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 或任何部份內容而產生或因倚賴該等內容而引 致的任何損失承擔任何責任。 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 t ...

[Chairman's Statement](index=6&type=section&id=Chairman's%20Statement) The Group achieved significant performance growth this year, with revenue up 91.3% to HKD 439.3 million and net profit reaching HKD 4.5 million Key Financial Performance for FY2020 | Metric | FY2020 (Million HKD) | FY2019 (Million HKD) | YoY Growth | | :--- | :--- | :--- | :--- | | Revenue | 439.3 | 229.7 | +91.3% | | Net Profit | 4.5 | 0.8 | +462.5% | - Net profit growth was primarily due to increased diesel business sales and transportation, and a fair value change in contingent consideration payable of approximately **HKD 3.6 million**[18](index=18&type=chunk)[21](index=21&type=chunk) - To enhance capacity and fulfill environmental responsibilities, the Group acquired two new diesel tank trucks to replace existing vehicles and owns one marine diesel barge[19](index=19&type=chunk)[20](index=20&type=chunk) - Despite the impact of the COVID-19 pandemic, continuous investment in Hong Kong's public infrastructure and the recovery of the logistics sector provide an optimistic outlook for the diesel sales market[24](index=24&type=chunk) [Management Discussion and Analysis](index=8&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=8&type=section&id=Business%20Review) The Group expanded its core business to include steel product manufacturing and sales in China, complementing its Hong Kong diesel operations, which saw revenue growth Revenue by Business Segment for FY2020 | Business Segment | Revenue (Million HKD) | % of Total Revenue | | :--- | :--- | :--- | | Diesel and Related Products Sales & Transportation | 328.1 | 74.7% | | Steel Products Sales | 111.2 | 25.3% | | **Total** | **439.3** | **100.0%** | - Diesel business revenue increased by **42.8%** year-on-year, primarily due to increased demand from existing client projects and contributions from three new marine diesel clients[31](index=31&type=chunk)[34](index=34&type=chunk) - The Group established a joint venture in China with a **55%** equity stake, primarily engaged in steel product processing, motor accessories, and finished product manufacturing, with a registered capital of **RMB 30 million**[30](index=30&type=chunk) - The Group disposed of **90%** equity in China Forest Food during the year, and its financial results are no longer consolidated into the Group's statements[29](index=29&type=chunk) [Financial Review](index=10&type=section&id=Financial%20Review) Total revenue grew 91.3% to HKD 439.3 million, with net profit increasing to HKD 4.5 million despite a gross margin decline to 5.4% FY2020 vs FY2019 Financial Performance Comparison | Financial Metric | FY2020 (Million HKD) | FY2019 (Million HKD) | Change | | :--- | :--- | :--- | :--- | | Revenue | 439.3 | 229.7 | +91.3% | | Cost of Sales | 415.5 | 208.0 | +99.8% | | Gross Profit | 23.8 | 21.7 | +9.7% | | Gross Profit Margin | 5.4% | 9.5% | -4.1 percentage points | | Profit for the Year | 4.5 | 0.8 | +462.5% | | Net Profit Margin | 1.0% | 0.4% | +0.6 percentage points | - Revenue growth primarily stemmed from increased diesel sales, particularly due to higher demand from construction and logistics clients, and the newly added steel product sales business[46](index=46&type=chunk)[47](index=47&type=chunk) - The decline in gross profit margin was mainly due to bulk purchase discounts offered to a major client[52](index=52&type=chunk) - The increase in net profit and net profit margin was primarily attributable to higher diesel business sales and transportation, and a fair value change in contingent consideration payable of approximately **HKD 3.6 million** arising from the disposal of a subsidiary[54](index=54&type=chunk)[57](index=57&type=chunk) [Liquidity and Capital Resources](index=12&type=section&id=Liquidity%20and%20Capital%20Resources) The Group maintained sound net current assets of HKD 82 million, with current ratio at 3.2x and gearing ratio increasing to 23.6% due to higher bank borrowings Liquidity and Capital Structure Metrics (As of March 31) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Current Assets (Million HKD) | 118.7 | 109.0 | | Current Liabilities (Million HKD) | 36.8 | 26.1 | | Current Ratio | 3.2 | 4.2 | | Gearing Ratio | 23.6% | 3.4% | - Bank financing facilities increased to **HKD 65 million**, with **HKD 16.1 million** utilized, secured by corporate guarantees, time deposits, and life insurance policies[61](index=61&type=chunk)[62](index=62&type=chunk) [Significant Investments, Material Acquisitions and Disposals](index=14&type=section&id=Significant%20Investments%2C%20Material%20Acquisitions%20and%20Disposals) The Group made two strategic moves: establishing a 55% owned joint venture in China for steel processing and acquiring a 51% stake in Mega Shell to expand its lubricant business - On June 27, 2019, the Group established a joint venture with partners in China to engage in steel product processing, motor accessories, and finished product manufacturing, holding a **55%** equity interest with a registered capital of **RMB 30 million**[74](index=74&type=chunk) - On March 23, 2020, the Group agreed to acquire a **51%** equity interest in Mega Shell (Global) Lubricant Technology Co., Ltd. for approximately **HKD 16.38 million**, paid by issuing **78 million** consideration shares, with the acquisition completed on April 21, 2020[75](index=75&type=chunk)[107](index=107&type=chunk) [Use of Proceeds](index=19&type=section&id=Use%20of%20Proceeds) As of March 31, 2020, HKD 25.8 million of the HKD 45.1 million net proceeds from the 2017 listing were used, with HKD 19.3 million remaining for future use by March 31, 2022 Use of Net Proceeds from Listing (As of March 31, 2020) | Purpose | Planned Use (Million HKD) | Actual Use (Million HKD) | Unused (Million HKD) | Estimated Completion | | :--- | :--- | :--- | :--- | :--- | | Purchase of diesel tank trucks | 7.8 | 3.9 | 3.9 | Before March 31, 2022 | | Purchase of marine diesel barge | 14.0 | 8.5 | 5.5 | Before March 31, 2022 | | Further strengthening of workforce | 6.1 | 2.1 | 4.0 | Before March 31, 2022 | | Enhancement of IT and systems | 3.6 | 0.1 | 3.5 | Before March 31, 2022 | | Working capital for new businesses | 9.1 | 6.7 | 2.4 | Before March 31, 2022 | | General working capital | 4.5 | 4.5 | 0.0 | - | | **Total** | **45.1** | **25.8** | **19.3** | | [Corporate Governance Report](index=22&type=section&id=Corporate%20Governance%20Report) This report details the Company's compliance with the GEM Listing Rules' Corporate Governance Code, demonstrating its commitment to high governance standards through board structure, committee operations, and internal controls [Board of Directors](index=22&type=section&id=Board%20of%20Directors) The Board comprises three executive and three independent non-executive directors, fulfilling listing requirements with separate Chairman and CEO roles, holding seven meetings and engaging in professional development - The Board comprises **6** members: Mr. Fong Chun Man (Chairman), Mr. Chan Chi Fai, and Ms. Lo Pui Yee as Executive Directors; Mr. Chui Chi Yan, Mr. Kwong Yuk Lap, and Mr. Wong On Yuen as Independent Non-executive Directors[119](index=119&type=chunk) - During the reporting period, the Board held **7** meetings, and the Chairman and Independent Non-executive Directors also held **1** meeting without Executive Directors present, demonstrating high overall attendance[131](index=131&type=chunk) - All Directors participated in continuous professional development activities, including attending training courses or reading relevant regulations and industry materials[140](index=140&type=chunk)[145](index=145&type=chunk) [Board Committees](index=29&type=section&id=Board%20Committees) The Company established Audit, Remuneration, and Nomination Committees, all chaired by independent non-executive directors, to oversee financial reporting, internal controls, and remuneration policies - The Audit Committee comprises three Independent Non-executive Directors, chaired by Mr. Chui Chi Yan, primarily responsible for overseeing the effectiveness of financial reporting, internal control, and risk management systems[158](index=158&type=chunk)[159](index=159&type=chunk) - The Remuneration Committee consists of two Independent Non-executive Directors and one Executive Director, chaired by Mr. Wong On Yuen, responsible for advising the Board on remuneration policies for Directors and senior management[165](index=165&type=chunk)[166](index=166&type=chunk) - The Nomination Committee comprises two Independent Non-executive Directors and one Executive Director, chaired by Mr. Kwong Yuk Lap, responsible for reviewing the Board's structure, size, composition, and diversity policy[176](index=176&type=chunk)[177](index=177&type=chunk) [Risk Management and Internal Control](index=37&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board is responsible for effective risk management and internal control systems, categorizing key risks into strategic, operational, financial, and compliance, relying on cost-effective external annual reviews deemed adequate by the Audit Committee Key Risk Areas | Risk Area | Key Risk Content | | :--- | :--- | | Strategic Risk | Government policy sensitivity, market competition, reputational risk, etc | | Operational Risk | Labor supply, industrial accidents, information system disruption, etc | | Financial Risk | Liquidity, credit, interest rate, foreign exchange, inflation risk, etc | | Compliance Risk | Occupational safety and health, employment regulations, changes in listing rules, etc | - The Board, through the Audit Committee, conducted an annual review of the Group's risk management and internal control systems, covering financial, operational, and compliance controls, and deemed the systems adequate and effective[233](index=233&type=chunk)[240](index=240&type=chunk) - The Group currently does not have an internal audit function, as the Board believes engaging external independent professionals for annual reviews is more cost-effective and will continue to review the need for establishing an internal audit function[238](index=238&type=chunk) [Environmental, Social and Governance Report](index=40&type=section&id=Environmental%2C%20Social%20and%20Governance%20Report) This report outlines the Group's ESG initiatives and performance, including an ESG task force, environmental data and reduction measures, and social aspects like employment, health and safety, and anti-corruption [A. Environmental](index=47&type=section&id=A.%20Environmental) The Group is committed to environmental protection, managing emissions and resource consumption through policies, implementing energy-saving measures and promoting paperless operations despite increased emissions due to business growth Key Environmental Performance Indicators | Indicator | Unit | 2019/2020 | 2018/2019 | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Total Air Pollutant Emissions | kg | 2,954.66 | 2,749.41 | +7.47% | | Total Greenhouse Gas Emissions | tonnes | 432.78 | 404.32 | +7.04% | | - Scope 1 (Direct Emissions) | tonnes | 415.02 | 386.19 | +7.47% | | - Scope 2 (Indirect Emissions) | tonnes | 16.24 | 16.57 | -2.01% | | Total Electricity Consumption | MWh | 31.84 | 32.49 | -2.00% | | Waste Paper Generated | kg | 318 | 325 | -2.15% | - Increased emissions were primarily attributed to higher demand for diesel and related products, leading to increased use of transport vehicles[293](index=293&type=chunk) - The Group has implemented energy-saving and emission reduction measures, including setting office air conditioning temperatures, encouraging employees to turn off unnecessary lights and appliances, and promoting paperless operations[300](index=300&type=chunk)[311](index=311&type=chunk)[325](index=325&type=chunk) [B. Social](index=54&type=section&id=B.%20Social) The Group prioritizes employee well-being and social responsibility, ensuring equal employment opportunities, adhering to health and safety regulations, providing staff development, prohibiting child and forced labor, and implementing anti-corruption policies - As of March 31, 2020, the Group employed a total of **53** staff members, comprising **44** males and **9** females, all of whom are full-time employees[336](index=336&type=chunk) - The Group strictly adheres to occupational health and safety regulations, with no fatal cases reported during the period, successfully achieving a **0%** fatality rate[350](index=350&type=chunk) - The Group strictly prohibits child and forced labor, ensuring compliance by verifying identity documents during the recruitment process[360](index=360&type=chunk)[361](index=361&type=chunk) - The Group has implemented an effective whistleblowing policy to prevent unethical behaviors such as fraud, corruption, and bribery, with no concluded corruption litigation cases reported during the period[381](index=381&type=chunk)[382](index=382&type=chunk) [Report of the Board of Directors](index=68&type=section&id=Report%20of%20the%20Board%20of%20Directors) This report outlines the Board's work and decisions, including business expansion to steel manufacturing, no dividend recommendation, disclosure of shareholder interests, non-compete compliance, and details of continuing connected transactions [Principal Activities and Results](index=68&type=section&id=Principal%20Activities%20and%20Results) The Company primarily engages in investment holding, with core businesses in Hong Kong diesel sales and China steel product manufacturing, and the Board does not recommend any dividend for the year - The Group's principal activities are diesel sales and transportation in Hong Kong, and steel product manufacturing and sales in China[402](index=402&type=chunk) - The Board does not recommend the payment of any dividend for the year ended March 31, 2020[403](index=403&type=chunk) [Directors' and Controlling Shareholders' Interests](index=73&type=section&id=Directors'%20and%20Controlling%20Shareholders'%20Interests) As of March 31, 2020, Chairman Mr. Fong Chun Man held 50.1% of the Company's shares as the controlling shareholder, with his spouse deemed to have the same interest, and all controlling shareholders confirmed non-compete compliance Major Shareholders' Shareholding (As of March 31, 2020) | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Fong Chun Man | Interest in controlled corporation | 440,000,000 | 50.1% | | Ms. Lo Pui Yee | Spouse's interest | 440,000,000 | 50.1% | | Grand Tycoon Limited | Beneficial owner | 440,000,000 | 50.1% | | Mr. Li Hok Yin | Beneficial owner | 49,456,000 | 5.6% | - Controlling shareholders Mr. Fong Chun Man and Grand Tycoon Limited confirmed compliance with non-compete undertakings during the reporting period, which was reviewed and confirmed by the Independent Non-executive Directors[461](index=461&type=chunk) [Connected Transactions](index=79&type=section&id=Connected%20Transactions) Jiangxi Xinji, a non-wholly owned subsidiary, engaged in continuing connected transactions for steel material procurement totaling approximately RMB 15.991 million, which the Board subsequently ratified as fair, reasonable, and compliant with GEM Listing Rules - The Group's subsidiary, Jiangxi Xinji, engaged in steel material procurement transactions with associates of its non-controlling shareholder, constituting continuing connected transactions[488](index=488&type=chunk)[494](index=494&type=chunk) - For the year ended March 31, 2020, the total value of these procurement transactions was approximately **RMB 15.991 million** (approximately **HKD 17.923 million**)[489](index=489&type=chunk) - The Board, including the Independent Non-executive Directors, confirmed that these transactions were conducted in the ordinary course of the Group's business on normal commercial terms, were fair and reasonable, in the overall interest of shareholders, and were confirmed by the auditor[502](index=502&type=chunk)[507](index=507&type=chunk) [Independent Auditors' Report](index=92&type=section&id=Independent%20Auditors'%20Report) Grant Thornton Hong Kong Limited issued an unmodified opinion on the Group's consolidated financial statements for FY2020, affirming their fair presentation, with a key audit matter being the expected credit loss provision for trade and other receivables - The auditor issued an unmodified opinion on the consolidated financial statements for the year, deeming them to present fairly, in all material respects, the Group's financial position and performance[594](index=594&type=chunk) - A key audit matter was the 'Expected Credit Loss (ECL) provision for trade and other receivables,' where the auditor performed procedures to assess management's judgments and estimates regarding recoverability, finding sufficient evidence to support them[601](index=601&type=chunk)[605](index=605&type=chunk) [Consolidated Financial Statements](index=99&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=99&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the year ended March 31, 2020, the Group's revenue from continuing operations increased by 91.3% to HKD 439.3 million, with profit for the year significantly rising to HKD 4.506 million Consolidated Statement of Profit or Loss Summary (For the year ended March 31) | Item (Thousand HKD) | 2020 | 2019 | | :--- | :--- | :--- | | **Continuing Operations** | | | | Revenue | 439,338 | 229,718 | | Gross Profit | 23,817 | 21,723 | | Operating Profit | 7,291 | 6,950 | | Profit Before Tax | 5,928 | 6,813 | | Profit for the year from continuing operations | 4,506 | 5,336 | | **Discontinued Operations** | | | | Loss for the year | - | (4,532) | | **Total Profit for the year** | **4,506** | **804** | | Profit attributable to owners of the Company | 4,664 | 804 | | Basic Earnings Per Share (HK Cents) | 0.58 | 0.10 | [Consolidated Statement of Financial Position](index=101&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of March 31, 2020, the Group's total assets were HKD 152.8 million, total liabilities HKD 46.3 million, and total equity HKD 106.5 million, with non-current assets significantly increasing to HKD 34.1 million Consolidated Statement of Financial Position Summary (As of March 31) | Item (Thousand HKD) | 2020 | 2019 | | :--- | :--- | :--- | | **Assets** | | | | Non-current Assets | 34,103 | 10,166 | | Current Assets | 118,704 | 108,992 | | **Total Assets** | **152,807** | **119,158** | | **Liabilities and Equity** | | | | Current Liabilities | 36,775 | 26,085 | | Non-current Liabilities | 9,498 | 4,522 | | **Total Liabilities** | **46,273** | **30,607** | | **Total Equity** | **106,534** | **88,551** | | - Equity attributable to owners of the Company | 91,772 | 88,551 | | - Non-controlling interests | 14,762 | - | [Consolidated Statement of Cash Flows](index=104&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) The Group reported net cash outflows from operating and investing activities of HKD 4.011 million and HKD 29.407 million respectively, offset by a net cash inflow from financing activities of HKD 34.245 million, resulting in a year-end cash balance of HKD 6.661 million Consolidated Statement of Cash Flows Summary (For the year ended March 31) | Item (Thousand HKD) | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | (4,011) | (2,415) | | Net cash used in investing activities | (29,407) | (8,304) | | Net cash from financing activities | 34,245 | 3,816 | | Net increase/(decrease) in cash and cash equivalents | 827 | (6,903) | | Cash and cash equivalents at beginning of year | 6,041 | 13,179 | | **Cash and cash equivalents at end of year** | **6,661** | **6,041** | [Financial Summary](index=214&type=section&id=Financial%20Summary) This section provides a five-year financial summary, showing the Group's revenue consistently grew in FY2019 and FY2020 to a new high, with profitability significantly recovering in FY2020, and total assets and net assets steadily expanding Five-Year Results Summary (For the year ended March 31) | Item (Thousand HKD) | 2016 | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 146,920 | 180,616 | 164,491 | 229,718 | 439,338 | | Gross Profit | 20,956 | 24,843 | 24,821 | 21,723 | 23,817 | | Profit for the Year | 12,303 | 7,282 | 1,241 | 804 | 4,506 | Five-Year Assets and Liabilities Summary (As of March 31) | Item (Thousand HKD) | 2016 | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets (Current + Non-current) | 36,122 | 50,898 | 100,619 | 119,158 | 152,807 | | Total Liabilities (Current + Non-current) | 14,092 | 21,586 | 12,845 | 30,607 | 46,273 | | Net Assets | 22,030 | 29,312 | 87,774 | 88,551 | 106,534 |

[Corporate Information](index=4&type=section&id=Corporate%20Information) [Board of Directors](index=4&type=section&id=Board%20of%20Directors) The company's Board of Directors comprises executive and independent non-executive directors, with Mr. Fong Chun Man as Chairman, Ms. Lo Pui Yee as Vice Chairman, and Mr. Chan Chi Fai as Chief Executive Officer - Board members include Mr. Fong Chun Man (Chairman), Ms. Lo Pui Yee (Vice Chairman), Mr. Chan Chi Fai (Chief Executive Officer), and Mr. Lee Hok Yin as executive directors, along with Mr. Cui Zhi Ren, Mr. Kwong Yuk Lap, and Mr. Wang An Yuan as independent non-executive directors[12](index=12&type=chunk)[13](index=13&type=chunk) [Committees](index=4&type=section&id=Committees) The company has established Audit, Remuneration, and Nomination Committees, each chaired by an independent non-executive director, to ensure robust and independent corporate governance structures - The Audit Committee is chaired by Mr. Cui Zhi Ren, the Remuneration Committee by Mr. Wang An Yuan, and the Nomination Committee by Mr. Kwong Yuk Lap[12](index=12&type=chunk)[13](index=13&type=chunk) [Key Administrative Information](index=4&type=section&id=Key%20Administrative%20Information) The company is registered in the Cayman Islands, with its Hong Kong headquarters in Kowloon Bay, and has appointed Boardroom Share Registrars (HK) Limited as its Hong Kong share registrar and Guotai Junan Capital Limited as compliance adviser - The company's registered office is in the Cayman Islands, with its Hong Kong headquarters and principal place of business at Unit 3304, 33/F, Tower 1, Enterprise Square Five, 38 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong[13](index=13&type=chunk)[14](index=14&type=chunk) - The Hong Kong share registrar is Boardroom Share Registrars (HK) Limited, and the compliance adviser is Guotai Junan Capital Limited[15](index=15&type=chunk)[16](index=16&type=chunk) [Highlight](index=6&type=section&id=Highlight) [Financial Performance Overview](index=6&type=section&id=Financial%20Performance%20Overview) For the six months ended September 30, 2019, the Group's revenue significantly increased by **63.7%** to **HK$206.7 million**, and profit attributable to owners grew by **69.5%** to **HK$7.7 million**, primarily driven by increased diesel and marine diesel sales and fair value changes of contingent consideration Key Financial Indicators for the Six Months Ended September 30, 2019 | Metric | 2019 (HK$ Million) | 2018 (HK$ Million) | Change (HK$ Million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 206.7 | 126.2 | 80.5 | 63.7% | | Profit attributable to owners of the company | 7.7 | 4.6 | 3.2 | 69.5% | | Profit excluding one-off fair value changes | 4.1 | 4.6 | (0.5) | (9.2%) | - The increase in profit was primarily due to increased sales of diesel and marine diesel, and the recognition of a fair value change of contingent consideration of approximately **HK$3.6 million**[19](index=19&type=chunk)[21](index=21&type=chunk) - The Board does not recommend the payment of any dividend for the six months ended September 30, 2019[20](index=20&type=chunk)[22](index=22&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) [Profit or Loss Performance](index=7&type=section&id=Profit%20or%20Loss%20Performance) The Group's revenue for the six months ended September 30, 2019, was **HK$206.7 million**, representing a **63.7%** increase from the same period last year, with profit for the period at **HK$7.9 million** and basic and diluted earnings per share at **HK$0.97 cents** Summary of Profit or Loss Statement for the Six Months Ended September 30, 2019 | Metric | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 206,722 | 126,248 | | Cost of sales | (193,993) | (114,090) | | Gross profit | 12,729 | 12,158 | | Operating profit | 9,196 | 5,535 | | Profit before taxation | 8,843 | 5,533 | | Profit for the period | 7,931 | 4,567 | | Profit attributable to owners of the company | 7,744 | 4,567 | | Basic and diluted earnings per share (HK cents) | 0.97 | 0.57 | - Total other comprehensive income for the period was **HK$8.340 million**, of which total comprehensive income attributable to owners of the company was **HK$7.981 million**[26](index=26&type=chunk) [Unaudited Condensed Consolidated Statement of Financial Position](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) [Assets and Liabilities Overview](index=9&type=section&id=Assets%20and%20Liabilities%20Overview) As of September 30, 2019, the Group's total assets less current liabilities amounted to **HK$121.997 million**, with net assets of **HK$112.273 million**, and a significant increase in net current assets to **HK$111.149 million**, primarily due to higher trade receivables, prepayments, and pledged bank deposits Summary of Financial Position as of September 30, 2019 and March 31, 2019 | Metric | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Non-current assets | 10,848 | 10,166 | | Current assets | 158,374 | 88,105 | | Current liabilities | (47,225) | (14,251) | | Net current assets | 111,149 | 82,907 | | Total assets less current liabilities | 121,997 | 93,073 | | Non-current liabilities | (9,724) | (4,522) | | Net assets | 112,273 | 88,551 | | Total equity attributable to owners of the company | 96,532 | 88,551 | | Non-controlling interests | 15,741 | – | - Current assets increased from **HK$88.105 million** as of March 31, 2019, to **HK$158.374 million** as of September 30, 2019, primarily due to increases in inventories, trade receivables, prepayments, and pledged bank deposits[28](index=28&type=chunk) - Non-current liabilities increased from **HK$4.522 million** as of March 31, 2019, to **HK$9.724 million** as of September 30, 2019, mainly due to the recognition of bonds payable[29](index=29&type=chunk) [Unaudited Condensed Consolidated Statement of Changes in Equity](index=11&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) [Equity Movements](index=11&type=section&id=Equity%20Movements) For the six months ended September 30, 2019, the Group's total equity increased from **HK$88.551 million** at the beginning of the period to **HK$112.273 million**, mainly influenced by profit for the period, exchange differences, and non-controlling interests from the incorporation of a subsidiary Summary of Changes in Equity for the Six Months Ended September 30, 2019 | Item | Apr 1, 2019 (HK$ Thousand) | Profit for the Period (HK$ Thousand) | Exchange Differences (HK$ Thousand) | Incorporation of Subsidiary (HK$ Thousand) | Sep 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total equity attributable to owners of the company | 88,551 | 7,744 | 210 | – | 96,532 | | Non-controlling interests | – | 187 | 172 | 15,382 | 15,741 | | **Total** | **88,551** | **7,931** | **382** | **15,382** | **112,273** | - Profit for the period was **HK$7.931 million**, of which **HK$7.744 million** was attributable to owners of the company and **HK$0.187 million** to non-controlling interests[31](index=31&type=chunk) - Non-controlling interests increased by **HK$15.382 million** due to the incorporation of a subsidiary[31](index=31&type=chunk) [Unaudited Condensed Consolidated Statement of Cash Flows](index=12&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) [Cash Flow Summary](index=12&type=section&id=Cash%20Flow%20Summary) For the six months ended September 30, 2019, the Group's net cash used in operating activities was **HK$31.447 million**, net cash generated from investing activities was **HK$8.308 million**, and net cash generated from financing activities was **HK$22.521 million**, resulting in a net decrease of **HK$0.618 million** in cash and cash equivalents Summary of Cash Flows for the Six Months Ended September 30, 2019 | Activity Type | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Net cash used in operating activities | (31,447) | (2,191) | | Net cash generated from/(used in) investing activities | 8,308 | (10,014) | | Net cash generated from financing activities | 22,521 | 3,892 | | Net decrease in cash and cash equivalents | (618) | (8,313) | | Cash and cash equivalents at end of period | 5,626 | 4,866 | - Net cash used in operating activities significantly increased from **HK$2.191 million** in 2018 to **HK$31.447 million** in 2019[33](index=33&type=chunk) - Investing activities shifted from cash used to cash generated, primarily due to the disposal of a subsidiary[33](index=33&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1 General Information](index=13&type=section&id=1%20General%20Information) The company, incorporated in the Cayman Islands, primarily engages in diesel sales and transportation in Hong Kong and steel product distribution in China, ultimately controlled by Mr. Fong Chun Man - The company is an investment holding company, and its subsidiaries are principally engaged in the sale and transportation of diesel fuel and related products in Hong Kong, and the distribution of steel products in the People's Republic of China[36](index=36&type=chunk)[39](index=39&type=chunk) - The company's immediate and ultimate holding company is Grand Honour Limited, controlled by Mr. Fong Chun Man, a director of the company[35](index=35&type=chunk)[39](index=39&type=chunk) [2 Basis of Preparation and Principal Accounting Policies](index=13&type=section&id=2%20Basis%20of%20Preparation%20and%20Principal%20Accounting%20Policies) These interim financial statements are prepared in accordance with the GEM Listing Rules and HKAS 34, with the first-time application of HKFRS 16 Leases leading to the recognition of right-of-use assets and lease liabilities [2(a) Basis of preparation](index=13&type=section&id=2(a)%20Basis%20of%20preparation) The interim financial statements are prepared in accordance with Appendix 16 of the GEM Listing Rules and HKAS 34, consistent with the accounting policies adopted in the 2019 annual report, except for new and revised HKFRSs effective from April 1, 2019 - The unaudited condensed consolidated interim financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Listing Rules and Hong Kong Accounting Standard 34 'Interim Financial Reporting'[38](index=38&type=chunk)[40](index=40&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, 2019, except for the new and revised HKFRSs effective for the financial year beginning April 1, 2019[42](index=42&type=chunk)[44](index=44&type=chunk) [2(b) Application of new and revised HKFRSs](index=15&type=section&id=2(b)%20Application%20of%20new%20and%20revised%20HKFRSs) The Group first applied HKFRS 16 Leases during this interim period, with retrospective application and cumulative impact recognized on April 1, 2019, resulting in the recognition of approximately **HK$1.469 million** in lease liabilities and **HK$1.469 million** in right-of-use assets - The Group has first applied HKFRS 16 'Leases' during the current interim period, which supersedes HKAS 17 'Leases'[50](index=50&type=chunk)[57](index=57&type=chunk) - The Group has applied HKFRS 16 retrospectively, with the cumulative effect of initial application recognized on April 1, 2019[89](index=89&type=chunk)[92](index=92&type=chunk) Impact of HKFRS 16 Application (April 1, 2019) | Item | Amount (HK$ Thousand) | | :--- | :--- | | Lease liabilities | 1,469 | | Right-of-use assets | 1,469 | - The lessee's incremental borrowing rate is **3.67%**[98](index=98&type=chunk)[100](index=100&type=chunk) [3 Revenue](index=25&type=section&id=3%20Revenue) For the six months ended September 30, 2019, the Group's total revenue was **HK$206.722 million**, primarily derived from the sale of diesel and related products, and new contributions from steel product sales Revenue Classification for the Six Months Ended September 30, 2019 | Product Category | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Diesel | 138,425 | 108,164 | | Marine diesel | 32,338 | 3,511 | | Lubricants | 374 | 844 | | Health food sales | – | 13,729 | | Steel product sales | 35,585 | – | | **Total Revenue** | **206,722** | **126,248** | - Sales of diesel and related products remain the largest contributor to the Group's revenue, while steel product sales became a new revenue source in 2019[112](index=112&type=chunk) [4 Segment Information](index=26&type=section&id=4%20Segment%20Information) The Group's business is segmented into diesel sales and transportation, health food sales, and steel product sales, with diesel sales and transportation contributing the majority of revenue and segment results for the six months ended September 30, 2019, and steel product sales emerging as a new revenue source Segment Revenue and Results for the Six Months Ended September 30, 2019 | Segment | 2019 Revenue (HK$ Thousand) | 2018 Revenue (HK$ Thousand) | 2019 Segment Result (HK$ Thousand) | 2018 Segment Result (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Diesel sales and transportation | 171,137 | 112,519 | 12,135 | 12,484 | | Health food sales | – | 13,729 | – | (326) | | Steel product sales | 35,585 | – | 513 | – | | **Total** | **206,722** | **126,248** | **12,648** | **12,158** | Geographical Revenue for the Six Months Ended September 30, 2019 | Region | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Hong Kong | 171,137 | 112,519 | | China | 35,585 | 13,729 | | **Total** | **206,722** | **126,248** | - Customer A and Customer B were major customers during the reporting period, contributing significant revenue[122](index=122&type=chunk) [5 Other Gains and Losses](index=28&type=section&id=5%20Other%20Gains%20and%20Losses) For the six months ended September 30, 2019, the Group recorded total other gains and losses of **HK$0.857 million**, primarily comprising fair value changes of financial assets at fair value through profit or loss and miscellaneous income Other Gains and Losses for the Six Months Ended September 30, 2019 | Item | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Gain on disposal of property, plant and equipment | 160 | – | | Exchange gain/(loss) | 104 | 12 | | Loss on disposal of a subsidiary | (27) | – | | Fair value change of financial assets at fair value through profit or loss | 292 | 1,263 | | Miscellaneous income | 328 | 121 | | **Total** | **857** | **1,396** | - Fair value changes of financial assets at fair value through profit or loss decreased from **HK$1.263 million** in 2018 to **HK$0.292 million** in 2019[126](index=126&type=chunk) [6 Finance Costs](index=28&type=section&id=6%20Finance%20Costs) For the six months ended September 30, 2019, the Group's finance costs significantly increased to **HK$0.353 million**, mainly due to interest expenses on bank borrowings, bonds payable, and lease liabilities Finance Costs for the Six Months Ended September 30, 2019 | Item | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Interest expense on bank borrowings | 79 | – | | Interest expense on bank overdrafts | 1 | – | | Interest expense on bonds payable | 254 | – | | Interest expense on lease liabilities | 19 | – | | **Total** | **353** | **2** | - New interest expense on bonds payable of **HK$0.254 million** in 2019 was the primary reason for the increase in finance costs[128](index=128&type=chunk) [7 Profit Before Taxation](index=29&type=section&id=7%20Profit%20Before%20Taxation) For the six months ended September 30, 2019, the Group's profit before taxation was net of directors' remuneration of **HK$1.192 million**, staff costs of **HK$2.631 million**, cost of inventories of **HK$191.813 million**, and depreciation expenses of **HK$1.712 million** (including right-of-use assets depreciation) Deductions from Profit Before Taxation for the Six Months Ended September 30, 2019 | Item | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Directors' remuneration | 1,192 | 1,133 | | Other staff costs | 2,631 | 2,879 | | Auditor's remuneration | 350 | 300 | | Cost of inventories recognized as an expense | 191,813 | 111,058 | | Depreciation of property, plant and equipment | 1,100 | 1,330 | | Depreciation of right-of-use assets | 612 | – | | Operating lease rental expense for office premises | – | 942 | - Due to the application of HKFRS 16, depreciation of right-of-use assets of **HK$0.612 million** was recognized in 2019, while operating lease rental expenses decreased to zero[130](index=130&type=chunk) - Cost of inventories recognized as an expense significantly increased from **HK$111.058 million** in 2018 to **HK$191.813 million** in 2019[130](index=130&type=chunk) [8 Income Tax Expenses](index=30&type=section&id=8%20Income%20Tax%20Expenses) For the six months ended September 30, 2019, the Group's income tax expense was **HK$0.912 million**, with Hong Kong profits tax applying a two-tiered rate and Chinese subsidiaries taxed at **25%** Income Tax Expenses for the Six Months Ended September 30, 2019 | Item | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Hong Kong profits tax | 930 | 1,017 | | Deferred tax (current credit) | (18) | (51) | | **Total** | **912** | **966** | - The two-tiered profits tax rate applies to the Group in Hong Kong, with the first **HK$2 million** of assessable profits taxed at **8.25%** and the remainder at **16.5%**[134](index=134&type=chunk)[137](index=137&type=chunk) - Chinese subsidiaries are taxed at a rate of **25%**, while no income tax is payable in the Cayman Islands and British Virgin Islands[136](index=136&type=chunk)[137](index=137&type=chunk) [9 Dividends](index=31&type=section&id=9%20Dividends) The Board does not recommend the payment of any dividend for the six months ended September 30, 2019 - For the six months ended September 30, 2019, the Board did not recommend the payment of any dividend, consistent with the same period in 2018[139](index=139&type=chunk)[140](index=140&type=chunk) [10 Earnings Per Share](index=31&type=section&id=10%20Earnings%20Per%20Share) For the six months ended September 30, 2019, basic and diluted earnings per share attributable to owners of the company were **HK$0.97 cents**, an increase from **HK$0.57 cents** in the prior year Earnings Per Share Data for the Six Months Ended September 30, 2019 | Metric | 2019 (HK$ Thousand/Thousand Shares) | 2018 (HK$ Thousand/Thousand Shares) | | :--- | :--- | :--- | | Profit for the period attributable to owners of the company | 7,744 | 4,567 | | Weighted average number of ordinary shares | 800,000 | 800,000 | | Basic and diluted earnings per share (HK cents) | 0.97 | 0.57 | - As there were no dilutive potential ordinary shares outstanding for the six months ended September 30, 2019, and 2018, diluted earnings per share were the same as basic earnings per share[143](index=143&type=chunk)[145](index=145&type=chunk) [11 Movements in Property, Plant and Equipment](index=31&type=section&id=11%20Movements%20in%20Property,%20Plant%20and%20Equipment) During the reporting period, the Group disposed of property, plant and equipment amounting to approximately **HK$0.2 million** - For the six months ended September 30, 2019, the Group disposed of property, plant and equipment amounting to approximately **HK$0.2 million**[144](index=144&type=chunk)[146](index=146&type=chunk) [12 Trade Receivables](index=32&type=section&id=12%20Trade%20Receivables) As of September 30, 2019, the Group's net trade receivables were **HK$79.508 million**, an increase from March 31, 2019, with provisions for impairment losses recognized [12(a) Ageing analysis](index=32&type=section&id=12(a)%20Ageing%20analysis) As of September 30, 2019, total trade receivables amounted to **HK$80.866 million**, with **HK$20.199 million** due within 30 days, and an average credit period ranging from 3 to 120 days Ageing Analysis of Trade Receivables as of September 30, 2019 | Ageing | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Within 30 days | 20,199 | 18,911 | | 31 to 60 days | 22,053 | 14,581 | | 61 to 90 days | 17,612 | 13,951 | | 91 to 120 days | 3,716 | 6,501 | | Over 120 days | 17,286 | 18,691 | | **Total** | **80,866** | **72,635** | - The average credit period granted by the Group to its customers generally ranges from 3 to 120 days, and strict control is maintained over overdue receivables[151](index=151&type=chunk) [12(b) Impaired trade receivables](index=33&type=section&id=12(b)%20Impaired%20trade%20receivables) The Group has recognized an accumulated impairment loss provision of **HK$1.358 million** for trade receivables, with an additional credit provision of approximately **HK$0.109 million** required during the reporting period Trade Receivables and Impairment Provisions | Item | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Trade receivables | 80,866 | 72,635 | | Less: Accumulated impairment loss provision for trade receivables | (1,358) | (1,249) | | **Net** | **79,508** | **71,386** | - The Directors believe that a credit provision of approximately **HK$0.109 million** for impairment of trade receivables is required during the reporting period[153](index=153&type=chunk) [12(c) Ageing analysis of trade receivables which are past due but not impaired](index=33&type=section&id=12(c)%20Ageing%20analysis%20of%20trade%20receivables%20which%20are%20past%20due%20but%20not%20impaired) Past due but not impaired trade receivables are from independent customers with good payment histories, and management believes these balances are fully recoverable - Management believes that no impairment provision is required for trade receivables that are past due but not impaired, as there has been no significant change in credit quality and the balances are still considered fully recoverable[155](index=155&type=chunk)[157](index=157&type=chunk) [13 Financial Assets at Fair Value Through Profit or Loss](index=34&type=section&id=13%20Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) As of September 30, 2019, the Group's financial assets at fair value through profit or loss primarily consisted of equity securities listed in Malaysia, valued at **HK$1.891 million** Financial Assets at Fair Value Through Profit or Loss | Item | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Equity securities listed in Malaysia | 1,891 | 1,495 | - These financial assets are measured at fair value, determined by reference to quoted bid prices in the market[161](index=161&type=chunk) [14 Trade and Bills Payables](index=34&type=section&id=14%20Trade%20and%20Bills%20Payables) As of September 30, 2019, the Group's total trade and bills payables were **HK$6.906 million**, with an average credit period from suppliers of 3 to 30 days, and all amounts due within 30 days Trade and Bills Payables as of September 30, 2019 | Item | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Trade payables | 6,906 | 5,796 | | Bills payable | – | 1,141 | | **Total** | **6,906** | **6,937** | - The average credit period granted by suppliers ranges from 3 to 30 days, and all trade and bills payables are due within 30 days[165](index=165&type=chunk)[166](index=166&type=chunk) [15 Bank Borrowings](index=35&type=section&id=15%20Bank%20Borrowings) As of September 30, 2019, the Group's secured bank borrowings significantly increased to **HK$15.856 million** from March 31, 2019, collateralized by corporate guarantees and fixed deposits, bearing floating interest rates Bank Borrowings | Item | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Secured bank borrowings | 15,856 | 3,000 | - Bank borrowings are secured by corporate guarantees and fixed deposits of the Group, bearing floating interest rates ranging from **3.79%** to **4.88%** per annum[168](index=168&type=chunk)[169](index=169&type=chunk) [16 Share Capital](index=36&type=section&id=16%20Share%20Capital) As of September 30, 2019, the company's authorized share capital was **HK$20.000 million**, with issued and fully paid share capital of **HK$8.000 million**, maintaining an unchanged capital structure Share Capital Structure | Item | Number of Shares | Amount (HK$ Thousand) | | :--- | :--- | :--- | | Authorized share capital (HK$0.01 per share) | 2,000,000,000 | 20,000 | | Issued and fully paid share capital (HK$0.01 per share) | 800,000,000 | 8,000 | - There have been no changes in the company's authorized and issued share capital since April 1, 2018[171](index=171&type=chunk) [17 Disposal of Subsidiary](index=36&type=section&id=17%20Disposal%20of%20Subsidiary) The company completed the disposal of **90%** equity interest in China Forest Food Limited on April 9, 2019, for a consideration of **HK$8.148 million**, retaining a **10%** stake as a passive investment - The company disposed of **90%** equity interest in China Forest Food Limited for a consideration of **HK$8.148 million**, and the company is no longer a subsidiary of the Group[172](index=172&type=chunk)[173](index=173&type=chunk) - The company retained a **10%** equity interest in China Forest Food as a passive investment due to its overall positive outlook on the Chinese health food industry[173](index=173&type=chunk) [18 Fair Value Measurement of Financial Instruments](index=37&type=section&id=18%20Fair%20Value%20Measurement%20of%20Financial%20Instruments) The Group's financial assets are measured at fair value on a recurring basis and classified using a three-level hierarchy, with Malaysian-listed equity securities as Level 1 and unlisted securities in China as Level 3 Fair Value Hierarchy of Financial Instruments | Financial Asset | Fair Value Level | Valuation Techniques and Key Inputs | Significant Unobservable Inputs | | :--- | :--- | :--- | :--- | | Financial assets at fair value through profit or loss: Equity securities listed in Malaysia | Level 1 | Quoted bid prices in active markets | Not applicable | | Financial assets at fair value through other comprehensive income: Unlisted securities in China | Level 3 | Discounted cash flows | Discount rate determined using capital model cost of **21%** | - Level 1 fair value measurements are derived from quoted prices in active markets, while Level 3 measurements use valuation techniques with unobservable market data[176](index=176&type=chunk) [19 Pledge of Assets](index=39&type=section&id=19%20Pledge%20of%20Assets) As of September 30, 2019, the Group had pledged bank deposits of **HK$14.0 million** as collateral for bank financing Pledged Assets | Item | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Pledged bank deposits | 14,000 | 4,000 | - Pledged bank deposits increased from **HK$4.0 million** as of March 31, 2019, to **HK$14.0 million** as of September 30, 2019[182](index=182&type=chunk) [20 Capital Commitments](index=39&type=section&id=20%20Capital%20Commitments) For the six months ended September 30, 2019, the Group had no significant capital expenditures contracted but not provided for the acquisition of property, plant and equipment - The Group had no capital expenditures contracted but not provided for during the reporting period[183](index=183&type=chunk)[184](index=184&type=chunk) [21 Material Related Party Transactions](index=39&type=section&id=21%20Material%20Related%20Party%20Transactions) During the reporting period, the Group engaged in product sales transactions with related parties and had outstanding trade receivables balances, involving close family members of the company's executive directors [21(a) Transactions with related parties](index=39&type=section&id=21(a)%20Transactions%20with%20related%20parties) For the six months ended September 30, 2018, the Group conducted product sales with Yuk Shing Engineering Company Limited, Kit Ho Engineering Company Limited, and Kit Ho Geotechnical & Construction Company Limited Product Sales with Related Parties for the Six Months Ended September 30, 2018 | Related Party Name | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Yuk Shing Engineering Company Limited | – | 1,399 | | Kit Ho Engineering Company Limited | – | 7 | | Kit Ho Geotechnical & Construction Company Limited | – | 1,076 | [21(b) Balances with related parties](index=40&type=section&id=21(b)%20Balances%20with%20related%20parties) As of March 31, 2019, the Group had trade receivables balances with Yuk Shing Engineering Company Limited and Kit Ho Geotechnical & Construction Company Limited Trade Receivables with Related Parties as of March 31, 2019 | Related Party Name | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Yuk Shing Engineering Company Limited | – | 1,244 | | Kit Ho Geotechnical & Construction Company Limited | – | 427 | [21(c) Compensation of key management personnel](index=40&type=section&id=21(c)%20Compensation%20of%20key%20management%20personnel) The company's directors are identified as the Group's key management personnel, with their remuneration details provided in Note 7 - The company's directors are identified as the Group's key management personnel, and their remuneration during the reporting period is set out in Note 7[188](index=188&type=chunk)[189](index=189&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 sales and transportation in Hong Kong, disposed of **90%** of its health food business equity during the reporting period, and established a steel product sales joint venture in China, driving significant revenue growth - The Group primarily engages in the sale and transportation of diesel and related products in Hong Kong, owning **ten** diesel tanker trucks and **one** marine diesel barge[190](index=190&type=chunk)[195](index=195&type=chunk) - The company disposed of **90%** equity interest in China Forest Food during the six months ended September 30, 2019, and its financial results are no longer consolidated into the Group's consolidated financial statements[191](index=191&type=chunk)[195](index=195&type=chunk) - The Group established a joint venture in China with Xinyu Iron & Steel Group Co., Ltd. and Xinyu City Investment Holding Co., Ltd., primarily engaged in steel product processing, motor accessories, and finished product manufacturing and processing, with the Group holding a **55%** interest[193](index=193&type=chunk)[197](index=197&type=chunk) [Sale and transportation of diesel oil and related products business](index=41&type=section&id=Sale%20and%20transportation%20of%20diesel%20oil%20and%20related%20products%20business) For the six months ended September 30, 2019, revenue from diesel and related product sales and transportation was approximately **HK$171.1 million**, a **52.1%** year-on-year increase, primarily due to increased demand from an existing customer project and three new clients for marine diesel Revenue from Sale and Transportation of Diesel Oil and Related Products Business | Metric | 2019 (HK$ Million) | 2018 (HK$ Million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 171.1 | 112.5 | 52.1% | - This business accounted for approximately **82.8%** of the Group's total revenue[192](index=192&type=chunk)[196](index=196&type=chunk) - The increase in revenue was primarily due to increased demand from an existing customer project that commenced in October 2018, and increased demand for marine diesel from three new customers[192](index=192&type=chunk)[196](index=196&type=chunk) [Sale of steel product business](index=41&type=section&id=Sale%20of%20steel%20product%20business) For the six months ended September 30, 2019, the steel product sales business recorded revenue of approximately **HK$35.6 million**, accounting for about **17.2%** of the Group's total revenue Revenue from Sale of Steel Product Business | Metric | 2019 (HK$ Million) | | :--- | :--- | | Revenue | 35.6 | | Share of Total Revenue (%) | 17.2% | [Future Prospects](index=42&type=section&id=Future%20Prospects) The Board remains optimistic about the Hong Kong diesel and marine diesel market outlook, supported by public infrastructure investment and logistics sector recovery, and will continue to enhance diesel business development and marketing strategies while actively seeking potential business opportunities - The sales trend in the Hong Kong diesel and marine diesel market remains optimistic, primarily due to stable high-level investments in public infrastructure (including railway networks), the development of marine engineering projects (including the Hong Kong International Airport Third Runway project), and the recovery of Hong Kong's logistics industry[200](index=200&type=chunk)[203](index=203&type=chunk) - The Group will continue to allocate more resources to talent recruitment and strengthen its business development and marketing strategies for diesel, while actively seeking potential business opportunities to expand revenue streams and enhance shareholder value[201](index=201&type=chunk)[203](index=203&type=chunk) [Financial Review](index=43&type=section&id=Financial%20Review) The Group's revenue grew **63.7%** year-on-year to **HK$206.7 million**, primarily due to increased diesel and marine diesel sales and steel product contributions; gross margin declined due to bulk purchase discounts, but net profit increased due to a one-off fair value change [Revenue](index=43&type=section&id=Revenue_FinancialReview) The Group's revenue increased by **63.7%** to **HK$206.7 million** for the six months ended September 30, 2019, from **HK$126.2 million** in the prior year, mainly driven by increased diesel and marine diesel sales and steel product contributions Revenue Composition for the Six Months Ended September 30, 2019 | Product Category | 2019 Revenue (HK$ Million) | Share of Total Revenue (%) | 2018 Revenue (HK$ Million) | Share of Total Revenue (%) | | :--- | :--- | :--- | :--- | :--- | | Diesel | 138.4 | 67.0% | 108.2 | 85.7% | | Marine diesel | 32.3 | 15.6% | 3.5 | 2.7% | | Lubricants | 0.4 | 0.2% | 0.8 | 0.6% | | Steel products | 35.6 | 17.2% | – | – | - The increase in diesel demand was primarily due to increased demand from an existing customer project that commenced in October 2018, and the increase in marine diesel demand was attributable to the demand from three new customers[207](index=207&type=chunk)[210](index=210&type=chunk) [Cost of sales](index=43&type=section&id=Cost%20of%20sales_FinancialReview) For the six months ended September 30, 2019, the cost of sales for diesel and related product sales and transportation was approximately **HK$159.0 million**, a **59.0%** year-on-year increase, consistent with the overall revenue growth Cost of Sales for Diesel and Related Products | Metric | 2019 (HK$ Million) | 2018 (HK$ Million) | Change (%) | | :--- | :--- | :--- | :--- | | Cost of sales | 159.0 | 100.0 | 59.0% | - Cost of sales primarily includes the cost of diesel, marine diesel, lubricants, direct labor costs, and depreciation, with procurement costs referenced to price indicators such as European Brent crude oil spot prices[209](index=209&type=chunk)[212](index=212&type=chunk) [Gross profit and gross profit margin](index=44&type=section&id=Gross%20profit%20and%20gross%20profit%20margin_FinancialReview) The Group's gross profit slightly increased by **HK$0.6 million** to **HK$12.7 million**, but the gross profit margin decreased from **9.6%** to **6.2%**, primarily due to bulk purchase discounts offered to a major customer during the reporting period Gross Profit and Gross Profit Margin | Metric | 2019 (HK$ Million) | 2018 (HK$ Million) | Change (HK$ Million) | | :--- | :--- | :--- | :--- | | Gross profit | 12.7 | 12.2 | 0.6 | | Gross profit margin | 6.2% | 9.6% | (3.4%) | - The decrease in gross profit margin was primarily due to bulk purchase discounts granted to a major customer during the reporting period[213](index=213&type=chunk)[218](index=218&type=chunk) [Profit for the period](index=44&type=section&id=Profit%20for%20the%20period_FinancialReview) The Group's net profit increased by **HK$3.4 million** to **HK$7.9 million** for the six months ended September 30, 2019, from **HK$4.6 million** in the prior year, with net profit margin rising from **3.6%** to **3.8%**, mainly influenced by a one-off fair value change of contingent consideration Net Profit and Net Profit Margin for the Period | Metric | 2019 (HK$ Million) | 2018 (HK$ Million) | Change (HK$ Million) | | :--- | :--- | :--- | :--- | | Net profit | 7.9 | 4.6 | 3.4 | | Net profit margin | 3.8% | 3.6% | 0.2% | - The increase in net profit and net profit margin was primarily due to a one-off fair value change of contingent consideration during the reporting period[214](index=214&type=chunk)[219](index=219&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2019, the Group reported net current assets of **HK$111.1 million**, a current ratio of approximately **3.4 times**, and a gearing ratio of approximately **14.1%**, indicating a robust liquidity position Liquidity Indicators as of September 30, 2019 | Metric | Amount (HK$ Million) | | :--- | :--- | | Net current assets | 111.1 | | Current assets | 158.4 | | Current liabilities | 47.2 | | Current ratio | 3.4 times | | Gearing ratio | 14.1% | | Available bank facilities limit | 41.0 | | Utilized bank facilities | 15.9 | - The Group finances its operations through interest-bearing borrowings and bond placements[215](index=215&type=chunk)[220](index=220&type=chunk) [Capital Structure](index=45&type=section&id=Capital%20Structure) For the six months ended September 30, 2019, the Group's capital structure included equity attributable to owners of approximately **HK$96.5 million**, with share capital consisting solely of ordinary shares and remaining unchanged since the listing date - The Group's capital structure includes equity attributable to owners of the company of approximately **HK$96.5 million**[223](index=223&type=chunk)[228](index=228&type=chunk) - The Group's share capital comprises only ordinary shares, and there have been no changes in the capital structure since its listing on April 12, 2017[223](index=223&type=chunk)[228](index=228&type=chunk) [Foreign Currency Exposure Risks](index=45&type=section&id=Foreign%20Currency%20Exposure%20Risks) The Group primarily faces foreign exchange risks from steel product transactions settled in RMB and financial assets denominated in Malaysian Ringgit, but did not enter into any derivative agreements or hedging during the reporting period - The Group primarily faces foreign exchange risks related to steel product distribution transactions settled in RMB and financial assets denominated in Malaysian Ringgit[224](index=224&type=chunk)[229](index=229&type=chunk) - During the six months ended September 30, 2019, the Group did not enter into any derivative agreements and had no commitments to use any financial instruments to hedge foreign exchange risks[224](index=224&type=chunk)[229](index=229&type=chunk) [Treasury Policies](index=45&type=section&id=Treasury%20Policies) The Group adopts a prudent financial management approach, committed to maintaining a sound liquidity position, and manages risks through continuous credit assessment and liquidity monitoring - The Group has adopted a prudent financial management approach for its treasury policies and maintained a sound liquidity position throughout the six months ended September 30, 2019[225](index=225&type=chunk)[230](index=230&type=chunk) - The Group is committed to mitigating credit risk through continuous credit assessment and evaluation of its customers' financial standing, and closely monitors its liquidity position to meet funding requirements[225](index=225&type=chunk)[230](index=230&type=chunk) [Material Acquisitions and Disposal of Subsidiaries, Associates or Joint Ventures](index=45&type=section&id=Material%20Acquisitions%20and%20Disposal%20of%20Subsidiaries,%20Associates%20or%20Joint%20Ventures) Except for disclosed matters, the Group had no other material investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures for the six months ended September 30, 2019 - For the six months ended September 30, 2019, the Group held no other significant investments, material acquisitions, or disposals of subsidiaries, associates, or joint ventures[226](index=226&type=chunk)[231](index=231&type=chunk) [Capital Commitments and Contingent Liabilities](index=45&type=section&id=Capital%20Commitments%20and%20Contingent%20Liabilities) As of September 30, 2019, the Group had no other significant capital commitments or contingent liabilities, apart from those disclosed regarding the use of proceeds - As of September 30, 2019, the Group had no other significant capital commitments or contingent liabilities[227](index=227&type=chunk)[232](index=232&type=chunk) [Dividends](index=46&type=section&id=Dividends_MDA) The Board does not recommend the payment of any dividend for the six months ended September 30, 2019, and 2018 - The Board does not recommend the payment of any dividend for the six months ended September 30, 2019, and 2018[233](index=233&type=chunk)[235](index=235&type=chunk) [Pledge of Assets](index=46&type=section&id=Pledge%20of%20Assets_MDA) As of September 30, 2019, the Group had pledged short-term bank deposits of **HK$14.0 million** as collateral for bank financing Pledged Bank Deposits | Date | Amount (HK$ Million) | | :--- | :--- | | Sep 30, 2019 | 14.0 | [Comparison of Implementation Plans for Business Strategies with Actual Implementation Progress](index=46&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 supply, upgrading IT systems, and strengthening manpower, though some plans are ongoing or adjusted - Regarding the expansion of the diesel tanker fleet, two new diesel tanker trucks have been purchased and one existing diesel tanker truck replaced, with the remaining new vehicles expected to be delivered by the end of December 2020[238](index=238&type=chunk)[239](index=239&type=chunk) - The marine fuel supply business commenced trial operations in April 2018 and full operations in July 2018, with ongoing marketing activities[241](index=241&type=chunk) - Minor upgrades to the IT system have been completed, and the new office administrative IT system is still under negotiation with potential suppliers[241](index=241&type=chunk) - In terms of manpower, two logistics assistants have been hired, a safety supervisor was recruited through job reallocation, and the marine fuel supply business operates under contract with a service company[243](index=243&type=chunk) [Use of Proceeds](index=49&type=section&id=Use%20of%20Proceeds) The actual net proceeds from the share offer were **HK$45.1 million**, with **HK$23.8 million** utilized as of September 30, 2019, leaving **HK$21.3 million** unutilized Actual Use of Net Proceeds as of September 30, 2019 | Planned Use | Approximate Percentage of Total Net Proceeds (%) | Actual Use (HK$ Million) | Unutilized Total Net Proceeds (HK$ Million) | | :--- | :--- | :--- | :--- | | Purchase of diesel tanker trucks | 17.3% | 3.9 | 3.9 | | Purchase of marine diesel barge | 31.0% | 8.5 | 5.5 | | Further strengthening of manpower | 13.6% | 1.7 | 4.4 | | Enhancement of IT system | 7.9% | 0.1 | 3.5 | | Working capital for operating new diesel tanker trucks and marine fuel supply business | 20.2% | 5.1 | 4.0 | | Working capital | 10.0% | 4.5 | – | | **Total** | **100.0%** | **23.8** | **21.3** | - The actual net proceeds were **HK$45.1 million**, lower than the **HK$50.9 million** estimated in the prospectus[244](index=244&type=chunk)[245](index=245&type=chunk) - The Group implements its business strategies and utilizes net proceeds based on actual business and industry developments, as well as market conditions[249](index=249&type=chunk)[253](index=253&type=chunk) [Financial Assets](index=50&type=section&id=Financial%20Assets_MDA) As of September 30, 2019, the Group's total investment in a Malaysian-listed company was approximately **HK$2.6 million**, recording a net unrealized gain of approximately **HK$0.1 million** Financial Asset Investments as of September 30, 2019 | Item | Amount (HK$ Million) | | :--- | :--- | | Total investment in a Malaysian-listed company | 2.6 | | Net unrealized gain | 0.1 | [Employees and Remuneration Policies](index=50&type=section&id=Employees%20and%20Remuneration%20Policies) As of September 30, 2019, the Group had **27** employees (including directors), with total staff costs of approximately **HK$3.8 million**; remuneration policy is based on performance, qualifications, experience, position, and Group performance Employee and Remuneration Data | Metric | Sep 30, 2019 | Sep 30, 2018 | | :--- | :--- | :--- | | Total number of employees | 27 | 53 | | Total staff costs (HK$ Million) | 3.8 | 4.0 | - Remuneration packages are maintained at market levels and reviewed regularly, with employee compensation and related benefits determined based on performance, qualifications, experience, position, and the Group's business performance[251](index=251&type=chunk)[255](index=255&type=chunk) [Environment Policies and Performance](index=51&type=section&id=Environment%20Policies%20and%20Performance) The Group complies with Hong Kong environmental laws and regulations, implementing various measures to minimize environmental impact, and has not faced any prosecutions or fines for violations as of the reporting date - The Group's principal businesses are regulated by environmental laws and regulations in Hong Kong, such as the Air Pollution Control Ordinance and Water Pollution Control Ordinance[257](index=257&type=chunk)[261](index=261&type=chunk) - The Group has implemented various environmental protection measures to minimize the impact of its operations on the environment and natural resources[257](index=257&type=chunk)[261](index=261&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[258](index=258&type=chunk)[262](index=262&type=chunk) [Events After the Reporting Period](index=51&type=section&id=Events%20After%20the%20Reporting%20Period) As of the reporting date, the Board is unaware of any significant events requiring disclosure that occurred between September 30, 2019, and the date of this report, other than those disclosed herein - To the best of the Board's knowledge, no significant events requiring disclosure have occurred between September 30, 2019, and the date of this report[259](index=259&type=chunk)[263](index=263&type=chunk) [Significant Investment, Material Acquisitions and Disposals of Subsidiaries](index=51&type=section&id=Significant%20Investment,%20Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries) Except as disclosed above, the Group had no significant investments, material acquisitions, or disposals of subsidiaries and associates for the six months ended September 30, 2019 - For the six months ended September 30, 2019, the Group had no significant investments, material acquisitions, or disposals of subsidiaries and associates[260](index=260&type=chunk)[264](index=264&type=chunk) [Other Information](index=52&type=section&id=Other%20Information) [Purchase, Sale or Redemption of the Company's Listed Securities](index=52&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) For the six months ended September 30, 2019, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - For the six months ended September 30, 2019, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities[266](index=266&type=chunk)[268](index=268&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=52&type=section&id=Interests%20and%20short%20positions%20of%20Directors%20and%20chief%20executive%20in%20the%20shares,%20underlying%20shares%20and%20debentures%20of%20the%20Company%20and%20its%20associated%20corporations) As of September 30, 2019, the company's directors and chief executive held interests in the company's shares, primarily through controlled corporations or spouse interests Shareholdings of Directors and Chief Executive as of September 30, 2019 | Director Name | Capacity/Nature of Interest | Number of Shares Held | Shareholding Percentage | | :--- | :--- | :--- | :--- | | Mr. Fong Chun Man | Interest in controlled corporation | 440,000,000 | 55% | | Ms. Lo Pui Yee | Spouse interest | 440,000,000 | 55% | | Mr. Lee Hok Yin | Beneficial owner | 49,456,000 | 6.18% | - Mr. Fong Chun Man holds a **55%** equity interest through Grand Honour Limited, and Ms. Lo Pui Yee, as his spouse, is also deemed to have the same interest[270](index=270&type=chunk)[274](index=274&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=54&type=section&id=Interests%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 September 30, 2019, substantial shareholder Grand Honour Limited held a **55%** equity interest in the company, while Ms. Cheung Yee Lok (spouse of Mr. Lee Hok Yin) was deemed to have a **6.182%** interest Shareholdings of Substantial Shareholders and Other Persons as of September 30, 2019 | Shareholder Name/Name | Capacity/Nature of Interest | Number of Shares Held | Shareholding Percentage | | :--- | :--- | :--- | :--- | | Grand Honour Limited | Beneficial owner | 440,000,000 | 55% | | Ms. Cheung Yee Lok | Spouse interest | 49,456,000 | 6.182% | - Grand Honour Limited is **100%** owned by Mr. Fong Chun Man, and Ms. Cheung Yee Lok is the spouse of Mr. Lee Hok Yin[277](index=277&type=chunk)[278](index=278&type=chunk)[280](index=280&type=chunk) [Share Option Scheme](index=55&type=section&id=Share%20Option%20Scheme) The company conditionally adopted a share option scheme on March 23, 2017, but no options have been granted or remain outstanding from the adoption date to September 30, 2019 - The company conditionally adopted a share option scheme on March 23, 2017, which became unconditional after the listing date[282](index=282&type=chunk)[286](index=286&type=chunk) - No share options have been granted or remain outstanding from the adoption date up to September 30, 2019[283](index=283&type=chunk)[286](index=286&type=chunk) - As of September 30, 2019, the company had **80,000,000** shares available for issue under the share option scheme, representing **10%** of the existing issued share capital[283](index=283&type=chunk)[286](index=286&type=chunk) [Competing Interests](index=55&type=section&id=Competing%20Interests) The directors confirm that, during the reporting period and up to the date of this report, no controlling shareholder or director, or their respective close associates, held interests in any business directly or indirectly competing or potentially competing with the Group's business - The directors confirm that no controlling shareholder or director, or their respective close associates, held interests in any business competing with the Group's business[284](index=284&type=chunk)[287](index=287&type=chunk) [Interests of the Compliance Adviser](index=55&type=section&id=Interests%20of%20the%20Compliance%20Adviser) Guotai Junan Capital Limited, the compliance adviser, and its directors, employees, or close associates, hold no interests in the share capital of the company or any Group member, except for its role as listing sponsor and

Performance Highlights [Performance Highlights](index=3&type=section&id=Highlight) The company reported strong Q1 2019 revenue growth of 75.9% to HKD 88.1 million and profit of HKD 6.3 million, though adjusted profit declined 14.5% YoY, with no dividend recommended Key Financial Indicators for Q1 2019 | Metric | 2019 Q1 (HKD million) | 2018 Q1 (HKD million) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | Approx. 88.1 | Approx. 50.1 | +75.9% | | Profit attributable to owners | Approx. 6.3 | Approx. 3.2 | +96.9% | - Profit growth was primarily driven by increased sales of diesel and marine diesel, alongside a fair value gain on contingent consideration payable of approximately **HKD 3.6 million**; excluding this one-off gain, profit attributable to owners would have decreased from **HKD 3.2 million** in the prior year to **HKD 2.7 million**, representing a **14.5% year-on-year decrease**[12](index=12&type=chunk) - The Board of Directors does not recommend the payment of any dividend for the three months ended June 30, 2019[13](index=13&type=chunk) Unaudited Condensed Consolidated Financial Statements [Unaudited Condensed Consolidated Statement of Profit or Loss and other Comprehensive Income](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20other%20Comprehensive%20Income) Revenue surged 75.9% to HKD 88.06 million this quarter; despite higher cost of sales, operating profit rose to HKD 6.77 million due to a HKD 3.6 million fair value gain, leading to a near doubling of profit for the period to HKD 6.3 million and basic EPS of HKD 0.79 cents Key Profit and Loss Data for Q1 2019 (HKD thousand) | Item | 2019 Q1 (HKD thousand) | 2018 Q1 (HKD thousand) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 88,060 | 50,065 | +75.9% | | Gross Profit | 6,365 | 5,754 | +10.6% | | Profit from Operations | 6,770 | 3,723 | +81.8% | | Profit for the Period | 6,298 | 3,161 | +99.2% | | Basic EPS | 0.79 | 0.40 | +97.5% | [Unaudited Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2019, the company's total equity increased to HKD 94.852 million from HKD 88.551 million at the beginning of the period, primarily driven by the HKD 6.301 million total comprehensive income recorded during the quarter Summary of Changes in Equity (HKD thousand) | Item | Amount (HKD thousand) | | :--- | :--- | | As at April 1, 2019 | 88,551 | | Profit and Total Comprehensive Income for the Period | 6,301 | | As at June 30, 2019 | 94,852 | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's core business of diesel sales and transport in Hong Kong, accounting policies, and financial items, noting diesel sales comprised over 80% of revenue, explaining the new two-tiered profits tax rate, and confirming no dividend distribution this quarter - The company's principal activities involve the sale and transportation of diesel oil and related products in Hong Kong[27](index=27&type=chunk) Revenue Breakdown by Product (HKD thousand) | Product | 2019 Q1 (HKD thousand) | 2018 Q1 (HKD thousand) | | :--- | :--- | :--- | | Diesel Oil | 71,783 | 47,828 | | Marine Diesel Oil | 16,081 | 2,068 | | Lubricant Oil | 196 | 169 | | **Total** | **88,060** | **50,065** | - The company adopted Hong Kong's new two-tiered profits tax rate regime, taxing the first **HKD 2 million** of assessable profits at **8.25%** and the remainder at **16.5%**[49](index=49&type=chunk)[50](index=50&type=chunk) - The Board of Directors does not recommend the payment of any dividend for the three months ended June 30, 2019[51](index=51&type=chunk) Management Discussion and Analysis [Business Review and Future Prospects](index=13&type=section&id=BUSINESS%20REVIEW) The company's core business of diesel sales and transport in Hong Kong saw a 75.9% revenue increase this quarter, driven by existing project demand and new marine diesel clients; management is optimistic about future demand from public infrastructure and logistics, planning talent acquisition and new business opportunities - The company's principal business is supplying diesel oil, marine diesel oil, and lubricant oil to construction companies in Hong Kong for their operating machinery and vehicles[60](index=60&type=chunk) - Revenue for the quarter increased by **75.9%** to **HKD 88.1 million**, primarily driven by increased demand from an existing client's project that commenced in October 2018 and the acquisition of three new marine diesel oil customers[61](index=61&type=chunk) - The Board believes the Hong Kong diesel oil sales market outlook is positive, driven by public infrastructure investments, such as the Airport Third Runway project, and the recovery of the logistics industry[66](index=66&type=chunk) [Financial Review](index=14&type=section&id=FINANCIAL%20REVIEW) Revenue grew 75.9% to HKD 88.1 million this quarter, with diesel sales at 81.5% and marine diesel sales at 18.3%; however, cost of sales outpaced revenue growth at 84.4%, lowering gross profit margin from 11.5% to 7.2% due to bulk discounts, with net profit growth largely from a one-off fair value gain Changes in Revenue Composition | Revenue Source | 2019 Q1 Share | 2018 Q1 Share | | :--- | :--- | :--- | | Diesel Oil Sales | 81.5% | 95.5% | | Marine Diesel Oil Sales | 18.3% | 4.1% | | Lubricant Oil Sales | 0.2% | 0.3% | Profitability Analysis | Metric | 2019 Q1 (HKD million) | 2018 Q1 (HKD million) | | :--- | :--- | :--- | | Gross Profit | 6.4 | 5.8 | | Gross Profit Margin | 7.2% | 11.5% | - The decrease in gross profit margin was primarily due to bulk purchase discounts offered to a major customer during the reporting period[76](index=76&type=chunk) [Liquidity and Capital Resources](index=15&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The Group maintains a sound financial position, funding operations via cash from activities; as of June 30, 2019, it reported **HKD 91.1 million** in net current assets, a **6.3x** current ratio, and a **3.2%** gearing ratio, with **HKD 3 million** utilized from **HKD 20 million** bank facilities, facing foreign exchange risk from Malaysian Ringgit assets Key Financial Ratios (As at June 30, 2019) | Metric | Value | | :--- | :--- | | Net Current Assets | Approx. 91.1 million HKD | | Current Ratio | Approx. 6.3 times | | Gearing Ratio | Approx. 3.2% | - As of June 30, 2019, the Group had available banking facilities of approximately **HKD 20 million**, of which **HKD 3 million** was utilized[84](index=84&type=chunk) - The Group's foreign exchange risk primarily arises from financial assets denominated in Malaysian Ringgit, with no financial instruments used for hedging[86](index=86&type=chunk) [Material Acquisitions and Disposal of Subsidiaries, Associates or Joint Ventures](index=17&type=section&id=MATERIAL%20ACQUISITIONS%20AND%20DISPOSAL%20OF%20SUBSIDIARIES%2C%20ASSOCIATES%20OR%20JOINT%20VENTURES) During the reporting period, the company undertook two significant capital operations: establishing a joint venture in China with Xinyu Iron & Steel Group and others for steel product processing, holding a 55% stake, and completing the disposal of 90% equity in China Forest Food Co., Ltd. on April 9, 2019 - On June 27, 2019, the company's indirect wholly-owned subsidiary entered into a joint venture agreement with Xinyu Iron & Steel Group and Xinyu Investment Holdings to establish a joint venture in China with a registered capital of **RMB 30 million** for steel product processing, with the company holding a **55% equity interest**[94](index=94&type=chunk) - On April 9, 2019, the company completed the disposal of its **90% equity interest** in China Forest Food Co., Ltd. to China Eco-Tourism Investment Co., Ltd[95](index=95&type=chunk) [Use of Proceeds](index=18&type=section&id=USE%20OF%20PROCEEDS) The company's net proceeds from listing were approximately HKD 45.1 million; as of June 30, 2019, HKD 22.9 million was utilized for purchasing diesel tank trucks, marine diesel barges, strengthening manpower, and supplementing working capital, with HKD 22.2 million remaining for fleet expansion and IT system upgrades as planned Use of Net Proceeds (HKD million) | Planned Use | Planned Amount (HKD million) | Actual Utilized (HKD million) | Unutilized (HKD million) | | :--- | :--- | :--- | :--- | | Purchase of diesel tank trucks | 7.8 | 3.7 | 4.1 | | Purchase of marine diesel barges | 14.0 | 8.5 | 5.5 | | Strengthening manpower | 6.1 | 1.7 | 4.4 | | Enhancement of IT systems | 3.6 | 0.1 | 3.5 | | Working capital for new business | 9.1 | 4.4 | 4.7 | | Working capital | 4.5 | 4.5 | – | | **Total** | **45.1** | **22.9** | **22.2** | [Other Disclosures](index=19&type=section&id=OTHER%20DISCLOSURES) This section discloses miscellaneous information, including the company's **HKD 2.6 million** investment in a Malaysian listed company, **26 employees** with **HKD 1.8 million** in staff costs, and compliance with Hong Kong environmental regulations with no violations or significant post-reporting period events - As of June 30, 2019, the Group invested approximately **HKD 2.6 million** in a company listed on the Malaysian stock exchange, recording an unrealized gain of approximately **HKD 0.1 million**[109](index=109&type=chunk) - As of June 30, 2019, the Group employed **26 staff members**, with total staff costs for the quarter amounting to approximately **HKD 1.8 million**[110](index=110&type=chunk) - The company complies with Hong Kong's environmental laws and regulations, with no prosecutions, fines, or penalties for environmental non-compliance during the reporting period[115](index=115&type=chunk)[120](index=120&type=chunk) Other Information [Interests and short positions of Directors and chief executive](index=21&type=section&id=Interests%20and%20short%20positions%20of%20Directors%20and%20chief%20executive) This section discloses the shareholdings of directors and major shareholders, noting Chairman Mr. Fong Chun Man holds **55%** through Grand Tycoon Limited, Executive Director Mr. Li Hok Yin beneficially owns **10.27%**, and no share options have been granted since the adoption of the share option scheme Shareholdings of Directors and Major Shareholders (As at June 30, 2019) | Name/Entity | Capacity | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Fong Chun Man | Interest in controlled corporation | 440,000,000 | 55% | | Mr. Li Hok Yin | Beneficial owner | 82,132,000 | 10.27% | | Grand Tycoon Limited | Beneficial owner | 440,000,000 | 55% | - No share options have been granted by the company since the adoption of the share option scheme on March 23, 2017, up to June 30, 2019[137](index=137&type=chunk) [Corporate Governance](index=24&type=section&id=Corporate%20Governance) The company established Audit, Nomination, and Remuneration Committees compliant with GEM Listing Rules, chaired or majority-held by independent non-executive directors; the Audit Committee reviewed unaudited financial statements, and the company adhered to the Corporate Governance Code and directors complied with the Model Code for Securities Transactions - The company has established an Audit Committee, a Nomination Committee, and a Remuneration Committee, with their composition and terms of reference complying with the requirements of the GEM Listing Rules[143](index=143&type=chunk)[149](index=149&type=chunk)[152](index=152&type=chunk) - The unaudited condensed consolidated financial statements of the Group for the three months ended June 30, 2019, have been reviewed by the Audit Committee[145](index=145&type=chunk) - The company complied with the code provisions of the Corporate Governance Code as set out in Appendix 15 to the GEM Listing Rules for the three months ended June 30, 2019[161](index=161&type=chunk)