Annual Report 2024

MQThlX

• Enhance customer satisfaction through delivery of high quol products thot meet world safety standard

  • Be a socially responsible

    employer by providing safe and pleasant working environment to workers

• Optimise shareholders business growth, diversification on productivity enhancement

Content

1. Corporate Profile

2. Corporate Information

3. Financial Highlights

6 Chairman's Statement

7 Management Discussion and Analysis

13 Biographies of Directors and Senior Management

15 Corporate Governance Report

31 Environmental, Social and Governance Report

46 Report of the Directors

55 Independent Auditor's Report

61 Consolidated Statement of Profit or Loss and Other Comprehensive Income

62 Consolidated Statement of Financial Position

64 Consolidated Statement of Changes in Equity

65 Consolidated Statement of Cash Flows

67 Notes to the Consolidated Financial Statements

148 Financial Summary

Corporate Profile

Danang City, Vietnam First Plant Danang City, Vietnam Second Plant

MATRIX is a well-established manufacturer of plastic, die-cast and plush toys, with vertically integrated production process including mould making, manufacturing and design and a manufacturer of lighting products. Currently, the Group operates four plants in Vietnam. As at 31 December 2024, the Group employed approximately 2,200 staff in Hong Kong, the PRC, Vietnam, Australia, the United States of America, Canada, Mexico and Europe. The well-established toy companies in designing, manufacturing and selling plastic toys - The Shelcore and the Funrise Group, and two overseas lighting companies were merged into the Group in 2005, 2007 and 2017 respectively.

Danang City, Vietnam Third Plant Vinh City, Vietnam Fourth Plant

Corporate Information BOARD OF DIRECTORS REGISTERED OFFICE

Executive Directors

Cheng Yung Pun (Chairman)

Cheng King Cheung Yip Hiu Har

Shirley Marie Price (appointed on 12 March 2024)

Independent Non-executive Directors

Mak Shiu Chung, Godfrey Heng Victor Ja Wei

Chui Ka Hing

AUDIT COMMITTEE & REMUNERATION COMMITTEE

Heng Victor Ja Wei (Chairman) Mak Shiu Chung, Godfrey Chui Ka Hing

NOMINATION COMMITTEE

Cheng Yung Pun (Chairman) Mak Shiu Chung, Godfrey Heng Victor Ja Wei

Chui Ka Hing

COMPANY SECRETARY

Lai Mei Fong

AUDITOR

Crowe (HK) CPA Limited

Registered Public Interest Entity Auditors 9/F, Leighton Centre,

77 Leighton Road, Causeway Bay, Hong Kong

Victoria Place, 5th Floor 31 Victoria Street

Hamilton HM 10 Bermuda

SHARE REGISTRAR

Appleby Global Corporate Services (Bermuda) Limited Canon's Court, 22 Victoria Street,

PO Box HM 1179, Hamilton HM EX Bermuda

BRANCH SHARE REGISTRAR IN HONG KONG

Tricor Investor Services Limited 17/F, Far East Finance Centre 16 Harcourt Road

Hong Kong

PRINCIPAL PLACE OF BUSINESS

Unit 01, 10/F., Railway Plaza, 39 Chatham Road South, Tsim Sha Tsui,

Kowloon, Hong Kong

PRINCIPAL BANKERS

DBS Bank (Hong Kong) Limited

WEBSITE

https://www.irasia.com/listco/hk/matrix/index.htm

STOCK CODE

1005 (Main Board of The Stock Exchange of Hong Kong Limited)

Financial Highlights

Financial Highlights and Key Ratios as of the Year Ended 31 December:

CONSOLIDATED

55,092

10,588

REVENUE

(LOSS)/PROFIT ATTRIBUTABLE TO OWNERS OF THE COMPANY

REVENUE BREAKDOWN BY MARKET

-298,573

-102,604

6,228

456,859

714,486

986,094

1,082,637

901,141

2024 2023

2020 2021 2022 2023 2024 2020 2021 2022 2023 2024

United States Europe Mexico Canada

South America Australia Others

2023

67.7%

12.4%

1.6%

9.3%

1.9%

5.0%

2.1%

Financial Highlights

-0.395

-0.136

0.008

0.073

0.014

90,732

152,228

85,127

851,230

1,035,765

1,127,168

1,115,640

NET ASSETS

(LBITDA)/EBITDA BASIC (LOSS)/EARNINGS PER SHARE

-218,544

-36,467

494,562

2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024

DEFINITIONS

Gross Profit Margin (%)

=

Gross Profit

Revenue

x 100%

Net Loss Margin (%)

=

Gearing Ratio (%)

=

Loss for the year attributable to owners of the Company Revenue

Debt (bank borrowings, amount due to a director and lease liabilities)

Total Equity

x 100%

x 100%

Current Ratio

=

Current Assets

Current Liabilities

Quick Ratio

=

Current Assets excluding Inventories

Current Liabilities

Chairman's Statement

To Our Shareholders,

I am pleased to present to our shareholders the annual report of Matrix Holdings Limited (the "Company") and its subsidiaries (collectively the "Group") for the financial year ended 31 December 2024.

In 2024, the Group's consolidated revenue decreased by approximately HK$257,627,000 or 36.1%, amounting to approximately HK$456,859,000 compared to HK$714,486,000 in the previous year. The loss attributable to the owners of the Company was approximately HK$298,573,000, reflecting an increase of 191.0% from last year's loss of approximately HK$102,604,000.

In 2024, facing global economic uncertainty and escalating geopolitical tensions, investments and economic growth were significantly impacted. The United States experienced a volatile economic and political environment, leading to notable changes in consumer attitudes and behaviors. The U.S. market was further affected by slowing real wage growth, the depletion of excess savings, and increasing credit card debt, all of which collectively eroded consumer confidence and led consumers to adopt more cautious consumption habits and therefore weakened consumer spending. Despite some easing of inflation, consumer debt continued to influence spending habits, causing consumers to be more selective in discretionary spending. Additionally, intense competition among manufacturers may limit market share and growth. To maintain our market position, the Group will focus on continuously improving operational efficiency and optimizing its organizational structure, emphasizing innovative products, marketing strategies, and internal efficiency improvements, while continuing to employ a consumer-centric strategy. By strengthening our core strengths and adapting to the rapidly evolving market, we are focused on achieving growth despite current challenges.

Furthermore, I would like to highlight the importance of Environmental, Social, and Governance (ESG) considerations for the Group's long-term sustainability. The Board of Directors and management have fully incorporated ESG principles into the Group's mission and daily activities. For a comprehensive overview of our performance in these areas, please refer to the ESG Report, which can be found on pages 31 to 45.

Finally, I would like to extend my heartfelt gratitude to all our stakeholders including shareholders, customers, business partners, and suppliers for their unwavering support and trust in the Group's activities. I also wish to thank the management team and all staff members for their invaluable contributions and commitment to our success.

Cheng Yung Pun

Chairman

Hong Kong, 26 March 2025

Management Discussion and Analysis RESULTS

During the year of 2024 (the "year"), the Group's consolidated revenue reported approximately HK$456,859,000, decreased by approximately HK$257,627,000 or 36.1% as compared to approximately HK$714,486,000 of 2023 ("last year"). The loss attributable to the owners of the Company amounted to approximately HK$298,573,000, representing an increase of 191.0% as compared with the loss of approximately HK$102,604,000 last year. The increase in the loss was mainly driven by a decrease in revenue, which was mainly due to global economic uncertainty and escalating geopolitical tensions, which had a notable impact on consumer attitudes and behaviors, leading to reduced consumer spending. In addition, impairment loss was made on property, plant and equipment, intangible assets and right-of-use assets.

FINAL DIVIDEND

During the year, the Company paid an interim dividend of HK1.5 cents (2023: HK2.0 cents) in cash per share to the shareholders. The Board resolved on 3 May 2024 to declare and pay a second interim dividend of HK3.0 cents per share in respect of the year ended 31 December 2023. The Directors have resolved to recommend the payment of a final dividend of HK1 cent in cash per Share for the year ended 31 December 2024 (2023: N/A), payable to Shareholders whose names appear on the Register of Members of the Company on 23 May 2025. Together with the interim dividend paid of HK1.5 cents per share, the total dividend per share for the year is HK2.5 cents (2023: HK5.0 cents).

Subject to the approval of the shareholders at the forthcoming annual general meeting, the proposed final dividend will be paid on or about 6 June 2025 in cash.

FINANCIAL REVIEW Revenue

Revenue for the year recorded approximately HK$456,859,000, decreased by approximately 36.1% from last year as the slowdown in investments and economic growth, driven by global economic uncertainty and rising geopolitical tensions, has had a detrimental effect on consumer spending.

Gross profit

The Group's gross profit for the year decreased by approximately 50.6% to approximately HK$152,366,000 due to decrease of sales.

Distribution and selling costs

Distribution and selling costs decreased by approximately 6.7% to approximately HK$181,074,000 for the year. The decrease was mainly attributable to the decrease in royalty expenses.

Administrative expenses

Administrative expenses for the year increased by approximately 2.5% to approximately HK$160,096,000, which mainly consisted of office staff salaries, rent and rates of offices, depreciation of property, plant and equipment and other administrative expenses.

Management Discussion and Analysis

Finance costs and income tax

Finance costs for the year increased by approximately 17.7% to approximately HK$4,473,000 as compared to last year due to the increase in the interest of lease liabilities. Income tax expense for the year recorded approximately HK$22,781,000 as compared to income tax expense of approximately HK$4,312,000 of last year due to the increase in deferred tax expense.

Trade and bills receivables, prepayments, deposits and other receivables

Trade and bills receivables of the year decreased by approximately 31.7% to approximately HK$77,591,000 as compared to last year, mainly attributed from the decline in sales. Prepayment, deposit and other receivables decreased by approximately 12.1% to approximately HK$128,869,000, due to the decrease in other deposits paid.

Trade payables, accruals and other payables

Trade payables of the year decreased by approximately 10.9% to approximately HK$27,007,000 as compared to last year, mainly due to less purchase. Accruals and other payables increased by approximately 8.9% to approximately HK$77,421,000, due to the increase in other payables and accruals.

Quick Ratio

The quick ratio of the year was lower than last year which resulted mainly from the decrease in trade and bills receivables and bank and cash balances.

Current Ratio

The current ratio of the year was similar to last year.

Financial position and cash flows review

The Group's cash flow position decreased significantly while the bank borrowings were maintained at a minimum level.

Liquidity and Financial Resources

As at 31 December 2024, the Group had bank, cash balances and fixed bank deposits of approximately HK$57,733,000 (2023: HK$181,202,000). As at 31 December 2024, the Group obtained banking facilities in a total of approximately HK$70,000,000 (2023: HK$70,000,000) which was supported by corporate guarantee.

As at 31 December 2024, the Group had bank borrowings of approximately HK$5,242,000 (2023: HK$4,234,000).

The Group's gearing ratio, representing the debt (bank borrowings, amount due to a director and lease liabilities) divided by total equity, increased to 16.3% (2023: 5.8%) due to the decrease in the equity balance.

The Group has maintained an adequate level of cash flows for its business operations and capital expenditures.

Management Discussion and Analysis

Capital Expenditure and Commitments

During the year, the Group acquired property, plant and equipment at a cost of approximately HK$25,024,000 (2023: HK$18,046,000) mainly to maintaining the facilities. These capital expenditures were financed primarily by cash flow generated from operations.

Assets and Liabilities

As at 31 December 2024, the Group had total assets of approximately HK$694,161,000 (2023: HK$1,031,356,000), total liabilities of approximately HK$199,599,000 (2023: HK$180,126,000) and equity attributable to owners of the Company of approximately HK$507,013,000 (2023: HK$863,734,000). The net assets of the Group decreased by approximately 41.9% to approximately HK$494,562,000 as at 31 December 2024 (2023: HK$851,230,000).

SIGNIFICANT INVESTMENT AND ACQUISITION

There was no significant investment and acquisition for the year ended 31 December 2024.

SIGNIFICANT DISPOSAL/IMPORTANT EVENT

There was no significant disposal/important corporate event for the year ended 31 December 2024.

EXCHANGE RATE RISK

Several subsidiaries of the Company have foreign currency sales and purchases, which expose the Group to foreign currency risk. Certain bank balances, and trade and other receivables, trade and other payable and accruals of the Group are denominated in foreign currencies. The Group currently does not have a foreign currency hedging policy. However, the management monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arise.

BUSINESS REVIEW Manufacturing Operation

The global and U.S. economies experienced volatility in 2024, leading to substantial changes in consumer attitudes and behaviors. The U.S. market faced additional challenges, including slowing real wage growth, depleted excess savings, persistent inflation, and rising credit card debt. These factors collectively reduced consumer spending, eroded confidence, and prompted more cautious spending habits, ultimately impacting sales. The unstable global economy resulted in high customer inventory levels, contributing to reduced sales. As a result, customers adopted more cautious inventory management and order placement strategies in 2024. This led to a decline in sales of products under Original Brand Manufacturing ("OBM") brands like 'Bright Fairy Friends', 'Crushie Fluffies', and 'Gazillion', as well as the Original Design Manufacturing ("ODM") brand 'TEENAGE MUTANT NINJA TURTLES', 'Rocket League' and a girl toys' series products and lighting products. This decline offset the increased sales in the ODM brand 'CAT' and OBM brand 'FART NINJAS'.

Management Discussion and Analysis

In response to these challenges, the Group focused on retaining customer loyalty in North America and Europe by enhancing product offerings and improving inventory management. The Group remains committed to its established brand strategies and has launched new marketing campaigns for brands such as 'CAT', 'FART NINJAS', 'Furlings', and 'Bright Fairy Friends'. To address these challenges and expand offerings, the Group introduced new licensed ODM product 'SpongeBob SquarePants' and OBM products including, 'Burp Zombies', 'Furlings', and 'Might Fleet'. Simultaneously, the Group is implementing cost control measures and automation. Despite the challenging operational environment, the Group maintains a financially prudent approach.

The Group's main manufacturing facility is situated in Vietnam. Leveraging its strong industry position and expansion strategy within the country, the Group has restructured its plant operations and improved supply chain efficiency, resulting in lower production costs. To enhance its competitiveness, the Group has increased both production capacity and quality through localized production and management practices, alongside advancements in automation within its manufacturing processes.

Property Development

The Company has strategically expanded its presence in Vietnam by acquiring lands in Danang City through its subsidiary. This strategic move aligns with the Group's strategy to diversify its focus towards Vietnam's growing property market. Leveraging its established presence and management expertise in the region, the Company aims to capitalize on the opportunities in property development, thereby broadening its asset and income bases.

After taking into consideration of various conditions in Vietnam, the strategic focus on the property development and the readiness of resources, the Group considered to go for the property development in 2024.

NUMBER OF EMPLOYEES AND REMUNERATION POLICIES

As at 31 December 2024, the Group had a total of approximately 2,200 (2023: 2,310) employees in Hong Kong, Macau, the PRC, Vietnam, Australia, the US, Canada, Mexico and Europe. The Group provides its employees with competitive remuneration packages commensurate with the level of pay established by the market trend in comparable businesses. A share option scheme was adopted by the Group for selected participants (including full-time employees) as incentives or rewards for their contributions to the business and operation of the Group. A mandatory provident fund scheme and respective local retirement benefit schemes are also in place.

ENVIRONMENTAL PROTECTION

The Group believes that maintaining a healthy and harmonious relationship with its stakeholders and fulfilling its social responsibilities to the community is essential for building and preserving the value of the Group. Adhering to the principle of Reducing, Recycling and Reusing, the Group encourages green office practices such as double-sided printing and copying, setting up recycling bins, promoting using recycled paper and reducing energy consumption by switching off lightings and electrical appliances, and will consider implementing further eco-friendly measures and practices in the operation of the Group's business.

Management Discussion and Analysis

COMPLIANCE WITH LAWS AND REGULATIONS

Compliance procedures are in place to ensure adherence to applicable laws, rules and regulations in particular, those that have significant impact on the Group. The Board and internal audit function team delegated by the Board monitor the Group's policies and practices on compliance with legal and regulatory requirements and such policies are regularly reviewed. Any changes in the applicable laws, rules and regulations are brought to the attention of relevant employees and relevant operation units from time to time. In accordance with the requirements of the laws, regulations and related policies in Hong Kong, the PRC, Vietnam and other relevant jurisdictions, the Company provides and maintains statutory benefits for its staff, including but not limited to mandatory provident fund, basic medical insurance and labour insurance. All employees are entitled to statutory holidays. The Group has registered its products, domain name and trademarks in Hong Kong, the PRC and other relevant jurisdictions and takes all appropriate actions to protect and enforce its intellectual property rights.

RELATIONSHIP WITH EMPLOYEES, CUSTOMERS AND SUPPLIERS

The Group acknowledges that employees, customers and business partners are crucial to its sustainable growth. The Group is hence committed to providing a friendly and caring working environment for its employees, providing excellent service to its customers and maintaining trust relationship with its business partners.

PROSPECT Manufacturing Operation

The U.S. toy industry is expected to experience flat growth in 2025 due to a combination of economic, demographic, and consumer behavior factors. Despite these challenges, there are opportunities for growth driven by trends such as licensed products. Tariffs on imported goods are likely to increase retail price for consumers and along with inflation which reduces consumer purchasing power. Many manufacturers have diversified their supply chains to mitigate these impacts, but higher costs could still affect margins. slowing consumer spending, economic uncertainty and rising consumer debt lead to reduced discretionary spending on toys. This cautious spending behavior is expected to continue in 2025. Despite these challenges, the toy industry remains resilient. Licensed products tied to popular franchises continue to drive sales.

While the U.S. toy industry faces several challenges in 2025, there are opportunities for growth through innovation, licensed products, and the expanding adult consumer market. Companies that adapt to these trends and challenges are likely to thrive in a competitive landscape. In response to the current global economic and geopolitical uncertainties, the Group will implement a flexible strategy to expand its product offerings and strengthen its customer base. We will also manage our financial resources and cash reserves prudently to enhance our resilience against challenging business conditions.

From a manufacturing perspective, we will continue to invest in automation to improve efficiency and create long-term value for our shareholders.

Management Discussion and Analysis

Property Development

The sustained growth in Southeast Asia, for instance, reinforces our confidence in investing in this region. Specifically, the Group determined to seize this opportunity by investing in real estate in Vietnam.

EXPLANATION OF THE QUALIFIED OPINION

The audit modifications made by the predecessor auditor in 2023 were arising from the Agreement and Undertaking. However, the Board was of the view that the Agreement constitutes financial assistance from a connected person to the Group with favorable commercial terms and is a fully exempted connected transaction under Listing Rule 14A.90. Company B executed the Undertaking to provide assurance to Subsidiary Y that income generated by Company B's horses that are managed by Subsidiary Y would belong to Subsidiary Y. This was to guarantee that Subsidiary Y would receive the financial benefits from the horses it managed. The details of which, please refer to the section "Explanation of the Qualified Opinion" in the Company's 2023 Annual Report.

The concern raised by Agreement and the Undertaking, which led to Audit Modifications is no longer applicable and do not impact the financial figures for the year ended 31 December 2024.

As of September 2024, due to the delay in land acquisition as well as the downturn in the Company's core manufacturing business, the Company has scaled down the capital investment in the relevant development project by disposing its horses and suspended horse racing operations, which also helped alleviate the concerns. The details of which, please refer to the Company's announcement dated 25 September 2024.

The Audit Modifications related to last year's concerns were resolved in the year ended 31 December 2024 with the exception of the possible effects of the matter that gave rise to the Audit Modifications on the comparability of the figures in 2024 and the corresponding figures.

Biographies of Directors and Senior Management EXECUTIVE DIRECTORS

Mr. Cheng Yung Pun

Aged 73, was appointed Chairman of the Company in September 2000 and also the Chairman of the nomination committee of the Company. Mr. Cheng is responsible for the overall corporate policies and development strategies and monitoring the overall management of the Group. Mr. Cheng has in-depth knowledge and extensive experience in business operations in Greater China. Mr. Cheng has more than 44 years' extensive experience in plastic toys manufacturing, property development and investment. Mr. Cheng is also a director of Smart Forest Limited (Mr. Cheng's wholly owned company) which owns share interest in the Company. He is the father of Mr. Cheng King Cheung, Executive Director of the Company.

Mr. Cheng King Cheung

Aged 33, was appointed Executive Director of the Company in October 2013. Mr. Cheng holds a bachelor's degree in Government from Franklin and Marshall College in Pennsylvania, USA. Mr. Cheng joined Funrise Group since 2010. He has about 15 years' experience in sales and marketing of toys. He is currently a Chief Executive of Funrise Group. He is a son of Mr. Cheng Yung Pun, the Chairman of the Company.

Ms. Yip Hiu Har

Aged 45, was appointed Executive Director of the Company in April 2018 and appointed as Chief Executive Officer on 15 April 2021. She holds a Bachelor of Arts degree in Language with Business from The Hong Kong Polytechnic University and a Bachelor's Degree in Law from University of London. Furthermore, she holds a Master of Corporate Governance from The Hong Kong Polytechnic University, further enhancing her expertise in leading and governing the Group with over 17 years' experience in toy industry, Ms. Yip effectively overseas the procurement, marketing and shipping operation of the Group.

Ms. Shirley Marie Price

Aged 58, was appointed as Executive Director on 12 March 2024. She currently serves as the President and Chief Operating Officer of the US subsidiary of the Group, Funrise Inc. ("Funrise") with extensive experience and influential network in the toy industry over 36 years. She started her toy industry career with Funrise in 1987, the same year Funrise was founded, and subsequently held several senior management positions in Funrise over the years. In addition to managing the operations for Funrise that goes through the entire creative process of designing and manufacturing toys, Ms. Price leads all strategic planning and business development initiatives, including licensing partnerships with major studios and brand owners.

Ms. Price has been very involved in charitable causes. For 10 years, she helped organise Funrise's "Toy Run For Kids," an annual toy drive that brought the largest single donation of toys to Children's Hospital of Los Angeles. She was the founding co-chair of the Toy Industry Foundation's Toy Bank Committee when it was created in 2004. Ms. Price has been an active member of the Toy Industry Association and was elected to the Board of Directors in February 2010 and a member of the Executive Committee in May 2012. She served on the Executive Committee from 2012 to 2016. She is also a member of Women In Toys and received the Wonder Woman In Toys Award for Manufacturing in 2011.

Ms. Price Obtained legal advice in 11 March 2024 in accordance with the requirements set out in Rule 3.09D and confirmed that she understood her obligations as a director of a listed issuer.

Biographies of Directors and Senior Management

INDEPENDENT NON-EXECUTIVE DIRECTORS

Mr. Mak Shiu Chung, Godfrey

Aged 62, was appointed Independent Non-executive Director in May 2000 and is also a member of the audit committee, the remuneration committee and the nomination committee of the Company. Mr. Mak holds a Bachelor of Science degree in business studies from Bradford University School of Management, United Kingdom and a Master of Business Administration degree from the University of Wales, United Kingdom. He is a Member of the Hong Kong Securities Institute; a Member of The Chartered Institute of Marketing and an Associate of The Chartered Governance Institute (formally "The Institute of Chartered Secretaries and Administrators"). Mr. Mak has over 34 years of experiences in the field of corporate finance.

Mr. Heng Victor Ja Wei

Aged 47, was appointed Independent Non-executive Director in December 2012. He was appointed as the Chairman of the audit committee and the remuneration committee on 17 March 2025. He also serves as a member of the nomination committee of the Company. He is a partner of Morison Heng, Certified Public Accountants. Mr. Heng 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 Hong Kong Institute of Certified Public Accountants and a Fellow of The Association of Chartered Certified Accountants. He is a nephew-in-law of Dr. Loke Yu alias Loke Hoi Lam, the former Independent Non-Executive Director of the Company, who resigned on 17 March 2025.

Mr. Heng serves as an Independent Non-Executive Director of Lee & Man Chemical Company Limited (Stock Code: 0746), Veson Holdings Limited (Stock Code: 1399) and TradeGo FinTech Limited (Stock Code: 8017) and as the Company Secretary of China Life Insurance Company Limited (Stock Code: 2628), all being companies whose shares are listed on the Stock Exchange. He also serves as an Independent Non-Executive Director of Bacui Technologies International Ltd (stock code: YYB), a company listed on the Singapore Stock Exchange.

Mr. Heng resigned an independent non-executive director of Best Food Holding Company Limited (Stock Code: 1488) on 13 December 2024 whose shares are listed on the Stock Exchange and CIMC-TianDa Holdings Company Limited (Stock Code: 0445) on 1 February 2021, whose shares were delisted from the Stock Exchange.

Mr. Chui Ka Hing

Aged 60, was appointed as an Independent Non-executive Director and a member of the audit committee, the remuneration committee and the nomination committee with effect from 1 April 2023. He is the Finance Director of Digital Climate Group Limited, a start-up integrated financial services company focusing on impact financing and green investment. Mr. Chui holds a Bachelor's degree in Accounting from Queen's University of Belfast and Master's Degree in Business Administration (Executive) from the City University of Hong Kong. Mr. Chui is a fellow member of the Association of Chartered Certified Accountants, a member of the Hong Kong Institute of Certified Public Accountants as well as a member of the Institute of Chartered Accountants in England and Wales. Mr. Chui has more than 32 years of experience in banking, asset management, securities companies and financial holding companies. Mr. Chui also serves as an Independent Non-executive Director of Sino Tactful Co., Ltd. (Stock Code: 5481) which is listed on Taipei Exchange.

Corporate Governance Report

The board of directors (the "Board") of Matrix Holdings Limited (the "Company") has adopted the Company's corporate governance code (the "CG Code") to reflect the requirements of Appendix C1 (the "HKEx Code") of the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). Continuous efforts are made to review, apply and enhance the Group's procedures in light of changes in regulations and developments in best practices. Following sustained development of the Company, the Board and its executive management will continue to monitor the governance policies to ensure that such policies meet the general rules and standards. The Board is pleased to report compliance with the CG Code under the HKEx Code during the year ended 31 December 2024.

1. DIRECTORS
   1. The Board

      The Board assumes responsibility for directing the Company and enhancing its value for shareholders in accordance with good corporate governance principles and has established relevant board committees to assist in discharging this responsibility.

      The principal functions of the Board are to make decision on the strategic development of the Company; to oversee the management of the business and affairs of the Group; to supervise the management of the business and affairs with the objective of enhancing the Company and shareholders' value with the proper delegation of the power to the management of the Company and its subsidiaries for its day-today management and operation of the Group's businesses, implementation of the budgets and strategic plans and development of the organisation of the Company for implementing the Board's decision; to oversee and evaluate the conduct of the Group's businesses; to identify principal risks and ensure the implementation of appropriate measures and control systems; to review and approve important matters such as financial results and investments etc.; and to review the Company's policies and practices on corporate governance.

      As at 31 December 2024, at least one-third of the Company's board are Independent Non-executive Directors ("INED") of which the Board comprises four (4) executive directors, namely Mr. Cheng Yung Pun (Chairman), Mr. Cheng King Cheung, Ms. Yip Hiu Har and Ms. Shirley Marie Price and four (4) INEDs, namely Dr. Loke Yu alias Loke Hoi Lam (resigned as an independent non-executive Director and the Chairman of each of the Audit Committee and Remuneration Committee and a member of Nomination Committee), Mr. Mak Shiu Chung, Godfrey, Mr. Heng Victor Ja Wei and Mr. Chui Ka Hing, (collectively the "Directors"). The INEDs required under Rule 3.10(1) of the Listing Rules who represent one third of the Board and include three with appropriate professional qualifications and accounting and related financial expertise required under Rule 3.10(2) of the Listing Rules.

      Corporate Governance Report

      A. DIRECTORS (Continued)
      
      
      
      1. The Board (Continued)

         In accordance with the Bye-laws, the CG Code of the Company, every Director should be subject to retirement by rotation at least once every three years. All Directors appointed as an additional Director or to fill a casual vacancy should be subject to election by shareholders at the first annual general meeting after their appointment and that one-third of the Directors should be subject to retirement and re-election every year. Non-executive Directors (including independent non-executive) are not appointed for a specific term. they are subject to retirement by rotation and re-election at the annual general meeting of the Company pursuant to the retirement provision under the Company's Bye-laws.

         The Directors who are subject to retirement and re-election at the 2025 Annual General Meeting are set out on page 50 of this Annual Report. The independence of the INED has been assessed in accordance with the applicable Listing Rules as each of the INED has provided an annual written confirmation of independence pursuant to the Listing Rules 3.13.

         The Company considers that the INEDs continue to be independent in compliance with those independence criteria under the said rule and are capable to effectively exercise independent judgment up to and as at the date of this report.

         The Directors' biographical details are listed in the section of "Biographies of Directors and Senior Management" in this Annual Report. Save as Mr. Cheng King Cheung is a son of Mr. Cheng Yung Pun and Mr. Heng Victor Ja Wei is a nephew-in-law of Dr. Loke Yu alias Loke Hoi Lam (resigned as INED on 17 March 2025), there is no financial, business, family or other material/relevant relationship between the Directors. The INEDs are expressly identified in all the Company's publication such as circular, announcement or relevant corporate communications in which the names of Directors of the Company are disclosed. The Company considers that the Board has the necessary skills and experience appropriate for discharging their duties as Directors in the best interest of the Company and that the current board size as adequate for its present operations.

      2. Chairman and Chief Executive Officer ("CEO")

         The roles of the Chairman and the CEO of the Company are segregated and are not held by the same person and are governed by the Chairman Mandate and CEO Mandate (containing the minimum prescribed duties) and stated in the Company's own CG Code. The primary responsibility of the Chairman is to ensure smooth and effective functioning of the Board. His responsibilities are, inter alia, the leadership and effective running of the Board, ensuring that all key and appropriate issues are discussed by the Board in a timely and constructive manner and ensure that Directors receive adequate information, which must be complete and reliable, in a timely manner. The CEO is delegated with the authority and his principal responsibilities are, inter alia, running the Group's business, and implementation of the Group's strategy in achieving the overall commercial objectives. The CEO also help the Board to set the desired culture, act with integrity, lead by example, communicate between the Board and middle management. Currently, Mr. Cheng Yung Pun is the Chairman and Ms. Yip Hiu Har is the CEO of the Company.

         Corporate Governance Report

         A. DIRECTORS (Continued)
         
         
         
      3. Board Meetings and Access of Information

         The Board conducts meeting on a regular basis and on an ad hoc basis, as required by business needs. The Bye-laws of the Company allow board meetings to be conducted by way of telephone or video conference. Members of the Board receive information before the meetings about developments in the Company's business.

         During the year under review, the Board held eleven (32 board meetings (including some meetings held by video or telephone conference) in which Ms. Yip Hiu Har, Dr. Loke Yu alias Loke Hoi Lam (resigned as INED on 17 March 2025), Mr. Mak Shiu Chung, Godfrey and Mr. Heng Victor Ja Wei had attended all board meetings; Mr. Cheng Yung Pun and Mr. Chui Ka Hing had attended 31 board meeting; Ms. Shirley Marie Price had attended thirteen (13) board meetings; Mr. Cheng King Cheung had attended ten (10) board meetings. Ms. Shirley Marie Price appointed as an Executive Director with effect from 12 March 2024.

         In the said board meetings, sufficient fourteen-day notices for regular board meetings and notice in reasonable days for non-regular board meetings were given to all Directors. Board papers are circulated prior to board meetings in a timely manner in which sufficient information was supplied by the management to the Board to enable it to make informed decisions, which are made in the best interests of the Company.

         All Directors have access to the advice and services of the company secretary and upon reasonable request, independent professional advice in appropriate circumstances at the Company's expense, if any.

      4. Directors' Securities Transactions

         The Company has adopted and amended from time to time its code for securities transactions by directors of listed issuers as the code of conduct governing directors' securities transactions in compliance with the recently amended Appendix C3 to the Listing Rules (the "Model Code").

         All Directors of the Company during the year, following specific enquiry by the Company, have confirmed that they have complied with the required standard set out in the Company's own code and the amended Model Code throughout the year.

         Corporate Governance Report

         A. DIRECTORS (Continued)
         
         
         
      5. Directors' Continuous Training and Development Programme

      Pursuant to the HKEx Code, all Directors should participate the continuous professional development to develop and refresh their knowledge and skills. This is to ensure that their contribution to the board remains informed and relevant. The Company has introduced the development programme for Directors. Each of the Directors keeps abreast of his/her responsibilities as a Director of the Company and of its conduct, and business activities and development. All Directors are updated from time to time with development in the laws and regulations applicable to the Company.

      During the year ended 31 December 2024, all Directors of the Company namely, Mr. Cheng Yung Pun, Mr. Cheng King Cheung, Ms. Yip Hiu Har, Ms. Shirley Marie Price, Dr. Loke Yu alias Loke Hoi Lam (resigned as INED on 17 March 2025), Mr. Mak Shiu Chung, Godfrey, Mr. Heng Victor Ja Wei and Mr. Chi Ka Hing, received regular updates on the Group's business, operations and corporate governance matters. Materials on new or changes to salient laws and regulations applicable to the Group were provided to the Directors. They also attended regulatory update sessions on relevant topics. All Directors are requested to provide the Company with their respective training record pursuant to the CG Code.

2. DIRECTORS' REMUNERATION
   1. Remuneration Committee ("RC")

      The principal role and functions of RC include, inter alia, reviewing the Board on the remuneration policy and structure for the remuneration of Directors and senior management, the specific remuneration packages of all executive Directors and senior management, including benefits in kind, pension rights and compensation payment, including any compensation payable for loss or termination of their office or appointment, as well as to make recommendation to the Board as described under Code E.1.2(c)(ii) of the HKEx Code. The RC consults the Chairman and/or CEO about their proposal relating to the remuneration of other executive Directors and has access to professional advice where necessary. No Directors and executives can determine his own remuneration. The overriding objective of the remuneration policy is to ensure that the Company is able to attract, retain, and motivate a high-calibre team which is essential to the success of the Company. Detailed terms of reference of the RC are accessible on the website of the Company and the Hong Kong Exchanges and Clearing Limited ("HKEx").

      Corporate Governance Report

      B. DIRECTORS' REMUNERATION (Continued)
      
      
      
      1. Remuneration Committee ("RC") (Continued)

         Membership and attendance:

         The RC comprises Mr. Heng Victor Ja Wei as chairman (appointed on 17 March 2025 following the resignation of Dr. Loke Yu alias Loke Hoi Lam as INED and chairman of RC), Mr. Mak Shiu Chung, Godfrey and Mr. Chui Ka Hing. For the year ended 31 December 2024, all members of RC had attended the meeting.

         Work done during the year

         • reviewed its remuneration policy for Directors and senior management; and

         • reviewed the remuneration packages of executive Directors and senior management for the year 2024.

      2. Level and Make-up of Remuneration

      The Group's remuneration policy for executive Directors and senior management is linked to performance, service seniority and experience, which are reviewed from time to time to align with market/industry practices.

      Details of the remuneration of the Directors for the year ended 31 December 2024 are provided in Note 15 to the Consolidated Financial Statements in this annual report.

3. DIRECTORS' NOMINATION
   1. Nomination Committee ("NC")

      The NC shall report back to the Board in writing on their decisions or recommendations within a reasonable time after such decisions or recommendations are made, unless there is legal or regulatory restriction on the Committee to do so. Its role and functions shall be the review of the structure, size and composition (including the skills, knowledge, experience) of the board at least annually and make recommendations on any proposed changes to the board to complement the Company's corporate strategy; identify individuals suitably qualified to become board members and select or make recommendations to the board on the selection of individuals nominated for directorships; assess the independence of INEDs; make recommendations to the board on the appointment or re-appointment of directors and succession planning for directors, in particular the chairman and the chief executive. Where vacancies on the Board exist or an additional Director is considered necessary, the chairman of the NC will identify suitable candidates and propose the appointment of such candidates to the Board for consideration and the NC will take into account the qualification, in particular any qualification as required in the Listing Rules, ability, working experience, leadership and professional ethics etc. of the candidates and approved if such appointment considered suitable. The NC also considers the existing human resources policy in recruitment of new senior staff, to certain circumstance, is applicable to nomination of a new Director. The overriding objective of the nomination policy is to ensure that the Company is able to nominate a right person to be director which is essential to the success of the Company. Detailed terms of reference of the NC are accessible on the website of the Company and the HKEx.

      NC's principal role is to review the Board's size, structure and composition to ensure that the Board has and by reviewing the Board's size, structure and composition, the Board will also consider a balance of ages, talents expertise, skills, experience, independent, knowledge and gender appropriate according to the Company's Board Diversity Policy.

      Corporate Governance Report

      C. DIRECTORS' NOMINATION (Continued)
      
      
      
      1. Nomination Committee ("NC") (Continued)

         Membership and attendance:

         The NC comprises Mr. Cheng Yung Pun as chairman, Dr. Loke Yu alias Loke Hoi Lam (resigned as INED and a member of NC on 17 March 2025), Mr. Mak Shiu Chung, Godfrey, Mr. Heng Victor Ja Wei and Mr. Chui Ka Hing. For the year ended 31 December 2024, all members of NC had attended the meeting.

         Work done during the year

         • identified suitable candidate and made recommendation to the board on the appointment of new director;

         • reviewed the structure, size and composition of the Board, and is of the view that there is an appropriate and diverse mix of skills and experience;

         • reviewed the independence of INEDs of the Company and confirmed that all INEDs are considered independent;

         • reviewed the profile and performance of Directors who will stand for re-election at Annual General meeting and confirmed that all those Directors are suitable to stand for re-election;

         • reviewed and assessed the composition of the Board; and

         • reviewed the existing Nomination Policy on i) whether it can and how to identify potential directors and which the selection process should be transparent and fair. The Company is encouraged to select from a broad range of candidates who are outside the Board's circle of contacts, and in accordance with the Company diversity policy; and ii) whether it sets out the procedure for the selection, appointment and reappointment of directors containing the selection criteria. This should include, but not limited to, considering the potential contributions a candidate can bring to the board in terms of qualifications, skills, experience, independence and gender diversity or not.

      2. Implementation of Board Diversity policy

      The policy concerning diversity of the board includes a mechanism on how NC oversees the conduct of the annual review of the effectiveness of the Board. In reviewing and assessing the composition of the Board, the NC will consider the benefits of all aspects of diversity, including without limitation, those described above, in order to maintain an appropriate range and balance of talents, skills, experience and background on the Board. In recommending candidates for appointment to the Board, the NC will consider candidates on merit against objective criteria and with due regard for the benefits of diversity on the Board. In overseeing the conduct of the annual review of the effectiveness of the Board, the NC will consider the balance of ages, talents, skills, experience, independence, knowledge and gender on the Board and the diversity representation of the Board.

      Corporate Governance Report

      C. DIRECTORS' NOMINATION (Continued)
      
      
      
      1. Implementation of Board Diversity policy (Continued)

         The NC will discuss and agree annually all measurable objectives for achieving diversity on the Board and recommended them to the Board for adoption. It will also review annually the progress on achieving those objectives. Such as, the Nomination Committee is encouraged to (a) be more transparency on the considerations for diversity, including gender, during the nomination process of directors if the Company is without a single woman on its board; (b) articulate the benefits of diversity, including gender diversity, and the importance of being able to attract, retain and motivate employees from the widest possible pool of available talent; (c) express the Nomination Committee or the Company's commitment to diversity at all levels, including gender, age, culture and educational background, or professional experience; (d) assess annually on each issuer's diversity profile including gender balance of the directors and senior management and their direct reports, and its progress in achieving its diversity objectives; (e) ensure that recruitment and selection practices at all levels (from the board downwards) are appropriately structured so that a diverse range of candidates are considered; and (f) state whether the Nomination Committee or the Company has identified and implemented programs that will assist in the development of a broader and more diverse pool of skilled and experienced employees and that, in time, their skills will prepare them for senior management and board positions. At any given time, the Board may seek to improve one or more aspects of its diversity and measure progress accordingly.

         During the year under review, the Board comprised six (6) male directors (one of INEDs resigned on 17 March 2025) and two (2) female director. The minimum requirement set forth in Rule 13.92 is considered to be satisfied. Moreover, the Company has appointed an additional female executive director on 12 March 2024, increasing the proportion of women on the Board to 25%. Regarding the target and timeline of achieving further diversity at Board level, the Company will endeavor to maintain at least one (1) female director in the coming four (4) years. the Nomination Committee will continue to look for suitable female candidates to achieve further diversity.

         Measures to develop a pipeline of potential successors to achieve gender diversity:

         Board level:

         • The Board will identify potential successors internally from Senior Management as well as middle management, having regard to the industry expertise, leadership skills, decision making capabilities, communication skills and professional qualification of the staff.

         • The Board will also consider outside sources such as head hunter, referral, and The Hong Kong Institute of Directors.

      Corporate Governance Report

      C. DIRECTORS' NOMINATION (Continued)
      
      
      
      1. Implementation of Board Diversity policy (Continued)

         Senior Management level:

         • The Board will identify potential successors internally from middle management such as department heads, having regard to the industry expertise, leadership, decision making capabilities, communication skills and professional qualification of the staff.

         • The Board will also consider outside sources such as head hunter, referral, and open recruitment.

      The total workforce of the Group comprised 13.5% males and 86.5% females as at 31 December 2024.

4. ACCOUNTABILITY AND AUDIT
   1. Audit Committee ("AC")

      The principal role and functions of the AC are, inter alia, to review the appointment of the external auditor on an annual basis including a review of the audit scope and approval of the audit fees; to ensure continuing auditor objectivity and to safeguard independence of the Company's auditors; to meet the external auditor to discuss issues and reservations (if any) arising from the interim review and final audit, and any matters the auditor suggests to discuss; to review the Group's internal control system; to review the annual and interim report and quarterly result (if any) prior to approval by the Board in accordance with the accounting policies and practices and relevant accounting standards, the Listing Rules and the legal requirements; to serve as a focal point for communication between other Directors and the external auditor in respect of the duties relating to financial and other reporting, internal controls, external audit, and such other matters as the Board determines from time to time; to consider major findings of internal review and management's response and ensure proper arrangement in place for the fair and independent review of such concerns and appropriate follow up action; to devise a framework for the type and authorisation of non-audit services provided by the external auditor.

      Detailed terms of reference of the AC are accessible on the website of the Company and the HKEx.

      Three AC members are qualified accountants (one of the INEDs who is a qualified accountant, resigned on 17 March 2025). None of the AC members are members of the former or existing auditor of the Company.

      Corporate Governance Report

      D. ACCOUNTABILITY AND AUDIT (Continued)
      
      
      
      1. Audit Committee ("AC") (Continued)

         Membership and attendance:

         The AC comprises Mr. Heng Victor Ja Wei as chairman (appointed on 17 March 2025 following the resignation of Dr. Loke Yu alias Loke Hoi Lam as INED and chairman of AC), Mr. Mak Shiu Chung, Godfrey and Mr. Chui Ka Hing. For the year ended 31 December 2024, all members except Mr. Chui Ka Hing had attended the two (2) meetings. The chief financial officer is a normal attendee of the AC meetings. Where appropriate, representatives of the external auditors are invited to attend the AC meetings to present significant audit and accounting matters which they noted in the course of their audit.

         Work done during the year

         • carried out interim and final financial review;

         • reviewed interim and annual reports before submission to the Board in accordance with the accounting policies and practices, relevant accounting standards, the Listing Rules and the legal requirements;

         • reviewed the external auditor's engagement letter; to discuss issues during the audits of external auditor. The external auditor and the senior executives are invited to attend the meeting for annual financial statements;

         • reviewed the nature and scope of external audit and approved the external audit fee;

         • reviewed the interim financial report, interim results announcement, the annual accounts and the annual results announcement in accordance with the accounting policies and practices and relevant accounting standards, the Listing Rules and the legal requirements;

         • reviewed continuing auditor objectivity and to safeguard independence of the Company's auditors;

         • met the external auditor to discuss issues and reservations (if any) arising from the interim review and final audit, and any matters the auditor suggests to discuss;

         • reviewed the Group's internal control system;

         • reviewed the Group's whistleblowing policy;

         • served as a focal point for communication between other Directors and the external auditor in respect of the duties relating to financial and other reporting, internal controls, external audit, and such other matters as the Board determines from time to time;

      Corporate Governance Report

      D. ACCOUNTABILITY AND AUDIT (Continued)
      
      
      
      1. Audit Committee ("AC") (Continued)

         Work done during the year (Continued)

         • considered major findings of internal review and management's response and ensure proper arrangement in place for the fair and independent review of such concerns and appropriate follow up action; and

         • devised a framework for the type and authorisation of non-audit services provided by the external auditor.

      2. Financial Reporting

         The financial statements of the Company for the year ended 31 December 2024 have been reviewed by the AC and audited by the external auditor, Crowes (HK) CPA Limited. The Directors acknowledge their responsibility for preparing the financial statements of the Group and presenting a balanced, clear and comprehensive assessment of the Group's performance and prospects. They are not aware of any material uncertainties relating to events or conditions that may cast significant doubt upon the Company's ability to continue as a going concern.

         The Board approves the financial statements after taking into account specific accounting matters. The Board is satisfied that appropriate accounting policies have been used in preparing the financial statements, consistently applied and complied with the relevant accounting standards. Directors ensure the preparation of the financial statements of the Group is in accordance with statutory requirements and applicable accounting standards and also ensure the publication of the financial statements of the Group in a timely manner.

         The Listing Rules require listed companies to prepare annual financial statements which shall provide a true and fair view of the state of affairs of the companies and of the results of their operations and cash flows.

         The Board is responsible for ensuring the maintenance of proper accounting records of the Group. It has also acknowledged its responsibility for preparing the financial statements in a timely manner.

         A statement of the auditor about their reporting responsibilities is included in the Independent Auditor's Report on pages 55 to 60 of this annual report.

         Corporate Governance Report

         D. ACCOUNTABILITY AND AUDIT (Continued)
         
         
         
      3. Internal Control

      The directors are responsible for maintaining and reviewing the effectiveness of the Group's internal controls including material financial, operational and compliance controls, risk management functions and particularly the adequacy of resources, staff qualifications and experience, training programs and budget of the Group's accounting and financial reporting function as well as those relating to the Company's ESG performance and reporting.

      The Audit Committee has, at a regularly scheduled meeting throughout the year, received a report from Group Internal Audit on the results of their activities during the preceding period and reported to the Board, including any significant matters pertaining to the adequacy and effectiveness of internal controls including, but not limited to any indications of failings or material weaknesses in those controls.

      The Board and Audit Committee accordingly have conducted a review of its risk management and internal control systems on (a) whether the Company has an internal audit function; (b) how often the risk management and internal control systems are reviewed; and (c) a statement that a review of the effectiveness of the risk management and internal control systems has been conducted and whether the Company considers them effective and adequate. They also reviewed the effectiveness of the system of internal control of the Group including the relevant financial, operational and compliance controls and risk management procedures and has delegated to the management the implementation of such systems of internal controls.

      Appropriate control procedures have been designed to ensure that assets are safeguarded against improper use or disposal, relevant rules and regulations are adhered to and complied with, reliable financial and accounting records are maintained in accordance with relevant accounting standards and regulatory reporting requirements, and key risks (including ESG risks) that may impact on the Group's performance are appropriately identified and managed. Such procedures are designed to manage, rather than eliminate, the risk of failure to achieve business objectives. These procedures can only provide reasonable, and not absolute, assurance against material errors, losses and fraud.

      Parties involved in internal control function:

      Chief audit executive

      The Group's chief audit executive with relevant experience and qualification, serve the Board in the Group to overseeing the Group's financial reporting procedure, internal controls and compliance with the related requirements under the Listing Rules. Notwithstanding, the Board considers the adequacy of resources, qualifications and experience of staff of the Company's accounting and financing reporting function and their training programmes and budget.

      Corporate Governance Report

      D. ACCOUNTABILITY AND AUDIT (Continued)
      
      
      
      1. Internal Control (Continued)

         Parties involved in internal control function: (Continued)

         Internal audit function team

         The directors have reviewed the need for an internal audit function and are of the view that in light of the size, nature and complexity of the business of the Group, it would be more cost effective to set up an in-house internal audit function team to perform internal audit functions for the Group. As the Group uses internal resources to comply with internal audit function, an in-house internal audit function team was set up in 2015. The Audit Committee has identified the main risks in the Group and that the internal audit function team designed an internal audit program and will emphasise on the review of the risks according to the Risk Management plan. Nevertheless, the directors will continue to review at least annually the need for an internal audit function.

         The Internal Audit function team comprises two (2) members. It reviews and monitors dealings of the Group to ensure that all dealings with these entities are conducted on an arm's-length basis.

         The Internal Audit function team reviews significant aspects of risk management for the Group companies and makes recommendations to the Audit Committee and other committees (as the case may be) if necessary, including amongst other things, the appropriate mitigation. The Audit Committee of the Company has established and oversees a whistleblower policy and a set of comprehensive procedures whereby employees, customers, suppliers and other concerned parties have the right and the ability to report any actual or suspected occurrence of improper conduct involving the Company, and for such matters to be investigated and dealt with efficiently in an appropriate and transparent manner. The Chairman of the Audit Committee has designated the team leader of internal audit function team to receive on his behalf any such reports, to oversee the conduct of subsequent investigations, and to provide information, including recommendations, arising from any investigation to him for consideration by the Audit Committee. The Company has adopted policies and procedures for assessing and, where prudent, improving the effectiveness of its internal controls and risk management functions to personally certify that such matters are appropriate and functioning effectively in the belief that this will enhance the corporate governance of the Company.

         The Group's internal audit function team provides independent assurance to the Board and executive management on the adequacy and effectiveness of internal controls for the Group. The team leader of internal audit function team reports directly to the Chairman of the Audit Committee under adoption of a risk-and-control-based audit approach. The annual work plan of Group Internal Audit covers major activities and processes of the Group's operations, businesses and service units. During 2024, the Group internal audit function team conducted selective reviews of the effectiveness of the Group's internal audit program. The Audit Committee and the Board were not aware of any areas of concern that would have a material impact on the Company's financial position or results of operations and considered the internal control systems to be generally effective and adequate.

         Corporate Governance Report

         D. ACCOUNTABILITY AND AUDIT (Continued)
         
         
         
      2. Auditors' Remuneration

      During the year under review, the fees paid or payable to the auditor of the Company, Crowe (HK) CPA Limited, were approximately HK$1,800,000 for statutory audit services Rendered (including disbursement fees) rendered to the Group respectively. Remuneration paid to other auditors for audit and non-audit services rendered to overseas subsidiaries was approximately HK$1,821,000.

5. CORPORATE GOVERNANCE FUNCTIONS

   The Board is responsible for performing the following corporate governance duties as required under the HKEx Code:

   • to develop and review the Company's policies and practices on corporate governance;

   • to review and monitor the training and continuous professional development of Directors and senior management;

   • to review and monitor the Company's policies and practices on compliance with legal and regulatory requirements; and

   • to review the Company's compliance with the HKEx Code and disclosure in the Corporate Governance Report.

     During the year, the Board considered the following corporate governance matters:

   • reviewed the corporate governance duties under the HKEx Code; and

   • review the compliance with the HKEx Code.

6. COMPANY SECRETARY

   Ms. Lo Siu Ting ("Ms. Lo") has been appointed on 1 March 2021 and resigned on 28 February 2025 as the Joint Company Secretary of the Company. Ms. Lo is a Director of Hongkong Managers and Secretaries Limited, a service firm providing professional corporate services to Hong Kong listed and private companies.

   All Directors have access to the advice and services of the company secretary on corporate governance and board practices and matters. Ms. Yip Hiu Har, Executive Director of the Company, has been designated as the primary contact person at the Company who worked and communicated with Ms. Lo on the Company's corporate governance and secretarial and administrative matters during 2024.

   Corporate Governance Report

   G. INVESTOR RELATIONS
   
   
   
   1. Communication with investors

      During the year under review, the Group has proactively enhanced its corporate transparency and communications with its shareholders and the potential investors through its mandatory interim and final reports. Through the timely distribution of press releases, the Group has also kept the public abreast of its latest developments.

      The Company has conducted review of the implementation and effectiveness of the Shareholder Communication Policy annually, covering areas such as:

      • whether corporate communication materials are provided to shareholders in a timely manner;

      • whether electronic means or communication channels are provided to shareholders to facilitate them make enquiries; and

      • whether directors and auditors are present in the general meetings to answer questions of shareholders.

        The review included checking of the content, delivery channel and schedule of corporate communication materials as well as the attendance records of general meetings. The Shareholder Communication Policy was implemented effectively during the year under review.

   2. Annual General Meeting ("AGM")

The AGM provides a useful forum for shareholders to exchange views with the Board. The Chairman as well as chairman of the Committees and their members is pleased to answer shareholders' questions.

Separate resolutions are proposed at general meetings on each substantially separate issue, including the re-election of individual Directors.

The circular to shareholders dispatched together with the annual report includes relevant details of proposed resolutions, including biographies of each candidates standing for re-election. In order to comply with the Listing Rules and CG Code as well, the forthcoming AGM will be held with voting by way of a poll and that all shareholders will be given a notice not less than 21 days. The results of the poll in general meetings from time to time will be published on website of the Company and HKEx.

All directors except Mr. Cheng King Cheung and Ms. Shirley Marie Price had attended the 2024 AGM of the Company held on 8 August 2024.