Exhibit 99.1

 

Entity 15

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

(Incorporated in Hong Kong with limited liability)

 

Directors’ Report and Audited Financial Statements

For the year ended 31 December 2020

 

 

 

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

REPORTS AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

C O N T E N T S

 

  Pages
   
Directors’ Report 1 & 2
   
Independent Auditor’s Report 3 - 6
   
Statement of Profit or Loss and Other Comprehensive Income 7
   
Statement of Financial Position 8
   
Statement of Changes in Equity 9
   
Statement of Cash Flows 10
   
Notes to the Financial Statements 11 - 50
   
Appendices (For management information only)  
   
Detailed Income Statement i
   
Overhead Expenses ii

 

 
1

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

DIRECTORS’ REPORT

 

 

DIRECTORS’ REPORT

 

The directors present their annual report together with the audited financial statements for the year ended 31 December 2020.

 

1. PRINCIPAL ACTIVITIES

 

The principal activities of Unique Logistics International (H.K.) Limited (the “Company”) are investment holding and the provision of air and ocean freight forwarding services.

 

2. RESULTS AND APPROPRIATIONS

 

The results of the Company for the year ended 31 December 2020 are set out in the statement of profit or loss and other comprehensive income on page 7.

 

The directors do not recommend the payment of a dividend.

 

3. DONATIONS

 

Charitable and other donations made by the Company during the year amounted to HKD1,198.

 

4. DIRECTORS

 

Directors of the Company

 

The directors during the financial year and up to the date of this report were:

 

Mr. Lee Chi Tak, Richard

Mr. Lee Man Bun, Patrick

Mr. Wong Hon Man

 

In accordance with Articles 7 of the Company’s Articles of Association, all directors retire at the forthcoming annual general meeting and, being eligible, will offer themselves for re-election.

 

5. DIRECTORS’ MATERIAL INTERESTS IN TRANSACTIONS, ARRANGEMENTS AND CONTRACTS THAT ARE SIGNIFICANT IN RELATION TO THE COMPANY’S BUSINESS

 

Saved as disclosed in notes 9(b) and 24(b) to the financial statements, no other transactions, arrangements and contracts of significance to which the Company, its holding company, any of its subsidiaries or fellow subsidiaries was a party and in which a director of the Company had a material interest whether directly or indirectly, subsisted at the end of the year or at any time during the year.

 

 
2

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

DIRECTORS’ REPORT

 

 

6. DIRECTORS’ INTERESTS IN THE SHARES, UNDERLYING SHARES OF THE COMPANY OR ANY SPECIFIED UNDERTAKING OF THE COMPANY OR ANY OTHER ASSOCIATED CORPORATION

 

At no time during the year was the Company, its holding company, any of its subsidiaries or fellow subsidiaries a party to any arrangement to enable the directors of the Company (including their spouse and children under 18 years of age) to hold any interests or short positions in the shares or underlying shares in the Company or its specified undertakings or other associated corporations.

 

7. MANAGEMENT CONTRACTS

 

No contracts concerning the management and administration of the whole or any substantial part of the business of the Company or its subsidiaries were entered into or existed during the year.

 

8. PERMITTED INDEMNITY PROVISIONS

 

At no time during the financial year and up to the date of this Directors’ Report, was there a permitted indemnity provision in force for the benefit of any of the directors of the Company (whether made by the Company or otherwise) or an associated company (if made by the Company).

 

9. AUDITOR

 

The financial statements have been audited by RSM Hong Kong who retire and, being eligible, offer themselves for re-appointment.

 

On behalf of the Board

 

   
Mr. Lee Chi Tak, Richard  
Hong Kong, 22 July 2021  

 

 
3

 

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBER OF

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

(Incorporated in Hong Kong with limited liability)

 

 

Opinion

 

We have audited the financial statements of Unique Logistics International (H.K.) Limited (the “Company”) set out on pages 7 to 50, which comprise the statement of financial position as at 31 December 2020, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

 

In our opinion, the financial statements give a true and fair view of the financial position of the Company as at 31 December 2020, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”) and Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and have been properly prepared in compliance with the Hong Kong Companies Ordinance.

 

Basis for Opinion

 

We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the HKICPA’s Code of Ethics for Professional Accountants (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

 
4

 

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBER OF

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

(Incorporated in Hong Kong with limited liability)

 

 

Material Uncertainty Related to Going Concern

 

We draw attention to note 2(b) in the financial statements which indicates that as at 31 December 2020, the Company’s current liabilities exceeded its total assets by HK$32,635,340. As stated in note 2(b), this condition indicates that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

 

Other Information

 

The directors are responsible for the Other Information. The Other Information comprises all of the information included in the annual report other than the financial statements and our auditor’s report thereon.

 

Our opinion on the financial statements does not cover the Other Information and we do not express any form of assurance conclusion thereon.

 

In connection with our audit of the financial statements, our responsibility is to read the Other Information and, in doing so, consider whether the Other Information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this Other Information, we are required to report that fact. We have nothing to report in this regard.

 

Responsibilities of Directors for the Financial Statements

 

The directors are responsible for the preparation of the financial statements that give a true and fair view in accordance with IFRSs issued by the IASB , HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

 

 
5

 

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBER OF

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

(Incorporated in Hong Kong with limited liability)

 

 

Auditor’s Responsibilities for the Audit of the Financial Statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. We report our opinion solely to you, as a body, in accordance with section 405 of the Hong Kong Companies Ordinance and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

 

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
   
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
   
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
   
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

 

 
6

 

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBER OF

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

(Incorporated in Hong Kong with limited liability)

 

 

Auditor’s Responsibilities for the Audit of the Financial Statements (cont’d)

 

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

By: /s/ RSM Hong Kong

 

Certified Public Accountants

Hong Kong

22 July 2021

 

 
7

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

   Note  2020   2019 
      HKD   HKD 
            
Revenue  4   142,690,712    150,858,723 
              
Freight costs      (108,114,331)   (137,533,173)
              
Gross profit      34,576,381    13,325,550 
              
Other income  5   19,086,778    24,233,985 
Other gains and losses  6   369,566    27,262 
Administrative expenses      (24,723,666)   (32,319,998)
Other operating expenses      (2,978,360)   (2,844,726)
              
Profit from operations      26,330,699    2,422,073 
              
Finance costs  7(a)   (4,627,096)   (5,395,681)
              
Profit/(loss) before taxation  7   21,703,603    (2,973,608)
              
Income tax credit  8(a)   1,241,000    - 
              
Profit/(loss) for the year      22,944,603    (2,973,608)
              
Other comprehensive income for the year, net of tax      -    - 
              
Total comprehensive income for the year      22,944,603    (2,973,608)

 

The notes on pages 11 to 50 form part of these financial statements.

 

 
8

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

STATEMENT OF FINANCIAL POSITION

AT 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

   Note  2020   2019 
      HKD   HKD 
            
Non-current assets             
              
Property and equipment  10   2,568,473    1,735,446 
Right-of-use assets  11   4,203,290    6,218,718 
Investment in subsidiaries  12   19,066,978    19,066,978 
Deferred tax assets  21   1,241,000    - 
       25,838,741    27,021,142 
Current assets             
              
Trade receivables  15   45,338,731    27,530,366 
Other receivables, deposits and prepayments  14   2,162,183    3,137,884 
Amounts due from related parties  16   38,176,794    24,130,572 
Investments  13   15,040,726    23,811,951 
Pledged bank deposits  17   4,206,034    4,171,093 
Cash at bank and on hand  17   3,385,543    3,965,222 
       108,310,011    86,747,088 
Current liabilities             
              
Trade payables  18   62,901,777    57,802,718 
Other payables and accrued expenses      3,274,557    4,267,028 
Amounts due to related parties  16   2,443,313    4,280,109 
Bank loans and overdrafts  19   98,012,134    102,466,065 
Lease liabilities  20   1,393,311    1,904,107 
       168,025,092    170,720,027 
Net current liabilities      (59,715,081)   (83,972,939)
              
Total assets less current liabilities      (32,635,340)   (56,951,797)
              
Non-current liabilities             
              
Bank loans and overdrafts  19   2,856,260    - 
Lease liabilities  20   2,947,865    4,432,271 
       5,804,125    4,432,271 
NET LIABILITIES      (38,439,465)   (61,384,068)
              
Capital and reserve             
              
Share capital  22   1,000,000    1,000,000 
Reserves      (39,439,465)   (62,384,068)
              
CAPITAL DEFICIENCY      (38,439,465)   (61,384,068)

 

Approved by the Board of Directors on 22 July 2021 and are signed on its behalf by:

 

     
Mr. Lee Chi Tak, Richard   Mr. Wong Hon Man

 

The notes on pages 11 to 50 form part of these financial statements.

 

 
9

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

   Share
capital
   Accumulated
losses
   Total 
   HKD   HKD   HKD 
             
Balance at 1 January 2019   1,000,000    (59,410,460)   (58,410,460)
                
Total comprehensive income for the year   -    (2,973,608)   (2,973,608)
                
Balance at 31 December 2019 and 1 January 2020   1,000,000    (62,384,068)   (61,384,068)
                
Total comprehensive income for the year   -    22,944,603    22,944,603 
                
Balance at 31 December 2020   1,000,000    (39,439,465)   (38,439,465)

 

The notes on pages 11 to 50 form part of these financial statements.

 

 
10

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

   Note  2020   2019 
      HKD   HKD 
            
Operating activities             
              
Profit/(loss) before taxation      21,703,603    (2,973,608)
Adjustments for:             
- Depreciation of property and equipment  10   550,761    276,232 
- Depreciation of right-of-use assets  11   2,016,355    1,613,475 
- Bade debt expenses      33,012    - 
- Fixed assets written off      -    82,403 
- Gain on disposals of fixed assets  6   (5,587)   (40,000)
- Finance costs  7(a)   4,627,096    5,395,681 
- Interest income  5   (228,752)   (534,257)
              
Operating profit/(loss) before changes in working capital      28,696,488    3,819,926 
              
(Increase)/decrease in trade receivables      (17,841,377)   7,540,761 
Decrease in other receivables, deposits and prepayments      975,701    53,960 
Increase/(decrease) in amounts due from related parties      (14,046,222)   1,177,536 
Increase in trade payables      5,099,059    8,920,638 
(Decrease)/increase in other payables and accrued expenses      (992,471)   71,474 
(Decrease)/increase in amount due to related parties      (1,836,796)   1,690,003 
              
Cash generated from operations      54,382    23,274,298 
              
Interests paid      (4,480,253)   (5,201,153)
Interest on lease liabilities      (146,843)   (194,528)
              
Net cash (used in)/generated from operating activities      (4,572,714)   17,878,617 
              
Investing activities             
              
Redemption in investments      8,771,225    157,210 
Increase in pledged bank deposits      (34,941)   (36,086)
Sales proceeds from disposals of fixed assets      338,373    40,000 
Purchase of fixed assets      (1,383,788)   (1,483,686)
Interest received      228,752    534,257 
              
Net cash generated from/(used in) investing activities      7,919,621    (788,305)
              
Financing activities             
              
Proceeds from new bank loans      185,283,940    215,550,902 
Repayment of bank loans      (174,738,917)   (226,034,432)
Principal elements of lease payments      (2,328,915)   (1,526,184)
              
Net cash generated from/(used in) financing activities      8,216,108    (12,009,714)
              
Net increase in cash and cash equivalents      11,563,015    5,080,598 
              
Cash and cash equivalents at 1 January      (57,734,106)   (62,814,704)
              
Cash and cash equivalents at 31 December  17   (46,171,091)   (57,734,106)

 

The notes on pages 11 to 50 form part of these financial statements.

 

 
11

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

1.COMPANY INFORMATION

 

Unique Logistics International (H.K.) Limited (the “Company”) was incorporated in Hong Kong with limited liability. The address of its registered office and principal place of business is Unit 05-06, 3/F., Tower 2, Enterprise Square, 9 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong.

 

The principal activities of the Company were investment holding and the provision of air and ocean freight forwarding services during the year.

 

As at 31 December 2020, the directors consider the immediate and ultimate holding company of the Company to be Unique Logistics Holdings Limited (“ULHL”) and Rich Group Holdings Limited, which were incorporated in Hong Kong and the British Virgin Islands respectively.

 

The financial statements are prepared in Hong Kong dollars (“HKD”), which is also the functional currency of the Company.

 

2.SIGNIFICANT ACCOUNTING POLICIES

 

(a)Statement of compliance

 

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”), Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). These financial statements also comply with the applicable requirements of the Hong Kong Companies Ordinance (Cap. 622). Significant accounting policies adopted by the Company are disclosed below.

 

The IASB/HKICPA has issued certain new and revised IFRSs/HKFRSs that are first effective or available for early adoption for the current accounting period of the Company. Note 3 provides information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Company for the current and prior accounting periods reflected in these financial statements.

 

 
12

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2.SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(b)Basis of preparation of the financial statements

 

The Company is a wholly owned subsidiary of another body corporate and therefore, in accordance with section 379(3)(a) of the Hong Kong Companies Ordinance, is not required to prepare consolidated financial statements.

 

For the purposes of compliance with sections 379 and 380 of the Hong Kong Companies Ordinance, these financial statements have been prepared to present a true and fair view of the state of affairs and profit or loss of the Company only. Consequently, they have been prepared in accordance with all applicable IFRSs, HKFRSs and the requirements of the Hong Kong Companies Ordinance which apply to the preparation of separate unconsolidated financial statements.

 

These financial statements do not comply with the requirements of IFRS/HKFRS10 “Consolidated Financial Statements” so far as the preparation of consolidated financial statements is concerned. As a consequence, the financial statements do not give all the information required by IFRS/HKFRS10 about the economic activities of the group of which the Company is the parent. Full compliance with IFRS/HKFRS10 would require the Company to produce consolidated financial statements which disclose this information, as neither the Company’s ultimate holding company, nor any intermediate holding company, produces consolidated financial statements in accordance with IFRSs/HKFRSs which are available for public use.

 

The measurement basis used in the preparation of the financial statements is the historical cost basis. Historical cost is generally based on the fair value of consideration given in exchange for assets.

 

The preparation of financial statements in conformity with IFRSs and HKFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

Judgements and estimates made by management in the application of IFRSs and HKFRSs that have significant effect on the financial statements are discussed in note 27.

 

 
13

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2.SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(b)Basis of preparation of the financial statements (cont’d)

 

The financial statements have been prepared on a going concern basis. This may not be appropriate as Company’s current liabilities exceeded its total assets by HKD32,635,340. The continuation of the business as a going concern is dependent upon the Company attaining future profitable operations and the continuing financial support of its immediate holding company.

 

Should the Company be unable to continue to operate as a going concern, adjustments would have to be made to reduce the value of assets to their recoverable amount, to provide for any further liabilities which may arise, and to re-classify non-current assets and liabilities as current assets and liabilities, respectively.

 

ULHL, the immediate holding company, has confirmed in writing its intention to provide continuing financial support so as to enable the Company to meet its liabilities as and when they fall due and to carry on its business without a significant curtailment of operations for the foreseeable future. The directors believe that the Company will continue as a going concern and consequently have prepared the financial statements on a going concern basis.

 

(c)Foreign currency translation

 

(i)Functional and presentation currency

 

Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The financial statements are presented in Hong Kong dollars, which is the Company’s functional and presentation currency.

 

(ii)Transactions and balances in financial statements

 

Transactions in foreign currencies are translated into the functional currency on initial recognition using the exchange rates prevailing on the transaction dates. Monetary assets and liabilities in foreign currencies are translated at the exchange rates at the end of each reporting period. Gains and losses resulting from this translation policy are recognised in profit or loss.

 

 
14

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(d)Property and equipment

 

Property and equipment are stated in the statement of financial position at cost less accumulated depreciation and impairment losses, if any.

 

Depreciation of property and equipment is calculated at rate sufficient to write off their cost, less their residual values, over their estimated useful lives on a straight-line basis. The principal annual rates are as follows:

 

- Leasehold improvements 20%
- Furniture and fixtures 20%
- Office equipment 20%
- Motor vehicles 25%

 

The residual values, useful lives and depreciation method are reviewed and adjusted, if appropriate, at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis

 

The gain or loss on disposal of property and equipment is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in profit or loss.

 

(e)Leases

 

At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to direct the use of the identified asset and to obtain substantially all of the economic benefits from that use.

 

(i)The Company as a lessee

 

Where the contract contains lease component(s) and non-lease component(s), the Company has elected not to separate non-lease components and accounts for each lease component and any associated non-lease components as a single lease component for all leases.

 

 
15

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2.SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(e)Leases (cont’d)

 

(i)The Company as a lessee (cont’d)

 

At the lease commencement date, the Company recognises a right-of-use asset and a lease liability, except for short-term leases that have a lease term of 12 months or less and leases of low-value assets which, for the Company are primarily laptops and office furniture. When the Company enters into a lease in respect of a low-value asset, the Company decides whether to capitalise the lease on a lease-by-lease basis. The lease payments associated with those leases which are not capitalised are recognised as an expense on a systematic basis over the lease term.

 

Where the lease is capitalised, the lease liability is initially recognised at the present value of the lease payments payable over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using a relevant incremental borrowing rate. After initial recognition, the lease liability is measured at amortised cost and interest expense is calculated using the effective interest method. Variable lease payments that do not depend on an index or rate are not included in the measurement of the lease liability and hence are charged to profit or loss in the accounting period in which they are incurred.

 

The right-of-use asset recognised when a lease is capitalised is initially measured at cost, which comprises the initial amount of the lease liability plus any lease payments made at or before the commencement date, and any initial direct costs incurred. Where applicable, the cost of the right-of-use assets also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, discounted to their present value, less any lease incentives received. The right-of-use asset is subsequently stated at cost less accumulated depreciation and impairment losses.

 

Right-of-use assets in which the Company is reasonably certain to obtain ownership of the underlying leased assets at the end of the lease term are depreciated from commencement date to the end of the useful life. Otherwise, right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.

 

 
16

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2.SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(e)Leases (cont’d)

 

(i)The Company as a lessee (cont’d)

 

When the Company obtains ownership of the underlying leased assets at the end of the lease term, upon exercising purchase options, the cost of the relevant right-of-use assets and the related accumulated depreciation and impairment loss are transferred to property, plant and equipment / the carrying amount of the relevant right-of-use asset is transferred to property, plant and equipment.

 

Refundable rental deposits paid are accounted under IFRS/HKFRS 9 and initially measured at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments and included in the cost of right-of-use assets.

 

The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, or there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or there is a change arising from the reassessment of whether the Company will be reasonably certain to exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

 

The lease liability is also remeasured when there is a change in the scope of a lease or the consideration for a lease that is not originally provided for in the lease contract (“lease modification”) that is not accounted for as a separate lease. In this case the lease liability is remeasured based on the revised lease payments and lease term using a revised discount rate at the effective date of the modification.

 

(ii)The Company as a lessor

 

When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to the ownership of an underlying assets to the lessee. If this is not the case, the lease is classified as an operating lease.

 

 
17

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(f)Subsidiary

 

A subsidiary is an entity controlled by the Company. Control exists when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable are taken into account.

 

An investment in subsidiary is stated at cost less impairment losses. Results of a subsidiary are accounted for on the basis of dividends received and receivable.

 

The carrying amount of investment in a subsidiary is reviewed for indications of impairment at the end of each reporting period. An impairment loss is recognised to the extent that the carrying amount of an asset, or the cash-generating unit to which it belongs, is more than its recoverable amount. The recoverable amount of an asset, or of the cash-generating unit to which it belongs, is the greater of its net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of time value of money and the risks specific to the assets. An impairment loss is reversed if there has been a favourable change in estimates used to determine the recoverable amount.

 

(g)Recognition and derecognition of financial instruments

 

Financial assets and financial liabilities are recognised in the statement of financial position when the Company becomes a party to the contractual provisions of the instruments.

 

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss (“FVTPL”)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

 

The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

 

 
18

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2.SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(g)Recognition and derecognition of financial instruments (cont’d)

 

The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

 

(h)Financial assets

 

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

 

Debt investments held by the Company are classified into one of the following measurement categories:

 

  - amortised cost, if the investment is held for the collection of contractual cash flows which represent solely payments of principal and interest. Interest income from the investment is calculated using the effective interest method.
     
  - Fair value through other comprehensive income (“FVTOCI”) - recycling, if the contractual cash flows of the investment comprise solely payments of principal and interest and the investment is held within a business model whose objective is achieved by both the collection of contractual cash flows and sale. Changes in fair value are recognised in other comprehensive income, except for the recognition in profit or loss of expected credit losses (“ECL”), interest income (calculated using the effective interest method) and foreign exchange gains and losses. When the investment is derecognised, the amount accumulated in other comprehensive income is recycled from equity to profit or loss.
     
  - Fair value through profit or loss (“FVTPL”) if the investment does not meet the criteria for being measured at amortised cost or FVTOCI (recycling). Changes in the fair value of the investment (including interest) are recognised in profit or loss.

 

 
19

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2.SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(i)Trade and other receivables

 

A receivable is recognised when the Company has an unconditional right to receive consideration. A right to receive consideration is unconditional if only the passage of time is required before payment of that consideration is due. If revenue has been recognised before the Company has an unconditional right to receive consideration, the amount is presented as a contract asset.

 

Receivables are stated at amortised cost using the effective interest method less allowance for credit losses.

 

(j)Cash and cash equivalents

 

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are also included as a component of cash and cash equivalents for the purpose of the cash flow statement. Cash and cash equivalents are assessed for ECL.

 

(k)Financial liabilities and equity instruments

 

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into the definitions of a financial liability and equity instruments under IFRSs and HKFRSs. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

 

(l)Interest-bearing borrowings

 

Interest-bearing borrowings are recognised initially at fair value, net of transaction costs incurred and subsequently measured at amortised cost using the effective interest method.

 

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

 

 
20

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(m)Trade and other payables

 

Trade and other payables are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.

 

(n)Equity instruments

 

Any equity instrument is any contract that evidence a residual interest in the assets of an equity after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

 

(o)Employee benefits

 

(i)Employee leave entitlements

 

Employee entitlements to annual leave and long service leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave and long service leave as a result of services rendered by employees up to the end of the reporting period.

 

Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.

 

(ii)Pension obligations

 

The Company contributes to a defined contribution retirement scheme which are available to all employees. Contributions to the scheme by the Company and employees are calculated as a percentage of employees’ basic salaries. The retirement benefit scheme cost charged to profit or loss represents contributions payable by the Company to the funds.

 

(iii)Termination benefits

 

Termination benefits are recognised at the earlier of the dates when the Company can no longer withdraw the offer of those benefits, and when the Company recognises restructuring costs and involves the payment of termination benefits.

 

 
21

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(p)Borrowing costs

 

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

 

To the extent that funds are borrowed generally and used for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate to the expenditures on that asset. The capitalisation rate is the weighted average of the borrowing costs applicable to the borrowings of the Company that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asses. Any specific borrowing that remain outstanding after the related asset is ready for its intended use or sale is included in the general borrowing pool for calculation of capitalisation rate on general borrowings.

 

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

 

(q)Government grants

 

A government grant is recognised when there is reasonable assurance that the Company will comply with the conditions attaching to it and that the grant will be received.

 

Government grants relating to income are deferred and recognised in profit or loss over the period to match them with the costs they are intended to compensate.

 

Government grants that become receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company future related costs are recognised in profit or loss in the period in which they become receivable.

 

 
22

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(r)Taxation

 

Income tax represents the sum of the current tax and deferred tax.

 

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit recognised in profit or loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

 

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences, unused tax losses or unused tax credits can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

 

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised in profit or loss, except when it relates to items recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity.

 

The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

 

 
23

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(s)Impairment of non-financial assets

 

The carrying amounts of non-financial assets are reviewed at each reporting date for indications of impairment and where an asset is impaired, it is written down as an expense through the statement of profit or loss to its estimated recoverable amount. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. If this is the case, recoverable amount is determined for the cash-generating unit to which the asset belongs. Recoverable amount is the higher of value in use and the fair value less costs of disposal of the individual asset or the cash-generating unit.

 

Value in use is the present value of the estimated future cash flows of the asset / cash-generating unit. Present values are computed using pre-tax discount rates that reflect the time value of money and the risks specific to the asset / cash-generating unit whose impairment is being measured.

 

Impairment losses for cash-generating units are allocated first against the goodwill of the unit and then pro rata amongst the other assets of the cash-generating unit. Subsequent increases in the recoverable amount caused by changes in estimates are credited to profit or loss to the extent that they reverse the impairment.

 

(t)Impairment of financial assets

 

The Company recognises a loss allowance for ECL on investments in debt instruments which are measured at amortised cost. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

 

The Company always recognises lifetime ECL for trade receivables. The ECL on these financial assets are estimated using a provision matrix based on the Company’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

 

For all other financial instruments, the Company recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.

 

 
24

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

  (t)Impairment of financial assets (cont’d)

 

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

 

Significant increase in credit risk

 

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Company compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the date of initial recognition. In making this assessment, the Company considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Company’s debtors operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the Company’s core operations.

 

In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

 

  - an actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit rating;
  - significant deterioration in external market indicators of credit risk for a particular financial instrument;
  - existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;
  - an actual or expected significant deterioration in the operating results of the debtor;
  - significant increases in credit risk on other financial instruments of the same debtor;
  - an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations.

 

Irrespective of the outcome of the above assessment, the Company presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Company has reasonable and supportable information that demonstrates otherwise.

 

 
25

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2.SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(t)Impairment of financial assets (cont’d)

 

Significant increase in credit risk (cont’d)

 

Despite the foregoing, the Company assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if:

 

  (i) the financial instrument has a low risk of default,
  (ii) the debtor has a strong capacity to meet its contractual cash flow obligations in the near term, and
  (iii) adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

 

The Company considers a financial asset to have low credit risk when the asset has external credit rating of “investment grade” in accordance with the globally understood definition or if an external rating is not available, the asset has an internal rating of “performing”. Performing means that the counterparty has a strong financial position and there is no past due amounts.

 

The Company regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

 

Definition of default

 

The Company considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that receivables that meet either of the following criteria are generally not recoverable.

 

  - when there is a breach of financial covenants by the counterparty; or
  - information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Company, in full (without taking into account any collaterals held by the Company).

 

Irrespective of the above analysis, the Company considers that default has occurred when a financial asset is more than 180 days past due unless the Company has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

 

 
26

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2.SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(t)Impairment of financial assets (cont’d)

 

Credit-impaired financial assets

 

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

 

  - significant financial difficulty of the issuer or the counterparty;
  - a breach of contract, such as a default or past due event;
  - the lender(s) of the counterparty, for economic or contractual reasons relating to the counterparty’s financial difficulty, having granted to the counterparty a concession(s) that the lender(s) would not otherwise consider; or
  - it is becoming probable that the counterparty will enter bankruptcy or other financial reorganisation; or
  - the disappearance of an active market for that financial asset because of financial difficulties.

 

Write-off policy

 

The Company writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, including when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over two years past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Company’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.

 

Measurement and recognition of ECL

 

The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above. As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date; together with any additional amounts expected to be drawn down in the future by default date determined based on historical trend, the Company’s understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.

 

 
27

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2.SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(t)Impairment of financial assets (cont’d)

 

Measurement and recognition of ECL (cont’d)

 

For financial assets, the ECL is estimated as the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate.

 

If the Company has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Company measures the loss allowance at an amount equal to 12-month ECL at the current reporting date, except for assets for which simplified approach was used.

 

The Company recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, and does not reduce the carrying amount of the financial asset in the statement of financial position.

 

(u)Financial guarantees issued, provisions and contingent liabilities

 

(i)Financial guarantees issued

 

Financial guarantees are contracts that require the issuer (i.e. the guarantor) to make specified payments to reimburse the beneficiary of the guarantee (the “holder”) for a loss the holder incurs because a specified debtors fails to make payment when due in accordance with the terms of a debt instrument.

 

Where the Company issues a financial guarantee, the fair value of the guarantee (being the transaction price, unless the fair value can otherwise be reliably estimated) is initially recognised as deferred income within trade and other payables. Where consideration is received and receivable for the issuance of the guarantee, the consideration is recognised in accordance with the Company’s policies applicable to that category of assets. Where no such consideration is received or receivable, an immediate expense is recognised in profit or loss on initial recognition of any deferred income.

 

The amount of the guarantee initially recognised as deferred income is amortised in profit or loss over the term of the guarantee as income from financial guarantees issued. In addition, provisions are recognised in accordance with note 2(u)(ii) if and when (i) it becomes probable that the holder of the guarantee will call upon the Company under the guarantee, and

 

(ii) the amount of that claim on the Company is expected to exceed the amount currently carried in trade and other payables in respect of that guarantee i.e. the amount initially recognised, less accumulated amortisation.

 

 
28

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

2.SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

(u)Financial guarantees issued, provisions and contingent liabilities (cont’d)

 

  (ii)Other provisions and contingent liabilities

 

Provisions are recognised for liabilities of uncertain timing or amount when the Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

 

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

 

(v)Revenue recognition

 

Revenue from the provision of freight forwarding services is recognised when control of the cargoes has transferred, being when the cargoes have been delivered to the customer’s specific location (delivery). Following delivery, the customer has the primary responsibility on delivering the cargoes and bears the risks and loss in relation to the cargoes. A receivable is recognised by the Company when the cargoes are delivered to the customer as this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time is required before payment is due.

 

Management fee income is recognised based on the state of completion of the contract. Payment for management services is not due from the customer until the management services are completed and therefore a contract asset is recognised over the period in which the management services are performed representing the entity’s right to consideration for the services performed to date.

 

Interest income is recognised as it accrues using the effective interest method. For financial assets measured at amortised cost or FVTOCI (recycling) that are not credit-impaired, the effective interest rate is applied to the gross carrying amount of the asset. For credit impaired financial assets, the effective interest rate is applied to the amortised cost (i.e. gross carrying amount net of loss allowance) of the asset.

 

 
29

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

3.ADOPTION OF NEW AND REVISED INTERNATIONAL/HONG KONG FINANCIAL REPORTING STANDARDS

 

(a)Application of new and revised IFRSs/HKFRSs

 

The Company has applied the Amendments to Reference to the Conceptual Framework in IFRS/HKFRS Standards and the following amendments to IFRSs/HKFRSs issued by the IASB/HKICPA for the first time, which are mandatorily effective for the annual period beginning on or after 1 January 2020 for the preparation of the financial statements:

 

Amendments to IAS/HKAS 1 and IAS/HKAS 8   Definition of Material
amendments to HKFRS 3   Definition of a Business
Amendments to IFRS/HKFRS 9, IAS/HKAS 9 and IFRS/HKFRS 7   Interest Rate Benchmark Reform

 

The application of the Amendments to References to the Conceptual Framework in IFRS/HKFRS Standards and the amendments to IFRSs/HKFRSs in the current year had no material impact on the Company’s financial positions and performance for the current and prior years and/or on the disclosures set out in these financial statements.

 

(b)New and revised IFRSs/HKFRSs in issue but not yet effective

 

The Company has not early applied new and revised IFRSs/HKFRSs that have been issued but are not yet effective for the financial year beginning on 1 January 2020. These new and revised IFRSs/HKFRSs include the following which may be relevant to the Company.

 

   

Effective for accounting periods

beginning on or after

     
Amendments to IFRS/HKFRS 9, IAS/HKAS 39, IFRS/HKFRS 7, IFRS/HKFRS 4 and IFRS/HKFRS 16 Interest Rate Benchmark Reform - Phase 2   1 January 2021
     
Amendments to IFRS/HKFRS 3 Reference to the Conceptual Framework   1 January 2022
     
Amendments to IAS/HKAS 16 Property, plant and equipment: proceeds before intended use   1 January 2022
     
Annual Improvements to IFRSs/HKFRSs 2018 - 2020 Cycle   1 January 2022
     
Amendments to IAS/HKAS 1 classification of liabilities as current or non-current   1 January 2023

 

 
30

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

3.ADOPTION OF NEW AND REVISED INTERNATIONAL/HONG KONG FINANCIAL REPORTING STANDARDS (CONT’D)

 

  (b)New and revised IFRSs/HKFRSs in issue but not yet effective

 

The Company is in the process of making an assessment of what the impact of these amendments and new standards is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the financial statements.

 

4.REVENUE

 

The principal activities of the Company are investment holding and the provision of air and ocean freight forwarding services.

 

Revenue represents gross invoiced freight income for the year and recognised at a point in time for the year.

 

5.OTHER INCOME

 

   2020   2019 
   HKD   HKD 
         
Bank interest income   228,752    534,257 
Dividend income   612,000    113,203 
Government grants   2,888,634    - 
Management income   14,524,350    22,401,908 
Rental income   96,000    68,000 
Other income   737,042    1,116,617 
    19,086,778    24,233,985 

 

6.OTHER GAINS AND LOSSES

 

   2020   2019 
   HKD   HKD 
         
Gain on disposals of property and equipment   5,587    40,000 
Net exchange gains/(losses)   363,979    (12,738)
    369,566    27,262 

 

 
31

 

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

7.PROFIT/(LOSS) BEFORE TAXATION

 

Profit/(loss) before taxation is arrived at after charging/(crediting):

 

     2020   2019 
     HKD   HKD 
           
(a) Finance costs:          
  Interest expense on lease liabilities   146,843    194,528 
  Interest on bank loans and overdrafts   4,480,253    5,201,153 
      4,627,096    5,395,681 
             
(b) Staff costs (including directors’ remuneration):          
  Salaries, allowances and other benefits   18,491,693    22,846,863 
  Contributions to defined contribution retirement plan   684,235    762,479 
      19,175,928    23,609,342 
             
(c) Other items:          
  Audit fee   123,100    132,200 
  Depreciation of property and equipment   550,761    276,232 
  Depreciation of right-of-use assets   2,016,355    1,613,475 
  Property and equipment written off   -    82,403 
  Gain on disposals of property and equipment   (5,587)   (40,000)
  Operating lease rentals          
  - property rentals   435,401    4,848,775 

 

8.INCOME TAX EXPENSE

 

(a)Income tax has been recognised in profit or loss as followings:

 

   2020   2019 
   HKD   HKD 
               
Deferred tax (note 21)   (1,241,000)   - 

 

No provision for Hong Kong Profits Tax has been made since the Company has sufficient tax losses brought forward to set off against current year’s assessable profit.

 

 
32

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

8.INCOME TAX EXPENSE (CONT’D)

 

(b)Reconciliation between the income tax expense and accounting loss at applicable tax rates:

 

   2020   2019 
   HKD   HKD 
         
Profit/(loss) before taxation   21,703,603    (2,973,608)
           
Notional tax on loss before taxation, calculated at the current rate of 16.5% (2019:16.5%)   3,581,094    (490,645)
Tax effect of income that not taxable   (656,600)   (6,600)
Tax effect of expenses that not deductible   325,985    376,733 
Tax effect of temporary differences not recognised   (72,694)   (55,851)
Tax effect of unused tax losses not recognised   (3,177,785)   176,363 
Tax losses recognised   (1,241,000)   - 
           
Income tax credit   (1,241,000)   - 

 

9.BENEFITS AND INTERESTS OF DIRECTORS

 

(a)Directors’ emoluments

 

   2020   2019 
   HKD   HKD 
         
Fees        - 
Salaries and allowances   2,890,952    4,920,188 
Contributions to defined contribution retirement plan   36,000    36,000 
           
    2,926,952    4,956,188 

 

 
33

 

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

9.BENEFITS AND INTERESTS OF DIRECTORS (CONT’D)

 

(b)Directors’ material interests in transactions, arrangements or contracts

 

         2020   2019 
Identity of related parties  Nature of related party relationship  Type of transactions  Volume of transactions   Volume of transactions 
         HKD   HKD 
               
Unique Logistics Holdings Limited  Immediate holding company  Management income received   14,038,206    18,036,506 
      Sundry income received   355,335    358,273 
      Corporate fee paid   (346,191)   (303,359)
      Freight charges paid   (47,222)   (78,858)
                 
ULI (South China) Limited  Fellow subsidiary  Freight income received       25,496 
      Freight charges paid   (34,197)    
                 
Unique Logistics International (South China) Limited  Fellow subsidiary  Freight income received   32,843    145,487 
      Freight charges paid   (478,295)   (200,409)
      Management income received       4,000,000 
                 
Unique Logistics International (India) Private Limited  Fellow subsidiary  Freight income received   883,956    220,969 
      Freight charges paid   (18,551)   (7,182)
                 
Unique Logistics (Korea) Co., Ltd.  Fellow subsidiary  Freight income received   26,938    25,405 
      Freight charges paid   (197,595)   (13,571)
                 
Unique Logistics International (Vietnam) Co., Ltd.  Fellow subsidiary  Freight income received   20,797     
      Freight charges paid   (7,382)   (8,053)
                 
Unique Freight Solutions (Thailand) Co., Ltd.  Fellow subsidiary  Freight income received   13,314    29,409 
      Freight charges paid   829     
                 
Green Trident Logistics (Hangzhou) Ltd.  Fellow subsidiary  Freight income received   109    1,078 
      Freight charges paid   (174,236)    
                 
Unique Logistics International (SIN) Pte. Ltd.  Fellow subsidiary  Freight income received   67,017    56,931 
(formerly known as Unique Freight Solutions (S) Pte. Ltd.)     Freight charges paid   (9,904)   (4,687)

 

 
34

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

9.BENEFITS AND INTERESTS OF DIRECTORS (CONT’D)

 

  (b)Directors’ material interests in transactions, arrangements or contracts (cont’d)

 

         2020   2019 
Identity of related parties  Nature of related party relationship  Type of transactions  Volume of transactions   Volume of transactions 
         HKD   HKD 
               
Shenzhen Unique Logistics International Limited  Subsidiary  Freight income received   288,386    691,581 
                 
China Wealth Logistics Limited  Subsidiary  Freight income   23,274,042    7,347,745 
      Freight paid   (4,055,696)   (2,225,413)
      Management income received   486,144    365,402 
      Rental income received   96,000    68,000 
      Dividend income   612,000    - 
                 
Master Freight International (H.K.) Limited  Subsidiary  Dividend income   -    113,203 
                 
Unique Logistics International (ATL) LLC  Mr. Lee Chi Tak, Richard is the beneficial member of the contracted party/ fellow subsidiary  Freight income received   515,014    2,843,690 
      Freight charges paid   (410,785)   (2,724,287)
                 
Unique Logistics International (NYC), LLC  Mr. Lee Chi Tak, Richard is the beneficial member of the contracted party/ fellow subsidiary  Freight income received   6,270,269    1,145,064 
      Freight charges paid   (2,739,926)   (1,189,137)
                 
Unique Logistics International (LAX) Inc.  Mr. Lee Chi Tak, Richard is the beneficial member of the contracted party/ fellow subsidiary  Freight income received   220,058    1,045,391 
      Freight charges paid   (184,013)   (616,126)
                 
Unique Logistics International (BOS), Inc.  Mr. Lee Chi Tak, Richard is the beneficial member of the contracted party/ fellow subsidiary  Freight income received   2,666,484    4,697,963 
      Freight charges paid   (644,183)   (1,558,834)

 

 
35

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

9.BENEFITS AND INTERESTS OF DIRECTORS (CONT’D)

 

  (b)Directors’ material interests in transactions, arrangements or contracts (cont’d)

 

         2020   2019 
Identity of related parties  Nature of related party relationship  Type of transactions  Volume of transactions   Volume of transactions 
         HKD   HKD 
               
PT. Unique Logistics International Indonesia  Associate company  Freight income received   -    1,187 
      Freight charges paid   (20,024)   (955)
                 
ULI (North & East China) Company Limited  Associate company  Freight charges paid   (1,207,081)   (389,369)
                 
ULI International Company Limited  Associate company  Freight income received   113,467    118,050 
      Freight charges paid   (106,920)   (121,973)
                 
Unique Logistics International (Shanghai) Co., Ltd.  Associate company  Freight income received   64,799    - 
      Freight charges paid   -    (33)
                 
Unique International Logistics (M) Sdn. Bhd.  Associate company  Freight income received   49,038    52,510 
      Freight charges paid   (51,081)   (83,763)
                 
Uniquorn International Logistics Co., Ltd  Associate company  Freight income received   176,666    - 
                 
Unique Logistics International Philippines Inc.  Associate company  Freight income received   35,406    16,971 
      Freight charges paid   (124,696)   (396,710)
                 
TGF Unique Limited  Associate company  Freight income received   7,788,468    2,937,365 
      Freight charges paid   (1,990,238)   (862,550)
                 
Asia Freight Solutions (H.K.) Limited  Associate company  Freight income received   236,438    519,704 
      Freight charges paid   (5,731)   (3,666)
                 
Across Logistics (H.K.) Limited  Associate company  Freight income received   353,052    55,695 
                 
Across Logistics (Shenzhen) Limited  Associate company  Freight income received   256,877    561 
                 
Across Logistics Australia Pty Ltd  Associate company  Freight charges paid   -    (29,244)
                 
Advance Tank International Limited  Related company  Rental expenses   (435,401)   (4,848,775)
                 
Unique Investment Limited  Related company  Rental expenses   (762,087)   (1,161,984)

 

 
36

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

10.PROPERTY AND EQUIPMENT

 

   Leasehold improvements   Furniture and fixtures   Office equipment   Motor vehicles   Total 
   HKD   HKD   HKD   HKD   HKD 
                     
Cost:                         
                          
At 1 January 2019   306,799    1,689,169    8,824,814    4,067,701    14,888,483 
Reclassification due to adoption of IFRS/HKFRS 16   -    -    -    (3,219,900)   (3,219,900)
Additions   864,901    550,975    67,810    -    1,483,686 
Disposals   -    -    -    (359,000)   (359,000)
Written off   (306,799)   (1,491,352)   (374,190)   -    (2,172,341)
                          
At 31 December 2019 and 1 January 2020   864,901    748,792    8,518,434    488,801    10,620,928 
Additions   -    42,160    1,341,628    -    1,383,788 
                          
At 31 December 2020   861,901    790,952    9,860,062    488,801    12,004,716 
                          
Accumulated depreciation:                         
                          
At 1 January 2019   222,919    1,581,735    8,405,733    2,997,028    13,207,415 
Reclassification due to adoption of IFRS/HKFRS 16   -    -    -    (2,149,227)   (2,149,227)
Charge for the year   41,654    48,883    185,695    -    276,232 
Disposals   -    -    -    (359,000)   (359,000)
Written off   (244,030)   (1,471,718)   (374,190)   -    (2,089,938)
                          
At 31 December 2019 and 1 January 2020   20,543    158,900    8,217,238    488,801    8,885,482 
                          
Charge for the year   172,980    129,424    248,357    -    550,761 
                          
At 31 December 2020   193,523    288,324    8,465,595    488,801    9,436,243 
                          
Carrying value:                         
                          
At 31 December 2020   671,378    502,628    1,394,467    -    2,568,473 
                          
At 31 December 2019   844,358    589,892    301,196    -    1,735,446 

 

 
37

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

11.RIGHT-OF-USE ASSETS

 

   Motor
vehicle
   Leased
properties
   Total 
   HKD   HKD   HKD 
             
At 1 January 2020 (note 3)   796,823    5,421,895    6,218,718 
Lease modification   -    333,713    333,713 
Disposals   (332,786)   -    (332,786)
Depreciation   (197,784)   (1,818,571)   (2,016,355)
                
At 31 December 2020   266,253    3,937,037    4,203,290 

 

Lease liabilities of HK$4,341,176 (2019: HK$6,336,378) are recognised with related right-of-use assets of HKD4,023,290 as at 31 December 2020 (2019: HK$6,218,718). The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

 

   2020 
   HKD 
     
Depreciation expenses on right-of-use assets   2,016,355 
Interest expense on lease liabilities (included in finance cost)   146,843 
Expenses relating to short-term lease (included in administrative expenses)   435,401 

 

Details of total cash outflow for leases is set out in note 26(b).

 

12.INVESTMENT IN SUBSIDIARIES

 

   2020   2019 
   HKD   HKD 
           
Unlisted investment, at cost   19,066,978    19,066,978 

 

Details of the subsidiaries as at 31 December 2020 is as follow:

 

Name   Place of incorporation / registration and operation   Paid up capital   Percentage of ownership interest/profit sharing held directly   Principal activities
                 
China Wealth Logistics Limited   Hong Kong   HKD1,000,000   51%   Provision of air freight forwarding services
                 
Shenzhen Unique Logistics International Limited   People’s Republic of China   Renminbi (“RMB”) 16,500,000   100%   Provision of freight forwarding services

 

 
38

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

13.INVESTMENTS

 

Held-to-maturity securities comprise 70% (2019: 82%) capital protected notes and 30% (2019: 18%) structured investment deposit, denominated in United States dollars, Hong Kong dollars and Renminbi, and would be mature in 2020, issued by banks. The investments were pledged to a bank to secure banking facilities granted to the Company as set out in note 19 to the financial statements.

 

14.OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

 

All other receivables, deposits and prepayments are expected to be recovered or recognised as expense within one year.

 

15.TRADE RECEIVABLES

 

All trade receivables are expected to be recovered within one year.

 

At 31 December 2020 and 2019, no allowance was made for estimated irrecoverable trade receivables.

 

Trade receivables represented by:

 

   2020   2019 
   HKD   HKD 
         
- Third parties   17,182,067    23,393,417 
- Subsidiary   16,829,189    2,559,010 
- Immediate holding company   273,605    - 
- Fellow subsidiaries   5,895,424    1,096,052 
- Related companies   5,158,446    481,887 
           
    45,338,731    27,530,366 

 

The carrying amounts of the Company’s trade receivables are denominated in the following currencies:

 

   2020   2019 
   HKD   HKD 
         
United States Dollars   9,603,588    4,404,894 
Others   165,478    43,968 
           
    9,769,066    4,448,862 

 

 
39

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

15.TRADE RECEIVABLES (CONT’D)

 

Receivables that were neither past due nor impaired relate to a wide range of customers for whom there was no recent history of default.

 

Receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the Company. Based on past experience, management believes that no loss allowance for ECL is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are considered fully recoverable. The Company does not hold any collateral over these balances.

 

16.AMOUNTS DUE FROM/TO RELATED PARTIES

 

   2020   2019 
   HKD   HKD 
         
Amounts due from related parties          
- Immediate holding company   38,173,663    24,130,040 
- Director   3,131    532 
           
    38,176,794    24,130,572 
Amounts due to related parties          
- Subsidiary   82,716    1,000,204 
- Fellow subsidiary   972,686    - 
- Related company   1,387,911    3,279,905 
           
    2,443,313    4,280,109 

 

The balances with related parties are unsecured, interest-free and have no fixed terms of repayment.

 

 
40

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

17.PLEDGED BANK DEPOSITS AND CASH AND CASH EQUIVALENTS

 

The Company’s pledged bank deposits represented deposits pledged to banks to secure banking facilities granted to the Company and a fellow subsidiary as set out in note 19 to the financial statements. The deposits are in Hong Kong dollars and United States dollars and at fixed interest rates ranging from 0.1% to 0.9% p.a. and therefore are subject to foreign currency risk, fair values and interest rate risk.

 

   2020   2019 
   HKD   HKD 
         
Cash at bank and on hand   3,385,543    3,965,222 
Secured bank overdrafts (note 19)   (49,556,634)   (61,699,328)
           
Cash and cash equivalents in the statement of cash flows   (46,171,091)   (57,734,106)

 

Cash at bank earns interest at floating interest rates based on daily bank deposit rates.

 

Included in cash at bank and on hand are the following amounts denominated in currencies other than the Company’s functional currency:

 

   2020   2019 
   HKD   HKD 
         
United States Dollars   2,182,935    3,493,176 
Renminbi   319,289    224,372 
Euro Dollars   28,752    2,491 
British Pound   692,621    3,914 
Australian Dollars   1,153    1,057 
New Zealand Dollars   404    379 

 

 

18.TRADE PAYABLES

 

All trade payables are expected to be settled within one year. The trade payables represented by:

 

   2020   2019 
   HKD   HKD 
         
Trade payables          
- Third parties   13,836,519    13,710,696 
- Subsidiary   1,443,798    4,526,792 
- Fellow subsidiary companies   40,397,762    37,983,780 
- Related companies   5,964,690    662,757 
- Immediate holding company   1,259,008    918,693 
           
    62,901,777    57,802,718 

 

 
41

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

18.TRADE PAYABLES (CONT’D)

 

The carrying amounts of the Company’s trade payables are denominated in the following currencies:

 

   2020   2019 
   HKD   HKD 
         
Hong Kong Dollars   15,889,973    28,214,164 
Euro Dollars   -    64,163 
Renminbi   155,718    490,909 
United States Dollars   45,551,886    28,694,078 
Pound   1,180,766    - 
Others   123,434    339,404 
           
    62,901,777    57,802,718 

 

19.BANK LOANS AND OVERDRAFTS

 

At 31 December 2020, except bank loans of HK$2,856,260 (2019: HKDNil), all other bank loans and overdrafts were repayable within 1 year or on demand.

 

At 31 December 2020, the bank loans and overdrafts were secured as follows:

 

   2020   2019 
   HKD   HKD 
         
Secured bank overdrafts (note 17)   49,556,634    61,699,328 
Secured bank loans   51,311,760    40,766,737 
           
    100,868,394    102,466,065 

 

The secured bank loans of HKD3,732,312 (2019: HKD5,454,535) and HK$4,000,000 (2019: HKD Nil) bear interest at 2.85% per annum over 3 months HIBOR/LIBOR HKD prime rate less 2.5%. The remaining bank loans bear interest ranging from 1.25% per annum below best lending rate of the relevant currencies to 1% per annum over best lending rate of the relevant currencies.

 

 
42

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

19.BANK LOANS AND OVERDRAFTS (CONT’D)

 

Included in bank loans and overdrafts is the following amount denominated in a currency other than the Company’s functional currency:

 

   2020   2019 
   HKD   HKD 
           
United States Dollars   35,225,151    32,730,631 

 

At 31 December 2020, the Company had general banking facilities of approximately HKD159 million (2019: HKD138 million), which are shared with fellow subsidiaries. These facilities are secured by the following:

 

  (i) pledged bank deposits of the Company (note 17);
  (ii) pledged investments of the Company (note 13);
  (iii) guarantee from ultimate holding company;
  (iv) guarantees and undertakings from certain directors;
  (v) first legal charge over certain leasehold properties of a director;
  (vi) guarantee from the immediate holding company which are partially supported by certain leasehold properties of a related company;
  (vii) guarantees from certain related companies which are partially supported by certain leasehold properties and investment securities of related companies; and
  (viii) Charge over certain leasehold properties of a related company.

 

20.LEASE LIABILITIES

 

   Minimum lease payments   Present value of
minimum lease payments
 
   2020   2019   2020   2019 
   HKD   HKD   HKD   HKD 
                 
Within one year   1,482,825    2,044,800    1,393,311    1,904,107 
In the second to fifth years, inclusive   3,022,848    4,610,106    2,947,865    4,432,271 
    4,505,673    6,654,906    4,341,176    6,336,378 
Less: Future finance charges   (164,497)   (318,528)   N/A    N/A 
                     
Present value of lease obligations   4,341,176    6,336,378    4,341,176    6,336,378 
Less: Amount due for settlement within 12 months (shown under current liabilities)             (1,393,311)   (1,904,107)
                     
Amount due for settlement after 12 months             2,947,865    4,432,271 

 

 
43

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

21.DEFERRED TAX

 

The following is the deferred tax assets recognised by the Company.

 

   Tax losses 
   HKD 
     
At 1 January 2020   - 
Credit to profit or loss for the year (note 8)   1,241,000 
      
At 31 December 2020   1,241,000 

 

At the end of the reporting period, the Company has unused tax losses of approximately HKD35 million (2019: HKD58 million) available for offset against future profits. A defrred tax asset has been recognised in respect of HK$1,241,000 (2019: HKDNil) of such losses. No deferred tax asset has been recognised in respect of the remaining approximately HKD31 million (2019: HKD58 million) due to the unpredictability of future profit streams. The tax losses may be carried forward indefinitely.

 

22.CAPITAL AND RESERVE

 

(a)Share capital

 

   2020       2019     
   Number of shares   Amount   Number of shares   Amount 
       HKD       HKD 
Ordinary shares, issued and fully paid:                    
At 1 January and 31 December   1,000,000    1,000,000    1,000,000    1,000,000 

 

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

 

(b)Capital management

 

Capital comprises share capital and reserves in the statement of financial position. The Company’s objective when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders.

 

The Company manages capital by regularly monitoring its current and expected liquidity requirements rather than using debt/equity ratio analysis.

 

The Company is not subject to either internally or externally imposed capital requirements.

 

 
44

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

23.FINANCIAL RISK MANAGEMENT

 

Exposure to credit, liquidity, foreign currency and interest rate risks arises in the normal course of the Company’s business. The Company’s exposure to these risks and the financial risk management policies and practices used by the Company to manage these risks are described below.

 

(a)Credit risk

 

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Company’s exposure to credit risk arising from cash and cash equivalents is limited because the counterparties are banks and financial institutions with high credit-rating assigned by international credit-rating agencies, for which the Company considers to have low credit risk.

 

Trade receivables

 

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. Individual credit evaluations are performed on all customers requiring credit over a certain amount. These evaluations focus on the customer’s past history of making payments when due and current ability to pay, and take into account information specific to the customer as well as pertaining to the economic environment in which the customer operates. Trade receivables are due within 30-60 days from the date of billing.

 

The Company measures loss allowances for trade receivables at an amount equal to lifetime ECL, which is calculated using a provision matrix. As the Company’s historical credit loss experience does not indicate significantly different loss patterns for different customer segments, the loss allowance based on past due status is not further distinguished between the Company’s different customer bases. In the opinion of the directors, allowance for ECL was insignificant as at 31 December 2020.

 

Expected loss rates are based on actual loss experience over the past 3 years. These rates are adjusted to reflect differences between economic conditions during the period over which the historic data has been collected, current conditions and the Company’s view of economic conditions over the expected lives of the receivables.

 

 
45

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

  23.FINANCIAL RISK MANAGEMENT (CONT’D)

 

(b)Liquidity risk

 

The Company is exposed to significant liquidity risk. At 31 December 2020, the Company’s current liabilities exceeded its total assets by HKD32,635,340 (2019: HKD56,951,797). The maintenance of the Company as a going concern depends mainly on the ongoing financial support from the immediate holding company.

 

The Company’s policy is to regularly monitor its current and expected liquidity requirements to ensure that it maintains sufficient reserve of cash to meet its liquidity requirements in the short and longer term.

 

The following table details the remaining contractual maturities at the end of the reporting period of the Company’s financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the end of the reporting period) and earliest date the Company can be required to pay:

 

      

2020

Contractual undiscounted cash outflow

 
   Statement of financial position carrying amount   Total   Within 1 year or on demand   More than 1 year but less than 2 years   More than 2 years but less than 5 years 
   HKD   HKD   HKD   HKD   HKD 
                     
Trade payables   62,901,777    62,901,777    62,901,777    -    - 
Other payables and accrued expenses   3,274,557    3,274,557    3,274,557    -    - 
Amounts due to related parties   2,443,313    2,443,313    2,443,313    -    - 
Bank loans and overdrafts   100,868,394    102,997,407    100,081,960    2,057,794    857,653 
Lease liabilities   4,341,176    4,505,673    1,482,825    1,203,768    1,819,080 
                          
    173,835,217    176,122,727    170,184,432    3,261,562    2,676,733 

 

 
46

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

23.FINANCIAL RISK MANAGEMENT (CONT’D)

 

(b)Liquidity risk (cont’d)

 

       2019
Contractual undiscounted cash outflow
 
   Statement of financial position carrying amount   Total   Within 1 year or on demand   More than 1 year but less than 2 years   More than 2 years but less than 5 years 
   HKD   HKD   HKD   HKD   HKD 
                     
Trade payables   57,802,718    57,802,718    57,802,718    -    - 
Other payables and accrued expenses   4,267,028    4,267,028    4,267,028    -    - 
Amounts due to a related party   4,280,109    4,280,109    4,280,109    -    - 
Bank loans and overdrafts   102,466,065    105,712,405    105,712,405    -    - 
Finance lease payables   6,336,378    6,654,906    2,044,800    1,441,908    3,168,198 
                          
    175,152,298    178,717,166    174,107,060    1,441,908    3,168,198 

 

(c)Foreign currency risk

 

The Company is not exposed to any significant foreign currency risk as its monetary assets and transactions are predominately in United States dollars and Hong Kong dollars. As Hong Kong dollar is pegged to United States dollar, the Company does not expect any significant exposure to foreign currency risk.

 

(d)Interest rate risk

 

The Company’s interest rate arises primarily from pledged bank deposits, bank balances and bank loans. Bank balances and bank loans contracted at variable rates expose the Company to fair value interest rate risk.

 

(e)Categories of financial instruments at 31 December

 

   2020   2019 
   HKD   HKD 
         
Financial assets:          
Financial assets measured at amortised cost   108,069,423    86,422,452 
           
Financial liabilities:          
Financial liabilities at amortised cost   169,488,041    168,815,920 

 

 
47

 

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

23.FINANCIAL RISK MANAGEMENT (CONT’D)

 

(f)Fair value

 

All financial instruments are carried at amounts not materially different from their fair values as at 31 December 2020 and 2019.

 

24.MATERIAL RELATED PARTY TRANSACTIONS

 

(a)Transactions with key management personnel

 

   2020   2019 
   HKD   HKD 
         
Salaries and other benefits   4,223,936    6,796,760 
Contributions to defined contribution retirement plan   72,000    72,000 
           
    4,295,936    6,868,760 

 

All of key management personnel are the directors of the Company, and the remuneration for them has been included in total amount of directors’ remuneration disclosed in note 9(a) above.

 

 
48

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

24.MATERIAL RELATED PARTY TRANSACTIONS (CONT’D)

 

(b)Transactions with other related parties

 

Apart from the above and the financing arrangements as mentioned in notes 15, 16 and 18, the Company entered into the following material related party transactions during the year:

 

   2020   2019 
   HKD   HKD 
         
         
Immediate holding company          
Management income received   14,038,206    18,036,506 
Sundry income received   355,335    358,273 
Corporate fee paid   346,191    303,360 
Freight charges paid   47,222    78,858 
           
Fellow subsidiary companies          
Freight income received   1,044,974    10,236,881 
Freight charges paid   919,331    6,322,284 
Management income received   -    4,000,000 
           
Subsidiaries          
Freight income received   23,562,428    8,039,326 
Freight charges paid   4,055,696    2,225,413 
Rental income received   96,000    68,000 
Dividend income received   612,000    113,203 
Management income received   486,144    365,402 
           
Related companies          
Freight income received   18,726,035    3,702,042 
Freight charges paid   7,484,678    1,888,261 
Rent paid   1,197,488    6,010,759 

 

Balances with related parties are disclosed in the statement of financial position and in notes 15, 16 and 18 to the financial statements.

 

 
49

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

26.NOTES TO STATEMENT OF CASH FLOWS

 

(a)Reconciliation of liabilities arising from financing activities

 

The table below details changes in the Company’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Company’s statement of cash flows as cash flows from financing activities.

 

   1 January 2020   Cash flows   Lease modification   Interest expenses   31 December 2020 
   HKD   HKD   HKD   HKD   HKD 
                     
Secured bank overdraft (note 19)   61,699,328    (14,890,652)   -    2,747,958    49,556,634 
Secured bank loan (note 19)   40,766,737    8,812,728    -    1,732,295    51,311,760 
Lease liabilities (note 20)   6,336,378    (2,475,758)   333,713    146,843    4,341,176 
                          
    108,802,443    (8,553,682)   333,713    4,627,096    105,209,570 

 

   1 January 2019   Impact on initial application of IFRS/ HKFRS 16 (note 3)   Restated balance at 1 January 2019   Cash flows   Interest expenses   Addition of right-of-use assets   31 December 2019 
   HKD   HKD   HKD   HKD   HKD   HKD   HKD 
                             
Secured bank overdraft (note 19)   64,846,954    -    64,846,954    (6,440,488)   3,292,862    -    61,699,328 
Secured bank loan (note 19)   51,250,267    -    51,250,267    (12,391,821)   1,908,291    -    40,766,737 
Finance lease (note 20)   1,101,042    (1,101,042)   -    -    -    -    - 
Lease liabilities (note 20)   -    2,827,096    2,827,096    (1,720,712)   194,528    5,035,466    6,336,378 
                                    
    117,198,263    1,726,054    118,924,317    (20,553,021)   5,395,681    5,035,466    108,802,443 

 

(b)Total cash outflow for leases

 

Amounts included in the cash flow statements for leases comprise the following:

 

   2020   2019 
   HKD   HKD 
         
Within operating cash flows   582,244    5,043,303 
Within financing cash flows   2,328,915    1,526,184 
           
    2,911,159    6,569,487 

 

These amounts relate to the following:

 

   2020   2019 
   HKD   HKD 
           
Lease rental paid   2,911,159    6,569,487 

 

 
50

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

 

 

27.ACCOUNTING ESTIMATES AND JUDGEMENTS

 

Note 23 contains information about the assumptions and their risk factors relating to financial instruments. Other key sources of estimates and judgements are as follows:

 

(a)Going concern basis

 

The financial statements have been prepared on a going concern basis, the validity of which depends upon the financial support from the immediate holding company at a level sufficient to finance the working capital requirements of the Company. Details are set out in note 2(b) to the financial statements.

 

(b)Depreciation

 

Depreciation is calculated to write off the cost of items of fixed assets, less their estimated residual value, if any, using the straight-line method over their estimated useful lives. The Company reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation expense to be recorded during any reporting period. The useful lives and residual values are based on the Company’s historical experience with similar assets and taking into account anticipated technological changes. The depreciation expense for future periods is adjusted if there are significant changes from previous estimates.

 

(c)Impairment of trade receivables

 

The management of the Company estimates the amount of impairment loss for ECL on trade receivables based on the credit risk of trade receivables. The amount of the impairment loss based on ECL model is measured as the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the effective interest rate determined at initial recognition. Where the future cash flows are less than expected, or being revised downward due to changes in facts and circumstances, a material impairment loss may arise.

 

As at 31 December 2020, the carrying amount of trade receivables is HKD45,338,731 with no allowance for doubtful debts (2019: HKD27,530,366 with no allowance for doubtful debts).

 

 

 

 

Appendix i

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

DETAILED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

(For Management Information Only)

 

 

   2020   2019 
   HKD   HKD 
         
FREIGHT INCOME   142,690,712    150,858,723 
           
Freight costs (Appendix ii)   (108,114,331)   (137,533,173)
           
GROSS PROFIT   34,576,381    13,325,550 
           
OTHER INCOME          
           
Bank interest income   228,752    534,257 
Dividend income   612,000    113,203 
Government subsidy   2,888,634    - 
Management income   14,524,350    22,401,908 
Rental income   96,000    68,000 
Sundry income   737,042    1,116,617 
           
    19,086,778    24,233,985 
           
OTHER GAINS AND LOSSES          
           
Gain on disposals of property and equipment   5,587    40,000 
Net exchange gains/ (losses)   363,979    (12,738)
           
    369,566    27,262 
EXPENDITURE (APPENDIX ii)          
           
Administrative expenses   24,723,666    32,319,998 
Other operating expenses   2,978,360    2,844,726 
           
    27,702,026    35,164,724 
           
OPERATING PROFIT   26,330,699    2,422,073 
           
Finance costs (Appendix ii)   (4,627,096)   (5,395,681)
           
PROFIT/(LOSS) BEFORE TAXATION   21,730,603    (2,973,608)

 

 

 

 

Appendix ii

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

OVERHEAD EXPENSES

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

(For Management Information Only)

 

 

   2020   2019 
   HKD   HKD 
         
FREIGHT COSTS          
           
Agency fees   590,175    1,276,158 
Freight and handling charges   107,524,156    136,257,015 
    108,114,331    137,533,173 
ADMINISTRATIVE EXPENSES          
           
Distribution costs          
           
Advertisement and promotion   13,640    13,000 
Claim expenses   1,590    - 
Staff commission   1,956,391    973,708 
Motor vehicles expenses   393,377    427,982 
Telephone, facsimile and internet   210,966    157,595 
    2,575,964    1,572,285 
Staff          
           
Directors’ remuneration   2,164,865    3,758,204 
Provident fund contributions   648,235    762,479 
Recruitment expenses   -    6,158 
Salaries and bonuses   15,146,967    17,559,622 
Staff welfare benefits   417,774    360,895 
    18,377,841    22,447,358 
Premises          
           
Building management fee   434,170    329,981 
Computer expenses   145,339    181,945 
Depreciation of right-of-use assets   2,016,355    1,613,475 
Office cleaning expenses   86,129    116,847 
Rent and rates expenses - office   651,190    5,097,607 
Rent and rates expenses - storage   38,064    37,960 
Repairs and maintenance expenses   259,893    612,855 
Utility electricity and water   138,721    309,685 
    3,769,861    8,300,355 
    24,723,666    32,319,998 

 

 

 

 

Appendix ii (cont’d)

 

UNIQUE LOGISTICS INTERNATIONAL (H.K.) LIMITED

OVERHEAD EXPENSES (CONT’D)

FOR THE YEAR ENDED 31 DECEMBER 2020

(Expressed in Hong Kong dollars)

(For Management Information Only)

 

 

   2020   2019 
   HKD   HKD 
         
OTHER OPERATING EXPENSES          
           
Communications          
           
Postage and courier charges   30,241    34,982 
Printing and stationery   238,202    302,661 
    268,443    337,643 
Financial and other expenses          
           
Auditor’s remuneration   123,100    132,200 
Bank charges   1,171,660    1,001,612 
Bad debt   33,012    - 
Business registration fee   500    2,500 
Corporate fee   346,191    303,360 
Depreciation of property and equipment   550,761    276,232 
Right-of-use assets written off   -    82,403 
General expenses   68,367    80,307 
Insurance   (91,693)   (72,358)
Legal and professional fees   79,674    158,465 
Dues & subscription   197,457    165,504 
           
    2,479,029    2,130,225 
Travelling and entertainment          
           
Donation   1,198    14,000 
Entertainment   58,432    162,587 
Travelling - local   171,258    198,706 
Travelling - overseas   -    1,565 
           
    230,888    376,858 
    2,978,360    2,844,726 
FINANCE COSTS          
           
Interest expense on lease liabilities   146,843    194,528 
Interest on bank loans and overdraft   4,480,253    5,201,153 
           
    4,627,096    5,395,681