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

[GEM Characteristics and Report Statement](index=2&type=section&id=GEM%20Characteristics%20and%20Report%20Statement) [GEM Market Risk Disclosure](index=2&type=section&id=GEM%20Market%20Risk%20Disclosure) The GEM market is designed for small and medium-sized companies, carrying higher investment risks, and securities may face high market volatility and low liquidity risks - GEM market positioning: provides a listing platform for small and medium-sized companies, with higher investment risks[1](index=1&type=chunk)[5](index=5&type=chunk) - Potential risks: securities may experience significant market volatility, and high liquidity is not guaranteed[2](index=2&type=chunk)[5](index=5&type=chunk) [Directors' Responsibility Statement](index=2&type=section&id=Directors'%20Responsibility%20Statement) The Board confirms that this report's content is accurate, complete, and not misleading, assuming full responsibility; the Stock Exchange is not responsible for the report's content - The Board confirms that the information in this report is accurate, complete, and not misleading, and assumes full responsibility[4](index=4&type=chunk)[5](index=5&type=chunk) - The Stock Exchange takes no responsibility for the content of this report and does not guarantee its accuracy or completeness[3](index=3&type=chunk)[5](index=5&type=chunk) [HIGHLIGHTS](index=3&type=section&id=HIGHLIGHTS) For the three months ended June 30, 2022, the Group's revenue significantly decreased by 70.2% to HK$19.1 million, turning from profit to a loss of HK$0.7 million, while gross profit margin improved; the Board does not recommend a dividend 2022 Q1 Key Financial Indicators Comparison | Indicator | 2022 Q1 (HK$ million) | 2021 Q1 (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 19.1 | 64.0 | -70.2% | | Gross profit margin | 5.6% | 3.3% | +2.3pp | | (Loss)/Profit for the period | (0.7) | 0.1 | -800% (from profit to loss) | - The Board does not recommend the payment of any dividend for the three months ended June 30, 2022[7](index=7&type=chunk) [UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=4&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents the Group's unaudited condensed consolidated financial statements for the three months ended June 30, 2022, including the statement of profit or loss and other comprehensive income and statement of changes in equity, with comparative data for the same period in 2021 [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) For the three months ended June 30, 2022, the Group's revenue significantly decreased, leading to a loss from a profit in the prior year, with a loss per share of HK$0.18 cents Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the three months ended June 30) | Indicator | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 19,129 | 63,966 | | Cost of sales | (18,051) | (61,874) | | Gross profit | 1,078 | 2,092 | | Other income | 344 | – | | Administrative and other operating expenses | (2,061) | (1,962) | | Finance costs | (92) | (56) | | (Loss)/Profit before taxation | (731) | 74 | | Income tax expense | – | – | | (Loss)/Profit and total comprehensive (loss)/income for the period | (731) | 74 | | (Loss)/Earnings per share (HK cents) Basic and diluted | (0.18) | 0.02 | [UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY](index=5&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CHANGES%20IN%20EQUITY) As of June 30, 2022, the Group's total equity decreased to HK$51,293 thousand due to the loss for the period, compared to HK$55,232 thousand in the prior year Unaudited Condensed Consolidated Statement of Changes in Equity (For the three months ended June 30) | Indicator | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | April 1 (audited) | 52,024 | 55,158 | | (Loss)/Profit and total comprehensive (loss)/income for the period | (731) | 74 | | June 30 (unaudited) | 51,293 | 55,232 | [NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=6&type=section&id=NOTES%20TO%20THE%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed notes to the unaudited condensed consolidated financial statements, covering general information, accounting policies, revenue and expense breakdowns, earnings per share calculation, and dividend policy [1. GENERAL INFORMATION](index=6&type=section&id=1.%20GENERAL%20INFORMATION) Sun Kong Holdings Limited was incorporated in the Cayman Islands, primarily engaged in the sale of diesel and related products in Hong Kong, and listed on GEM of the Stock Exchange on January 8, 2019 - Company registration: Cayman Islands, registered on October 31, 2017[13](index=13&type=chunk)[17](index=17&type=chunk) - Principal business: sale of diesel and related products in Hong Kong[14](index=14&type=chunk)[18](index=18&type=chunk) - Listing information: listed on GEM of the Stock Exchange on January 8, 2019[14](index=14&type=chunk)[18](index=18&type=chunk) [2. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES](index=7&type=section&id=2.%20BASIS%20OF%20PREPARATION%20AND%20PRINCIPAL%20ACCOUNTING%20POLICIES) The condensed consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards, using the historical cost basis, consistent with the accounting policies adopted for the annual financial statements for the year ended March 31, 2022, except for the adoption of certain new and revised standards [2. (a) Basis of preparation](index=7&type=section&id=2.%20(a)%20Basis%20of%20preparation) The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards (HKFRSs), using the historical cost basis, and involve management judgments, estimates, and assumptions - Preparation basis: Hong Kong Financial Reporting Standards (HKFRSs) and GEM Listing Rules[20](index=20&type=chunk)[22](index=22&type=chunk) - Measurement basis: historical cost basis[24](index=24&type=chunk)[26](index=26&type=chunk) - Important note: should be read in conjunction with the audited annual financial information for the year ended March 31, 2022[21](index=21&type=chunk)[22](index=22&type=chunk) [2. (b) Adoption of new/revised HKFRSs](index=9&type=section&id=2.%20(b)%20Adoption%20of%20new/revised%20HKFRSs) The Group adopted new and revised Hong Kong Financial Reporting Standards, but these adoptions had no material impact on the results and financial position for the current or prior periods, nor did they lead to significant changes in accounting policies - Standards adopted: Amendments to HKAS 39, HKFRS 4, HKFRS 7, HKFRS 9 and HKFRS 16 (Interest Rate Benchmark Reform – Phase 2), and Amendment to HKFRS 16 (Covid-19-Related Rent Concessions)[28](index=28&type=chunk)[31](index=31&type=chunk) - Impact: no material impact on the results and financial position for the current or prior periods, and no significant changes in accounting policies[28](index=28&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) [3. REVENUE](index=9&type=section&id=3.%20REVENUE) For the three months ended June 30, 2022, the Group's revenue primarily derived from diesel sales, totaling HK$19,129 thousand, a significant decrease from the prior year Revenue Composition (For the three months ended June 30) | Revenue Source | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | Diesel sales | 18,930 | 63,845 | | AdBlue sales | 199 | 121 | | **Total Revenue** | **19,129** | **63,966** | [4. (LOSS)/PROFIT BEFORE TAXATION](index=10&type=section&id=4.%20(LOSS)/PROFIT%20BEFORE%20TAXATION) For the three months ended June 30, 2022, the Group recorded a loss before taxation of HK$731 thousand, primarily influenced by staff costs, administrative expenses, and depreciation (Loss)/Profit Before Taxation Composition (For the three months ended June 30) | Item | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | Directors' emoluments | 582 | 372 | | Salaries and other benefits | 1,070 | 1,329 | | Contributions to retirement benefit schemes | 61 | 73 | | **Total staff costs** | **1,713** | **1,774** | | Auditor's remuneration | 120 | 120 | | Depreciation of property, plant and equipment | 754 | 710 | [5. FINANCE COSTS](index=11&type=section&id=5.%20FINANCE%20COSTS) For the three months ended June 30, 2022, the Group's finance costs increased to HK$92 thousand, mainly comprising interest on bank overdrafts and new bank loans Finance Costs (For the three months ended June 30) | Item | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | Interest on bank overdrafts | 50 | 49 | | Imputed interest on lease liabilities | 3 | 7 | | Interest on bank loans | 39 | – | | **Total** | **92** | **56** | [6. INCOME TAX EXPENSES](index=11&type=section&id=6.%20INCOME%20TAX%20EXPENSES) For the three months ended June 30, 2022, the Group incurred no income tax expense in Hong Kong due to the absence of assessable profit, while entities in the Cayman Islands and BVI are exempt from income tax - Hong Kong profits tax: zero for both 2022 and 2021 due to no assessable profit[39](index=39&type=chunk)[40](index=40&type=chunk) - Tax exemption: entities in the Cayman Islands and British Virgin Islands are exempt from income tax[39](index=39&type=chunk)[40](index=40&type=chunk) [7. (LOSS)/EARNINGS PER SHARE](index=12&type=section&id=7.%20(LOSS)/EARNINGS%20PER%20SHARE) For the three months ended June 30, 2022, the Group's basic and diluted loss per share was HK$0.18 cents, compared to earnings per share of HK$0.02 cents in the prior year (Loss)/Earnings Per Share (For the three months ended June 30) | Indicator | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | (Loss)/Profit for the period attributable to owners of the Company | (731) | 74 | | Weighted average number of ordinary shares | 400,000,000 | 400,000,000 | | (Loss)/Earnings per share (HK cents) | (0.18) | 0.02 | - No diluted (loss)/earnings per share: no potential ordinary shares were issued in either period[43](index=43&type=chunk)[45](index=45&type=chunk) [8. DIVIDEND](index=12&type=section&id=8.%20DIVIDEND) The Board does not recommend the payment of any dividend for the three months ended June 30, 2022, consistent with the prior year - Dividend policy: the Board does not recommend the payment of any dividend for the three months ended June 30, 2022[44](index=44&type=chunk)[46](index=46&type=chunk) [MANAGEMENT DISCUSSION AND ANALYSIS](index=13&type=section&id=MANAGEMENT%20DISCUSSION%20AND%20ANALYSIS) This section reviews the Group's business performance during the reporting period, noting that rising crude oil prices and declining market demand due to the pandemic and the Russia-Ukraine war led to a significant drop in revenue and profit; the Group plans to monitor the pandemic and adjust business plans for recovery [BUSINESS REVIEW](index=13&type=section&id=BUSINESS%20REVIEW) The Group primarily sells diesel and related products in Hong Kong to logistics and construction companies; during the reporting period, COVID-19 and the Russia-Ukraine war caused crude oil prices to surge, the Hong Kong economy to worsen, and cross-border transport demand to fall, leading to a significant decline in the Group's revenue and profit - Principal business: sale of diesel and related products in Hong Kong, with customers mainly logistics and construction companies[48](index=48&type=chunk)[51](index=51&type=chunk) - Market environment: crude oil prices surged (Brent crude reached **US$125/barrel**), Hong Kong's economy contracted by **4.0%**, and cross-border transport demand significantly decreased[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - Financial performance: revenue decreased by **70.2%** year-on-year to **HK$19.1 million**, turning from a profit of HK$0.1 million in the prior year to a loss of **HK$0.7 million**[53](index=53&type=chunk)[54](index=54&type=chunk)[57](index=57&type=chunk) [FUTURE PROSPECTS](index=14&type=section&id=FUTURE%20PROSPECTS) Facing uncertainties and challenges from the COVID-19 pandemic, the Group will continuously monitor pandemic developments, strengthen cash flow management, integrate resources, and actively adjust business plans to ensure operational stability and prepare for business recovery once the pandemic is controlled - Challenges: COVID-19 pandemic creates an extremely challenging operating environment[55](index=55&type=chunk)[58](index=58&type=chunk) - Response strategies: closely monitor pandemic developments, strengthen cash flow management, integrate existing resources, and actively adjust business plans[55](index=55&type=chunk)[58](index=58&type=chunk) - Goal: ensure operational stability and be fully prepared for business recovery once the pandemic is controlled[55](index=55&type=chunk)[58](index=58&type=chunk) - Risk management: continuously review the pandemic situation prudently, reduce business operating risks, and take preventive measures to ensure the safety of employees and partners[56](index=56&type=chunk)[58](index=58&type=chunk) [FINANCIAL REVIEW](index=15&type=section&id=FINANCIAL%20REVIEW) This section analyzes the Group's financial performance during the reporting period, including changes and key reasons for revenue, sales volume, selling price, cost of sales, gross profit, administrative expenses, income tax, capital commitments, post-reporting events, capital expenditure, other income, and loss for the period [Revenue](index=15&type=section&id=Revenue) Group revenue significantly decreased by **70.2%** year-on-year to **HK$19.1 million**, primarily from diesel sales (accounting for **99.0%**) and AdBlue sales (accounting for **1.0%**) Revenue Composition and Change (For the three months ended June 30) | Revenue Source | 2022 (HK$ million) | 2021 (HK$ million) | Change (HK$ million) | Change (%) | Share (2022) | Share (2021) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Diesel sales | 18.9 | 63.9 | -45.0 | -70.4% | 99.0% | 99.8% | | AdBlue sales | 0.2 | 0.1 | +0.1 | +100.0% | 1.0% | 0.2% | | **Total Revenue** | **19.1** | **64.0** | **-44.9** | **-70.2%** | **100.0%** | **100.0%** | [Sales quantity](index=15&type=section&id=Sales%20quantity) Diesel sales volume significantly decreased by **86.3%** year-on-year to **2.2 million liters**, while AdBlue sales volume increased by **60.6%** to **53 thousand liters** Sales Quantity Change (For the three months ended June 30) | Product | 2022 (Unit) | 2021 (Unit) | Change (%) | | :--- | :--- | :--- | :--- | | Diesel | 2.2 million liters | 16.0 million liters | -86.3% | | AdBlue | 53 thousand liters | 33 thousand liters | +60.6% | [Selling price](index=16&type=section&id=Selling%20price) The average selling price of diesel significantly increased by **114.5%** year-on-year to **HK$8.56 per liter**, mainly due to rising market prices; the average selling price of AdBlue remained stable Average Selling Price Change (For the three months ended June 30) | Product | 2022 (HK$/liter) | 2021 (HK$/liter) | Change (%) | | :--- | :--- | :--- | :--- | | Diesel | 8.56 | 3.99 | +114.5% | | AdBlue | 3.73 | 3.72 | +0.3% | - Reason for diesel average selling price increase: upward trend in prevailing market prices[66](index=66&type=chunk)[71](index=71&type=chunk) [Cost of sales](index=16&type=section&id=Cost%20of%20sales) Cost of sales decreased by **70.8%** year-on-year to **HK$18.1 million**, consistent with the revenue decline; diesel cost remains the largest component, but unit purchase cost significantly increased by **99.2%** - Total cost of sales: **HK$18.1 million** in 2022 Q1, a year-on-year decrease of **70.8%**[68](index=68&type=chunk)[72](index=72&type=chunk) - Diesel cost: accounted for **91.2%** of cost of sales (2022), with unit purchase cost increasing by **99.2%** year-on-year to **HK$7.47 per liter**[69](index=69&type=chunk)[72](index=72&type=chunk) - Direct labor cost: **HK$0.6 million** in 2022 Q1, slightly lower than the prior year[73](index=73&type=chunk)[78](index=78&type=chunk) - Depreciation expense: increased to **HK$0.6 million** in 2022 Q1, mainly from diesel tank trucks[74](index=74&type=chunk)[78](index=78&type=chunk) [Gross profit and gross profit margin](index=17&type=section&id=Gross%20profit%20and%20gross%20profit%20margin) Gross profit decreased by **47.6%** year-on-year to **HK$1.1 million**, but gross profit margin improved from **3.3%** to **5.6%**, primarily due to reduced repair and related costs for diesel tank trucks Gross Profit and Gross Profit Margin Change (For the three months ended June 30) | Indicator | 2022 (HK$ million) | 2021 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Gross profit | 1.1 | 2.1 | -1.0 | -47.6% | | Gross profit margin | 5.6% | 3.3% | +2.3pp | N/A | - Reason for gross profit margin improvement: mainly due to lower repair and related costs for operating diesel tank trucks[75](index=75&type=chunk)[79](index=79&type=chunk) [Administrative and other operating expenses](index=17&type=section&id=Administrative%20and%20other%20operating%20expenses) Administrative and other operating expenses slightly increased by **5.0%** year-on-year to **HK$2.1 million**, primarily including administrative staff costs, professional service fees, rent, and rates - Total: **HK$2.1 million** in 2022 Q1, an increase of **HK$0.1 million** or **5.0%** year-on-year[76](index=76&type=chunk)[80](index=80&type=chunk) - Main components: administrative staff costs, professional service fees, rent and rates, etc[76](index=76&type=chunk)[80](index=80&type=chunk) [Income tax expenses](index=17&type=section&id=Income%20tax%20expenses) The Group had no assessable profit during the reporting period, resulting in zero Hong Kong income tax expense - Income tax: zero for both 2022 and 2021 due to no assessable profit[77](index=77&type=chunk)[81](index=81&type=chunk) [Capital commitments and contingent liabilities](index=18&type=section&id=Capital%20commitments%20and%20contingent%20liabilities) As of June 30, 2022, the Group had no capital commitments related to the acquisition of property, plant, and equipment - No capital commitments: as of June 30, 2022, the Group had no capital commitments[83](index=83&type=chunk)[89](index=89&type=chunk) [Events after the Reporting Period](index=18&type=section&id=Events%20after%20the%20Reporting%20Period) No significant events occurred after the reporting period up to the date of this report - No significant events: no significant events occurred after the reporting period up to the date of this report[84](index=84&type=chunk)[90](index=90&type=chunk) [Capital expenditure](index=18&type=section&id=Capital%20expenditure) For the three months ended June 30, 2022, the Group's capital expenditure was zero - Capital expenditure: zero for both 2022 and 2021[85](index=85&type=chunk)[91](index=91&type=chunk) [Other income](index=18&type=section&id=Other%20income) Other income primarily originated from the 2022 Employment Support Scheme under the Anti-epidemic Fund, aimed at providing wage subsidies to retain existing employees - Main source: wage subsidies provided by the 2022 Employment Support Scheme[86](index=86&type=chunk)[92](index=92&type=chunk) - Purpose: to retain existing employees and hire more when business recovers[86](index=86&type=chunk)[92](index=92&type=chunk) [Loss for the period](index=18&type=section&id=Loss%20for%20the%20period) The Group turned from a profit of **HK$0.1 million** in the prior year to a loss of **HK$0.7 million**, with net profit margin decreasing from **0.1%** to **-3.8%** (Loss)/Profit for the Period and Net Profit Margin Change (For the three months ended June 30) | Indicator | 2022 (HK$ million) | 2021 (HK$ million) | Change (HK$ million) | | :--- | :--- | :--- | :--- | | (Loss)/Profit for the period | (0.7) | 0.1 | -0.8 | | Net profit margin | -3.8% | 0.1% | -3.9pp | [USE OF PROCEEDS](index=19&type=section&id=USE%20OF%20PROCEEDS) The Group's net proceeds from its 2019 listing were **HK$34.8 million**, with **HK$27.2 million** utilized as of June 30, 2022; the expected timeline for some uses (e.g., purchasing diesel tank trucks and upgrading IT systems) has been extended to March 31, 2023 - Listing date: January 8, 2019[95](index=95&type=chunk)[96](index=96&type=chunk) - Net proceeds: **HK$34.8 million**[95](index=95&type=chunk)[96](index=96&type=chunk) Actual Use of Net Proceeds (As of June 30, 2022) | Purpose | Proposed allocation in prospectus (HK$ million) | Revised allocation (HK$ million) | Actual use (HK$ million) | Total unutilized (HK$ million) | Expected timeline for full utilization | | :--- | :--- | :--- | :--- | :--- | :--- | | Purchase of diesel tank trucks | 15.0 | 15.0 | 12.4 | 2.6 | Before March 31, 2023 | | Expansion of workforce | 12.5 | 1.7 | 1.7 | – | N/A | | Upgrade of IT system | 5.0 | 5.0 | – | 5.0 | Before March 31, 2023 | | Working capital | 2.3 | 13.1 | 13.1 | – | N/A | | **Total** | **34.8** | **34.8** | **27.2** | **7.6** | | - Timeline delay: unutilized proceeds for purchasing diesel tank trucks and upgrading IT systems are expected to be fully utilized by March 31, 2023[99](index=99&type=chunk) [ENVIRONMENT POLICIES AND PERFORMANCE](index=21&type=section&id=ENVIRONMENT%20POLICIES%20AND%20PERFORMANCE) The Group's operations are regulated by Hong Kong environmental laws and regulations, and it has implemented various environmental protection measures to reduce its operational impact and ensure compliance; as of the reporting date, the Group has not been penalized for environmental violations - Regulation: governed by Hong Kong environmental laws and regulations such as the Air Pollution Control Ordinance and Water Pollution Control Ordinance[102](index=102&type=chunk)[105](index=105&type=chunk) - Measures: implemented environmental protection measures to reduce air pollutant emissions and prevent leaks of petroleum products or other harmful substances[103](index=103&type=chunk)[105](index=105&type=chunk) - Compliance: continuously monitors business operations to ensure compliance with all applicable laws and regulations, with no violations recorded as of the reporting date[104](index=104&type=chunk)[106](index=106&type=chunk) [OTHER INFORMATION](index=22&type=section&id=OTHER%20INFORMATION) This section discloses other important information for the reporting period, including listed securities transactions, interests of directors and substantial shareholders, share option scheme, competing interests, and the composition and functions of corporate governance committees [Purchase, Sale or Redemption of the Company's Listed Securities](index=22&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) As of June 30, 2022, the Company had no purchases, sales, or redemptions of its listed securities - No transactions: as of June 30, 2022, the Company had no purchases, sales, or redemptions of any listed securities[108](index=108&type=chunk)[110](index=110&type=chunk) [Interests and short positions of Directors and chief executive in the Shares, underlying Shares or debentures of the Company and its associated corporations](index=22&type=section&id=Interests%20and%20short%20positions%20of%20Directors%20and%20chief%20executive%20in%20the%20Shares,%20underlying%20Shares%20or%20debentures%20of%20the%20Company%20and%20its%20associated%20corporations) As of June 30, 2022, Mr. Law Ming Yik, Chairman and Executive Director, held a **62.78%** long position in the Company's shares through a controlled corporation Directors' Long Positions in Shares (As of June 30, 2022) | Name of Director | Capacity/Nature of interest | Number of Shares | Percentage of issued share capital | | :--- | :--- | :--- | :--- | | Mr. Law Ming Yik | Interest in controlled corporation | 251,110,000 shares | 62.78% | - Mr. Law Ming Yik holds Company shares through Full Fortress, which he wholly owns[115](index=115&type=chunk)[117](index=117&type=chunk) - No other disclosures: no other Directors or chief executive had disclosable interests or short positions besides those mentioned above[114](index=114&type=chunk)[116](index=116&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=24&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 June 30, 2022, substantial shareholders Mr. Law Ming Yik and Full Fortress Group Limited each held a **62.78%** long position in the Company's shares Substantial Shareholders' Long Positions in Shares (As of June 30, 2022) | Name of Shareholder | Capacity/Nature of interest | Number of Shares held | Percentage of shareholding | | :--- | :--- | :--- | :--- | | Mr. Law Ming Yik | Interest in controlled corporation | 251,110,000 shares | 62.78% | | Full Fortress Group Limited | Beneficial owner | 251,110,000 shares | 62.78% | - Mr. Law Ming Yik is deemed to be interested in all shares held by Full Fortress[121](index=121&type=chunk)[123](index=123&type=chunk) - No other disclosures: no other persons had disclosable interests or short positions besides those mentioned above[122](index=122&type=chunk)[123](index=123&type=chunk) [Share Option Scheme](index=25&type=section&id=Share%20Option%20Scheme) The Company's Share Option Scheme was conditionally adopted on December 11, 2018, effective from the listing date; no share options were granted, exercised, lapsed, or cancelled, nor were there any outstanding share options during or as of the reporting date - Adoption date: December 11, 2018[124](index=124&type=chunk)[129](index=129&type=chunk) - Effective date: listing date[124](index=124&type=chunk)[129](index=129&type=chunk) - Status: no share options were granted, exercised, lapsed, or cancelled, nor were there any outstanding share options during or as of the reporting date[125](index=125&type=chunk)[130](index=130&type=chunk) [Competing Interests](index=25&type=section&id=Competing%20Interests) The Directors confirm that as of the reporting date, neither the Company's controlling shareholders, Directors, nor their close associates held any interests in businesses competing with the Group's operations - No competing interests: Directors confirm that controlling shareholders, Directors, and their close associates have no interests competing with the Group's business[126](index=126&type=chunk)[131](index=131&type=chunk) [Audit Committee](index=25&type=section&id=Audit%20Committee) The Audit Committee, established on December 11, 2018, comprises three independent non-executive Directors, chaired by Mr. Ho Cheung Ki; the Committee reviewed the unaudited condensed consolidated financial statements and deemed them compliant with applicable accounting standards and GEM Listing Rules - Establishment date: December 11, 2018[127](index=127&type=chunk)[132](index=132&type=chunk) - Composition: three independent non-executive Directors (Mr. Ho Cheung Ki, Mr. Wong Ka Chun, Mr. Fan Tak Wai), with Mr. Ho Cheung Ki as Chairman[127](index=127&type=chunk)[132](index=132&type=chunk) - Functions: reviewed the unaudited condensed consolidated financial statements and confirmed their compliance with accounting standards and GEM Listing Rules[128](index=128&type=chunk)[133](index=133&type=chunk) [Nomination Committee](index=26&type=section&id=Nomination%20Committee) The Nomination Committee, established on December 11, 2018, comprises two independent non-executive Directors and one executive Director, chaired by Mr. Law Ming Yik; its main responsibilities include regularly reviewing Board composition, identifying qualified director candidates, assessing independent directors' independence, and making appointment recommendations - Establishment date: December 11, 2018[135](index=135&type=chunk)[138](index=138&type=chunk) - Composition: two independent non-executive Directors (Mr. Wong Ka Chun, Mr. Fan Tak Wai) and one executive Director (Mr. Law Ming Yik), with Mr. Law Ming Yik as Chairman[135](index=135&type=chunk)[138](index=138&type=chunk) - Main functions: review Board diversity, structure, size, and composition; identify qualified director candidates; assess independent directors' independence; and make recommendations for director appointments or re-appointments[136](index=136&type=chunk)[138](index=138&type=chunk) - Meeting frequency: should hold at least one meeting annually[137](index=137&type=chunk)[139](index=139&type=chunk) [Remuneration Committee](index=27&type=section&id=Remuneration%20Committee) The Remuneration Committee, established on December 11, 2018, comprises two independent non-executive Directors and one executive Director, chaired by Mr. Fan Tak Wai; its primary responsibility is to advise the Board on the overall remuneration policy and structure for Directors and senior management - Establishment date: December 11, 2018[142](index=142&type=chunk)[145](index=145&type=chunk) - Composition: two independent non-executive Directors (Mr. Fan Tak Wai, Mr. Ho Cheung Ki) and one executive Director (Mr. Law Ming Yik), with Mr. Fan Tak Wai as Chairman[142](index=142&type=chunk)[145](index=145&type=chunk) - Main functions: advise the Board on remuneration policy and structure for Directors and senior management; review and approve management remuneration proposals; ensure Directors do not determine their own remuneration[143](index=143&type=chunk)[145](index=145&type=chunk) - Remuneration determination: references market benchmarks and considers individual capabilities, responsibilities, performance, and Group results[144](index=144&type=chunk)[146](index=146&type=chunk) - Meeting frequency: should hold at least one meeting annually[144](index=144&type=chunk)[146](index=146&type=chunk) [Directors' Securities Transactions](index=28&type=section&id=Directors'%20Securities%20Transactions) The Company has adopted a code of conduct for Directors' securities transactions, and all Directors confirm compliance with this code and the trading standards stipulated by the GEM Listing Rules - Code of conduct: the Company has adopted a code of conduct for Directors' securities transactions, with terms no less exacting than those required by the GEM Listing Rules[148](index=148&type=chunk)[150](index=150&type=chunk) - Compliance: all Directors confirm compliance with the code and stipulated trading standards[148](index=148&type=chunk)[150](index=150&type=chunk) [Corporate Governance](index=28&type=section&id=Corporate%20Governance) The Company is committed to maintaining high corporate governance standards and has complied with the Corporate Governance Code in Appendix 15 of the GEM Listing Rules from its listing date to June 30, 2022 - Commitment: committed to maintaining and ensuring high corporate governance standards[149](index=149&type=chunk)[151](index=151&type=chunk) - Compliance: has complied with the Corporate Governance Code in Appendix 15 of the GEM Listing Rules from its listing date to June 30, 2022[149](index=149&type=chunk)[151](index=151&type=chunk) [SUFFICIENCY OF PUBLIC FLOAT](index=29&type=section&id=SUFFICIENCY%20OF%20PUBLIC%20FLOAT) As of the date of this report, the Company has maintained a sufficient public float as required by the GEM Listing Rules - Public float: as of the reporting date, the Company has maintained a sufficient public float as required by the GEM Listing Rules[153](index=153&type=chunk)[155](index=155&type=chunk)

[Corporate Information](index=3&type=section&id=CORPORATE%20INFORMATION) [Board of Directors Composition](index=4&type=section&id=BOARD%20OF%20DIRECTORS) The Board of Directors comprises two executive directors and three independent non-executive directors, with Mr. Law Ming Yik as Chairman and Mr. Li Yi Hao as Chief Executive Officer, bringing diverse professional backgrounds and experience - The Board of Directors consists of **5** directors, including **2** executive directors and **3** independent non-executive directors[8](index=8&type=chunk) - Mr. Law Ming Yik serves as Chairman, and Mr. Li Yi Hao serves as Chief Executive Officer[8](index=8&type=chunk) - Independent non-executive directors include Mr. Fan Tak Wai, Mr. Wong Ka Chun, and Mr. Ho Cheung Kong, with Mr. Ho Cheung Kong serving as Chairman of the Audit Committee[8](index=8&type=chunk)[10](index=10&type=chunk) [Committees](index=4&type=section&id=COMMITTEES) The company has established Audit, Remuneration, and Nomination Committees to ensure effective corporate governance, with independent non-executive directors serving as chairpersons or key members - The Audit Committee Chairman is Mr. Ho Cheung Kong, with members including Mr. Wong Ka Chun and Mr. Fan Tak Wai[10](index=10&type=chunk) - The Remuneration Committee Chairman is Mr. Fan Tak Wai, with members including Mr. Law Ming Yik and Mr. Ho Cheung Kong[10](index=10&type=chunk) - The Nomination Committee Chairman is Mr. Law Ming Yik, with members including Mr. Wong Ka Chun and Mr. Fan Tak Wai[10](index=10&type=chunk) [Key Contacts and Information](index=4&type=section&id=KEY%20CONTACTS%20AND%20INFORMATION) The company's authorised representatives are Mr. Law Ming Yik and Mr. Li Yi Hao, with Mr. Law also serving as Compliance Officer and Mr. Leung Cheuk Wai as Company Secretary; the company is registered in the Cayman Islands with Hong Kong headquarters in Yuen Long and stock code 8631 - Authorised Representatives: Mr. Law Ming Yik, Mr. Li Yi Hao[9](index=9&type=chunk) - Compliance Officer: Mr. Law Ming Yik[9](index=9&type=chunk) - Company Secretary: Mr. Leung Cheuk Wai (Practising Accountant)[9](index=9&type=chunk) - Company Website: www.skhl.com.hk, Stock Code: **8631**[11](index=11&type=chunk) [Chairman's Statement](index=6&type=section&id=CHAIRMAN'S%20STATEMENT) [Performance Overview and Market Conditions](index=6&type=section&id=OVERVIEW%20OF%20PERFORMANCE%20AND%20MARKET%20CONDITIONS) Amidst the ongoing COVID-19 pandemic, Hong Kong and mainland China's economies deteriorated, and rising crude oil prices increased procurement and operating costs, leading to a slight revenue decrease but significantly narrowed losses - Hong Kong and mainland China's economies continued to deteriorate due to the COVID-19 pandemic, leading to major city lockdowns and slowed economic activity[14](index=14&type=chunk) - Crude oil prices continuously rose throughout the year, intensifying procurement and operating cost pressures[15](index=15&type=chunk) Key Financial Data for FY2022 (vs. FY2021) | Metric | FY2022 (HK$ million) | FY2021 (HK$ million) | Change | Change Rate | Original Chunk Ref | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 230.9 | 240.1 | ↓9.2 | ↓3.8% | [16] | | Loss Attributable to Owners | 3.1 | 7.5 | ↓4.4 | ↓58.7% | [16] | [Future Outlook and Strategy](index=7&type=section&id=FUTURE%20OUTLOOK%20AND%20STRATEGY) Facing pandemic challenges, the company will strive to maintain stable business scale, enhance operational efficiency, and adapt flexibly to new challenges, gradually implementing strategies to solidify its position as a long-established diesel supplier in Hong Kong and create long-term shareholder value - The company will strive to maintain a stable business scale, enhance operational efficiency, and remain highly vigilant and flexible to adapt to new challenges[19](index=19&type=chunk) - Gradually implement business strategies to consolidate the Group's position as a long-established diesel supplier in Hong Kong, creating long-term value for shareholders[19](index=19&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 primarily sells diesel and related products in Hong Kong to logistics and construction companies; COVID-19 impacted cross-border logistics, reducing diesel sales, though Hong Kong construction recovery boosted some demand, while rising crude oil prices increased procurement costs and pressured cash flow - The Group primarily sells diesel and related products in Hong Kong, with services including procurement and transportation[23](index=23&type=chunk) - Major customers are logistics and construction companies, with **eight** diesel tanker trucks as of March 31, 2022[23](index=23&type=chunk) - The COVID-19 pandemic led to major city lockdowns in mainland China and slowed economic activity in Hong Kong, restricting cross-border transportation and reducing diesel demand in the logistics industry[24](index=24&type=chunk)[26](index=26&type=chunk) - Crude oil prices surged, with Brent crude exceeding **US$100/barrel**, increasing diesel procurement costs and pressuring operating cash flow[25](index=25&type=chunk) - Hong Kong construction projects resumed, leading to improved diesel demand for construction site machinery[26](index=26&type=chunk) [Future Prospects](index=9&type=section&id=FUTURE%20PROSPECTS) Amidst COVID-19 uncertainty, the Group will closely monitor the pandemic, strengthen cash flow management, integrate resources, and adjust business plans to ensure stable operations and prepare for post-pandemic recovery, while continuously implementing preventive measures for employee and partner safety - The Group will continue to closely monitor COVID-19 developments, focus on cash flow management, integrate existing resources, and actively adjust business plans[31](index=31&type=chunk) - Ensuring smooth operations through difficult times and being fully prepared for business recovery once the pandemic is under control[31](index=31&type=chunk) - Continuously and cautiously reviewing the pandemic situation to reduce business operating risks and implementing appropriate preventive measures to ensure the safety of employees and partners[32](index=32&type=chunk) [Financial Review](index=10&type=section&id=FINANCIAL%20REVIEW) The Group's FY2022 revenue decreased by **3.8%** to **HK$230.9 million** due to reduced diesel sales from the pandemic; despite lower volume, average diesel selling price rose **67.6%**, gross profit surged **228.6%** to **HK$6.9 million**, and gross margin improved from **0.9%** to **3.0%**, driven by increased sales to high-margin construction clients and lower maintenance costs, narrowing the annual loss to **HK$3.1 million** Revenue Overview | Metric | FY2022 (HK$ million) | FY2021 (HK$ million) | Change (HK$ million) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 230.9 | 240.1 | ↓9.2 | ↓3.8% | | Diesel Sales Revenue | 230.4 | 239.4 | ↓9.0 | ↓3.8% | | Urea Solution Sales Revenue | 0.5 | 0.5 | 0 | 0% | Sales Volume and Average Selling Price Changes | Product | FY2022 Sales Volume (thousand liters) | FY2021 Sales Volume (thousand liters) | Sales Volume Change Rate | FY2022 Average Selling Price (HK$/liter) | FY2021 Average Selling Price (HK$/liter) | Selling Price Change Rate | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Diesel | 50.0 | 87.1 | ↓42.6% | 4.61 | 2.75 | ↑67.6% | | Urea Solution | 120.2 | 102.0 | ↑17.8% | 4.00 | 4.51 | ↓11.3% | Costs and Profit | Metric | FY2022 (HK$ million) | FY2021 (HK$ million) | Change (HK$ million) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Cost of Sales | 224.0 | 238.0 | ↓14.0 | ↓5.9% | | Diesel Cost | 217.1 | 230.4 | ↓13.3 | ↓5.8% | | Average Unit Procurement Cost of Diesel (HK$/liter) | 4.34 | 2.65 | ↑1.69 | ↑63.8% | | Gross Profit | 6.9 | 2.1 | ↑4.8 | ↑228.6% | | Gross Profit Margin | 3.0% | 0.9% | ↑2.1% | - | | Administrative and Other Operating Expenses | 9.0 | 9.4 | ↓0.4 | ↓4.3% | | Loss for the Year | 3.1 | 7.5 | ↓4.4 | ↓58.7% | | Net Profit Margin | -1.36% | -3.12% | ↑1.76% | - | - The increase in gross profit margin was primarily due to higher diesel sales to more profitable construction clients and reduced maintenance costs for diesel tanker trucks[53](index=53&type=chunk)[56](index=56&type=chunk) [Liquidity and Capital Resources](index=13&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The Group funds operations through operating cash and bank financing; as of March 31, 2022, net current assets were **HK$42.3 million**, the current ratio was **3.2**, available bank facilities were **HK$11 million**, with **HK$10.5 million** utilised, and the gearing ratio significantly increased from **2.3%** to **20.1%** - The Group funds its operations through cash generated from operating activities and bank financing[60](index=60&type=chunk) Liquidity Ratios | Metric | March 31, 2022 (HK$ million) | March 31, 2021 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Net Current Assets | 42.3 | 45.77 | ↓3.47 | | Current Assets | 61.8 | 55.185 | ↑6.649 | | Current Liabilities | 19.6 | 9.415 | ↑10.145 | | Current Ratio | 3.2 | 5.86 | ↓2.66 | | Available Banking Facilities | 11.0 | 5.0 | ↑6.0 | | Utilised Banking Facilities | 10.5 | 1.27 | ↑9.23 | | Gearing Ratio | 20.1% | 2.3% | ↑17.8% | [Major Risks and Uncertainties](index=14&type=section&id=MAJOR%20RISKS%20AND%20UNCERTAINTIES) Key risks include inaccurate oil and gas price assumptions, reliance on a single petroleum supplier, customer attrition due to price competition and economic slowdown, and operational disruptions from staff turnover, which the Group mitigates through risk management practices - If the Group uses incorrect oil and gas price assumptions to evaluate projects and business opportunities, its profitability, cash flow, and financial position may be adversely affected[72](index=72&type=chunk) - Diesel transportation services may be interrupted if the Group relies on a single petroleum supplier in Hong Kong[72](index=72&type=chunk) - Customer attrition due to price competition and global economic slowdown[72](index=72&type=chunk) - Operational disruptions due to difficulty in retaining employees[72](index=72&type=chunk) [Foreign Currency Exposure Risk](index=15&type=section&id=FOREIGN%20CURRENCY%20EXPOSURE%20RISK) The Group primarily operates in Hong Kong and did not face any foreign exchange risk for the year ended March 31, 2022 - The Group primarily operates in Hong Kong and did not face any foreign exchange risk for the year ended March 31, 2022[73](index=73&type=chunk)[77](index=77&type=chunk) [Capital Structure](index=15&type=section&id=CAPITAL%20STRUCTURE) As of March 31, 2022, the Group's capital structure included equity attributable to owners of approximately **HK$52 million**, with share capital consisting solely of ordinary shares, and no changes since its listing on January 8, 2019 - As of March 31, 2022, the Group's capital structure included equity attributable to owners of approximately **HK$52.0 million**[74](index=74&type=chunk)[78](index=78&type=chunk) - The Group's share capital consists solely of ordinary shares, with no changes in its capital structure since its listing on January 8, 2019[74](index=74&type=chunk)[78](index=78&type=chunk) [Treasury Policies](index=15&type=section&id=TREASURY%20POLICIES) The Group adopts prudent financial management principles, maintaining a robust liquidity position by continuously assessing customer creditworthiness to mitigate credit risk and closely monitoring liquidity to meet funding requirements - The Group adopted prudent financial management principles, maintaining a robust liquidity position for the year ended March 31, 2022[75](index=75&type=chunk)[79](index=79&type=chunk) - Credit risk is mitigated by continuously assessing customers' creditworthiness and financial standing[75](index=75&type=chunk)[79](index=79&type=chunk) - The Board closely monitors the Group's liquidity position to ensure its asset, liability, and other commitment liquidity structure meets its funding needs at all times[75](index=75&type=chunk)[79](index=79&type=chunk) [Significant Investments, Acquisitions and Disposals](index=15&type=section&id=SIGNIFICANT%20INVESTMENTS,%20MATERIAL%20ACQUISITIONS%20AND%20DISPOSALS) For the year ended March 31, 2022, the Group did not undertake any significant investments, material acquisitions, or disposals of subsidiaries, associates, or joint ventures - For the year ended March 31, 2022, the Group did not undertake any significant investments, material acquisitions, or disposals of subsidiaries, associates, or joint ventures[76](index=76&type=chunk)[80](index=80&type=chunk) [Capital Commitments and Capital Expenditure](index=16&type=section&id=CAPITAL%20COMMITMENTS%20AND%20CAPITAL%20EXPENDITURE) As of March 31, 2022, the Group had no capital commitments for property and equipment acquisitions; capital expenditure for the period significantly decreased by **87.1%** to **HK$0.4 million**, primarily for vehicle purchases - As of March 31, 2022, the Group had no capital commitments for the acquisition of property and equipment[82](index=82&type=chunk)[87](index=87&type=chunk) Capital Expenditure Changes | Metric | FY2022 (HK$ million) | FY2021 (HK$ million) | Change (HK$ million) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Capital expenditure | 0.4 | 3.1 | ↓2.7 | ↓87.1% | - Capital expenditure was primarily related to vehicle purchases[83](index=83&type=chunk)[88](index=88&type=chunk) [Dividends](index=16&type=section&id=DIVIDENDS) The Board does not recommend the payment of any dividends for the years ended March 31, 2021 and 2022 - The Board does not recommend the payment of any dividends for the years ended March 31, 2021 and 2022[85](index=85&type=chunk)[90](index=90&type=chunk) [Events After the Reporting Period](index=16&type=section&id=EVENTS%20AFTER%20THE%20REPORTING%20PERIOD) No significant events occurred after the financial year ended March 31, 2022, up to the date of this report - No significant events occurred after the financial year ended March 31, 2022, up to the date of this report[86](index=86&type=chunk)[91](index=91&type=chunk) [Comparison of Business Strategy Implementation Plans with Actual Progress](index=17&type=section&id=COMPARISON%20OF%20IMPLEMENTATION%20PLANS%20FOR%20BUSINESS%20STRATEGIES%20WITH%20ACTUAL%20IMPLEMENTATION%20PROGRESS) The Group has proceeded with planned diesel tanker fleet expansion by ordering and deploying new vehicles, while IT system upgrades are still in discussion with potential vendors regarding requirements and specifications; human resources recruitment for drivers, logistics assistants, and senior accounting staff has progressed as planned Comparison of Business Strategy Implementation Plans with Actual Progress | Business Strategy | Plan (as at March 31, 2022) | Actual Progress (as at March 31, 2022) | Original Chunk Ref | | :--- | :--- | :--- | :--- | | Expand and Improve Diesel Tanker Fleet | Order two new diesel tankers; replace two existing diesel tankers; order one new diesel tanker | Two new diesel tankers ordered and put into use in Oct 2019; two new diesel tankers ordered and put into use in Apr 2020; one new diesel tanker ordered in May 2020 and put into use in Jun 2021 | [95, 96, 98] | | Enhance IT and Systems | Purchase Enterprise Resource Planning System | Discussing requirements and specifications for new office administrative IT system upgrade with potential vendors | [99] | | Strengthen Manpower | Recruit four drivers and two logistics assistants; recruit two accounting staff; recruit one administrative staff | As of March 31, 2020, four drivers and two logistics assistants employed; one senior accountant employed; one administrative staff employed in May 2019 | [99] | [Use of Proceeds](index=20&type=section&id=USE%20OF%20PROCEEDS) The company listed on January 8, 2019, with net proceeds from the share offer of approximately **HK$34.8 million**; as of March 31, 2022, **HK$27.2 million** has been used, with **HK$7.6 million** remaining, and the utilisation of funds for diesel tanker purchases and IT system upgrades is delayed, expected to be fully deployed by March 31, 2023 - Net proceeds from the share offer were approximately **HK$34.8 million**[102](index=102&type=chunk)[103](index=103&type=chunk) Actual Use of Net Proceeds (as at March 31, 2022) | Purpose | Allocation as per Prospectus (HK$ million) | Revised Allocation (HK$ million) | Actual Use (HK$ million) | Total Unused Amount (HK$ million) | Expected Full Utilisation Timeline | | :--- | :--- | :--- | :--- | :--- | :--- | | Purchase Diesel Tankers | 15.0 | 15.0 | 12.4 | 2.6 | Before March 31, 2023 | | Manpower Expansion | 12.5 | 1.7 | 1.7 | – | N/A | | Upgrade IT Systems | 5.0 | 5.0 | – | 5.0 | Before March 31, 2023 | | Working Capital | 2.3 | 13.1 | 13.1 | – | N/A | | **Total** | **34.8** | **34.8** | **27.2** | **7.6** | | - The utilisation of funds for diesel tanker purchases and IT system upgrades is delayed, expected to be fully deployed by March 31, 2023[106](index=106&type=chunk) [Employees and Remuneration Policies](index=22&type=section&id=EMPLOYEES%20AND%20REMUNERATION%20POLICIES) As of March 31, 2022, the Group had **23** employees with total staff costs of **HK$7.6 million**; remuneration policy is based on market levels, employee performance, qualifications, experience, and position, and is regularly reviewed Employee Headcount and Costs | Metric | March 31, 2022 | March 31, 2021 | | :--- | :--- | :--- | | Total Employees | 23 | 27 | | Total Staff Costs (HK$ million) | 7.6 | 7.3 | - Remuneration (including employee benefits) is maintained at market levels and regularly reviewed[108](index=108&type=chunk)[111](index=111&type=chunk) - Employee remuneration and related benefits are determined based on performance, qualifications, experience, position, and the Group's business performance[108](index=108&type=chunk)[111](index=111&type=chunk) [Environmental Policies and Performance](index=22&type=section&id=ENVIRONMENT%20POLICIES%20AND%20PERFORMANCE) The Group's primary business is regulated by Hong Kong environmental laws and regulations, such as the Air Pollution Control Ordinance and Water Pollution Control Ordinance; the Group prioritises environmental protection, implementing measures to minimise operational impact on the environment and natural resources, with detailed policies and performance outlined in the Environmental, Social and Governance Report - The Group's primary business is regulated by Hong Kong environmental laws and regulations, including the Air Pollution Control Ordinance and Water Pollution Control Ordinance[109](index=109&type=chunk)[112](index=112&type=chunk) - The Group recognises the importance of environmental protection and has implemented various measures to minimise the operational impact on the environment and natural resources[109](index=109&type=chunk)[112](index=112&type=chunk) [Corporate Governance Report](index=23&type=section&id=CORPORATE%20GOVERNANCE%20REPORT) [Board of Directors](index=23&type=section&id=BOARD%20OF%20DIRECTORS_CG) The Board is committed to establishing high corporate governance standards, adhering to all applicable codes, and is responsible for overall strategy, management objectives, and performance oversight, delegating daily management while ensuring independence and diversity through its professionally qualified and experienced members - The Board is committed to establishing and ensuring high standards of corporate governance within the Group, complying with all applicable code provisions in the Corporate Governance Code[114](index=114&type=chunk)[115](index=115&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - The Board's primary responsibilities include formulating the Group's overall strategy, setting management objectives, and monitoring management performance[116](index=116&type=chunk)[120](index=120&type=chunk) - The Board comprises **two** executive directors and **three** independent non-executive directors, meeting GEM Listing Rules requirements and possessing sufficient independence[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) [Board Meetings and Training](index=26&type=section&id=BOARD%20MEETINGS%20AND%20TRAINING) The Board holds at least four regular meetings annually, supported by Audit, Remuneration, and Nomination Committees; meeting notices and materials are distributed in advance for informed decision-making, and all directors engage in continuous professional development to update knowledge and skills, complying with corporate governance code requirements - The Board holds at least **four** regular meetings annually and has established Audit, Remuneration, and Nomination Committees[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) - Notices and agendas for regular Board meetings are provided to all directors at least **14** days before the meeting[133](index=133&type=chunk)[135](index=135&type=chunk) - All directors have undertaken continuous professional development by attending training courses or reviewing materials on corporate governance and regulatory topics, complying with Code Provision C.1.4[149](index=149&type=chunk)[153](index=153&type=chunk) Board and Committee Meeting Attendance (for the year ended March 31, 2022) | Director Name | Board | Audit Committee | Remuneration Committee | Nomination Committee | AGM | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Law Ming Yik (Chairman) | 4/4 | – | 1/1 | 1/1 | 1/1 | | Mr. Li Yi Hao | 4/4 | – | – | – | 1/1 | | Mr. Fan Tak Wai | 4/4 | 4/4 | 1/1 | 1/1 | 1/1 | | Mr. Wong Ka Chun | 4/4 | 4/4 | – | 1/1 | 1/1 | | Mr. Ho Cheung Kong | 4/4 | 4/4 | 1/1 | – | 1/1 | [Chairman and Chief Executive Officer](index=29&type=section&id=CHAIRMAN%20AND%20CHIEF%20EXECUTIVE%20OFFICER) Mr. Law Ming Yik serves as Chairman, leading the Board and overall corporate management strategy, while Mr. Li Yi Hao, as Chief Executive Officer, implements business strategies and oversees overall Group operations; this clear division of responsibilities aligns with corporate governance codes, ensuring effective management oversight - Mr. Law Ming Yik serves as Chairman, responsible for leading the Board and the overall corporate management of the Group's business development strategy[158](index=158&type=chunk)[160](index=160&type=chunk) - Mr. Li Yi Hao serves as Chief Executive Officer, responsible for implementing business strategies, policies, and objectives set by the Board, and is accountable to the Board for the Group's overall operations[158](index=158&type=chunk)[160](index=160&type=chunk) - The segregation of duties between the Chairman and Chief Executive Officer complies with Code Provision C.2.1 of the Corporate Governance Code, ensuring effective oversight of management[158](index=158&type=chunk)[160](index=160&type=chunk) [Board Committees](index=30&type=section&id=BOARD%20COMMITTEE) The company has Audit, Remuneration, and Nomination Committees, each with clear written terms of reference; the Audit Committee oversees internal controls and financial statements, the Remuneration Committee sets compensation policies for directors and senior management, and the Nomination Committee handles board member nominations and diversity policy - The Audit Committee comprises **three** independent non-executive directors, with Mr. Ho Cheung Kong as Chairman; its primary responsibilities include providing independent opinions, overseeing internal control and risk management systems, and reviewing financial statements[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[167](index=167&type=chunk) - The Remuneration Committee comprises **two** independent non-executive directors and **one** executive director, with Mr. Fan Tak Wai as Chairman; its primary responsibility is to provide recommendations to the Board on the remuneration policy and structure for directors and senior management[170](index=170&type=chunk)[171](index=171&type=chunk)[175](index=175&type=chunk) - The Nomination Committee comprises **two** independent non-executive directors and **one** executive director, with Mr. Law Ming Yik as Chairman; its primary responsibilities include regularly reviewing the Board's diversity policy, structure, size, and composition, and identifying suitable candidates[183](index=183&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk)[191](index=191&type=chunk) Senior Management Remuneration Range (for the year ended March 31, 2022) | Remuneration Range (HK$) | Number of Individuals | | :--- | :--- | | 0 to 1,000,000 | 2 | | 1,000,000 to 2,000,000 | 1 | [Accountability and Audit](index=34&type=section&id=ACCOUNTABILITY%20AND%20AUDIT) The Board is responsible for ensuring true and fair financial statements, maintaining proper accounting records, and safeguarding assets; the auditor is responsible for the financial statements and has reviewed audit and non-audit service fees; the company has no corporate governance committee, with its functions performed by the Board - The Board is responsible for ensuring that the Group's consolidated financial statements for each financial year present a true and fair view, and for maintaining proper accounting records and safeguarding assets[195](index=195&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) - The auditor's reporting responsibilities are set out in the Independent Auditor's Report[197](index=197&type=chunk)[200](index=200&type=chunk) Auditor's Remuneration (for the year ended March 31, 2022) | Service Type | Amount (HK$) | | :--- | :--- | | Annual Audit Services | 480,000 | | Certain Agreed-Upon Procedures Services | 140,000 | | **Total** | **620,000** | - The company has not established a corporate governance committee, with its functions performed by the Board[204](index=204&type=chunk)[205](index=205&type=chunk) [Board Diversity Policy](index=36&type=section&id=BOARD%20DIVERSITY%20POLICY) The company has adopted a Board Diversity Policy considering factors like gender, age, culture, education, professional experience, skills, and knowledge; the Nomination Committee is satisfied with current board diversity and plans to prioritise enhancing gender diversity by December 31, 2024 - The Board Diversity Policy considers factors such as gender, age, cultural and educational background, professional experience, skills, and knowledge[207](index=207&type=chunk)[211](index=211&type=chunk) - The Nomination Committee is satisfied with the Board's diversity in terms of independence, skills, industry and professional experience, cultural and educational background, and tenure of board members[208](index=208&type=chunk)[211](index=211&type=chunk) - The Nomination Committee agreed to proactively identify suitable candidates to enhance gender diversity as a primary consideration by December 31, 2024[208](index=208&type=chunk)[211](index=211&type=chunk) [Securities Transactions by Directors](index=36&type=section&id=SECURITIES%20TRANSACTIONS%20BY%20DIRECTORS) The company has adopted the GEM Listing Rules' code of conduct for directors' securities transactions and confirmed all directors complied with it during the reporting period - The company has adopted Rules **5.48** to **5.67** of the GEM Listing Rules as its own code of conduct for directors' securities transactions[210](index=210&type=chunk)[212](index=212&type=chunk) - The company has confirmed that all directors complied with the code of conduct for the entire year ended March 31, 2022, and up to the date of this report[210](index=210&type=chunk)[212](index=212&type=chunk) [Communication with Shareholders](index=37&type=section&id=COMMUNICATION%20WITH%20SHAREHOLDERS) The company is committed to continuous communication with shareholders through AGMs and other meetings, encouraging participation; all resolutions will be voted on by poll, with results promptly published, and an open, effective investor communication policy will be maintained, providing timely business updates - The company is committed to continuous communication with shareholders, particularly through Annual General Meetings or other general meetings, and encourages shareholder participation[213](index=213&type=chunk)[219](index=219&type=chunk) - All resolutions proposed at general meetings will be voted on by poll, and the voting results will be published on the company's and Stock Exchange's websites in a timely manner after each general meeting[214](index=214&type=chunk)[219](index=219&type=chunk) - The company will continue to maintain an open and effective investor communication policy, providing investors with timely updates on the Group's business in compliance with relevant regulatory requirements[215](index=215&type=chunk)[219](index=219&type=chunk) [Dividend Policy](index=37&type=section&id=DIVIDEND%20POLICY) The Board has adopted a dividend policy requiring sufficient cash reserves for working capital and future growth when proposing or declaring dividends; dividend distribution depends on financial performance, cash flow, business strategy, capital needs, and other factors, payable in cash or scrip, and the policy will be reviewed periodically - The Board has adopted a dividend policy, requiring the company to maintain sufficient cash reserves to meet its working capital needs and future business growth when proposing or declaring dividends[218](index=218&type=chunk)[222](index=222&type=chunk) - Dividend distribution will consider factors such as financial performance, cash flow position, business conditions and strategies, future operations and profitability, capital requirements and expenditure plans, and shareholders' interests[224](index=224&type=chunk)[228](index=228&type=chunk) - The company may declare and pay dividends in cash, by way of scrip dividends, or in other forms deemed appropriate by the Board[225](index=225&type=chunk)[227](index=227&type=chunk) - The Board reviews the dividend policy from time to time as needed[230](index=230&type=chunk)[234](index=234&type=chunk) [Shareholders' Rights](index=39&type=section&id=SHAREHOLDERS'%20RIGHTS) Shareholders holding at least one-tenth of the company's paid-up capital have the right to requisition an extraordinary general meeting, and may direct enquiries to the Board, with the Company Secretary facilitating such communications - Shareholders holding not less than **one-tenth** of the company's paid-up capital have the right to requisition an extraordinary general meeting by written request to the Board or Company Secretary[231](index=231&type=chunk)[235](index=235&type=chunk) - Shareholders may direct enquiries to the Board, with the Company Secretary responsible for forwarding such communications[238](index=238&type=chunk)[241](index=241&type=chunk) [Investor Relations and Inside Information Disclosure](index=40&type=section&id=INVESTOR%20RELATIONS%20AND%20INSIDE%20INFORMATION%20DISCLOSURE) The company updates business development and financial performance through annual, interim, and quarterly reports, using its website as a communication platform; an inside information disclosure policy is in place, with the Board responsible for timely, accurate, and complete disclosure, and directors, management, and employees required to maintain confidentiality of unpublished information - The company updates its shareholders on its latest business developments and financial performance through annual, interim, and quarterly reports[239](index=239&type=chunk)[242](index=242&type=chunk) - The company has established an inside information disclosure policy, with the Board responsible for timely dissemination of accurate and complete inside information regarding the Group to the market[240](index=240&type=chunk)[243](index=243&type=chunk) - The policy strictly requires directors, management, and employees to keep unpublished inside information confidential and prohibits them from trading in the company's securities if they possess such information[240](index=240&type=chunk)[243](index=243&type=chunk) [Company Secretary](index=41&type=section&id=COMPANY%20SECRETARY) Mr. Leung Cheuk Wai, the Company Secretary, advises the Board on corporate governance matters, ensures compliance with board procedures and applicable laws, and facilitates communication between directors and management; Mr. Leung has completed the professional training required by the GEM Listing Rules - Mr. Leung Cheuk Wai, the Company Secretary, advises the Board on corporate governance matters and ensures compliance with Board policies and procedures, applicable laws, rules, and regulations[245](index=245&type=chunk)[249](index=249&type=chunk) - The Company Secretary facilitates communication among directors and between directors and management[245](index=245&type=chunk)[249](index=249&type=chunk) - For the year ended March 31, 2022, the Company Secretary participated in over **15** hours of relevant professional training in compliance with Rule **5.15** of the GEM Listing Rules[246](index=246&type=chunk)[249](index=249&type=chunk) [Risk Management and Internal Control](index=41&type=section&id=RISK%20MANAGEMENT%20AND%20INTERNAL%20CONTROL) The Board is fully responsible for establishing and maintaining effective risk management and internal control systems to achieve business objectives, safeguard assets, ensure reliable financial information, and comply with regulations; the Group has established organisational structures and policies, identifying strategic, operational, financial, and compliance risks, with the Board, through the Audit Committee, annually reviewing system effectiveness and planning to continue engaging external professionals for internal audit functions - The Board is fully responsible for establishing and maintaining appropriate and effective risk management and internal control systems for the Group[247](index=247&type=chunk)[250](index=250&type=chunk) - The systems aim to help achieve business objectives, safeguard assets, ensure proper accounting records for reliable financial information, and ensure compliance with relevant laws and regulations[247](index=247&type=chunk)[250](index=250&type=chunk) Key Risks | Risk Area | Key Risks | | :--- | :--- | | Strategic Risks | Sensitivity to government policies; keeping up with new developments and customer expectations; market competition risk; reputational risk | | Operational Risks | Insufficient labour supply; work injuries; IT system disruptions | | Financial Risks | Liquidity risk; credit risk; interest rate risk; foreign exchange risk; inflation risk | | Compliance Risks | Risks related to occupational safety and health; risks of non-compliance with employment-related ordinances; changes in Listing Rules and relevant company regulations and ordinances | - The Board, through the Audit Committee, reviews the design and implementation effectiveness of the Group's risk management and internal control systems[257](index=257&type=chunk)[258](index=258&type=chunk) - The Group currently has no internal audit function, but the Board believes engaging external independent professionals to perform internal audit functions would be more cost-effective[260](index=260&type=chunk)[262](index=262&type=chunk) [Environmental, Social and Governance Report](index=44&type=section&id=ENVIRONMENTAL,%20SOCIAL%20AND%20GOVERNANCE%20REPORT) - The Group firmly believes in the benefits of sustainable development, and that business growth should not come at the expense of the environment[319](index=319&type=chunk)[322](index=322&type=chunk) - During the reporting period, the Group found no material non-compliance with environmental laws and regulations[320](index=320&type=chunk)[323](index=323&type=chunk) [Approach and Report Overview](index=44&type=section&id=APPROACH%20AND%20ABOUT%20THIS%20REPORT) The Group integrates sustainability into its business strategy, focusing on environmental, social, and governance (ESG) factors to foster business growth and long-term sustainability; this report, prepared in accordance with Appendix 20 of the GEM Listing Rules, covers key operational performance in Hong Kong from April 1, 2021, to March 31, 2022 - The Group primarily engages in the sale of diesel and related products in Hong Kong, integrating sustainability into its business strategy[265](index=265&type=chunk)[268](index=268&type=chunk) - This report is prepared in accordance with Appendix **20** of the GEM Listing Rules, 'Environmental, Social and Governance Reporting Guide,' covering key operational performance in Hong Kong from April 1, 2021, to March 31, 2022[272](index=272&type=chunk)[275](index=275&type=chunk) - The Board has overall responsibility for the Group's ESG strategy and reporting, and for assessing and determining ESG-related risks[273](index=273&type=chunk)[275](index=275&type=chunk) [About the Company](index=47&type=section&id=ABOUT%20THE%20COMPANY) The Group listed on GEM of the Stock Exchange in 2019, primarily engaged in selling and transporting diesel and related products in Hong Kong; its competitive advantages lie in delivery capability and flexible delivery schedules, aiming to be a leading diesel supplier in Hong Kong's logistics industry - The Group listed on GEM of the Stock Exchange in **2019** (Stock Code: **8631**), with its principal business being the sale and transportation of diesel and related products in Hong Kong[286](index=286&type=chunk)[288](index=288&type=chunk) - The Group's delivery capability and flexibility in offering diverse delivery schedules to customers are its competitive advantages in the industry[286](index=286&type=chunk)[288](index=288&type=chunk) - The goal is to become a leading diesel provider focused on the Hong Kong logistics industry[287](index=287&type=chunk)[289](index=289&type=chunk) [Board Statement](index=48&type=section&id=BOARD%20STATEMENT_ESG) The Board understands the importance of ESG governance for corporate sustainability and has established an ESG management framework; it primarily oversees ESG governance, including appointing key personnel, approving strategies and targets, monitoring progress, and reviewing annual ESG reports, while management and functional departments handle specific implementation and reporting - The Board is primarily responsible for overseeing the Group's environmental, social, and governance matters, such as determining the Group's ESG approach, managing ESG-related risks, and supervising management and relevant departments in formulating policies and appropriate measures[293](index=293&type=chunk)[295](index=295&type=chunk) - The Board is responsible for appointing key personnel, approving ESG strategies, action plans and targets, approving resources, monitoring progress and performance, and reviewing and approving the annual ESG report[296](index=296&type=chunk)[297](index=297&type=chunk) - Management is responsible for identifying and assessing ESG risks and opportunities, formulating strategies and plans, ensuring risk management systems are in place, and reporting to the Board[301](index=301&type=chunk)[305](index=305&type=chunk) - Functional departments are responsible for coordinating and implementing specific policies, reporting regularly to management, collecting data, and preparing the annual ESG report[302](index=302&type=chunk)[305](index=305&type=chunk) [Stakeholder Engagement](index=50&type=section&id=PARTICIPATION%20OF%20STAKEHOLDERS) The Group actively engages with stakeholders, including the HKEX, government, suppliers, shareholders/investors, media and public, customers, employees, communities, and industry associations, to understand their concerns and ensure continuous business success and improvement - The Group actively strives to better understand and engage with stakeholders to ensure continuous improvement[307](index=307&type=chunk) - Stakeholders include the Hong Kong Stock Exchange, government, suppliers, shareholders/investors, media and public, customers, employees, communities, and industry associations[308](index=308&type=chunk)[309](index=309&type=chunk) - Communication methods include meetings, training, site visits, financial reports, website updates, and community activities[308](index=308&type=chunk)[309](index=309&type=chunk) [Materiality Assessment](index=52&type=section&id=MATERIALITY%20ASSESSMENT) The Group identified its most material ESG issues through surveys of internal and external stakeholders, with compliance with environmental laws, COVID-19 response, service quality, operational compliance, and anti-corruption being the top five, highlighting the Group's focus on environmental, social responsibility, and operational standards - The Group has conducted a materiality assessment involving surveys of internal and external stakeholders, including management, employees, customers, suppliers, industry associations, community organisations, and investors[311](index=311&type=chunk)[312](index=312&type=chunk) - The **five** most material ESG issues are: compliance with environmental laws and regulations, combating the COVID-19 pandemic, service quality, operational compliance, and anti-corruption[315](index=315&type=chunk)[317](index=317&type=chunk) - The Group will continue to communicate with stakeholders, collecting opinions more broadly through various channels for materiality analysis[316](index=316&type=chunk)[317](index=317&type=chunk) [Section A: Environmental](index=55&type=section&id=SECTION%20A:%20ENVIRONMENTAL) The Group is committed to environmental sustainability, integrating eco-friendly practices into operations; no significant environmental non-compliance was found during the reporting period; measures like optimising fleet routes, procuring energy-efficient products, and promoting 3R principles aim to reduce atmospheric and greenhouse gas emissions, water, and paper consumption; the Group acknowledges climate change's physical and transition risks, planning new business strategies to address them [A1 Emissions](index=55&type=section&id=A1%20Emissions) The Group is committed to reducing atmospheric pollutants and greenhouse gas emissions; during the reporting period, total atmospheric and greenhouse gas emissions significantly decreased, primarily due to COVID-19's impact on diesel demand in logistics and construction; the Group controls emissions through route optimisation, energy-efficient product procurement, and 3R principles - Diesel consumption by vehicles is the Group's primary source of atmospheric pollutant emissions, including nitrogen oxides (NOx), sulphur oxides (SOx), and particulate matter (PM)[325](index=325&type=chunk)[327](index=327&type=chunk) Atmospheric Emissions Overview | Metric | FY2022 | FY2021 | Change Rate | Original Chunk Ref | | :--- | :--- | :--- | :--- | :--- | | Total Atmospheric Emissions | 1,288 kg | 1,604 kg | ↓20% | [329, 331] | | Atmospheric Emissions Intensity (per vehicle) | 90 kg | 100 kg | ↓10% | [329, 331] | | Nitrogen Oxides (NOx) | 1,199.81 kg | 1,484.16 kg | ↓19.16% | [85, 487] | | Sulphur Oxides (SOx) | 1.26 kg | 2.01 kg | ↓37.26% | [85, 487] | | Particulate Matter (PM) | 86.83 kg | 117.74 kg | ↓26.26% | [85, 487] | Greenhouse Gas Emissions Overview | Metric | FY2022 (tonnes) | FY2021 (tonnes) | Change Rate | Original Chunk Ref | | :--- | :--- | :--- | :--- | | Total GHG Emissions | 213 | 338 | ↓37% | [336, 338] | | GHG Emissions Intensity (per vehicle) | 15 | 21 | ↓29% | [336, 338] | | Scope 1 (Direct Emissions) | 207.97 | 333.50 | ↓38% | [345] | | Scope 2 (Indirect Emissions from Electricity Consumption) | 4.18 | 3.735 | ↑12% | [345] | | Scope 3 (Other Indirect Emissions) | 0.63 | 0.44 | ↑43% | [345] | - Scope **1** greenhouse gas emissions decreased by **38%**, mainly due to the COVID-19 pandemic's impact on diesel demand in the logistics industry and for construction site machinery[347](index=347&type=chunk)[351](index=351&type=chunk) - Scope **2** and Scope **3** emissions increased, primarily because employees resumed normal working hours as the pandemic eased, leading to increased paper and electricity consumption[348](index=348&type=chunk)[351](index=351&type=chunk) - The Group's non-hazardous waste primarily consists of waste paper; during the reporting period, both waste paper generation and density increased, mainly due to employees resuming normal working hours after the pandemic subsided[360](index=360&type=chunk)[361](index=361&type=chunk)[363](index=363&type=chunk)[365](index=365&type=chunk) [A2 Use of Resources](index=63&type=section&id=A2%20Use%20of%20Resources) The Group is committed to being an environmentally friendly and sustainable enterprise, reducing energy, water, and paper consumption through energy-efficient equipment and 3R principles; during the reporting period, energy and water consumption increased, mainly due to employees returning to normal working hours as the pandemic eased; the Group will continue to monitor and strive to reduce resource consumption - The Group is committed to being an environmentally friendly and sustainable enterprise, having implemented a series of measures in its daily operations to reduce carbon emissions[368](index=368&type=chunk)[370](index=370&type=chunk) Energy Consumption Overview | Metric | FY2022 | FY2021 | Change Rate | Original Chunk Ref | | :--- | :--- | :--- | :--- | :--- | | Total Energy Consumption (kWh) | 10,719 | 10,092 | ↑6% | [369, 371] | | Energy Consumption Intensity (kWh/employee) | 491 | 381 | ↑29% | [369, 371] | - Increased energy consumption was mainly due to the slowing spread of COVID-19 in Hong Kong, with employees resuming normal working hours at headquarters[369](index=369&type=chunk)[371](index=371&type=chunk) Water Consumption Overview | Metric | FY2022 | FY2021 | Change Rate | Original Chunk Ref | | :--- | :--- | :--- | :--- | :--- | | Total Water Consumption (m³) | 46 | 35 | ↑31% | [375, 378, 381] | | Water Consumption Intensity (m³/employee) | 2 | 1 | ↑100% | [375, 378] | - Increased water consumption was mainly due to the slowing spread of COVID-19 in Hong Kong, with employees resuming normal working hours at headquarters[381](index=381&type=chunk)[384](index=384&type=chunk) - The Group's core business involves selling diesel, and no significant use of packaging materials was identified during the reporting period[387](index=387&type=chunk)[390](index=390&type=chunk) [A3 The Environment and Natural Resources](index=67&type=section&id=A3%20The%20Environment%20and%20Natural%20Resources) The Group believes business development should not compromise the environment, implementing various environmental protection measures; no significant environmental non-compliance was found during the reporting period, and future plans include investing more resources to upgrade equipment, reduce carbon footprint, and continuously monitor resource usage - The Group believes that business development should not come at the expense of the environment and has implemented various environmental protection measures[388](index=388&type=chunk)[391](index=391&type=chunk) - During the reporting period, no material non-compliance with relevant laws and regulations was identified[389](index=389&type=chunk)[391](index=391&type=chunk) - Future plans include investing more resources to upgrade equipment and existing vehicles to meet Hong Kong environmental standards and reduce carbon footprint[388](index=388&type=chunk)[391](index=391&type=chunk) [A4 Climate Change](index=68&type=section&id=A4%20Climate%20Change) The Group recognises climate change threats, integrating them into decision-making and strategic planning; physical risks include extreme weather impacting employee safety and logistics, while transition risks, such as government green transport policies phasing out diesel commercial vehicles, could increase operating costs and reduce diesel demand, threatening long-term financial performance; the Group will optimise its business model and promote green business to address these challenges - The Group deeply understands the current threat of climate change and integrates it into its decision-making process and strategic business planning[394](index=394&type=chunk)[396](index=396&type=chunk) - Physical risks include more frequent and intense adverse weather events (e.g., extreme precipitation and tropical cyclones), which could endanger employee safety and disrupt logistics[395](index=395&type=chunk)[396](index=396&type=chunk) - Long-term temperature changes could lead to water scarcity and flooding, affecting upstream diesel supply and consequently increasing procurement costs[398](index=398&type=chunk)[400](index=400&type=chunk) - The government's 'Hong Kong Climate Action Plan 2050' and 'Hong Kong Roadmap on Popularisation of Electric Vehicles' will gradually phase out diesel commercial vehicles, which is expected to increase the Group's vehicle replacement costs and reduce diesel demand, posing a significant threat to the Group's long-term financial performance[399](index=399&type=chunk)[401](index=401&type=chunk) - The Group will formulate new long-term and short-term business strategies and review its existing ones to mitigate physical and transition risks as much as possible[403](index=403&type=chunk)[405](index=405&type=chunk) [Section B: Social – Employment and Labour Practices](index=70&type=section&id=SECTION%20B:%20SOCIAL%20–%20EMPLOYMENT%20AND%20LABOUR%20PRACTICES) - Employees are the foundation of the Group's success, and the Group equally values the contributions and dedication of all its employees[404](index=404&type=chunk)[406](index=406&type=chunk) - The Group strives to create a harmonious and inclusive work environment, protecting employees from any harassment and discrimination[413](index=413&type=chunk)[417](index=417&type=chunk) - The Group highly values human rights and strictly complies with all labour laws and regulations prohibiting child and forced labour[451](index=451&type=chunk)[454](index=454&type=chunk) [B1 Employment](index=70&type=section&id=B1%20Employment) As of March 31, 2022, the Group had **23** employees, all from Hong Kong, committed to equal opportunity and diversity regardless of age, gender, or marital status; comprehensive benefits include year-end bonuses, MPF contributions, and additional medical insurance; annual employee assessments drive performance, and a **1.26%** average monthly turnover rate indicates good talent retention Employee Composition (as at March 31, 2022) | Metric | Quantity/Ratio | | :--- | :--- | | Total Employees | 23 | | Gender Composition | Male 78%, Female 22% | | Age Group | Age 18-25 0%, 26-35 30%, 36-45 22%, 46-55 22%, 56-66 26% | | Employment Type | Full-time 100% | | Length of Service | Less than 1 year 11%, 1-3 years 39%, 3-5 years 22%, 5-10 years 22%, More than 10 years 17% | - The Group highly values providing equal opportunities and diversity for all employees, recruiting regardless of age, gender, marital status, etc[413](index=413&type=chunk)[414](index=414&type=chunk)[417](index=417&type=chunk) - Comprehensive compensation and benefits are provided, including year-end bonuses, MPF contributions, and additional medical insurance[420](index=420&type=chunk)[422](index=422&type=chunk) - Annual employee assessments, considering factors like teamwork, job responsibilities, attitude, punctuality, capability, work quality, and efficiency, are used for promotion, salary adjustments, and bonuses[421](index=421&type=chunk)[422](index=422&type=chunk) Employee Turnover Rate (for the year ended March 31, 2022) | Metric | Average Monthly Turnover Rate | | :--- | :--- | | Overall | 1.26% | | Male | 1.19% | | Female | 1.19% | | 26-35 Age Group | 0.39% | | 36-45 Age Group | 3.16% | | 18-25, 46-55, 56-65 Age Group | 0% | [B2 Health and Safety](index=76&type=section&id=B2%20Health%20and%20Safety) The Group is committed to safeguarding all employees' safety, health, and welfare, exceeding minimum legal occupational health and safety standards; all oil tankers and tractors are registered, equipped with fire safety gear, and drivers receive safety training; employee compensation and additional medical insurance are provided; no work-related injuries or fatalities were reported; in response to COVID-19, the Group implemented various preventive measures, including temperature checks, disinfection, and rapid antigen test kit provision - The Group is committed to safeguarding the safety, health, and welfare of all employees, striving for occupational health and safety standards higher than the minimum legal requirements[433](index=433&type=chunk)[435](index=435&type=chunk) - All oil tankers and tractors are registered with relevant authorities, equipped with fire-fighting equipment and flammable material labels, and undergo regular inspection and maintenance[434](index=434&type=chunk)[435](index=435&type=chunk) - All drivers are required to attend safety training courses organised by Sinopec, and are provided with safety manuals and industrial safety policies[437](index=437&type=chunk)[440](index=440&type=chunk) - The Group provides employee compensation insurance to all its employees, covering work-related injuries and other medical needs, and offers additional medical insurance[438](index=438&type=chunk)[440](index=440&type=chunk) - During the reporting period, the Group reported no work-related injuries or fatalities[439](index=439&type=chunk)[440](index=440&type=chunk) - In response to the COVID-19 pandemic, the Group implemented various preventive measures, including social distancing, personal hygiene, temperature checks, disinfection, and procuring rapid antigen test kits for employees[442](index=442&type=chunk)[44

[Performance Highlights](index=3&type=section&id=HIGHLIGHTS) This section provides a concise overview of the Group's key financial performance indicators for the nine months ended December 31, 2021 Performance Highlights for the Nine Months Ended December 31, 2021 | Metric | For the Nine Months Ended December 31, 2021 | For the Nine Months Ended December 31, 2020 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | Approx. HKD 191.0 million | Approx. HKD 180.8 million | ▲ 5.6% | | Gross Margin | Approx. 2.8% | Approx. 1.7% | ▲ 1.1 percentage points | | Loss Attributable to Owners of the Company | Approx. HKD 0.8 million | Approx. HKD 3.0 million | ▼ 73.3% | | Dividends | Not Recommended | N/A | - | [Financial Statements](index=4&type=section&id=FINANCIAL%20STATEMENTS) This section presents the Group's unaudited condensed consolidated financial statements, including the statement of profit or loss, statement of changes in equity, and accompanying notes [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) For the nine months ended December 31, 2021, the Group's revenue increased by 5.6% to HKD 191.0 million, with gross profit significantly rising to HKD 5.428 million, and loss for the period narrowing to HKD 0.833 million due to increased gross profit and reduced administrative expenses Key Data from Consolidated Statement of Profit or Loss (For the Nine Months Ended December 31) | Item | 2021 (HKD '000) | 2020 (HKD '000) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 190,952 | 180,798 | ▲ 5.6% | | Gross Profit | 5,428 | 3,053 | ▲ 77.8% | | Administrative and Other Operating Expenses | (6,349) | (7,855) | ▼ 19.2% | | Loss Before Tax | (833) | (3,705) | ▼ 77.5% | | Total Loss for the Period | (833) | (2,986) | ▼ 72.1% | | Basic Loss Per Share (HK cents) | (0.21) | (0.75) | Narrowed by 72% | [Unaudited Condensed Consolidated Statement of Changes in Equity](index=5&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CHANGES%20IN%20EQUITY) As of December 31, 2021, the Group's total equity slightly decreased to HKD 54.325 million from HKD 55.158 million on April 1, 2021, primarily due to the HKD 0.833 million loss recorded during the period Summary of Changes in Equity (For the Nine Months Ended December 31, 2021) | Item | Amount (HKD '000) | | :--- | :--- | | As at April 1, 2021 (Audited) | 55,158 | | Loss and Total Comprehensive Loss for the Period | (833) | | As at December 31, 2021 (Unaudited) | 54,325 | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=6&type=section&id=NOTES%20TO%20THE%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides key notes to the financial statements, covering general information, accounting policies, revenue breakdown, expense details, taxation, loss per share calculation, and dividend policy, with the Group's principal business being the sale of diesel and related products in Hong Kong, generating almost all revenue from Hong Kong, and no dividends declared during the period [1. General Information](index=6&type=section&id=1.%20GENERAL%20INFORMATION) Sun Kong Holdings Limited, an investment holding company incorporated in the Cayman Islands and listed on GEM since January 8, 2019, primarily engages in the sale of diesel and related products in Hong Kong - The Group's principal business is the sale of diesel and related products in Hong Kong[15](index=15&type=chunk) [2. Basis of Preparation and Principal Accounting Policies](index=7&type=section&id=2.%20BASIS%20OF%20PREPARATION%20AND%20PRINCIPAL%20ACCOUNTING%20POLICIES) These unaudited interim financial statements, reviewed by the Audit Committee, are prepared in accordance with Hong Kong Financial Reporting Standards, with accounting policies consistent with the annual financial statements as of March 31, 2021, and the adoption of new/revised standards having no significant impact on the Group's financial position - The accounting policies adopted in these interim financial statements are consistent with those in the previous annual financial statements, and the adoption of new accounting standards has had no significant impact[25](index=25&type=chunk)[27](index=27&type=chunk) [3. Revenue](index=9&type=section&id=3.%20REVENUE) For the nine months ended December 31, 2021, the Group's total revenue was HKD 191.0 million, with diesel sales of HKD 190.6 million accounting for the vast majority, and all revenue from customer contracts generated in Hong Kong Revenue Breakdown (For the Nine Months Ended December 31) | Revenue Source | 2021 (HKD '000) | 2020 (HKD '000) | | :--- | :--- | :--- | | Diesel Sales | 190,556 | 180,190 | | AdBlue Sales | 396 | 333 | | Ancillary Transportation Services | – | 275 | | **Total** | **190,952** | **180,798** | [4. Loss Before Tax](index=10&type=section&id=4.%20LOSS%20BEFORE%20TAX) During the reporting period, the Group's finance costs increased to HKD 0.193 million from HKD 0.149 million in the prior period, while staff costs totaled approximately HKD 5.374 million, up from HKD 4.957 million, and depreciation of property, plant and equipment slightly decreased - For the nine months ended December 31, 2021, finance costs increased by **29.5%** year-on-year to **HKD 0.193 million**[36](index=36&type=chunk) - Staff costs (including directors' emoluments) increased by **8.4%** year-on-year from **HKD 4.957 million** to **HKD 5.374 million**[36](index=36&type=chunk) [5. Taxation](index=11&type=section&id=5.%20TAXATION) No Hong Kong profits tax provision was made for the Group during the reporting period due to the absence of assessable profits, contrasting with a deferred tax credit of HKD 0.719 million in the prior period - For the three and nine months ended December 31, 2021, no Hong Kong profits tax was incurred as the Group had no assessable profits[39](index=39&type=chunk) [6. Loss Per Share](index=12&type=section&id=6.%20LOSS%20PER%20SHARE) For the nine months ended December 31, 2021, basic and diluted loss per share significantly narrowed to **0.21 HK cents** from **0.75 HK cents** in the prior period, calculated based on a weighted average of **400 million** ordinary shares with no potential ordinary shares issued during the period Loss Per Share Calculation | Item | For the Nine Months Ended December 31, 2021 | For the Nine Months Ended December 31, 2020 | | :--- | :--- | :--- | | Loss for the Period Attributable to Owners of the Company (HKD '000) | (833) | (2,986) | | Weighted Average Number of Ordinary Shares | 400,000,000 | 400,000,000 | [7. Dividends](index=12&type=section&id=7.%20DIVIDENDS) The Board does not recommend the payment of any dividend for the nine months ended December 31, 2021 - The Board does not recommend the payment of dividends for the nine months ended December 31, 2021[43](index=43&type=chunk) [Management Discussion and Analysis](index=13&type=section&id=MANAGEMENT%20DISCUSSION%20AND%20ANALYSIS) This section provides a detailed discussion and analysis of the Group's business operations, financial performance, and future outlook [Business Review and Future Prospects](index=13&type=section&id=BUSINESS%20REVIEW%20AND%20FUTURE%20PROSPECTS) The Group, primarily engaged in diesel sales in Hong Kong to logistics and construction companies, faced increased procurement costs due to volatile crude oil prices and reduced demand from cross-border logistics due to restrictions, though partially offset by local construction recovery, with future focus on cash flow management amid ongoing COVID-19 uncertainties - Significant fluctuations in crude oil prices led to a substantial increase in diesel procurement costs, putting pressure on operating cash flow[48](index=48&type=chunk) - Cross-border transportation services were restricted due to COVID-19 related customs clearance arrangements, resulting in reduced diesel demand from the logistics sector[49](index=49&type=chunk) - The recovery of Hong Kong's local construction industry stimulated a rebound in diesel demand for construction machinery[50](index=50&type=chunk) - The Group will continue to closely monitor the pandemic's development, focusing on cash flow management, and preparing for business recovery[56](index=56&type=chunk) [Financial Review](index=14&type=section&id=FINANCIAL%20REVIEW) During the review period, the Group's revenue grew by **5.6%** to **HKD 191.0 million**, primarily driven by a **71.3%** increase in average diesel selling price offsetting a **38.1%** volume decrease, leading to a **4.4%** rise in cost of sales, an improved gross margin from **1.7%** to **2.8%**, a **20.3%** reduction in administrative and other operating expenses, and a significant narrowing of net loss from **HKD 3.0 million** to **HKD 0.8 million** [Revenue](index=14&type=section&id=Revenue) For the nine months ended December 31, 2021, the Group's total revenue increased by **5.6%** to **HKD 191.0 million**, primarily driven by a **71.3%** surge in average diesel selling price, which offset a **38.1%** decline in diesel sales volume, with diesel sales remaining the absolute revenue pillar, accounting for **99.8%** Sales Volume and Average Selling Price Changes (For the Nine Months Ended December 31) | Product | Metric | 2021 | 2020 | Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | | Diesel | Sales Volume (million liters) | 43.2 | 69.8 | ▼ 38.1% | | | Average Selling Price (HKD/liter) | 4.42 | 2.58 | ▲ 71.3% | | AdBlue | Sales Volume (thousand liters) | 101.6 | 71.5 | ▲ 42.1% | | | Average Selling Price (HKD/liter) | 3.90 | 4.65 | ▼ 16.1% | [Cost of sales](index=15&type=section&id=Cost%20of%20sales) During the reporting period, cost of sales increased by **4.4%** to **HKD 185.5 million**, aligning with revenue growth, with diesel costs comprising **97.1%** of total cost of sales, and the average unit procurement cost of diesel rising by **68.8%** year-on-year, consistent with market trends - Diesel costs accounted for **97.1%** of total cost of sales, amounting to **HKD 180.1 million**[71](index=71&type=chunk) - The average unit procurement cost of diesel increased by **68.8%** from **HKD 2.47 per liter** to **HKD 4.17 per liter**[71](index=71&type=chunk) [Gross profit and gross profit margin](index=17&type=section&id=Gross%20profit%20and%20gross%20profit%20margin) Benefiting from revenue growth outpacing cost increases, the Group's gross profit surged by **74.2%** from **HKD 3.1 million** to **HKD 5.4 million**, consequently improving the gross margin from **1.7%** to **2.8%** compared to the prior period Gross Profit and Gross Profit Margin Performance (For the Nine Months Ended December 31) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Gross Profit | Approx. HKD 5.4 million | Approx. HKD 3.1 million | | Gross Margin | Approx. 2.8% | Approx. 1.7% | [Administrative and other operating expenses](index=17&type=section&id=Administrative%20and%20other%20operating%20expenses) The Group effectively controlled operating costs, with administrative and other operating expenses decreasing by **20.3%** year-on-year from **HKD 7.9 million** to **HKD 6.3 million** - Administrative and other operating expenses decreased by **20.3%** from **HKD 7.9 million** in the prior period to **HKD 6.3 million**[80](index=80&type=chunk) [Loss for the period](index=18&type=section&id=Loss%20for%20the%20period) Overall, due to increased gross profit and continuous reduction in operating costs, the Group's net loss for the reporting period significantly narrowed by **73.3%** from **HKD 3.0 million** in the prior period to **HKD 0.8 million** - Net loss decreased from **HKD 3.0 million** to **HKD 0.8 million**, narrowing by **73.3%** year-on-year, primarily attributable to increased gross profit and decreased operating costs[87](index=87&type=chunk) [Capital expenditure and Dividend](index=18&type=section&id=Capital%20expenditure%20and%20Dividend) During the reporting period, the Group's capital expenditure was approximately **HKD 1.1 million**, primarily for the purchase of diesel tank trucks, representing a **62.1%** significant decrease from **HKD 2.9 million** in the prior period, and the Board did not recommend any dividend payment - Capital expenditure decreased by **62.1%** year-on-year to **HKD 1.1 million**, primarily for the purchase of diesel tank trucks[86](index=86&type=chunk) - The Board does not recommend the payment of any dividend for the nine months ended December 31, 2021[88](index=88&type=chunk) [Events after the Reporting Period](index=18&type=section&id=Events%20after%20the%20Reporting%20Period) As of December 31, 2021, the Group could not reliably estimate the ultimate financial impact of the COVID-19 pandemic, and management believes no significant events have occurred after the reporting period that would materially affect the Group's financial performance and operations - Management believes that no significant events requiring disclosure have occurred since December 31, 2021, that could materially affect the Group's financial performance[85](index=85&type=chunk) [Other Important Information](index=19&type=section&id=OTHER%20IMPORTANT%20INFORMATION) This section covers additional crucial information, including the use of proceeds, environmental policies, interests of directors and substantial shareholders, and corporate governance practices [Use of Proceeds](index=19&type=section&id=USE%20OF%20PROCEEDS) The company's net proceeds from listing were approximately **HKD 34.8 million**, with **HKD 27.2 million** utilized and **HKD 7.6 million** remaining unused as of December 31, 2021, primarily allocated for purchasing diesel tank trucks (**HKD 2.6 million**) and upgrading IT systems (**HKD 5.0 million**), expected to be fully utilized by March 31, 2023 Use of Net Proceeds (As of December 31, 2021) | Purpose | Revised Allocation (HKD million) | Actual Utilization (HKD million) | Unutilized Amount (HKD million) | Expected Full Utilization Time | | :--- | :--- | :--- | :--- | :--- | | Purchase of Diesel Tank Trucks | 15.0 | 12.4 | 2.6 | By March 31, 2023 | | Expansion of Workforce | 1.7 | 1.7 | – | N/A | | Upgrade of Information Technology System | 5.0 | – | 5.0 | By March 31, 2023 | | Working Capital | 13.1 | 13.1 | – | N/A | | **Total** | **34.8** | **27.2** | **7.6** | | - Due to project delays, the remaining funds for purchasing diesel tank trucks and upgrading IT systems are now expected to be fully utilized by March 31, 2023[98](index=98&type=chunk) [Environment Policies and Performance](index=21&type=section&id=ENVIRONMENT%20POLICIES%20AND%20PERFORMANCE) The Group prioritizes environmental protection, implementing measures to reduce air pollutant emissions and prevent oil product leaks in compliance with Hong Kong's environmental laws and regulations, with no prosecutions or penalties for environmental breaches as of the reporting date - The Group has implemented various environmental protection measures and continuously monitors its operations to ensure compliance, with no record of violations as of the reporting date[102](index=102&type=chunk)[103](index=103&type=chunk)[105](index=105&type=chunk) [Interests of Directors, Executives, and Substantial Shareholders](index=22&type=section&id=Interests%20of%20Directors,%20Executives,%20and%20Substantial%20Shareholders) As of December 31, 2021, Mr. Lo Ming Yik, Chairman and Executive Director, held **62.78%** of the issued share capital through his wholly-owned company, Fully Fort Group Limited, with no other directors, executives, or substantial shareholders holding disclosable interests or short positions - Mr. Lo Ming Yik, the Chairman of the Board, holds **62.78%** of the company's shares through a controlled corporation[112](index=112&type=chunk)[116](index=116&type=chunk) - Substantial shareholder Fully Fort Group Limited beneficially owns **62.78%** of the company's shares, being wholly-owned by Mr. Lo Ming Yik[119](index=119&type=chunk)[120](index=120&type=chunk) [Corporate Governance](index=25&type=section&id=Corporate%20Governance) The company complied with the Corporate Governance Code in Appendix 15 of the GEM Listing Rules during the reporting period, establishing Audit, Nomination, and Remuneration Committees with independent non-executive directors playing key roles, and confirming no competing business from controlling shareholders or directors, while maintaining sufficient public float - The company has adopted a share option scheme, but no share options were granted, exercised, or cancelled during the reporting period[124](index=124&type=chunk)[125](index=125&type=chunk) - The company has established Audit, Nomination, and Remuneration Committees, whose composition and terms of reference comply with corporate governance requirements[133](index=133&type=chunk)[135](index=135&type=chunk)[142](index=142&type=chunk) - The company complied with the provisions of the Corporate Governance Code throughout the reporting period and maintained a sufficient public float[151](index=151&type=chunk)[156](index=156&type=chunk)

Performance Highlights [Performance Highlights](index=3&type=section&id=HIGHLIGHTS) The Group achieved a significant turnaround to profitability for the six months ended September 30, 2021, with total revenue up 6.1%, gross margin doubling to 3.5%, and a net profit of approximately HKD 0.3 million compared to a prior-year loss of HKD 1.2 million, with no interim dividend declared 2021/2022 Interim Performance Highlights | Metric | For the Six Months Ended September 30, 2021 | For the Six Months Ended September 30, 2020 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | Approx. HKD 133.2 million | Approx. HKD 125.5 million | ▲ 6.1% | | Gross Margin | Approx. 3.5% | Approx. 1.7% | ▲ 1.8 percentage points | | Profit (Loss) Attributable to Owners of the Company | Profit Approx. HKD 0.3 million | Loss Approx. HKD 1.2 million | Turned to Profit | | Proposed Dividend | Not Declared | N/A | - | Condensed Consolidated Financial Statements [Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20PROFIT%20OR%20LOSS%20AND%20OTHER%20COMPREHENSIVE%20INCOME) For the six months ended September 30, 2021, the company reported revenue of HKD 133 million, up 6.1%, with gross profit significantly increasing to HKD 4.59 million from HKD 2.07 million, leading to a net profit of HKD 0.25 million and basic earnings per share of 0.06 HK cents, reversing a prior-year loss of HKD 1.21 million Condensed Consolidated Statement of Profit or Loss (For the Six Months Ended September 30) | Item | 2021 (HKD thousands) | 2020 (HKD thousands) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 133,165 | 125,476 | ▲ 6.1% | | Gross Profit | 4,594 | 2,071 | ▲ 121.8% | | Profit (Loss) Before Tax | 250 | (1,613) | Turned to Profit | | Profit (Loss) for the Period | 250 | (1,211) | Turned to Profit | | Basic Earnings (Loss) Per Share | 0.06 HK cents | (0.30) HK cents | Turned to Profit | [Statement of Financial Position](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20FINANCIAL%20POSITION) As of September 30, 2021, the company reported total assets of HKD 76.335 million, total liabilities of HKD 20.927 million, and net assets of HKD 55.408 million, a slight increase from March 31, 2021, with net current assets stable at HKD 46.257 million, and significant growth in trade receivables and payables indicating business expansion Summary of Statement of Financial Position | Item | September 30, 2021 (HKD thousands) | March 31, 2021 (HKD thousands) | | :--- | :--- | :--- | | **Non-current Assets** | 9,227 | 9,687 | | **Current Assets** | 67,108 | 55,185 | | Of which: Trade Receivables | 65,609 | 50,058 | | **Current Liabilities** | 20,851 | 9,415 | | Of which: Trade Payables | 10,623 | 5,033 | | **Net Current Assets** | 46,257 | 45,770 | | **Non-current Liabilities** | 76 | 299 | | **Net Assets** | 55,408 | 55,158 | | **Total Equity** | 55,408 | 55,158 | [Statement of Changes in Equity](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CHANGES%20IN%20EQUITY) For the six months ended September 30, 2021, the company's total equity increased from HKD 55.158 million at the beginning of the period to HKD 55.408 million at the end, with this increase solely attributable to the HKD 0.25 million net profit recorded during the period, and no other equity movements - The increase in total equity during the period was solely attributable to the **HKD 0.25 million** profit recorded for the period[13](index=13&type=chunk) [Statement of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS) During the reporting period, the company's operating cash flow turned to a net outflow of HKD 3.804 million from a prior-year net inflow of HKD 1.869 million, with investing activities showing a net outflow of HKD 1.031 million, resulting in a negative cash and cash equivalents balance of HKD 4.266 million at period-end primarily due to increased bank overdrafts Condensed Consolidated Statement of Cash Flows (For the Six Months Ended September 30) | Item | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Net Cash From Operating Activities | (3,804) | 1,869 | | Net Cash Used in Investing Activities | (1,031) | (1,877) | | Net Cash Used in Financing Activities | (217) | (209) | | Net Decrease in Cash and Cash Equivalents | (5,052) | (217) | | Cash and Cash Equivalents at End of Period | (4,266) | 409 | Notes to the Condensed Consolidated Financial Statements [General Information and Accounting Policies](index=8&type=section&id=1.%20GENERAL%20INFORMATION%20%26%202.%20BASIS%20OF%20PREPARATION) Sun Kong Holdings Limited, incorporated in the Cayman Islands, primarily sells diesel and related products in Hong Kong, and its unaudited interim financial statements have been reviewed by the audit committee and prepared in accordance with HKAS 34 'Interim Financial Reporting,' maintaining consistent accounting policies with the prior year's financial statements - The company's principal business is the sale of **diesel and related products** in Hong Kong[17](index=17&type=chunk)[20](index=20&type=chunk) - These condensed consolidated financial statements are prepared in accordance with **Hong Kong Accounting Standard 34 'Interim Financial Reporting'**[22](index=22&type=chunk) [Revenue and Segment Information](index=11&type=section&id=3.%20REVENUE%20AND%20SEGMENT%20INFORMATION) All company revenue is derived from a single operating segment in Hong Kong, the sale of diesel and related products, with diesel sales contributing HKD 132.9 million, or 99.8% of total revenue, for the six months ended September 30, 2021 Revenue Composition (For the Six Months Ended September 30) | Revenue Source | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Diesel Sales | 132,912 | 125,095 | | AdBlue Sales | 253 | 201 | | Ancillary Transportation Services | – | 180 | | **Total** | **133,165** | **125,476** | - The Group has only one operating and reportable segment, which is the sale of **diesel and related products** in Hong Kong[36](index=36&type=chunk) [Other Income](index=12&type=section&id=4.%20OTHER%20INCOME) During the reporting period, other income significantly decreased from HKD 1.246 million in the prior period to HKD 0.02 million, primarily due to the absence of government grants related to the 'Employment Support Scheme' received in the previous year - Other income significantly decreased, primarily due to **HKD 1.246 million** in government grants received in the prior period, with no such income in the current period[40](index=40&type=chunk) [Taxation](index=14&type=section&id=6.%20TAXATION) No Hong Kong profits tax provision was made as the Group incurred a tax loss during the reporting period, and entities in the Cayman Islands and British Virgin Islands are exempt from income tax - No Hong Kong profits tax provision was made as the Group incurred a **tax loss** for the six months ended September 30, 2021[46](index=46&type=chunk) [Dividends](index=15&type=section&id=7.%20DIVIDENDS) The Board does not recommend the payment of any dividend for the six months ended September 30, 2021, consistent with the prior period's policy - The Board does not recommend the payment of any dividend for the six months ended **September 30, 2021**[50](index=50&type=chunk) [Earnings (Loss) Per Share](index=15&type=section&id=8.%20EARNINGS%20(LOSS)%20PER%20SHARE) For the six months ended September 30, 2021, basic earnings per share were 0.06 HK cents, calculated based on a net profit of HKD 0.25 million and 400 million weighted average ordinary shares, compared to a loss of 0.30 HK cents per share in the prior period, with no diluted earnings per share presented due to the absence of potential ordinary shares Earnings Per Share Calculation | Item | For the Six Months Ended September 30, 2021 | For the Six Months Ended September 30, 2020 | | :--- | :--- | :--- | | Profit (Loss) Attributable to Shareholders (HKD thousands) | 250 | (1,211) | | Weighted Average Number of Ordinary Shares | 400,000,000 | 400,000,000 | [Trade Receivables](index=18&type=section&id=11.%20TRADE%20RECEIVABLES) As of September 30, 2021, net trade receivables increased to HKD 65.609 million from HKD 50.058 million on March 31, with an increase in receivables over 90 days, and high credit risk concentration as the top five customers accounted for 81% of total receivables - Trade receivables increased from **HKD 50.058 million** to **HKD 65.609 million**[70](index=70&type=chunk) - Credit risk is concentrated, with the largest customer and top five customers accounting for **38%** and **81%** respectively of total trade receivables[74](index=74&type=chunk) [Banking Facility](index=23&type=section&id=19.%20BANKING%20FACILITY) As of September 30, 2021, the Group had a HKD 5 million banking facility, with HKD 4.978 million utilized as bank overdrafts, leaving only HKD 0.022 million unutilized, indicating a very high credit facility utilization rate - As of September 30, 2021, the Group had a banking facility of **HKD 5 million**, with an unutilized amount of **HKD 0.022 million**[99](index=99&type=chunk)[100](index=100&type=chunk) [Events After Reporting Period](index=24&type=section&id=20.%20EVENTS%20AFTER%20REPORTING%20PERIOD) Subsequent to the reporting period, the company's wholly-owned subsidiary, Wing Ko, secured new general banking facilities totaling HKD 11 million from Bank of China (Hong Kong), comprising a HKD 6 million 96-month installment loan and a HKD 5 million renewed bank overdraft, which will significantly improve the company's liquidity position - Subsequent to the reporting period, the company secured new banking facilities totaling **HKD 11 million**, including a **HKD 6 million** installment loan and a **HKD 5 million** bank overdraft[102](index=102&type=chunk)[103](index=103&type=chunk) Management Discussion and Analysis [Business Review and Future Prospects](index=25&type=section&id=BUSINESS%20REVIEW%20%26%20FUTURE%20PROSPECTS) The Group, primarily selling diesel in Hong Kong to logistics and construction companies, faced reduced demand due to volatile crude oil prices and COVID-19 restrictions, but a recovery in local construction activities supported performance, leading to a turnaround to profitability, with future uncertainties from COVID-19 remaining a key challenge requiring close cash flow management for post-pandemic recovery - The Group primarily engages in the sale of **diesel and related products** in Hong Kong, with customers mainly comprising logistics and construction companies[105](index=105&type=chunk) - Significant fluctuations in crude oil prices and the impact of the **COVID-19 pandemic** on cross-border transportation reduced diesel demand from the logistics industry[106](index=106&type=chunk)[107](index=107&type=chunk) - The recovery of Hong Kong's construction industry stimulated a rebound in diesel demand, helping the company achieve a net profit of approximately **HKD 0.3 million** for the six months ended September 30, 2021, compared to a net loss of **HKD 1.2 million** in the prior period[108](index=108&type=chunk)[111](index=111&type=chunk) [Financial Review](index=26&type=section&id=FINANCIAL%20REVIEW) The period's financial performance was driven by 'price up, volume down': despite a 35.8% decrease in diesel sales volume, a 65.7% surge in average selling price boosted total revenue by 6.1% to HKD 133.2 million, with gross margin improving from 1.7% to 3.5% and gross profit increasing by 119.0% to HKD 4.6 million, culminating in a net profit of HKD 0.3 million Sales Volume and Selling Price Changes (For the Six Months Ended September 30) | Item | 2021 | 2020 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Diesel Sales Volume | 31.6 million liters | 49.2 million liters | ▼ 35.8% | | Average Diesel Selling Price | HKD 4.21/liter | HKD 2.54/liter | ▲ 65.7% | - The average unit procurement cost of diesel increased by **61.9%** year-on-year, from **HKD 2.44/liter** to **HKD 3.95/liter**[125](index=125&type=chunk) - Gross profit increased by **119.0%** from **HKD 2.1 million** to **HKD 4.6 million**, with gross margin improving from **1.7%** to **3.5%**[132](index=132&type=chunk) - Administrative and other operating expenses decreased by **10.42%** year-on-year, primarily due to a reduction in bad debt provision[133](index=133&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of September 30, 2021, the Group maintained a sound financial position with net current assets of HKD 46.3 million and a current ratio of 3.2, indicating strong short-term solvency, while a low gearing ratio of 9.0% reflected minimal leverage, with financial resources primarily derived from shareholders' funds Key Liquidity and Capital Resources Indicators (As of September 30, 2021) | Metric | Value | | :--- | :--- | | Net Current Assets | Approx. HKD 46.3 million | | Cash and Bank Balances | Approx. HKD 0.7 million | | Current Ratio | Approx. 3.2 | | Gearing Ratio | Approx. 9.0% | [Use of Proceeds](index=33&type=section&id=USE%20OF%20PROCEEDS) The company, listed in January 2019, had net proceeds of approximately HKD 34.8 million, with HKD 27.2 million utilized and HKD 7.6 million remaining unutilized as of September 30, 2021, noting delays in funds for diesel tank lorries and IT system upgrades, with all unutilized amounts expected to be fully deployed by March 31, 2023 Use of Net Proceeds from Listing (As of September 30, 2021) | Purpose | Revised Allocation (HKD millions) | Actual Usage (HKD millions) | Unutilized (HKD millions) | Expected Full Utilization Date | | :--- | :--- | :--- | :--- | :--- | | Purchase of Diesel Tank Lorries | 15.0 | 12.4 | 2.6 | By March 31, 2023 | | Expansion of Workforce | 1.7 | 1.7 | – | N/A | | Upgrade of Information Technology System | 5.0 | – | 5.0 | By March 31, 2023 | | Working Capital | 13.1 | 13.1 | – | N/A | | **Total** | **34.8** | **27.2** | **7.6** | | Other Information [Interests of Directors and Substantial Shareholders](index=36&type=section&id=Interests%20of%20Directors%20and%20substantial%20shareholders) As of September 30, 2021, Mr. Lo Ming Yik, Chairman and Executive Director, held 251,110,000 shares, representing 62.78% of the issued share capital, through his wholly-owned company Fully Fort Group Limited, making him the controlling shareholder - Executive Director Mr. Lo Ming Yik holds **62.78%** of the company's shares through his wholly-owned company, **Fully Fort Group Limited**[180](index=180&type=chunk)[182](index=182&type=chunk) [Share Option Scheme](index=38&type=section&id=Share%20Option%20Scheme) The company adopted a share option scheme on December 11, 2018, with no options granted, exercised, lapsed, or cancelled during the reporting period or up to the reporting date, and no outstanding share options as of September 30, 2021 - There was no activity under the share option scheme during the reporting period, and no outstanding share options at period-end[190](index=190&type=chunk) [Corporate Governance](index=39&type=section&id=Corporate%20Governance) The company is committed to maintaining high corporate governance standards, complying with the GEM Listing Rules' Corporate Governance Code, and has established audit, nomination, and remuneration committees, with the unaudited condensed consolidated financial statements for the period reviewed by the audit committee - The company has established an **Audit Committee**, a **Nomination Committee**, and a **Remuneration Committee**, each comprising three independent non-executive directors[198](index=198&type=chunk)[200](index=200&type=chunk)[209](index=209&type=chunk) - This interim financial report is unaudited but has been reviewed by the **Audit Committee**[199](index=199&type=chunk)[218](index=218&type=chunk)

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

Financial Performance - The Group recorded a revenue of approximately HK$240.1 million for the year ended 31 March 2021, representing a decrease of approximately HK$111.0 million or 31.6% compared to HK$351.1 million for the year ended 31 March 2020[14]. - Loss attributable to the owners of the Company was approximately HK$7.5 million for the year ended 31 March 2021, a decrease of approximately HK$9.2 million from a profit of approximately HK$1.7 million for the year ended 31 March 2020[14]. - Revenue from the sale of diesel oil accounted for approximately HK$239.4 million, representing approximately 99.7% of the Group's total revenue for the year ended 31 March 2021[36]. - The sales quantity of diesel oil increased by approximately 7.5% from 81.0 million litres for the year ended 31 March 2020 to 87.1 million litres for the year ended 31 March 2021[38]. - The average selling price of diesel oil decreased by approximately 36.0% from HK$4.30 per litre for the year ended 31 March 2020 to HK$2.75 per litre for the year ended 31 March 2021[42]. - The Group's cost of sales was approximately HK$238.0 million for the year ended 31 March 2021, representing a decrease of 29.7% from HK$338.5 million for the year ended 31 March 2020[44]. - The average unit purchase cost of diesel oil decreased by 35.0% from approximately HK$4.08 per litre for the year ended 31 March 2020 to approximately HK$2.65 per litre for the year ended 31 March 2021[45]. - The Group's gross profit decreased by approximately HK$10.5 million or approximately 83.3%, from HK$12.6 million for the year ended 31 March 2020 to HK$2.1 million for the year ended 31 March 2021[52]. - The net profit margin for the year ended 31 March 2021 was negative 3.12%, compared to a positive 0.48% for the year ended 31 March 2020[58]. - The Group's current ratio was approximately 5.9 as at 31 March 2021, calculated by current assets of approximately HK$55.2 million over current liabilities of approximately HK$9.4 million[60]. - The Group recorded net current assets of approximately HK$45.7 million as at 31 March 2021[59]. - The gearing ratio of the Group as at 31 March 2021 was 2.3%, compared to nil in 2020[66]. Operational Challenges - The Company acknowledges the challenges faced in 2020 due to the COVID-19 pandemic, which disrupted business activities and affected market conditions[14]. - The uncertainty regarding the containment of the COVID-19 pandemic has made the Group's operating environment extremely challenging, prompting a focus on cash flow management and business plan adjustments[29]. - The market demand for diesel oil from the logistics sector was reduced due to the impact of COVID-19 and related anti-epidemic measures[23]. Business Strategy and Future Plans - The Company aims to maintain a steady business scale and improve operational efficiency while adapting to new challenges[17]. - The Group plans to implement business strategies step by step to strengthen its position as an established diesel oil provider in Hong Kong[17]. - The Company is committed to creating long-term shareholder value through its strategic initiatives[17]. - The report emphasizes the importance of operational flexibility in response to market volatility[17]. - The Group has no future plans for material investments or capital assets as of the date of this report[84]. Corporate Governance - The Company has complied with all applicable code provisions set out in the Corporate Governance Code throughout the year ended March 31, 2021[115]. - The Group's corporate governance practices are based on the Corporate Governance Code as set out in Appendix 15 to the GEM Listing Rules, emphasizing the importance of sound governance for growth and shareholder interests[114]. - The Board comprises five Directors, including two executive Directors and three independent non-executive Directors, ensuring a balance of skills and experience[122]. - The Board has established three committees: the Audit Committee, Remuneration Committee, and Nomination Committee, to oversee specific aspects of the Company's affairs[132]. - The Company has a strong corporate governance structure to ensure effective oversight of management[158]. - The roles of Chairman and Chief Executive Officer are separated to ensure effective corporate governance[158]. Employee and Manpower Management - The Group has expanded its manpower, with total staff costs for the year ended 31 March 2021 amounting to approximately HK$7.3 million, up from HK$6.6 million in the previous year[108]. - The Group hired one senior accountant and one administrative staff member to support its expanding business[101]. - As of 31 March 2021, the Group engaged a total of 27 employees, an increase from 24 employees as of 31 March 2020[108]. - Total employee costs for the year ended March 31, 2021, were approximately HK$7.3 million, compared to approximately HK$6.6 million for the year ended March 31, 2020, reflecting an increase of about 10.61%[111]. Financial Management and Capital Expenditure - The Group maintained a healthy liquidity position throughout the year ended March 31, 2021, by adopting prudent financial management approaches[75]. - Capital expenditure for the Group decreased by approximately HK$2.6 million or 45.6% to approximately HK$3.1 million compared to the previous year, primarily related to the purchase of diesel tank wagons[83]. - The total actual use of net proceeds up to 31 March 2021 was HK$26.1 million, leaving an unutilized amount of HK$8.7 million[104]. - The net proceeds from the share offer amounted to approximately HK$34.8 million after deducting underwriting commissions and other listing expenses[102]. - As of 31 March 2021, the actual use of net proceeds included HK$11.3 million for the purchase of diesel tank wagons, with an unutilized amount of HK$3.7 million expected to be fully utilized by 31 March 2023[104]. Risk Management - The Group's reliance on a single oil supplier in Hong Kong poses a risk of disruption to diesel oil transportation services[72]. - The Group's earnings and financial condition may be adversely affected by incorrect oil and gas price assumptions used to evaluate projects[72].

[Financial Highlights](index=3&type=section&id=Highlights) The company experienced a significant decline in revenue and gross margin, resulting in a net loss for the nine months ended December 31, 2020 Key Performance Indicators for the Nine Months Ended December 31, 2020 | Metric | Nine Months 2020 | Nine Months 2019 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | approximately **HKD 180.8 million** | approximately **HKD 299.4 million** | -39.6% | | Gross Margin | approximately **1.7%** | approximately **3.8%** | -2.1 percentage points | | (Loss)/Profit Attributable to Owners of the Company | Loss of approximately **HKD 3.0 million** | Profit of approximately **HKD 4.2 million** | -171.4% | - The Board does not recommend the payment of any dividend for the nine months ended December 31, 2020[8](index=8&type=chunk) [Unaudited Condensed Consolidated Financial Statements](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including the income statement, equity changes, and explanatory notes [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) The Group transitioned from profit to loss, with revenue decreasing by **39.6%** to **HKD 180.8 million** and gross profit declining by **72.8%** to **HKD 3.05 million**, resulting in a net loss of **HKD 2.99 million** Consolidated Statement of Profit or Loss (For the Nine Months Ended December 31) | Item | 2020 ('000 HKD) | 2019 ('000 HKD) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | **180,798** | **299,381** | -39.6% | | Gross Profit | **3,053** | **11,245** | -72.8% | | (Loss)/Profit Before Tax | **(3,705)** | **4,794** | From Profit to Loss | | (Loss)/Profit and Total Comprehensive (Loss)/Income for the Period | **(2,986)** | **4,221** | From Profit to Loss | | Basic (Loss)/Earnings Per Share (HK cents) | **(0.75)** | **1.06** | From Profit to Loss | [Unaudited Condensed Consolidated Statement of Changes in Equity](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) The Group's total equity decreased from **HKD 62.66 million** to **HKD 59.68 million** as of December 31, 2020, primarily due to a **HKD 2.99 million** loss for the period Summary of Changes in Equity | Item | Amount ('000 HKD) | | :--- | :--- | | As at April 1, 2020 (Audited) | **62,661** | | Loss and Total Comprehensive Loss for the Period | **(2,986)** | | As at December 31, 2020 (Unaudited) | **59,675** | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's core business of selling diesel and related products in Hong Kong, with **99.7%** of revenue from diesel sales, and confirm no dividend recommendation for the period - The Group is principally engaged in the sale of diesel and related products in Hong Kong[15](index=15&type=chunk) Revenue Composition for the Nine Months Ended December 31, 2020 | Revenue Source | Amount ('000 HKD) | % of Total Revenue | | :--- | :--- | :--- | | Diesel Sales | **180,190** | **99.7%** | | AdBlue Sales | **333** | **0.2%** | | Ancillary Transportation Services | **275** | **0.1%** | | **Total** | **180,798** | **100%** | - The Board does not recommend the payment of any dividend for the nine months ended December 31, 2020[44](index=44&type=chunk) [Management Discussion and Analysis](index=13&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the Group's business performance, future outlook, and detailed financial analysis for the reporting period [Business Review](index=13&type=section&id=Business%20Review) The Group faced significant challenges due to the COVID-19 pandemic, leading to reduced diesel demand from cross-border transportation and construction, resulting in substantial revenue and profit decline despite competitive pricing - The Group's principal business is the sale of diesel and related products in Hong Kong, primarily to logistics and construction companies[48](index=48&type=chunk) - The COVID-19 pandemic led to economic contraction, tightened customs clearance measures between Hong Kong and mainland China, severely impacting cross-border transportation services and reducing diesel demand from the logistics sector[49](index=49&type=chunk)[50](index=50&type=chunk) - Hong Kong government's anti-epidemic measures caused suspension of construction projects, leading to uncertain demand for diesel used in construction machinery[53](index=53&type=chunk) - Despite offering competitive prices to maintain sales volume, declining gross margins and increasing operating costs resulted in a net loss for the reporting period[54](index=54&type=chunk) [Future Prospects](index=14&type=section&id=Future%20Prospects) The Group will closely monitor the COVID-19 pandemic, prioritize cash flow management, adjust business plans for operational stability, and prepare for business recovery while ensuring employee safety - The Group will closely monitor the development of the COVID-19 pandemic, prioritize cash flow management, integrate resources, and adjust business plans to prepare for business recovery[55](index=55&type=chunk) [Financial Review](index=15&type=section&id=Financial%20Review) The Group's financial performance significantly declined, with total revenue down **39.6%** to **HKD 180.8 million** due to a **41.1%** drop in average diesel selling price, leading to a **72.3%** gross profit decrease and a net loss of **HKD 3.0 million** [Revenue, Sales Volume and Selling Price](index=15&type=section&id=Revenue%2C%20Sales%20quantity%20and%20Selling%20price) For the nine months ended December 31, 2020, Group revenue decreased by **39.6%** to **HKD 180.8 million**, primarily due to a **41.1%** drop in average diesel selling price to **HKD 2.58 per liter**, despite a **2.9%** increase in sales volume Changes in Diesel Sales Volume and Selling Price (For the Nine Months) | Metric | 2020 | 2019 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Sales Volume | **69.8 million liters** | **67.8 million liters** | +2.9% | | Average Selling Price | **HKD 2.58/liter** | **HKD 4.38/liter** | -41.1% | [Cost of Sales](index=16&type=section&id=Cost%20of%20sales) Cost of sales decreased by **38.3%** to **HKD 177.7 million**, aligning with revenue decline, as average unit diesel procurement cost fell by **40.6%** in line with market trends - Cost of sales decreased by **38.3%** to **HKD 177.7 million**, consistent with the decline in revenue[69](index=69&type=chunk) - The average unit procurement cost of diesel decreased by **40.6%** from approximately **HKD 4.16 per liter** to approximately **HKD 2.47 per liter**, consistent with market trends[70](index=70&type=chunk) [Gross Profit and Gross Profit Margin](index=17&type=section&id=Gross%20profit%20and%20gross%20profit%20margin) Gross profit significantly decreased by **72.3%** to **HKD 3.1 million**, and gross margin sharply declined from **3.8%** to **1.7%** due to competitive pricing in a challenging business environment Changes in Gross Profit and Gross Profit Margin (For the Nine Months) | Metric | 2020 | 2019 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Gross Profit | approximately **HKD 3.1 million** | approximately **HKD 11.2 million** | -72.3% | | Gross Margin | approximately **1.7%** | approximately **3.8%** | -2.1 percentage points | [Loss for the Period](index=19&type=section&id=Loss%20for%20the%20period) The Group recorded a net loss of approximately **HKD 3.0 million** for the period, a **171.4%** decrease from the prior year's net profit of approximately **HKD 4.2 million**, due to adverse business conditions and increased operating costs - For the nine months ended December 31, 2020, the Group recorded a net loss of approximately **HKD 3.0 million**, compared to a net profit of approximately **HKD 4.2 million** in the prior year, representing a **171.4%** decrease[92](index=92&type=chunk) [Use of Proceeds](index=20&type=section&id=Use%20of%20Proceeds) Of the **HKD 34.8 million** net proceeds from the January 2019 listing, **HKD 25.9 million** has been utilized as of December 31, 2020, with the remaining **HKD 8.9 million** for diesel tank trucks and IT system upgrades expected to be fully deployed by March 31, 2021 Use of Net Proceeds (As at December 31, 2020) | Purpose | Revised Allocation (million HKD) | Actual Use (million HKD) | Unutilized Amount (million HKD) | Expected Full Utilization Time | | :--- | :--- | :--- | :--- | :--- | | Purchase of Diesel Tank Trucks | **15.0** | **11.1** | **3.9** | Before March 31, 2021 | | Manpower Expansion | **1.7** | **1.7** | **0** | N/A | | Upgrade of Information Technology System | **5.0** | **0** | **5.0** | Before March 31, 2021 | | Working Capital | **13.1** | **13.1** | **0** | N/A | | **Total** | **34.8** | **25.9** | **8.9** | | [Other Information](index=22&type=section&id=Other%20Information) This section provides details on directors' and shareholders' interests and the company's adherence to corporate governance principles [Interests of Directors and Shareholders](index=23&type=section&id=Interests%20of%20Directors%20and%20Shareholders) As of December 31, 2020, Chairman and Executive Director Mr. Lo Ming Yik held **62.78%** of the company's issued share capital through Fully Fort Group Limited, with no other directors or major shareholders having disclosable interests - Company Chairman Mr. Lo Ming Yik holds **62.78%** of the company's shares through his wholly-owned company, Fully Fort[116](index=116&type=chunk)[118](index=118&type=chunk) [Corporate Governance](index=26&type=section&id=Corporate%20Governance) The company complied with the GEM Listing Rules' Corporate Governance Code during the period, establishing audit, nomination, and remuneration committees with compliant compositions, and the audit committee reviewed the unaudited condensed consolidated financial statements - The company has established an Audit Committee, Nomination Committee, and Remuneration Committee, with compositions compliant with Listing Rules requirements[134](index=134&type=chunk)[141](index=141&type=chunk)[147](index=147&type=chunk) - The unaudited condensed consolidated financial statements for the quarter have been reviewed by the Audit Committee[135](index=135&type=chunk) - The company complied with the provisions of the Corporate Governance Code throughout the reporting period and maintained sufficient public float[154](index=154&type=chunk)[155](index=155&type=chunk)

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

Sun Kong Holdings Limited 申港控股有限公司 (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: 8631 2020/2021 First Quarterly Report 第一季度報告 CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential ris ...