[Report Cover](index=1&type=section&id=%E6%8A%A5%E5%91%8A%E5%B0%81%E9%9D%A2) - This report is the third quarterly results report for the 2019/2020 financial year of Wing Kee Tea House Group Limited (Stock Code: 8241)[1](index=1&type=chunk) [GEM Listing Characteristics and Disclaimer](index=2&type=section&id=GEM%E4%B8%8A%E5%B8%82%E7%89%B9%E8%89%B2%E5%8F%8A%E5%85%8D%E8%B4%A3%E5%A3%B0%E6%98%8E) - The GEM market is positioned to provide a listing platform for small and medium-sized companies, involving higher investment risks, and investors should exercise caution[2](index=2&type=chunk) - Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this report and make no statement as to its accuracy or completeness[2](index=2&type=chunk) - The Company's directors jointly and severally accept full responsibility for the information in this report, confirming it is accurate, complete, and free from misleading or fraudulent statements[2](index=2&type=chunk) [Third Quarterly Results](index=3&type=section&id=%E7%AC%AC%E4%B8%89%E5%AD%A3%E5%BA%A6%E4%B8%9A%E7%BB%A9) [Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=%E6%9C%AA%E7%BB%8F%E5%AE%A1%E6%A0%B8%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E6%8D%9F%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) For the nine months ended December 31, 2019, the Group's revenue and gross profit decreased year-on-year, turning from profit to loss, with a net loss of HKD 5,177 thousand and a loss per share of HKD 1.44 cents Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the nine months ended December 31) | Indicator | 2019 (Thousand HKD) | 2018 (Thousand HKD) | Change (YoY) | | :--------------------------------------------------- | :------------------ | :------------------ | :----------- | | Revenue | 30,644 | 34,701 | -11.7% | | Cost of Sales | (6,738) | (7,464) | -9.7% | | Gross Profit | 23,906 | 27,237 | -12.2% | | Other Income | 476 | 464 | +2.6% | | Selling and Distribution Costs | (1,284) | (1,566) | -18.1% | | Administrative Expenses | (28,184) | (26,508) | +6.3% | | Finance Costs | (56) | (46) | +21.7% | | Profit/(Loss) Before Income Tax | (5,142) | (419) | -1127.2% | | Income Tax Expense | (35) | (934) | -96.3% | | Profit/(Loss) and Total Comprehensive Income/(Expense) for the Period | (5,177) | (1,353) | -282.6% | | Basic and Diluted Earnings/(Loss) Per Share (HK cents) | (1.44) | (0.38) | -278.9% | Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the three months ended December 31) | Indicator | 2019 (Thousand HKD) | 2018 (Thousand HKD) | Change (YoY) | | :--------------------------------------------------- | :------------------ | :------------------ | :----------- | | Revenue | 14,647 | 17,679 | -17.2% | | Cost of Sales | (2,924) | (3,713) | -21.2% | | Gross Profit | 11,723 | 13,966 | -16.0% | | Other Income | 84 | 120 | -30.0% | | Selling and Distribution Costs | (663) | (832) | -20.3% | | Administrative Expenses | (10,015) | (8,462) | +18.3% | | Finance Costs | (20) | – | N/A | | Profit/(Loss) Before Income Tax | 1,109 | 4,792 | -76.8% | | Income Tax Expense | (35) | (926) | -96.2% | | Profit/(Loss) and Total Comprehensive Income/(Expense) for the Period | 1,074 | 3,866 | -72.2% | | Basic and Diluted Earnings/(Loss) Per Share (HK cents) | 0.30 | 1.07 | -71.9% | [Unaudited Condensed Consolidated Statement of Changes in Equity](index=4&type=section&id=%E6%9C%AA%E7%BB%8F%E5%AE%A1%E6%A0%B8%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E6%9D%83%E7%9B%8A%E5%8F%98%E5%8A%A8%E8%A1%A8) For the nine months ended December 31, 2019, the Group's total equity decreased to HKD 37,042 thousand, primarily due to a loss of HKD 5,177 thousand for the period, offset by a new share option reserve of HKD 987 thousand Condensed Consolidated Statement of Changes in Equity (For the nine months ended December 31) | Indicator | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :------------------------ | :------------------ | :------------------ | | Share Capital | 41,879 | 41,879 | | Capital Reserve | 990 | 990 | | Share Option Reserve | 987 | – | | (Accumulated Losses)/Retained Profits | (6,814) | (238) | | **Total Equity** | **37,042** | **42,631** | - As of April 1, 2019, audited total equity was **HKD 41,232 thousand**, with a loss of **HKD 5,177 thousand** for the period, resulting in total equity decreasing to **HKD 37,042 thousand** as of December 31, 2019[6](index=6&type=chunk) - The issuance of equity-settled share-based payments in 2019 led to an increase in share option reserve by **HKD 987 thousand**[6](index=6&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=5&type=section&id=%E6%9C%AA%E7%BB%8F%E5%AE%A1%E6%A0%B8%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E9%99%84%E6%B3%A8) [1. General Information](index=5&type=section&id=1.%20%E4%B8%80%E8%88%AC%E8%B5%84%E6%96%99) Wing Kee Tea House Group Limited was incorporated in Hong Kong on September 14, 2017, listed on GEM on April 16, 2018, primarily retailing Chinese tea, tea sets, and tea gift boxes in Hong Kong, and operating food and beverage retail under the 'Oi Cha' brand - The Company was incorporated in Hong Kong on **September 14, 2017**, and listed on GEM on **April 16, 2018**[8](index=8&type=chunk)[9](index=9&type=chunk) - The Group's principal activities are the retail of Chinese tea, tea sets, and tea gift boxes in Hong Kong, and the retail of food and beverages such as Hong Kong-style coffee, fruit, and bubble tea under the name 'Oi Cha'[9](index=9&type=chunk) [2. Basis of Preparation](index=5&type=section&id=2.%20%E7%BC%96%E5%88%B6%E5%9F%BA%E5%87%86) The Group's unaudited condensed consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and GEM Listing Rules, on a historical cost basis, with HKD as the functional currency, and have been reviewed by the Audit Committee - The financial statements are prepared in accordance with all applicable Hong Kong Financial Reporting Standards and the GEM Listing Rules[10](index=10&type=chunk) - The statements are prepared on a historical cost basis, with the functional currency being Hong Kong Dollars, and all values are rounded to the nearest thousand HKD[10](index=10&type=chunk) - The statements have not been audited by an independent auditor but have been reviewed by the Company's Audit Committee[11](index=11&type=chunk) [3. Adoption of New and Revised Hong Kong Financial Reporting Standards](index=6&type=section&id=3.%20%E9%87%87%E7%BA%B3%E6%96%B0%E8%AE%A2%E5%8F%8A%E7%BB%8F%E4%BF%AE%E8%AE%A2%E9%A6%99%E6%B8%AF%E8%B4%A2%E5%8A%A1%E6%8A%A5%E5%91%8A%E5%87%86%E5%88%99) The Group first applied new and revised Hong Kong Financial Reporting Standards during this period, with HKFRS 16 'Leases' having a significant impact on the financial statements, leading to the recognition of right-of-use assets and lease liabilities [HKFRS 16 'Leases'](index=6&type=section&id=%E9%A6%99%E6%B8%AF%E8%B4%A2%E5%8A%A1%E6%8A%A5%E5%91%8A%E5%87%86%E5%88%99%E7%AC%AC16%E5%8F%B7%E3%80%8C%E7%A7%9F%E8%B3%83%E3%80%8D) The adoption of HKFRS 16 'Leases' resulted in the Group recognizing lease liabilities of HKD 1,896 thousand and measuring right-of-use assets, with no restatement of prior periods - The adoption of HKFRS 16 'Leases' has a significant impact on the preparation and presentation of the Group's results and financial position for the current and prior periods[13](index=13&type=chunk) - The Group has elected to apply the modified retrospective approach, recognizing the cumulative effect of adopting HKFRS 16 in equity[14](index=14&type=chunk) Reconciliation of Lease Liabilities (As of April 1, 2019) | Indicator | Thousand HKD | | :------------------------------------------------------------------ | :----------- | | Total operating lease commitments disclosed as at March 31, 2019 | 4,590 | | Recognition exemption – leases with remaining lease term of 12 months or less | (2,638) | | Operating lease liabilities before discounting | 1,952 | | Discounted using the incremental borrowing rate as at April 1, 2019 | (56) | | **Total lease liabilities recognized under HKFRS 16 as at April 1, 2019** | **1,896** | | Classified as: Current lease liabilities | 1,896 | [4. Revenue](index=7&type=section&id=4.%20%E6%94%B6%E7%9B%8A) For the nine months ended December 31, 2019, the Group's total revenue was HKD 30,644 thousand, primarily from tea product sales, with food and beverage retail contributing HKD 651 thousand Revenue Composition (For the nine months ended December 31) | Revenue Source | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :------------------- | :------------------ | :------------------ | | Sales of tea products | 29,993 | 34,701 | | Food and beverage retail | 651 | – | | **Total Revenue** | **30,644** | **34,701** | Revenue Composition (For the three months ended December 31) | Revenue Source | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :------------------- | :------------------ | :------------------ | | Sales of tea products | 14,485 | 17,679 | | Food and beverage retail | 162 | – | | **Total Revenue** | **14,647** | **17,679** | - Total revenue for the nine months of 2019 decreased by **11.7%** year-on-year, primarily due to reduced sales of tea products[18](index=18&type=chunk) [5. Profit/(Loss) Before Income Tax](index=8&type=section&id=5.%20%E9%99%A4%E6%89%80%E5%BE%97%E7%A8%8E%E5%89%8D%E6%BA%A2%E5%88%A9%EF%BC%8F%EF%BC%88%E4%BA%8F%E6%8D%9F%EF%BC%89) For the nine months ended December 31, 2019, the Group's loss before income tax was HKD 5,142 thousand, mainly impacted by new expenses such as depreciation of right-of-use assets, short-term lease expenses, and variable lease payments Items for Profit/(Loss) Before Income Tax Calculation (For the nine months ended December 31) | Item | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :----------------------------------------- | :------------------ | :------------------ | | Auditor's remuneration | 300 | 245 | | Cost of inventories recognized as expense | 5,798 | 6,471 | | Depreciation of property, plant and equipment | 691 | 429 | | Depreciation of right-of-use assets | 1,037 | – | | Operating lease expenses (short-term leases and variable rents) | 8,857 | 7,004 | | Listing expenses | – | 4,000 | - For the nine months of 2019, new depreciation of right-of-use assets amounted to **HKD 1,037 thousand**, short-term lease expenses and leases with terms of less than 12 months amounted to **HKD 8,538 thousand**, and variable lease payments were **HKD 319 thousand**[20](index=20&type=chunk) - Listing expenses of **HKD 4,000 thousand** were incurred in the nine months of 2018, with no such expenses in the corresponding period of 2019[20](index=20&type=chunk) [6. Income Tax Expense](index=9&type=section&id=6.%20%E6%89%80%E5%BE%97%E7%A8%8E%E5%BC%80%E6%94%AF) For the nine months ended December 31, 2019, the Group's income tax expense was HKD 35 thousand, significantly lower than HKD 934 thousand in the prior year, primarily due to reduced taxable profit Income Tax Expense (For the nine months ended December 31) | Tax Type | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :--------------- | :------------------ | :------------------ | | Hong Kong Profits Tax | 35 | 934 | - Hong Kong profits tax is provided at a rate of **16.5%**, with one subsidiary's first **HKD 2,000,000** of assessable profits taxed at **8.25%**[22](index=22&type=chunk) - As of December 31, 2019, the Group had no significant unrecognized deferred tax assets and liabilities[23](index=23&type=chunk) [7. Dividends](index=9&type=section&id=7.%20%E8%82%A1%E6%81%AF) The Board resolved not to declare any dividends for the nine months ended December 31, 2019, consistent with the prior year - For the nine months ended December 31, 2019, the Board did not declare any dividends[24](index=24&type=chunk) [8. Earnings/(Loss) Per Share](index=10&type=section&id=8.%20%E6%AF%8F%E8%82%A1%E6%BA%A2%E5%88%A9%EF%BC%8F%EF%BC%88%E4%BA%8F%E6%8D%9F%EF%BC%89) For the nine months ended December 31, 2019, the loss attributable to equity holders of the Company was HKD 5,177 thousand, resulting in a basic and diluted loss per share of HKD 1.44 cents Earnings/(Loss) Per Share Calculation (For the nine months ended December 31) | Indicator | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :--------------------------------------------------- | :------------------ | :------------------ | | Profit/(Loss) attributable to equity holders of the Company for the period | (5,177) | (1,353) | | Weighted average number of ordinary shares (Thousand shares) | 360,000 | 356,073 | | Basic and Diluted Earnings/(Loss) Per Share (HK cents) | (1.44) | (0.38) | - For the nine months ended December 31, 2019, the effect of the exercise of share options on potential diluted shares was anti-dilutive and therefore not considered[27](index=27&type=chunk) [Management Discussion and Analysis](index=11&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%82%E8%AE%A8%E8%AE%BA%E5%8F%8A%E5%88%86%E6%9E%90) [Financial Summary](index=11&type=section&id=%E8%B4%A2%E5%8A%A1%E6%91%98%E8%A6%81) For the nine months ended December 31, 2019, the Group's revenue, gross profit, and profit/loss attributable to shareholders all decreased year-on-year, with net loss expanding to HKD 5.177 million Financial Summary (For the nine months ended December 31) | Indicator | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :------------------------------ | :------------------ | :------------------ | | Revenue | 30,644 | 34,701 | | Gross Profit | 23,906 | 27,237 | | Loss Before Tax | (5,142) | (419) | | Income Tax Expense | (35) | (934) | | Profit/(Loss) Attributable to Shareholders | (5,177) | (1,353) | | Loss Per Share (HK cents) | (1.44) | (0.38) | [Business Review](index=11&type=section&id=%E4%B8%9A%E5%8A%A1%E5%9B%9E%E9%A1%BE) The Company, as an investment holding company, has its subsidiary Wing Kee Tea House Limited primarily selling tea, tea sets, and tea gift boxes through 12 retail outlets, while another subsidiary, Oi Cha Wing Kee Limited, sells Chinese tea and other beverages through one store - Wing Kee Tea House Limited sells tea, tea sets, and tea gift boxes through **12** retail stores and counters[31](index=31&type=chunk) - Oi Cha Wing Kee Limited sells Chinese tea, Italian coffee, fruit, and other ingredient beverages through **one** store[31](index=31&type=chunk) [Financial Review](index=11&type=section&id=%E8%B4%A2%E5%8A%A1%E5%9B%9E%E9%A1%BE) During the reporting period, the Group's revenue and gross profit both decreased, and net loss expanded, primarily due to social events and economic uncertainties in Hong Kong. Selling and distribution costs decreased, but administrative expenses rose due to increased staff salaries, depreciation, and rent [Revenue, Gross Profit and Net Loss](index=11&type=section&id=%E6%94%B6%E7%9B%8A%E3%80%81%E6%AF%9B%E5%88%A9%E5%8F%8A%E5%87%80%E4%BA%8F%E6%8D%9F) For the nine months ended December 31, 2019, the Group's revenue decreased by 11.7% to HKD 30.6 million, gross profit decreased by 12.2% to HKD 23.9 million, and net loss expanded to HKD 5.2 million, primarily attributed to large-scale protests and economic recession in Hong Kong - Consolidated revenue for the reporting period was approximately **HKD 30.6 million**, a year-on-year decrease of approximately **11.7%**[32](index=32&type=chunk) - Gross profit was approximately **HKD 23.9 million**, a year-on-year decrease of approximately **12.2%**; gross profit margin was approximately **78.0%**, a slight year-on-year decrease of **0.5%**[32](index=32&type=chunk) - Net loss was approximately **HKD 5.2 million**, primarily due to revenue contraction caused by large-scale protests in Hong Kong and weak consumer sentiment triggered by social events[32](index=32&type=chunk) [Selling and Distribution Costs](index=12&type=section&id=%E9%94%80%E5%94%AE%E5%8F%8A%E5%88%86%E9%94%80%E6%88%90%E6%9C%AC) Selling and distribution costs decreased by 18.0% to HKD 1.3 million, mainly benefiting from reduced entertainment expenses and sales commissions post-listing, but partially offset by increased social media advertising expenses - Selling and distribution costs decreased by approximately **18.0%** to approximately **HKD 1.3 million**[34](index=34&type=chunk) - The decrease was primarily due to reduced entertainment expenses after listing and lower contractual sales commissions for sales employees[34](index=34&type=chunk) - Part of the decrease was offset by increased advertising development and maintenance expenses for Facebook, Instagram, and WeChat[34](index=34&type=chunk) [Administrative Expenses](index=12&type=section&id=%E8%A1%8C%E6%94%BF%E5%BC%80%E6%94%AF) Administrative expenses increased year-on-year, mainly due to higher staff salaries from hiring store assistants, depreciation of right-of-use assets from HKFRS 16 adoption, increased depreciation of fixed assets and rent due to new stores, and share option compensation expenses - Staff salaries increased by approximately **11.9%** to approximately **HKD 8.9 million**, due to hiring store assistants for the Sha Tin counter and Oi Cha store[35](index=35&type=chunk) - New depreciation of right-of-use assets amounted to approximately **HKD 1.0 million**, due to the implementation of HKFRS 16[35](index=35&type=chunk) - Depreciation of fixed assets increased by approximately **61.1%** to approximately **HKD 0.7 million**, and rent increased by approximately **30.8%** to approximately **HKD 9.2 million**, both due to the new Sha Tin counter and Oi Cha store[35](index=35&type=chunk) - New share option compensation expenses amounted to approximately **HKD 1.0 million**[35](index=35&type=chunk) - The increased administrative expenses were offset by listing expenses of approximately **HKD 4.0 million** incurred in the corresponding period of 2018[36](index=36&type=chunk) [Outlook and Prospects](index=13&type=section&id=%E5%B1%95%E6%9C%9B%E5%8F%8A%E5%89%8D%E6%99%AF) The Group faces severe challenges from global economic recession and ongoing social unrest in Hong Kong, anticipating stagnant or negative growth. Prudent cash management measures have been adopted, including rent negotiations and discretionary spending cuts. Part of the IPO proceeds were used for new store openings and system upgrades, but further retail store openings are deferred given market conditions - With global economic recession and ongoing social unrest in Hong Kong, the Group faces stagnant or negative growth[39](index=39&type=chunk) - Prudent cash management strategies have been adopted, including negotiating rent reductions and cutting discretionary expenses such as advertising, entertainment, and incentive bonuses[39](index=39&type=chunk) - Approximately **HKD 25.2 million** of the IPO proceeds have been used for opening the Sha Tin counter, Tsim Sha Tsui store, office and warehouse renovation, information system upgrades, hiring new staff, and repaying bank loans of approximately **HKD 3.8 million**[40](index=40&type=chunk) - Given the current market conditions, the Group has deferred opening the other two retail stores mentioned in the prospectus[40](index=40&type=chunk) [Liquidity and Cash Flow Management](index=13&type=section&id=%E6%B5%81%E5%8A%A8%E8%B5%84%E9%87%91%E5%8F%8A%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E7%AE%A1%E7%90%86) The Group's liquidity primarily stems from cash generated from operations and proceeds from share offerings. As of December 31, 2019, both net current assets and cash and bank balances decreased, while the current ratio remained at a high level - The Group primarily funds its liquidity and capital requirements through cash generated from operations and proceeds from share offerings[41](index=41&type=chunk) Liquidity Position (As of December 31) | Indicator | 2019 (Thousand HKD) | March 31, 2019 (Thousand HKD) | Change | | :------------------------------- | :------------------ | :---------------------------- | :------- | | Net Current Assets | 32,500 | 37,700 | -13.8% | | Cash and Bank Balances | 8,200 | 10,200 | -19.5% | | Current Assets | 34,300 | 39,200 | -12.5% | | Current Liabilities | 1,800 | 1,500 | +20.0% | | Current Ratio | 18.7 times | 26.4 times | -29.2% | - Net current assets decreased by approximately **HKD 5.2 million**, primarily due to the withdrawal of cash and bank balances for working capital purposes[41](index=41&type=chunk) [Gearing Ratio](index=14&type=section&id=%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E6%AF%94%E7%8E%87) As of December 31, 2019, the Group's gearing ratio increased to 13.6%, primarily due to a decrease in retained profits - As of December 31, 2019, the gearing ratio was approximately **13.6%**, higher than **7.8%** as of March 31, 2019[44](index=44&type=chunk) - The increase in gearing ratio was primarily due to a decrease in retained profits[44](index=44&type=chunk) [Capital Expenditure](index=14&type=section&id=%E8%B5%84%E6%9C%AC%E5%BC%80%E6%94%AF) For the nine months ended December 31, 2019, the Group's capital expenditure was approximately HKD 1.9 million, mainly for furniture and fixtures for new counters and beverage stores - For the nine months ended December 31, 2019, capital expenditure was approximately **HKD 1.9 million**, slightly lower than **HKD 2.0 million** in the corresponding period last year[45](index=45&type=chunk) - Capital expenditure was primarily for furniture and fixtures for new counters and beverage stores[45](index=45&type=chunk) [Foreign Exchange Risk](index=14&type=section&id=%E5%A4%96%E6%B1%87%E9%A3%8E%E9%99%A9) The Group's principal operations and assets and liabilities are denominated in HKD, resulting in insignificant foreign exchange risk, with no hedging instruments employed - All of the Group's assets and liabilities are located in Hong Kong and denominated in HKD, and almost all revenue is derived from Hong Kong, resulting in insignificant foreign exchange risk[46](index=46&type=chunk) - No hedging instruments are used for RMB purchase payments, as they represent a small portion of total purchases and settlement within **60 days** does not give rise to significant foreign exchange risk[46](index=46&type=chunk) [Key Risks and Uncertainties](index=14&type=section&id=%E4%B8%BB%E8%A6%81%E9%A3%8E%E9%99%A9%E5%8F%8A%E4%B8%8D%E6%98%8E%E6%9C%97%E5%9B%A0%E7%B4%A0) The Group faces credit, interest rate, and liquidity risks, but manages these through stringent credit reviews, absence of bank borrowings, and cash flow forecasts [Credit Risk](index=14&type=section&id=%E4%BF%A1%E8%B4%B7%E9%A3%8E%E9%99%A9) The Group only transacts with reputable third parties and conducts stringent credit reviews for credit customers, resulting in immaterial bad debt risk - The Group only transacts with approved and reputable third parties[47](index=47&type=chunk) - Credit terms are subject to stringent credit review procedures, and receivable balances are continuously monitored, resulting in immaterial bad debt risk[47](index=47&type=chunk) [Interest Rate Risk](index=14&type=section&id=%E5%88%A9%E7%8E%87%E9%A3%8E%E9%99%A9) The Group had no bank borrowings at the end of the reporting period, thus no interest rate risk arising from borrowings - As of December 31, 2019, the Group had no bank borrowings, thus no interest rate risk arising from borrowings[48](index=48&type=chunk) - The risks arising from commercial bank deposits are not significant or immediate[48](index=48&type=chunk) [Liquidity Risk](index=14&type=section&id=%E6%B5%81%E5%8A%A8%E8%B5%84%E9%87%91%E9%A3%8E%E9%99%A9) The Group manages its funding shortage risk through monthly cash flow forecasts, aiming to maintain a balance between funding sustainability and flexibility - The Group uses monthly cash flow forecasts to monitor its funding shortage risk[49](index=49&type=chunk) - The objective is to maintain a balance between funding sustainability and flexibility through cash from fixed deposits and funds generated from operations[49](index=49&type=chunk) [Employees and Remuneration Policy](index=15&type=section&id=%E9%9B%87%E5%91%98%E5%8F%8A%E8%96%AA%E9%85%AC%E6%94%BF%E7%AD%96) As of December 31, 2019, the Group's employee count increased to 70, total staff costs rose to HKD 11.7 million, and remuneration is determined based on qualifications, position, and performance, with training provided - As of December 31, 2019, the Group had **70** employees working in Hong Kong, an increase from **56** in the corresponding period last year[52](index=52&type=chunk) - Total staff costs (including directors' emoluments and mandatory provident fund contributions) were approximately **HKD 11.7 million**, higher than **HKD 10.8 million** in the corresponding period last year[52](index=52&type=chunk) - Employee remuneration is determined based on qualifications, position, and performance, including salaries, allowances, and discretionary bonuses, with various training provided[52](index=52&type=chunk) [Dividends](index=15&type=section&id=%E8%82%A1%E6%81%AF) The Board has resolved not to declare any dividends for the nine months ended December 31, 2019, consistent with the prior year - For the nine months ended December 31, 2019, the Board did not declare any dividends[53](index=53&type=chunk) [Contingent Liabilities](index=15&type=section&id=%E6%88%96%E6%9C%89%E8%B4%9F%E5%80%BA) As of December 31, 2019, the Group had no significant contingent liabilities - As of December 31, 2019, the Group had no significant contingent liabilities[54](index=54&type=chunk) [Pledge of the Group's Assets](index=15&type=section&id=%E6%9C%AC%E9%9B%86%E5%9B%A2%E8%B5%84%E4%BA%A7%E4%B9%8B%E6%8A%B5%E6%8A%BC) As of December 31, 2019, the Group had no pledge of any assets - As of December 31, 2019, the Group had no pledge of any assets[55](index=55&type=chunk) [Events After Reporting Period](index=16&type=section&id=%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%90%8E%E4%BA%8B%E9%A1%B9) Subsequent to the reporting period, the Company's subsidiaries entered into a sale and purchase agreement with related party Chan Sing Hoi Enterprises Limited to acquire two properties for a total of HKD 95.5 million, partly paid by promissory notes. This acquisition constitutes a very substantial acquisition and connected transaction, subject to GEM Listing Rules' reporting, announcement, and shareholder approval requirements - On **February 4, 2020**, the Company's subsidiaries, Star Ocean Property Limited and Wing Luen Limited, entered into a sale and purchase agreement with related party Chan Sing Hoi Enterprises Limited[57](index=57&type=chunk) - Two properties were acquired for **HKD 50.0 million** for Property 1 and **HKD 45.5 million** for Property 2, totaling **HKD 95.5 million**[57](index=57&type=chunk) - Part of the consideration will be paid by promissory notes issued by the Company with principal amounts of **HKD 25.0 million** and **HKD 25.5 million**[57](index=57&type=chunk) - This acquisition constitutes a very substantial acquisition and connected transaction under the GEM Listing Rules, subject to reporting, announcement, and shareholder approval requirements[58](index=58&type=chunk) [Other Information](index=17&type=section&id=%E5%85%B6%E4%BB%96%E8%B5%84%E6%96%99) [Corporate Governance Practices and Compliance Matters](index=17&type=section&id=%E4%BC%81%E4%B8%9A%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A7%84%E5%8F%8A%E5%90%88%E8%A7%84%E4%BA%8B%E5%AE%9C) The Group is committed to maintaining high standards of corporate governance and has complied with all relevant provisions of the Corporate Governance Code set out in Appendix 15 of the GEM Listing Rules for the nine months ended December 31, 2019 - The Group is committed to maintaining high standards of corporate governance and complying with the Corporate Governance Code[62](index=62&type=chunk) - For the nine months ended December 31, 2019, the Company has complied with all relevant provisions of the Corporate Governance Code[62](index=62&type=chunk) [Directors' Securities Transactions](index=17&type=section&id=%E8%91%A3%E4%BA%8B%E7%9A%84%E8%AF%81%E5%88%B8%E4%BA%A4%E6%98%93) The Group has adopted a code of conduct for directors' securities transactions, and all directors confirmed compliance with the code during the reporting period - The Group has adopted a code of conduct for directors' securities transactions, with terms no less exacting than the required standards set out in the GEM Listing Rules[63](index=63&type=chunk) - Following specific enquiries, all directors confirmed compliance with the code of conduct for the nine months ended December 31, 2019[63](index=63&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=17&type=section&id=%E4%B9%B0%E5%8D%96%E6%88%96%E8%B5%8E%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E7%9A%84%E4%B8%8A%E5%B8%82%E8%AF%81%E5%88%B8) For the nine months ended December 31, 2019, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the nine months ended December 31, 2019, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[64](index=64&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares or Debentures of the Company and its Associated Corporations](index=18&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E6%9C%80%E9%AB%98%E8%A1%8C%E6%94%BF%E4%BA%BA%E5%91%98%E4%BA%8E%E6%9C%AC%E5%85%AC%E5%8F%B8%E5%8F%8A%E5%85%B6%E7%9B%B8%E8%81%94%E6%B3%95%E5%9B%A2%E8%82%A1%E4%BB%BD%E3%80%81%E7%9B%B8%E5%85%B3%E8%82%A1%E4%BB%BD%E6%88%96%E5%80%BA%E6%9D%83%E8%AF%81%E7%9A%84%E6%9D%83%E7%9B%8A%E5%8F%8A%E6%B7%A1%E4%BB%93) As of December 31, 2019, several directors and the chief executive held long positions in the Company's ordinary shares and underlying shares, primarily through controlled corporation Profit Ocean Enterprises Limited holding 75% equity, and a small number of beneficially owned shares through the share option scheme Directors' and Chief Executive's Long Positions in Ordinary Shares and Underlying Shares of the Company (As of December 31, 2019) | Name of Director/Chief Executive | Capacity/Nature of Interest | Number of Shares/Underlying Shares Held/Interested | Approximate Percentage of Shareholding | | :------------------------------- | :-------------------------- | :------------------------------------------------ | :----------------------------------- | | Chan Kwong Yuen | Interest in controlled corporation | 270,000,000 | 75% | | | Beneficial owner | 3,200,000 | 0.89% | | Chan Kun Yuen | Interest in controlled corporation | 270,000,000 | 75% | | | Beneficial owner | 3,200,000 | 0.89% | | Chan Shu Yuen | Interest in controlled corporation | 270,000,000 | 75% | | | Beneficial owner | 3,200,000 | 0.89% | | Siu Tsz Ming | Beneficial owner | 200,000 | 0.06% | | Lee Wai Ho | Beneficial owner | 200,000 | 0.06% | | Wong Tsz Chung | Beneficial owner | 200,000 | 0.06% | - The **270,000,000** shares are held by Profit Ocean Enterprises Limited, which is equally owned by Mr. Chan Tat Yuen, Mr. Chan Kun Yuen, Mr. Chan Shu Yuen, and Mr. Chan Kwong Yuen[68](index=68&type=chunk) - The beneficially owned shares are derived from share options granted under the share option scheme adopted on **March 14, 2018**[70](index=70&type=chunk) [Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares of the Company](index=20&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E4%B8%9C%E5%8F%8A%E5%85%B6%E4%BB%96%E4%BA%BA%E5%A3%AB%E4%BA%8E%E6%9C%AC%E5%85%AC%E5%8F%B8%E8%82%A1%E4%BB%BD%E5%8F%8A%E7%9B%B8%E5%85%B3%E8%82%A1%E4%BB%BD%E7%9A%84%E6%9D%83%E7%9B%8A%E5%8F%8A%E6%B7%A1%E4%BB%93) As of December 31, 2019, Profit Ocean Enterprises Limited was a substantial shareholder of the Company, holding 75% equity. Mr. Chan Tat Yuen and his spouse Ms. Chu Man, along with other directors and their spouses, held significant shares through controlled corporations or spouse interests Substantial Shareholders' and Other Persons' Long Positions in Ordinary Shares and Underlying Shares of the Company (As of December 31, 2019) | Name of Shareholder/Person | Nature and Capacity of Interest | Number of Shares/Underlying Shares Held/Interested | Approximate Percentage of Total Issued Shares | | :------------------------- | :------------------------------ | :------------------------------------------------ | :-------------------------------------------- | | Profit Ocean | Beneficial owner | 270,000,000 | 75% | | Tri-Luck | Interest in controlled corporation | 270,000,000 | 75% | | Wealth City | Interest in controlled corporation | 270,000,000 | 75% | | Tin King | Interest in controlled corporation | 270,000,000 | 75% | | Coastal Lion | Interest in controlled corporation | 270,000,000 | 75% | | Mr. Chan Tat Yuen | Interest in controlled corporation | 270,000,000 | 75% | | | Beneficial owner | 3,200,000 | 0.89% | | Ms. Chu Man | Spouse interest | 270,000,000 | 75% | | | | 3,200,000 | 0.89% | - The issued share capital of Profit Ocean is equally held by Tri-Luck, Wealth City, Tin King, and Coastal Lion, which are wholly-owned by Mr. Chan Tat Yuen, Mr. Chan Kun Yuen, Mr. Chan Shu Yuen, and Mr. Chan Kwong Yuen, respectively[78](index=78&type=chunk) - An acting in concert arrangement exists among Mr. Chan Tat Yuen, Mr. Chan Kun Yuen, Mr. Chan Shu Yuen, and Mr. Chan Kwong Yuen, each deemed to be interested in all shares held by Profit Ocean[78](index=78&type=chunk) - Spouses of several directors (e.g., Ms. Chu Man, Ms. Chan King Chi, Ms. Po Miu Kuen, Ms. Ng Wai Lam) are deemed to be interested in the relevant shares by virtue of spouse interests[79](index=79&type=chunk) [Share Option Scheme](index=22&type=section&id=%E8%B4%AD%E8%82%A1%E6%9D%83%E8%AE%A1%E5%88%92) The Company adopted a share option scheme on March 14, 2018, and for the nine months ended December 31, 2019, a total of 32,300,000 share options were granted, of which 31,550,000 remained unexercised, with an exercise price of HKD 0.189 - The Company adopted a share option scheme on **March 14, 2018**, aiming to grant share options to participants including employees, consultants, advisors, and directors[86](index=86&type=chunk) Details of Share Option Scheme Movements (For the nine months ended December 31, 2019) | Category of Participants | Date of Grant | Exercise Period | Exercise Price (HKD) | Granted During the Period | Unexercised (December 31, 2019) | | :----------------------- | :------------- | :------------------------- | :------------------- | :------------------------ | :------------------------------ | | Directors | September 9, 2019 | June 1, 2020 to May 31, 2023 | 0.189 | 10,200,000 | 10,200,000 | | Substantial Shareholders | September 9, 2019 | June 1, 2020 to May 31, 2023 | 0.189 | 3,200,000 | 3,200,000 | | Other Employees | September 9, 2019 | June 1, 2020 to May 31, 2023 | 0.189 | 18,900,000 | 18,150,000 | | **Total** | | | | **32,300,000** | **31,550,000** | - **750,000** share options for other employees lapsed during the period[87](index=87&type=chunk) [Competing Interests](index=23&type=section&id=%E7%AB%9E%E4%BA%89%E6%9D%83%E7%9B%8A) The Directors are unaware of any business or interest held by Directors or controlling shareholders and their close associates that constitutes or may constitute a competing business or interest with the Group's business during the reporting period - The Directors are unaware of any business or interest held by Directors or the Company's controlling shareholders or any of their respective close associates that constitutes or may constitute a competing business or interest with the Group's business for the nine months ended December 31, 2019[91](index=91&type=chunk) [Audit Committee](index=23&type=section&id=%E5%AE%A1%E6%A0%B8%E5%A7%94%E5%91%98%E4%BC%9A) The Company's Audit Committee comprises three independent non-executive directors, responsible for reviewing and overseeing financial reporting, risk management, and internal control systems, and has reviewed the current period's results, deeming them compliant with applicable accounting standards and GEM Listing Rules - The Audit Committee was established on **March 14, 2018**, comprising all three independent non-executive directors, with Mr. Siu Tsz Ming as Chairman[92](index=92&type=chunk) - Its primary responsibilities include reviewing and overseeing the Group's financial reporting process, risk management, and internal control systems, and reviewing financial information[92](index=92&type=chunk) - The Audit Committee has reviewed the Company's unaudited condensed consolidated results for the nine months ended December 31, 2019, and considers them to be in compliance with applicable accounting standards and the requirements of the GEM Listing Rules[92](index=92&type=chunk) [Compliance Adviser's Interests](index=23&type=section&id=%E5%90%88%E8%A7%84%E9%A1%BE%E9%97%AE%E6%9D%83%E7%9B%8A) The Company has appointed Kingston Corporate Finance Limited as its compliance adviser, and as of the reporting date, neither the compliance adviser nor its associates held any interests in the share capital of the Company or any member of the Group that are required to be disclosed to the Company - The Company has appointed Kingston Corporate Finance Limited as its compliance adviser[93](index=93&type=chunk) - As of December 31, 2019, and up to the date of this report, neither the compliance adviser nor its directors, employees, or close associates held any interests in the share capital of the Company or any member of the Group that are required to be disclosed to the Company[93](index=93&type=chunk) [By Order of the Board](index=23&type=section&id=%E6%89%BF%E8%91%A3%E4%BA%8B%E4%BC%9A%E5%91%BD) This report was signed and released by Mr. Chan Kwong Yuen, Chairman of the Board, on February 12, 2020. The Board comprises three executive directors and three independent non-executive directors - This report was signed by Mr. Chan Kwong Yuen, Chairman of Wing Kee Tea House Group Limited, on **February 12, 2020**[94](index=94&type=chunk)[95](index=95&type=chunk) - The Board comprises executive directors Mr. Chan Kwong Yuen, Mr. Chan Kun Yuen, and Mr. Chan Shu Yuen, and independent non-executive directors Mr. Wong Tsz Chung, Mr. Siu Tsz Ming, and Mr. Lee Wai Ho[94](index=94&type=chunk)[95](index=95&type=chunk)

Financial Performance - Revenue for the six months ended September 30, 2019, was HKD 15,997,000, a decrease of 6% compared to HKD 17,000,000 for the same period in 2018[7] - Gross profit for the six months ended September 30, 2019, was HKD 12,183,000, representing a gross margin of approximately 76.3%[7] - The company reported a loss before tax of HKD 6,251,000 for the six months ended September 30, 2019, compared to a loss of HKD 1,637,000 for the same period in 2018[7] - Basic and diluted loss per share for the six months ended September 30, 2019, was HKD 1.72, compared to HKD 0.26 for the same period in 2018[7] - The company reported a net loss before tax of HKD 3,204,000 for the three months ended September 30, 2019, compared to a loss of HKD 925,000 for the same period in 2018[43] - For the six months ended September 30, 2019, the company reported a loss attributable to equity holders of HKD 6,251,000, compared to a loss of HKD 5,219,000 for the same period in 2018, representing an increase in loss of approximately 19.8%[43] - The group reported a significant loss of approximately HKD 6.251 million for the period, compared to a loss of HKD 5.219 million in the previous year[73] Assets and Liabilities - Total assets as of September 30, 2019, were HKD 32,982,000, a decrease from HKD 39,207,000 as of March 31, 2019[8] - The company's cash and bank balances decreased to HKD 2,788,000 as of September 30, 2019, from HKD 10,172,000 as of March 31, 2019[8] - Trade receivables as of September 30, 2019, amounted to HKD 704,000, down 50.7% from HKD 1,429,000 as of March 31, 2019[49] - The total lease liabilities as of September 30, 2019, were HKD 2,096,000, with HKD 1,043,000 due within one year[53] - The group had a total minimum lease payment obligation of HKD 6.694 million due within one year as of September 30, 2019, compared to HKD 3.939 million as of March 31, 2019[61] - The debt-to-equity ratio as of September 30, 2019, was approximately 15.5%, an increase from 7.8% as of March 31, 2019, due to increased accrued expenses and decreased retained earnings[83] Revenue Sources - Tea product sales for the six months ended September 30, 2019, amounted to HKD 15,508,000, a decrease of 9% compared to HKD 17,022,000 for the same period in 2018[25] - Retail sales of food and beverages reached HKD 489,000 for the six months ended September 30, 2019, with no sales reported in the same period of 2018[25] - Total revenue for the six months ended September 30, 2019, was HKD 15,997,000, down from HKD 17,022,000 in the previous year, representing a decline of approximately 6%[25] Expenses - The company incurred administrative expenses of HKD 18,169,000 for the six months ended September 30, 2019, up from HKD 6,962,000 for the same period in 2018[7] - Administrative expenses for the six months ended September 30, 2019, increased significantly compared to the same period in 2018, primarily due to new staff hiring and increased rental costs[78] - Total employee costs for the six months ended September 30, 2019, were approximately HKD 7.1 million, up from HKD 6.7 million for the same period in 2018[89] Market Conditions - The company experienced a decline in retail sales due to ongoing social unrest, with sales in July, August, and September dropping by 11.4%, 23.0%, and 18.3% year-on-year, respectively[74] - The group anticipates negative growth for the remainder of 2019 due to widespread protests affecting the Hong Kong economy[81] - The company's management discussed the impact of the ongoing social events on revenue contraction and increased administrative expenses, contributing to the reported losses[76] Future Outlook - The company has not provided specific guidance for future performance but indicated a focus on improving operational efficiency and exploring new market opportunities[12] - The company has sufficient cash to meet current business needs and obligations, but will adopt prudent cash management strategies if revenue continues to decline[81] Shareholder Information - The company has a significant shareholder structure, with Profit Ocean Enterprises Limited holding 270,000,000 shares, representing 75% of the total issued shares[114] - The major shareholders, including Tri-Luck, Wealth City, Tianjing, and Coastal Lion, each hold 25% of Profit Ocean's issued share capital[112] - The beneficial ownership of the shares is concentrated among four individuals: Chen Da Yuan, Chen Gen Yuan, Chen Shu Yuan, and Chen Guang Yuan, each holding 270,000,000 shares[114] - The company has not pledged any shares to any contracting parties, and there are no covenants restricting specific performance conditions that could lead to a breach of loan agreements[120] Compliance and Governance - The audit committee was established on March 14, 2018, and consists of three independent non-executive directors, with responsibilities including reviewing financial reporting and risk management[128] - The company has a clear governance structure in place, ensuring compliance with GEM listing rules and internal controls[128] - The company maintains compliance with the Securities and Futures Ordinance regarding the disclosure of interests and positions in shares[120]

Financial Performance - Revenue for the three months ended June 30, 2019, was HKD 8,524,000, a decrease of 6.2% compared to HKD 9,085,000 for the same period in 2018[4] - Gross profit for the same period was HKD 6,446,000, down 10.2% from HKD 7,178,000 year-over-year[4] - The company reported a loss before tax of HKD 3,047,000, an improvement from a loss of HKD 4,286,000 in the previous year, indicating a 29% reduction in losses[4] - Basic and diluted loss per share was HKD 0.85, compared to HKD 1.23 for the same period in 2018, reflecting a 30.9% improvement[4] - The group's consolidated revenue for the three months ended June 30, 2019, was approximately HKD 8.5 million, a decrease of about 6.2% compared to HKD 9.1 million in 2018[25] - Gross profit for the same period was approximately HKD 6.4 million, down about 10.2% from HKD 7.2 million in 2018, with a gross margin of approximately 75.6% compared to 79.0% in the previous year[25] - The net loss for the period was approximately HKD 3.0 million, compared to a net loss of HKD 4.3 million in the same period last year[25] - Sales of limited edition aged Pu-erh tea cakes significantly declined by approximately HKD 1.6 million, contributing to the overall decrease in revenue[25] Administrative Expenses - Administrative expenses decreased to HKD 9,216,000 from HKD 11,084,000, representing a reduction of 16.9%[4] - Administrative expenses increased due to new advertising campaigns, new lease agreements, and higher costs associated with IT system maintenance[26] Shareholder Information - As of June 30, 2019, the company has 270,000,000 shares held by Profit Ocean Enterprises Limited, representing 75% of the total issued shares[34] - The major shareholders, including Tri-Luck, Wealth City, Tianjing, and Coastal Lion, each hold 25% of Profit Ocean, which is fully owned by the respective individuals[40] - No other individuals, apart from the disclosed directors and major shareholders, hold any interests in the company's shares as of June 30, 2019[41] - The directors and senior management collectively own 270,000,000 shares, each holding 75% in the controlled corporation[34] - The company has no record of any interests or positions held by directors or senior management in the company's shares beyond what has been disclosed[41] - The compliance advisor has confirmed no interests in the company that need to be disclosed under GEM listing rules as of June 30, 2019[45] - The company has established a consistent action arrangement among its major shareholders regarding the shares held in Profit Ocean[35] Compliance and Governance - The financial statements were prepared in accordance with Hong Kong Financial Reporting Standards, ensuring compliance and accuracy[10] - The company has appointed KGI Asia Limited as its compliance advisor to ensure adherence to GEM listing rules[45] - The Audit Committee was established on March 14, 2018, in compliance with GEM listing rules, consisting of three independent non-executive directors[47] - The Audit Committee reviewed the unaudited condensed consolidated results for the three months ended June 30, 2019, confirming compliance with applicable accounting standards and GEM listing rules[47] Market and Strategic Outlook - The company continues to operate in the retail business of Chinese tea and related products, with no significant changes in strategy noted[9] - The company remains cautious about opening new stores and counters, aiming to maximize the contribution profit from existing locations[27] - The economic environment remains uncertain, with a GDP growth of only 0.6% year-on-year in the second quarter of 2019, leading to a decrease in consumer spending[27] - There are no indications of market expansion or acquisitions mentioned in the report[4] - The company has not reported any new product launches or technological advancements during this quarter[4] Dividends - The company did not declare any interim dividend for the three months ended June 30, 2019, consistent with the previous year[20] - No interim dividend was declared for the three months ended June 30, 2019, consistent with the previous year[46] Events After Reporting Period - No significant events occurred after the reporting period that would impact the group's performance for the three months ended June 30, 2019[28] Share Pledges and Conflicts - There were no pledges of shares by the controlling shareholders to any contracting parties as of June 30, 2019[42] - The directors are not aware of any competing businesses or interests that may conflict with the company's operations as of June 30, 2019[43]

Financial Performance - The group's revenue decreased by 1.1% from approximately HKD 45.4 million for the year ended March 31, 2018, to approximately HKD 44.9 million for the year ended March 31, 2019[11]. - The net loss attributable to shareholders for the year ended March 31, 2019, was approximately HKD 2.8 million, compared to a net loss of approximately HKD 3.2 million in the previous year, primarily due to non-recurring listing expenses[11]. - The group recorded a net profit of approximately HKD 1.2 million for the year, excluding listing expenses of about HKD 4.0 million[11]. - The group's consolidated revenue for the fiscal year ended March 31, 2019, was approximately HKD 44.9 million, a decrease of 1.1% compared to HKD 45.4 million in 2018[21]. - The annual gross profit was approximately HKD 35.0 million, down 3.0% from HKD 36.1 million in 2018, with a gross margin of 78.0%[21]. - The net loss for the reporting year was approximately HKD 2.8 million, an improvement from a net loss of HKD 3.2 million in 2018, primarily due to non-recurring listing expenses of about HKD 4.0 million[21]. - Sales and distribution costs decreased to approximately HKD 2.1 million, a reduction of 32.3% from HKD 3.1 million in 2018[26]. Business Expansion and Strategy - The company is expanding its business into food and beverage retail, launching a new product line in mid-April 2019, including Hong Kong-style coffee and mixed drinks[9]. - The board maintains a cautious outlook on business prospects and plans to closely follow the expansion strategy[13]. - The company aims to capture the younger generation market with innovative tea blends and flavors[9]. - The company is facing challenges in identifying new retail locations that provide a safe buffer between existing points and cost-effectiveness[8]. - The group opened two new counters, contributing to a slight revenue decline of 1.1% due to economic stagnation caused by the US-China trade tensions[19]. - The company opened two new retail points in Hong Kong during the year, including a counter in Kwun Tong and a store in Shatin[65]. - The group opened a new concept store in Tsim Sha Tsui on April 15, 2019, selling tea and coffee beverages made from Chinese tea leaves and Italian coffee beans[77]. Financial Position and Capital Management - The company raised approximately HKD 25.2 million from the share offering, net of related costs, in April 2018[12]. - The company's equity attributable to shareholders increased significantly to approximately HKD 41.2 million, a rise of HKD 39.1 million or 1,861.9% compared to 2018[42]. - The company's debt-to-equity ratio improved to 7.8% as of March 31, 2019, down from 760.7% in 2018, primarily due to the repayment of bank loans and the issuance of new shares[54]. - The net proceeds from the issuance of 90,000,000 ordinary shares at HKD 0.54 per share amounted to approximately HKD 25.2 million, which was allocated for various operational improvements[56]. - Approximately 49.8% of the net proceeds were used for opening new retail locations, totaling HKD 12.6 million[57]. Operational Efficiency and Cost Management - The group's inventory net value at the end of the reporting year was approximately HKD 7.4 million, an increase of 17.5% from HKD 6.3 million in 2018[32]. - Trade and other receivables decreased to approximately HKD 4.8 million, down 5.9% from HKD 5.1 million in 2018[34]. - Current assets net value increased to approximately HKD 37.7 million, a significant rise of 5,285.7% from HKD 0.7 million in 2018[36]. - Cash and bank balances were approximately HKD 10.2 million, an increase of 251.7% from HKD 2.9 million in 2018[36]. - Trade and other payables decreased to approximately HKD 1.5 million, a reduction of 69.4% from HKD 4.9 million in 2018[37]. - The total employee costs for the year ended March 31, 2019, amounted to approximately HKD 14.9 million, compared to HKD 11.0 million in 2018[46]. Corporate Governance and Board Structure - The board consists of 6 members, including 3 executive directors and 3 independent non-executive directors, ensuring a balanced governance structure[125]. - The board held a total of 7 meetings during the year ending March 31, 2019, to approve quarterly, interim, and final results, as well as other significant operational matters[140]. - All independent non-executive directors possess professional accounting and financial experience, enabling them to provide constructive advice to the board[128]. - The company has implemented a board diversity policy, considering various factors such as gender, age, ethnicity, and professional experience in the selection of board candidates[129]. - The company recognizes the importance of continuous training and professional development for directors to enhance corporate governance quality[130]. - The chairman and CEO roles are separated, with Mr. Chan Kwong Yuen serving as the chairman and Mr. Chan Kun Yuen as the CEO[135]. - The board has authorized management to handle daily operations while retaining oversight of strategic objectives and financial performance[124]. Risk Management and Internal Control - The company has established policies and procedures for regular risk assessments to identify and manage operational, accounting, and compliance risks[178]. - The board is responsible for the risk management and internal control systems, which are reviewed annually for effectiveness[183]. - The company has not established an internal audit department but will continue to review the need for one at least annually[184]. - The company aims to maintain a robust internal control system to ensure the accuracy and completeness of its disclosures[180]. Environmental and Social Responsibility - The group emphasizes the importance of maintaining good relationships with suppliers, customers, and stakeholders, with no significant disputes reported during the review period[76]. - The group actively encourages employees to participate in energy-saving activities and adheres to environmental laws and regulations in Hong Kong[86]. - The group believes its operations do not have any significant impact on the environment and natural resources due to the nature of its business[98]. - The group reduced paper consumption from 59,410 sheets in 2018 to 33,000 sheets in 2019, reflecting a shift towards paperless operations[93]. - The group consumed 171,594 units of paper packaging in 2019, down from 183,326 units in 2018, indicating effective monitoring of packaging materials[97]. - The group donated approximately HKD 113,000 to support community services and school education for non-profit organizations during the reporting year[121]. Employee Relations and Welfare - The company provides competitive compensation and benefits, including overtime and meal allowances, commissions, and bonuses[1]. - All employees undergo annual performance evaluations based on the same performance standards, which influence bonuses, salary increases, and promotions[105]. - The company offers biannual free health check-ups to ensure employees maintain good health[102]. - There were no significant labor disputes with employees during the reporting year[101]. - The company is committed to continuous training and self-development for its employees[165]. Shareholder Communication and Rights - The company has established a comprehensive communication system to ensure transparency and timely disclosure to stakeholders, including public, analysts, and shareholders[197]. - Shareholders have the right to propose independent resolutions on important matters, including the election of individual directors, during the annual general meeting[198]. - The voting results for shareholder meetings will be published on the Hong Kong Stock Exchange website and the company's official website[198]. - The company is committed to adhering to the disclosure requirements under the GEM Listing Rules and the guidelines for insider information disclosure issued by the Securities and Futures Commission[197]. - The annual general meeting provides a platform for shareholders to communicate with the board of directors and raise questions[197]. - The company has strict prohibitions against unauthorized use of confidential or insider information[197]. - Shareholders can receive company communications electronically through the company's website to facilitate effective communication[197]. - The board of directors must convene a meeting within 21 days if requested by shareholders, or the requesting shareholders may convene the meeting themselves[200].

Financial Performance - The group's consolidated revenue for the nine months ended December 31, 2018, was approximately HKD 34.7 million, representing a growth of about 3.9% compared to HKD 33.4 million for the same period in 2017[7]. - Gross profit for the same period was approximately HKD 27.2 million, an increase of about 3.0%, with a gross profit margin of approximately 78.5%, slightly down from 79.0% in the previous year[7]. - The net loss for the period was approximately HKD 1.4 million, an improvement from a net loss of HKD 1.9 million in the same period of 2017, primarily due to non-recurring listing expenses of approximately HKD 4.0 million[7]. - For the nine months ended December 31, 2018, the company's revenue was HKD 34,701,000, an increase of 3.83% compared to HKD 33,417,000 for the same period in 2017[50]. - The gross profit for the nine months ended December 31, 2018, was HKD 27,237,000, representing a gross margin of 78.5%[50]. - The net loss for the nine months ended December 31, 2018, was HKD 1,353,000, compared to a net loss of HKD 1,900,000 for the same period in 2017, indicating an improvement[50]. - Basic and diluted loss per share for the nine months ended December 31, 2018, was HKD 0.38, compared to HKD 0.70 for the same period in 2017[50]. - The pre-tax profit for the nine months ended December 31, 2018, was a loss of HKD 1,353,000, compared to a loss of HKD 1,900,000 for the same period in 2017[68]. Expenses and Costs - Administrative expenses increased significantly due to new hires and ongoing listing maintenance costs, impacting net profit when excluding listing costs[9][11]. - The company's operating lease expenses for the nine months ended December 31, 2018, included minimum lease payments of HKD 6,489,000, up from HKD 5,931,000 in the same period of 2017[63]. - The income tax expense for the nine months ended December 31, 2018, was HKD 934,000, compared to HKD 1,472,000 for the same period in 2017[65]. - The cost of goods sold for the nine months ended December 31, 2018, was HKD 6,471,000, an increase from HKD 6,197,000 in the same period of 2017[63]. - The auditor's remuneration for the nine months ended December 31, 2018, was HKD 245,000, significantly higher than HKD 30,000 for the same period in 2017[63]. - The company incurred listing expenses of HKD 4,000,000 for the nine months ended December 31, 2018, down from HKD 9,212,000 in the same period of 2017[63]. Assets and Liabilities - As of December 31, 2018, the group's current assets net value was approximately HKD 40.2 million, a significant increase of about 5,642.9% from HKD 0.7 million on March 31, 2018[15]. - Cash and bank balances increased to approximately HKD 29.8 million, up about 751.4% from HKD 3.5 million on March 31, 2018, primarily due to funds received from the IPO[15]. - The debt-to-equity ratio improved to 7.4% as of December 31, 2018, down from approximately 760.7% on March 31, 2018, following the repayment of bank loans and issuance of new shares[16]. - The total equity as of December 31, 2018, was HKD 42,631,000, an increase from HKD 3,390,000 as of December 31, 2017[51]. - As of December 31, 2018, the group had no significant contingent liabilities[26]. - As of December 31, 2018, the group had no assets pledged as collateral[27]. Corporate Governance and Management - The group maintained high standards of corporate governance and complied with the GEM Listing Rules during the reporting period[29]. - The board of directors did not recommend the distribution of dividends for the nine months ended December 31, 2018, compared to HKD 2.0 million for the same period in 2017[25]. - The company did not purchase, sell, or redeem any of its listed securities during the nine months ended December 31, 2018[31]. - The company did not grant any financial assistance or guarantees to any controlling shareholders during the nine months ended December 31, 2018[43]. - The company has adopted a board diversity policy for the nomination and appointment of new directors, considering various diversity aspects[44]. - The audit committee reviewed the financial results for the nine months ended December 31, 2018, and confirmed compliance with applicable accounting standards[46]. - The company has appointed KGI Asia Limited as its compliance advisor, with no interests reported in the company's equity as of December 31, 2018[47]. - The company was listed on the GEM of the Hong Kong Stock Exchange on April 16, 2018, following a restructuring process[54]. Employee and Training - As of December 31, 2018, the total employee cost for the group was approximately HKD 10.8 million, an increase of 44% compared to HKD 7.5 million for the same period in 2017[24]. - The group provided various training programs for employees to enhance their skills[24]. Business Development - The group opened two new counters in shopping malls, contributing to expected steady business growth despite potential economic uncertainties due to the ongoing US-China trade tensions[14]. - Tea product sales for the nine months ended December 31, 2018, reached HKD 34,701,000, an increase of 3.83% compared to HKD 33,417,000 for the same period in 2017[60]. - Capital expenditures for the nine months ended December 31, 2018, were approximately HKD 2.0 million, mainly for the furniture and fixtures of the new counters[17]. Shareholding Structure - As of December 31, 2018, the directors and senior management held a total of 270,000,000 shares, representing 75% of the company's total shares[34]. - Profit Ocean Enterprises Limited, the major shareholder, held 270,000,000 shares, also representing 75% of the total shares[36]. Events and Contingencies - There were no significant events after the reporting period that would affect the group's performance for the nine months ended December 31, 2018[28].