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Foreword by Chairman

Dr. Benjamin Lai

Chairman of Board of Directors,
MentalCare Connect Co Ltd

The new normal of a persisting COVID-19 pandemic, the social distancing measures, the mandatory and voluntary testing, the quarantine arrangement, the restriction of travelling across the borders, work from home, zoom meetings and zoom classes appear to stay with us for ages. The efforts by scientists, pharmaceutical companies and governments bring hope of vaccination to combat the virus. With the efforts of the public bodies and the community to control the spread of the virus and the roll out of vaccination in early 2021, the local community is able to look forward to the light at the other end of the tunnel. In the past one year "MentalCare Connect" has been put to the test and the challenges like everyone else.

I am pleased to share with you that while there was significant drop in business of our shops in the hospitals, there was positive growth in business in our other shops. The overall turnover of the business of Company was around HK$163,000,000 in the year and the net profit of the Company in the year was around 9.8 million dollars which include 7.8 million dollars from the special grants under the Anti-epidemic Fund. The Company continues to maintain the majority of its business outlets inside the hospitals, and it is expanding its shops outside of the hospitals. It will continue the joint efforts with other social enterprises in the promotion of social responsibilities and support of the disadvantaged persons.

As a social enterprise operating under the principles of free market economy, it is natural that the Company has faced competition with other organizations. Healthy competition should promote increased cost effectiveness of a business and ultimate benefit to the customers. I am sure our staff will take the opportunity to further enhance our business model and business effectiveness. The Company pledges to provide employment and training opportunities for the disadvantaged persons, and to promote a working environment facilitating the development of mutual support and positive mental health. I am glad to learn that the Company will enlist the support service for its staff from the mother company, The Mental Health Association of Hong Kong.

On behalf of the Board I would like to thank the Home Affairs Bureau, Social Welfare Department, the Hospital Authority, suppliers, honorary advisors and other stakeholders for their continual support and advice to the Company. The Board is grateful to Mr. Chung Wai Shing and his staff for their dedication and hard work for the success of the Company. I wish to thank members of the Board for their insightful advice and untiring support to the Company.

Mr. Chung Wai Shing

CEO, MentalCare Connect Co Ltd

Executive Report

"Heart fluttered like a hanging pennant in the wind" is the best description of feeling and perception in Years 2020-2021. The persistence of COVID-19 and implementation of "Emergency Response Level" in public hospitals resulting in the turnover of our more than 10 Convenience Store and Rehab Shop dropped by 40% to 60%. What is worse, "Cheers Gallery" Tuen Mun Hospital, our best performing shop in retail business and "Cheers" Bakery was retrieved by Hospital for other purpose. The most tragic incident was the loss of business operations of Queen Mary Hospital. The reason was due to the "cut-throat" pricing strategy adopted by another NGO peer. This was a vicious competition as it did not create any added value to the society, but risking our disabled employees to be dismissed. It was also a waste of the government funding and our painstaking efforts throughout the years. In fact, the profit margin of MentalCare Connect's business was very thin. Even a change of half percentage in gross profit will turn the business into profit or loss.

"MentalCare Connect" went through a turbulent year. Though we are facing an adverse environment, we will not sacrifice any disabled staff. We would continue to create job opportunities to them. We proactively strived to open more "Cheers Gallery" on Hong Kong Island, so that the then staff working in Queen Mary Hospital can be settled. This was particularly important as those disabled staff did not need to worry about switching to other job or working in unfamiliar environment. In addition to the opening of retail branches on Hong Kong Island, we are fortunate to successfully bid for the operations of new rehab shop in Tuen Mun Hospital and retail store in Immigration Tower, Wanchai. This further enabled us to create more opportunities to hire more disabled and disadvantaged employees.

With the team's substantial effort and the Government's series measures on anti-epidemic, it is a blessing to us that we are able to avoid loss but record profits in the operations.


Financial Performance

In 2020-2021, the Company's revenue was HK$174,176,096, an increase of 3.5% year-to-year. The two startup funds, "Enhancing Employment of People with Disabilities through Small Enterprise Project" and "Enhancing Self-Reliance through District Partnership Programme", granted a total of HK$2,756,890 to a number of SE projects. The fund contributed a total of 1.58% of the income. "MentalCare Connect" recorded a profit of HK$9,622,353 after tax. The tax expense was HK$196,117. The income was enhanced by a series of Government funding / measures in response to the pandemic, such as Anti-epidemic Fund, Licence Fee Reduction, as well as the direct sales of personalised protective gear. Although a serious deficit was recorded in the shops situated in the Hospital, there is steady growth of business in the shops in the community. The growth was mainly due to the steady footfall which was not affected by the implementation of "Emergency Response Level" and restriction imposed on medical consultation by the Hospitals.


Core Mission Implementation

Up to March 2021, the number of social enterprises operating under "MentalCare Connect" was 31, employing a total of 201 employees, of whom 129 were from disadvantaged groups (119 were people in recovery), accounting for 64% of the total number of employees. 152 trainees were referred to the Company for placement. In order to render the emotional support to those disabled staff who have left the supported employment service, the Company will proactively consider and allocate internal resources to purchase social workers' support service from our Mother Organisation in the coming year.


Business Development

"MentalCare Connect" opened three new shops, including "Cheers Gallery" Rehab Link at Hennessy Road & Nam On Street, as well as "Cheers Coop" at Wanchai Immigration Tower last year. We lost the operations of "Cheers Gallery" Rehab Shop at Tuen Mun Hospital and "Cheers" Bakery due to the retrieval by the Hospital for its own use."Cheers Gallery" Rehab Shop in Queen Mary Hospital could not be continued as we lost in the re-tender exercise. However, our colleagues were not discouraged and able to identify a perspective location for maintaining the portfolio of Rehab Business in Sheung Wan. Coincidentally, we were able to secure the rehab shop operations in Pamela Youde Nethersole Eastern Hospital. Upon my preparation of this report, there are 19 Cheers Gallery with 12 of them are serving in the Hospital and seven in the community. "Cheers Coop" was increased to three. The opening of shop in community become a critical development strategy to the Company.


Future

The condition of COVID-19 was eased recently. The retail, catering and other businesses are ready to pick up. It is highly predicted that the economy and social activities would be resume normal soon. "MentalCare Connect" hopes that the business would be sustainably recovered, even exceed the time before the pandemic. "MentalCare Connect" would be 20 years old later. This young enterprise experienced the peak and trough of life. Our colleagues have contributed their endeavor, with upholding the central dogma of the Company, to work hard in creating job opportunities for the disadvantaged and laid a solid foundation for future sustainable development.

In the past year, "MentalCare Connect" have been able to expand and tide over the difficulties in the adverse environment, thanks were given in particular to the astonishing efficiency of the secretariat of "Enhancing Employment of People with Disabilities through Small Enterprise Project" of Social Welfare Department in assisting to set up the new social enterprise projects, and to HKSAR Government and Hospital Authority recognize our operational difficulties and provide licence fee concessions. Regarding the employment difficulties of people in recovery, "MentalCare Connect" will strive to approach different organisations with common goals and mission and develop innovative business cooperation models.

Over the past two decades, "MentalCare Connect" has been developing steadily, one of the main factors is renouncing the thinking and limitations of social service organisations and promoting sustainable development through a flexible business model and subsequently building exceptional value to the social benefits. Thanks to the Board's past recognition of the philosophy of social enterprise development and put their trust in me and the Team. In terms of future development of the Company, The Board of Directors and our colleagues are of one mind. We will continue to glitter in the community and Social enterprise's sector.