WECON Janu Trans Than INTERIM REPORT 中期報告 2020/2021 ul Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 中期簡明綜合損益及其他全面收入表 25 Interim Condensed Consolidated Statement of Financial Position 中期簡明綜合財務狀況表 26 Interim Condensed Consolidated Statement of Changes in Equity 中期簡明綜合權益變動表 28 Interim Condensed Consolidated Statement of Cash Flows 中期簡明綜合現金流量表 29 Notes to Interim Condensed Consolidated Financial Information 中期簡明綜合財務資料附註 32 WECON CONTENTS 目錄 | --- | --- | |----------- ...

２０１９/２０ ＡＮＮＵＡＬ ＲＥＰＯＲＴ | 年 報 WE T WECON HOLDINGS LIMITED 偉工控股有限公 司 Stock code 股份代號: 1793 (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立之有限公司） CONTENTS 目錄 Corporate Information 公司資料 2 Chairman's Statement 主席報告 4 Management Discussion and Analysis 管理層討論及分析 6 Corporate Governance Report 企業管治報告 17 Biographical Details of Directors and Senior Management 董事及高級管理層的履歷詳情 36 wecon Report of the Directors 50 | --- | --- | |------------------------------------------------------------------------- ...

[Corporate Information](index=3&type=section&id=Corporate%20Information) This section details Wecon Holdings Limited's corporate information, including board, advisors, and stock code 01793 - Board members include **Executive Directors Mr. Tsang Ka Yip (Chairman), Mr. Tsang Tsz Him, Mr. Tsang Tsz Kit**, and **Independent Non-executive Directors Dr. Lau Chi Keung, Mr. Chan Tim Yiu, Mr. Sze Kwok Wing**[3](index=3&type=chunk) - The company's auditor is **Ernst & Young**, with **HSBC, Bank of China (Hong Kong), and Standard Chartered Bank (Hong Kong)** as principal bankers[6](index=6&type=chunk) - The company's **stock code is 01793**, and its official website is **http://www.wecon.com.hk**[6](index=6&type=chunk) [Management Discussion and Analysis](index=5&type=section&id=Management%20Discussion%20and%20Analysis) This section details Wecon Holdings Limited's business performance, financial position, outlook, key risks, and capital utilization [Business Review](index=5&type=section&id=BUSINESS%20REVIEW) Wecon Holdings Limited, a long-established Hong Kong general contractor, primarily provides building construction and RMAA engineering services - The Group primarily engages in providing **building construction services** and **renovation, maintenance, alteration, and addition (RMAA) engineering services**[9](index=9&type=chunk) - As of September 30, 2019, the Group had **11 major projects** with awarded contract sums of **HKD 10.0 million or more**, including **2 newly awarded projects**[9](index=9&type=chunk) - During the same period, the Group had **no major projects** with awarded contract sums of **HKD 10.0 million or more** actually completed[9](index=9&type=chunk) [Prospects](index=5&type=section&id=PROSPECTS) The company's successful listing in February 2019 enhanced its image and provided capital for larger projects, despite market competition - The company's successful listing on the Main Board of the Stock Exchange on **February 27, 2019**, significantly enhanced its corporate image and provided a capital platform for bidding on larger contracts[9](index=9&type=chunk) - The Group faces **intense competition** in the Hong Kong building construction and RMAA markets, cautious client evaluation, and **rising direct labor and material costs**, increasing overall operational risks[12](index=12&type=chunk) - Despite challenging local economic conditions, the Board remains **cautiously optimistic** about the industry outlook, benefiting from government infrastructure development and housing supply policies[14](index=14&type=chunk)[16](index=16&type=chunk) [Principal Risks and Uncertainties](index=6&type=section&id=PRINCIPAL%20RISKS%20AND%20UNCERTAINTIES) The Group's business faces multiple risks, including reliance on non-recurring contracts, customer concentration, and subcontractor dependency - The Group's revenue relies on contracts obtained through **non-recurring tender or quotation processes**, with no guarantee of continuous success[19](index=19&type=chunk) - The Group faces **significant concentration risk** due to its heavy reliance on its largest and key customers[19](index=19&type=chunk) - The Group relies on **subcontractors** for most of its work, and fluctuations in subcontracting costs, poor performance, or inability to find subcontractors could significantly impact operations and profitability[21](index=21&type=chunk) - **Cash flow** may be insufficient due to timing mismatches between receiving progress payments from customers and paying suppliers and subcontractors[21](index=21&type=chunk) - Changes in **raw material prices and supply** could significantly and adversely affect operating results[22](index=22&type=chunk) - The Group provides **performance bonds**, which may affect its liquidity position[22](index=22&type=chunk) [Segment Information](index=7&type=section&id=SEGMENT%20INFORMATION) The Group's reportable and operating segments are building construction services and renovation and maintenance engineering services - The Group's reportable and operating segments are **(i) building construction services** and **(ii) renovation and maintenance engineering services**[25](index=25&type=chunk) - Detailed segment information is disclosed in **Note 3 to the interim condensed consolidated financial information** within this interim report[25](index=25&type=chunk) [Financial Review](index=7&type=section&id=FINANCIAL%20REVIEW) For the six months ended September 30, 2019, total revenue grew 10.7% to HKD 627.7 million, with net profit up 58.5% to HKD 21.4 million [Key Financial Indicators Overview](index=7&type=section&id=Key%20Financial%20Indicators%20Overview) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :----------------------------------- | :----------------------------------- | :------------ | :------- | | Total Revenue | 627,711 | 566,946 | 60,765 | 10.7% | | Gross Profit | 44,324 | 36,636 | 7,688 | 21.0% | | Net Profit | 21,385 | 13,501 | 7,884 | 58.5% | | Adjusted Net Profit (excluding listing expenses) | 21,400 | 19,200 | 2,200 | 11.5% | - The Group's **gross profit margin increased by 0.6 percentage points** from 6.5% in the same period of 2018 to 7.1% in the same period of 2019[31](index=31&type=chunk) - The **adjusted net profit margin (excluding listing expenses)** remained approximately **3.4%** in both periods[51](index=51&type=chunk) [Revenue](index=7&type=section&id=Revenue) Total Group revenue increased by 10.7% to HKD 627.7 million, driven by growth in both building construction and RMAA services [Revenue Composition and Change](index=7&type=section&id=Revenue%20Composition%20and%20Change) | Service Category | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | Change (thousand HKD) | Change (%) | | :------- | :----------------------------------- | :----------------------------------- | :------------ | :------- | | Building Construction Services | 516,239 | 473,197 | 43,042 | 9.1% | | Renovation and Maintenance Engineering Services | 111,472 | 93,749 | 17,723 | 19.0% | | **Total Revenue** | **627,711** | **566,946** | **60,765** | **10.7%** | - The increase in building construction services revenue was primarily due to the **commencement of a large project** during the six months ended September 30, 2019[28](index=28&type=chunk) - The increase in renovation and maintenance engineering services revenue was primarily due to **significant progress on ongoing projects** during the six months ended September 30, 2019[29](index=29&type=chunk) [Cost of Sales](index=8&type=section&id=Cost%20of%20Sales) The Group's cost of sales increased by 10.0% to HKD 583.4 million, mainly due to higher subcontracting and staff costs [Cost of Sales Change](index=8&type=section&id=Cost%20of%20Sales%20Change) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :----------------------------------- | :----------------------------------- | :------------ | :------- | | Cost of Sales | 583,387 | 530,310 | 53,077 | 10.0% | - The increase in cost of sales was primarily attributable to **higher subcontracting costs, direct staff costs, and site overheads**[30](index=30&type=chunk) - The increase in cost of sales was partially offset by a **decrease in material costs**[30](index=30&type=chunk) [Gross Profit and Gross Profit Margin](index=8&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) Total gross profit increased to HKD 44.3 million, with the gross profit margin rising 0.6 percentage points to 7.1% [Gross Profit and Gross Profit Margin Change](index=8&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin%20Change) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | Change (thousand HKD) | Change (percentage points) | | :--- | :----------------------------------- | :----------------------------------- | :------------ | :------------ | | Group Gross Profit | 44,324 | 36,636 | 7,688 | N/A | | Group Gross Profit Margin | 7.1% | 6.5% | N/A | 0.6 | | Building Construction Services Gross Profit | 34,300 | 25,700 | 8,600 | N/A | | Building Construction Services Gross Profit Margin | 6.6% | 5.4% | N/A | 1.2 | | Renovation and Maintenance Engineering Services Gross Profit | 10,000 | 10,900 | (900) | N/A | | Renovation and Maintenance Engineering Services Gross Profit Margin | 9.0% | 11.6% | N/A | (2.6) | - The increase in building construction services gross profit margin was primarily attributable to the **contribution from a higher-margin industrial building development project**[37](index=37&type=chunk) - The decrease in renovation and maintenance engineering services gross profit margin was primarily due to the **contribution from a large project with a relatively lower gross profit margin** caused by increased gas and electricity installation subcontracting costs[39](index=39&type=chunk) [Other Income and Gains](index=9&type=section&id=Other%20Income%20and%20Gains) Other income and gains increased by HKD 1.9 million to HKD 3.5 million, mainly due to higher bank interest and insurance compensation [Other Income and Gains Change](index=9&type=section&id=Other%20Income%20and%20Gains%20Change) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :----------------------------------- | :----------------------------------- | :------------ | :------- | | Other Income and Gains | 3,517 | 1,553 | 1,964 | 126.5% | - The increase was primarily due to **(i) increased interest income from bank deposits** and **(ii) increased compensation from insurance companies for employees**[40](index=40&type=chunk) [Administrative Expenses](index=10&type=section&id=Administrative%20Expenses) Administrative expenses increased by 4.7% to HKD 22.4 million, driven by post-listing professional fees and staff costs [Administrative Expenses Change](index=10&type=section&id=Administrative%20Expenses%20Change) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :----------------------------------- | :----------------------------------- | :------------ | :------- | | Administrative Expenses | 22,396 | 21,375 | 1,021 | 4.7% | - The increase was primarily due to **(i) professional fees and other operating expenses post-listing; (ii) staff costs; and (iii) depreciation costs**[45](index=45&type=chunk) - The increase was partially offset by **one-off non-recurring listing expenses**[45](index=45&type=chunk) [Finance Costs](index=10&type=section&id=Finance%20Costs) Finance costs significantly decreased by 66.4% to HKD 0.144 million, primarily due to reduced interest expenses on bank borrowings [Finance Costs Change](index=10&type=section&id=Finance%20Costs%20Change) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :----------------------------------- | :----------------------------------- | :------------ | :------- | | Finance Costs | 144 | 429 | (285) | (66.4%) | - The decrease was primarily due to **reduced interest expenses on bank borrowings**[49](index=49&type=chunk) [Income Tax Expenses](index=10&type=section&id=Income%20Tax%20Expenses) Income tax expenses increased by 34.5% to HKD 3.9 million, mainly due to higher profits from building construction services [Income Tax Expenses Change](index=10&type=section&id=Income%20Tax%20Expenses%20Change) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :----------------------------------- | :----------------------------------- | :------------ | :------- | | Income Tax Expenses | 3,916 | 2,884 | 1,032 | 34.5% | - The increase was primarily attributable to **higher profits generated from building construction services**, partially offset by a decrease in profits from renovation and maintenance engineering services and non-deductible listing expenses[49](index=49&type=chunk) [Net Profit and Adjusted Net Profit](index=11&type=section&id=Net%20Profit%20and%20Adjusted%20Net%20Profit) Group net profit increased by 58.5% to HKD 21.4 million, with adjusted net profit (excluding listing expenses) up 11.5% [Net Profit and Adjusted Net Profit Change](index=11&type=section&id=Net%20Profit%20and%20Adjusted%20Net%20Profit%20Change) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :----------------------------------- | :----------------------------------- | :------------ | :------- | | Net Profit | 21,385 | 13,501 | 7,884 | 58.5% | | Adjusted Net Profit (excluding listing expenses) | 21,400 | 19,200 | 2,200 | 11.5% | | Adjusted Net Profit Margin (excluding listing expenses) | 3.4% | 3.4% | N/A | 0.0 | | Listing Expenses | Nil | 5,700 | (5,700) | -100.0% | [Employees and Remuneration Policies](index=11&type=section&id=EMPLOYEES%20AND%20REMUNERATION%20POLICIES) As of September 30, 2019, the Group had 207 employees, with remuneration based on performance and market conditions, and total staff costs increasing - As of September 30, 2019, the Group had **205 full-time employees and 2 part-time employees** (compared to 165 full-time and 1 part-time in the same period of 2018)[52](index=52&type=chunk) - Remuneration packages are determined by reference to **individual performance, qualifications, merit, responsibilities, and market conditions**, and are reviewed periodically[52](index=52&type=chunk) - Employee benefits include **provident fund contributions, medical insurance, annual leave, and a share option scheme** adopted on January 21, 2019[52](index=52&type=chunk) [Total Staff Costs (excluding Directors' Emoluments)](index=11&type=section&id=Total%20Staff%20Costs%20(excluding%20Directors'%20Emoluments)) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | | :--- | :----------------------------------- | :----------------------------------- | | Total Staff Costs | 42,500 | 32,300 | [Significant Investments, Material Acquisitions and Disposal of Subsidiaries and Associated Companies](index=11&type=section&id=SIGNIFICANT%20INVESTMENTS,%20MATERIAL%20ACQUISITIONS%20AND%20DISPOSAL%20OF%20SUBSIDIARIES%20AND%20ASSOCIATED%20COMPANIES) For the six months ended September 30, 2019, the Group held no significant investments, acquisitions, or disposals of subsidiaries - For the six months ended September 30, 2019, there were **no significant investments, material acquisitions, or disposals of subsidiaries and associated companies**[52](index=52&type=chunk) [Commitments](index=12&type=section&id=COMMITMENTS) As of September 30, 2019, the Group had no material capital or operating lease commitments, except as disclosed in Note 14 - As of September 30, 2019, the Group had **no material capital commitments or operating lease commitments**, except as disclosed in Note 14 to the interim condensed consolidated financial information[56](index=56&type=chunk) [Contingent Liabilities](index=12&type=section&id=CONTINGENT%20LIABILITIES) As of September 30, 2019, the Group had no material contingent liabilities, except as disclosed in Note 13 - As of September 30, 2019, the Group had **no material contingent liabilities**, except as disclosed in Note 13 to the interim condensed consolidated financial information[56](index=56&type=chunk) [Foreign Exchange Exposure](index=12&type=section&id=FOREIGN%20EXCHANGE%20EXPOSURE) The Group faces minimal foreign exchange risk as most transactions and balances are denominated in HKD, with no hedging policy - As most business transactions and assets and liabilities are primarily denominated in **Hong Kong Dollars**, the Group faces **minimal foreign exchange risk**[56](index=56&type=chunk) - The Directors believe the Group's foreign exchange risk is negligible, thus **no foreign currency hedging policy** is currently deemed necessary[56](index=56&type=chunk) [Gearing Ratio](index=12&type=section&id=GEARING%20RATIO) As of September 30, 2019, the Group's gearing ratio was approximately 4.3%, a slight decrease from 4.6% on March 31, 2019 [Gearing Ratio](index=12&type=section&id=Gearing%20Ratio) | Indicator | Sep 30, 2019 | Mar 31, 2019 | Change (percentage points) | | :--- | :------------ | :------------ | :------------ | | Gearing Ratio | 4.3% | 4.6% | (0.3) | [Liquidity and Financial Resources and Capital Structure](index=13&type=section&id=LIQUIDITY%20AND%20FINANCIAL%20RESOURCES%20AND%20CAPITAL%20STRUCTURE) The Group funds its liquidity and capital needs through shareholder contributions, bank borrowings, and operating cash flows, maintaining sufficient working capital - The Group primarily funds its liquidity and capital requirements through **shareholder contributions, bank borrowings, and net cash generated from operating activities**[58](index=58&type=chunk) [Liquidity Indicators](index=13&type=section&id=Liquidity%20Indicators) | Indicator | Sep 30, 2019 (thousand HKD) | Mar 31, 2019 (thousand HKD) | | :--- | :--------------------- | :--------------------- | | Pledged bank deposits, time deposits, and cash and bank balances | 203,800 | 194,800 | | Current Ratio | 1.7 times | 1.9 times | - The Directors believe the Group has **sufficient working capital** to meet its future requirements[60](index=60&type=chunk) - The company's shares were successfully listed on the Stock Exchange on February 27, 2019, and the Group's **capital structure has remained unchanged** since then[60](index=60&type=chunk) [Debts and Charge on Assets](index=13&type=section&id=DEBTS%20AND%20CHARGE%20ON%20ASSETS) As of September 30, 2019, the Group's interest-bearing bank borrowings totaled approximately HKD 10.8 million, secured by pledged deposits and corporate guarantees [Total Interest-Bearing Bank Borrowings](index=13&type=section&id=Total%20Interest-Bearing%20Bank%20Borrowings) | Indicator | Sep 30, 2019 (thousand HKD) | Mar 31, 2019 (thousand HKD) | | :--- | :--------------------- | :--------------------- | | Total Interest-Bearing Bank Borrowings | 10,800 | 11,100 | - Bank facilities are secured by **(i) the Group's pledged bank deposits** and **(ii) corporate guarantees** executed by the Group[62](index=62&type=chunk) - Borrowings are denominated in **Hong Kong Dollars** and primarily bear interest at **floating rates**, with no interest rate hedging policy currently in place[62](index=62&type=chunk) [Use of Proceeds](index=14&type=section&id=USE%20OF%20PROCEEDS) Net proceeds from the February 2019 listing were approximately HKD 93.5 million, with HKD 39.5 million utilized as of September 30, 2019 - The net proceeds from the share listing amounted to approximately **HKD 93.5 million**[66](index=66&type=chunk) [Use of Net Proceeds](index=14&type=section&id=Use%20of%20Net%20Proceeds) | Purpose | Planned Total Use of Proceeds (million HKD) | Actual Use of Proceeds from Listing Date to Sep 30, 2019 (million HKD) | Remaining Net Proceeds Balance (million HKD) | | :--- | :------------------------------ | :----------------------------------------------------- | :---------------------------- | | Enhance capacity to undertake more building construction and RMAA projects | 66.7 | 30.8 | 35.9 | | Strengthen human resources | 14.4 | 1.3 | 13.1 | | Office upgrade and renovation | 3.6 | 1.3 | 2.3 | | Research and development of innovative engineering and technologies | 2.9 | 2.2 | 0.7 | | General working capital | 5.9 | 3.9 | 2.0 | | **Total** | **93.5** | **39.5** | **54.0** | - The utilization of proceeds for strengthening human resources and R&D of innovative engineering and technologies was **delayed** due to difficulties in recruiting suitable personnel and delays in technological innovation development[70](index=70&type=chunk) [Other Matter](index=15&type=section&id=OTHER%20MATTER) Comparative information for the six months ended September 30, 2018, was not reviewed in accordance with Hong Kong Standard on Review Engagements 2410 - The comparative information for the interim condensed consolidated statement of profit or loss and other comprehensive income, interim condensed consolidated statement of changes in equity, and interim condensed consolidated statement of cash flows for the six months ended September 30, 2018, and related explanatory notes, **were not reviewed in accordance with Hong Kong Standard on Review Engagements 2410**[72](index=72&type=chunk) [Corporate Governance and Other Information](index=16&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section outlines Wecon Holdings Limited's corporate governance framework, board composition, and compliance with regulations [Corporate Governance Practices](index=16&type=section&id=CORPORATE%20GOVERNANCE%20PRACTICES) The company is committed to maintaining high standards of corporate governance, emphasizing transparency, accountability, and independence - The company is committed to achieving and maintaining the **highest standards of corporate governance**, based on principles of transparency, accountability, and independence[75](index=75&type=chunk) - The company has complied with all applicable code provisions of the **Corporate Governance Code** in Appendix 14 of the Listing Rules, except for code provision A.2.1 (separation of Chairman and Chief Executive roles)[76](index=76&type=chunk) [Chairman and Chief Executive](index=16&type=section&id=CHAIRMAN%20AND%20CHIEF%20EXECUTIVE) Mr. Tsang Ka Yip serves as both Chairman and Chief Executive, a deviation from code provision A.2.1, deemed beneficial by the Board - **Mr. Tsang Ka Yip** has served as both the Chairman and Chief Executive of the Board since the listing date, deviating from code provision A.2.1[77](index=77&type=chunk) - The Board believes Mr. Tsang's dual role is in the **best interest of the Group and its shareholders** due to his deep industry knowledge and familiarity with the Group's operations[77](index=77&type=chunk) [Model Code for Securities Transactions by Directors](index=17&type=section&id=MODEL%20CODE%20FOR%20SECURITIES%20TRANSACTIONS%20BY%20DIRECTORS) The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, with all directors confirming full compliance - The company has adopted the **Model Code for Securities Transactions by Directors of Listed Issuers** as set out in Appendix 10 of the Listing Rules[81](index=81&type=chunk) - All Directors confirmed their **full compliance** with the required standards set out in the Model Code for the six months ended September 30, 2019[81](index=81&type=chunk) [Board of Directors](index=17&type=section&id=BOARD%20OF%20DIRECTORS) The Board is responsible for setting overall strategy, management objectives, and overseeing management performance, comprising six directors - The Board's primary responsibilities include **formulating the Group's overall strategy, setting management objectives, and overseeing management performance**[82](index=82&type=chunk) - The Board comprises **six Directors**, including three executive directors and three independent non-executive directors[86](index=86&type=chunk) - Half of the Board consists of independent non-executive directors, with one possessing **appropriate professional qualifications or expertise in accounting or financial management**[86](index=86&type=chunk) [Compliance with Laws and Regulations](index=18&type=section&id=COMPLIANCE%20WITH%20THE%20LAWS%20AND%20REGULATIONS) The Group has complied with all material laws and regulations impacting its business and operations, with no serious breaches reported - The Group has complied in all material respects with **relevant laws and regulations** that have a significant impact on its business and operations[90](index=90&type=chunk) - As of September 30, 2019, and up to the date of this interim report, the Group had **no serious breaches or non-compliance** with applicable laws and regulations[90](index=90&type=chunk) [Results and Dividends](index=18&type=section&id=RESULTS%20AND%20DIVIDENDS) The Group's profit and financial position for the six months ended September 30, 2019, are presented, with no interim dividend proposed - The Board resolved **not to recommend the payment of an interim dividend** to shareholders for the six months ended September 30, 2019[92](index=92&type=chunk) [Share Options Scheme](index=18&type=section&id=SHARE%20OPTIONS%20SCHEME) The company adopted a share option scheme on January 21, 2019, with no options granted, exercised, or lapsed since its adoption - The company adopted a **share option scheme on January 21, 2019**[92](index=92&type=chunk) - Since the adoption date and up to the date of this interim report, **no share options have been granted, exercised, expired, cancelled, or lapsed** under the scheme[92](index=92&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=19&type=section&id=PURCHASE,%20SALE%20OR%20REDEMPTION%20OF%20LISTED%20SECURITIES) For the six months ended September 30, 2019, neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities - For the six months ended September 30, 2019, **neither the company nor any of its subsidiaries purchased, sold, or redeemed any listed securities**[94](index=94&type=chunk) [Disclosure of Interests](index=19&type=section&id=DISCLOSURE%20OF%20INTERESTS) This section discloses the interests of directors, chief executives, and substantial shareholders in the company's shares [Directors' and Chief Executive's Long Positions in the Company's Ordinary Shares](index=19&type=section&id=Directors'%20and%20Chief%20Executive's%20Long%20Positions%20in%20the%20Company's%20Ordinary%20Shares) | Director's Name | Capacity/Nature | Number of Shares Held | Approximate Percentage of Shareholding | | :------- | :--------- | :----------- | :------------- | | Mr. Tsang Ka Yip | Interest in controlled corporation | 600,000,000 | 75% | [Interests of Substantial Shareholders (other than Directors) in the Company's Shares](index=19&type=section&id=Interests%20of%20Substantial%20Shareholders%20(other%20than%20Directors)%20in%20the%20Company's%20Shares) | Name | Nature of Interest | Number of Shares Held | Approximate Percentage of Interest in the Company | | :--- | :------- | :----------- | :--------------------- | | Triple Arch Limited | Beneficial owner | 600,000,000 | 75% | | Ms. Lai Yuk Lin (spouse of Mr. Tsang Ka Yip) | Interest in controlled corporation and spouse's interest | 600,000,000 | 75% | [Directors' Interests in Competing Business](index=21&type=section&id=DIRECTORS'%20INTERESTS%20IN%20COMPETING%20BUSINESS) As of September 30, 2019, no directors or their close associates held interests in businesses competing with the Group - As of September 30, 2019, and up to the date of this interim report, **no Directors or their close associates had any interests in any business that directly or indirectly competes or may compete with the Group's business**[110](index=110&type=chunk) [Directors' Interests in Contracts of Significance](index=21&type=section&id=DIRECTORS'%20INTERESTS%20IN%20CONTRACTS%20OF%20SIGNIFICANCE) No directors or their related entities held significant interests in material contracts with the Group as of September 30, 2019 - Except as disclosed in this interim report, as of September 30, 2019, or at any time during the six months ended September 30, 2019, **no Director of the company or their related entities had a material interest, directly or indirectly, in any contract of significance to the Group's business** entered into by the company, its holding company, or its subsidiaries[110](index=110&type=chunk) [Connected Transactions](index=21&type=section&id=CONNECTED%20TRANSACTIONS) The Group did not enter into any connected transactions during the six months ended September 30, 2019 - For the six months ended September 30, 2019, the Group **did not enter into any connected transactions**[110](index=110&type=chunk) [Related Party Transactions](index=21&type=section&id=RELATED%20PARTY%20TRANSACTIONS) Material related party transactions entered into by the Group for the six months ended September 30, 2019, are detailed in Note 15 - Material related party transactions entered into by the Group for the six months ended September 30, 2019, are **set out in Note 15 to the interim condensed consolidated financial information**[110](index=110&type=chunk) [Interests of the Compliance Adviser](index=22&type=section&id=INTERESTS%20OF%20THE%20COMPLIANCE%20ADVISER) The company appointed Optima Capital Limited as its compliance adviser, with no other interests in the company's securities - The company has appointed **Optima Capital Limited as its compliance adviser**[113](index=113&type=chunk) - Except for the compliance adviser agreement, **neither Optima Capital Limited nor any of its directors, employees, or associates had any interests** or potential interests in the securities of the company or any member of the Group as of September 30, 2019[113](index=113&type=chunk) [Events After the Reporting Period](index=22&type=section&id=EVENTS%20AFTER%20THE%20REPORTING%20PERIOD) No other significant events or material changes in the Group's condition or business occurred after September 30, 2019 - **No other significant events** occurred after September 30, 2019, and up to the date of this interim report[114](index=114&type=chunk) - There have been **no material changes in the Group's condition and business** since the publication of the previous annual report[114](index=114&type=chunk) [Audit Committee Review](index=22&type=section&id=AUDIT%20COMMITTEE%20REVIEW) The Audit Committee, established on January 21, 2019, reviewed the interim condensed consolidated financial information for the period - The Audit Committee was established on **January 21, 2019**, comprising three independent non-executive directors, in compliance with Listing Rule 3.21[115](index=115&type=chunk)[117](index=117&type=chunk) - Its main responsibilities include **collaborating with auditors, reviewing financial information, overseeing financial reporting, risk management, internal control systems, and continuous connected transactions**[116](index=116&type=chunk) - The Committee has **reviewed the Group's interim condensed consolidated financial information** for the six months ended September 30, 2019[120](index=120&type=chunk) [Appreciation](index=23&type=section&id=APPRECIATION) The Board expresses sincere gratitude to shareholders, clients, subcontractors, suppliers, management, and staff for their continued support - The Board, on behalf of the company, thanks **shareholders, clients, subcontractors, and suppliers** for their continued confidence and support[123](index=123&type=chunk) - The Board also sincerely thanks **management and staff** for their hard work and loyalty to the Group[123](index=123&type=chunk) [Report on Review of Interim Financial Information](index=24&type=section&id=Report%20on%20Review%20of%20Interim%20Financial%20Information) Ernst & Young reviewed Wecon Holdings Limited's interim financial information for the six months ended September 30, 2019 - **Ernst & Young** reviewed the interim financial information in accordance with **Hong Kong Standard on Review Engagements 2410**[132](index=132&type=chunk) - Based on the review, **nothing has come to the reviewer's attention** that causes them to believe the interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[134](index=134&type=chunk) - The scope of a review is **substantially less than an audit**, and therefore no audit opinion is expressed[132](index=132&type=chunk) [Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=26&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended September 30, 2019, revenue grew 10.7% to HKD 627.7 million, and profit for the period increased 58.4% to HKD 21.4 million [Summary of Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=26&type=section&id=Summary%20of%20Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :----------------------------------- | :----------------------------------- | :------------ | :------- | | Revenue | 627,711 | 566,946 | 60,765 | 10.7% | | Cost of Sales | (583,387) | (530,310) | (53,077) | 10.0% | | Gross Profit | 44,324 | 36,636 | 7,688 | 21.0% | | Other Income and Gains | 3,517 | 1,553 | 1,964 | 126.5% | | Administrative Expenses | (22,396) | (21,375) | (1,021) | 4.8% | | Finance Costs | (144) | (429) | 285 | (66.4%) | | Profit Before Tax | 25,301 | 16,385 | 8,916 | 54.4% | | Income Tax | (3,916) | (2,884) | (1,032) | 35.8% | | **Profit and Total Comprehensive Income for the Period Attributable to Equity Holders of the Company** | **21,385** | **13,501** | **7,884** | **58.4%** | | Earnings Per Share - Basic and Diluted | HK2.7 cents | HK2.3 cents | HK0.4 cents | 17.4% | [Interim Condensed Consolidated Statement of Financial Position](index=27&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of September 30, 2019, total assets less current liabilities increased to HKD 251.9 million, with net assets rising to HKD 248.9 million [Summary of Interim Condensed Consolidated Statement of Financial Position](index=27&type=section&id=Summary%20of%20Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) | Indicator | Sep 30, 2019 (thousand HKD) | Mar 31, 2019 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--------------------- | :--------------------- | :------------ | :------- | | Total Non-current Assets | 18,616 | 10,323 | 8,293 | 80.3% | | Total Current Assets | 548,844 | 490,755 | 58,089 | 11.8% | | Total Current Liabilities | 315,522 | 261,172 | 54,350 | 20.8% | | Net Current Assets | 233,322 | 229,583 | 3,739 | 1.6% | | Total Assets Less Current Liabilities | 251,938 | 239,906 | 12,032 | 5.0% | | Total Non-current Liabilities | 3,080 | 1,230 | 1,850 | 150.4% | | Net Assets | 248,858 | 238,676 | 10,182 | 4.3% | | Total Equity | 248,858 | 238,676 | 10,182 | 4.3% | - Total non-current assets significantly increased, primarily due to the **recognition of right-of-use assets** upon adoption of HKFRS 16[140](index=140&type=chunk) - Contract assets and trade receivables increased to **HKD 293.7 million** (March 31, 2019: HKD 246.0 million)[140](index=140&type=chunk) - Trade payables and retention payables increased to **HKD 166.5 million** (March 31, 2019: HKD 118.9 million)[140](index=140&type=chunk) [Interim Condensed Consolidated Statement of Changes in Equity](index=29&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of September 30, 2019, total equity attributable to equity holders increased to HKD 248.9 million, driven by profit for the period [Summary of Interim Condensed Consolidated Statement of Changes in Equity](index=29&type=section&id=Summary%20of%20Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) | Indicator | Sep 30, 2019 (thousand HKD) | Apr 1, 2019 (restated/unaudited) (thousand HKD) | Change (thousand HKD) | | :--- | :--------------------- | :--------------------------------------- | :------------ | | Issued Share Capital | 8,000 | 8,000 | 0 | | Share Premium | 91,967 | 103,167 | (11,200) | | Merger Reserve | 18,900 | 18,900 | 0 | | Retained Profits | 129,991 | 108,606 | 21,385 | | **Total Equity** | **248,858** | **238,673** | **10,185** | - Profit and total comprehensive income for the period amounted to **HKD 21.385 million**[154](index=154&type=chunk) - Dividends paid to shareholders of the company totaled **HKD 11.2 million**[154](index=154&type=chunk) - The adoption of HKFRS 16 resulted in a **decrease in retained profits of HKD 3 thousand**[154](index=154&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=30&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended September 30, 2019, net cash from operating activities increased, while investing and financing activities resulted in net outflows [Summary of Interim Condensed Consolidated Statement of Cash Flows](index=30&type=section&id=Summary%20of%20Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | Change (thousand HKD) | | :--- | :----------------------------------- | :----------------------------------- | :------------ | | Net Cash From Operating Activities | 27,866 | 22,073 | 5,793 | | Net Cash (Used in)/Generated from Investing Activities | (12,327) | 659 | (12,986) | | Net Cash Used in Financing Activities | (17,880) | (39,114) | 21,234 | | Net Decrease in Cash and Cash Equivalents | (2,341) | (16,382) | 14,041 | | Cash and Cash Equivalents at End of Period | 171,970 | 44,015 | 127,955 | - Net cash outflow from investing activities was primarily due to an **increase in pledged deposits of HKD 11.36 million** and the **purchase of property, plant, and equipment of HKD 3.368 million**[170](index=170&type=chunk) - Net cash outflow from financing activities primarily included **repayment of bank loans of HKD 30.0 million** and **dividends paid to shareholders of the company of HKD 11.2 million**[170](index=170&type=chunk) [Notes to Interim Condensed Consolidated Financial Information](index=33&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Information) This section provides detailed notes to the interim condensed consolidated financial information, covering company details, accounting policies, and financial disclosures [Corporate and Group Information](index=33&type=section&id=CORPORATE%20AND%20GROUP%20INFORMATION) Wecon Holdings Limited is incorporated in the Cayman Islands, with Triple Arch Limited as its ultimate holding company - Wecon Holdings Limited is **incorporated in the Cayman Islands**[175](index=175&type=chunk) - The company's ultimate holding company is **Triple Arch Limited**, incorporated in the British Virgin Islands[175](index=175&type=chunk) [Basis of Preparation](index=33&type=section&id=BASIS%20OF%20PREPARATION) The interim condensed consolidated financial information is prepared in HKD, rounded to the nearest thousand, following HKAS 34 and Listing Rules - The interim condensed consolidated financial information is prepared in accordance with **Hong Kong Accounting Standard 34 "Interim Financial Reporting"** and the applicable disclosure requirements of Appendix 16 of the Listing Rules[176](index=176&type=chunk) - The financial information is presented in **Hong Kong Dollars**, and all values have been **rounded to the nearest thousand**[178](index=178&type=chunk) - Acquisitions of subsidiaries under common control are accounted for using **merger accounting principles**, while acquisitions of subsidiaries not under common control are accounted for using the **acquisition method**[180](index=180&type=chunk)[182](index=182&type=chunk) [Changes in Accounting Policies and Disclosures](index=37&type=section&id=CHANGES%20IN%20ACCOUNTING%20POLICIES%20AND%20DISCLOSURES) The Group adopted new and revised HKFRSs from April 1, 2019, notably HKFRS 16 Leases, using a modified retrospective approach - The Group adopted new and revised **Hong Kong Financial Reporting Standards (HKFRSs)** from April 1, 2019, including **HKFRS 16 "Leases"**[193](index=193&type=chunk) - HKFRS 16 was adopted using the **modified retrospective approach**, and comparative information for 2018 was not restated[198](index=198&type=chunk) [Impact of Adopting HKFRS 16 (as at April 1, 2019)](index=37&type=section&id=Impact%20of%20Adopting%20HKFRS%2016%20(as%20at%20April%201,%202019)) | Indicator | thousand HKD | | :--- | :----- | | Increase in right-of-use assets | 2,579 | | Decrease in property, plant and equipment | (1,684) | | Increase in total assets | 895 | | Increase in lease liabilities | 1,957 | | Decrease in finance lease payables | (1,059) | | Increase in total liabilities | 898 | | Decrease in retained profits | (3) | - For the six months ended September 30, 2019, the Group recognized **rental expenses for short-term leases of HKD 1.2 million**[237](index=237&type=chunk) [Operating Segment Information](index=49&type=section&id=OPERATING%20SEGMENT%20INFORMATION) The Group's operating segments, building contracts and renovation and maintenance engineering, both achieved revenue growth for the period [Overview of Operating Segment Performance](index=49&type=section&id=Overview%20of%20Operating%20Segment%20Performance) | Indicator | Building Contracts (thousand HKD) | Renovation and Maintenance Engineering (thousand HKD) | Total (thousand HKD) | | :--- | :---------------- | :-------------------- | :------------ | | **Six Months Ended Sep 30, 2019** | | | | | Revenue from External Customers | 516,239 | 111,472 | 627,711 | | Segment Results | 34,323 | 10,001 | 44,324 | | **Six Months Ended Sep 30, 2018** | | | | | Revenue from External Customers | 473,197 | 93,749 | 566,946 | | Segment Results | 25,726 | 10,910 | 36,636 | [Overview of Operating Segment Assets and Liabilities](index=49&type=section&id=Overview%20of%20Operating%20Segment%20Assets%20and%20Liabilities) | Indicator | Building Contracts (thousand HKD) | Renovation and Maintenance Engineering (thousand HKD) | Total (thousand HKD) | | :--- | :---------------- | :-------------------- | :------------ | | **Sep 30, 2019** | | | | | Segment Assets | 276,271 | 69,377 | 345,648 | | Segment Liabilities | 251,018 | 43,397 | 294,415 | | **Mar 31, 2019** | | | | | Segment Assets | 232,924 | 64,960 | 297,884 | | Segment Liabilities | 212,580 | 27,253 | 239,833 | - Unallocated head office and corporate expenses amounted to **HKD 20.317 million** (2018: HKD 19.252 million)[242](index=242&type=chunk) [Revenue](index=51&type=section&id=REVENUE) For the six months ended September 30, 2019, total revenue from customer contracts was HKD 627.7 million, primarily from building construction services [Analysis of Revenue from Customer Contracts](index=51&type=section&id=Analysis%20of%20Revenue%20from%20Customer%20Contracts) | Service Category | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | | :------- | :----------------------------------- | :----------------------------------- | | Building Contracts | 516,239 | 473,197 | | Renovation and Maintenance Engineering | 111,472 | 93,749 | | **Total Revenue** | **627,711** | **566,946** | [Timing of Revenue Recognition (Six Months Ended Sep 30, 2019)](index=51&type=section&id=Timing%20of%20Revenue%20Recognition%20(Six%20Months%20Ended%20Sep%2030,%202019)) | Timing of Revenue Recognition | Building Contracts (thousand HKD) | Renovation and Maintenance Engineering (thousand HKD) | Total (thousand HKD) | | :----------- | :---------------- | :-------------------- | :------------ | | Over time | 516,239 | 24,724 | 540,963 | | At a point in time | – | 86,748 | 86,748 | | **Total Revenue** | **516,239** | **111,472** | **627,711** | [Finance Costs](index=52&type=section&id=FINANCE%20COSTS) Total finance costs decreased to HKD 0.144 million, mainly due to lower bank borrowing interest, partially offset by new lease liabilities interest [Analysis of Finance Costs](index=52&type=section&id=Analysis%20of%20Finance%20Costs) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | | :--- | :----------------------------------- | :----------------------------------- | | Interest on bank borrowings | 35 | 429 | | Interest on lease liabilities | 109 | – | | **Total Finance Costs** | **144** | **429** | [Profit Before Tax](index=53&type=section&id=PROFIT%20BEFORE%20TAX) Profit before tax increased to HKD 25.301 million, after deducting depreciation and employee benefit expenses, with no listing expenses this period [Composition of Profit Before Tax](index=53&type=section&id=Composition%20of%20Profit%20Before%20Tax) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | | :--- | :----------------------------------- | :----------------------------------- | | Profit Before Tax | 25,301 | 16,385 | | Depreciation of property, plant and equipment | 774 | 552 | | Depreciation of right-of-use assets | 1,539 | – | | Employee benefit expenses (excluding directors' emoluments) | 42,500 | 32,310 | | Listing expenses | – | 5,737 | | Minimum lease payments under operating leases | 1,256 | 1,867 | [Income Tax](index=54&type=section&id=INCOME%20TAX) Hong Kong profits tax is provided at 16.5%, with a two-tiered rate for one subsidiary, leading to a total tax expense of HKD 3.916 million - Hong Kong profits tax is provided at a rate of **16.5%**, with one subsidiary subject to a two-tiered tax rate (8.25% for the first HKD 2 million of estimated assessable profits, and 16.5% thereafter) for 2019 (2018: standard rate of 16.5%)[266](index=266&type=chunk) [Analysis of Income Tax Expenses](index=54&type=section&id=Analysis%20of%20Income%20Tax%20Expenses) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | | :--- | :----------------------------------- | :----------------------------------- | | Current - Hong Kong tax for the period | 3,679 | 3,009 | | Deferred tax | 237 | 99 | | **Total Tax Expense for the Period** | **3,916** | **2,884** | [Earnings Per Share Attributable to Equity Holders of the Company](index=54&type=section&id=EARNINGS%20PER%20SHARE%20ATTRIBUTABLE%20TO%20EQUITY%20HOLDERS%20OF%20THE%20COMPANY) Basic earnings per share were HK2.7 cents, calculated based on profit attributable to equity holders and weighted average shares outstanding [Earnings Per Share](index=54&type=section&id=Earnings%20Per%20Share) | Indicator | Six Months Ended Sep 30, 2019 | Six Months Ended Sep 30, 2018 | | :--- | :------------------------- | :------------------------- | | Basic and Diluted Earnings Per Share | HK2.7 cents | HK2.3 cents | | Profit for the Period Attributable to Equity Holders of the Company | HK$21,385,000 | HK$13,501,000 | | Weighted Average Number of Ordinary Shares in Issue | 800,000,000 | 600,000,000 | - For the six months ended September 30, 2018 and 2019, **no adjustments for dilutive events were made** as there were no potentially dilutive ordinary shares in issue during these periods[270](index=270&type=chunk) [Dividends](index=55&type=section&id=DIVIDENDS) A final dividend of HK1.4 cents per share for FY2019, totaling HKD 11.2 million, was declared and paid, with no interim dividend proposed - A final dividend of **HK1.4 cents per share** for the financial year ended March 31, 2019, totaling **HKD 11.2 million**, was declared and paid during the six months ended September 30, 2019[274](index=274&type=chunk) - The Board resolved **not to declare an interim dividend** for the six months ended September 30, 2019[274](index=274&type=chunk) - For the six months ended September 30, 2018, and prior to the completion of the Reorganisation, certain subsidiaries of the Group declared an interim dividend of **HKD 50.0 million** to their then shareholders[273](index=273&type=chunk) [Contract Assets and Trade Receivables](index=55&type=section&id=CONTRACT%20ASSETS%20AND%20TRADE%20RECEIVABLES) As of September 30, 2019, total contract assets and trade receivables increased to HKD 293.7 million, with most trade receivables not yet overdue [Analysis of Contract Assets and Trade Receivables](index=55&type=section&id=Analysis%20of%20Contract%20Assets%20and%20Trade%20Receivables) | Indicator | Sep 30, 2019 (thousand HKD) | Mar 31, 2019 (thousand HKD) | | :--- | :--------------------- | :--------------------- | | Other contract assets | 33,858 | 10,900 | | Retention receivables | 80,357 | 63,583 | | Trade receivables | 179,510 | 171,536 | | **Total** | **293,725** | **246,019** | - The increase in other contract assets was due to **increased provisions for ongoing construction services** at the end of the period[281](index=281&type=chunk) - The increase in retention receivables was due to **more completed contracts**[281](index=281&type=chunk) [Aging Analysis of Trade Receivables (based on invoice date)](index=55&type=section&id=Aging%20Analysis%20of%20Trade%20Receivables%20(based%20on%20invoice%20date)) | Aging | Sep 30, 2019 (thousand HKD) | Mar 31, 2019 (thousand HKD) | | :--- | :--------------------- | :--------------------- | | Within 90 days | 173,059 | 169,278 | | 91 to 180 days | 5,278 | 1,493 | | 181 to 360 days | 611 | 172 | | Over 360 days | 562 | 593 | | **Total** | **179,510** | **171,536** | - The Group applies the **simplified approach for expected credit losses** under HKFRS 9, considering overdue but not impaired trade receivables to be fully recoverable[289](index=289&type=chunk) [Trade and Retention Payables](index=59&type=section&id=TRADE%20AND%20RETENTION%20PAYABLES) As of September 30, 2019, total trade and retention payables increased to HKD 166.5 million, with trade payables typically due within 30 days [Analysis of Trade and Retention Payables](index=59&type=section&id=Analysis%20of%20Trade%20and%20Retention%20Payables) | Indicator | Sep 30, 2019 (thousand HKD) | Mar 31, 2019 (thousand HKD) | | :--- | :--------------------- | :--------------------- | | Trade payables | 104,894 | 64,443 | | Retention payables | 61,582 | 54,452 | | **Total** | **166,476** | **118,895** | - Payment terms for trade payables are stipulated in relevant contracts, with a **credit period generally of 30 days**[293](index=293&type=chunk) - Retention payables are generally **settled within one to two years**[293](index=293&type=chunk) [Share Capital](index=60&type=section&id=SHARE%20CAPITAL) The company's authorized share capital is HKD 50.0 million, with 800 million issued and fully paid shares totaling HKD 8.0 million [Share Capital Structure](index=60&type=section&id=Share%20Capital%20Structure) | Indicator | Sep 30, 2019 | Mar 31, 2019 | | :--- | :------------ | :------------ | | Authorized Share Capital (shares) | 5,000,000,000 | 5,000,000,000 | | Authorized Share Capital (thousand HKD) | 50,000 | 50,000 | | Issued and Fully Paid Share Capital (shares) | 800,000,000 | 800,000,000 | | Issued and Fully Paid Share Capital (thousand HKD) | 8,000 | 8,000 | - Changes in share capital include the **issue of new shares under the Reorganisation**, a **capitalization issue of 599,999,895 shares**, and the **issue of 200,000,000 new shares under the Share Offer**[299](index=299&type=chunk) [Contingent Liabilities](index=62&type=section&id=CONTINGENT%20LIABILITIES) As of September 30, 2019, the Group's contingent liabilities primarily comprised performance bonds, significantly increasing to HKD 85.185 million [Contingent Liabilities: Performance Bonds](index=62&type=section&id=Contingent%20Liabilities:%20Performance%20Bonds) | Indicator | Sep 30, 2019 (thousand HKD) | Mar 31, 2019 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--------------------- | :--------------------- | :------------ | :------- | | Performance Bonds | 85,185 | 24,881 | 60,304 | 242.4% | - Certain performance bonds are secured by **time deposits of HKD 16.373 million** (March 31, 2019: HKD 5.0 million)[304](index=304&type=chunk) [Commitments](index=62&type=section&id=COMMITMENTS) As of September 30, 2019, the Group's capital commitments included HKD 0.648 million for leasehold improvements, with future minimum lease payments for short-term operating leases [Capital Commitments](index=62&type=section&id=Capital%20Commitments) | Indicator | Sep 30, 2019 (thousand HKD) | Mar 31, 2019 (thousand HKD) | | :--- | :--------------------- | :--------------------- | | Contracted but not provided for: furniture, fixtures and office equipment | – | 1,250 | | Contracted but not provided for: leasehold improvements | 648 | – | | **Total** | **648** | **1,250** | [Total Future Minimum Lease Payments under Irrevocable Short-Term Operating Leases](index=62&type=section&id=Total%20Future%20Minimum%20Lease%20Payments%20under%20Irrevocable%20Short-Term%20Operating%20Leases) | Indicator | Sep 30, 2019 (thousand HKD) | Mar 31, 2019 (thousand HKD) | | :--- | :--------------------- | :--------------------- | | Within one year | 1,531 | 2,497 | - The Group has elected **not to recognize right-of-use assets and lease liabilities for short-term leases** with a lease term of 12 months or less[309](index=309&type=chunk) [Related Party Transactions](index=64&type=section&id=RELATED%20PARTY%20TRANSACTIONS) As of September 30, 2019, the Group had no outstanding balances with related companies, and key management personnel remuneration decreased - As of September 30, 2019, and March 31, 2019, the Group had **no outstanding balances with related companies**[313](index=313&type=chunk) [Total Remuneration Paid to Key Management Personnel](index=64&type=section&id=Total%20Remuneration%20Paid%20to%20Key%20Management%20Personnel) | Indicator | Six Months Ended Sep 30, 2019 (thousand HKD) | Six Months Ended Sep 30, 2018 (thousand HKD) | | :--- | :----------------------------------- | :----------------------------------- | | Short-term employee benefits | 1,900 | 3,214 | | Post-employment benefits | 131 | 147 | | **Total Remuneration** | **2,031** | **3,361** | - Remuneration includes **salaries, allowances, and benefits in kind paid to Ms. Lai Yuk Lin**, spouse of a Director, including a housing allowance for a director's residence[316](index=316&type=chunk) [Fair Value Measurement](index=65&type=section&id=FAIR%20VALUE%20MEASUREMENT) Management assesses that the fair values of most financial instruments approximate their carrying amounts due to short-term maturities - Management has assessed that the fair values of financial instruments such as **cash and cash equivalents, contract assets and trade receivables, and trade and retention payables** approximate their carrying amounts, primarily due to their **short-term maturities**[319](index=319&type=chunk) - The fair values of the non-current portions of **retention payables, lease liabilities, and finance lease payables** are calculated by discounting expected future cash flows using prevailing interest rates applicable to instruments with similar terms, credit risk, and remaining maturities[319](index=319&type=chunk) - During the period, there were **no transfers between Level 1 and Level 2** of fair value measurements, and no financial assets or financial liabilities were transferred into or out of Level 3[319](index=319&type=chunk) [Approval of the Unaudited Interim Financial Information](index=65&type=section&id=APPROVAL%20OF%20THE%20UNAUDITED%20INTERIM%20FINANCIAL%20INFORMATION) The unaudited interim financial information was approved and authorized for issue by the Board of Directors on November 28, 2019 - The unaudited interim financial information was **approved and authorized for issue by the Board of Directors on November 28, 2019**[320](index=320&type=chunk)

[Corporate Information](index=3&type=section&id=Corporate%20Information) Provides essential details about the company's governance, registered offices, professional advisors, and stock information [Directors](index=3&type=section&id=Directors) The Board of Directors comprises three executive and three independent non-executive directors, with Mr. Tsang Ka Yip as Chairman and Executive Director - Executive Directors include Mr. Tsang Ka Yip (Chairman), Mr. Tsang Tsz Him, and Mr. Tsang Tsz Kit[5](index=5&type=chunk) - Independent Non-Executive Directors include Dr. Lau Chi Keung, Mr. Chan Tim Yiu, and Mr. Sze Kwok Wing, all appointed on January 21, 2019[5](index=5&type=chunk) [Company Secretary](index=3&type=section&id=Company%20Secretary) Ms. Tsang Li Mui was appointed as the Company Secretary on June 25, 2018 - Ms. Tsang Li Mui was appointed as the Company Secretary on June 25, 2018[5](index=5&type=chunk) [Committees](index=3&type=section&id=Committees) The company has Audit, Remuneration, and Nomination Committees, each chaired by an independent non-executive director - The Audit Committee is chaired by Mr. Sze Kwok Wing, with members Dr. Lau Chi Keung and Mr. Chan Tim Yiu[5](index=5&type=chunk) - The Remuneration Committee is chaired by Mr. Chan Tim Yiu, with members Mr. Sze Kwok Wing and Mr. Tsang Ka Yip[5](index=5&type=chunk) - The Nomination Committee is chaired by Dr. Lau Chi Keung, with members Mr. Sze Kwok Wing and Mr. Tsang Ka Yip[5](index=5&type=chunk) [Registered Office and Principal Place of Business](index=3&type=section&id=Registered%20Office%20and%20Principal%20Place%20of%20Business) The company is registered in the Cayman Islands with its principal place of business in Hong Kong - The registered office is located at Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111, Cayman Islands[5](index=5&type=chunk) - The principal place of business in Hong Kong is on the 18th Floor, ASEAN Commercial Building, 244-252 Des Voeux Road Central, Hong Kong[8](index=8&type=chunk) [Legal Adviser, Auditor and Principal Bankers](index=4&type=section&id=Legal%20Adviser%2C%20Auditor%20and%20Principal%20Bankers) The company engages Woo Kwan Lee & Lo as Hong Kong legal adviser, Ernst & Young as auditor, and maintains accounts with major banks - The Hong Kong legal adviser is Woo Kwan Lee & Lo[8](index=8&type=chunk) - The auditor is Ernst & Young[8](index=8&type=chunk) - Principal bankers include The Hongkong and Shanghai Banking Corporation Limited, Bank of China (Hong Kong), and Standard Chartered Bank (Hong Kong) Limited[8](index=8&type=chunk) [Share Registrars](index=4&type=section&id=Share%20Registrars) The principal share registrar is in the Cayman Islands, with Tricor Investor Services Limited as the Hong Kong branch registrar - The principal share registrar is Conyers Trust Company (Cayman) Limited[8](index=8&type=chunk) - The Hong Kong branch share registrar is Tricor Investor Services Limited[8](index=8&type=chunk) [Stock Code and Website](index=4&type=section&id=Stock%20Code%20and%20Website) The company's stock code is 01793, and its official website is http://www.wecon.com.hk - The stock code is **01793**[8](index=8&type=chunk) - The company website is http://www.wecon.com.hk[8](index=8&type=chunk) [Chairman's Statement](index=5&type=section&id=Chairman%27s%20Statement) The Chairman's statement provides an overview of the company's listing, financial performance, future outlook, and acknowledgments [Listing on the Stock Exchange](index=5&type=section&id=Listing%20on%20the%20Stock%20Exchange) The company successfully listed on the Main Board of the Stock Exchange on February 27, 2019, raising approximately HK$93.5 million net proceeds - The company's shares were successfully listed on the Main Board of the Stock Exchange on **February 27, 2019**[12](index=12&type=chunk)[15](index=15&type=chunk) Listing Proceeds | Metric | Amount (HKD) | | :--- | :--- | | Number of shares offered | 200,000,000 shares | | Net proceeds | Approximately **HK$93.5 million** | - The Board believes the listing will enhance the Group's image, bring market opportunities, and provide necessary capital for long-term development[12](index=12&type=chunk)[15](index=15&type=chunk) [Financial Highlights](index=5&type=section&id=Financial%20Highlights) The group's total revenue slightly decreased for the year ended March 31, 2019, but adjusted net profit increased after excluding listing expenses FY2019 Financial Highlights | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | Approximately **HK$980.6 million** | Approximately **HK$980.8 million** | Decrease of approximately **HK$0.2 million (0.02%)** | | Profit attributable to equity holders | Approximately **HK$37.2 million** | Approximately **HK$41.4 million** | Decrease of approximately **HK$4.2 million** | | Adjusted Net Profit (excluding listing expenses) | Approximately **HK$50.3 million** | Approximately **HK$46.0 million** | Increase of approximately **HK$4.3 million** | [Prospects](index=6&type=section&id=Prospects) The company anticipates continued growth in construction demand, leveraging listing proceeds to expand market share and invest in employee development - Demand for construction projects in both public and private sectors is expected to grow, with government initiatives for revitalizing industrial buildings and urban renewal providing ample opportunities[19](index=19&type=chunk)[23](index=23&type=chunk) - The net proceeds of approximately **HK$93.5 million** from the listing will be used to expand market share, compete for larger contracts, and attract experienced management talent[20](index=20&type=chunk)[23](index=23&type=chunk) - The Group will continue to invest in employee development, focus on efficient project execution, and seek expansion opportunities through other construction-related businesses to maximize shareholder returns and Group value[21](index=21&type=chunk)[23](index=23&type=chunk) [Appreciation](index=6&type=section&id=Appreciation) The Chairman expresses gratitude to shareholders, clients, subcontractors, suppliers, management, and employees for their support and dedication - The Chairman thanks shareholders, clients, subcontractors, and suppliers for their continued trust and support[22](index=22&type=chunk)[24](index=24&type=chunk) - The Chairman also expresses gratitude to management and employees for their hard work and loyalty to the Group[22](index=22&type=chunk)[24](index=24&type=chunk) [Management Discussion and Analysis](index=7&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the group's business, financial performance, key risks, and future outlook [Business Review](index=7&type=section&id=Business%20Review) Wecon Holdings is a long-established general contractor in Hong Kong, specializing in building construction and RMAA services, with 9 major projects in hand - The Group is a general contractor in Hong Kong, primarily providing building construction services and RMAA engineering services to both private and public sector clients[26](index=26&type=chunk)[30](index=30&type=chunk) - As of March 31, 2019, the Group had **9 major projects** (contract value of HK$10.0 million or more) in hand and had completed **3 major projects**[27](index=27&type=chunk)[31](index=31&type=chunk) [Prospects_MD&A](index=7&type=section&id=Prospects_MD%26A) The company maintains cautious optimism for the Hong Kong construction industry, despite facing market competition and rising costs, benefiting from its listing - The listing has enhanced the Group's image, and the net proceeds will support long-term development and growth[28](index=28&type=chunk)[32](index=32&type=chunk) - The Group faces operational risks from intense competition in the Hong Kong building construction and RMAA market, cautious client attitudes towards project evaluation, and continuously rising direct labor and material costs[29](index=29&type=chunk)[32](index=32&type=chunk) - Benefiting from the Hong Kong government's infrastructure development and housing supply policies, the Board remains cautiously optimistic about the industry's prospects[35](index=35&type=chunk)[37](index=37&type=chunk) [Principal Risks and Uncertainties](index=8&type=section&id=Principal%20Risks%20and%20Uncertainties) Key risks include tender success uncertainty, client concentration, subcontractor performance, cash flow mismatches, material price volatility, and performance bond impact on liquidity - Revenue relies on non-recurring tender or quotation processes, with no guarantee of continuous success[36](index=36&type=chunk)[38](index=38&type=chunk) - Significant reliance on major and key clients poses concentration risk[36](index=36&type=chunk)[38](index=38&type=chunk) - Fluctuations in subcontracting costs, poor performance, or inability to source subcontractors may affect operations and profitability[36](index=36&type=chunk)[38](index=38&type=chunk) - Mismatches between client progress payments and payments to suppliers and subcontractors may lead to insufficient cash flow[36](index=36&type=chunk)[38](index=38&type=chunk) - Changes in raw material prices and supply may have a significant adverse impact on operating results[36](index=36&type=chunk)[38](index=38&type=chunk) - Providing performance bonds may affect the Group's liquidity position[36](index=36&type=chunk)[38](index=38&type=chunk) [Segment Information](index=9&type=section&id=Segment%20Information) The group's reportable operating segments are building construction services and renovation, maintenance, alteration, and addition (RMAA) engineering services - The Group's reportable and operating segments are (i) building construction services and (ii) renovation, maintenance, alteration, and addition (RMAA) engineering services[41](index=41&type=chunk)[46](index=46&type=chunk) [Financial Review](index=9&type=section&id=Financial%20Review) For the year ended March 31, 2019, the group's total revenue slightly decreased, but gross profit and margin improved, while net profit declined due to listing expenses [Revenue](index=9&type=section&id=Revenue) Total group revenue slightly decreased by 0.02%, with building construction services revenue down 3.7% and RMAA services revenue up 18.3% Revenue Overview | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | Approximately **HK$980.6 million** | Approximately **HK$980.8 million** | Decrease of approximately **HK$0.2 million (0.02%)** | | Building Construction Services Revenue | Approximately **HK$787.6 million** | Approximately **HK$817.7 million** | Decrease of approximately **HK$30.1 million (3.7%)** | | RMAA Engineering Services Revenue | Approximately **HK$193.0 million** | Approximately **HK$163.1 million** | Increase of approximately **HK$29.9 million (18.3%)** | - The decrease in building construction services revenue was primarily due to significant progress and practical completion of major projects in hand during the year ended March 31, 2018[43](index=43&type=chunk) - The increase in RMAA engineering services revenue was primarily due to revenue growth from a large project during the year ended March 31, 2019[43](index=43&type=chunk) [Cost of Sales](index=10&type=section&id=Cost%20of%20Sales) Group sales cost decreased by 1.5%, primarily due to lower subcontracting costs, partially offset by increases in material, direct staff, and site overhead costs Cost of Sales | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Cost of Sales | Approximately **HK$890.1 million** | Approximately **HK$903.5 million** | Decrease of approximately **HK$13.4 million (1.5%)** | - Cost of sales primarily includes subcontracting costs, material costs, direct staff costs, and site overheads[49](index=49&type=chunk)[52](index=52&type=chunk) [Gross Profit and Gross Profit Margin](index=10&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) Group gross profit increased to HK$90.5 million, gross profit margin improved by 1.3% to 9.2%, driven by improved margins in building construction services Gross Profit and Gross Profit Margin | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Gross Profit | Approximately **HK$90.5 million** | Approximately **HK$77.3 million** | Increase of approximately **HK$13.2 million** | | Gross Profit Margin | Approximately **9.2%** | Approximately **7.9%** | Increase of approximately **1.3%** | - Gross profit from building construction services increased by approximately **HK$15.6 million** to **HK$67.9 million**, with the gross profit margin rising from **6.4% to 8.6%**, mainly due to the contribution from a high-margin industrial building development project[51](index=51&type=chunk)[54](index=54&type=chunk) - Gross profit from RMAA engineering services decreased by approximately **HK$2.4 million** to **HK$22.6 million**, with the gross profit margin falling from **15.3% to 11.7%**, primarily due to a large project having a lower gross profit margin due to increased subcontracting costs for gas and electrical installations[56](index=56&type=chunk)[58](index=58&type=chunk) [Other Income and Gains](index=11&type=section&id=Other%20Income%20and%20Gains) Group other income and gains decreased by approximately HK$1.7 million, mainly due to lower dividend income, interest from financial assets, and foreign exchange gains Other Income and Gains | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Other Income and Gains | Approximately **HK$4.1 million** | Approximately **HK$5.8 million** | Decrease of approximately **HK$1.7 million** | - The decrease was primarily due to lower dividend income, interest income from other financial assets measured at amortized cost, and foreign exchange gains[57](index=57&type=chunk)[59](index=59&type=chunk) [Administrative Expenses](index=11&type=section&id=Administrative%20Expenses) Administrative expenses increased by approximately HK$15.1 million, or 46.7%, primarily due to higher listing expenses, staff costs, and foreign exchange losses Administrative Expenses | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Administrative Expenses | Approximately **HK$47.4 million** | Approximately **HK$32.3 million** | Increase of approximately **HK$15.1 million (46.7%)** | - The increase was primarily due to higher listing expenses, staff costs, and foreign exchange losses[57](index=57&type=chunk)[59](index=59&type=chunk) [Finance Costs](index=11&type=section&id=Finance%20Costs) Finance costs increased by approximately HK$356,000, mainly due to higher interest expenses on bank borrowings and finance leases Finance Costs | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Finance Costs | Approximately **HK$600,000** | Approximately **HK$244,000** | Increase of approximately **HK$356,000** | - The increase was primarily due to higher interest expenses on bank borrowings and finance leases[57](index=57&type=chunk)[59](index=59&type=chunk) [Income Tax Expenses](index=12&type=section&id=Income%20Tax%20Expenses) Income tax expenses increased by approximately HK$0.5 million, or 5.6%, primarily due to higher revenue from building construction services and non-deductible listing expenses Income Tax Expenses | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Income Tax Expenses | Approximately **HK$9.4 million** | Approximately **HK$8.9 million** | Increase of approximately **HK$0.5 million (5.6%)** | | Effective Tax Rate | Approximately **20.2%** | Approximately **17.7%** | Increase of approximately **2.5%** | - The increase was primarily attributable to higher revenue generated from building construction services and an increase in non-deductible listing expenses[61](index=61&type=chunk)[64](index=64&type=chunk) [Net Profit and Adjusted Net Profit](index=12&type=section&id=Net%20Profit%20and%20Adjusted%20Net%20Profit) Profit for the year decreased by 10.1%, but adjusted net profit, excluding listing expenses, increased to HK$50.3 million, with a slight 0.4% rise in adjusted net profit margin Net Profit and Adjusted Net Profit | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Profit for the Year | Approximately **HK$37.2 million** | Approximately **HK$41.4 million** | Decrease of approximately **HK$4.2 million (10.1%)** | | Adjusted Net Profit (excluding listing expenses) | Approximately **HK$50.3 million** | Approximately **HK$46.0 million** | Increase of approximately **HK$4.3 million** | | Adjusted Net Profit Margin | Approximately **5.1%** | Approximately **4.7%** | Increase of approximately **0.4%** | - Listing expenses were approximately **HK$13.1 million** for 2019 and **HK$4.6 million** for 2018, respectively[62](index=62&type=chunk)[65](index=65&type=chunk) [Employees and Remuneration Policies](index=12&type=section&id=Employees%20and%20Remuneration%20Policies) As of March 31, 2019, the group had 181 full-time employees with total staff costs of approximately HK$76.1 million, offering competitive remuneration and benefits Employees and Remuneration Policies | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Number of Full-time Employees | 181 | 141 | | Total Staff Costs (excluding directors' emoluments) | Approximately **HK$76.1 million** | Approximately **HK$60.8 million** | - Remuneration policies are regularly reviewed based on individual performance, merit, responsibilities, and market conditions, with benefits including MPF contributions, medical insurance, annual leave, and share options[63](index=63&type=chunk)[66](index=66&type=chunk) [Significant Investments, Material Acquisitions and Disposal of Subsidiaries and Associated Companies](index=13&type=section&id=Significant%20Investments%2C%20Material%20Acquisitions%20and%20Disposal%20of%20Subsidiaries%20and%20Associated%20Companies) The company was incorporated on March 23, 2018, and completed a group reorganization on December 21, 2018, with no other significant investments or disposals during the year - The company was incorporated in the Cayman Islands on **March 23, 2018**[68](index=68&type=chunk)[69](index=69&type=chunk) - The Group completed its reorganization on **December 21, 2018**, with the company becoming the holding company of the Group[68](index=68&type=chunk)[69](index=69&type=chunk) - For the year ended March 31, 2019, other than the reorganization, there were no significant investments, material acquisitions, or disposals of subsidiaries and associated companies[68](index=68&type=chunk)[69](index=69&type=chunk) [Capital Commitments](index=13&type=section&id=Capital%20Commitments) As of March 31, 2019, the group had capital commitments of approximately HK$1.3 million for computer hardware and software, with HK$1.1 million to be settled by listing proceeds Capital Commitments | Metric | 2019 (HKD) | | :--- | :--- | | Total for purchase of computer hardware and software | Approximately **HK$1.3 million** | | To be settled by net proceeds | Approximately **HK$1.1 million** | [Operating Lease Commitments](index=13&type=section&id=Operating%20Lease%20Commitments) As of March 31, 2019, the group's total future minimum lease payments under non-cancellable operating leases payable within one year were approximately HK$2.5 million, a decrease from 2018 Operating Lease Commitments | Metric | 2019 (HKD) | 2018 (HKD) | | :--- | :--- | :--- | | Total minimum lease payments payable within one year | Approximately **HK$2.5 million** | Approximately **HK$4.2 million** | | Total minimum lease payments payable in the second to fifth years | None | Approximately **HK$2.2 million** | - Operating lease payments are primarily for office properties, car parks, warehouses, and staff quarters, with lease terms ranging from one to two years[72](index=72&type=chunk)[74](index=74&type=chunk) [Contingent Liabilities](index=14&type=section&id=Contingent%20Liabilities) As of March 31, 2019, the group had no significant contingent liabilities other than those disclosed in Note 26 to the consolidated financial statements - As of March 31, 2019, the Group had no significant contingent liabilities, details of which are provided in Note 26[77](index=77&type=chunk)[82](index=82&type=chunk) [Foreign Exchange Exposure](index=14&type=section&id=Foreign%20Exchange%20Exposure) The group faces minimal foreign exchange risk as most business transactions and assets/liabilities are denominated in Hong Kong Dollars, requiring no hedging policy - The Group's foreign exchange risk is minimal as most business transactions and assets and liabilities are denominated in Hong Kong Dollars[78](index=78&type=chunk)[83](index=83&type=chunk) - The Directors believe that no foreign currency hedging policy is currently required[78](index=78&type=chunk)[83](index=83&type=chunk) [Liquidity and Financial Resources and Capital Structure](index=14&type=section&id=Liquidity%20and%20Financial%20Resources%20and%20Capital%20Structure) The group's liquidity is primarily funded by shareholder contributions, bank borrowings, and operating cash flows, maintaining a healthy current ratio and sufficient working capital - The Group's primary sources of funding are shareholder contributions, bank borrowings, and net cash generated from operating activities[79](index=79&type=chunk)[85](index=85&type=chunk) Liquidity and Capital Structure Metrics | Metric | As of March 31, 2019 | As of March 31, 2018 | | :--- | :--- | :--- | | Pledged bank deposits, time deposits, and cash and bank balances | Approximately **HK$194.8 million** | Approximately **HK$86.7 million** | | Gearing Ratio | Approximately **4.6%** | None | | Current Ratio | Approximately **1.9 times** | Approximately **1.7 times** | - The Directors believe the Group has sufficient working capital to meet its future requirements[81](index=81&type=chunk)[85](index=85&type=chunk) [Debts and Charge on Assets](index=15&type=section&id=Debts%20and%20Charge%20on%20Assets) As of March 31, 2019, the group's total interest-bearing bank borrowings were approximately HK$11.1 million, primarily secured by pledged bank deposits and corporate guarantees Debts and Charge on Assets | Metric | As of March 31, 2019 (HKD) | As of March 31, 2018 (HKD) | | :--- | :--- | :--- | | Total interest-bearing bank borrowings (including bank loans and finance lease payables) | Approximately **HK$11.1 million** | None | - Bank facilities are secured by the Group's pledged bank deposits and corporate guarantees[93](index=93&type=chunk) - Borrowings are denominated in Hong Kong Dollars and primarily bear interest at floating rates, with the Group currently having no interest rate hedging policy[93](index=93&type=chunk) [Use of Proceeds](index=16&type=section&id=Use%20of%20Proceeds) As of March 31, 2019, the group utilized approximately HK$9.7 million of listing proceeds to enhance engineering capabilities, strengthen human resources, and for general working capital, with delays in office upgrades and technology innovation Use of Proceeds (As of March 31, 2019) | Purpose | Planned Total Proceeds (HK$ million) | Actual Proceeds Used (HK$ million) | Remaining Balance (HK$ million) | | :--- | :--- | :--- | :--- | | Enhance capacity to undertake more building construction and RMAA projects | 66.7 | 5.2 | 61.5 | | Strengthen human resources | 14.4 | 0.5 | 14.4 | | Office upgrade and renovation | 3.6 | – | 3.6 | | Research and development of innovative engineering and technology | 2.9 | – | 2.9 | | General working capital | 5.9 | 2.0 | 3.9 | | **Total** | **93.5** | **7.2** | **86.3** | - The delay in utilizing funds for office upgrades and renovation, and research and development of innovative engineering and technology, was mainly due to delays in new office expansion[100](index=100&type=chunk)[102](index=102&type=chunk) - The Group will continue to apply the net proceeds as planned in the prospectus as soon as practicable[100](index=100&type=chunk)[102](index=102&type=chunk) [Environmental Policies and Performance](index=17&type=section&id=Environmental%20Policies%20and%20Performance) The group is committed to environmental protection through green office practices and will publish a separate Environmental, Social and Governance Report - The Group is committed to supporting environmental protection and implements green office practices, including using energy-efficient lighting, recycling paper, switching off idle electrical appliances, and using environmentally friendly products[101](index=101&type=chunk)[103](index=103&type=chunk) - An independent Environmental, Social and Governance Report will be published on the Stock Exchange website and the company's website within three months after the publication of this annual report, as required by the Listing Rules[101](index=101&type=chunk)[103](index=103&type=chunk) [Corporate Governance Report](index=17&type=section&id=Corporate%20Governance%20Report) This report details the company's corporate governance practices, board structure, committees, and compliance with regulatory standards [Corporate Governance Practices](index=18&type=section&id=Corporate%20Governance%20Practices) The company is committed to high standards of corporate governance, adhering to the Corporate Governance Code, with a noted deviation regarding the Chairman and CEO roles - The company is committed to achieving and maintaining the highest standards of corporate governance, based on principles of transparency, accountability, and independence[106](index=106&type=chunk)[109](index=109&type=chunk) - The company has complied with the Corporate Governance Code, except for the deviation where the roles of Chairman (Mr. Tsang Ka Yip) and Chief Executive Officer are combined, which deviates from Code Provision A.2.1[107](index=107&type=chunk)[108](index=108&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) [Model Code for Securities Transactions by Directors](index=19&type=section&id=Model%20Code%20for%20Securities%20Transactions%20by%20Directors) The company adopted the Model Code for Securities Transactions by Directors, and all directors confirmed full compliance during the reporting period - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules[113](index=113&type=chunk)[116](index=116&type=chunk) - All Directors confirmed full compliance with the Model Code during the period from the Listing Date to March 31, 2019[113](index=113&type=chunk)[116](index=116&type=chunk) [Board of Directors_CG](index=19&type=section&id=Board%20of%20Directors_CG) The Board is responsible for overall strategy and oversight, comprising six directors, including three independent non-executive directors, ensuring independence and diversity [Composition](index=19&type=section&id=Composition) The Board consists of three executive and three independent non-executive directors, with one independent director possessing professional accounting expertise, meeting listing requirements - The Board comprises **six directors**, including **three executive directors** and **three independent non-executive directors**[115](index=115&type=chunk)[118](index=118&type=chunk) - Independent non-executive directors constitute half of the Board, with Mr. Sze Kwok Wing possessing professional accounting or financial management expertise, fulfilling Listing Rule 3.10(2) requirements[115](index=115&type=chunk)[120](index=120&type=chunk) - All independent non-executive directors meet the independence guidelines under Listing Rule 3.13[121](index=121&type=chunk)[124](index=124&type=chunk) - Directors are subject to retirement by rotation and are eligible for re-election, ensuring Board renewal[122](index=122&type=chunk)[124](index=124&type=chunk) [Meetings and Attendance](index=21&type=section&id=Meetings%20and%20Attendance) The Board and its committees held meetings during the period, with a deviation from the code regarding separate meetings between the Chairman and non-executive directors - The Board held **one meeting** during the period from the Listing Date to March 31, 2019[129](index=129&type=chunk)[132](index=132&type=chunk) - The Audit Committee, Nomination Committee, and Remuneration Committee each held **one meeting**[131](index=131&type=chunk) - The separate meeting between the Chairman and Executive Director, Mr. Tsang Ka Yip, and non-executive directors was not held due to practical infeasibility, deviating from Code Provision A.2.7, but independent non-executive directors can communicate directly through other means[130](index=130&type=chunk)[135](index=135&type=chunk) [Directors' Training and Professional Development](index=22&type=section&id=Directors%27%20Training%20and%20Professional%20Development) To comply with corporate governance code, the company arranged continuous professional training for all directors by Hong Kong legal advisers, covering Listing Rules, corporate governance code, and inside information disclosure - All Directors participate in continuous professional development to update their knowledge and skills, ensuring they receive the latest information on Listing Rules and other regulatory requirements[138](index=138&type=chunk)[139](index=139&type=chunk) - For the year ended March 31, 2019, the company arranged training for all Directors by its Hong Kong legal advisers, covering Listing Rules, the Corporate Governance Code, and disclosure of inside information[138](index=138&type=chunk)[139](index=139&type=chunk) [Board Diversity Policy](index=22&type=section&id=Board%20Diversity%20Policy) The Board adopted a diversity policy considering gender, age, cultural background, professional experience, and other factors, aiming to enhance board performance and gradually increase the proportion of female directors to achieve gender equality - The Board has adopted a Board Diversity Policy to enhance the quality of the company's performance[138](index=138&type=chunk)[139](index=139&type=chunk) - Diversity considerations include gender, age, cultural background, educational background, ethnicity, professional experience and qualifications, skills, knowledge, and length of service[140](index=140&type=chunk)[143](index=143&type=chunk) - Director selection is based on strengths and contributions, considering diversity benefits and Board needs, without over-reliance on a single diversity aspect[141](index=141&type=chunk)[143](index=143&type=chunk) - The Board will gradually increase the proportion of female directors, with the ultimate goal of achieving gender equality[142](index=142&type=chunk)[143](index=143&type=chunk) [Board Committees_CG](index=24&type=section&id=Board%20Committees_CG) The Board established Audit, Nomination, and Remuneration Committees to assist in specific oversight functions, each with defined written terms of reference [Audit Committee](index=24&type=section&id=Audit%20Committee) Established on January 21, 2019, the Audit Committee, composed of three independent non-executive directors, oversees auditor relations, financial reporting, and risk management - The Audit Committee was established on **January 21, 2019**, with clear terms of reference[146](index=146&type=chunk) - Its primary responsibilities include maintaining relations with the auditor, reviewing financial information, overseeing financial reporting, risk management, internal control systems, and monitoring continuing connected transactions[146](index=146&type=chunk) - The Committee comprises three independent non-executive directors: Mr. Sze Kwok Wing (Chairman), Dr. Lau Chi Keung, and Mr. Chan Tim Yiu[146](index=146&type=chunk) - From the Listing Date to March 31, 2019, the Audit Committee held **one meeting** with the external auditor to discuss the scope of the statutory audit and pre-audit plan[146](index=146&type=chunk) [Nomination Committee](index=25&type=section&id=Nomination%20Committee) Established on January 21, 2019, the Nomination Committee reviews board structure, identifies suitable director candidates, advises on appointments and succession planning, and assesses independent non-executive directors' independence - The Nomination Committee was established on **January 21, 2019**, with clear terms of reference[148](index=148&type=chunk) - Its primary responsibilities include reviewing the Board structure, identifying suitable director candidates, making recommendations on director appointments and succession planning, and assessing the independence of independent non-executive directors[148](index=148&type=chunk) - The Committee comprises three members: Dr. Lau Chi Keung (Chairman), Mr. Sze Kwok Wing, and Mr. Tsang Ka Yip[148](index=148&type=chunk) - From the Listing Date to March 31, 2019, the Nomination Committee held **one meeting** to review the Board's composition, director succession plan, and terms of reference[148](index=148&type=chunk) [Nomination criteria](index=26&type=section&id=Nomination%20criteria) Nomination policy for directors considers character, integrity, professional qualifications, skills, knowledge, experience, diversity factors, measurable objectives, independence, and time commitment - Nomination criteria include character and integrity, professional qualifications, skills, knowledge, experience, and diversity factors under the Board Diversity Policy[152](index=152&type=chunk) - Measurable objectives adopted by the Board for achieving diversity and the independence of independent non-executive directors are considered[152](index=152&type=chunk) - Candidates are assessed for their potential contributions to the Board in terms of qualifications, skills, experience, independence, and gender diversity[152](index=152&type=chunk) - Candidates are required to be willing and able to devote sufficient time to fulfill their responsibilities as Board members[152](index=152&type=chunk) [Nomination Procedures](index=27&type=section&id=Nomination%20Procedures) The company has procedures for appointing new directors and re-electing existing ones, including multi-channel candidate sourcing, Nomination Committee screening, and shareholder nomination procedures - When appointing new directors, the Board will identify suitable candidates through various channels, and the Nomination Committee will screen them based on selection criteria[154](index=154&type=chunk)[155](index=155&type=chunk)[158](index=158&type=chunk) - For re-election of directors, the Board will consider and recommend eligible retiring directors for re-appointment[156](index=156&type=chunk)[158](index=158&type=chunk) - Shareholders may nominate individuals for election as directors by submitting written nominations, consent letters from candidates, and biographical details within a specified period[157](index=157&type=chunk)[158](index=158&type=chunk) [Remuneration Committee](index=28&type=section&id=Remuneration%20Committee) Established on January 21, 2019, the Remuneration Committee advises on remuneration policies and structures for directors and senior management, and approves executive directors' compensation - The Remuneration Committee was established on **January 21, 2019**, with clear terms of reference[161](index=161&type=chunk)[164](index=164&type=chunk) - Its primary responsibilities include making recommendations on the remuneration policy and structure for directors and senior management, and determining and approving the remuneration packages of individual executive directors and senior management[162](index=162&type=chunk)[164](index=164&type=chunk) - The Committee comprises three members: Mr. Chan Tim Yiu (Chairman), Mr. Tsang Ka Yip, and Mr. Sze Kwok Wing[163](index=163&type=chunk)[165](index=165&type=chunk) - From the Listing Date to March 31, 2019, the Remuneration Committee held **one meeting** to review and approve the remuneration packages of executive directors[163](index=163&type=chunk)[165](index=165&type=chunk) [Senior management's remuneration](index=29&type=section&id=Senior%20management%27s%20remuneration) For the year ended March 31, 2019, senior management remuneration was primarily below HK$1,000,000, with one individual earning between HK$1,000,001 and HK$1,500,000 Senior Management Remuneration Range (As of March 31, 2019) | Remuneration Range (HKD) | Number of Individuals | | :--- | :--- | | Zero to 1,000,000 | 5 | | 1,000,001 to 1,500,000 | 1 | [Independent Auditor's Remuneration](index=29&type=section&id=Independent%20Auditor%27s%20Remuneration) For the year ended March 31, 2019, the company paid Ernst & Young HK$4,510,000 in total remuneration, including HK$1,300,000 for audit services and HK$3,210,000 for non-audit services Independent Auditor's Remuneration (As of March 31, 2019) | Service Category | Amount (HK$ thousand) | | :--- | :--- | | Annual audit services | 1,300 | | Acting as reporting accountants for listing | 3,200 | | Other non-audit services | 10 | | **Total** | **4,510** | [Dividend Policy](index=30&type=section&id=Dividend%20Policy) The company adopted a dividend policy on January 21, 2019, balancing shareholder interests with prudent capital management by considering financial position, capital, and market conditions - The company adopted a dividend policy on **January 21, 2019**[176](index=176&type=chunk) - The Board will consider the Group's financial position, capital and debt levels, future cash needs, business strategies, market conditions, and other relevant factors when determining dividends[176](index=176&type=chunk) - Dividend payments are subject to restrictions under the Companies Law of the Cayman Islands and the company's Articles of Association[176](index=176&type=chunk) - The Board aims to balance shareholder interests with prudent capital management through a sustainable dividend policy[176](index=176&type=chunk) [Directors' and Auditor's Responsibility for the Financial Statements](index=31&type=section&id=Directors%27%20and%20Auditor%27s%20Responsibility%20for%20the%20Financial%20Statements) All directors confirm responsibility for preparing the group's financial statements, with the auditor's reporting responsibilities detailed in the independent auditor's report, and no material uncertainties regarding going concern - All Directors confirm responsibility for preparing the Group's financial statements[178](index=178&type=chunk)[180](index=180&type=chunk) - The reporting responsibilities of the auditor, Ernst & Young, are set out in the Independent Auditor's Report[178](index=178&type=chunk)[180](index=180&type=chunk) - There are no material uncertainties that cast significant doubt upon the company's ability to continue as a going concern[179](index=179&type=chunk)[181](index=181&type=chunk) [Company Secretary_CG](index=31&type=section&id=Company%20Secretary_CG) Ms. Tsang Li Mui, also the Financial Controller, serves as Company Secretary, ensuring compliance with board policies and providing corporate governance advice, having completed required training - Ms. Tsang Li Mui, the Company Secretary, is also the company's Financial Controller and a full-time employee[179](index=179&type=chunk) - The Company Secretary is responsible for supporting the Board in complying with policies and procedures and providing advice on corporate governance matters[179](index=179&type=chunk) - For the year ended March 31, 2019, Ms. Tsang completed no less than **15 hours** of relevant professional training, meeting Listing Rules requirements[179](index=179&type=chunk) [Communication with Shareholders and Shareholders' Rights](index=32&type=section&id=Communication%20with%20Shareholders%20and%20Shareholders%27%20Rights) The company communicates with shareholders through general meetings, corporate communications, and its website, providing procedures for calling extraordinary general meetings and nominating directors - General meetings are the primary opportunity for communication between shareholders and the Board, with the first AGM scheduled for **August 29, 2019**[184](index=184&type=chunk) - Shareholders holding not less than **one-tenth** of the paid-up share capital have the right to request an extraordinary general meeting[184](index=184&type=chunk) - Shareholders nominating directors must submit written nominations and candidate consent letters within a specified period[186](index=186&type=chunk)[188](index=188&type=chunk) - Shareholders can submit written inquiries to the company's principal place of business in Hong Kong, and the company will respond as soon as practicable[187](index=187&type=chunk)[189](index=189&type=chunk) [Investor Relations](index=34&type=section&id=Investor%20Relations) The company adopted a shareholder communication policy to ensure timely, transparent, and accurate information dissemination to shareholders and potential investors through various channels - The company has adopted a shareholder communication policy to ensure timely, transparent, and accurate communication between shareholders and the company[192](index=192&type=chunk) - Communication methods include annual general meetings, annual reports, interim reports, meeting notices, circulars, proxy forms, regular announcements, and the company website[192](index=192&type=chunk) - Tricor Investor Services Limited, the Hong Kong branch share registrar, provides services to shareholders for share registration, dividend payments, and related matters[192](index=192&type=chunk) [Constitutional Documents](index=35&type=section&id=Constitutional%20Documents) There have been no changes to the company's Memorandum and Articles of Association from the listing date to the date of this annual report - There have been no changes to the company's Memorandum and Articles of Association from the Listing Date to the date of this annual report[194](index=194&type=chunk)[198](index=198&type=chunk) [Internal Control and Risk Management](index=35&type=section&id=Internal%20Control%20and%20Risk%20Management) The Board regularly reviews internal control and risk management systems to ensure their effectiveness. The group has an internal audit function and strict regulations on handling and disseminating inside information - The Board is committed to regularly reviewing internal control and risk management systems to ensure their effectiveness and efficiency[195](index=195&type=chunk)[199](index=199&type=chunk) - The internal audit function aims to identify, monitor, and manage key risk areas in business activities and provide improvement recommendations to the Audit Committee[196](index=196&type=chunk)[199](index=199&type=chunk) - The Group's employee handbook strictly prohibits unauthorized use of confidential or inside information[197](index=197&type=chunk)[200](index=200&type=chunk) - Prior to listing, the company arranged training for directors on inside information disclosure[197](index=197&type=chunk)[200](index=200&type=chunk) [Compliance of Non-Competition Undertaking](index=63&type=section&id=Compliance%20of%20Non-Competition%20Undertaking) Controlling shareholders Mr. Tsang Ka Yip and Triple Arch Limited entered into a non-competition undertaking on January 21, 2019, which has been complied with - Controlling shareholders Mr. Tsang Ka Yip and Triple Arch Limited entered into a non-competition undertaking on **January 21, 2019**[339](index=339&type=chunk) - The independent non-executive directors have reviewed and confirmed that the controlling shareholders have not breached the non-competition undertaking from the Listing Date to March 31, 2019[339](index=339&type=chunk) [Sufficiency of Public Float](index=66&type=section&id=Sufficiency%20of%20Public%20Float) Based on public information and the directors' knowledge, the company has maintained a public float of at least 25% as required by the Listing Rules from its listing date to the date of this annual report - The company has maintained a public float of at least **25%** as required by the Listing Rules from the Listing Date to the date of this annual report[369](index=369&type=chunk)[376](index=376&type=chunk) [Permitted Indemnity Provision](index=67&type=section&id=Permitted%20Indemnity%20Provision) The company's articles of association provide for indemnification of directors for liabilities incurred in their duties, excluding fraud or dishonesty, and appropriate insurance is in place - The company's articles of association stipulate that each director is entitled to be indemnified out of the company's assets and profits for all actions, costs, charges, losses, damages, and expenses they may suffer or incur in the performance of their duties, except for matters involving fraud or dishonesty[378](index=378&type=chunk)[384](index=384&type=chunk) - For the year ended March 31, 2019, the company has arranged appropriate insurance coverage for directors and officers against legal actions they may face due to corporate activities[379](index=379&type=chunk)[385](index=385&type=chunk) [Environmental, Social and Governance Report_CG](index=67&type=section&id=Environmental%20Social%20and%20Governance%20Report_CG) The group is committed to environmental protection through green office practices and will publish a separate Environmental, Social and Governance Report within three months of this annual report - The Group is committed to supporting environmental protection and implements green office practices to reduce energy and natural resource consumption[380](index=380&type=chunk)[386](index=386&type=chunk) - An independent Environmental, Social and Governance Report is expected to be published on the Stock Exchange website and the company's website within **three months** after the publication of this annual report[381](index=381&type=chunk)[387](index=387&type=chunk) [Biographical Details of Directors and Senior Management](index=35&type=section&id=Biographical%20Details%20of%20Directors%20and%20Senior%20Management) This section provides biographical details of the group's directors and senior management, highlighting their extensive experience in the construction industry and relevant professional fields [Executive Directors](index=36&type=section&id=Executive%20Directors) This section details the biographies of the three executive directors, including Mr. Tsang Ka Yip (Chairman and CEO), Mr. Tsang Tsz Him, and Mr. Tsang Tsz Kit, who possess extensive industry experience - Mr. Tsang Ka Yip (66 years old) is the Group's Chairman and Chief Executive Officer, with over **40 years** of experience in civil engineering, building construction, and the construction industry, responsible for overall strategic planning and business development[203](index=203&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) - Mr. Tsang Tsz Him (37 years old) is an Executive Director, responsible for overall construction project management and daily operations, having joined the Group in 2008[212](index=212&type=chunk)[213](index=213&type=chunk)[215](index=215&type=chunk) - Mr. Tsang Tsz Kit (32 years old) is an Executive Director, responsible for overall administration, information systems, finance, and human resources planning, having joined the Group in 2010[214](index=214&type=chunk) [Independent Non-Executive Directors](index=39&type=section&id=Independent%20Non-Executive%20Directors) This section introduces the three independent non-executive directors, Dr. Lau Chi Keung, Mr. Chan Tim Yiu, and Mr. Sze Kwok Wing, who bring diverse professional expertise to the Board - Dr. Lau Chi Keung (64 years old) was appointed as an Independent Non-Executive Director on **January 21, 2019**, with over **40 years** of engineering experience, and is a member of various professional institutions and a Registered Professional Engineer[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) - Mr. Chan Tim Yiu (60 years old) was appointed as an Independent Non-Executive Director on **January 21, 2019**, with over **33 years** of legal professional experience as a practicing solicitor[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[229](index=229&type=chunk) - Mr. Sze Kwok Wing (62 years old) was appointed as an Independent Non-Executive Director on **January 21, 2019**, with over **38 years** of commercial and administrative management experience, and is a member of CPA Australia[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk) [Senior Management](index=43&type=section&id=Senior%20Management) This section outlines the biographies of the group's senior management, including project managers, financial controllers, and HR and safety managers, who are crucial for daily operations - Mr. Wu Wing Lun (41 years old) is a Project Manager at Wecon Limited, with over **17 years** of experience in civil engineering, building construction, and the construction industry[242](index=242&type=chunk)[243](index=243&type=chunk)[245](index=245&type=chunk) - Ms. Tsang Li Mui (49 years old) is the Financial Controller and Company Secretary of Wecon Limited, with over **24 years** of accounting experience, and is an accountant of the Hong Kong Institute of Certified Public Accountants[247](index=247&type=chunk)[248](index=248&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk) - Ms. Hui Pik Yu (46 years old) is the Human Resources and Administration Manager of Wecon Limited, with over **20 years** of experience in business management, human resources, and company secretarial matters[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk) - Mr. Choi Ying Tung (44 years old) is the Safety and Environmental Manager of Wecon Limited, with over **21 years** of experience in civil engineering, building construction, and the construction industry, and is a Registered Safety Officer and Registered Safety Auditor[257](index=257&type=chunk)[259](index=259&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk) - Mr. Ho Chi Ming (57 years old) is the Assistant General Manager of Wecon Limited, with over **34 years** of experience in building construction and the construction industry[265](index=265&type=chunk)[266](index=266&type=chunk) - Mr. Yu Fei Hung (40 years old) is the Quality Manager of Wecon Limited, with over **17 years** of experience in engineering, building construction, and the construction industry[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk) [Report of the Directors](index=49&type=section&id=Report%20of%20the%20Directors) This report covers the group's principal activities, reorganization, compliance, major stakeholders, financial results, dividends, and other corporate matters [Principal Activities](index=49&type=section&id=Principal%20Activities) The company's principal business is investment holding, with its subsidiaries primarily engaged in building construction and RMAA services - The company is an investment holding company[275](index=275&type=chunk) - The Group's subsidiaries are primarily engaged in providing building construction services and renovation, maintenance, alteration, and addition (RMAA) services[275](index=275&type=chunk) [Group Reorganisation](index=49&type=section&id=Group%20Reorganisation) The company was incorporated on March 23, 2018, completed a group reorganization on December 21, 2018, and listed its shares on the Stock Exchange on February 27, 2019 - The company was incorporated in the Cayman Islands on **March 23, 2018**[275](index=275&type=chunk) - The Group completed its reorganization on **December 21, 2018**, with the company becoming the holding company of the Group[275](index=275&type=chunk) - The company's shares were listed on the Stock Exchange on **February 27, 2019**[275](index=275&type=chunk) [Compliance with the Laws and Regulations](index=50&type=section&id=Compliance%20with%20the%20Laws%20and%20Regulations) For the year ended March 31, 2019, and up to the date of this annual report, the group has complied with all material laws and regulations, with no serious breaches or non-compliance - The Group has complied in all material respects with relevant laws and regulations that have a significant impact on its business and operations[278](index=278&type=chunk)[283](index=283&type=chunk) - From the Listing Date to March 31, 2019, and up to the date of this annual report, the Group has not seriously breached or failed to comply with applicable laws and regulations[278](index=278&type=chunk)[283](index=283&type=chunk) [Major Customers and Suppliers](index=50&type=section&id=Major%20Customers%20and%20Suppliers) For the year ended March 31, 2019, the group's top five customers accounted for 81.1% of total revenue, with the largest customer contributing 31.2%. The top five subcontractors accounted for 26.1% of total subcontracting costs, and the top five suppliers accounted for 70.4% of total construction material purchases. No directors, close associates, or major shareholders held beneficial interests in these major customers, suppliers, or subcontractors Major Customer, Subcontractor, and Supplier Concentration (As of March 31, 2019) | Category | 2019 | 2018 | | :--- | :--- | :--- | | Top five customers as % of total revenue | Approximately **81.1%** | Approximately **91.0%** | | Largest customer as % of total revenue | Approximately **31.2%** | Approximately **29.3%** | | Top five subcontractors as % of total subcontracting costs | Approximately **26.1%** | Approximately **25.8%** | | Largest subcontractor as % of total subcontracting costs | Approximately **7.2%** | Approximately **7.6%** | | Top five suppliers as % of total construction material purchases | Approximately **70.4%** | Approximately **54.8%** | | Largest supplier as % of total construction material purchases | Approximately **46.5%** | Approximately **18.4%** | - No Director, their close associates, or any shareholder holding more than **5%** interest in the company's issued share capital had any beneficial interest in the Group's top five customers, suppliers, or subcontractors[282](index=282&type=chunk)[284](index=284&type=chunk) [Relationship with Customers, Suppliers, Subcontractors and Employees](index=51&type=section&id=Relationship%20with%20Customers%2C%20Suppliers%2C%20Subcontractors%20and%20Employees) The group actively maintains relationships with customers, striving to provide quality services; retains a list of approved subcontractors and suppliers; and values employees as assets, offering competitive remuneration and training. No significant disputes occurred during the reporting period - The Group maintains active relationships with customers, exploring business opportunities and striving to deliver high-quality services on time[286](index=286&type=chunk) - The Group maintains an approved list of subcontractors and suppliers based on factors such as past experience, skills, workload, quotations, and quality[286](index=286&type=chunk) - The Group regards employees as valuable assets, offering competitive remuneration, good benefits, and continuous professional training to attract and retain talent[286](index=286&type=chunk) - For the year ended March 31, 2019, there were no significant disputes or disagreements between the Group and its customers, subcontractors, suppliers, and employees[286](index=286&type=chunk) [Results and Dividends](index=51&type=section&id=Results%20and%20Dividends) The group's profit and financial position for the year ended March 31, 2019, are disclosed in the consolidated financial statements. Prior to listing, certain subsidiaries declared and paid an interim dividend of HK$50,000,000. Directors recommend a final dividend of HK$0.014 per share, totaling approximately HK$11.2 million - The Group's profit and financial position for the year ended March 31, 2019, are set out in the consolidated financial statements[286](index=286&type=chunk) - Prior to listing, certain subsidiaries declared and paid an interim dividend of **HK$50,000,000** to their then sole shareholder[286](index=286&type=chunk) - The Directors recommend a final dividend of **HK$0.014 per share**, totaling approximately **HK$11.2 million**, for the year ended March 31, 2019, subject to shareholder approval[286](index=286&type=chunk) [Annual General Meeting and Closure of Register of Members](index=52&type=section&id=Annual%20General%20Meeting%20and%20Closure%20of%20Register%20of%20Members) The company's 2019 Annual General Meeting is scheduled for August 29, 2019. To determine eligibility for attendance and voting, the register of members will be closed from August 26 to 29, 2019. To determine entitlement to the final dividend, the register of members will be closed from September 4 to 5, 2019 - The company's 2019 Annual General Meeting is scheduled for **Thursday, August 29, 2019**[289](index=289&type=chunk) - To determine eligibility for attending and voting, the register of members will be closed from **Monday, August 26, 2019, to Thursday, August 29, 2019**[289](index=289&type=chunk) - To determine entitlement to the final dividend, the register of members will be closed from **Wednesday, September 4, 2019, to Thursday, September 5, 2019**[291](index=291&type=chunk)[292](index=292&type=chunk) - The final dividend is expected to be paid on **Monday, September 30, 2019**[291](index=291&type=chunk)[292](index=292&type=chunk) [Charitable Contributions](index=53&type=section&id=Charitable%20Contributions) For the year ended March 31, 2019, the group's charitable contributions amounted to approximately HK$150,000, a decrease from HK$230,000 in 2018 Charitable Contributions | Year | Amount (HKD) | | :--- | :--- | | March 31, 2019 | Approximately **HK$150,000** | | March 31, 2018 | Approximately **HK$230,000** | [Share Options Scheme](index=53&type=section&id=Share%20Options%20Scheme) The company adopted a share option scheme on January 21, 2019, to incentivize employees and attract talent. The scheme specifies eligible participants, maximum share numbers, individual allocation limits, conditions for granting options to core connected persons, and acceptance and exercise periods and subscription prices - The company's Share Option Scheme was approved and adopted on **January 21, 2019**, aiming to incentivize or reward eligible participants who have contributed to the Group and to recruit and retain outstanding employees[293](index=293&type=chunk)[296](index=296&type=chunk) - Eligible participants include employees (including directors), suppliers, customers, technical support providers, shareholders, and other individuals who have contributed to the Group's development[296](index=296&type=chunk) - The maximum number of shares that may be issued upon exercise of all outstanding share options shall not exceed **30%** of the company's issued share capital from time to time[301](index=301&type=chunk)[303](index=303&type=chunk) - The total number of shares that may be issued upon exercise of options granted to each eligible participant in any **12-month period** shall not exceed **1%** of the company's issued share capital[310](index=310&type=chunk)[312](index=312&type=chunk) - Granting share options to core connected persons requires approval from independent non-executive directors, and if exceeding certain thresholds, requires approval at a general meeting[311](index=311&type=chunk)[312](index=312&type=chunk)[315](index=315&type=chunk) - The offer period for share options is a maximum of **21 days**, and the exercise period is determined by the Board, up to a maximum of **10 years**[315](index=315&type=chunk)[317](index=317&type=chunk)[320](index=320&type=chunk) - The subscription price for shares shall not be less than the highest of the closing price of the shares on the offer date, the average closing price for the five business days immediately preceding the offer date, and the nominal value of the shares[323](index=323&type=chunk) [Pre-emptive Rights](index=60&type=section&id=Pre-emptive%20Rights) Neither the company's articles of association nor Cayman Islands law provides for pre-emptive rights, meaning new shares are not required to be offered proportionally to existing shareholders - Neither the company's Articles of Association nor the laws of the Cayman Islands provide for pre-emptive rights, meaning the company is not required to offer new shares proportionally to existing shareholders[324](index=324&type=chunk)[327](index=327&type=chunk) [Reserves](index=60&type=section&id=Reserves) Details of the company's and group's reserves and their movements for the year ended March 31, 2019, are presented in Note 25 and the consolidated statement of changes in equity - Details of the company's and Group's reserves and their movements for the year ended March 31, 2019, are set out in Note 25 to the consolidated financial statements and the consolidated statement of changes in equity[325](index=325&type=chunk)[328](index=328&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=60&type=section&id=Purchase%20Sale%20or%20Redemption%20of%20Listed%20Securities) Neither the company nor its subsidiaries purchased, sold, or redeemed any of its listed securities from the listing date to March 31, 2019 - Neither the company nor any of its subsidiaries purchased, sold, or redeemed any of its listed securities from the Listing Date to March 31, 2019[326](index=326&type=chunk)[329](index=329&type=chunk) [Disclosure of Interests](index=61&type=section&id=Disclosure%20of%20Interests) As of March 31, 2019, Mr. Tsang Ka Yip held a 75% long position in the company's ordinary shares through Triple Arch Limited. In addition to the directors, Ms. Lai Yuk Lin (Mr. Tsang Ka Yip's spouse) is also deemed to hold a 75% interest in the company's shares Directors' Long Position in the Company's Ordinary Shares (As of March 31, 2019) | Director Name | Capacity/Nature | Number of Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Tsang Ka Yip | Interest in controlled corporation | 600,000,000 | 75% | - Mr. Tsang Ka Yip holds shares in the company through Triple Arch Limited, which he wholly owns[333](index=333&type=chunk) Major Shareholders' Interests in the Company's Shares (As of March 31, 2019) | Name | Nature of Interest | Number of Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Triple Arch Limited | Beneficial owner | 600,000,000 | 75% | | Ms. Lai Yuk Lin | Interest in controlled corporation and spouse's interest | 600,000,000 | 75% | - Ms. Lai Yuk Lin is the spouse of Mr. Tsang Ka Yip and is therefore deemed to have an interest in the company's shares in which Mr. Tsang Ka Yip has an interest[336](index=336&type=chunk) [Directors' Interests in Competing Business](index=63&type=section&id=Directors%27%20Interests%20in%20Competing%20Business) For the year ended March 31, 2019, and up to the date of this annual report, no director or their close associates had any interests in businesses directly or indirectly competing with the group's business - For the year ended March 31, 2019, and up to the date of this annual report, no Director or their close associates had any interest in any business that directly or indirectly competes or may compete with the Group's business[338](index=338&type=chunk)[340](index=340&type=chunk) [Directors' Service Contracts](index=64&type=section&id=Directors%27%20Service%20Contracts) No directors nominated for re-election at the upcoming AGM have service contracts with the company that are not terminable within one year without compensation (other than statutory compensation) - No Director nominated for re-election at the forthcoming Annual General Meeting has a service contract with the company that is not terminable by the company within one year without payment of compensation (other than statutory compensation)[346](index=346&type=chunk)[349](index=349&type=chunk) [Remuneration of Directors and Five Highest Paid Individuals](index=65&type=section&id=Remuneration%20of%20Directors%20and%20Five%20Highest%20Paid%20Individuals) Details of remuneration for di