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 ...

[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 |

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 ...

[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)

CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") 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。 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 ...