Quali Smart : 2017 Annual Report

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ANNUAL REPORT

IT Division

Toys Division

Contents

Page

Corporate Information 2

Biographical Details of Directors and Senior Management 3

Chairman's Statement 7

Corporate Governance Report 8

Management Discussion and Analysis 18

Directors' Report 27

Independent Auditor's Report 40

Consolidated Financial Statements

Consolidated Statement of Profit or Loss and Other

Comprehensive Income 44

Consolidated Statement of Financial Position 46

Consolidated Statement of Changes in Equity 48

Consolidated Statement of Cash Flows 50

Notes to Consolidated Financial Statements 52

Five-year Financial Summary 136

Corporate Information

BOARD OF DIRECTORS

Executive Directors

Mr. Lau Ho Ming, Peter (Executive Chairman)

Mr. Poon Pak Ki, Eric Mr. Ng Kam Seng Mr. Chu, Raymond

Non-executive Director

Madam Li Man Yee, Stella

Independent Non-executive Directors Mr. Leung Po Wing, Bowen Joseph GBS, JP Mr. Chan Siu Wing, Raymond

Mr. Wong Wah On, Edward

COMMITTEES OF THE BOARD OF DIRECTORS

Audit Committee

Mr. Chan Siu Wing, Raymond (Chairman) Mr. Leung Po Wing, Bowen Joseph GBS, JP Mr. Wong Wah On, Edward

Remuneration Committee

Mr. Leung Po Wing, Bowen Joseph GBS, JP (Chairman)

Mr. Chan Siu Wing, Raymond Mr. Lau Ho Ming, Peter

Nomination committee

Mr. Leung Po Wing, Bowen Joseph GBS, JP (Chairman)

Mr. Lau Ho Ming, Peter

Mr. Chan Siu Wing, Raymond

Corporate Governance Committee

Mr. Chan Siu Wing, Raymond (Chairman)

Mr. Ng Kam Seng

Madam Li Man Yee, Stella

COMPANY SECRETARY

Ms. Tang Yuen Ching, Irene

AUTHORIZED REPRESENTATIVES

Mr. Ng Kam Seng

Ms. Tang Yuen Ching Irene

AUDITOR

BDO Limited

25th Floor, Wing On Centre 111 Connaught Road Central Hong Kong

REGISTERED OFFICE

Cricket Square, Hutchins Drive

P. O. Box 2681

Grand Cayman KY1-1111 Cayman Islands

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

Workshop C, 19/F., TML Tower

3 Hoi Shing Road Tsuen Wan

Hong Kong

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE IN THE CAYMAN ISLANDS

Codan Trust Company (Cayman) Limited Cricket Square, Hutchins Drive

P. O. Box 2681

Grand Cayman KY1-1111 Cayman Islands

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Tricor Investor Services Limited Level 22, Hopewell Centre

183 Queen's Road East Hong Kong

PRINCIPAL BANKERS

DBS Bank (Hong Kong) Limited Hang Seng Bank Limited

The Hongkong and Shanghai Banking Corporation Limited

COMPANY'S WEBSITE

www.quali-smart.com.hk

2 QUALI-SMART HOLDINGS LIMITED ANNUAL REPORT 2017 Biographical Details of Directors and Senior Management

EXECUTIVE DIRECTORS

Mr. Lau Ho Ming, Peter

Mr. Lau Ho Ming, Peter, aged 62, was appointed as a Director on 14 March 2012. He is the Executive Chairman and one of the co-founders of the Group. He is a member of each of the Remuneration Committee and the Nomination Committee of the Board and is also a director of the principal subsidiaries of the Company. Mr. Lau is responsible for formulating the overall business development strategies, management team development and daily operations of the Group. He is the husband of Madam Li Man Yee, Stella, a non-executive Director.

Mr. Lau has experience of more than 30 years in the toy manufacturing industry. He has held senior positions with Jetta-Victory Toys and Gifts Company Limited and Mattel Toys (HK) Ltd respectively before he founded the Group in 1996. Mr. Lau obtained the1984 President's Award for innovative performance from Mattel Inc. during his service in Mattel Toys (HK) Ltd.

Mr. Lau obtained his Bachelor's Degree of Science in Engineering from the University of Hong Kong in November 1978 and a Master's Degree of Business Administration from the University of East Asia, Macau in February 1988.

Mr. Lau has been the vice president of The Toys Manufacturers' Association of Hong Kong since 2008. Mr. Lau was the advisor for The Second Council of the Toy Industry Association in Nanhai District, Foshan City in November 2007. Mr. Lau obtained an award from Guangdong government on his contribution to economic development in October 1996 and obtained an outstanding entrepreneur award from China Toys Association in October 2006. Mr. Lau has committed to contribute certain scholarships offered by the Department of Industrial and Manufacturing Systems Engineering of the University of Hong Kong. Namely, the "Peter H.M. Lau Penultimate Year Scholarship" and "Peter H.M. Lau Project Prize". The former targets to offer to students who are considered as high achievers with leadership potential and the latter targets to those demonstrate excellent performance in projects.

Mr. Poon Pak Ki, Eric

Mr. Poon Pak Ki, Eric, aged 50, was appointed as an executive Director on 3 January 2013. He is responsible for the financial and accounting matters and general administration in the Group. Prior to joining the Group in November 1996, Mr. Poon worked for an audit firm as audit clerk from February 1987 to May 1990. He also has experience of 5 years in accounting and administration for a toy manufacturing company. Mr. Poon obtained his Bachelor's Degree in Accountancy from the Bolton Institute of Higher Education (now known as University of Bolton) in August 2004. In May 2017, Mr. Poon has been admitted as as a member of the Institute of Public Accountants and an associate of the Institute of Financial Accountants.

Mr. Ng Kam Seng

Mr. Ng Kam Seng, aged 36, was appointed as an executive Director on 3 January 2013 and he is a member of the Corporate Governance Committee of the Board. He is responsible for the corporate development and lean production strategy in the Group. Since he joined the Group in January 2010, Mr. Ng has been responsible for formulating and implementing the Group development strategies in conjunction with other senior management. In particular, he is the primary responsible person in working with the largest customer of the Group on lean and future development strategies, methods and production control techniques to ensure the production costs of the toys staying competitive. He is also leading a technical team of industrial engineers and manufacturing engineers to monitor and design the manufacturing methods for the production team to execute.

Mr. Ng obtained his Bachelor's Degree of Engineering in Industrial Management and Manufacturing Systems Engineering with first class honours from the University of Hong Kong in December 2003 and a Master's Degree of Philosophy from the University of Hong Kong in December 2006. Mr. Ng is pursuing his study in a Doctoral Degree of Philosophy in Engineering Science.

QUALI-SMART HOLDINGS LIMITED ANNUAL REPORT 2017 3