Financial Performance - The Group recorded a revenue of approximately HK$352.1 million for the nine months ended 31 December 2022, representing an increase of approximately HK$90.2 million or 34.4% compared to the same period in 2021[7]. - The Group achieved a net profit of approximately HK$4.0 million for the nine months ended 31 December 2022, a significant turnaround from a net loss of approximately HK$11.3 million for the same period in 2021[7]. - The gross profit for the nine months ended 31 December 2022 was approximately HK$16.9 million, compared to HK$10.4 million for the same period in 2021, reflecting improved operational efficiency[13]. - The Group's profit from operations for the nine months ended 31 December 2022 was approximately HK$5.6 million, compared to a loss of approximately HK$7.8 million for the same period in 2021[13]. - The profit before taxation for the nine months ended 31 December 2022 was approximately HK$4.0 million, compared to a loss of approximately HK$11.5 million for the same period in 2021[13]. - For the three months ended December 31, 2022, the company reported a profit of HK$236,000, compared to a loss of HK$6,041,000 in the same period of 2021, marking a significant turnaround[14]. - For the nine months ended December 31, 2022, the company achieved a profit of HK$4,031,000, a substantial improvement from a loss of HK$11,421,000 in the previous year[14]. - The total comprehensive income for the period attributable to owners of the company was HK$236,000 for the three months and HK$4,031,000 for the nine months, compared to losses of HK$6,134,000 and HK$12,795,000 respectively in 2021[15]. Revenue Sources - Diesel oil sales contributed HK$344,458,000, representing a 34.0% increase from HK$257,005,000 in the previous year[34]. - Marine diesel oil sales increased significantly to HK$6,599,000, up from HK$3,162,000, marking a 108.7% growth[34]. - Revenue from diesel oil sales amounted to approximately HK$344.5 million, representing approximately 97.8% of the Group's total revenue for the nine months ended 31 December 2022[111]. Expenses and Costs - The increase in revenue was primarily driven by higher sales of diesel oil and a reduction in administrative expenses, although this was partially offset by an increase in other operating expenses[8]. - The Group's administrative expenses decreased to approximately HK$12.1 million for the nine months ended 31 December 2022, down from HK$12.3 million in the same period in 2021[13]. - The finance costs for the nine months ended 31 December 2022 were approximately HK$2.2 million, a reduction from HK$3.4 million for the same period in 2021[13]. - The cost of inventories recognized as expenses for the nine months ended December 31, 2022, was HK$328,770,000, which is a 33.3% increase from HK$246,673,000 in the previous year[49]. - The Group's cost of sales for the nine months ended December 31, 2022 was approximately HK$335.2 million, an increase of approximately 33.3% from approximately HK$251.5 million for the same period in 2021[112]. Dividends and Share Capital - The Board does not recommend the payment of any dividend for the nine months period ended 31 December 2022[10]. - The company’s share capital increased to HK$13,752,000 as of December 31, 2022, from HK$10,080,000 at the beginning of the period due to the issuance of new shares[15]. - The group did not declare any dividends for the nine months ended December 31, 2022, compared to no dividends declared for the same period in 2021[56]. Equity and Financial Position - As of December 31, 2022, the company's total equity stood at HK$111,442,000, reflecting an increase from HK$95,370,000 at the beginning of the period[15]. - The Group's capital structure included equity attributable to the owners of the Company of approximately HK$111.4 million as of 31 December 2022, an increase from approximately HK$95.4 million as of 31 March 2022[127]. - As of December 31, 2022, the Group's current assets were approximately HK$143.7 million, while current liabilities were approximately HK$91.0 million, resulting in a current ratio of approximately 1.6[120]. - The gearing ratio improved to approximately 34.9% as of 31 December 2022, down from 46.2% as of 31 March 2022[123]. Operational Developments - The Group's performance indicates a positive trend in operational recovery and financial stability moving forward[8]. - The Group's operations focus on the sale and transportation of diesel oil and related products[22]. - The company operates primarily in Hong Kong, with all revenue derived from external customers located in the region[37]. - The Group will focus on talent recruitment and strengthen business development and marketing strategies in the diesel oil market due to a challenging business environment[105][108]. Compliance and Governance - The Audit Committee reviewed the Quarterly Financial Statements for the nine months ended December 31, 2022, confirming compliance with applicable accounting standards and GEM Listing Rules[192]. - The Company has established an Audit Committee to oversee internal control and risk management systems, comprising three independent non-executive Directors[190]. - There are no competing interests from controlling shareholders or Directors that could affect the Company's business during the reporting period[189]. Environmental Compliance - The Group continues to monitor its business operations to ensure compliance with environmental laws and regulations[158]. - No prosecution, penalty, or punishment has been imposed on the Group for violations of environmental laws as of the report date[163]. - The Group has implemented various environmental protection measures to minimize operational impact on the environment[161].

[CORPORATE INFORMATION](index=4&type=section&id=CORPORATE%20INFORMATION) [Board of Directors and Committees](index=4&type=section&id=Board%20of%20Directors%20and%20Committees) The Company's Board of Directors comprises executive and independent non-executive directors, supported by audit, remuneration, and nomination committees to ensure sound corporate governance - The Board members include executive directors Mr. Fong Chun Man (Chairman), Ms. Lo Pui Yee (Vice Chairman), Mr. Chan Chi Fai (CEO), and independent non-executive directors Mr. Chui Chi Yan, Mr. Kwong Yuk Lap, and Mr. Wong On Yuen[9](index=9&type=chunk) - Mr. Chui Chi Yan chairs the Audit Committee, Mr. Wong On Yuen chairs the Remuneration Committee, and Mr. Kwong Yuk Lap chairs the Nomination Committee[9](index=9&type=chunk) [Company Details and Advisors](index=4&type=section&id=Company%20Details%20and%20Advisors) The Company is registered in the Cayman Islands with its principal place of business in Hong Kong, engaging professional accountants, lawyers, and banks as its key advisors - The Company Secretary is Ms. Leung Yin Fai (HKICPA, FCCA, CPAA)[10](index=10&type=chunk) - The registered office is in the Cayman Islands, with the Hong Kong head office and principal place of business at Unit 3304, 33/F, Tower 1, Enterprise Square Five, 38 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong[10](index=10&type=chunk)[12](index=12&type=chunk) - The auditor is National Auditing Firm Limited, legal advisor is Cheung Tai Shu & Co., and principal banker is The Hongkong and Shanghai Banking Corporation Limited[13](index=13&type=chunk) [HIGHLIGHTS](index=6&type=section&id=HIGHLIGHT) [Financial Highlights](index=6&type=section&id=Financial%20Highlights) The Group achieved significant financial improvement for the six months ended September 30, 2022, with substantial revenue growth and a successful turnaround to profit, though the Board did not recommend a dividend Financial Highlights for the Six Months Ended September 30, 2022 | Metric | 2022 (HK$ million) | 2021 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 245.5 | 168.8 | 76.7 | 45.4% | | Profit/(Loss) | 3.8 | (5.1) | 8.9 | N/A | - The Group recorded profit primarily due to increased diesel sales and reduced other operating expenses[16](index=16&type=chunk)[17](index=17&type=chunk) - The Board did not recommend the payment of any dividend for the six months ended September 30, 2022[16](index=16&type=chunk)[18](index=18&type=chunk) [UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME](index=7&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20PROFIT%20OR%20LOSS%20AND%20OTHER%20COMPREHENSIVE%20INCOME) [Consolidated Profit or Loss Performance](index=7&type=section&id=Consolidated%20Profit%20or%20Loss%20Performance) The Group achieved a significant profit turnaround for the six months ended September 30, 2022, with substantial growth in revenue and gross profit, moving from a loss to a profit, and positive earnings per share Key Consolidated Profit or Loss Statement Data for the Six Months Ended September 30, 2022 | Metric | 2022 (HK$ thousand) | 2021 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 245,468 | 168,753 | 76,715 | 45.4% | | Cost of sales | (234,438) | (160,957) | (73,481) | 45.7% | | Gross profit | 11,030 | 7,796 | 3,234 | 41.5% | | Operating profit/(loss) | 5,134 | (3,188) | 8,322 | N/A | | Profit/(Loss) before taxation | 3,795 | (5,668) | 9,463 | N/A | | Profit/(Loss) for the period | 3,795 | (5,107) | 8,902 | N/A | | Profit/(Loss) for the period attributable to owners of the Company | 3,795 | (5,380) | 9,175 | N/A | | Basic and diluted earnings/(loss) per share (HK cents) | 3.56 | (5.69) | 9.25 | N/A | - For the six months ended September 30, 2022, total comprehensive income was **HK$3,795 thousand**, compared to a total comprehensive loss of **HK$6,272 thousand** in the prior period, indicating significant financial improvement[22](index=22&type=chunk) [UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION](index=9&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20FINANCIAL%20POSITION) [Consolidated Financial Position Overview](index=9&type=section&id=Consolidated%20Financial%20Position%20Overview) As of September 30, 2022, the Group's financial position improved with increased total equity and net current assets, driven by growth in property, plant and equipment, higher cash balances, and reduced bank and other borrowings Key Consolidated Financial Position Data as of September 30, 2022 | Metric | September 30, 2022 (HK$ thousand) | March 31, 2022 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Non-current assets | 59,027 | 49,722 | 9,305 | 18.7% | | Current assets | 143,752 | 131,411 | 12,341 | 9.4% | | Current liabilities | 91,105 | 85,295 | 5,810 | 6.8% | | Net current assets | 52,647 | 46,116 | 6,531 | 14.2% | | Net assets | 111,206 | 95,370 | 15,836 | 16.6% | | Total equity | 111,206 | 95,370 | 15,836 | 16.6% | - Property, plant and equipment significantly increased from **HK$5,122 thousand** as of March 31 to **HK$14,217 thousand** as of September 30[23](index=23&type=chunk) - Cash and bank balances increased from **HK$14,276 thousand** as of March 31 to **HK$22,439 thousand** as of September 30[23](index=23&type=chunk) - Bank and other borrowings decreased from **HK$43,089 thousand** as of March 31 to **HK$30,052 thousand** as of September 30[23](index=23&type=chunk) [UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY](index=11&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CHANGES%20IN%20EQUITY) [Equity Changes and Capital Activities](index=11&type=section&id=Equity%20Changes%20and%20Capital%20Activities) The Group's total equity significantly increased during the reporting period, primarily driven by profit for the period and a rights issue, alongside a share consolidation to adjust the capital structure Equity Changes for the Six Months Ended September 30, 2022 | Metric | September 30, 2022 (HK$ thousand) | April 1, 2022 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Share capital | 13,752 | 10,080 | 3,672 | | Share premium | 83,070 | 74,701 | 8,369 | | Retained earnings/(Accumulated losses) | (9,666) | (13,461) | 3,795 | | Total equity | 111,206 | 95,370 | 15,836 | - On June 29, 2022, the Company completed a share consolidation, merging every ten existing shares of **HK$0.01** par value into one consolidated share of **HK$0.10** par value[31](index=31&type=chunk)[144](index=144&type=chunk) - On September 15, 2022, the Company completed the allotment and issue of ordinary shares under a rights issue, on the basis of one rights share for every two existing shares held, leading to an increase in share capital[31](index=31&type=chunk)[144](index=144&type=chunk) [UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS](index=13&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS) [Consolidated Cash Flow Performance](index=13&type=section&id=Consolidated%20Cash%20Flow%20Performance) The Group achieved a significant turnaround to net cash inflow from operating activities for the six months ended September 30, 2022, resulting in a substantial increase in cash and cash equivalents Key Consolidated Cash Flow Statement Data for the Six Months Ended September 30, 2022 | Metric | 2022 (HK$ thousand) | 2021 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Net cash generated from/(used in) operating activities | 18,050 | (5,104) | 23,154 | | Net cash used in investing activities | (9,824) | (10,960) | 1,136 | | Net cash (used in)/generated from financing activities | (63) | 7,033 | (7,096) | | Net increase/(decrease) in cash and cash equivalents | 8,163 | (9,031) | 17,194 | | Cash and cash equivalents at end of period | 22,439 | 11,704 | 10,735 | - Net cash from operating activities turned from a net outflow of **HK$5,104 thousand** in the same period of 2021 to a net inflow of **HK$18,050 thousand** in 2022[33](index=33&type=chunk) [NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=14&type=section&id=NOTES%20TO%20THE%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [1. GENERAL INFORMATION](index=14&type=section&id=1.%20GENERAL%20INFORMATION) The Company is an investment holding company incorporated in the Cayman Islands, listed on GEM, primarily engaged in the sale and transportation of diesel and related products in Hong Kong - The Company was incorporated in the Cayman Islands on March 30, 2016, and is listed on GEM of the Stock Exchange of Hong Kong[35](index=35&type=chunk)[38](index=38&type=chunk) - The Company is an investment holding company, with its subsidiaries primarily engaged in the sale and delivery of diesel and related products in Hong Kong[36](index=36&type=chunk)[38](index=38&type=chunk) - The Company's ultimate holding company is Grand Gain Limited, controlled by Mr. Fong Chun Man, a director[35](index=35&type=chunk)[38](index=38&type=chunk) [2. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES](index=14&type=section&id=2.%20BASIS%20OF%20PREPARATION%20AND%20PRINCIPAL%20ACCOUNTING%20POLICIES) The interim financial statements are prepared in accordance with HKAS 34 and GEM Listing Rules, applying consistent accounting policies with annual financial statements, and new HKFRS amendments had no significant impact - The interim financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting' and the applicable disclosure requirements of the GEM Listing Rules[37](index=37&type=chunk)[39](index=39&type=chunk) - The accounting policies adopted are consistent with those used in the Group's audited annual financial statements for the year ended March 31, 2022, except for the amendments to Hong Kong Financial Reporting Standards effective for the financial year beginning April 1, 2022[41](index=41&type=chunk)[44](index=44&type=chunk) - The adoption of these HKFRS amendments had no significant impact on the Group's financial performance and/or disclosures for the current and prior periods[48](index=48&type=chunk)[49](index=49&type=chunk) [3. REVENUE](index=17&type=section&id=3.%20REVENUE) The Group's revenue primarily derives from diesel sales, which saw substantial growth for the six months ended September 30, 2022, with diesel sales being the main contributor Revenue Breakdown for the Six Months Ended September 30, 2022 | Product Type | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | Diesel | 240,457 | 164,608 | | Marine diesel | 4,437 | 3,064 | | Lubricants | 574 | 1,081 | | **Total** | **245,468** | **168,753** | - Revenue is recognized at a point in time[53](index=53&type=chunk) [4. SEGMENT INFORMATION](index=17&type=section&id=4.%20SEGMENT%20INFORMATION) All of the Group's continuing operations are located in Hong Kong, the steel product sales segment has been discontinued, and revenue is primarily generated from a few major customers - The Group's continuing operations are located in Hong Kong[57](index=57&type=chunk) - The steel product sales operating segment was discontinued during the year ended March 31, 2022[54](index=54&type=chunk)[55](index=55&type=chunk) Revenue Contribution from Major Customers (Six Months Ended September 30) | Customer | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | Customer A | 58,365 | 18,550 | [5. OTHER GAINS AND LOSSES](index=19&type=section&id=5.%20OTHER%20GAINS%20AND%20LOSSES) The Group recorded various other gains during the reporting period, including transportation service fees, rental income, government grants, and a significant interest waiver, positively impacting the period's results Other Gains and Losses for the Six Months Ended September 30, 2022 | Item | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | Gain on disposal of property, plant and equipment | 325 | – | | Transportation service fee | 1,916 | – | | Rental income from diesel vehicles | 1,390 | 3,246 | | Rental income from investment property | 278 | – | | Government grants | 514 | – | | Interest waived | 3,098 | – | | **Total** | **7,234** | **4,923** | - Government grants refer to subsidies under the Anti-epidemic Fund[65](index=65&type=chunk) [6. FINANCE COSTS](index=20&type=section&id=6.%20FINANCE%20COSTS) The Group's finance costs decreased for the six months ended September 30, 2022, primarily due to reduced interest expenses on lease liabilities and bonds payable Finance Costs for the Six Months Ended September 30, 2022 | Item | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | Interest expense on bank borrowings | 35 | – | | Interest expense on other borrowings | 1,607 | – | | Interest expense on bonds payable | – | 192 | | Interest expense on lease liabilities | 18 | 2,213 | | **Total** | **1,660** | **2,405** | - Interest expense on lease liabilities significantly decreased from **HK$2,213 thousand** in 2021 to **HK$18 thousand** in 2022[68](index=68&type=chunk) [7. PROFIT/(LOSS) BEFORE TAXATION](index=21&type=section&id=7.%20PROFIT%2F%28LOSS%29%20BEFORE%20TAXATION) The Group achieved a profit before taxation for the six months ended September 30, 2022, a significant improvement from the loss in the prior year, despite increases in staff costs and inventory costs Profit/(Loss) Before Taxation for the Six Months Ended September 30, 2022 | Item | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | Profit/(Loss) before taxation | 3,795 | (5,668) | | Directors' emoluments | 1,395 | 1,225 | | Other staff costs | 3,247 | 2,943 | | Auditor's remuneration | 350 | 355 | | Cost of inventories recognised as an expense | 229,875 | 157,947 | | Depreciation of property, plant and equipment | 729 | 803 | | Depreciation of right-of-use assets | 191 | – | | Expenses relating to short-term leases | 513 | 798 | - Cost of inventories recognized as an expense increased from **HK$157,947 thousand** in 2021 to **HK$229,875 thousand** in 2022[71](index=71&type=chunk) [8. INCOME TAX CREDIT](index=22&type=section&id=8.%20INCOME%20TAX%20CREDIT) The Group applies a two-tiered profits tax rate in Hong Kong, is exempt from income tax in the Cayman Islands and BVI, and its PRC subsidiaries are subject to a 25% tax rate - Hong Kong profits tax adopts a two-tiered system: the first **HK$2 million** of assessable profits is taxed at **8.25%**, and profits exceeding **HK$2 million** are taxed at **16.5%**[74](index=74&type=chunk)[75](index=75&type=chunk) - Under the rules and regulations of the Cayman Islands and British Virgin Islands, the Group is not subject to any income tax[75](index=75&type=chunk)[77](index=77&type=chunk) - The tax rate for PRC subsidiaries was **25%** for both the six months ended September 30, 2022, and 2021[76](index=76&type=chunk)[77](index=77&type=chunk) [9. DIVIDENDS](index=23&type=section&id=9.%20DIVIDENDS) The Board did not recommend the payment of any dividend for the six months ended September 30, 2022 - The Board did not recommend the payment of any dividend for the six months ended September 30, 2022 (six months ended September 30, 2021: Nil)[79](index=79&type=chunk)[80](index=80&type=chunk) [10. EARNINGS/(LOSS) PER SHARE](index=23&type=section&id=10.%20EARNINGS%2F%28LOSS%29%20PER%20SHARE) The Group's basic and diluted earnings per share from continuing operations turned positive, reflecting improved profitability, with no potential dilutive ordinary shares during the reporting period Earnings/(Loss) Per Share for the Six Months Ended September 30, 2022 | Metric | 2022 (HK cents) | 2021 (HK cents) | | :--- | :--- | :--- | | Basic and diluted from continuing operations | 3.56 | (5.99) | | Basic and diluted from continuing and discontinued operations | 3.56 | (5.69) | - The weighted average number of ordinary shares for basic and diluted earnings/(loss) per share for both periods has been adjusted for the share consolidation effective June 29, 2022, and the rights issue effective September 15, 2022[83](index=83&type=chunk) - As there were no potential dilutive ordinary shares for the three and six months ended September 30, 2022, and 2021, diluted earnings per share were the same as basic earnings per share[90](index=90&type=chunk)[92](index=92&type=chunk) [11. DISCONTINUED OPERATIONS](index=25&type=section&id=11.%20DISCONTINUED%20OPERATIONS) The Group discontinued its steel product sales business and the sale and distribution of lubricants and related products in China, with their results reclassified as discontinued operations - The steel product sales business was discontinued upon the deemed completion of disposal on April 15, 2021, with Jiangxi Xinji no longer a subsidiary and subsequently accounted for as an associate using the equity method[93](index=93&type=chunk)[95](index=95&type=chunk) - The sale and distribution of lubricants and related products business in China was discontinued upon the completion of disposal of all equity interest in Mega Shell (Global) Lubricant Technology Co., Ltd. on March 31, 2022[100](index=100&type=chunk)[102](index=102&type=chunk) - For the six months ended September 30, 2022, revenue and gross profit from discontinued operations were both zero, compared to a small amount of revenue and gross profit in the prior period of 2021[96](index=96&type=chunk)[103](index=103&type=chunk) [12. MOVEMENTS IN PROPERTY, PLANT AND EQUIPMENT](index=29&type=section&id=12.%20MOVEMENTS%20IN%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT) The Group significantly increased its acquisitions of property, plant and equipment during the reporting period, alongside some disposals Movements in Property, Plant and Equipment for the Six Months Ended September 30, 2022 | Item | 2022 (HK$ million) | 2021 (HK$ million) | | :--- | :--- | :--- | | Additions | 14.5 | Nil | | Disposals | 4.7 | 15.2 | [13. INVESTMENT PROPERTY](index=29&type=section&id=13.%20INVESTMENT%20PROPERTY) The Group holds investment properties for capital appreciation and rental income, measured at fair value, and these properties are pledged as collateral for other borrowings - As of September 30, 2022, the fair value of investment property was **HK$20,000 thousand**[111](index=111&type=chunk) - Investment properties are held for capital appreciation, generate rental income, and are measured using the fair value model[111](index=111&type=chunk)[112](index=112&type=chunk) - The Group's investment properties have been pledged to secure other borrowings of the Group[113](index=113&type=chunk)[114](index=114&type=chunk) [14. TRADE RECEIVABLES](index=30&type=section&id=14.%20TRADE%20RECEIVABLES) The Group's trade receivables increased, with an average credit period of 3 to 150 days, and expected credit losses are assessed using a simplified approach with strict credit control Trade Receivables (Net of Allowance for Expected Credit Losses) | Date | Amount (HK$ thousand) | | :--- | :--- | | September 30, 2022 | 93,909 | | March 31, 2022 | 83,284 | - The average credit period granted by the Group to its customers generally ranges from **3 to 150 days**[119](index=119&type=chunk)[120](index=120&type=chunk) - The Group applies the simplified approach to trade receivables to provide for expected credit losses as required by HKFRS 9[123](index=123&type=chunk)[126](index=126&type=chunk) [15. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS](index=32&type=section&id=15.%20FINANCIAL%20ASSETS%20AT%20FAIR%20VALUE%20THROUGH%20PROFIT%20OR%20LOSS) The Group holds life insurance policies for key management personnel, measured at fair value through profit or loss, with fair value determined by the redemption value reported by the insurer Financial Assets at Fair Value Through Profit or Loss | Financial Asset | September 30, 2022 (HK$ thousand) | Fair Value Hierarchy | Valuation Technique and Key Inputs | | :--- | :--- | :--- | :--- | | Life insurance policies for key management personnel | 5,945 | Level 2 | Redemption value reported by the insurance company | - Fair value is calculated based on the redemption value reported by the insurance company, classified as Level 2 fair value measurement[131](index=131&type=chunk)[149](index=149&type=chunk) - The total insured amount is approximately **US$3,150,000** (equivalent to **HK$24,570,000**)[131](index=131&type=chunk) [16. TRADE PAYABLES](index=33&type=section&id=16.%20TRADE%20PAYABLES) The Group's trade payables increased, with an average credit period granted by suppliers ranging from 3 to 90 days Trade Payables | Date | Amount (HK$ thousand) | | :--- | :--- | | September 30, 2022 | 52,843 | | March 31, 2022 | 36,622 | - The average credit period granted by suppliers ranges from **3 to 90 days**[133](index=133&type=chunk) [17. BANK AND OTHER BORROWINGS](index=34&type=section&id=17.%20BANK%20AND%20OTHER%20BORROWINGS) The Group's total bank and other borrowings decreased, including secured bank borrowings and other loans, with some loans fully repaid during the period Bank and Other Borrowings | Item | September 30, 2022 (HK$ thousand) | March 31, 2022 (HK$ thousand) | | :--- | :--- | :--- | | Secured bank borrowings | 9,755 | 11,810 | | Secured other loans | 20,297 | 31,279 | | **Total** | **30,052** | **43,089** | - Bank borrowings bear interest at HIBOR plus **1.5%** per annum and are secured by the Group's pledged bank deposits[142](index=142&type=chunk) - Other loans of **HK$14,000,000** as of March 31, 2022, were fully repaid in August 2022[140](index=140&type=chunk)[142](index=142&type=chunk) [18. SHARE CAPITAL](index=35&type=section&id=18.%20SHARE%20CAPITAL) The Group's share capital increased due to share consolidation and a rights issue, adjusting the number and par value of issued shares Movements in Share Capital | Item | Number of Shares | Share Capital (HK$ thousand) | | :--- | :--- | :--- | | March 31, 2022 and April 1, 2022 (audited) | 1,008,000,000 | 10,080 | | Share consolidation | (907,200,000) | – | | Issue of shares by way of rights issue | 36,720,190 | 3,672 | | **September 30, 2022 (unaudited)** | **137,520,190** | **13,752** | - On June 29, 2022, the Company completed a share consolidation, merging every ten existing shares of **HK$0.01** par value into one consolidated share of **HK$0.10** par value[144](index=144&type=chunk) - On September 15, 2022, the Company completed the allotment and issue of ordinary shares by way of rights issue, on the basis of one rights share for every two existing shares of the Company held[144](index=144&type=chunk) [19. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS](index=36&type=section&id=19.%20FAIR%20VALUE%20MEASUREMENT%20OF%20FINANCIAL%20INSTRUMENTS) The Group uses a three-level fair value hierarchy, with life insurance policies for key management personnel classified as Level 2 and measured based on the redemption value reported by the insurer - The Group uses a three-level hierarchy (Level 1: quoted prices in active markets, Level 2: observable inputs, Level 3: unobservable inputs) to determine and disclose the fair value of financial instruments[146](index=146&type=chunk)[147](index=147&type=chunk) Financial Assets at Fair Value Through Profit or Loss | Financial Asset | September 30, 2022 (HK$ thousand) | Fair Value Hierarchy | Valuation Technique and Key Inputs | | :--- | :--- | :--- | :--- | | Life insurance policies for key management personnel | 5,945 | Level 2 | Redemption value reported by the insurance company | [20. PLEDGE OF ASSETS](index=38&type=section&id=20.%20PLEDGE%20OF%20ASSETS) Various Group assets, including bank deposits, investment properties, life insurance policies, vessels, and motor vehicles, have been pledged as security for bank financing Pledged Assets | Item | September 30, 2022 (HK$ thousand) | March 31, 2022 (HK$ thousand) | | :--- | :--- | :--- | | Financial assets at fair value through profit or loss (life insurance policies) | 4,979 | 4,979 | | Investment property | 20,000 | 20,000 | | Pledged bank deposits | 6,077 | 6,077 | | Motor vehicles | 383 | 574 | | Vessels | 14,017 | – | | **Total** | **45,456** | **31,630** | - The pledged amount for vessels increased from **Nil** as of March 31, 2022, to **HK$14,017 thousand** as of September 30, 2022[153](index=153&type=chunk) [21. CONNECTED TRANSACTIONS AND MATERIAL RELATED PARTY TRANSACTIONS](index=39&type=section&id=21.%20CONNECTED%20TRANSACTIONS%20AND%20MATERIAL%20RELATED%20PARTY%20TRANSACTIONS) The Group engaged in transactions such as product sales and rental expenses with related parties controlled by executive director Mr. Fong Chun Man, and key management personnel provided personal guarantees for Group loans Connected Transactions (Six Months Ended September 30) | Related Party Name | Nature of Transaction | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | :--- | | Grand Gain Limited | Sales of products | – | 934 | | Grand Gain Limited | Rental expenses | 512 | 809 | | Sun Cheung Steel Limited | Sales of products | – | 1,294 | - Mr. Fong Chun Man, an executive director and ultimate controlling shareholder of the Company, has beneficial interests in Sun Cheung and Grand Gain, making these two companies connected entities of the Company[159](index=159&type=chunk)[162](index=162&type=chunk) - Mr. Fong Chun Man provided personal guarantees and a life insurance policy with a sum assured of **US$2,600,000** as collateral for loan facilities granted to the Group[160](index=160&type=chunk)[163](index=163&type=chunk) [MANAGEMENT DISCUSSION AND ANALYSIS](index=41&type=section&id=MANAGEMENT%20DISCUSSION%20AND%20ANALYSIS) [BUSINESS REVIEW](index=41&type=section&id=BUSINESS%20REVIEW) The Group primarily engages in diesel and related product sales and transportation in Hong Kong, having disposed of steel product and China lubricant businesses, acquired a vessel, and undertaken capital activities like share consolidation and rights issue during the period - The Group primarily engages in the sale and transportation of diesel and related products in Hong Kong and the PRC, operating eight diesel tank trucks, one marine diesel barge, and one vessel[164](index=164&type=chunk)[167](index=167&type=chunk) - On April 15, 2021, the Group disposed of the steel product sales business of Jiangxi Xinji Power Technology Co., Ltd., reducing its equity interest to **19.70%** and accounting for it as an associate[165](index=165&type=chunk)[170](index=170&type=chunk)[173](index=173&type=chunk) - On March 31, 2022, the Group disposed of its **51%** equity interest in Mega Shell (Global) Lubricant Technology Co., Ltd. and its subsidiaries for **HK$9,000,000**, discontinuing the sale and distribution of lubricants and related products business in China[171](index=171&type=chunk)[174](index=174&type=chunk) - On April 29, 2022, the Company acquired a vessel for **HK$9,500,000**[177](index=177&type=chunk)[181](index=181&type=chunk) - On June 29, 2022, the Company completed a share consolidation; on September 15, 2022, the Company completed a rights issue[178](index=178&type=chunk)[179](index=179&type=chunk)[181](index=181&type=chunk) [INDUSTRY REVIEW](index=43&type=section&id=INDUSTRY%20REVIEW) International oil prices fluctuated and declined in 2021, with the COVID-19 pandemic introducing short-term uncertainties that require a collective response to challenges - International oil prices fluctuated significantly and declined in 2021[180](index=180&type=chunk)[182](index=182&type=chunk) - The outbreak of the COVID-19 pandemic brought short-term uncertainties to international oil prices[180](index=180&type=chunk)[182](index=182&type=chunk) [FUTURE PROSPECTS](index=44&type=section&id=FUTURE%20PROSPECTS) Facing the COVID-19 pandemic and intense market competition, the Group plans to invest more in talent, strengthen diesel business development and marketing, actively seek new opportunities, and strictly control costs to enhance operational efficiency and profitability - The outbreak of the COVID-19 pandemic has adversely affected international and domestic economic conditions[184](index=184&type=chunk) - The Group will prudently allocate more resources to talent recruitment and strengthen its business development and marketing strategies for diesel[185](index=185&type=chunk)[188](index=188&type=chunk) - The Group will also proactively seek potential business opportunities to expand its revenue streams and enhance shareholder value[185](index=185&type=chunk)[188](index=188&type=chunk) - The Group will strictly control costs and expenses to improve the operational efficiency and profitability of its businesses[185](index=185&type=chunk)[188](index=188&type=chunk) [FINANCIAL REVIEW](index=44&type=section&id=FINANCIAL%20REVIEW) The Group experienced substantial revenue growth, primarily driven by diesel sales, successfully turning a loss into a profit with a positive net profit margin while maintaining a stable gross profit margin Financial Review for the Six Months Ended September 30, 2022 | Metric | 2022 (HK$ million) | 2021 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 245.5 | 168.8 | 76.7 | 45.4% | | Cost of sales | 234.4 | 161.0 | 73.4 | 45.6% | | Gross profit | 11.0 | 7.8 | 3.2 | 41.0% | | Gross profit margin | 4.5% | 4.6% | -0.1% | -2.2% | | Profit/(Loss) | 3.8 | (5.1) | 8.9 | N/A | | Net profit margin | 1.6% | -3.0% | 4.6% | N/A | - Diesel sales accounted for approximately **98.0%** of total revenue, primarily due to increased demand from construction and logistics customers, and rising diesel prices[187](index=187&type=chunk)[189](index=189&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=46&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The Group maintained a robust liquidity position, with improvements in net current assets and current ratio, while the gearing ratio significantly decreased due to reduced debt and increased equity Key Liquidity and Capital Resources Data | Metric | September 30, 2022 (HK$ million) | March 31, 2022 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net current assets | 52.6 | 46.1 | 6.5 | 14.1% | | Current ratio | 1.6 times | 1.5 times | 0.1 times | 6.7% | | Utilized borrowing facilities | 30.1 | 43.1 | (13.0) | -30.2% | | Gearing ratio | 30.2% | 46.2% | -16.0% | -34.6% | | Equity attributable to owners of the Company | 111.2 | 95.4 | 15.8 | 16.6% | - Borrowings are denominated in HK$, with bank facilities bearing floating interest rates ranging from **1.83% to 2.26%** per annum, secured by corporate guarantees, fixed deposits, and life insurance policies[201](index=201&type=chunk)[205](index=205&type=chunk) [FOREIGN CURRENCY EXPOSURE RISKS](index=47&type=section&id=FOREIGN%20CURRENCY%20EXPOSURE%20RISKS) The Group primarily operates in Hong Kong, with foreign exchange risk mainly arising from lubricant sales denominated in RMB, and no hedging activities were undertaken during the reporting period - The Group primarily operates in Hong Kong and is exposed to foreign exchange risk arising from various currency exposures, mainly related to lubricant sales denominated in RMB[212](index=212&type=chunk)[214](index=214&type=chunk) - For the six months ended September 30, 2022, the Group was not involved in any derivative agreements and had not entered into any financial instruments to hedge foreign exchange risk[212](index=212&type=chunk)[214](index=214&type=chunk) [TREASURY POLICIES](index=48&type=section&id=TREASURY%20POLICIES) The Group adopts a prudent financial management approach to maintain a robust liquidity position, mitigate credit risk through continuous assessment, and the Board closely monitors liquidity to meet funding requirements - The Group has adopted a prudent financial management approach to its treasury policies, thereby maintaining a sound liquidity position throughout the six months ended September 30, 2022[216](index=216&type=chunk)[222](index=222&type=chunk) - The Group endeavors to mitigate credit risk through ongoing credit assessments and evaluations of its customers' financial standing[216](index=216&type=chunk)[222](index=222&type=chunk) - The Board closely monitors the Group's liquidity position to ensure that the liquidity structure of its assets, liabilities, and other commitments can meet its funding requirements from time to time[216](index=216&type=chunk)[222](index=222&type=chunk) [MATERIAL ACQUISITIONS AND DISPOSAL OF SUBSIDIARIES, ASSOCIATES OR JOINT VENTURES](index=48&type=section&id=MATERIAL%20ACQUISITIONS%20AND%20DISPOSAL%20OF%20SUBSIDIARIES%2C%20ASSOCIATES%20OR%20JOINT%20VENTURES) Except as disclosed in the 'Business Review' section, the Group had no other material acquisitions or disposals of subsidiaries, associates, or joint ventures for the six months ended September 30, 2022 - Save as disclosed in the 'Business Review' section of this report, the Group had no other material investments, or material acquisitions or disposals of subsidiaries, associates, or joint ventures for the six months ended September 30, 2022[217](index=217&type=chunk)[223](index=223&type=chunk) [FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS](index=48&type=section&id=FUTURE%20PLANS%20FOR%20MATERIAL%20INVESTMENTS%20OR%20CAPITAL%20ASSETS) Except as disclosed in this interim report, the Group had no other plans for material investments or capital assets as of September 30, 2022 - Save as disclosed in this interim report, the Group had no other plans for material investments or capital assets as of September 30, 2022[218](index=218&type=chunk)[224](index=224&type=chunk) [CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES](index=48&type=section&id=CAPITAL%20COMMITMENTS%20AND%20CONTINGENT%20LIABILITIES) As of September 30, 2022, the Group had no other material capital commitments or significant contingent liabilities, except as disclosed in the 'Use of Proceeds' section of this report - As of September 30, 2022, save as disclosed in the 'Use of Proceeds' section below in this report, the Group had no other material capital commitments or any significant contingent liabilities[219](index=219&type=chunk)[225](index=225&type=chunk) [DIVIDENDS](index=48&type=section&id=DIVIDENDS) The Board did not recommend the payment of any dividend for the six months ended September 30, 2022, and 2021 - The Board did not recommend the payment of any dividend for the six months ended September 30, 2022, and 2021[220](index=220&type=chunk)[226](index=226&type=chunk) [PLEDGE OF ASSETS](index=48&type=section&id=PLEDGE%20OF%20ASSETS) Various Group assets, including bank deposits, investment properties, life insurance policies, vessels, and motor vehicles, have been pledged as security for bank financing Pledged Assets (As of September 30, 2022) | Item | Amount (HK$ million) | | :--- | :--- | | Pledged short-term bank deposits | 6.1 | | Investment property | 20.0 | | Life insurance policies | 5.0 | | Vessels | 14.0 | | Motor vehicles | 0.4 | - The pledged amount for vessels increased from **Nil** as of March 31, 2022, to **HK$14.0 million** as of September 30, 2022[221](index=221&type=chunk)[227](index=227&type=chunk) [COMPARISON OF IMPLEMENTATION PLANS FOR BUSINESS STRATEGIES WITH ACTUAL IMPLEMENTATION PROGRESS](index=49&type=section&id=COMPARISON%20OF%20IMPLEMENTATION%20PLANS%20FOR%20BUSINESS%20STRATEGIES%20WITH%20ACTUAL%20IMPLEMENTATION%20PROGRESS) The Group made progress in expanding its diesel tank truck fleet, developing marine fuel supply operations, and strengthening manpower, while IT system upgrades are still under negotiation with potential suppliers Business Strategy Implementation Progress (As of September 30, 2022) | Business Strategy | Implementation Plan (April 1, 2017 to September 30, 2022) | Actual Implementation Progress (As of September 30, 2022) | | :--- | :--- | :--- | | Expansion and improvement of diesel tank truck fleet | Purchase three new diesel tank trucks; replace three existing diesel tank trucks | Three new diesel tank trucks have been purchased and two existing diesel tank trucks have been replaced, with the remaining to be delivered by end of March 2023 | | Development and expansion of marine fuel supply business | Commence trial and full operation of marine diesel barge; conduct marketing | All licenses and permits have been obtained, trial operation commenced in April 2018, and full operation commenced in July 2018 | | Enhancement of IT and systems | Purchase and update new office administration and IT systems | Minor upgrades to IT systems have been completed, new systems are still under negotiation with potential suppliers | | Strengthening of our manpower | Recruit three drivers and three logistics assistants; recruit one safety supervisor; recruit seamen, administrative staff, operations manager, and independent consultants | One logistics assistant has been recruited, the safety supervisor has been recruited through job reallocation, and marine fuel supply business is operated under contract with a service company | [USE OF PROCEEDS](index=52&type=section&id=USE%20OF%20PROCEEDS) The Group has utilized most of the net proceeds from the share offer for planned business strategies, with the remaining funds expected to be fully utilized by March 31, 2023 - The actual net proceeds from the share offer were approximately **HK$45.1 million**, lower than the estimated **HK$50.9 million**[235](index=235&type=chunk)[236](index=236&type=chunk) Actual Use of Net Proceeds (As of September 30, 2022) | Planned Use | Approximate Percentage of Total Net Proceeds | Actual Use (HK$ million) | Unutilized Total Net Proceeds (HK$ million) | Expected Timeline for Remaining Available Net Proceeds | | :--- | :--- | :--- | :--- | :--- | | Purchase of diesel tank trucks | 17.3% | 5.0 | 2.8 | Before March 31, 2023 | | Purchase of marine diesel barge | 31.0% | 14.0 | – | Before March 31, 2023 | | Further strengthening of manpower | 13.6% | 3.9 | 2.2 | Before March 31, 2023 | | Enhancement of IT and systems | 7.9% | 0.6 | 3.0 | Before March 31, 2023 | | Working capital for operating new diesel tank trucks and marine fuel supply business | 20.2% | 9.1 | – | Before March 31, 2023 | | Working capital | 10.0% | 4.5 | – | | | **Total** | **100.0%** | **37.1** | **8.0** | | - The Directors intend to utilize the unutilized net proceeds of **HK$8.0 million** as soon as practicable, by March 31, 2023[238](index=238&type=chunk)[239](index=239&type=chunk)[242](index=242&type=chunk) [FINANCIAL ASSETS THROUGH PROFIT AND LOSS](index=53&type=section&id=FINANCIAL%20ASSETS%20THROUGH%20PROFIT%20AND%20LOSS) As of September 30, 2022, the Group held **HK$5.9 million** in life insurance policies for key management personnel, classified as financial assets at fair value through profit or loss - As of September 30, 2022, the Group had taken out life insurance policies for key management personnel with an insurance company, totaling **HK$5.9 million**[240](index=240&type=chunk)[243](index=243&type=chunk) [EMPLOYEES AND REMUNERATION POLICIES](index=53&type=section&id=EMPLOYEES%20AND%20REMUNERATION%20POLICIES) The Group's total number of employees decreased to 23, with remuneration policies based on qualifications, position, seniority, and performance, supported by an annual review mechanism - As of September 30, 2022, the Group employed a total of **23** employees, including directors (September 30, 2021: **38** employees)[241](index=241&type=chunk)[244](index=244&type=chunk) - The remuneration package includes salaries, bonuses, and other cash allowances, determined based on each employee's qualifications, position, and seniority[241](index=241&type=chunk)[244](index=244&type=chunk) - The Group has established an annual review mechanism to assess employee performance as a basis for salary increments, bonus payments, and promotion decisions[241](index=241&type=chunk)[244](index=244&type=chunk) [ENVIRONMENT POLICIES AND PERFORMANCE](index=54&type=section&id=ENVIRONMENT%20POLICIES%20AND%20PERFORMANCE) The Group complies with Hong Kong environmental laws and regulations, implements various measures to minimize its environmental impact, and has not faced any prosecutions or penalties for environmental violations - The Group's principal business is regulated by Hong Kong environmental laws and regulations, including the Air Pollution Control Ordinance (Cap. 311) and the Water Pollution Control Ordinance (Cap. 358) of the Laws of Hong Kong[246](index=246&type=chunk)[250](index=250&type=chunk) - The Group has implemented various environmental protection measures to minimize the impact of its operations on the environment and natural resources[246](index=246&type=chunk)[250](index=250&type=chunk) - As of the date of this report, the Group has not been subject to any prosecutions, fines, or penalties for non-compliance with any environmental laws or regulations[247](index=247&type=chunk)[252](index=252&type=chunk) [EVENTS AFTER THE REPORTING PERIOD](index=54&type=section&id=EVENTS%20AFTER%20THE%20REPORTING%20PERIOD) As of the date of this report, the Board is not aware of any significant events requiring disclosure that occurred after September 30, 2022 - From September 30, 2022, to the date of this report, save as disclosed in this report, the Board is not aware of any significant events requiring disclosure[248](index=248&type=chunk)[253](index=253&type=chunk) [SIGNIFICANT INVESTMENT, MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES](index=54&type=section&id=SIGNIFICANT%20INVESTMENT%2C%20MATERIAL%20ACQUISITIONS%20AND%20DISPOSALS%20OF%20SUBSIDIARIES) Except as disclosed in the 'Business Review' section, the Group had no significant investments, material acquisitions, or disposals of subsidiaries and associates for the six months ended September 30, 2022 - Save as disclosed in the 'Business Review' section of this report, the Group had no significant investments, material acquisitions, or disposals of subsidiaries and associates for the six months ended September 30, 2022[249](index=249&type=chunk)[254](index=254&type=chunk) [OTHER INFORMATION](index=55&type=section&id=OTHER%20INFORMATION) [Purchase, Sale or Redemption of the Company's Listed Securities](index=55&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) For the six months ended September 30, 2022, the Company did not purchase, sell, or redeem any of its listed securities - For the six months ended September 30, 2022, there were no purchases, sales, or redemptions of any of the Company's listed securities[256](index=256&type=chunk)[258](index=258&type=chunk) [Interests and Short Positions of Directors and Chief Executive](index=55&type=section&id=Interests%20and%20Short%20Positions%20of%20Directors%20and%20Chief%20Executive) As of September 30, 2022, Mr. Fong Chun Man and his spouse Ms. Lo Pui Yee held substantial shares in the Company through controlled corporations, with no other directors or chief executives disclosing interests or short positions Interests of Directors and Chief Executive in the Company's Shares (As of September 30, 2022) | Name of Director | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Fong Chun Man | Interest in controlled corporation (long position) | 75,686,400 | 55.04% | | Ms. Lo Pui Yee | Interest of spouse (long position) | 75,686,400 | 55.04% | - Mr. Fong Chun Man's interest is held by Grand Gain Limited, which is **100%** owned by Mr. Fong Chun Man[260](index=260&type=chunk) - Ms. Lo Pui Yee is the spouse of Mr. Fong Chun Man and is therefore deemed to be interested in all shares in which Mr. Fong Chun Man has an interest[261](index=261&type=chunk) [Interests and Short Positions of the Substantial Shareholders and Other Persons](index=56&type=section&id=Interests%20and%20Short%20Positions%20of%20the%20Substantial%20Shareholders%20and%20Other%20Persons) As of September 30, 2022, Grand Gain Limited (controlled by Mr. Fong Chun Man) was the sole beneficial owner of the Company's shares, with no other substantial shareholders or persons disclosing interests or short positions Interests of Substantial Shareholders in the Company's Shares (As of September 30, 2022) | Name of Shareholder | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Grand Gain Limited | Beneficial owner (long position) | 75,686,400 | 55.04% | - Grand Gain Limited is **100%** owned by Mr. Fong Chun Man[269](index=269&type=chunk) [Share Option Scheme](index=57&type=section&id=Share%20Option%20Scheme) The Company adopted a share option scheme in 2017, but as of September 30, 2022, no share options had been granted or remained outstanding - The Company conditionally adopted a share option scheme on March 23, 2017[271](index=271&type=chunk)[275](index=275&type=chunk) - From the adoption date up to September 30, 2022, no share options had been granted, nor were any outstanding[272](index=272&type=chunk)[275](index=275&type=chunk) - The Company may grant share options involving a maximum of **8,000,000** shares to participants[272](index=272&type=chunk)[275](index=275&type=chunk) [Directors' Rights to Acquire Shares and Debentures](index=57&type=section&id=Directors%27%20Rights%20to%20Acquire%20Shares%20and%20Debentures) For the six months ended September 30, 2022, no arrangements were entered into by the Company, its holding company, or any subsidiaries, other than the share option scheme, that would enable directors to acquire benefits through purchasing shares or debentures of the Company or any other body corporate - Save for the share option scheme, for the six months ended September 30, 2022, neither the Company nor any of its holding companies or subsidiaries had entered into any arrangements that would enable directors to acquire benefits through purchasing shares or debentures of the Company or any other body corporate[273](index=273&type=chunk)[276](index=276&type=chunk) [Competing Interests](index=58&type=section&id=Competing%20Interests) The Directors confirm that as of the reporting date, neither the Company's controlling shareholders, directors, nor their close associates held any interests in businesses that compete with the Group's operations - The Directors confirm that during the reporting period and up to the date of this report, none of the Company's controlling shareholders or directors and their respective close associates had any interests in any business that directly or indirectly competes or may compete with the Group's business[278](index=278&type=chunk)[282](index=282&type=chunk) [Audit Committee](index=58&type=section&id=Audit%20Committee) The Audit Committee, composed of three independent non-executive directors, reviewed the Group's unaudited interim financial statements and confirmed their compliance with applicable accounting standards and GEM Listing Rules - The Audit Committee was established on March 23, 2017, in compliance with Rules 5.28 to 5.29 of the GEM Listing Rules[279](index=279&type=chunk)[283](index=283&type=chunk) - The Committee comprises three independent non-executive directors: Mr. Chui Chi Yan (Chairman), Mr. Kwong Yuk Lap, and Mr. Wong On Yuen[279](index=279&type=chunk)[283](index=283&type=chunk) - The Audit Committee has reviewed the Group's unaudited condensed consolidated financial statements for the six months ended September 30, 2022, and is of the opinion that they have been prepared in accordance with applicable accounting standards and the GEM Listing Rules[281](index=281&type=chunk)[283](index=283&type=chunk) [Nomination Committee](index=59&type=section&id=Nomination%20Committee) The Nomination Committee is responsible for regularly reviewing the Board's diversity, structure, size, and composition policy, identifying qualified Board candidates, assessing the independence of independent non-executive directors, and recommending director appointments - The Nomination Committee was established on March 23, 2017, comprising Mr. Fong Chun Man and two independent non-executive directors, Mr. Kwong Yuk Lap (Chairman) and Mr. Chui Chi Yan[285](index=285&type=chunk)[288](index=288&type=chunk) - Key responsibilities include reviewing the Board diversity policy, identifying suitable Board candidates, assessing the independence of independent non-executive directors, and making recommendations on director appointments or re-appointments[286](index=286&type=chunk)[288](index=288&type=chunk) [Remuneration Committee](index=60&type=section&id=Remuneration%20Committee) The Remuneration Committee is responsible for recommending to the Board the overall remuneration policy and structure for all directors and senior management, ensuring remuneration is determined by market benchmarks and individual performance - The Remuneration Committee was established on March 23, 2017, comprising two independent non-executive directors, Mr. Wong On Yuen (Chairman) and Mr. Chui Chi Yan, and Mr. Fong Chun Man[291](index=291&type=chunk)[295](index=295&type=chunk) - Its primary duties are to make recommendations to the Board on the overall remuneration policy and structure for all directors and senior management of the Group, and to review and approve management's remuneration proposals[292](index=292&type=chunk)[295](index=295&type=chunk) - The Remuneration Committee determines the specific remuneration levels for each director by reference to market benchmarks, individual capabilities, duties, responsibilities, performance, and the Group's results[293](index=293&type=chunk)[296](index=296&type=chunk) [Directors' Securities Transactions](index=60&type=section&id=Directors%27%20Securities%20Transactions) The Company has adopted a code of conduct for directors' securities transactions and confirms that all directors complied with this code as of the reporting date - The Company has adopted a code of conduct for directors' securities transactions, with terms no less exacting than the required standard of dealings set out in Rules 5.48 to 5.67 of the GEM Listing Rules[294](index=294&type=chunk)[297](index=297&type=chunk) - The Company confirms that all Directors have complied with the required standard of dealings and the Company's code of conduct regarding directors' securities transactions as of the date of this report[294](index=294&type=chunk)[297](index=297&type=chunk) [Corporate Governance](index=61&type=section&id=Corporate%20Governance) The Company is committed to maintaining high corporate governance standards and has complied with the Corporate Governance Code set out in Appendix 15 of the GEM Listing Rules for the six months ended September 30, 2022 - The Company is committed to maintaining and ensuring high standards of corporate governance and will continuously review and improve its corporate governance practices and standards[299](index=299&type=chunk)[300](index=300&type=chunk) - The Company has complied with the code provisions of the Corporate Governance Code set out in Appendix 15 to the GEM Listing Rules for the six months ended September 30, 2022[299](index=299&type=chunk)[300](index=300&type=chunk)

CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. Given that the companies listed on GEM are generally small ...

CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. Given that the companies listed on GEM are generally small ...

CHARACTERISTICS OF THE GEM ("GEM") OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. Given that the companies listed on GEM are gene ...

CHARACTERISTICS OF THE GEM ("GEM") OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. Given that the companies listed on GEM are gene ...

CHARACTERISTICS OF THE GEM ("GEM") OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. Given that the companies listed on GEM are gene ...

[Report Overview and Disclaimer](index=2&type=section&id=CHARACTERISTICS%20OF%20THE%20GEM) This section covers GEM market characteristics, investment risks, and the directors' responsibility statement [GEM Market Characteristics and Investment Risks](index=2&type=section&id=1.1%20GEM%20market%20characteristics%20and%20investment%20risks) The GEM market provides a listing platform for high-risk small and medium-sized companies, whose securities may face high market volatility and uncertain liquidity, requiring prudent investor consideration - GEM market aims to accommodate small and medium-sized companies, with investment risks higher than other listed companies on the Stock Exchange[1](index=1&type=chunk)[5](index=5&type=chunk) - GEM securities may be subject to high market volatility risks, and high liquidity cannot be guaranteed[2](index=2&type=chunk)[5](index=5&type=chunk) [Directors' Responsibility Statement](index=2&type=section&id=1.2%20Directors'%20Responsibility%20Statement) The company's directors collectively and individually assume full responsibility for this report's content, confirming its accuracy, completeness, and absence of misleading or fraudulent information in all material aspects - The company's directors jointly and severally assume full responsibility for the content of this report[4](index=4&type=chunk)[6](index=6&type=chunk) - Directors confirm that the information in the report is accurate, complete, and not misleading or fraudulent in all material aspects[4](index=4&type=chunk)[6](index=6&type=chunk) [Financial Highlights](index=3&type=section&id=Highlight) This section provides an overview of key financial indicators, including revenue, net profit, and dividend policy for the period [Overview of Key Financial Indicators](index=3&type=section&id=2.1%20Key%20Financial%20Indicators%20Overview) For the nine months ended December 31, 2020, group revenue decreased by **5.1%** to **HKD 352.9 million**, and net profit declined by **HKD 1.4 million** to **HKD 6.7 million**, though it grew **47.9%** excluding one-off fair value changes, with no dividend recommended Key Financial Data for the Nine Months Ended December 31, 2020 | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) | Year-on-year Change (thousand HKD) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 352,900 | 371,900 | (19,000) | -5.1% | | Net Profit | 6,700 | 8,100 | (1,400) | -17.3% | | Net Profit excluding one-off fair value changes | 6,700 | 4,500 | 2,200 | 47.9% | - The decrease in net profit was primarily due to reduced steel product sales and the recognition of a fair value change of contingent consideration payable of approximately **HKD 3.6 million** in 2019[9](index=9&type=chunk)[11](index=11&type=chunk) - The Board does not recommend the payment of any dividend for the nine months ended December 31, 2020[10](index=10&type=chunk)[12](index=12&type=chunk) [Unaudited Condensed Consolidated Third Quarterly Results](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Third%20Quarterly%20Results) This section presents the unaudited condensed consolidated statements of profit or loss and other comprehensive income, and changes in equity for the period [Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=3.1%20Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the nine months ended December 31, 2020, the group reported **HKD 352.9 million** in revenue, **HKD 25.3 million** in gross profit, **HKD 6.7 million** in profit for the period, and **0.87 HK cents** basic and diluted earnings per share attributable to owners Summary of Consolidated Statement of Profit or Loss and Other Comprehensive Income for the Nine Months Ended December 31, 2020 | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Revenue | 352,869 | 371,856 | | Cost of Sales | 327,616 | (353,432) | | Gross Profit | 25,253 | 18,424 | | Operating Profit | 10,436 | 10,045 | | Profit Before Tax | 8,783 | 9,438 | | Profit for the Period | 6,713 | 8,138 | | Profit for the Period Attributable to Owners of the Company | 7,559 | 8,145 | | Basic and Diluted Earnings Per Share (HK cents) | 0.87 | 1.02 | [Unaudited Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=3.2%20Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of December 31, 2020, total equity attributable to owners increased to **HKD 115.981 million** from **HKD 96.521 million** in 2019, primarily due to profit for the period and new share issuance Summary of Changes in Equity for the Nine Months Ended December 31, 2020 | Indicator | December 31, 2020 (thousand HKD) | December 31, 2019 (thousand HKD) | | :--- | :--- | :--- | | Share Capital | 8,780 | 8,000 | | Share Premium | 64,821 | 49,221 | | Retained Earnings | 18,928 | 14,850 | | Subtotal Attributable to Owners of the Company | 115,981 | 96,521 | | Non-controlling Interests | 13,902 | 15,209 | | Total | 129,883 | 111,730 | - On April 21, 2020, the company allotted and issued **78,000,000** new shares at **HKD 0.21** per share to the vendor under a general mandate, resulting in an increase in share capital and share premium[18](index=18&type=chunk)[20](index=20&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes on general information, accounting policies, revenue, segment information, other gains and losses, finance costs, profit before taxation, income tax, dividends, and earnings per share [General Information](index=8&type=section&id=4.1%20General%20Information) F8 Enterprise (Holdings) Group Limited, registered in the Cayman Islands, primarily engages in diesel and related product sales and transportation, and steel product manufacturing and sales in Hong Kong and China, controlled by Macro Rich Limited - The company's principal activities include the sale and transportation of diesel oil and related products in Hong Kong and the PRC, and the manufacture and sale of steel products in the PRC[23](index=23&type=chunk)[27](index=27&type=chunk) - The company is controlled by Macro Rich Limited, which is controlled by Mr. Fong Chun Man[22](index=22&type=chunk)[27](index=27&type=chunk) [Basis of Preparation and Principal Accounting Policies](index=8&type=section&id=4.2%20Basis%20of%20Preparation%20and%20Principal%20Accounting%20Policies) The unaudited condensed consolidated financial statements are prepared in accordance with HKFRS, HKAS, and GEM Listing Rules, using consistent accounting policies with no material impact from new HKFRS revisions, and have been reviewed by the Audit Committee - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards, and the GEM Listing Rules[25](index=25&type=chunk)[28](index=28&type=chunk) - The new and revised Hong Kong Financial Reporting Standards applied during the period had no material impact on the amounts reported in the financial statements[31](index=31&type=chunk)[34](index=34&type=chunk) - The third quarterly results are unaudited by the auditor but have been reviewed by the Audit Committee[32](index=32&type=chunk)[34](index=34&type=chunk) [Revenue Analysis](index=9&type=section&id=4.3%20Revenue%20Analysis) For the nine months ended December 31, 2020, total group revenue was **HKD 352.9 million**, with **HKD 301.7 million** from diesel and related product sales and **HKD 51.2 million** from steel product sales Revenue Breakdown for the Nine Months Ended December 31, 2020 | Type of Goods or Services | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Diesel Oil | 227,835 | 221,586 | | Marine Diesel Oil | 62,157 | 46,412 | | Lubricant Oil | 11,665 | 534 | | **Total Sales of Diesel Oil and Related Products** | **301,657** | **268,532** | | Sales of Steel Products | 51,212 | 103,324 | | **Total Revenue** | **352,869** | **371,856** | - The group primarily operates in two segments: sales of diesel oil and related products, and sales of steel products[37](index=37&type=chunk) [Segment Information](index=10&type=section&id=4.4%20Segment%20Information) The group operates in two reportable segments: diesel sales and transportation, and steel product sales, generating **HKD 301.7 million** and **HKD 51.2 million** respectively for the nine months ended December 31, 2020, with operations primarily in Hong Kong and China Segment Revenue and Results for the Nine Months Ended December 31, 2020 | Segment | 2020 Revenue (thousand HKD) | 2019 Revenue (thousand HKD) | 2020 Segment Results (thousand HKD) | 2019 Segment Results (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Diesel Oil Sales and Transportation | 301,657 | 268,532 | 11,507 | 8,376 | | Steel Product Sales | 51,212 | 103,324 | (1,880) | (15) | | Unallocated | – | – | (2,506) | 295 | | **Total** | **352,869** | **371,856** | **7,121** | **8,656** | Revenue by Geographical Location for the Nine Months Ended December 31, 2020 | Region | 2020 Revenue (thousand HKD) | 2019 Revenue (thousand HKD) | | :--- | :--- | :--- | | Hong Kong | 290,653 | 268,532 | | PRC | 62,216 | 103,324 | | **Total** | **352,869** | **371,856** | [Other Gains and Losses](index=12&type=section&id=4.5%20Other%20Gains%20and%20Losses) For the nine months ended December 31, 2020, the group recorded total other gains and losses of **HKD 3.315 million**, primarily from government grants, diesel vehicle rental income, and realized gains on financial assets at fair value through profit or loss Other Gains and Losses for the Nine Months Ended December 31, 2020 | Item | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Realized gain on financial assets at fair value through profit or loss | 390 | – | | Bank interest income | 1 | – | | Rental income from diesel vehicles | 1,252 | – | | Government grants | 1,358 | – | | Miscellaneous income | 314 | 519 | | **Total** | **3,315** | **1,389** | - Government grants primarily refer to subsidies under the Anti-epidemic Fund[50](index=50&type=chunk) [Finance Costs](index=13&type=section&id=4.6%20Finance%20Costs) For the nine months ended December 31, 2020, total group finance costs significantly increased to **HKD 1.653 million**, mainly due to higher interest expenses on bank borrowings and bonds payable Finance Costs for the Nine Months Ended December 31, 2020 | Item | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Interest expense on bank borrowings | 948 | 103 | | Interest expense on bank overdrafts | 2 | 5 | | Interest expense on bonds payable | 660 | 474 | | Interest expense on lease liabilities | 20 | – | | Interest expense on finance lease payables | 23 | 25 | | **Total** | **1,653** | **607** | [Profit Before Taxation](index=14&type=section&id=4.7%20Profit%20Before%20Taxation) For the nine months ended December 31, 2020, the group's profit before taxation was **HKD 8.783 million**, with major expenses including staff costs (salaries and benefits), cost of inventories, and depreciation Components of Profit Before Taxation for the Nine Months Ended December 31, 2020 | Item | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Directors' remuneration | 1,840 | 1,787 | | Other staff costs (salaries and benefits) | 6,730 | 4,898 | | Contributions to retirement benefit schemes | 404 | 233 | | Auditor's remuneration | 531 | 525 | | Cost of inventories recognized as expense | 321,257 | 349,987 | | Depreciation of property, plant and equipment | 1,937 | 1,648 | | Depreciation of right-of-use assets | – | 918 | | Office operating lease rental expense | 1,026 | 172 | [Income Tax Expenses](index=15&type=section&id=4.8%20Income%20Tax%20Expenses) For the nine months ended December 31, 2020, group income tax expenses totaled **HKD 2.070 million**, comprising Hong Kong profits tax and PRC enterprise income tax, with Hong Kong applying a two-tiered tax system and PRC subsidiaries taxed at **25%** Income Tax Expenses for the Nine Months Ended December 31, 2020 | Item | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Hong Kong Profits Tax | 1,950 | 1,318 | | PRC Enterprise Income Tax | 120 | – | | Deferred Tax | – | (18) | | **Total** | **2,070** | **1,300** | - Hong Kong profits tax is subject to a two-tiered tax rate, with the first **HKD 2 million** of assessable profits taxed at **8.25%** and the remainder at **16.5%**[59](index=59&type=chunk)[60](index=60&type=chunk)[62](index=62&type=chunk) - PRC subsidiaries are subject to an enterprise income tax rate of **25%**[61](index=61&type=chunk)[62](index=62&type=chunk) [Dividends Policy](index=16&type=section&id=4.9%20Dividends%20Policy) The Board does not recommend paying any dividends for the nine months ended December 31, 2020, consistent with the prior period - The Board does not recommend the payment of any dividend for the nine months ended December 31, 2020[63](index=63&type=chunk)[64](index=64&type=chunk) [Earnings Per Share](index=16&type=section&id=4.10%20Earnings%20Per%20Share) For the nine months ended December 31, 2020, basic and diluted earnings per share attributable to owners decreased to **0.87 HK cents** from **1.02 HK cents** in the prior period, calculated based on profit attributable to owners and weighted average ordinary shares Earnings Per Share Data for the Nine Months Ended December 31, 2020 | Indicator | 2020 (thousand HKD/HK cents) | 2019 (thousand HKD/HK cents) | | :--- | :--- | :--- | | Profit for the Period Attributable to Owners of the Company | 7,559 | 8,145 | | Weighted Average Number of Ordinary Shares (thousands) | 872,327 | 800,000 | | Basic and Diluted Earnings Per Share (HK cents) | 0.87 | 1.02 | - Diluted earnings per share are the same as basic earnings per share as there were no dilutive potential ordinary shares in issue during the reporting period[67](index=67&type=chunk)[68](index=68&type=chunk) [Management Discussion and Analysis](index=17&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a comprehensive review of the group's business, industry outlook, financial performance, liquidity, capital resources, and other significant operational and governance matters [Business Review](index=17&type=section&id=5.1%20Business%20Review) The group primarily operates in diesel and related product sales and transportation, and steel product manufacturing and sales in Hong Kong and China; for the nine months ended December 31, 2020, diesel revenue grew **12.3%** due to acquisition and new demand, while steel product revenue declined **50.4%** due to economic challenges and strict credit policies - The group's principal businesses are the sale and transportation of diesel oil and related products, and the manufacture and sale of steel products[70](index=70&type=chunk)[73](index=73&type=chunk) - On March 23, 2020, the group conditionally acquired **51%** equity interest in Mega Shell (Global) Lubricant Technology Co., Ltd., which was completed on April 21, 2020, and its financial statements have been consolidated[71](index=71&type=chunk)[73](index=73&type=chunk) [Sale and Transportation of Diesel Oil and Related Products Business](index=17&type=section&id=5.1.1%20Sale%20and%20transportation%20of%20diesel%20oil%20and%20related%20products%20business) For the nine months ended December 31, 2020, diesel and related product sales revenue increased by **12.3%** to approximately **HKD 301.7 million**, accounting for **85.5%** of total revenue, driven by a lubricant company acquisition and new Hong Kong marine diesel demand Diesel and Related Product Sales Revenue | Indicator | 2020 (million HKD) | 2019 (million HKD) | Year-on-year Change (million HKD) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | :--- | | Diesel and related product sales revenue | 301.7 | 268.6 | 33.1 | 12.3% | - The increase in revenue for this business was mainly attributable to the acquisition of Mega Shell (Global) Lubricant Technology Co., Ltd. and new customer demand for marine diesel oil in Hong Kong[72](index=72&type=chunk)[74](index=74&type=chunk) [Sale of Steel Product Business](index=18&type=section&id=5.1.2%20Sale%20of%20steel%20product%20business) For the nine months ended December 31, 2020, steel product sales revenue significantly decreased by **50.4%** to approximately **HKD 51.2 million**, representing **14.5%** of total revenue, primarily due to economic challenges and stringent customer selection and credit control policies Steel Product Sales Revenue | Indicator | 2020 (million HKD) | 2019 (million HKD) | Year-on-year Change (million HKD) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | :--- | | Steel product sales revenue | 51.2 | 103.3 | (52.1) | -50.4% | - The decrease in revenue was mainly due to challenging economic conditions, stringent customer selection, and credit control policies implemented by the group[76](index=76&type=chunk)[82](index=82&type=chunk) [Industry Review and Future Prospects](index=18&type=section&id=5.2%20Industry%20Review%20and%20Future%20Prospects) In 2020, international oil prices fluctuated significantly, and the COVID-19 pandemic introduced uncertainties; the group will closely monitor and manage risks, planning to invest more resources in talent acquisition, business development, and marketing strategies for the Hong Kong diesel market, while actively seeking potential opportunities to diversify revenue streams - International oil prices fluctuated significantly in 2020, and the COVID-19 pandemic brought short-term uncertainties[79](index=79&type=chunk)[83](index=83&type=chunk) - The group will closely monitor and manage risks related to the pandemic[80](index=80&type=chunk)[84](index=84&type=chunk) - Future plans include investing more resources in talent acquisition, business development, and marketing strategies for the diesel business, and seeking potential business opportunities[81](index=81&type=chunk)[84](index=84&type=chunk) [Financial Review](index=19&type=section&id=5.3%20Financial%20Review) For the nine months ended December 31, 2020, group revenue decreased by **5.1%** to **HKD 352.9 million**, while cost of sales fell **7.3%** to **HKD 327.6 million**, leading to a **37%** gross profit increase to **HKD 25.3 million** and a **7.2%** gross profit margin; profit for the period declined **17.3%** to **HKD 6.7 million**, but grew **47.9%** excluding one-off fair value changes [Revenue Analysis](index=19&type=section&id=5.3.1%20Revenue%20Analysis) For the nine months ended December 31, 2020, total group revenue was **HKD 352.9 million**, a **5.1%** decrease, with diesel sales as the largest contributor at **64.6%**, marine diesel at **17.6%**, lubricant sales at **3.3%**, and steel product sales at **HKD 51.2 million** or **14.5%** of total revenue Revenue Contribution by Business Segment | Business | 2020 Revenue (million HKD) | 2020 Contribution (%) | 2019 Revenue (million HKD) | 2019 Contribution (%) | | :--- | :--- | :--- | :--- | :--- | | Diesel Sales | 227.9 | 64.6% | 221.6 | 59.6% | | Marine Diesel Sales | 62.2 | 17.6% | 46.4 | 12.5% | | Lubricant Sales | 11.7 | 3.3% | 0.5 | 0.1% | | Steel Product Sales | 51.2 | 14.5% | 103.3 | 27.8% | | **Total Revenue** | **352.9** | **100%** | **371.9** | **100%** | - The increase in sales of diesel and related products was offset by a decrease in steel product sales, leading to an overall decline in total revenue[88](index=88&type=chunk)[90](index=90&type=chunk) [Cost of Sales](index=19&type=section&id=5.3.2%20Cost%20of%20Sales) For the nine months ended December 31, 2020, group cost of sales was approximately **HKD 327.6 million**, a **7.3%** decrease from the prior period, primarily comprising costs of diesel, marine diesel, lubricants, direct labor, and depreciation Cost of Sales | Indicator | 2020 (million HKD) | 2019 (million HKD) | Year-on-year Change (million HKD) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cost of Sales | 327.6 | 353.4 | (25.8) | -7.3% | - Cost of sales was mainly affected by the purchase prices of diesel oil, marine diesel oil, lubricant oil, and raw material costs for steel products[89](index=89&type=chunk)[91](index=91&type=chunk) [Gross Profit and Gross Profit Margin](index=20&type=section&id=5.3.3%20Gross%20Profit%20and%20Gross%20Profit%20Margin) For the nine months ended December 31, 2020, group gross profit increased by **HKD 6.8 million** to **HKD 25.3 million**, with the gross profit margin rising from **5.0%** to **7.2%**, primarily due to a slower increase in cost of sales compared to revenue Gross Profit and Gross Profit Margin | Indicator | 2020 (million HKD) | 2019 (million HKD) | Year-on-year Change (million HKD) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | 25.3 | 18.4 | 6.8 | 37.0% | | Gross Profit Margin | 7.2% | 5.0% | 2.2% | - | - The increase in gross profit was mainly due to the increase in cost of sales being lower than the increase in revenue[93](index=93&type=chunk)[97](index=97&type=chunk) [Profit for the Period](index=20&type=section&id=5.3.4%20Profit%20for%20the%20Period) For the nine months ended December 31, 2020, group net profit was **HKD 6.7 million**, a **HKD 1.4 million** decrease year-on-year, with the net profit margin falling from **2.2%** to **1.9%**, though it increased **47.9%** to **HKD 6.7 million** when excluding one-off fair value changes Profit for the Period and Net Profit Margin | Indicator | 2020 (million HKD) | 2019 (million HKD) | Year-on-year Change (million HKD) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Profit | 6.7 | 8.1 | (1.4) | -17.3% | | Net Profit Margin | 1.9% | 2.2% | -0.3% | - | | Net Profit excluding one-off fair value changes | 6.7 | 4.5 | 2.2 | 47.9% | - The decrease in net profit was mainly affected by reduced steel product sales and the recognition of a fair value change of contingent consideration payable of approximately **HKD 3.6 million** in 2019[94](index=94&type=chunk)[98](index=98&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=5.4%20Liquidity%20and%20Capital%20Resources) As of December 31, 2020, the group reported net current assets of approximately **HKD 83.0 million**, a current ratio of **2.1 times**, and a gearing ratio of **31.5%**, funding operations through interest-bearing bank borrowings while maintaining prudent financial management without foreign exchange hedging [Financial Resources and Liquidity](index=20&type=section&id=5.4.1%20Financial%20Resources%20and%20Liquidity) As of December 31, 2020, the group's net current assets were approximately **HKD 83.0 million**, with current assets of **HKD 161.7 million**, current liabilities of **HKD 78.1 million**, and a current ratio of **2.1 times** Liquidity Position | Indicator | December 31, 2020 (million HKD) | | :--- | :--- | | Net Current Assets | 83.0 | | Current Assets | 161.7 | | Current Liabilities | 78.1 | | Current Ratio | 2.1 | [Gearing Ratio](index=21&type=section&id=5.4.2%20Gearing%20Ratio) As of December 31, 2020, the group's gearing ratio was **31.5%**, with bank financing facilities of approximately **HKD 65.0 million**, of which **HKD 18.5 million** was utilized, secured by company guarantees, time deposits, and life insurance policies Gearing Ratio and Bank Financing | Indicator | December 31, 2020 (million HKD/%) | | :--- | :--- | | Bank Financing Facilities Limit | 65.0 | | Utilized Bank Financing | 18.5 | | Gearing Ratio | 31.5% | - Bank borrowings are secured by company guarantees, time deposits, and life insurance policies[101](index=101&type=chunk)[106](index=106&type=chunk) [Capital Structure](index=21&type=section&id=5.4.3%20Capital%20Structure) As of December 31, 2020, the group's capital structure primarily consisted of equity attributable to owners of approximately **HKD 116.0 million**, with share capital solely comprising ordinary shares, and no significant changes since its listing on April 12, 2017 Capital Structure | Indicator | December 31, 2020 (million HKD) | | :--- | :--- | | Equity Attributable to Owners of the Company | 116.0 | - The group's share capital consists solely of ordinary shares, and there have been no significant changes to the capital structure since the listing date[103](index=103&type=chunk)[107](index=107&type=chunk) [Foreign Currency Exposure Risks](index=21&type=section&id=5.4.4%20Foreign%20Currency%20Exposure%20Risks) Operating primarily in Hong Kong, the group faces foreign exchange risks from RMB-denominated lubricant and steel product sales and Malaysian Ringgit financial assets, with no derivative or financial instruments used for hedging during the reporting period - The group faces foreign exchange risks from RMB-denominated lubricant and steel product sales, as well as Malaysian Ringgit financial assets[104](index=104&type=chunk)[108](index=108&type=chunk) - During the reporting period, the group did not enter into any derivative agreements or financial instruments to hedge foreign exchange risks[104](index=104&type=chunk)[108](index=108&type=chunk) [Treasury Policies](index=21&type=section&id=5.4.5%20Treasury%20Policies) The group adopts prudent financial management, maintaining a robust liquidity position, mitigating credit risk through continuous assessment, and closely monitoring liquidity to meet funding requirements - The group adopts a prudent financial management approach, maintaining a sound liquidity position[105](index=105&type=chunk)[109](index=109&type=chunk) - Credit risk is mitigated through continuous credit assessment, and liquidity is closely monitored to meet funding needs[105](index=105&type=chunk)[109](index=109&type=chunk) [Material Acquisitions and Disposals](index=22&type=section&id=5.5%20Material%20Acquisitions%20and%20Disposals) On March 23, 2020, the company conditionally agreed to acquire **51%** equity in Mega Shell (Global) Lubricant Technology Co., Ltd. for approximately **HKD 16.38 million**, settled by issuing **78,000,000** new shares, completed on April 21, 2020, with no other material acquisitions or disposals during the period - On March 23, 2020, the company entered into an agreement for the conditional acquisition of **51%** equity interest in Mega Shell (Global) Lubricant Technology Co., Ltd[110](index=110&type=chunk)[116](index=116&type=chunk) - The total consideration for the acquisition was approximately **HKD 16.38 million**, paid by issuing **78,000,000** new shares, and completed on April 21, 2020[110](index=110&type=chunk)[116](index=116&type=chunk) - Save as disclosed above, there were no other material investments, acquisitions, or disposals during the reporting period[111](index=111&type=chunk)[116](index=116&type=chunk) [Capital Commitments and Contingent Liabilities](index=22&type=section&id=5.6%20Capital%20Commitments%20and%20Contingent%20Liabilities) As of December 31, 2020, the group had no other significant capital commitments or contingent liabilities beyond those already disclosed - As of December 31, 2020, the group had no other significant capital commitments or contingent liabilities[112](index=112&type=chunk)[117](index=117&type=chunk) [Pledge of Assets](index=22&type=section&id=5.7%20Pledge%20of%20Assets) As of December 31, 2020, the group pledged approximately **HKD 12.0 million** in short-term bank deposits and **HKD 4.7 million** in life insurance policies as collateral for bank financing Pledged Assets | Asset Type | Amount (million HKD) | | :--- | :--- | | Pledged short-term bank deposits | 12.0 | | Pledged life insurance policies | 4.7 | - These assets serve as collateral for the group's bank financing[115](index=115&type=chunk)[120](index=120&type=chunk) [Use of Proceeds](index=23&type=section&id=5.8%20Use%20of%20Proceeds) Net proceeds from the share offer amounted to **HKD 45.1 million**, lower than the estimated **HKD 50.9 million**; as of December 31, 2020, **HKD 30.5 million** was utilized, with the remaining **HKD 14.6 million** earmarked for diesel tank trucks, marine diesel barges, enhanced staffing, and IT system upgrades, expected to be fully used by March 31, 2022 Actual Use of Net Proceeds (as of December 31, 2020) | Planned Use | Planned Use (%) | Actual Use (million HKD) | Unutilized Amount (million HKD) | Expected Timeline for Remaining Funds | | :--- | :--- | :--- | :--- | :--- | | Purchase of diesel tank trucks | 17.3% | 5.0 | 2.8 | Before March 31, 2022 | | Purchase of marine diesel barges | 31.0% | 8.5 | 5.5 | Before March 31, 2022 | | Further enhancement of manpower | 13.6% | 2.9 | 3.2 | Before March 31, 2022 | | Enhancement of information technology and systems | 7.9% | 0.5 | 3.1 | Before March 31, 2022 | | Working capital for operating new diesel tank trucks and marine fuel supply business | 20.2% | 9.1 | – | Before March 31, 2022 | | Working capital | 10.0% | 4.5 | – | – | | **Total** | **100.0%** | **30.5** | **14.6** | | - The actual use of net proceeds is consistent with the plans in the prospectus, but specific implementation will be adjusted based on business and market conditions[128](index=128&type=chunk)[130](index=130&type=chunk) [Financial Assets Through Profit and Loss](index=24&type=section&id=5.9%20Financial%20Assets%20Through%20Profit%20and%20Loss) As of December 31, 2020, the group had divested all equity in its Malaysia Exchange-listed company and held **HKD 4.7 million** in key management life insurance, realizing a net gain of approximately **HKD 0.3 million** from this investment - The group has disposed of all its equity interests in a company listed on the Malaysia Exchange[129](index=129&type=chunk)[131](index=131&type=chunk) - The group holds **HKD 4.7 million** in key management life insurance[129](index=129&type=chunk)[131](index=131&type=chunk) - This investment recorded a net realized gain of approximately **HKD 0.3 million**[129](index=129&type=chunk)[131](index=131&type=chunk) [Employees and Remuneration Policies](index=25&type=section&id=5.10%20Employees%20and%20Remuneration%20Policies) As of December 31, 2020, the group employed **66** staff (including directors) with total staff costs of approximately **HKD 9.0 million**; remuneration policies are regularly reviewed based on market levels, employee performance, qualifications, experience, position, and group performance Employees and Staff Costs | Indicator | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total Number of Employees | 66 | 27 | | Total Staff Costs (million HKD) | 9.0 | 6.9 | - Remuneration (including employee benefits) is maintained at market levels and is regularly reviewed, determined based on performance, qualifications, experience, position, and the group's business performance[133](index=133&type=chunk)[137](index=137&type=chunk) [Environmental Policies and Performance](index=25&type=section&id=5.11%20Environmental%20Policies%20and%20Performance) The group's operations are regulated by Hong Kong environmental laws, with measures implemented to minimize environmental impact; the group continuously monitors operations for compliance and has not faced prosecution or fines for environmental violations as of the reporting date - The group's operations are regulated by environmental laws and regulations in Hong Kong, such as the Air Pollution Control Ordinance and Water Pollution Control Ordinance[134](index=134&type=chunk)[138](index=138&type=chunk) - The group has implemented various environmental measures to minimize the impact of its operations on the environment and natural resources[134](index=134&type=chunk)[138](index=138&type=chunk) - As of the date of this report, the group has not been subject to any prosecution, fines, or penalties for non-compliance with any environmental laws or regulations[135](index=135&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) [Events After the Reporting Period](index=25&type=section&id=5.12%20Events%20After%20the%20Reporting%20Period) As of the report date, the Board has not identified any other material post-reporting period events requiring disclosure, apart from those already presented - As of the date of this report, the Board has not identified any other material events after the reporting period that require disclosure[136](index=136&type=chunk)[141](index=141&type=chunk) [Continuing Connected Transactions](index=26&type=section&id=5.13%20Continuing%20Connected%20Transactions) For the nine months ended December 31, 2020, the group engaged in approximately **HKD 27 million** in steel material procurement transactions with Xinguang (Shanghai) Trading Co., Ltd. and MCC South (Xinyu) Cold Rolling New Material Technology Co., Ltd., which constitute continuing connected transactions approved by the Board under GEM Listing Rules exemption conditions - The group conducted steel material procurement transactions with Xinguang (Shanghai) Trading Co., Ltd. and MCC South (Xinyu) Cold Rolling New Material Technology Co., Ltd[143](index=143&type=chunk)[146](index=146&type=chunk) Continuing Connected Transaction Amounts | Indicator | 2020 (million HKD) | | :--- | :--- | | Procurement Transaction Amount | 27 | - These transactions constitute continuing connected transactions under the GEM Listing Rules but have been approved by the Board (including independent non-executive directors) and meet the exemption conditions[145](index=145&type=chunk)[147](index=147&type=chunk)[151](index=151&type=chunk)[153](index=153&type=chunk)[156](index=156&type=chunk)[159](index=159&type=chunk) [Significant Investment, Material Acquisitions and Disposals, and Future Plans for Material Investments or Capital Assets](index=28&type=section&id=5.14%20Significant%20Investment,%20Material%20Acquisitions%20and%20Disposals,%20and%20Future%20Plans%20for%20Material%20Investments%20or%20Capital%20Assets) Excluding disclosed acquisitions, for the nine months ended December 31, 2020, the group had no other significant investments, material acquisitions or disposals of subsidiaries and associates, nor any other plans for material investments or capital assets - Save for the acquisition disclosed, there were no other significant investments, material acquisitions or disposals of subsidiaries and associates during the nine months ended December 31, 2020[157](index=157&type=chunk)[160](index=160&type=chunk) - The group currently has no other plans for material investments or capital assets[157](index=157&type=chunk)[160](index=160&type=chunk) [Other Information](index=29&type=section&id=OTHER%20INFORMATION) This section details information on securities transactions, directors' and substantial shareholders' interests, share option schemes, competing interests, and corporate governance practices [Purchase, Sale or Redemption of the Company's Listed Securities](index=29&type=section&id=6.1%20Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) For the nine months ended December 31, 2020, the company did not engage in any purchase, sale, or redemption of its listed securities - For the nine months ended December 31, 2020, the company did not purchase, sell, or redeem any of its listed securities[162](index=162&type=chunk)[164](index=164&type=chunk) [Interests and Short Positions of Directors and Chief Executive in the Shares, Underlying Shares and Debentures of the Company and its Associated Corporations](index=29&type=section&id=6.2%20Interests%20and%20short%20positions%20of%20Directors%20and%20chief%20executive%20in%20the%20shares,%20underlying%20shares%20and%20debentures%20of%20the%20Company%20and%20its%20associated%20corporations) As of December 31, 2020, Mr. Fong Chun Man and his spouse, Ms. Lo Pui Yee, each held a **51.5%** long position in the company's shares through Macro Rich Limited, with no other directors or chief executives holding disclosable interests or short positions Shareholdings of Directors and Chief Executive | Director Name | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Fong Chun Man | Interest in controlled corporation (long position) | 452,264,000 | 51.5% | | Ms. Lo Pui Yee | Spouse's interest (long position) | 452,264,000 | 51.5% | - Mr. Fong Chun Man holds shares through Macro Rich Limited, and his spouse, Ms. Lo Pui Yee, is deemed to have the same interest[166](index=166&type=chunk) [Interests and Short Positions of the Substantial Shareholders and Other Persons in the Shares, Underlying Shares and Debentures of the Company and its Associated Corporations](index=30&type=section&id=6.3%20Interests%20and%20short%20positions%20of%20the%20substantial%20shareholders%20and%20other%20persons%20in%20the%20shares,%20underlying%20shares%20and%20debentures%20of%20the%20Company%20and%20its%20associated%20corporations) As of December 31, 2020, Macro Rich Limited beneficially held a **51.5%** long position in the company's shares, and the Board was unaware of any other substantial shareholders or persons holding disclosable interests or short positions Shareholdings of Substantial Shareholders | Shareholder Name/Name | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Macro Rich Limited | Beneficial owner (long position) | 452,264,000 | 51.5% | - Macro Rich Limited is wholly owned by Mr. Fong Chun Man, who is deemed to be interested in all shares held by it[173](index=173&type=chunk) [Share Option Scheme](index=31&type=section&id=6.4%20Share%20Option%20Scheme) The company conditionally adopted a share option scheme on March 23, 2017, to grant options to eligible participants; as of December 31, 2020, no options were granted or outstanding, with **80,000,000** shares remaining available for issuance under the scheme - The company adopted a share option scheme on March 23, 2017, to grant share options to eligible participants, including directors and employees[174](index=174&type=chunk)[178](index=178&type=chunk) - As of December 31, 2020, no share options had been granted, and there were no outstanding share options[175](index=175&type=chunk)[178](index=178&type=chunk) - There are still **80,000,000** shares available for issuance under the scheme, representing **10%** of the issued share capital on the listing date[175](index=175&type=chunk)[178](index=178&type=chunk) [Directors' Rights to Acquire Shares and Debentures](index=31&type=section&id=6.5%20Directors'%20Rights%20to%20Acquire%20Shares%20and%20Debentures) Excluding the share option scheme, for the nine months ended December 31, 2020, neither the company, its holding company, nor any subsidiaries entered into arrangements enabling directors to acquire benefits through shares or debentures of the company or any other body corporate - Save for the share option scheme, during the nine months ended December 31, 2020, neither the company, its holding company, nor any of its subsidiaries entered into any arrangements enabling directors to acquire benefits through the acquisition of shares or debentures of the company or any other body corporate[176](index=176&type=chunk)[179](index=179&type=chunk) [Competing Interests](index=32&type=section&id=6.6%20Competing%20Interests) The directors confirm that as of the report date, neither the company's controlling shareholders, directors, nor their close associates held any interests in businesses competing or potentially competing with the group's operations - The directors confirm that as of the date of this report, neither the controlling shareholders, directors, nor their close associates held any interests in any business that competes or may compete with the group's business[181](index=181&type=chunk)[185](index=185&type=chunk) [Audit Committee](index=32&type=section&id=6.7%20Audit%20Committee) Established on March 23, 2017, the Audit Committee, comprising three independent non-executive directors chaired by Mr. Tsui Chi Yan, primarily provides independent opinions on internal control and risk management system effectiveness, oversees financial statement balance, transparency, and integrity, and reviews the relationship with external auditors - The Audit Committee comprises three independent non-executive directors, with Mr. Tsui Chi Yan as the chairman[182](index=182&type=chunk)[186](index=186&type=chunk) - Its primary responsibilities include providing independent opinions on the effectiveness of internal control and risk management systems, and overseeing the balance, transparency, and integrity of financial statements[183](index=183&type=chunk)[186](index=186&type=chunk) - The Audit Committee has reviewed the unaudited condensed consolidated financial statements for the nine months ended December 31, 2020, and considers them to be in compliance with applicable accounting standards and the GEM Listing Rules[184](index=184&type=chunk)[186](index=186&type=chunk) [Nomination Committee](index=33&type=section&id=6.8%20Nomination%20Committee) Established on March 23, 2017, the Nomination Committee, comprising Mr. Fong Chun Man and two independent non-executive directors chaired by Mr. Kwong Yuk Lap, primarily reviews board diversity policy, structure, size, and composition, identifies qualified board members, assesses independent non-executive directors' independence, and advises on director appointments - The Nomination Committee comprises Mr. Fong Chun Man and two independent non-executive directors, with Mr. Kwong Yuk Lap as the chairman[188](index=188&type=chunk)[193](index=193&type=chunk) - Its primary responsibilities include reviewing the board diversity policy, structure, size, and composition, identifying qualified board members, and assessing the independence of independent non-executive directors[189](index=189&type=chunk)[193](index=193&type=chunk) [Remuneration Committee](index=33&type=section&id=6.9%20Remuneration%20Committee) Established on March 23, 2017, the Remuneration Committee, comprising two independent non-executive directors and Mr. Fong Chun Man, chaired by Mr. Wong On Yuen, primarily advises the Board on the overall remuneration policy and structure for all directors and senior management, and reviews and approves management's remuneration proposals - The Remuneration Committee comprises two independent non-executive directors and Mr. Fong Chun Man, with Mr. Wong On Yuen as the chairman[191](index=191&type=chunk)[195](index=195&type=chunk) - Its primary responsibilities are to advise the Board on the overall remuneration policy and structure for all directors and senior management of the group, and to review and approve management's remuneration proposals[192](index=192&type=chunk)[195](index=195&type=chunk) - The Remuneration Committee determines remuneration levels by reference to market benchmarks and considering individual directors' capabilities, responsibilities, performance, and the group's results[197](index=197&type=chunk)[203](index=203&type=chunk) [Directors' Securities Transactions](index=34&type=section&id=6.10%20Directors'%20Securities%20Transactions) The company has adopted a code of conduct for directors' securities transactions, with terms no less exacting than those in the GEM Listing Rules, and all directors have confirmed compliance upon specific enquiry - The company has adopted a code of conduct for directors' securities transactions, with terms no less exacting than the required standards of the GEM Listing Rules[199](index=199&type=chunk)[204](index=204&type=chunk) - All directors have confirmed compliance with the code upon specific enquiry[199](index=199&type=chunk)[204](index=204&type=chunk) [Corporate Governance](index=34&type=section&id=6.11%20Corporate%20Governance) The company is committed to maintaining high corporate governance standards, continuously reviewing and improving them, and has complied with the Corporate Governance Code provisions in Appendix 15 of the GEM Listing Rules for the nine months ended December 31, 2020 - The company is committed to maintaining high standards of corporate governance and continuously reviews and improves them[200](index=200&type=chunk)[205](index=205&type=chunk) - For the nine months ended December 31, 2020, the company has complied with the provisions of the Corporate Governance Code set out in Appendix 15 of the GEM Listing Rules[200](index=200&type=chunk)[205](index=205&type=chunk)

[GEM Market Characteristics and Report Declaration](index=2&type=section&id=GEM_CHARACTERISTICS) This section outlines the GEM market's positioning for small and medium-sized companies and the directors' responsibility for report accuracy [GEM Market Positioning and Risk Disclosure](index=2&type=section&id=GEM_MARKET_POSITIONING) The GEM market targets small and medium-sized companies, carrying higher investment risks and potential market volatility than the Main Board - GEM market is positioned to provide a listing platform for high-investment-risk small and medium-sized companies[1](index=1&type=chunk)[5](index=5&type=chunk) - GEM securities may be subject to higher market volatility risks and do not guarantee high liquidity[2](index=2&type=chunk)[5](index=5&type=chunk) - The directors of F8 Enterprise (Holdings) Group Limited assume full responsibility for the content of this report, confirming its accuracy, completeness, and lack of misleading information[4](index=4&type=chunk)[6](index=6&type=chunk) [Corporate Information](index=4&type=section&id=CORPORATE_INFORMATION) This section details the company's board members, committees, registration, and contact information [Board and Committee Members](index=4&type=section&id=BOARD_AND_COMMITTEES) The Board of Directors comprises executive and independent non-executive directors, with established audit, remuneration, and nomination committees - The Board of Directors includes three executive directors and three independent non-executive directors[9](index=9&type=chunk) - The company has established an Audit Committee, a Remuneration Committee, and a Nomination Committee, with specified chairpersons for each[9](index=9&type=chunk) - Mr. Fong Chun Man serves concurrently as Chairman of the Board, authorized representative, and compliance officer[9](index=9&type=chunk)[10](index=10&type=chunk) [Company Registration and Contact Information](index=4&type=section&id=COMPANY_DETAILS) The company is registered in the Cayman Islands with its Hong Kong headquarters in Kowloon Bay, detailing key contact information - The company's registered office is in the Cayman Islands, with its Hong Kong headquarters and principal place of business located in Kowloon Bay, Hong Kong[10](index=10&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk) - The company has appointed BDO Limited as its auditor, Cheung & Dai Solicitors as its legal advisor, and The Hongkong and Shanghai Banking Corporation Limited as its principal banker[13](index=13&type=chunk) [Highlights](index=6&type=section&id=HIGHLIGHT) This section provides a concise overview of the company's key financial and operational performance [Financial Highlights](index=6&type=section&id=FINANCIAL_HIGHLIGHTS) Revenue increased by 11.9% to HK$231.4 million, while net profit decreased, but adjusted net profit rose by 56.3% Financial Highlights for the Six Months Ended September 30, 2020 | Indicator | 2020 (HK$ million) | 2019 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 231.4 | 206.7 | +24.7 | +11.9% | | Net Profit | 6.8 | 7.9 | -1.2 | -15.2% | | Adjusted Net Profit (excluding one-off fair value change) | 6.8 | 4.3 | +2.4 | +56.3% | - The decline in net profit was primarily due to losses from steel product sales and the fair value change of contingent consideration in 2019[17](index=17&type=chunk)[19](index=19&type=chunk) - The Board does not recommend any dividend payment for the six months ended September 30, 2020[18](index=18&type=chunk)[20](index=20&type=chunk) [Financial Statements](index=7&type=section&id=FINANCIAL_STATEMENTS) This section presents the unaudited condensed consolidated financial statements, including profit or loss, financial position, equity changes, and cash flows [Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=7&type=section&id=UNAUDITED_CONDENSED_CONSOLIDATED_STATEMENT_OF_PROFIT_OR_LOSS_AND_OTHER_COMPREHENSIVE_INCOME) For the six months ended September 30, 2020, the group reported revenue of HK$231.4 million and profit for the period of HK$6.8 million Key Profit or Loss and Other Comprehensive Income Data (Six Months Ended September 30) | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 231,376 | 206,722 | +24,654 | +11.9% | | Cost of sales | (212,434) | (193,993) | +18,441 | +9.5% | | Gross Profit | 18,942 | 12,729 | +6,213 | +48.8% | | Operating Profit | 9,008 | 9,196 | -188 | -2.0% | | Profit Before Tax | 8,287 | 8,843 | -556 | -6.3% | | Profit for the Period | 6,774 | 7,931 | -1,157 | -14.6% | | Profit for the Period Attributable to Owners of the Company | 7,289 | 7,744 | -455 | -5.9% | | Basic and Diluted Earnings Per Share (HK cents) | 0.84 | 0.97 | -0.13 | -13.4% | - The 2019 profit for the period included a fair value change of contingent consideration of **HK$3,598 thousand**, which was not present in 2020[23](index=23&type=chunk) - Profit for the period attributable to non-controlling interests changed from a profit of **HK$187 thousand** in 2019 to a loss of **HK$515 thousand** in 2020[24](index=24&type=chunk) [Unaudited Condensed Consolidated Statement of Financial Position](index=9&type=section&id=UNAUDITED_CONDENSED_CONSOLIDATED_STATEMENT_OF_FINANCIAL_POSITION) As of September 30, 2020, total assets less current liabilities were HK$139.3 million, with net assets of HK$129.8 million Key Financial Position Data (As of September 30) | Indicator | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Non-current Assets | 56,462 | 34,103 | +22,359 | +65.6% | | Current Assets | 147,992 | 118,704 | +29,288 | +24.7% | | Current Liabilities | 65,148 | 36,775 | +28,373 | +77.2% | | Net Current Assets | 82,844 | 81,929 | +915 | +1.1% | | Total Assets Less Current Liabilities | 139,306 | 116,032 | +23,274 | +20.1% | | Net Assets | 129,808 | 106,534 | +23,274 | +21.8% | | Total Equity Attributable to Owners of the Company | 115,587 | 91,772 | +23,815 | +26.0% | - Non-current assets, specifically property, plant and equipment, increased from **HK$20,494 thousand** to **HK$25,822 thousand**, and intangible assets from zero to **HK$16,246 thousand**[26](index=26&type=chunk) - Current liabilities, particularly trade payables, significantly increased from **HK$7,729 thousand** to **HK$25,867 thousand**, and bank borrowings from **HK$16,090 thousand** to **HK$22,817 thousand**[26](index=26&type=chunk) [Unaudited Condensed Consolidated Statement of Changes in Equity](index=11&type=section&id=UNAUDITED_CONDENSED_CONSOLIDATED_STATEMENT_OF_CHANGES_IN_EQUITY) Total equity attributable to owners increased from HK$91.8 million to HK$115.6 million, driven by profit and new share issuance Key Equity Changes Data (Six Months Ended September 30) | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Total Equity Attributable to Owners of the Company at Beginning of Period | 91,772 | 88,551 | | Profit for the Period (Attributable to Owners of the Company) | 7,289 | 7,744 | | Issue of Shares | 16,380 | - | | Total Equity Attributable to Owners of the Company at End of Period | 115,587 | 96,532 | | Non-controlling Interests at End of Period | 14,221 | 15,741 | | Total Equity at End of Period | 129,808 | 112,273 | - On April 21, 2020, the company allotted and issued **78,000,000 new shares** at **HK$0.21** per share to the vendor under a general mandate, increasing share capital by **HK$780 thousand** and share premium by **HK$15,600 thousand**[30](index=30&type=chunk)[32](index=32&type=chunk) - Non-controlling interests decreased from **HK$14,762 thousand** on April 1, 2020, to **HK$14,221 thousand** on September 30, 2020[30](index=30&type=chunk) [Unaudited Condensed Consolidated Statement of Cash Flows](index=13&type=section&id=UNAUDITED_CONDENSED_CONSOLIDATED_STATEMENT_OF_CASH_FLOWS) Net cash generated from operating activities was HK$2.9 million, with a closing cash and bank balance of HK$11.5 million Key Cash Flow Data (Six Months Ended September 30) | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Net Cash Generated From/(Used In) Operating Activities | 2,936 | (31,447) | | Net Cash (Used In)/Generated From Investing Activities | (5,550) | 8,308 | | Net Cash Generated From Financing Activities | 7,785 | 22,521 | | Net Increase/(Decrease) in Cash and Cash Equivalents | 5,171 | (618) | | Cash and Cash Equivalents at End of Period | 11,537 | 5,626 | - Operating cash flow significantly improved from a net outflow of **HK$31.4 million** in 2019 to a net inflow of **HK$2.9 million** in 2020[34](index=34&type=chunk) - Investing cash flow shifted from a net inflow of **HK$8.3 million** in 2019 to a net outflow of **HK$5.6 million** in 2020[34](index=34&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=14&type=section&id=NOTES_TO_FINANCIAL_STATEMENTS) This section provides detailed notes explaining the basis of preparation, significant accounting policies, and specific line items in the financial statements [1. General Information](index=14&type=section&id=1.%20General%20Information) F8 Enterprise (Holdings) Group Limited, incorporated in the Cayman Islands, primarily sells and transports diesel and related products in Hong Kong and China, and manufactures and sells steel products in China - The company was incorporated in the Cayman Islands on March 30, 2016, with Grand Tycoon Limited, controlled by Mr. Fong Chun Man, as the ultimate holding company[36](index=36&type=chunk)[40](index=40&type=chunk) - Principal activities include sales and transportation of diesel and related products in Hong Kong and China, and manufacturing and sales of steel products in China[37](index=37&type=chunk)[40](index=40&type=chunk) [2. Basis of Preparation and Principal Accounting Policies](index=14&type=section&id=2.%20Basis%20of%20Preparation%20and%20Principal%20Accounting%20Policies) Interim financial statements are prepared under GEM Listing Rules and HKAS 34, consistent with annual policies, with no material impact from new HKFRSs - Interim financial statements are prepared in accordance with Appendix 16 of the GEM Listing Rules and Hong Kong Accounting Standard 34[39](index=39&type=chunk)[41](index=41&type=chunk) - Accounting policies are consistent with the audited annual financial statements for the year ended March 31, 2020, with the adoption of new and revised HKFRSs effective April 1, 2020[43](index=43&type=chunk)[48](index=48&type=chunk) - The application of new and revised HKFRSs had no material impact on the group's financial performance and position for the current and prior periods[49](index=49&type=chunk)[50](index=50&type=chunk) [3. Revenue Notes](index=17&type=section&id=3.%20Revenue%20Notes) Total revenue for the six months ended September 30, 2020, was HK$231.4 million, with diesel and related products contributing HK$202.0 million Revenue from Contracts with Customers by Type of Goods or Services (Six Months Ended September 30) | Type of Goods or Services | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Diesel | 153,070 | 138,425 | +14,645 | +10.6% | | Marine Diesel | 40,352 | 32,338 | +8,014 | +24.8% | | Lubricants | 8,592 | 374 | +8,218 | +2197.3% | | **Total Diesel and Related Product Sales** | **202,014** | **171,137** | **+30,877** | **+18.0%** | | Steel Product Sales | 29,362 | 35,585 | -6,223 | -17.5% | | **Total Revenue** | **231,376** | **206,722** | **+24,654** | **+11.9%** | - Lubricant sales significantly increased from **HK$374 thousand** in 2019 to **HK$8,592 thousand** in 2020[54](index=54&type=chunk) - Steel product sales decreased by **17.5%** from **HK$35,585 thousand** to **HK$29,362 thousand**[54](index=54&type=chunk) [4. Segment Information Notes](index=18&type=section&id=4.%20Segment%20Information%20Notes) The group operates in diesel and steel product segments, with the diesel segment generating HK$202.0 million in revenue and HK$9.8 million in segment results Segment Revenue and Results (Six Months Ended September 30) | Segment | 2020 Revenue (HK$ thousand) | 2019 Revenue (HK$ thousand) | 2020 Segment Results (HK$ thousand) | 2019 Segment Results (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Diesel Sales and Transportation | 202,014 | 171,137 | 9,842 | 6,190 | | Steel Product Sales | 29,362 | 35,585 | (1,145) | (415) | | Unallocated | - | - | (1,762) | 2,564 | | **Total** | **231,376** | **206,722** | **6,935** | **8,339** | Revenue by Geographical Location of Customers (Six Months Ended September 30) | Region | 2020 Revenue (HK$ thousand) | 2019 Revenue (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong | 193,810 | 171,137 | | China | 37,566 | 35,585 | | **Total** | **231,376** | **206,722** | - Customers A and B contributed a significant portion of the group's total revenue in 2020, with Customer B emerging as a new major customer[65](index=65&type=chunk) [5. Other Gains and Losses](index=20&type=section&id=5.%20Other%20Gains%20and%20Losses) Total other gains and losses increased to HK$2.1 million, driven by realized gains from financial assets at fair value through profit or loss, diesel vehicle rental income, and government grants Other Gains and Losses (Six Months Ended September 30) | Item | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Realized gains on financial assets at fair value through profit or loss | 390 | - | | Diesel vehicle rental income | 850 | - | | Government grants | 705 | - | | Miscellaneous income | 128 | 328 | | Gain on disposal of property, plant and equipment | - | 160 | | Unrealized gains on financial assets at fair value through profit or loss | - | 292 | | Unrealized exchange gains on financial assets at fair value through profit or loss | - | 104 | | Loss on disposal of a subsidiary | - | (27) | | **Total** | **2,073** | **857** | - New government grants of **HK$705 thousand** were recognized in 2020, primarily from the Anti-epidemic Fund[69](index=69&type=chunk)[70](index=70&type=chunk) - Diesel vehicle rental income of **HK$850 thousand** was recorded in 2020, with no comparable item in 2019[69](index=69&type=chunk) [6. Finance Costs](index=21&type=section&id=6.%20Finance%20Costs) Total finance costs increased to HK$721 thousand, mainly due to higher interest expenses on bank borrowings and bonds payable Finance Costs (Six Months Ended September 30) | Item | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Interest expense on bank borrowings | 245 | 79 | | Interest expense on bank overdrafts | 2 | 1 | | Interest expense on bonds payable | 440 | 254 | | Interest expense on lease liabilities | 20 | 19 | | Interest expense on finance lease payables | 14 | - | | **Total** | **721** | **353** | - Interest expense on bank borrowings increased from **HK$79 thousand** in 2019 to **HK$245 thousand** in 2020[73](index=73&type=chunk) - Interest expense on bonds payable increased from **HK$254 thousand** in 2019 to **HK$440 thousand** in 2020[73](index=73&type=chunk) [7. Notes to Profit Before Taxation](index=22&type=section&id=7.%20Notes%20to%20Profit%20Before%20Taxation) Profit before taxation for the six months ended September 30, 2020, was stated after deducting directors' remuneration, staff costs, auditor's remuneration, inventory costs, and depreciation Deductions from Profit Before Taxation (Six Months Ended September 30) | Item | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Directors' remuneration | 1,227 | 1,192 | | Other staff costs (salaries and benefits) | 4,419 | 2,485 | | Other staff costs (retirement benefits) | 250 | 146 | | Auditor's remuneration | 350 | 350 | | Cost of inventories recognized as expense | 209,053 | 191,813 | | Depreciation of property, plant and equipment | 1,304 | 1,100 | | Depreciation of right-of-use assets | - | 612 | | Office operating lease rental expense | 628 | - | - Other staff costs (salaries and other benefits) increased from **HK$2,485 thousand** in 2019 to **HK$4,419 thousand** in 2020[76](index=76&type=chunk) - New office operating lease rental expense of **HK$628 thousand** was incurred in 2020[76](index=76&type=chunk) [8. Income Tax Expenses](index=23&type=section&id=8.%20Income%20Tax%20Expenses) Income tax expense increased to HK$1.5 million, with Hong Kong profits tax calculated under a two-tiered system and Chinese subsidiaries taxed at 25% Income Tax Expenses (Six Months Ended September 30) | Item | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong Profits Tax | 1,512 | 930 | | China Corporate Income Tax | 1 | - | | Deferred Tax (Current Credit) | - | (18) | | **Total** | **1,513** | **912** | - Hong Kong profits tax uses a two-tiered system, with the first **HK$2 million** of assessable profits taxed at **8.25%** and the remainder at **16.5%**[79](index=79&type=chunk)[80](index=80&type=chunk) - The corporate income tax rate for Chinese subsidiaries remained at **25%** for both reporting periods[81](index=81&type=chunk)[82](index=82&type=chunk) [9. Dividends Notes](index=24&type=section&id=9.%20Dividends%20Notes) The Board does not recommend any dividend payment for the six months ended September 30, 2020, consistent with the prior year - The Board does not recommend any dividend payment for the six months ended September 30, 2020[83](index=83&type=chunk)[84](index=84&type=chunk) [10. Earnings Per Share](index=24&type=section&id=10.%20Earnings%20Per%20Share) Basic and diluted earnings per share attributable to owners decreased to HK$0.84 cents, influenced by lower profit and an increased weighted average number of shares Earnings Per Share Data (Six Months Ended September 30) | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Profit for the Period Attributable to Owners of the Company (HK$ thousand) | 7,289 | 7,744 | | Weighted Average Number of Ordinary Shares (thousand shares) | 869,475 | 800,000 | | Basic and Diluted Earnings Per Share (HK cents) | 0.84 | 0.97 | - The decrease in basic earnings per share is primarily due to lower profit attributable to owners and an increased weighted average number of shares[86](index=86&type=chunk)[87](index=87&type=chunk) - Diluted earnings per share is the same as basic earnings per share as there were no dilutive potential ordinary shares during the reporting period[87](index=87&type=chunk)[89](index=89&type=chunk) [11. Movements in Property, Plant and Equipment](index=24&type=section&id=11.%20Movements%20in%20Property%2C%20Plant%20and%20Equipment) The group acquired approximately HK$7.7 million in property, plant and equipment during the period, with no disposals - For the six months ended September 30, 2020, the group acquired approximately **HK$7.7 million** in property, plant and equipment[88](index=88&type=chunk)[90](index=90&type=chunk) - There were no disposals of property, plant and equipment in the current reporting period, compared to **HK$0.2 million** in the prior period[88](index=88&type=chunk)[90](index=90&type=chunk) [12. Trade Receivables](index=25&type=section&id=12.%20Trade%20Receivables) Net trade receivables increased to HK$88.7 million as of September 30, 2020, with an average credit period of 3 to 150 days Trade Receivables (As of September 30) | Indicator | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Gross Trade Receivables | 90,433 | 78,367 | | Less: Provision for Impairment Losses | (1,771) | (1,771) | | **Net Trade Receivables** | **88,662** | **76,596** | Ageing Analysis of Trade Receivables (As of September 30) | Ageing | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Within 30 days | 28,927 | 20,298 | | 31 to 60 days | 18,356 | 10,825 | | 61 to 90 days | 16,511 | 13,023 | | 91 to 120 days | 11,331 | 25,009 | | 121 to 150 days | 15,308 | 9,190 | | Over 150 days | - | 22 | | **Total** | **90,433** | **78,367** | - As of September 30, 2020, a provision for expected credit losses on trade receivables of approximately **HK$1,249 thousand** was recognized[97](index=97&type=chunk)[100](index=100&type=chunk) [13. Financial Assets at Fair Value Through Profit or Loss](index=27&type=section&id=13.%20Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) Total financial assets at fair value through profit or loss were HK$4.7 million, comprising non-current assets, primarily life insurance policies for key management personnel Financial Assets at Fair Value Through Profit or Loss (As of September 30) | Item | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Malaysian listed equity investments | - | 750 | | Life insurance policies for key management personnel | 4,678 | 4,678 | | **Total** | **4,678** | **5,428** | | Of which: Current assets | - | 750 | | Of which: Non-current assets | 4,678 | 4,678 | - For the six months ended September 30, 2020, the group disposed of all its Malaysian listed equity investments[105](index=105&type=chunk) - The fair value of life insurance policies for key management personnel is determined by the surrender value reported by the insurance company, with a total sum insured of approximately **HK$20.28 million**[105](index=105&type=chunk) [14. Trade Payables](index=28&type=section&id=14.%20Trade%20Payables) Total trade payables significantly increased to HK$25.9 million as of September 30, 2020, with an average credit period of 3 to 90 days Trade Payables (As of September 30) | Indicator | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Trade Payables | 25,867 | 7,729 | Ageing Analysis of Trade Payables (As of September 30) | Ageing | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Within 30 days | 15,028 | 7,727 | | 31 to 60 days | 6,959 | - | | 61 to 90 days | 2,726 | 2 | | 91 to 120 days | 1,154 | - | | **Total** | **25,867** | **7,729** | - The significant increase in trade payables is concentrated in the 30-day and 31-60-day ageing categories[108](index=108&type=chunk) [15. Bank Borrowings](index=29&type=section&id=15.%20Bank%20Borrowings) Total bank borrowings increased to HK$22.8 million as of September 30, 2020, all secured and repayable within one year Bank Borrowings (As of September 30) | Indicator | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Secured Bank Borrowings | 22,817 | 16,090 | | **Total** | **22,817** | **16,090** | - Bank borrowings are secured by corporate guarantees, time deposits, and life insurance policies[111](index=111&type=chunk) - Bank borrowing interest rates range from **3.57% to 4.88%** and **2.76% to 3.97%** per annum[112](index=112&type=chunk) [16. Share Capital](index=30&type=section&id=16.%20Share%20Capital) As of September 30, 2020, the company's authorized share capital was HK$20.0 million, with issued and fully paid share capital of HK$8.8 million, following a new share issuance Share Capital Structure (As of September 30) | Indicator | Number of Shares | Amount (HK$ thousand) | | :--- | :--- | :--- | | Authorized Ordinary Shares (HK$0.01 per share) | 2,000,000,000 | 20,000 | | Issued and Fully Paid Ordinary Shares (April 1, 2020) | 800,000,000 | 8,000 | | Issue of Shares | 78,000,000 | 780 | | **Issued and Fully Paid Ordinary Shares (September 30, 2020)** | **878,000,000** | **8,780** | - On April 21, 2020, the company allotted and issued **78,000,000 new shares** at **HK$0.21** per share to the vendor under a general mandate[115](index=115&type=chunk)[117](index=117&type=chunk) [17. Acquisition of Subsidiaries](index=30&type=section&id=17.%20Acquisition%20of%20Subsidiaries) On April 21, 2020, the group acquired 51% equity interest in Mega Shell (Global) Lubricant Technology Co., Limited for approximately HK$16.4 million, paid by issuing new shares - The acquisition of **51% equity interest** in Mega Shell (Global) Lubricant Technology Co., Limited was completed on April 21, 2020[116](index=116&type=chunk)[118](index=118&type=chunk) - The total consideration for the acquisition was approximately **HK$16.4 million**, settled by issuing **78,000,000 new shares**, with no impact on cash flow[116](index=116&type=chunk)[118](index=118&type=chunk)[122](index=122&type=chunk) - Mega Shell Group contributed approximately **HK$8.2 million** in revenue and **HK$2.3 million** in profit, recognized in the profit for the period ended September 30, 2020[124](index=124&type=chunk) [18. Fair Value Measurement of Financial Instruments](index=32&type=section&id=18.%20Fair%20Value%20Measurement%20of%20Financial%20Instruments) The group uses a three-level fair value hierarchy for financial instruments, with life insurance policies measured at Level 2 and unlisted equity investments at Level 3 - The group uses a Level 1, Level 2, and Level 3 fair value hierarchy to determine the fair value of financial instruments[126](index=126&type=chunk)[127](index=127&type=chunk) - Life insurance policies for key management personnel are measured at Level 2 fair value, determined by the surrender value reported by the insurance company[129](index=129&type=chunk) - Unlisted equity investments in Hong Kong are measured at Level 3 fair value, using a market approach and considering a **16%** discount for lack of marketability[129](index=129&type=chunk) [19. Pledge of Assets Notes](index=34&type=section&id=19.%20Pledge%20of%20Assets%20Notes) As of September 30, 2020, the group pledged assets totaling HK$16.7 million, including life insurance policies and pledged bank deposits, as collateral for bank borrowings Pledged Assets (As of September 30) | Item | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Financial assets at fair value through profit or loss (life insurance policies) | 4,678 | 4,678 | | Pledged bank deposits | 12,025 | 12,025 | | **Total** | **16,703** | **16,703** | - Pledged assets are used to secure the group's bank borrowings[131](index=131&type=chunk) [20. Capital Commitments Notes](index=34&type=section&id=20.%20Capital%20Commitments%20Notes) As of September 30, 2020, capital commitments included contracted but unprovided capital expenditure for construction in progress, capital injection to a subsidiary, and acquisition of right-of-use assets Capital Commitments (As of September 30) | Item | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Capital expenditure contracted but not provided for in respect of construction in progress | 9,469 | 15,883 | | Capital injection payable to a subsidiary | 12,014 | 12,014 | | Acquisition of right-of-use assets | 28,570 | 28,570 | - Capital expenditure for construction in progress decreased from **HK$15.9 million** as of March 31, 2020, to **HK$9.5 million** as of September 30, 2020[134](index=134&type=chunk) [21. Material Related Party Transactions](index=35&type=section&id=21.%20Material%20Related%20Party%20Transactions) The group engaged in related party transactions including product sales and purchases, and an executive director provided personal guarantees for bank borrowings Related Party Transactions (Six Months Ended September 30) | Related Party Name | Nature of Transaction | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | :--- | | Keen Gain Limited | Product sales | 143 | - | | Keen Gain Limited | Rental expenses | 639 | 802 | | Fast Shine Steel Limited | Product sales | 776 | 670 | | Jet Ho Geotechnical Engineering Limited | Product sales | 975 | 1,680 | | MCC South (Xinyu) Cold Rolling New Material Technology Co., Ltd. | Product purchases | 26,946 | - | Balances with Related Parties (As of September 30) | Related Party Name | Nature of Balance | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | :--- | | Keen Gain Limited | Trade receivables | 57 | - | | Fast Shine Steel Limited | Trade receivables | 776 | 443 | | Jet Ho Geotechnical Engineering Limited | Trade receivables | 784 | 768 | | MCC South (Xinyu) Cold Rolling New Material Technology Co., Ltd. | Prepayments | 5,754 | 58 | - The group's bank borrowings are secured by personal guarantees from Executive Director Mr. Fong Chun Man, life insurance policies, and properties owned by him[142](index=142&type=chunk)[144](index=144&type=chunk) [Management Discussion and Analysis](index=38&type=section&id=MANAGEMENT_DISCUSSION_AND_ANALYSIS) This section provides an overview of the group's business, industry, financial performance, liquidity, and future outlook [Business Review](index=38&type=section&id=BUSINESS_REVIEW) The group's diesel and related product sales grew by 18.0% to HK$202.0 million, while steel product sales declined by 17.5% - The group's principal businesses are diesel and related product sales and transportation in Hong Kong, and steel product manufacturing and sales in China[147](index=147&type=chunk)[150](index=150&type=chunk) Business Segment Revenue Changes (Six Months Ended September 30) | Business Segment | 2020 Revenue (HK$ million) | 2019 Revenue (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Diesel and Related Product Sales and Transportation | 202.0 | 171.1 | +18.0% | | Steel Product Sales | 29.4 | 35.6 | -17.5% | - Growth in diesel and related product sales was primarily due to the acquisition of Mega Shell (Global) Lubricant Technology Co., Limited's lubricant business and new Hong Kong customer demand for marine diesel[149](index=149&type=chunk)[151](index=151&type=chunk) [Industry Review](index=39&type=section&id=INDUSTRY_REVIEW) International oil prices fluctuated significantly in 2020, and the COVID-19 pandemic introduced short-term uncertainties requiring long-term responses despite government fiscal plans - International oil prices fluctuated significantly and declined in 2020, with the COVID-19 pandemic introducing short-term uncertainties[156](index=156&type=chunk)[160](index=160&type=chunk) - Governments have implemented emergency fiscal plans to support labor and businesses, but the pandemic crisis requires a long-term response[156](index=156&type=chunk)[160](index=160&type=chunk) [Future Prospects](index=39&type=section&id=FUTURE_PROSPECTS) The group plans to manage COVID-19 risks, strengthen its diesel business, and actively seek new opportunities to expand revenue and enhance shareholder value - Directors will continue to closely monitor and manage economic risks arising from the COVID-19 pandemic[157](index=157&type=chunk)[161](index=161&type=chunk) - The group will prudently invest more resources in talent recruitment, diesel business development, and marketing strategies[158](index=158&type=chunk)[161](index=161&type=chunk) - The group will actively seek potential business opportunities to expand revenue sources and increase shareholder value[158](index=158&type=chunk)[161](index=161&type=chunk) [Financial Review](index=40&type=section&id=FINANCIAL_REVIEW) Revenue increased by 11.9% to HK$231.4 million, gross profit rose by 48.8% to HK$18.9 million, and adjusted net profit grew by 56.3% Revenue Composition and Changes (Six Months Ended September 30) | Revenue Source | 2020 (HK$ million) | Share (%) | 2019 (HK$ million) | Share (%) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Diesel Sales | 153.1 | 66.2% | 138.4 | 74.2% | +10.6% | | Marine Diesel Sales | 40.4 | 17.4% | 32.3 | 9.4% | +24.8% | | Lubricant Sales | 8.6 | 3.7% | 0.4 | 3.7% | +2150.0% | | Steel Product Sales | 29.4 | 12.7% | 35.6 | - | -17.4% | | **Total Revenue** | **231.4** | **100%** | **206.7** | **100%** | **+11.9%** | Gross Profit and Net Profit Changes (Six Months Ended September 30) | Indicator | 2020 (HK$ million) | 2019 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cost of Sales | 212.4 | 194.0 | +18.4 | +9.5% | | Gross Profit | 18.9 | 12.7 | +6.2 | +48.8% | | Gross Profit Margin | 8.2% | 6.2% | +2.0pp | - | | Net Profit | 6.8 | 7.9 | -1.2 | -15.2% | | Net Profit Margin | 2.9% | 3.8% | -0.9pp | - | | Adjusted Net Profit (excluding one-off fair value change) | 6.8 | 4.3 | +2.4 | +56.3% | - The decline in net profit was primarily due to losses from steel product sales and the fair value change of contingent consideration recognized in 2019[171](index=171&type=chunk)[175](index=175&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=LIQUIDITY_AND_CAPITAL_RESOURCES) As of September 30, 2020, the group reported net current assets of HK$82.8 million, a current ratio of 2.3 times, and a gearing ratio of 25.8% Key Liquidity and Capital Structure Data (As of September 30) | Indicator | 2020 (HK$ million) | | :--- | :--- | | Current Assets | 148.0 | | Current Liabilities | 65.1 | | Net Current Assets | 82.8 | | Current Ratio | 2.3 | | Available Bank Financing Limit | 65.0 | | Utilized Bank Financing | 22.8 | | Gearing Ratio | 25.8% | | Equity Attributable to Owners of the Company | 115.6 | - The group's bank borrowings are secured by corporate guarantees, time deposits, and life insurance policies[177](index=177&type=chunk)[182](index=182&type=chunk) - Operating primarily in Hong Kong, the group faces foreign exchange risks from Renminbi and Malaysian Ringgit denominated transactions but does not use derivative instruments for hedging[180](index=180&type=chunk)[184](index=184&type=chunk) [Material Acquisitions and Disposals of Subsidiaries, Associates or Joint Ventures](index=43&type=section&id=Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20Associates%20or%20Joint%20Ventures) The group acquired 51% of Mega Shell (Global) Lubricant Technology Co., Limited for HK$16.4 million, with no other significant investment activities during the period - On April 21, 2020, the acquisition of **51% equity interest** in Mega Shell (Global) Lubricant Technology Co., Limited was completed for a consideration of **HK$16.4 million**, paid by issuing **78,000,000 new shares**[187](index=187&type=chunk)[193](index=193&type=chunk) - This acquisition expanded the company's issued share capital to **878,000,000 shares**[187](index=187&type=chunk)[193](index=193&type=chunk) - Other than the aforementioned disclosure, there were no other material investments, acquisitions, or disposals during the reporting period[188](index=188&type=chunk)[193](index=193&type=chunk) [Capital Commitments and Contingent Liabilities](index=43&type=section&id=Capital%20Commitments%20and%20Contingent%20Liabilities%20MDA) As of September 30, 2020, the group had no material capital commitments or contingent liabilities beyond those disclosed in the financial statements notes - As of September 30, 2020, the group had no other material capital commitments or contingent liabilities, with disclosed commitments detailed in the notes to the financial statements[189](index=189&type=chunk)[194](index=194&type=chunk) [Comparison of Implementation Plans for Business Strategies with Actual Implementation Progress](index=44&type=section&id=Comparison%20of%20Implementation%20Plans%20for%20Business%20Strategies%20with%20Actual%20Implementation%20Progress) The group made progress in expanding its diesel tanker fleet, developing marine fuel oil supply, upgrading IT systems, and strengthening its workforce Business Strategy Implementation Plans vs. Actual Progress (As of September 30, 2020) | Business Strategy | Plan (April 1, 2017 to September 30, 2020) | Actual Progress (As of September 30, 2020) | | :--- | :--- | :--- | | Expand and improve diesel tanker fleet | Purchase three new vehicles, replace three existing vehicles | Two new vehicles purchased, two existing vehicles replaced; remaining new vehicle expected to be delivered by end of March 2022 | | Develop and expand marine fuel oil supply business | Commence trial run and full operation, conduct market promotion | Trial run commenced in April 2018, full operation in July 2018; market promotion conducted and orders received | | Enhance information technology and systems | Purchase and update new office administration and IT systems | Minor upgrades completed; new system still under negotiation with potential suppliers | | Strengthen workforce | Recruit drivers, logistics assistants, safety supervisors, seamen, etc. | One logistics assistant hired; safety supervisors hired through job re-allocation; marine fuel oil supply business operated by outsourced service company | - The marine fuel oil bunkering vessel was delivered in November 2017 and commenced full operation in July 2018[202](index=202&type=chunk)[216](index=216&type=chunk) - Regarding staffing, one logistics assistant has been hired, with other personnel expected to be recruited around March 2022[204](index=204&type=chunk) [Use of Proceeds](index=47&type=section&id=Use%20of%20Proceeds) Net proceeds from the share offer were HK$45.1 million, with HK$29.5 million utilized and the remaining HK$15.6 million allocated for future use by March 31, 2022 Actual Use of Net Proceeds (As of September 30, 2020) | Planned Use | Planned Use Share (%) | Actual Use (HK$ million) | Unutilized Proceeds (HK$ million) | Expected Timetable for Remaining Funds | | :--- | :--- | :--- | :--- | :--- | | Purchase of diesel tanker vehicles | 17.3% | 5.0 | 2.8 | Before March 31, 2022 | | Purchase of marine diesel bunkering vessel | 31.0% | 8.5 | 5.5 | Before March 31, 2022 | | Further strengthening of workforce | 13.6% | 2.5 | 3.6 | Before March 31, 2022 | | Enhancement of information technology and systems | 7.9% | 0.1 | 3.5 | Before March 31, 2022 | | Working capital for operating new diesel tanker vehicles and marine fuel oil supply business | 20.2% | 8.9 | 0.2 | Before March 31, 2022 | | Working capital | 10.0% | 4.5 | - | - | | **Total** | **100.0%** | **29.5** | **15.6** | - | - Actual net proceeds were **HK$45.1 million**, lower than the estimated **HK$50.9 million** in the prospectus[205](index=205&type=chunk)[206](index=206&type=chunk) - The expected timetable for utilizing the remaining available proceeds will vary based on future market developments[213](index=213&type=chunk)[216](index=216&type=chunk) [Employees and Remuneration Policies](index=49&type=section&id=Employees%20and%20Remuneration%20Policies) The group's employee count significantly increased to 63, with total staff costs of HK$5.9 million, and remuneration policies are performance-based and regularly reviewed Employee Count and Staff Costs (Six Months Ended September 30) | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Total Number of Employees (including directors) | 63 | 27 | | Total Staff Costs (HK$ million) | 5.9 | 3.8 | - The number of employees significantly increased, leading to a corresponding rise in total staff costs[217](index=217&type=chunk)[221](index=221&type=chunk) - Remuneration policies are based on performance, qualifications, experience, position, and the group's business performance, and are regularly reviewed[217](index=217&type=chunk)[221](index=221&type=chunk) [Environmental Policies and Performance](index=49&type=section&id=Environmental%20Policies%20and%20Performance) The group operates under Hong Kong environmental regulations, implementing measures to minimize environmental impact and ensuring compliance without any reported violations - The group's operations are regulated by Hong Kong environmental laws, including the Air Pollution Control Ordinance and Water Pollution Control Ordinance[218](index=218&type=chunk)[222](index=222&type=chunk) - The group has implemented various environmental protection measures and continuously monitors its operations to ensure compliance with all applicable laws and regulations[218](index=218&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk) - As of the reporting date, the group has not been subject to any prosecutions, fines, or penalties for violating environmental laws and regulations[219](index=219&type=chunk)[224](index=224&type=chunk) [Events After the Reporting Period](index=49&type=section&id=Events%20After%20the%20Reporting%20Period) As of the report date, the Board found no significant events requiring disclosure since September 30, 2020 - As of the report date, the Board found no significant events requiring disclosure since September 30, 2020[220](index=220&type=chunk)[225](index=225&type=chunk) [Continuing Connected Transactions](index=50&type=section&id=Continuing%20Connected%20Transactions) The group engaged in continuing connected transactions for steel material procurement with New Steel (Shanghai) Trading Co., Ltd. and MCC South (Xinyu) Cold Rolling New Material Technology Co., Ltd., totaling approximately HK$27 million - The group's procurement of steel materials from New Steel (Shanghai) Trading Co., Ltd. and MCC South (Xinyu) Cold Rolling New Material Technology Co., Ltd. constitutes continuing connected transactions[227](index=227&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) - For the six months ended September 30, 2020, the procurement transaction amount was approximately **HK$27 million**[228](index=228&type=chunk)[231](index=231&type=chunk) - These transactions were conducted on normal commercial terms or better, approved by the Board (including independent non-executive directors), and comply with GEM Listing Rules exemption conditions[235](index=235&type=chunk)[237](index=237&type=chunk)[240](index=240&type=chunk)[243](index=243&type=chunk)[245](index=245&type=chunk) [Significant Investment, Material Acquisitions and Disposals of Subsidiaries and Future Plans for Material Investments or Capital Assets](index=52&type=section&id=Significant%20Investment%2C%20Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%20and%20Future%20Plans%20for%20Material%20Investments%20or%20Capital%20Assets) Apart from the disclosed acquisition of Mega Shell (Global) Lubricant Technology Co., Limited, the group had no other material investments, acquisitions, or disposals of subsidiaries or associates, nor future plans for significant investments - Apart from the disclosed acquisition, the group had no other material investments, acquisitions, or disposals of subsidiaries and associates during the reporting period[241](index=241&type=chunk)[244](index=244&type=chunk) - The group currently has no other future plans for material investments or capital assets[241](index=241&type=chunk)[244](index=244&type=chunk) [Other Information](index=53&type=section&id=Other%20Information) The company did not purchase, sell, or redeem listed securities, and disclosed interests of directors, chief executives, and substantial shareholders, while adhering to corporate governance codes - For the six months ended September 30, 2020, the company did not purchase, sell, or redeem any listed securities[246](index=246&type=chunk)[248](index=248&type=chunk) Interests of Directors and Substantial Shareholders in Company Shares (As of September 30, 2020) | Name | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Fong Chun Man | Interest in controlled corporation | 451,000,000 | 51.4% | | Ms. Lo Pui Yee | Spouse's interest | 451,000,000 | 51.4% | | Grand Tycoon Limited | Beneficial owner | 451,000,000 | 51.4% | - The company has adopted a share option scheme, but no share options have been granted from its adoption date to September 30, 2020[258](index=258&type=chunk)[259](index=259&type=chunk)[262](index=262&type=chunk) - The company has established an Audit Committee, Nomination Committee, and Remuneration Committee, and complies with the Corporate Governance Code in Appendix 15 of the GEM Listing Rules[266](index=266&type=chunk)[270](index=270&type=chunk)[272](index=272&type=chunk)[277](index=277&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk)[284](index=284&type=chunk)[289](index=289&type=chunk)

F8 Enterprises (Holdings) Group Limited F8 企業（控股）集團有限公司 (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立的有限公司) Stock Code 股份代號 : 8347 2020 FIRST QUARTERLY REPORT 第一季度業績報告 F8 Enterprises (Holdings) Group Limited F8 企業（控股）集團有限公司 香港聯合交易所有限公司（「聯交 所」）GEM之特色 GEM的定位乃為相比起聯交所上市的其他公 司帶有更高投資風險的中小型公司提供上市的 市場。有意投資者應了解投資於此類公司的潛 在風險，並應經審慎周詳考慮後方作出投資決 定。 由於在GEM上市的公司一般為中小型公司， 在GEM買賣的證券可能會承受較於聯交所主 板買賣的證券為高的市場波動風險，同時亦無 法保證在GEM買賣的證券會有高流通量的市 場。 香港交易及結算所有限公司及聯交所對本報告 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報告全部 ...