eprint Group Limited — Annual Report 2018

Jun 29, 2018

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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eprint GROUP LIMITED eprint 集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1884)

ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2018

FINANCIAL HIGHLIGHTS

	For the year ended 31 March	For the year ended 31 March
	2018	2017
	HK$’million	HK$’million	Change
Operating Results
Revenue	403.3	390.6	3.3%
– e-print segment	308.8	314.4	-1.8%
– e-banner segment	94.5	76.2	24.0%
Operating profit before other losses – net	35.2	22.2	58.6%
– e-print segment	32.0	36.6	-12.6%
– e-banner segment	3.2	(14.4)	122.2%
Other losses - net	(4.9)	(7.8)	-37.2%
– e-print segment	(4.4)	(7.7)	-42.9%
– e-banner segment	(0.5)	(0.1)	400.0%
Operating profit	28.8	14.4	100.0%
– e-print segment	26.1	28.9	-9.7%
– e-banner segment	2.7	(14.5)	-118.6%
Profit for the year attributable to
– equity holders of company	22.0	17.3	27.2%
– non-controlling interests	1.1	(8.1)	-113.6%
Net profit margin % (Attributable to
equity holders of company)	5.5%	4.4%
Gross profit margin %	36.2%	35.7%
Basic earnings per share (HK Cents)	4.01	3.15	27.3%
Financial Position
Total assets	311.2	312.8	-0.5%
Total equity	231.7	207.5	11.7%
Cash and cash equivalents	89.5	68.2	31.2%

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The board (the “ Board ”) of directors (the “ Directors ”) of eprint Group Limited (the “ Company ”) announces the consolidated results of the Company and its subsidiaries (collectively, the “ Group ”) for the year ended 31 March 2018, together with the comparative figures for the year ended 31 March 2017, are as follows:

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2018

Note Revenue 2 Cost of sales 5 Gross profit Other income 3 Other losses – net 4 Selling and distribution expenses 5 Administrative expenses 5 Operating profit Finance income 6 Finance costs 6 Finance costs – net 6 Share of losses of associates Share of profit of a joint venture Profit before income tax Income tax expense 7 Profit for the year Other comprehensive income: Item that may be reclassified to profit or loss: Currency translation differences Total comprehensive income for the year	2018 HK$’000 403,303 (257,216) 146,087 7,107 (4,890) (43,955) (75,486) 28,863 488 (1,292) (804) (143) 777 634 28,693 (5,599) 23,094 2,012 25,106	2017 HK$’000 390,638 (251,328) 139,310 6,119 (7,807) (42,769) (80,507) 14,346 466 (1,579) (1,113) (1,746) 1,257 (489) 12,744 (3,525) 9,219 (1,705) 7,514

2

Note Profit for the year attributable to: Equity holders of the Company Non-controlling interests Earnings per share for profit attributable to equity holders of the Company during the year Basic and diluted (expressed in HK cents per share) 8 Total comprehensive income for the year attributable to: Equity holders of the Company Non-controlling interests	2018 HK$’000 22,032 1,062 23,094 4.01 23,854 1,252 25,106	2017 HK$’000 17,321 (8,102) 9,219 3.15 15,857 (8,343) 7,514

3

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2018

Note Assets Non-current assets Property, plant and equipment Intangible assets Held-to-maturity investments Financial asset at fair value through profit or loss Investments in associates Investment in a joint venture Deferred income tax assets Deposits and prepayments 10 Current assets Inventories Trade receivables 9 Deposits, prepayments and other receivables 10 Held-to-maturity investments Financial asset at fair value through profit or loss Current income tax recoverable Amounts due from related companies Cash and cash equivalents Total assets Equity Capital and reserves attributable to the equity holders of the Company Share capital Share premium Other reserves Non-controlling interests Total equity	2018 HK$’000 135,671 725 – – 2,977 8,021 2,402 4,913 154,709 6,051 7,880 15,036 15,000 12,746 20 10,191 89,524 156,448 311,157 5,500 132,921 86,868 225,289 6,377 231,666	2017 HK$’000 157,189 1,442 15,000 12,319 2,962 6,205 3,259 4,940 203,316 5,409 4,518 15,500 10,000 – 17 5,849 68,220 109,513 312,829 5,500 132,921 71,814 210,235 (2,715) 207,520

4

Note Liabilities Non-current liabilities Obligations under finance leases Deferred income tax liabilities Other payables Current liabilities Trade payables 11 Accruals and other payables Borrowings 12 Obligations under finance leases Amounts due to related parties Amounts due to directors Current income tax payable Total liabilities Total equity and liabilities	2018 HK$’000 1,935 7,768 1,186 10,889 12,886 25,270 24,592 5,110 336 245 163 68,602 79,491 311,157	2017 HK$’000 7,045 9,477 –
		16,522
		7,948 28,298 38,343 7,013 9 245 6,931
		88,787
		105,309
		312,829

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The consolidated financial statements of the Company have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“ HKFRS ”) issued by Hong Kong Institute of Certified Public Accounts (“ HKICPA ”). The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial asset at fair value through profit or loss, which are carried at fair value.

The preparation of financial statements in conformity with HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.

1.1 Changes in accounting policy and disclosures

(a) New and amended standards adopted by the Group

The following new and amended standards have been adopted by the Group for the first time for the financial year beginning on or after 1 April 2017:

Amendments to HKFRS 12 Disclosure of interest in other entities Amendments to HKAS 7 Statement of cash flows Amendments to HKAS 12 Income taxes

The adoption of the above new and amended standards did not have a significant impact on the Group’s consolidated financial statements.

(b) New and amended standards have been issued but are not effective and have not been early adopted by the Group

The following new and amended standards are not effective for financial year beginning on 1 April 2017, and have not been applied in preparing these consolidated financial statements:

		Effective for
		annual periods
		beginning on
		or after
Amendments to Annual	Annual improvements 2014－2016 cycle	1 January 2018
Improvements Projects
HKFRS 1 and HKAS 28
Amendments to HKFRS 1	First time adoption of HKFRS	1 January 2018
Amendments to HKFRS 2	Classification and measurement of	1 January 2018
	share-based payment transactions
Amendments to HKFRS 4	Applying HKFRS 9 financial instruments	1 January 2018
	with HKFRS 4 insurance contracts
HKFRS 9	Financial instruments	1 January 2018
HKFRS 15	Revenue from contracts with customers	1 January 2018
Amendment to HKFRS 15	Clarification to HKFRS 15	1 January 2018
Amendments to HKAS 28	Investments in associates and joint	1 January 2018
	ventures

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		Effective for
		annual periods
		beginning on
		or after
Amendments to HKAS 40	Transfers of investment property	1 January 2018
HK(IFRIC) 22	Foreign currency transactions and	1 January 2018
	advance consideration
Amendments to HKFRS 9	Prepayment features with negative	1 January 2019
	compensation
HKFRS 16	Leases	1 January 2019
HK(IFRIC)23	Uncertainty over income tax treatments	1 January 2019
HKFRS 17	Insurance contracts	1 January 2021
Amendments to HKFRS 10 and	Sale or contribution of assets between	Note
HKAS 28	an investor and its associate or joint
	venture

Note: To be announced by HKICPA

The Group is in the process of assessing the financial impact of the adoption of the above new standards and amendments to standards. The Group will adopt the new and amended standards when they become effective.

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 April 2017 and have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except the following set out below:

• (i) HKFRS 9, ‘Financial instruments’

Nature of change

HKFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.

Impact

The Group has reviewed its financial assets and liabilities and is expecting the following impact from the adoption of the new standard on 1 April 2018:

The financial assets held by the Group include:

• debt instruments currently classified as held-to-maturity investments and measured at amortised cost which meet the conditions for classification at amortised cost under HKFRS 9;

• equity investments currently measured at fair value through profit or loss (“ FVPL ”) which will continue to be measured on the same basis under HKFRS 9

Accordingly, the Group does not expect the new guidance to have a significant impact on the classification and measurement of its financial assets.

7

There will be no impact on the Group’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities. The derecognition rules have been transferred from Hong Kong Accounting Standards (“ HKAS ”) 39 Financial Instruments: Recognition and Measurement and have not been changed.

The new hedge accounting rules will align the accounting for hedging instruments more closely with the Group’s risk management practices. As a general rule, more hedge relationships might be eligible for hedge accounting, as the standard introduces a more principles-based approach. The Group does not have any hedge instrument. Therefore, the Group does not expect any impact on the new hedge accounting rules.

The new impairment model requires the recognition of impairment provisions based on expected credit losses (“ ECL ”) rather than only incurred credit losses as is the case under HKAS 39. It applies to financial assets classified at amortised cost, debt instruments measured at fair value through other comprehensive income, contract assets under HKFRS 15 Revenue from Contracts with Customers, lease receivables, loan commitments and certain financial guarantee contracts. Based on the assessments undertaken to date, the Group does not expect material change to the loss allowance for trade debtors.

The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of the Group’s disclosures about its financial instruments particularly in the year of the adoption of the new standard.

Date of adoption by the Group

It is mandatory for financial years commencing on or after 1 January 2018. The Group will apply the new rules retrospectively from 1 April 2018, with the practical expedients permitted under the standard. Comparative figures for the year ended 31 March 2018 will not be restated.

• (ii) HKFRS 15, ‘Revenue from contracts with customers’

Nature of change

The HKICPA has issued a new standard for the recognition of revenue. This will replace HKAS 18 which covers contracts for goods and services and HKAS 11 which covers construction contracts and the related literature.

The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer.

The standard permits either a full retrospective or a modified retrospective approach for the adoption.

8

Impact

Management is currently assessing the effects of applying the new standard on the Group’s financial statements and has identified the following areas that are likely to be affected:

• revenue from service – the application of HKFRS 15 may result in the identification of separate performance obligations which could affect the timing of the recognition of revenue.

• accounting for certain costs incurred in fulfilling a contract – certain costs which are currently expensed may need to be recognised as an asset under HKFRS 15; and

• rights of return HKFRS 15 requires separate presentation on the statement of financial position of the right to recover the goods from the customer and the refund obligation.

Management is in the process of quantifying the potential effects on its consolidated financial statements.

Date of adoption by Group

It is mandatory for financial years commencing on or after 1 January 2018. The Group intends to adopt the standard using the modified retrospective approach which means that the cumulative impact of the adoption will be recognised in retained earnings as of 1 April 2018 and that comparatives will not be restated.

(iii) HKFRS 16, ‘Leases’

Nature of change

HKFRS 16 will result in almost all leases being recognised on the statement of financial position, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.

Impact

The standard will affect primarily the accounting for the Group’s operating leases. As at the reporting date, the Group has non-cancellable operating lease commitments of approximately HK$28,081,000. Upon adoption of HKFRS16 the majority of operating lease commitments will be recongised in the statement of financial position as lease liabilities and right-of-use assets. The lease liabilities would subsequently be measured at amortised cost and the right-of-use assets will be depreciated on a straight-line basis during the lease term.

9

The Group has not yet assessed what other adjustments, if any, are necessary for example because of the change in the definition of the lease term and the different treatment of variable lease payments and of extension and termination options. It is therefore not yet possible to estimate the amount of right-of-use assets and lease liabilities that will have to be recognised on adoption of the new standard and how this may affect the Group’s profit or loss and classification of cash flows going forward.

Some of the commitments may be covered by the exception for short-term and low value leases and some commitments may relate to arrangements that will not qualify as leases under HKFRS 16.

Date of adoption by Group

It is mandatory for financial years commencing on or after 1 January 2019. At this stage, the Group does not intend to adopt the standard before its effective date. The Group intends to apply the simplified transition approach and will not restate comparative amounts for the year prior to first adoption.

2. SEGMENT INFORMATION

The chief operating decision-maker has been identified as the Executive Directors of the Company. The chief operating decision-maker has determined the operating segments based on the reports reviewed by the Executive Directors of the Company, that are used to make strategic decisions and assess performance.

The chief operating decision-maker has determined the operating segments based on these reports. The Group is organised into two business segments:

• (a) paper printing segment (mainly derived from the brand “e-print”); and

• (b) banner printing segment (mainly derived from the brand “e-banner”).

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.

Management assesses the performance of the operating segments based on a measure of gross profit less selling and distribution expenses and administrative expenses that are allocated to each segment. Other information provided is measured in a manner consistent with that in the consolidated financial statements.

Sales between segments are carried out at arm’s length basis.

The subsidiary incorporated in the People’s Republic of China (the “PRC”) provides I.T. support services within the Group. The subsidiaries incorporated in Malaysia and Australia generated immaterial external revenue during the year. Since the Group mainly operates in Hong Kong and the Group’s assets are mainly located in Hong Kong, no geographical segment information is presented.

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Information relating to segment liabilities is not disclosed as such information is not regularly reported to the chief operating decision-maker.

During the year ended 31 March 2018 and 2017, no external customers contributed over 10% of the Group’s revenue.

The following tables present revenue and segment results regarding the Group’s reportable segments for the years ended 31 March 2018 and 2017 respectively.

Segment revenue Revenue from external customers Inter-segment revenue Total Segment results Finance income Finance costs Share of losses of associates Share of profit of a joint venture Profit before income tax Income tax expense Profit for the year Depreciation of property, plant and equipment Amortisation of intangible assets Impairment loss on an intangible asset Capital expenditure	Paper printing HK$’000 308,780 364 309,144 26,147 11,702 – – 1,457	For the year ended 31 March 2018 Banner printing Eliminations HK$’000 HK$’000 94,523 – 65 (429) 94,588 (429) 2,716 6,781 430 287 246	Total HK$’000 403,303 – 403,303 28,863 488 (1,292) (143) 777 28,693 (5,599) 23,094 18,483 430 287 1,703

11

Segment revenue Revenue from external customers Inter-segment revenue Total Segment results Finance income Finance costs Share of losses of associates Share of profit of a joint venture Profit before income tax Income tax expense Profit for the year Depreciation of property, plant and equipment Amortisation of intangible assets Impairment loss on property, plant and equipment Capital expenditure	Paper printing HK$’000 314,486 426 314,912 28,845 11,750 – – 52,678	For the year ended 31 March 2017 Banner printing Eliminations HK$’000 HK$’000 76,152 – 91 (517) 76,243 (517) (14,499) 6,600 430 699 23,838	Total HK$’000 390,638 – 390,638 14,346 466 (1,579) (1,746) 1,257 12,744 (3,525) 9,219 18,350 430 699 76,516

The following tables present segment assets as at 31 March 2018 and 2017 respectively.

Segment assets Segment assets	As at 31 March 2018 Paper printing Banner printing Total HK$’000 HK$’000 HK$’000 156,719 48,919 205,638 As at 31 March 2017 Paper printing Banner printing Total HK$’000 HK$’000 HK$’000 175,192 55,253 230,445	As at 31 March 2018 Paper printing Banner printing Total HK$’000 HK$’000 HK$’000 156,719 48,919 205,638 As at 31 March 2017 Paper printing Banner printing Total HK$’000 HK$’000 HK$’000 175,192 55,253 230,445
		Total HK$’000 230,445

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A reconciliation of segment assets to total assets is provided as follows:

Segment assets Investments in associates Investment in a joint venture Cash and cash equivalents Other unallocated segment assets Total assets OTHER INCOME I.T. license fee income Sales of software Scrap sales Interest income from held-to-maturity investments Machinery rental income Sundry income OTHER LOSSES – NET Loss on disposal of property, plant and equipment Exchange (losses)/gains-net Fair value gains on financial assets at fair value through profit or loss Loss on disposal of financial assets Loss on partial disposal of an associate Others

As at 31 March 2018 2017 HK$’000 HK$’000 205,638 230,445 2,977 2,962 8,021 6,205 89,524 68,220 4,997 4,997 311,157 312,829 2018 2017 HK$’000 HK$’000 254 228 3,461 – 1,456 1,581 1,324 3,226 – 892 612 192 7,107 6,119 2018 2017 HK$’000 HK$’000 (4,720) (6,397) (486) 4 427 369 – (1,803) (111) – – 20 (4,890) (7,807)

3. OTHER INCOME

4. OTHER LOSSES – NET

13

5. EXPENSES BY NATURE

Expenses included in cost of sales, selling and distribution expenses and administrative expenses are analysed as follows:

Cost of materials Auditor’s remuneration – Audit services – Non-audit services Employee benefits expense Depreciation of property, plant and equipment Amortisation of intangible assets Impairment loss on property, plant and equipment Impairment loss on intangible assets Outsourced customer support expenses Subcontracting fee Operating lease rental of premises and equipment Repairs and maintenance Distribution costs Utility expenses Provision for impairment of other receivables Write off of trade receivables Recovery of trade receivables previously written off Others Total cost of sales, selling and distribution expenses and administrative expenses	2018 HK$’000 53,180 1,566 111 82,292 18,483 430 – 287 19,491 141,888 20,430 3,386 13,971 3,835 – 3 (24) 17,328 376,657	2017 HK$’000 53,269 1,521 198 84,001 18,350 430 699 – 19,351 129,739 23,237 4,274 13,697 4,281 240 23 (24) 21,228 374,604

Others mainly represent credit card handling charges, advertising and promotion expenses and telecommunication expenses.

6. FINANCE COSTS – NET

Finance income – Interest income from bank deposits – Unwinding of discounts on held-to-maturity investments Finance costs – Finance charges on obligations under finance lease – Interest expenses on borrowings Finance costs – net	2018 HK$’000 488 – 488 (375) (917) (1,292) (804)	2017 HK$’000 184 282 466 (676) (903) (1,579) (1,113)

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7. INCOME TAX EXPENSE

Current income tax – Hong Kong profits tax – PRC corporate income tax Under/(over)-provision in prior years Deferred income tax Income tax expense	2018 HK$’000 5,747 150 554 6,451 (852) 5,599	2017 HK$’000 7,989 – (1,239)
		6,750 (3,225)
		3,525

Subsidiaries incorporated in Hong Kong are subject to Hong Kong profits tax at a rate of 16.5% on the estimated assessable profits for the year (2017: 16.5%). Subsidiary incorporated in the PRC is subject to PRC corporate income tax based on the statutory income tax rate of 25% for the year (2017: 25%) as determined in accordance with the relevant PRC income tax rules and regulations. The Company has not been subject to any taxation in the Cayman Islands as it does not have any assessable profit since its incorporation.

8. EARNINGS PER SHARE

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue for the years ended 31 March 2018 and 2017.

Profit attributable to equity holders of the Company (HK$’000) Weighted average number of ordinary shares in issue (thousands) Basic earnings per share (HK cents)	2018 HK$’000 22,032 550,000 4.01	2017 HK$’000 17,321
		550,000
		3.15

(b) Diluted

Diluted earnings per share is the same as the basic earnings per share for the years ended 31 March 2018 and 2017 as there were no potential dilutive ordinary shares outstanding during the years.

15

9. TRADE RECEIVABLES

Trade receivables Less: provision for impairment of trade receivables Trade receivables – net	2018 HK$’000 7,895 (15) 7,880	2017 HK$’000 4,533 (15)
		4,518

The directors of the Company consider that the carrying amounts of trade receivables approximate their fair values.

Payment terms granted to customers are mainly cash on delivery and on credit. The average credit period ranges from 30 days to 60 days. The ageing analysis of the trade receivables based on invoice date is as follows:

0 – 30 days 31 – 60 days Over 60 days	2018 HK$’000	2017 HK$’000 2,983 713 822
	4,977
	1,530
	1,373
		4,518
	7,880

As at 31 March 2018, trade receivables of approximately HK$3,609,000 (2017: HK$1,886,000) were past due but not impaired. These relate to certain customers with no recent history of default. Based on historic low default rate, the Group believes that no impairment provision is necessary. The past due ageing analysis of these receivables is as follows:

0 – 30 days 31 – 60 days Over 60 days	2018 HK$’000	2017 HK$’000 990 605 291
	2,038
	1,167
	404
		1,886
	3,609

As at 31 March 2018 and 2017, no trade receivable was considered to be impaired.

The maximum exposures of the Group to credit risk are the carrying value of trade receivables mentioned above.

The carrying amounts of trade receivables of the Group are mainly denominated in Hong Kong dollars.

The Group does not hold any collateral as security for trade receivables.

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10. DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES

Deposits and prepayments Other receivables Deferred expenses Interest receivables from held-to-maturity investments Less: non-current portion Deposits and prepayments Deposits, prepayments and other receivables – current portion 11. TRADE PAYABLES Trade payables	2018 HK$’000	2017 HK$’000 16,801 1,317 1,102 1,220
	18,570
	335
	–
	1,044
		20,440 (4,940)
	19,949
	(4,913)
		15,500
	15,036
	2018 HK$’000	2017 HK$’000 7,948
	12,886

Payment terms granted by suppliers are mainly on credit. The credit period ranges from 30 to 90 days.

The ageing analysis of the trade payables based on invoice date was as follows:

0 – 30 days 31 – 60 days 61 – 90 days Over 90 days	2018 HK$’000	2017 HK$’000 5,476 2,175 277 20
	9,720
	2,250
	916
	–
		7,948
	12,886

The carrying amounts of the Group’s trade payables, accruals and other payables are mainly denominated in Hong Kong dollars.

12. BORROWINGS

Current Trust receipt loans Bank overdrafts Bank loans Mortgage loans	2018 HK$’000	2017 HK$’000 1,058 8,882 5,588 22,815
	1,679
	–
	1,035
	21,878
		38,343
	24,592

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The table below analyses the Group’s borrowings into relevant maturity groups based on the scheduled repayment dates set out in the loan agreements and ignore the effect of any repayment on demand clause:

Within 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years	2018 HK$’000	2017 HK$’000 13,904 3,437 3,094 17,908
	3,674
	981
	3,079
	16,858
		38,343
	24,592

Bank borrowings contained a repayment on demand clause which enables the bank to exercise at its sole discretion. Accordingly, the entire balance was classified under current liabilities.

The carrying amounts of borrowings are secured and denominated in Hong Kong dollars as at 31 March 2018 and 2017.

The fair values of the borrowings approximate to their carrying amounts as at 31 March 2018 and 2017 as all the borrowings carry interests which are benchmarked against Hong Kong Dollar prime rate and Hong Kong Interbank Offered Rate (“HIBOR”), where relevant.

The borrowings of the Group are subject to financial covenants and the Group is in compliance with the financial covenants as at 31 March 2018 and 2017.

As at 31 March 2018, the borrowings of the Group were secured by personal guarantees provided by a related party of the Group. Mortgage loans are secured by properties of the Group of approximately HK$64,716,000 (2017: HK$66,928,000).

13. DIVIDENDS

The dividends paid in 2018 was HK$8,800,000 (2017: HK$12,650,000). A dividend in respect of the year ended 31 March 2018 of HK2.40 cents per share, amounting to a total dividend of HK$13,200,000, was proposed by the Board of Directors on 29 June 2018 and to be recommended to the shareholders at the forthcoming annual general meeting. These financial statements do not reflect this dividend payable.

Proposed final dividend of HK2.40 cents (2017: HK1.60 cents) per ordinary share	2018 HK$’000	2017 HK$’000 8,800
	13,200

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MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

The Board presents to its shareholders the results of the Group for the year ended 31 March 2018. The Group’s revenue amounted to HK$403.3 million, representing an increase of 3.3% as compared with that of the year ended 31 March 2017. Gross profit margin increased to 36.2% (2017: 35.7%). The Group’s audited profit attributable to equity holders for the year ended 31 March 2018 was HK$22.0 million, representing an increase of 27.2% as compared with that of the year ended 31 March 2017. The increase in net profit was the result of the improving performance of banner printing segment, effective cost management and profitable investment in associate.

For the Group’s paper printing segment, there was a decrease of revenue of HK$5.6 million or 1.8% from HK$314.4 million to HK$308.8 million and it was the result of the continued deterioration of Hong Kong market during the year. The gross profit was also affected by the increasing material cost and hence the margin slightly decreased from 36.7% to 35.2% for the current year. Nevertheless, the operating profit of the segment only decreased by HK$2.8 million because of the lower other net loss incurred during the year, which was contributed by the decrease in the net loss on disposal of property, plant and equipment by HK$1.4 million.

For the Group’s banner printing segment, there was a significant growth in revenue of 24.0% from HK$76.2 million to HK$94.5 million. The increase in revenue was the result of the expansion of its market shares in Hong Kong during the year. The segment also benefited from the improving operating efficiencies and economies of scale, which increased the gross profit margin by 8.5%. The operating profit of the segment is HK$2.7 million for the year ended 31 March 2018 while it incurred the operating loss of HK$14.5 million for the year ended 31 March 2017. The improvement was contributed by the improving performance of the banner printing business in Hong Kong and Malaysia, which became profitable for the year ended 31 March 2018.

On 28 March 2017, E-Boss Co. Limited, a wholly-owned subsidiary of the Group, invested in Sakura Japan Property (Hong Kong) Limited (“ Sakura ”) with two independent investors. Sakura is principally engaged in providing Japanese real estate agency services in Hong Kong. It has commenced operation in April 2017 and was making profit for the year ended 31 March 2018. The Board considers that this investment enables the Group to diversify its business by utilising its reputation and system technology.

OUTLOOK

The Board expects the operating environment in Hong Kong will remain challenging in the foreseeable future. Nevertheless, the Group will continue to strive for strengthening its business, including but not limited to expanding banner business in Hong Kong and Malaysia, reinforcing internal controls and streamlining factory operation, production outsourcing in order to achieve stable revenue growth for the Group. Meanwhile, the Group will proactively look for new business opportunities from time to time to strengthen its market share.

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Under the leadership of the Board, the management of the Group has formed a broad consensus in response to the key improvement areas in the existing business operation and market expansion in order to further enhance the Group’s overall competitiveness. The Group will continue to strengthen its market position and increase its market share by adopting the following approaches:

• Adopting the product diversification strategy by expanding the product line of the existing printing business.

• Developing the new business line of gift products to meet the increasing demand of the market.

• Continuously effort to improve the value added services, including but not limited to the e-print app, self-service platform, phone ordering system, self checkout and collecting counters and the storage and delivery system.

FINANCIAL REVIEW

Revenue

Revenue from the provision of printing and other services increased by HK$12.7 million or 3.3% from HK$390.6 million for the year ended 31 March 2017 to HK$403.3 million for the year ended 31 March 2018. The growth was mainly contributed by the increasing demands on the banner printing services provided by the Group. The following table sets forth a breakdown of the revenue by service category and their respective percentage of the total revenue for the years indicated.

Advertising printing Bound book printing Stationery printing Banner printing Other services Total	2018 HK$’000 127,123 83,209 85,148 82,370 25,453 403,303	31.5% 20.7% 21.1% 20.4% 6.3% 100 %	2017 HK$’000
			131,854	33.8%
			84,581	21.6%
			85,015	21.8%
			68,646	17.6%
			20,542	5.2%
			390,638	100%

The contribution to the sales mix by the banner printing increased from 17.6% for the year ended 31 March 2017 to 20.4% for the year ended 31 March 2018, while the advertising printing remained as the major sources of revenue which accounted for 31.5% and 33.8% of our total revenue for year ended 31 March 2018 and 2017, respectively.

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Sales Channels Stores Websites Others (Note) Total	2018 HK$’000 96,482 164,055 142,766 403,303	23.9% 40.7% 35.4% 100 %	2017 HK$’000
			96,517	24.7%
			169,930	43.6%
			124,191	31.8%
			390,638	100%

Note: “Others” refers to revenue derived from orders received over the telephone, through e-mail, e-print mobile application and “Photobook” program.

Websites remained as the major sales channel of the Group and it contributed 40.7% of total revenue for the year ended 31 March 2018, which is slightly lower when compared with that of the year ended 31 March 2017. The sales contribution from other channels increased from 31.8% for the year ended 31 March 2017 to 35.4% for the year ended 31 March 2018. The change was attributable to the increasing proportion of the revenue contributed by the banner printing, in which the majority of sales orders were received through phone call and e-mail.

Other income

Other income primarily comprised the interest income from held-to-maturity investments and sales of scrap materials and sales of software to the Group’s joint venture. There was an increase of HK$1.0 million for the year ended 31 March 2018 when compared to that of the year ended 31 March 2017, and it was mainly contributed by the one-off sales of software of HK$3.4 million during the year, partly offsetting by the decrease in interest income from held-to-maturity investment of HK$1.9 million.

Other losses – net

Other losses – net primarily comprised net loss incurred by the disposal of property, plant and equipment, disposal of financial assets and net foreign exchange gain or loss. The amount decreased by HK$2.9 million when compared to that of the year ended 31 March 2017. It was the combined result of the decrease in the net loss on disposal of plant and equipment by HK$1.7 million, the absence of the loss on a one-off disposal of financial assets of HK$1.8 million which incurred in the prior year, offsetting by the increase in net foreign exchange loss for the year ended 31 March 2018.

Selling and distribution expenses

Selling and distribution expenses mainly consisted of staff costs, distribution costs, handling charges for electronic payments, and store rentals. Selling and distribution expenses represented 10.9% and 11.0% of the revenue for the year ended 31 March 2018 and 2017 respectively. The increase of the expenses was mainly due to the additional staff costs spent by the banner printing segment for the purpose of expanding its operation and market shares during the year.

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Administrative expenses

Administrative expenses primarily comprised directors’ remunerations, staff costs and outsourced customer support expenses. Administrative expenses represent 18.7% and 20.6% of the total revenue for the year ended 31 March 2018 and 2017 respectively. The amount decreased by HK$5.0 million from HK$80.5 million for the year ended 31 March 2017 to HK$75.5 million for the year ended 31 March 2018. The decrease in expenses was the result of staff reassignment to sales team of banner printing segment in the current year.

Finance income

Finance income represented the interest income generated from bank deposits.

Finance costs

Finance costs primarily consisted of interest expenses on bank borrowings and finance charges on obligations under finance lease.

Share of profit of a joint venture

Share of profit of a joint venture represented the share of result of the Group’s joint venture. As at 31 March 2018, the Group had one joint venture in Malaysia.

Share of losses of associates

Share of losses of associates represented the share of results of the Group’s associates. As at 31 March 2018, the Company had two associates operating in the PRC and Hong Kong respectively.

Profit for the year attributable to equity holders of the Company

Profit for the year attributable to equity holders of the Company increased by HK$4.7 million or 27.2%, from HK$17.3 million for the year ended 31 March 2017 to HK$22.0 million for the year ended 31 March 2018. Net profit margin also increased from 4.4% for the year ended 31 March 2017 to 5.5% for the year ended 31 March 2018. The increase in the profit for the year attributable to equity holders of the Company was mainly due to banner printing segment was profitable for the year ended 31 March 2018.

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Liquidity and Financial Information

As at 31 March 2018, the total amount of cash and cash equivalents of the Group was HK$89.5 million, an increase of HK$21.3 million as compared with that as at 31 March 2017. The increase was mainly arising from the cash inflow generated in the operating activities as well as the redemption of held-to-maturity investments during the year. As at 31 March 2018, the financial ratios of the Group were as follows:

	As at	As at
	31 March	31 March
	2018	2017
	HK$’000	HK$’000
Current ratio(1)	2.3	1.2
Gearing ratio(2)	13.7%	25.3%

Notes:

• (1) Current ratio is calculated based on total current assets divided by total current liabilities.

• (2) Gearing ratio is calculated based on total bank overdraft, borrowings and obligation under finance leases divided by total equity and multiplied by 100%.

Borrowings

The Group’s bank borrowings as at 31 March 2018 and 2017 were HK$24.6 million and HK$38.3 million respectively. All bank borrowings were made from banks in Hong Kong and were repayable within three years, except a mortgage loan of HK$21.9 million that was repayable within twenty years. No financial instruments were used for hedging purposes, nor were there any foreign currency net investments hedged by current borrowings and/or other hedging instruments. The weighted average interest rates (per annum) were 2.3% and 3.1% for the year ended 31 March 2018 and 31 March 2017 respectively.

Treasury Policies

The Group has adopted a prudent financial management approach towards its treasury policies and thus maintained a healthy liquidity position throughout the year. The Board closely monitors the Group’s liquidity position to ensure that the liquidity structure of the Group’s assets, liabilities and other commitments can meet its funding requirements from time to time.

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Capital Structure

The capital of the Company comprises ordinary shares and other reserves. The shares of the Company were listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) since 3 December 2013. As at 31 March 2018, the total number of issued ordinary shares of the Company was 550,000,000 shares.

Capital Commitments

As at 31 March 2018 and 2017, the Group respectively had capital commitments totaling HK$5.7 million and HK$4.5 million for investment in an associate and purchase of computer equipment, respectively.

Significant Investments Held

Except for the investments in subsidiaries, joint venture and associates, the Group did not hold any significant investment in equity interest in any other company during the year.

Future Plans for Material Investments and Capital Assets

Except for the aforesaid capital commitment to the investment in an associate, the Group did not have other plans for material investments and capital assets.

Material Acquisitions

The Group did not have any material acquisition or disposal of associates, joint ventures or subsidiaries for the year ended 31 March 2018.

Exposure to Foreign Exchange Risk

The Group operates principally in Hong Kong and its business is supported by an information technology support services centre located in the PRC. The Group is exposed to foreign exchange risk mainly arising from the exposure of Renminbi against Hong Kong dollars. The Group does not hedge its foreign exchange risk as its exposure to foreign exchange risk is low as the Group’s cash flows mainly denominated in Hong Kong dollars.

Charge of Assets

At 31 March 2018 and 2017, the Group pledged the plant and machinery with a carrying value of HK$9.7 million and HK$23.8 million respectively, as collaterals to secure the Group’s obligation under finance leases. As at 31 March 2018 and 2017, the Group pledged two properties with the total carrying value of HK$64.7 million and HK$66.9 million respectively, as collaterals to secure the Group’s mortgage loan.

Capital Expenditure

During the year, the Group invested HK$1.7 million in property, plant and equipment, represented a reduction of 97.8% in capital expenditure of last year.

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EMPLOYEES AND EMOLUMENT POLICIES

At 31 March 2018, the Group had 342 full time employees. There is no significant change in the Group’s emolument policies. On top of basic salaries, bonuses may be paid by reference to the Group’s performance as well as individual’s performance. Other staff benefits include housing allowances, contributions to Mandatory Provident Fund retirement benefits scheme in Hong Kong, the provision of pension funds, medical insurance, unemployment insurance and other relevant insurance for employees who are employed by the Group pursuant to the PRC rules and regulations and the prevailing regulatory requirements of the PRC, and the Employees Provident Fund and contributions to Social Security Organisation for employees who are employed by the Group pursuant to the Malaysian rules and regulations and the prevailing regulatory requirements of Malaysia.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

Neither the Company nor its subsidiaries purchased, redeemed or sold any of the Company’s listed securities during the year ended 31 March 2018.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange (the “ Listing Rules ”) as the code of conduct regarding securities transactions by the Directors. Having made specific enquiry of all Directors, the Company confirmed that all Directors had complied with the required standard set out in the Model Code throughout the year.

CODE ON CORPORATE GOVERNANCE PRACTICES

The Company has adopted the code provisions set out in the Corporate Governance Code (“ CG Code ”) in Appendix 14 to the Listing Rules as its own code of corporate governance.

During the year ended 31 March 2018, the Company was in compliance with the code provisions set out in the CG Code except for the deviation as explained below.

Code provision A.2.1 of the CG Code provides that the roles of the chairman and chief executive officer should be separated and should not be performed by the same individual. The Company does not at present separate the roles of the chairman and chief executive officer. Mr. She Siu Kee William is the chairman and chief executive officer of the Company. The Board believes that vesting the roles of both chairman and chief executive officer in the same person has the benefit of ensuring consistent leadership within the Group and enables more effective and efficient overall strategic planning for the Group. The Board further believes that the balance of power and authority for the present arrangement will not be impaired and is adequately ensured by the current Board which comprises experienced and high calibre individuals with sufficient number thereof being non-executive Directors and independent non-executive Directors.

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Save as the aforesaid and in the opinion of the Directors, the Company had met all code provisions set out in the CG Code during the year ended 31 March 2018.

The Board will continue to review and further improve the Company’s corporate governance practices and standards, so as to ensure its business activities and decision-making processes are regulated in a proper and prudent manner.

AUDIT COMMITTEE

The Company established the Audit Committee on 13 November 2013 with written terms of reference in compliance with the Code on Corporate Governance Practices as set out in Appendix 14 to the Listing Rules. The primary duties of the Audit Committee are to review and supervise the financial reporting system and to review the risk management and internal control systems of the Group. The Audit Committee comprises three independent non-executive Directors, namely, Mr. Ma Siu Kit (chairman), Mr. Poon Chun Wai and Mr. Fu Chung. The Audit Committee has reviewed the audited financial statements of the Group for the year ended 31 March 2018.

REVIEW OF PRELIMINARY ANNOUNCEMENT

The figures in respect of the preliminary announcement of the Group’s results for the year ended 31 March 2018 have been agreed by the Group’s auditor, PricewaterhouseCoopers, to the amounts set out in the Group’s audited consolidated financial statements for the year. The work performed by PricewaterhouseCoopers in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by PricewaterhouseCoopers on the preliminary announcement.

FINAL DIVIDEND

The Board resolved to recommend to the shareholders of the Company at the forthcoming annual general meeting of the Company to be held on Tuesday, 14 August 2018 (“ 2018 AGM ”) of a final dividend of HK2.40 cents per share for the year ended 31 March 2018 (2017: HK1.60 cents per share) to be paid on Wednesday, 5 September 2018 to the shareholders whose names appear on the register of members of the Company on Tuesday, 21 August 2018.

CLOSURE OF REGISTER OF MEMBERS

For the purpose of determining the identity of the shareholders entitled to attend and vote at the 2018 AGM, the register of members of the Company will be closed from Wednesday, 8 August 2018 to Tuesday, 14 August 2018, both days inclusive, during which period no transfer of shares will be registered. All transfer of shares accompanied by the relevant certificates must be lodged with the Company’s transfer office and share registrar in Hong Kong, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Tuesday, 7 August 2018.

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For determining the entitlement of the shareholders to the proposed final dividend, the register of members of the Company will be closed from Monday, 20 August 2018 to Tuesday, 21 August 2018, both days inclusive, during which period no transfer of shares will be registered. In order to qualify for the proposed final dividend, all transfer of shares accompanied by the relevant share certificates must be lodged with the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited for registration not later than 4:30 p.m. on Friday, 17 August 2018.

By Order of the Board eprint Group Limited She Siu Kee William Chairman and Chief Executive Officer

Hong Kong, 29 June 2018

As at the date of this announcement, the executive Directors are Mr. She Siu Kee William and Mr. Lam Shing Kai; the non-executive Directors are Mr. Leung Wai Ming, Mr. Chong Cheuk Ki and Mr. Deng Xiaen; and the independent non-executive Directors are Mr. Poon Chun Wai, Mr. Fu Chung and Mr. Ma Siu Kit.

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