香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部分內容而產生或因倚 賴該等內容而引致的任何損失承擔任何責任。 Wecon Holdings Limited 偉工控股有限公司 （於開曼群島註冊成立之有限公司） （股份代號：1793） 截至2023年9月30日止六個月的 中期業績公告 財務摘要 • 收益由截至2022年9月30日止六個月約451.4百萬港元增加至截至2023年9月30日止六個月約 494.4百萬港元，增幅約43.0百萬港元或約9.5%。 • 毛利由截至2022年9月30日止六個月約20.7百萬港元增加至截至2023年9月30日止六個月約 22.2百萬港元，增幅約1.5百萬港元或約7.2%。 • 毛利率由截至2022年9月30日止六個月約4.6%輕微下跌至截至2023年9月30日止六個月約 4.5%。 • 本公司權益持有人應佔溢利由截至2022年9月30日止六個月約2.6百萬港元減少至截至2023 年9月30日止六個月約2.2百萬港元，減幅約0.4百萬港元或約15.4%。 ...

Financial Performance - The revenue of Wecon Holdings Limited decreased by approximately HK$283.7 million or approximately 24.6%, from approximately HK$1,152.7 million for the year ended March 31, 2022, to approximately HK$869.0 million for the year ended March 31, 2023[7]. - The profit attributable to equity holders for the year ended March 31, 2023, was approximately HK$5.9 million, a decrease of approximately HK$8.3 million compared to the previous year[7]. - Revenue from building construction services decreased by approximately HK$426.0 million or approximately 43.2%, from approximately HK$986.7 million to approximately HK$560.7 million during the same period[32]. - Revenue from RMAA works services increased by approximately HK$142.3 million or approximately 85.7%, from approximately HK$166.0 million to approximately HK$308.3 million[33]. - The cost of sales decreased by approximately HK$269.0 million or approximately 24.5%, from approximately HK$1,099.0 million to approximately HK$830.0 million[38]. - The gross profit decreased by approximately HK$14.7 million or approximately 27.4%, from approximately HK$53.7 million to approximately HK$39.0 million[39]. - The gross profit margin for the Group was approximately 4.5% for the year ended March 31, 2023, compared to 4.7% for the previous year, representing a decrease of approximately 0.2 percentage points[39]. - The net profit of the group decreased by approximately HK$8.3 million or about 58.5%, from approximately HK$14.2 million to approximately HK$5.9 million[54]. - Other income and gains increased by approximately HK$5.9 million or about 80.8%, from approximately HK$7.3 million to approximately HK$13.2 million[46]. - Administrative and other operating expenses rose by approximately HK$1.1 million or about 2.5%, from approximately HK$44.3 million to approximately HK$45.4 million[47]. - Finance costs increased by approximately HK$51,000 or about 39.5%, from approximately HK$129,000 to approximately HK$180,000[52]. - Income tax decreased by approximately HK$1.6 million or about 69.6%, from approximately HK$2.3 million to approximately HK$0.7 million[53]. Contracts and Projects - The Group was awarded three sizeable contracts for redevelopment projects from new customers with an aggregate contract sum of approximately HK$1.5 billion during the year[8]. - An additional sizeable contract with a contract sum of approximately HK$500 million was awarded to the Group after March 31, 2023[8]. - As of March 31, 2023, the Group had 11 major projects on hand with an awarded contract sum of HK$10.0 million or above[21]. - The Group completed five major projects with an awarded contract sum of HK$10.0 million or above during the year ended March 31, 2023[21]. Strategic Plans and Industry Outlook - The Group plans to invest in building construction-related services to enhance capabilities and provide synergies to existing business[14]. - The management remains prudently optimistic about the prospects of the construction industry in Hong Kong[8]. - The Group aims to diversify its customer base and improve competitiveness through timely project completion and cost-effective measures[8]. - Building information modeling services are seen as a differentiator for the Group, providing creative technical solutions to customers[14]. Governance and Board Structure - The Board consists of six directors, including three executive directors and three independent non-executive directors, ensuring a balanced governance structure[100]. - Mr. Tsang Ka Yip serves as both Chairman and CEO, a decision deemed beneficial for the Group and its shareholders[95]. - Independent non-executive directors (INEDs) represent at least one-third of the Board, ensuring sufficient independence to safeguard shareholder interests[102]. - The Board's key responsibilities include formulating overall strategies and supervising management performance[99]. - The Company believes all INEDs meet the independence guidelines set out in the Listing Rules[103]. - The Board aims to appoint at least three independent non-executive Directors, ensuring that at least one-third of the Board members are independent[114]. - The Nomination Committee is mandated to assess the independence of all independent non-executive Directors annually, adhering to the independence criteria set out in the Listing Rules[117]. Diversity and Inclusion - The Board Diversity Policy aims to enhance performance quality through diversity, considering factors such as gender, age, cultural background, and professional experience[127]. - As of 31 March 2023, the Board had no female members, and plans to appoint at least one female Board member by 31 December 2024 to meet gender diversity requirements[134]. - The Board aspires to achieve gender parity and ensure a balance of Directors with experience in the Group's core markets and diverse ethnic backgrounds[135]. - The Group maintains a commitment to fair employment practices, prohibiting discrimination based on gender, religion, race, disability, or age[141]. - The Board recognizes the need for diversity and plans to maintain a balance of gender diversity in the workforce in the foreseeable future[143]. Financial Management and Remuneration - The total staff costs (excluding Directors' remuneration) were approximately HK$93.5 million and HK$92.9 million for the years ended 31 March 2023 and 2022, respectively[59]. - The Group's remuneration policy aims to provide competitive but not excessive remuneration packages to attract and retain quality staff[175]. - Directors' remuneration includes fixed salary or service fee and variable components, benchmarked against comparable companies[176]. - The remuneration of Directors is reviewed annually and subject to Shareholders' approval[176]. - The total remuneration paid to the external auditor, Ernst & Young, for audit services was HK$1,070,000, while non-audit services amounted to HK$210,000, bringing the total to HK$1,280,000[185]. Shareholder Communication and Meetings - The upcoming annual general meeting is scheduled for August 18, 2023, providing an opportunity for shareholder communication[197]. - There are no material uncertainties that may cast significant doubt on the company's ability to continue as a going concern[190]. - The board may call an extraordinary general meeting if shareholders holding at least one-tenth of the voting rights request it[198]. - Shareholders holding at least 10% of voting rights can request a special general meeting[200]. - The board must convene the meeting within two months of the request[200]. - If the board fails to convene within 21 days, the requesting shareholders can call the meeting themselves[200]. - Reasonable expenses incurred due to the board's failure to convene will be reimbursed by the company[200].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其 準確性或完整性亦不發表任何聲明，並明確表示，概不就因本公告全部或任何部分內容 而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 Wecon Holdings Limited 偉工控股有限公司 （於開曼群島註冊成立之有限公司） （股份代號：1793） 截至2023年3月31日止年度的年度業績公告 財務摘要 • 收益由截至2022年3月31日止年度約1,152.7百萬港元減少至截至2023年3月31日止年 度約869.0百萬港元，減幅約283.7百萬港元或約24.6%。 • 毛利由截至2022年3月31日止年度約53.7百萬港元減少至截至2023年3月31日止年度 約39.0百萬港元，減幅約14.7百萬港元或約27.4%。 • 毛利率由截至2022年3月31日止年度約4.7%下跌至截至2023年3月31日止年度約 4.5%。 • 本公司權益持有人應佔溢利由截至2022年3月31日止年度約14.2百萬港元減少至截至 2023年3月31日止年度約5.9百萬港元，減幅約8.3百萬港元或約58.5%。 ...

Project and Contract Management - The Group had eight major projects on hand with an awarded contract sum of HK$10.0 million or above as of September 30, 2022[10]. - During the six months ended September 30, 2022, the Group completed five major projects with an awarded contract sum of HK$10.0 million or above[10]. - In July 2022, Wecon Construction was admitted to Group C on probation, allowing it to tender for contracts exceeding HK$400 million, with a probationary limit of HK$1.5 billion[13]. - Subsequent to September 30, 2022, the Group was awarded two sizeable contracts for re-development projects with an aggregate contract sum of approximately HK$1 billion[14]. - The Group's indirect wholly-owned subsidiary, Wei Gong Construction, was included in the approved public works contractor list, allowing it to bid for contracts over HK$400 million[16]. - The Group secured two large contracts for reconstruction projects totaling approximately HK$1 billion after September 30, 2022[16]. Financial Performance - The Group's revenue decreased by approximately HK$87.0 million or approximately 16.2%, from approximately HK$538.4 million for the six months ended September 30, 2021, to approximately HK$451.4 million for the six months ended September 30, 2022[24][28]. - Revenue from building construction services decreased by approximately HK$173.8 million or approximately 35.6%, from approximately HK$488.8 million to approximately HK$315.0 million during the same period[25][29]. - Revenue from RMAA works services increased significantly by approximately HK$86.8 million or approximately 175.0%, from approximately HK$49.6 million to approximately HK$136.4 million[26][30]. - The gross profit decreased by approximately HK$13.4 million or approximately 39.3%, from approximately HK$34.1 million to approximately HK$20.7 million[35]. - The gross profit margin decreased from approximately 6.3% to approximately 4.6%, representing a decrease of approximately 1.7 percentage points[35]. - The net profit of the Group decreased by approximately HK$11.0 million or approximately 80.9%, from approximately HK$13.6 million for the six months ended September 30, 2021 to approximately HK$2.6 million for the six months ended September 30, 2022[49]. - Profit before tax decreased significantly to HK$2,322,000, a decline of 85.5% from HK$15,948,000 in the prior period[135]. - The company reported a profit for the period of HK$2,571,000, compared to HK$13,576,000 in the prior year, marking a decline of around 81.0%[172]. Cost Management - The cost of sales decreased by approximately HK$73.5 million or approximately 14.6%, from approximately HK$504.2 million to approximately HK$430.7 million[32][33]. - The gross profit of building construction services decreased by approximately HK$23.5 million or approximately 63.2%, from approximately HK$37.2 million for the six months ended 30 September 2021 to approximately HK$13.7 million for the six months ended 30 September 2022[36]. - The gross profit margin of building construction services decreased from approximately 7.6% for the six months ended 30 September 2021 to approximately 4.4% for the six months ended 30 September 2022[38]. - The gross profit of RMAA works services was approximately HK$7.0 million for the six months ended 30 September 2022, compared to a gross loss of approximately HK$3.1 million for the six months ended 30 September 2021[41]. Operational Challenges - The COVID-19 pandemic has created challenges, causing delays in raw material delivery and project progress, but the Group has taken measures to maintain construction works[10]. - The management will continuously monitor the pandemic's impact on the Group's business and financial performance[10]. Corporate Governance - The Group's commitment to corporate governance emphasizes transparency, accountability, and independence, with compliance to applicable code provisions[75]. - The Board comprises six directors, including three executive directors and three independent non-executive directors, ensuring compliance with the Listing Rules[86]. - The Group emphasizes transparency, accountability, and independence in its corporate governance practices[81]. - The Chairman and CEO roles are held by Mr. Tsang Ka Yip, which the Board believes is beneficial given his experience and knowledge of the industry[79]. Employee and Staff Costs - The total staff costs (excluding Directors' remuneration) of the Group were approximately HK$45.0 million for the six months ended September 30, 2022, compared to HK$42.8 million for the six months ended September 30, 2021[54]. - The Group's total employee count as of September 30, 2022, was 213 full-time employees, a decrease from 223 full-time employees as of September 30, 2021[57]. - The Group's profit before tax for the six months ended September 30, 2022, included employee benefit expenses of HK$43,387,000, an increase from HK$41,075,000 in 2021[198]. Cash Flow and Liquidity - The Group's current ratio as of September 30, 2022, was approximately 2.2 times, an increase from 2.1 times as of March 31, 2022[60]. - The Group had no outstanding bank borrowings as of September 30, 2022, and lease liabilities amounted to approximately HK$6.6 million, down from HK$7.9 million as of March 31, 2022[65]. - The gearing ratio as of September 30, 2022, was approximately 2.4%, a decrease from 2.8% as of March 31, 2022[68]. - Cash and bank balances decreased to HK$24,574,000 from HK$64,884,000 as of March 31, 2022[137]. - The company reported a net decrease in cash and cash equivalents of HK$37,777,000 compared to HK$78,172,000 in the prior period, showing a reduction in cash outflow[146]. Shareholder Information - The Board has resolved not to declare any interim dividend for the six months ended September 30, 2022, consistent with the previous year[91]. - The company paid dividends amounting to HK$9,536,000 to shareholders during the period, impacting retained earnings[142]. - The company did not purchase, sell, or redeem any shares during the six months ended September 30, 2022[116]. Future Outlook - The management remains prudently optimistic about the prospects of the construction industry in Hong Kong[14]. - The Group plans to invest in building construction-related services to enhance capabilities and provide synergies to existing business[15]. - The Group aims to differentiate itself through building information modeling services, providing creative technical solutions to customers[15].

Corporate Information The company provides essential corporate details, including its board composition, professional service providers, and key identification information [Directors and Committees](index=3&type=section&id=Directors%20and%20Committees) Wecon Holdings Limited discloses its board of directors' composition, including executive and independent non-executive directors, and the structure and chairpersons of its Audit, Remuneration, and Nomination Committees - Executive Directors include Mr. Tsang Ka Yip (Chairman), Mr. Tsang Tsz Him, and Mr. Tsang Tsz Kit[3](index=3&type=chunk) - Independent Non-executive Directors include Dr. Lau Chi Keung, Mr. Chan Tim Yiu, and Mr. Sze Kwok Wing[3](index=3&type=chunk) - The Audit Committee is chaired by Mr. Sze Kwok Wing, the Remuneration Committee by Mr. Chan Tim Yiu, and the Nomination Committee by Dr. Lau Chi Keung[3](index=3&type=chunk) [Company Details and Professional Services](index=3&type=section&id=Company%20Details%20and%20Professional%20Services) The company is registered in the Cayman Islands with its principal place of business in Hong Kong on Des Voeux Road Central, detailing its legal counsel, auditor, principal bankers, share registrar, and stock code - The company's registered office is in the Cayman Islands, with its principal place of business in Hong Kong at 18/F, Tung Hip Commercial Building, 244-252 Des Voeux Road Central, Hong Kong[3](index=3&type=chunk)[6](index=6&type=chunk) - Legal counsel is Woo Kwan Lee & Lo, and the auditor is Ernst & Young[6](index=6&type=chunk) - Principal bankers include The Hongkong and Shanghai Banking Corporation Limited, Bank of China (Hong Kong), and Standard Chartered Bank (Hong Kong) Limited[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 This section provides an overview of the company's business operations, financial performance, future outlook, and key risks for the reporting period [Business Review](index=5&type=section&id=Business%20Review) Wecon Holdings Limited, a main contractor in Hong Kong, primarily offers building construction and repair, maintenance, alteration, and addition (RMAA) engineering services, with 12 major projects on hand, 4 new awards, and 1 completion as of September 30, 2021 - The company's principal businesses are building construction services and RMAA engineering services, serving both private and public sector clients[8](index=8&type=chunk) Project Overview (As of September 30, 2021) | Metric | Quantity | | :--- | :--- | | Major Projects on Hand (Contract sum of HK$10.0 million or above) | 12 projects | | New Major Projects Awarded During the Period | 4 projects | | Major Projects Completed During the Period | 1 project | [Prospects](index=5&type=section&id=Prospects) Facing COVID-19 challenges, the company has taken measures to ensure project progress and continuously monitors the pandemic's impact, planning to enhance competitiveness through client diversification, quality assurance, cost-effectiveness, and investment in Building Information Modeling (BIM) services and related technological innovations, maintaining cautious optimism for the Hong Kong construction industry - The pandemic has adversely affected business, causing delays in raw material delivery and project progress, but the company has taken necessary measures to proceed with construction works as planned[8](index=8&type=chunk) - The company will continue to diversify its client base and enhance competitiveness by maintaining its reputation, ensuring timely and high-quality project completion, and implementing cost-effective measures[11](index=11&type=chunk) - The company plans to invest in Building Information Modeling (BIM) services and building construction-related services to enhance capabilities and provide synergistic effects[13](index=13&type=chunk)[15](index=15&type=chunk) - Management remains cautiously optimistic about the prospects of the Hong Kong construction industry[11](index=11&type=chunk) [Principal Risks and Uncertainties](index=6&type=section&id=Principal%20Risks%20and%20Uncertainties) The company faces multiple operational risks, including pandemic impact, reliance on non-recurring tender contracts, customer concentration, subcontractor performance and cost fluctuations, cash flow mismatches, raw material price and supply changes, and the impact of performance bonds on liquidity - Business and operations may be affected by the pandemic or other public health incidents, leading to lockdowns, travel restrictions, and work stoppages[14](index=14&type=chunk) - Revenue relies on non-recurring tender or quotation processes, with no guarantee of continuous success, which could materially and adversely affect sustainability and financial performance[14](index=14&type=chunk) - The company faces significant concentration risk due to heavy reliance on its largest and major customers[17](index=17&type=chunk) - Fluctuations in subcontracting costs, poor subcontractor performance, or inability to source subcontractors could materially and adversely affect operations and profitability[18](index=18&type=chunk) - Mismatches between receiving progress payments from customers and paying suppliers and subcontractors may lead to insufficient cash flow[18](index=18&type=chunk) - Changes in raw material prices and supply could materially and adversely affect operating results[18](index=18&type=chunk) - Providing performance bonds may affect the liquidity position[18](index=18&type=chunk) [Segment Information](index=7&type=section&id=Segment%20Information) The company's reportable and operating segments are building construction services and repair, maintenance, alteration, and addition (RMAA) engineering services, with detailed segment information disclosed in Note 3 to the financial statements - The Group's reportable and operating segments are building construction services and RMAA engineering services[18](index=18&type=chunk) [Financial Review](index=8&type=section&id=Financial%20Review) During the reporting period, the company experienced a decrease in total revenue and net profit, but an improvement in gross profit margin, with revenue decline primarily due to large project completions, and margin improvement from final account negotiations with subcontractors for building construction services; other income decreased due to non-recognition of government subsidies, and administrative expenses slightly increased due to fair value losses on financial assets [Revenue](index=8&type=section&id=Revenue) For the six months ended September 30, 2021, the company's total revenue decreased by **16.4%** year-on-year to **HK$538.4 million**, primarily due to the completion of a large building construction project and an RMAA project entering its completion phase Changes in Total Revenue | Metric | For the six months ended September 30, 2021 (HK$ Thousand) | For the six months ended September 30, 2020 (HK$ Thousand) | Change (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 538,359 | 643,757 | (105,398) | (16.4%) | Changes in Segment Revenue | Segment | For the six months ended September 30, 2021 (HK$ Thousand) | For the six months ended September 30, 2020 (HK$ Thousand) | Change (HK$ Thousand) | Change (%) | Primary Reason | | :--- | :--- | :--- | :--- | :--- | :--- | | Building Construction Services | 488,766 | 567,707 | (78,941) | (13.9%) | Revenue decreased due to the actual completion of a large project, partially offset by progress on other large projects | | RMAA Engineering Services | 49,593 | 76,050 | (26,457) | (34.8%) | Revenue decreased due to a large project entering its completion phase, partially offset by an increase from two newly awarded large projects | [Cost of Sales](index=9&type=section&id=Cost%20of%20Sales) For the six months ended September 30, 2021, the company's cost of sales decreased by **17.3%** year-on-year to **HK$504.2 million**, primarily consistent with the corresponding decrease in revenue, with cost of sales mainly comprising subcontracting costs, material costs, direct staff costs, and site overheads Changes in Cost of Sales | Metric | For the six months ended September 30, 2021 (HK$ Thousand) | For the six months ended September 30, 2020 (HK$ Thousand) | Change (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cost of Sales | 504,235 | 609,450 | (105,215) | (17.3%) | - Cost of sales primarily includes subcontracting costs, material costs, direct staff costs, and site overheads[28](index=28&type=chunk)[29](index=29&type=chunk) [Gross Profit and Gross Profit Margin](index=9&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) For the six months ended September 30, 2021, the company's gross profit slightly decreased by **0.6%** to **HK$34.1 million**, but the gross profit margin increased from **5.3%** to **6.3%**, primarily due to increased gross profit from building construction services after final account negotiations with subcontractors, while RMAA engineering services turned from profit to gross loss Changes in Total Gross Profit and Gross Profit Margin | Metric | For the six months ended September 30, 2021 (HK$ Thousand) | For the six months ended September 30, 2020 (HK$ Thousand) | Change (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | 34,124 | 34,307 | (183) | (0.6%) | | Gross Profit Margin | 6.3% | 5.3% | +1.0% | - | Changes in Segment Gross Profit and Gross Profit Margin | Segment | For the six months ended September 30, 2021 (HK$ Thousand) | For the six months ended September 30, 2020 (HK$ Thousand) | Change (HK$ Thousand) | Change (%) | Gross Profit Margin (2021) | Gross Profit Margin (2020) | Primary Reason | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Building Construction Services | 37,238 | 27,235 | +10,003 | +36.8% | 7.6% | 4.8% | Increased gross profit from several large projects after final account negotiations with subcontractors | | RMAA Engineering Services | (3,114) (Gross Loss) | 7,072 (Gross Profit) | (10,186) | - | (6.3)% | 9.3% | Decreased gross profit from a completed project and significant site overheads incurred during the initial stages of two new projects resulted in a gross loss | [Other Income and Gains](index=10&type=section&id=Other%20Income%20and%20Gains) For the six months ended September 30, 2021, the company's other income and gains decreased by **47.2%** year-on-year to **HK$4.7 million**, primarily due to the non-recognition of non-recurring government subsidies (Employment Support Scheme) recognized in the prior period, partially offset by dividend income Changes in Other Income and Gains | Metric | For the six months ended September 30, 2021 (HK$ Thousand) | For the six months ended September 30, 2020 (HK$ Thousand) | Change (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other Income and Gains | 4,667 | 8,901 | (4,234) | (47.2%) | - Primarily due to the non-recognition of non-recurring government subsidies (Employment Support Scheme) recognized in the prior period, partially offset by dividend income from equity investments[38](index=38&type=chunk)[41](index=41&type=chunk) [Administrative and Other Operating Expenses, Net](index=10&type=section&id=Administrative%20and%20Other%20Operating%20Expenses%2C%20Net) For the six months ended September 30, 2021, administrative and other operating expenses, net, slightly increased by **1.3%** to **HK$22.8 million**, primarily due to fair value losses on financial assets at fair value through profit or loss, partially offset by reduced staff costs and professional fees Changes in Administrative and Other Operating Expenses, Net | Metric | For the six months ended September 30, 2021 (HK$ Thousand) | For the six months ended September 30, 2020 (HK$ Thousand) | Change (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Administrative and Other Operating Expenses, Net | 22,769 | 22,487 | +282 | +1.3% | - Primarily due to an increase in net fair value losses on financial assets at fair value through profit or loss, partially offset by a decrease in staff costs and professional fees[39](index=39&type=chunk)[42](index=42&type=chunk) [Finance Costs](index=11&type=section&id=Finance%20Costs) For the six months ended September 30, 2021, the company's finance costs decreased by **42.2%** year-on-year to **HK$74 thousand**, primarily due to reduced interest expenses on lease liabilities Changes in Finance Costs | Metric | For the six months ended September 30, 2021 (HK$ Thousand) | For the six months ended September 30, 2020 (HK$ Thousand) | Change (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Finance Costs | 74 | 128 | (54) | (42.2%) | - Primarily due to a decrease in interest expenses on lease liabilities[44](index=44&type=chunk)[46](index=46&type=chunk) [Income Tax](index=11&type=section&id=Income%20Tax) For the six months ended September 30, 2021, the company's income tax increased by **14.3%** year-on-year to **HK$2.4 million**, with the effective tax rate rising from **10.0%** to **14.9%**, primarily due to the non-recognition of non-taxable government subsidies recognized in the prior period Changes in Income Tax | Metric | For the six months ended September 30, 2021 (HK$ Thousand) | For the six months ended September 30, 2020 (HK$ Thousand) | Change (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Income Tax | 2,372 | 2,064 | +308 | +14.9% | Changes in Effective Tax Rate | Metric | For the six months ended September 30, 2021 | For the six months ended September 30, 2020 | Change | | :--- | :--- | :--- | :--- | | Effective Tax Rate | 14.9% | 10.0% | +4.9% | - The increase in the effective tax rate is primarily due to the non-recognition of non-taxable non-recurring government subsidies recognized in the prior period[48](index=48&type=chunk) [Net Profit](index=11&type=section&id=Net%20Profit) For the six months ended September 30, 2021, the company's net profit decreased by **26.5%** year-on-year to **HK$13.6 million**, with the net profit margin declining from **2.9%** to **2.5%**, primarily due to the non-recognition of non-recurring government subsidies recognized in the prior period Changes in Net Profit | Metric | For the six months ended September 30, 2021 (HK$ Thousand) | For the six months ended September 30, 2020 (HK$ Thousand) | Change (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Profit | 13,576 | 18,529 | (4,953) | (26.5%) | Changes in Net Profit Margin | Metric | For the six months ended September 30, 2021 | For the six months ended September 30, 2020 | Change | | :--- | :--- | :--- | :--- | | Net Profit Margin | 2.5% | 2.9% | (0.4%) | - The decrease in net profit is primarily attributable to the non-recognition of non-recurring government subsidies recognized in the prior period[48](index=48&type=chunk) [Employees and Remuneration Policies](index=12&type=section&id=Employees%20and%20Remuneration%20Policies) As of September 30, 2021, the company had **224** employees (**223** full-time, **1** part-time), an increase in total headcount, with remuneration reviewed regularly based on performance, qualifications, responsibilities, and market conditions, offering benefits such as provident fund, medical insurance, annual leave, and share awards Employee Headcount | Metric | As of September 30, 2021 | As of September 30, 2020 | | :--- | :--- | :--- | | Full-time Employees | 223 | 204 | | Part-time Employees | 1 | 1 | | Total Employees | 224 | 205 | - The company determines remuneration based on factors such as employee performance, qualifications, merits, responsibilities, and market conditions, and regularly reviews remuneration packages[51](index=51&type=chunk)[53](index=53&type=chunk) - Employee benefits include provident fund contributions, medical insurance, annual leave, and share options and share awards that may be granted to eligible employees[51](index=51&type=chunk)[53](index=53&type=chunk) Total Staff Costs (Excluding Directors' Emoluments) | Metric | For the six months ended September 30, 2021 (HK$ Thousand) | For the six months ended September 30, 2020 (HK$ Thousand) | | :--- | :--- | :--- | | Total Staff Costs | 42,800 | 42,200 | [Significant Investments, Material Acquisitions and Disposal of Subsidiaries and Associated Companies](index=12&type=section&id=Significant%20Investments%2C%20Material%20Acquisitions%20and%20Disposal%20of%20Subsidiaries%20and%20Associated%20Companies) For the six months ended September 30, 2021, the company held no other significant investments apart from its equity interests in subsidiaries, nor did it undertake any material acquisitions or disposals of subsidiaries and associated companies - For the six months ended September 30, 2021, the company held no significant investments other than its equity interests in subsidiaries[52](index=52&type=chunk)[54](index=54&type=chunk) - The Group did not make any material acquisitions or disposals of subsidiaries and associated companies during the reporting period[52](index=52&type=chunk)[54](index=54&type=chunk) [Capital Commitments](index=12&type=section&id=Capital%20Commitments) As of September 30, 2021, the company had no significant capital commitments - As of September 30, 2021, the Group had no significant capital commitments (as of March 31, 2021: nil)[52](index=52&type=chunk) [Contingent Liabilities](index=12&type=section&id=Contingent%20Liabilities) Apart from performance bonds disclosed in Note 13 to the interim condensed consolidated financial information, the company had no other significant contingent liabilities as of September 30, 2021 - Apart from those disclosed in Note 13 to the interim condensed consolidated financial information, the Group had no other significant contingent liabilities as of September 30, 2021[52](index=52&type=chunk) [Foreign Exchange Exposure](index=13&type=section&id=Foreign%20Exchange%20Exposure) As most of the company's business transactions, assets, and liabilities are denominated in Hong Kong Dollars, the foreign exchange exposure is minimal, and no foreign currency hedging policy has been arranged - As most business transactions, assets, and liabilities are denominated in Hong Kong Dollars, the Group's foreign exchange exposure is minimal[56](index=56&type=chunk) - The Directors consider the Group's foreign exchange risk to be insignificant, thus no foreign currency hedging policy is required, and no instruments were entered into for hedging during the six months ended September 30, 2021[56](index=56&type=chunk) [Gearing Ratio](index=13&type=section&id=Gearing%20Ratio) As of September 30, 2021, the company's gearing ratio (lease liabilities divided by total equity) was approximately **1.0%**, a decrease from **1.7%** as of March 31, 2021 Changes in Gearing Ratio | Metric | As of September 30, 2021 | As of March 31, 2021 | Change | | :--- | :--- | :--- | :--- | | Gearing Ratio | 1.0% | 1.7% | (0.7%) | [Liquidity and Financial Resources and Capital Structure](index=13&type=section&id=Liquidity%20and%20Financial%20Resources%20and%20Capital%20Structure) The company primarily funds its liquidity and capital requirements through shareholders' contributions, bank borrowings, and net cash from operating activities; as of September 30, 2021, pledged deposits, time deposits, and cash and bank balances totaled approximately **HK$93.1 million**, with a current ratio of **2.0 times**, and the Board believes the company has sufficient working capital - The Group primarily funds its liquidity and capital requirements through shareholders' contributions, bank borrowings, and net cash generated from operating activities[56](index=56&type=chunk) Cash and Deposit Situation (As of September 30, 2021) | Metric | Amount (HK$ Thousand) | | :--- | :--- | | Pledged Deposits | 45,563 | | Time Deposits | 23,612 | | Cash and Bank Balances | 23,964 | | **Total** | **93,139** | Current Ratio | Metric | As of September 30, 2021 | As of March 31, 2021 | | :--- | :--- | :--- | | Current Ratio | 2.0 times | 2.2 times | - The Directors believe that the Group has sufficient working capital to meet its present commitments and future requirements[59](index=59&type=chunk) - There was no change in the company's capital structure during the six months ended September 30, 2021[60](index=60&type=chunk) [Debts and Charge on Assets](index=14&type=section&id=Debts%20and%20Charge%20on%20Assets) As of September 30, 2021, the company had no outstanding bank borrowings, with lease liabilities of approximately **HK$2.9 million**; bank financing is secured by pledged deposits and corporate guarantees, and the company's borrowings are denominated in Hong Kong Dollars with interest primarily at floating rates, with continuous monitoring of interest rate risk - As of September 30, 2021, the Group had no outstanding bank borrowings (as of March 31, 2021: nil)[62](index=62&type=chunk) Lease Liabilities | Metric | As of September 30, 2021 (HK$ Thousand) | As of March 31, 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Lease Liabilities | 2,900 | 4,700 | - The Group's bank financing is secured by pledged deposits (approximately **HK$45.6 million**) and corporate guarantees provided by the Group[62](index=62&type=chunk) - The Group's borrowings are denominated in Hong Kong Dollars, with interest primarily at floating rates. The Group currently has no interest rate hedging policy but continuously and prudently monitors interest rate risk[62](index=62&type=chunk) [Use of Proceeds](index=15&type=section&id=Use%20of%20Proceeds) The company listed in 2019, with net proceeds of approximately **HK$93.5 million**; as of September 30, 2021, some proceeds remained unutilized, primarily allocated to strengthening human resources, office upgrades and renovations, and R&D of innovative engineering technologies, with delays attributed to recruitment difficulties and technological innovation development delays, and the company plans to utilize the remaining proceeds within the next six months - The company's shares were successfully listed on the Main Board of The Stock Exchange of Hong Kong Limited on February 27, 2019, with net proceeds of approximately **HK$93.5 million**[66](index=66&type=chunk)[67](index=67&type=chunk) Use of Proceeds and Remaining Balance (As of September 30, 2021) | Planned Use | Total Planned Amount (HK$ Million) | Actual Use for the six months ended September 30, 2021 (HK$ Million) | Remaining Balance as of September 30, 2021 (HK$ Million) | Expected Timeline for Remaining Balance | | :--- | :--- | :--- | :--- | :--- | | Strengthening capabilities for building construction and RMAA engineering projects in Hong Kong | 66.7 | – | – | Not applicable | | Strengthening human resources | 14.4 | 2.4 | 4.4 | March 31, 2022 | | Office upgrades and renovations | 3.6 | 0.4 | 0.7 | June 30, 2022 | | R&D of innovative engineering and technologies | 2.9 | – | 0.4 | March 31, 2022 | | General working capital | 5.9 | – | – | Not applicable | | **Total** | **93.5** | **2.8** | **5.5** | | - The utilization of net proceeds for strengthening human resources, office upgrades and renovations, and R&D of innovative engineering and technologies was delayed, primarily due to difficulties in recruiting suitable candidates and delays in technological innovation development[73](index=73&type=chunk) - The Group plans to utilize the remaining balance of allocated net proceeds in the aforementioned areas during the next six months ending March 31, 2022[73](index=73&type=chunk) Corporate Governance and Other Information This section details the company's commitment to corporate governance, including board structure, compliance with regulations, and disclosures regarding directors' and major shareholders' interests [Corporate Governance Practices](index=17&type=section&id=Corporate%20Governance%20Practices) The company is committed to achieving and maintaining the highest standards of corporate governance, emphasizing transparency, accountability, and independence, with the Board continuously reviewing and strengthening its practices; as of September 30, 2021, the company complied with the applicable provisions of the Corporate Governance Code in Appendix 14 of the Listing Rules, except for the combined roles of Chairman and Chief Executive - 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) - As of September 30, 2021, the company complied with the applicable code provisions set out in the Corporate Governance Code in Appendix 14 of the Listing Rules, except for the combined roles of Chairman and Chief Executive Officer[76](index=76&type=chunk)[78](index=78&type=chunk) [Chairman and Chief Executive](index=17&type=section&id=Chairman%20and%20Chief%20Executive) Mr. Tsang Ka Yip has served as both Chairman of the Board and Chief Executive Officer since the listing date, which deviates from Code Provision A.2.1 of the Corporate Governance Code; the Board believes this arrangement is in the best interest of the company and shareholders as a whole, given Mr. Tsang's in-depth knowledge and experience in the industry and company operations - Mr. Tsang Ka Yip has served as both Chairman of the Board and Chief Executive Officer since the listing date, which deviates from Code Provision A.2.1 of the Corporate Governance Code[77](index=77&type=chunk)[79](index=79&type=chunk) - The Board believes that this arrangement is in the best interest of the Group and its shareholders as a whole, given Mr. Tsang Ka Yip's in-depth knowledge and experience in the industry in which the Group operates, and his familiarity with the Group's operations[77](index=77&type=chunk)[79](index=79&type=chunk) [Model Code for Securities Transactions by Directors](index=18&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 as set out in Appendix 10 of the Listing Rules, and all Directors have confirmed full compliance with the Code for the six months ended September 30, 2021 - 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[82](index=82&type=chunk)[83](index=83&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, 2021[82](index=82&type=chunk)[83](index=83&type=chunk) [Board of Directors](index=18&type=section&id=Board%20of%20Directors) The Board of Directors comprises six directors, including three executive and three independent non-executive directors, responsible for formulating overall strategies, setting management objectives, and overseeing management performance, with its composition meeting Listing Rules requirements of at least one-third independent non-executive directors and one possessing professional accounting or financial management expertise - The primary responsibilities of the Board include formulating the Group's overall strategies, setting management objectives, and overseeing management performance[84](index=84&type=chunk) - The Board comprises six Directors, including three executive Directors and three independent non-executive Directors[84](index=84&type=chunk) - The Board's composition complies with Listing Rules requirements, with at least one-third of its members being independent non-executive Directors, and Mr. Sze Kwok Wing possessing relevant expertise in accounting or financial management[84](index=84&type=chunk) [Compliance with the Laws and Regulations](index=19&type=section&id=Compliance%20with%20the%20Laws%20and%20Regulations) The company recognizes the importance of regulatory compliance; for the six months ended September 30, 2021, and up to the date of this interim report, the company has complied in all material respects with relevant laws and regulations significantly impacting the Group's business and operations, with no material breaches or non-compliance - The Group understands the importance of complying with regulatory requirements and the risks of non-compliance with applicable laws and regulations[86](index=86&type=chunk)[87](index=87&type=chunk) - For the six months ended September 30, 2021, and up to the date of this interim report, the Group has complied in all material respects with relevant laws and regulations significantly impacting its business and operations, with no serious breaches or non-compliance with applicable laws and regulations[86](index=86&type=chunk)[87](index=87&type=chunk) [Results and Dividends](index=19&type=section&id=Results%20and%20Dividends) The Group's profit and financial position for the six months ended September 30, 2021, are presented in the interim condensed consolidated financial information, and the Board resolved not to declare an interim dividend for the period - The Group's profit for the six months ended September 30, 2021, and its financial position as of September 30, 2021, are presented in the interim condensed consolidated financial information on pages 27 to 29 of this interim report[89](index=89&type=chunk) - The Board resolved not to declare any interim dividend to the company's shareholders for the six months ended September 30, 2021 (for the six months ended September 30, 2020: nil)[89](index=89&type=chunk) [Share Options Scheme](index=19&type=section&id=Share%20Options%20Scheme) The company adopted a share option scheme on January 21, 2019; since its 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 - The company adopted a share option scheme on January 21, 2019[89](index=89&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 share option scheme[89](index=89&type=chunk) [Share Award Plan](index=20&type=section&id=Share%20Award%20Plan) The company adopted a share award plan on July 31, 2020, to recognize, reward, retain, and attract talent; the plan's trustee purchased **5,304,000** shares on December 23, 2020, but as of September 30, 2021, no share awards have been granted or vested, with the plan valid for 10 years and a maximum share limit of **10%** of total issued shares - The Board adopted a share award plan on July 31, 2020, for the purpose of recognizing and rewarding contributions, incentivizing retention, and attracting talent[92](index=92&type=chunk)[94](index=94&type=chunk) - The Group has established a trust to administer the share award plan, which will acquire shares from the Stock Exchange and hold them until vesting[93](index=93&type=chunk)[94](index=94&type=chunk) - On December 23, 2020, the company allocated **HK$1,000,000** to the share award plan trust, of which approximately **HK$996,000** was used to purchase **5,304,000** shares; as of September 30, 2021, no share awards have been granted or vested under the share award plan[98](index=98&type=chunk) - According to the plan rules, the maximum number of shares that may be subscribed for and/or purchased shall not exceed **10%** of the total issued shares as of the adoption date (i.e., **80,000,000** shares)[96](index=96&type=chunk)[97](index=97&type=chunk) [Disclosure of Interests](index=22&type=section&id=Disclosure%20of%20Interests) This section discloses the interests of Directors, chief executives, and substantial shareholders in the company's shares; Mr. Tsang Ka Yip holds **75%** of the company's shares through his wholly-owned Triple Arch Limited, and his spouse, Ms. Lai Yuk Lin, is deemed to have the same interest [Directors' and Chief Executives' Interests in the Company and Associated Corporation](index=22&type=section&id=Directors%27%20and%20Chief%20Executives%27%20Interests%20in%20the%20Company%20and%20Associated%20Corporation) As of September 30, 2021, Mr. Tsang Ka Yip held **600 million** shares, representing **75%** of the company's share capital, through his wholly-owned Triple Arch Limited Mr. Tsang Ka Yip's Long Position in the Company's Shares | Name of Director | Capacity/Nature of Interest | Number of Shares Held (Long Position) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Tsang Ka Yip | Interest in controlled corporation (through Triple Arch Limited) | 600,000,000 | 75% | - Mr. Tsang Ka Yip beneficially owns **100%** interest in Triple Arch Limited[106](index=106&type=chunk) [Substantial Shareholders' Interests in Shares in the Company other than Directors and Chief Executives](index=23&type=section&id=Substantial%20Shareholders%27%20Interests%20in%20Shares%20in%20the%20Company%20other%20than%20Directors%20and%20Chief%20Executives) As of September 30, 2021, apart from Directors and chief executives, substantial shareholder Triple Arch Limited held **75%** of the company's shares, and Mr. Tsang Ka Yip's spouse, Ms. Lai Yuk Lin, was deemed to have the same interest due to spousal relationship Substantial Shareholders' Interests in the Company's Shares | Name | Nature of Interest | Number of Shares Held (Long Position) | Approximate Percentage of Interest in the Company | | :--- | :--- | :--- | :--- | | Triple Arch Limited | Beneficial owner | 600,000,000 | 75% | | Ms. Lai Yuk Lin | Interest of spouse (spouse of Mr. Tsang Ka Yip) | 600,000,000 | 75% | [Directors' Interests in Competing Business](index=24&type=section&id=Directors%27%20Interests%20in%20Competing%20Business) For the six months ended September 30, 2021, and up to the date of this interim 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 - For the six months ended September 30, 2021, and up to the date of this interim 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[116](index=116&type=chunk) [Directors' Interests in Contracts of Significance](index=24&type=section&id=Directors%27%20Interests%20in%20Contracts%20of%20Significance) Except as disclosed in this interim report, as of September 30, 2021, or at any time during the reporting period, no Director or their associated entities had a significant interest in any material contract related to the Group's business entered into by the company, its holding company, or any of its subsidiaries - Except as disclosed in this interim report, as of September 30, 2021, or at any time during the six months ended September 30, 2021, no Director or their associated entities had a significant direct or indirect interest in any material contract related to the Group's business entered into by the company, its holding company, or any of its subsidiaries[116](index=116&type=chunk) [Connected Transactions](index=24&type=section&id=Connected%20Transactions) For the six months ended September 30, 2021, the company did not enter into any connected transactions - For the six months ended September 30, 2021, the Group did not enter into any connected transactions[116](index=116&type=chunk) [Related Party Transactions](index=24&type=section&id=Related%20Party%20Transactions) Details of significant related party transactions entered into by the company for the six months ended September 30, 2021, are set out in Note 14 to the interim condensed consolidated financial information - Significant related party transactions entered into by the Group for the six months ended September 30, 2021, are set out in Note 14 to the interim condensed consolidated financial information[116](index=116&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=24&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) For the six months ended September 30, 2021, neither the company nor any of its subsidiaries purchased, sold, or redeemed any shares - For the six months ended September 30, 2021, neither the company nor any of its subsidiaries purchased, sold, or redeemed any shares[116](index=116&type=chunk) [Events After the Reporting Period](index=25&type=section&id=Events%20After%20the%20Reporting%20Period) No significant events requiring disclosure have occurred after September 30, 2021, and up to the date of this interim report - No significant events requiring disclosure have occurred after September 30, 2021, and up to the date of this interim report[120](index=120&type=chunk) [Audit Committee Review](index=25&type=section&id=Audit%20Committee%20Review) The Group's interim condensed consolidated financial information for the six months ended September 30, 2021, has been reviewed by the Audit Committee - The Group's interim condensed consolidated financial information for the six months ended September 30, 2021, has been reviewed by the Audit Committee[121](index=121&type=chunk)[122](index=122&type=chunk) [Appreciation](index=25&type=section&id=Appreciation) Mr. Tsang Ka Yip, Chairman and Chief Executive Officer, on behalf of the Board, expressed gratitude to shareholders, clients, subcontractors, suppliers, management, and staff - Mr. Tsang Ka Yip, Chairman and Chief Executive Officer, on behalf of the Board, expressed gratitude to shareholders, clients, subcontractors, and suppliers for their continued confidence and support, and sincerely thanked management and staff for their hard work and loyalty[124](index=124&type=chunk) Report on Review of Interim Financial Information This section presents the independent review report on the interim financial information, outlining the scope and conclusion of the review conducted by the auditor [Scope of Review and Conclusion](index=26&type=section&id=Scope%20of%20Review%20and%20Conclusion) Ernst & Young reviewed Wecon Holdings Limited's interim financial information for the six months ended September 30, 2021, in accordance with Hong Kong Standard on Review Engagements 2410; the scope of review is less than an audit, thus no audit opinion is expressed, and based on the review, nothing has come to their 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 - Ernst & Young reviewed the interim financial information in accordance with Hong Kong Standard on Review Engagements 2410[130](index=130&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - The scope of review is substantially less than that of an audit conducted in accordance with Hong Kong Standards on Auditing, and consequently, no audit opinion is expressed[132](index=132&type=chunk)[133](index=133&type=chunk) - Based on the review, nothing has come to their 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)[135](index=135&type=chunk) Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the company's financial performance, including revenue, profit, and other comprehensive income, for the six months ended September 30, 2021 [Key Financial Performance Indicators](index=28&type=section&id=Key%20Financial%20Performance%20Indicators) For the six months ended September 30, 2021, the company reported revenue of **HK$538.4 million**, gross profit of **HK$34.1 million**, profit before tax of **HK$15.9 million**, and total profit and comprehensive income attributable to equity holders of **HK$13.6 million**, with basic and diluted earnings per share of **HK1.7 cents** Key Financial Data (For the six months ended September 30, 2021) | Metric | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | Change (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 538,359 | 643,757 | (105,398) | (16.4%) | | Cost of Sales | (504,235) | (609,450) | 105,215 | (17.3%) | | Gross Profit | 34,124 | 34,307 | (183) | (0.5%) | | Other Income and Gains | 4,667 | 8,901 | (4,234) | (47.6%) | | Administrative and Other Operating Expenses, Net | (22,769) | (22,487) | (282) | 1.3% | | Finance Costs | (74) | (128) | 54 | (42.2%) | | Profit Before Tax | 15,948 | 20,593 | (4,645) | (22.6%) | | Income Tax | (2,372) | (2,064) | (308) | 14.9% | | Total Profit and Comprehensive Income Attributable to Equity Holders of the Company | 13,576 | 18,529 | (4,953) | (26.7%) | | Earnings Per Share (Basic and Diluted) | HK1.7 cents | HK2.3 cents | (HK0.6 cents) | (26.1%) | Interim Condensed Consolidated Statement of Financial Position This statement provides a snapshot of the company's assets, liabilities, and equity as of September 30, 2021, reflecting its financial health [Key Financial Position Indicators](index=29&type=section&id=Key%20Financial%20Position%20Indicators) As of September 30, 2021, the company's total assets less current liabilities were **HK$286.1 million**, net assets were **HK$285.1 million**, net current assets were **HK$262.2 million**, and the current ratio was **2.0 times** Key Financial Position Data (As of September 30, 2021) | Metric | September 30, 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | Change (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Non-current Assets** | | | | | | Property, Plant and Equipment | 10,067 | 8,148 | 1,919 | 23.5% | | Right-of-use Assets | 5,112 | 7,584 | (2,472) | (32.6%) | | Financial Assets at Fair Value Through Profit or Loss | 2,450 | 2,150 | 300 | 14.0% | | Prepayments, Deposits and Other Receivables | 6,237 | 5,379 | 858 | 15.9% | | **Total Non-current Assets** | **23,866** | **23,261** | **605** | **2.6%** | | **Current Assets** | | | | | | Contract Assets and Trade Receivables | 355,676 | 260,376 | 95,300 | 36.6% | | Prepayments, Deposits and Other Receivables | 40,918 | 21,295 | 19,623 | 92.2% | | Financial Assets at Fair Value Through Profit or Loss | 18,957 | 17,452 | 1,505 | 8.6% | | Tax Recoverable | 5,302 | 7,997 | (2,695) | (33.7%) | | Pledged Deposits | 45,563 | 42,193 | 3,370 | 8.0% | | Time Deposits | 23,612 | 5,109 | 18,503 | 362.2% | | Cash and Bank Balances | 23,964 | 120,639 | (96,675) | (80.1%) | | **Total Current Assets** | **513,992** | **475,061** | **38,931** | **8.2%** | | **Current Liabilities** | | | | | | Trade and Retention Payables | 214,611 | 143,758 | 70,853 | 49.3% | | Other Payables and Accruals | 34,862 | 68,166 | (33,304) | (48.9%) | | Lease Liabilities | 2,300 | 3,344 | (1,044) | (31.2%) | | **Total Current Liabilities** | **251,773** | **215,268** | **36,505** | **17.0%** | | **Net Current Assets** | **262,219** | **259,793** | **2,426** | **0.9%** | | **Total Assets Less Current Liabilities** | **286,085** | **283,054** | **3,031** | **1.1%** | | **Non-current Liabilities** | | | | | | Deferred Tax Liabilities | 405 | 728 | (323) | (44.4%) | | Lease Liabilities | 625 | 1,311 | (686) | (52.3%) | | **Total Non-current Liabilities** | **1,030** | **2,039** | **(1,009)** | **(49.5%)** | | **Net Assets** | **285,055** | **281,015** | **4,040** | **1.4%** | | **Equity** | | | | | | Issued Share Capital | 8,000 | 8,000 | 0 | 0.0% | | Reserves | 277,055 | 273,015 | 4,040 | 1.5% | | **Total Equity** | **285,055** | **281,015** | **4,040** | **1.4%** | Interim Condensed Consolidated Statement of Changes in Equity This statement outlines the changes in the company's total equity for the six months ended September 30, 2021, primarily driven by profit for the period and dividends paid [Equity Changes Overview](index=31&type=section&id=Equity%20Changes%20Overview) For the six months ended September 30, 2021, the company's total equity increased from **HK$281 million** at the beginning of the period to **HK$285.1 million**, primarily due to profit for the period of **HK$13.6 million**, partially offset by dividends paid of **HK$9.5 million** Changes in Equity (For the six months ended September 30, 2021) | Metric | April 1, 2021 (HK$ Thousand) | Total Profit and Comprehensive Income for the Period (HK$ Thousand) | Dividends Paid to Equity Holders of the Company (HK$ Thousand) | September 30, 2021 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Issued Share Capital | 8,000 | – | – | 8,000 | | Share Premium | 76,767 | – | (9,536) | 67,231 | | Merger Reserve | 18,900 | – | – | 18,900 | | Shares Held Under Share Award Scheme | (996) | – | – | (996) | | Retained Profits | 178,344 | 13,576 | – | 191,920 | | **Total Equity** | **281,015** | **13,576** | **(9,536)** | **285,055** | Interim Condensed Consolidated Statement of Cash Flows This statement summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended September 30, 2021 [Cash Flow Activities Summary](index=32&type=section&id=Cash%20Flow%20Activities%20Summary) For the six months ended September 30, 2021, the company reported net cash outflow from operating activities of **HK$58.8 million** (compared to an inflow of **HK$22 million** in the prior period), net cash outflow from investing activities of **HK$8 million**, and net cash outflow from financing activities of **HK$11.3 million**, with cash and cash equivalents decreasing to **HK$47.6 million** at period-end Cash Flow Summary (For the six months ended September 30, 2021) | Cash Flow Category | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Net Cash Flows from/(used in) Operating Activities | (58,818) | 21,952 | (80,770) | | Net Cash Flows used in Investing Activities | (8,058) | (14,271) | 6,213 | | Net Cash Flows used in Financing Activities | (11,296) | (20,420) | 9,124 | | **Net Decrease in Cash and Cash Equivalents** | **(78,172)** | **(12,739)** | **(65,433)** | | Cash and Cash Equivalents at Beginning of Period | 125,748 | 140,773 | (15,025) | | **Cash and Cash Equivalents at End of Period** | **47,576** | **128,034** | **(80,458)** | Notes to Interim Condensed Consolidated Financial Information This section provides detailed explanatory notes to the interim condensed consolidated financial information, covering company background, accounting policies, and specific financial items [1. Corporate and Group Information](index=35&type=section&id=1.%20Corporate%20and%20Group%20Information) Wecon Holdings Limited was incorporated in the Cayman Islands on March 23, 2018, as an investment holding company, with its subsidiaries primarily engaged in building construction and RMAA services; its direct and ultimate holding company is Triple Arch Limited, registered in the British Virgin Islands - The company was incorporated in the Cayman Islands as an exempted company with limited liability on March 23, 2018, and is an investment holding company[153](index=153&type=chunk) - During the period, the Group's subsidiaries were principally engaged in the provision of building construction and repair, maintenance, alteration, and addition (RMAA) services[153](index=153&type=chunk) - The company's immediate and ultimate holding company is Triple Arch Limited, incorporated in the British Virgin Islands[153](index=153&type=chunk) [2. Basis of Preparation](index=35&type=section&id=2.%20Basis%20of%20Preparation) The interim condensed consolidated financial information is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of Appendix 16 of the Listing Rules, presented in Hong Kong Dollars; the accounting policies adopted are consistent with those used for the annual consolidated financial statements for the year ended March 31, 2021, except for the initial adoption of amended HKFRS (Interest Rate Benchmark Reform – Phase 2), which had no significant impact on the results and financial position for the current or prior periods - The interim condensed consolidated financial information has been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and the disclosure requirements of Appendix 16 of the Listing Rules[153](index=153&type=chunk) - The interim condensed consolidated financial information is presented in Hong Kong Dollars, and all values are rounded to the nearest thousand[155](index=155&type=chunk)[158](index=158&type=chunk) - The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended March 31, 2021[165](index=165&type=chunk)[166](index=166&type=chunk) - The initial adoption of amended HKFRS 9, HKAS 39, HKFRS 7, HKFRS 4 and HKFRS 16 (Amendments) – Interest Rate Benchmark Reform – Phase 2 had no significant impact on the results and financial position for the current or prior accounting periods[167](index=167&type=chunk)[168](index=168&type=chunk) [3. Operating Segment Information](index=39&type=section&id=3.%20Operating%20Segment%20Information) The company's reportable operating segments are building contracts and repair, maintenance, alteration, and addition (RMAA) engineering; for the six months ended September 30, 2021, the building contracts segment generated **HK$488.8 million** in revenue and **HK$37.2 million** in gross profit, while the RMAA segment generated **HK$49.6 million** in revenue and incurred a gross loss of **HK$3.1 million**, with significant increases in both assets and liabilities for the building contracts segment Segment Revenue and Results (For the six months ended September 30, 2021) | Metric | Building Contracts (HK$ Thousand) | RMAA (HK$ Thousand) | Total (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Revenue from External Customers | 488,766 | 49,593 | 538,359 | | Segment Results (Gross Profit/Loss) | 37,238 | (3,114) | 34,124 | Segment Assets and Liabilities (As of September 30, 2021) | Metric | Building Contracts (HK$ Thousand) | RMAA (HK$ Thousand) | Total (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Segment Assets | 343,232 | 57,335 | 400,567 | | Segment Liabilities | 212,085 | 34,720 | 246,805 | [4. Revenue](index=41&type=section&id=4.%20Revenue) For the six months ended September 30, 2021, the company's total revenue from customer contracts was **HK$538.4 million**, with building contracts contributing **HK$488.8 million** and RMAA engineering contributing **HK$49.6 million**; most revenue (**HK$508.2 million**) was recognized "over time," while the remainder (**HK$30.2 million**) was recognized "at a point in time" Revenue by Source (For the six months ended September 30, 2021) | Category | Amount (HK$ Thousand) | | :--- | :--- | | Building Contracts | 488,766 | | RMAA Engineering | 49,593 | | **Total Revenue** | **538,359** | Revenue Recognition Timing (For the six months ended September 30, 2021) | Timing of Recognition | Amount (HK$ Thousand) | | :--- | :--- | | Over time | 508,153 | | At a point in time | 30,206 | | **Total Revenue** | **538,359** | [5. Finance Costs](index=42&type=section&id=5.%20Finance%20Costs) For the six months ended September 30, 2021, the company's finance costs were **HK$74 thousand**, primarily comprising **HK$30 thousand** in bank borrowing interest and **HK$44 thousand** in lease liabilities interest, representing a **42.2%** year-on-year decrease Composition of Finance Costs (For the six months ended September 30, 2021) | Category | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :--- | :--- | :--- | | Interest on bank borrowings | 30 | 32 | | Interest on lease liabilities | 44 | 96 | | **Total** | **74** | **128** | [6. Profit Before Tax](index=43&type=section&id=6.%20Profit%20Before%20Tax) For the six months ended September 30, 2021, the company's profit before tax was **HK$15.9 million**, with total depreciation expenses of **HK$3.492 million** and staff welfare expenses (excluding directors' emoluments) of **HK$42.8 million**; other key adjustments included fair value losses on financial assets of **HK$1.876 million**, gains on disposal of financial assets of **HK$0.734 million**, and dividend income of **HK$1.126 million** - For the six months ended September 30, 2021, the Group's profit before tax was **HK$15,948 thousand**[191](index=191&type=chunk)[192](index=192&type=chunk) Key Expense/Income Items (For the six months ended September 30, 2021) | Item | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 1,020 | 1,324 | | Depreciation of right-of-use assets | 2,472 | 2,372 | | Staff welfare expenses (excluding directors' emoluments) | 42,810 | 42,226 | | Net fair value losses/(gains) on financial assets at fair value through profit or loss | 1,876 | (200) | | Gains on disposal of financial assets at fair value through profit or loss | (734) | – | | Dividend income from equity investments at fair value through profit or loss | (1,126) | – | | Impairment of contract assets, net | 38 | 136 | | Impairment/(reversal of impairment) of trade receivables, net | (12) | 2 | - For the six months ended September 30, 2020, government grants of **HK$6,328 thousand** were included in "Other income and gains," with no such grants in the current period[193](index=193&type=chunk) [7. Income Tax](index=44&type=section&id=7.%20Income%20Tax) The company is exempt from income tax in the Cayman Islands and British Virgin Islands; Hong Kong profits tax is levied at **16.5%**, with qualifying subsidiaries taxed at **8.25%** on the first **HK$2 million** of assessable profits under the two-tiered tax rate regime, and total tax expense for the six months ended September 30, 2021, was **HK$2.372 million** - The Group is not subject to any income tax in the Cayman Islands and British Virgin Islands[196](index=196&type=chunk)[197](index=197&type=chunk) - Hong Kong profits tax is provided at **16.5%**, with qualifying subsidiaries taxed at **8.25%** on the first **HK$2,000,000** of assessable profits under the two-tiered tax rate regime, and the remainder at **16.5%**[196](index=196&type=chunk)[197](index=197&type=chunk) Total Tax Expense for the Period (For the six months ended September 30, 2021) | Category | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :--- | :--- | :--- | | Current – Hong Kong tax for the period | 2,695 | 1,896 | | Deferred tax deduction/(credit) | (323) | 274 | | **Total Tax Expense for the Period** | **2,372** | **2,064** | [8. Earnings Per Share Attributable to Equity Holders of the Company](index=45&type=section&id=8.%20Earnings%20Per%20Share%20Attributable%20to%20Equity%20Holders%20of%20the%20Company) For the six months ended September 30, 2021, the company's basic earnings per share were **HK1.7 cents** (compared to **HK2.3 cents** in the prior period), calculated based on profit attributable to equity holders of **HK$13.576 million** and a weighted average of **794,696,000** ordinary shares; there were no potentially dilutive ordinary shares during the reporting period Basic Earnings Per Share | Metric | 2021 (HK cents) | 2020 (HK cents) | | :--- | :--- | :--- | | Basic Earnings Per Share | 1.7 | 2.3 | - The basic earnings per share amount is calculated based on the profit attributable to equity holders of the company of **HK$13,576 thousand** (2020: **HK$18,529 thousand**) and the weighted average number of ordinary shares of **794,696,000** (2020: **800,000,000**)[201](index=201&type=chunk) - For the six months ended September 30, 2021 and 2020, there were no potentially dilutive ordinary shares in issue by the Group[201](index=201&type=chunk) [9. Dividends](index=45&type=section&id=9.%20Dividends) The Board recommended a final dividend of **HK1.2 cents** per share for the financial year ended March 31, 2021, totaling **HK$9.536 million**, and resolved not to declare an interim dividend for the six months ended September 30, 2021 - The Board recommended a final dividend of **HK1.2 cents** per share for the financial year ended March 31, 2021, totaling **HK$9,536 thousand**[201](index=201&type=chunk) - The Board resolved not to declare an interim dividend for the six months ended September 30, 2021 (for the six months ended September 30, 2020: nil)[201](index=201&type=chunk) [10. Contract Assets and Trade Receivables](index=46&type=section&id=10.%20Contract%20Assets%20and%20Trade%20Receivables) As of September 30, 2021, the company's total contract assets and trade receivables amounted to **HK$355.7 million**, comprising net contract assets of **HK$191.9 million** (including other contract assets of **HK$90.7 million** and retention receivables of **HK$101.6 million**) and net trade receivables of **HK$163.8 million**; both other contract assets and retention receivables increased due to continuous provision of construction services and significant progress on more contracts at the reporting period end Total Contract Assets and Trade Receivables | Metric | September 30, 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Contract Assets and Trade Receivables | 355,676 | 260,376 | Net Contract Assets | Category | September 30, 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Other contract assets | 90,656 | 61,569 | | Retention receivables | 101,640 | 90,462 | | Impairment of contract assets | (392) | (354) | | **Net Contract Assets** | **191,904** | **151,677** | Net Trade Receivables | Category | September 30, 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Trade receivables | 163,795 | 108,734 | | Impairment of trade receivables | (23) | (35) | | **Net Trade Receivables** | **163,772** | **108,699** | - The increase in other contract assets as of September 30, 2021, and March 31, 2021, was due to the continuous provision of construction services at the end of the reporting period[207](index=207&type=chunk)[208](index=208&type=chunk) - Retention receivables increased as of September 30, 2021, and March 31, 2021, primarily due to significant progress on more contracts that were not yet completed at the end of the reporting period; retention receivables are repayable within one to two years[211](index=211&type=chunk) Ageing Analysis of Trade Receivables (As of September 30, 2021) | Ageing | Amount (HK$ Thousand) | | :--- | :--- | | Within 90 days | 158,660 | | 91 to 180 days | 1,218 | | 181 to 365 days | 3,894 | | **Total** | **163,772** | [11. Trade and Retention Payables](index=49&type=section&id=11.%20Trade%20and%20Retention%20Payables) As of September 30, 2021, the company's total trade and retention payables amounted to **HK$214.6 million**, a significant increase from March 31, 2021, comprising trade payables of **HK$129.1 million** (within 3 months) and retention payables of **HK$85.5 million**; retention payables are typically settled within one to two years, and trade payables generally have a credit period of 30 days Total Trade and Retention Payables | Metric | September 30, 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Trade and Retention Payables | 214,611 | 143,758 | Ageing Analysis of Trade and Retention Payables (As of September 30, 2021) | Category | Ageing | Amount (HK$ Thousand) | | :--- | :--- | :--- | | Trade payables | Within 3 months | 129,094 | | Retention payables | - | 85,517 | - Retention payables are generally settled within one to two years; payment terms for trade payables are stipulated in the relevant contracts, with a typical credit period of 30 days[218](index=218&type=chunk) [12. Share Capital](index=50&type=section&id=12.%20Share%20Capital) As of September 30, 2021, the company's authorized share capital was **HK$50 million** (**5 billion** ordinary shares of **HK$0.01** each), and its issued and fully paid share capital was **HK$8 million** (**800 million** ordinary shares of **HK$0.01** each) Share Capital Structure (As of September 30, 2021) | Category | Number of Shares | Par Value | Amount (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Authorized share capital | 5,000,000,000 | HK$0.01 | 50,000 | | Issued and fully paid share capital | 800,000,000 | HK$0.01 | 8,000 | [13. Contingent Liabilities](index=50&type=section&id=13.%20Contingent%20Liabilities) As of September 30, 2021, the company's contingent liabilities primarily consisted of performance bonds totaling **HK$65.9 million**, a significant decrease from **HK$119.1 million** as of March 31, 2021; part of the performance bonds were secured by pledged deposits of **HK$31.19 million** Performance Bonds | Metric | September 30, 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | Change (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Performance Bonds | 65,896 | 119,107 | (53,211) | (44.7%) | - Part of the performance bonds were secured by pledged deposits of **HK$31,190 thousand** (March 31, 2021: **HK$34,193 thousand**)[225](index=225&type=chunk) [14. Related Party Transactions](index=51&type=section&id=14.%20Related%20Party%20Transactions) As of September 30, 2021, the company had no outstanding balances with related companies; total remuneration paid to key management personnel for the period was **HK$2.164 million**, including salaries, allowances, and benefits in kind paid to a director's spouse - As of September 30, 2021, and March 31, 2021, the Group had no balances with related companies[227](index=227&type=chunk) Key Management Personnel Remuneration (For the six months ended September 30, 2021) | Category | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :--- | :--- | :--- | | Short-term employee benefits | 2,017 | 1,900 | | Post-employment benefits | 147 | 137 | | **Total Remuneration** | **2,164** | **2,037** | - Total salaries, housing allowances, other allowances, and benefits in kind paid to Ms. Lai Yuk Lin, the spouse of a Director, including a housing allowance in kind of **HK$820,000**[230](index=230&type=chunk) [15. Fair Value and Fair Value Hierarchy of Financial Instruments](index=52&type=section&id=15.%20Fair%20Value%20and%20Fair%20Value%20Hierarchy%20of%20Financial%20Instruments) Management assessed that the fair values of cash and cash equivalents, contract assets and trade receivables, trade and retention payables, certain financial assets and liabilities, and lease liabilities approximate their carrying amounts, primarily due to their short-term maturities; as of September 30, 2021, total assets measured at fair value were **HK$21.407 million**, including listed equity investments of **HK$18.005 million** (Level 1) and other investments of **HK$3.402 million** (Level 2), with no transfers between Level 1 and Level 2, or into or out of Level 3 during the reporting period - Management has assessed that the fair values of cash and cash equivalents, contract assets and trade receivables, trade and retention payables, financial assets included in prepayments, deposits and other receivables, financial liabilities included in other payables and accruals, and lease liabilities approximate their carrying amounts, primarily due to the short-term maturities of these instruments[234](index=234&type=chunk)[236](index=236&type=chunk) Assets Measured at Fair Value (As of September 30, 2021) | Category | Quoted prices in active markets (Level 1) (HK$ Thousand) | Significant observable inputs (Level 2) (HK$ Thousand) | Significant unobservable inputs (Level 3) (HK$ Thousand) | Total (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Listed equity investments | 18,005 | – | – | 18,005 | | Other investments | – | 3,402 | – | 3,402 | | **Total** | **18,005** | **3,402** | **–** | **21,407** | - During the reporting period, there were no transfers between Level 1 and Level 2 fair value measurements, nor any transfers into or out of Level 3 for financial assets[242](index=242&type=chunk)[244](index=244&type=chunk) [16. Approval of the Unaudited Interim Financial Information](index=53&type=section&id=16.%20Approval%20of%20the%20Unaudited%20Interim%20Financial%20Information) The unaudited interim financial information was approved and authorized for issue by the Board of Directors on November 26, 2021 - The unaudited interim financial information was approved and authorized for issue by the Board of Directors on November 26, 20

WECON HOLDINGS LIMITED 偉工控股有限公司 (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立之有限公司) Stock code 股份代號: 1793 年 報 ANNUAL REPORT 2020/21 CONTENTS 目錄 | --- | --- | |---------------------------------------------------------------------------------------------------|-------| | Corporate Information 公司資料 | | | Chairman's Statement 主席報告 | | | Management Discussion and Analysis 管理層討論及分析 | | | Corporate Governance Report 企業管治報告 | 17 | | Biographical Details of Directors and Senior Management 董事 ...

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