is to protect, safeguard and improve the business, to
minimise cost and generate more sales income through online products.
The Board will continue to take all reasonable efforts to ensure that
sufficient working capital is maintained.
On behalf of the Board of Directors, I would like to thank our management and
staff for the great loyalty and dedication they continue to show through these
delicate times. I would also like to extend our utmost appreciation to all our
partners, shareholders, customers, business associates and suppliers, for
their continued support.
Ivor Colin Shrago
Chairman
29 July 2022
The financial information in this announcement is derived from the Group's
audited consolidated financial statements for the year ended 31 December 2021
which are available at the Company's website www.miloc.com
(http://mail.cn.gt.com/owa/redir.aspx?C=ad01eba1965048848ecdcffa4df282c8&URL=http%3a%2f%2fwww.globalmarket.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
Lo King Yu Lilian - Acting Chief Financial Officer Tel: +852 2110 4221
AQUIS Exchange Corporate Adviser Tel: +44 (0) 20 7469 0930
PETERHOUSE CAPITAL LIMITED
Guy Miller
Mark Anwyl
MiLOC Group Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended December 2021
2021 2020
From continuing operations HK$ HK$
Revenue 4,939,527 20,466,164
Cost of sales (4,101,932) (11,562,972)
Impairment loss on inventory (1,051,552) (1,988,453)
Gross (loss)/profit (213,957) 6,914,739
Other revenue 2,497,506 32,519,220
Distribution costs (402,676) (16,004,562)
Administrative expenses (11,253,978) (14,248,318)
Foreign exchange gain/(loss), net 460,283 (159,439)
Adjusted Operating (loss)/profit (8,912,822) 9,021,640
Impairment loss for intangible asset and goodwill
- -
Impairment loss on trade receivable (143,550) (2,382,672)
Operating (loss)/profit (9,056,372) 6,638,968
Loss on disposal of subsidiaries - -
Finance costs (399,673) (419,559)
Interest income 460 314
(Loss)/profit before taxation (9,455,585) 6,219,723
Taxation - -
(Loss)/profit for the for year (9,455,585) 6,219,723
Other comprehensive income / (loss)
Exchange differences arising from translation (280,737) (453,717)
Total comprehensive result for the year (9,736,322) 5,766,006
(Loss)/profit for the year attributable to:
The equity holders of the parent entity (5,216,634) 9,176,764
Non-controlling interests (4,238,951) (2,957,041)
(Loss)/profit for the for year (9,455,585) 6,219,723
Total comprehensive (loss)/profit for the year attributable to:
The equity holders of the parent entity (5,497,371) 8,723,047
Non-controlling interests (4,238,951) (2,957,041)
(9,736,322) 5,766,006
(Loss)/profit per share - from continuing operations (HK$)
Basic (0.06) 0.11
MiLOC Group Limited
Consolidated Statement of Financial Position
As of 31 December 2021
As at 31 December 2021 As at 31 December 2020
HK$ HK$
Assets
Non-current assets
Fixed assets 53,872 365,788
Other intangible assets 2,857,142 3,214,285
Right-of-use assets 185,826 2,370,463
3,096,840 5,950,536
Current assets
Inventories - 4,393,462
Trade receivables 495,904 376,798
Other receivables and prepayments 976,100 2,111,512
Cash and cash equivalents 435,836 234,118
1,907,840 7,115,890
5,004,680 13,066,426
Total assets
Equity and liabilities
Equity
Share capital 666,358 656,981
Share premium 96,546,867 92,908,360
Retained earnings (136,983,820) (131,486,449)
Equity attributable to the parent entity (39,770,595) (37,921,108)
Non-controlling interests (289,136) 3,949,815
Total equity (40,059,731) (33,971,293)
Liabilities
Current liabilities
Trade payables 4,835,437 7,209,544
Other payables and accruals 30,824,176 28,365,680
Amounts due to directors 3,899,385 3,444,748
Lease liabilities - right-of-use assets 348,808 2,679,127
Borrowings 5,156,605 5,338,620
45,064,411 47,037,719
Non-current liabilities
Lease liabilities - right-of-use assets - -
Total liabilities 45,064,411 47,037,719
Total equity and liabilities 5,004,680 13,066,426
MiLOC Group Limited
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
As at 31 December As at 31 December
2021 2020
HK$ HK$
OPERATING ACTIVITIES
Cash used in operations (188,879) 2,448,816
INVESTING ACTIVITIES
Purchase of fixed assets - (42,735)
Interest received 460 314
Net cash used in investing activities
460 (42,421)
FINANCING ACTIVITIES
Issuance of shares 3,647,884 1,513,981
Proceed received for incorporation of a subsidiary - 40
Repayment on leases (2,708,303) (3,358,585)
Interest paid (548,809) (403,640)
Net cash generated from financing activities
390,772 (2,248,204)
Net increase in cash and cash equivalents
202,353 158,191
Cash and cash equivalents at beginning of year
234,118 86,975
Effects of currency translation on cash and cash equivalents (635) (11,048)
Cash and cash equivalents at end of year
435,836 234,118
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