丰城控股(02295) - 2023 - 年度业绩

Annual Results Announcement Summary and Performance Highlights The company reported a 12.5% revenue decrease to HKD 168.2 million, with a slight 3.7% dip in profit, though adjusted profit (excluding anti-epidemic fund) rose 25.7% Key Financial Summary for FY2023 | Indicator | 2023 (HKD millions) | 2022 (HKD millions) | Change (HKD millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 168.2 | 192.3 | (24.1) | -12.5% | | Profit and total comprehensive income for the year | 13.9 | 14.5 | (0.5) | -3.7% | | Adjusted profit and total comprehensive income (excluding Anti-epidemic Fund) | 13.9 | 11.1 | 2.9 | +25.7% | - The Board resolved to recommend the payment of an interim dividend of 2.5 HK cents per ordinary share for the year ended December 31, 2023 (2022: nil), which was paid on September 29, 2023, and did not recommend a final dividend for the year (2022: 7.5 HK cents)[7] Consolidated Financial Statements This section provides an overview of the company's profitability and financial health through the consolidated statements of profit or loss and financial position for the year ended December 31, 2023 Consolidated Statement of Profit or Loss and Other Comprehensive Income Revenue declined 12.5% in 2023, gross profit slightly decreased, but gross margin improved, resulting in a profit of HKD 13.9 million and basic EPS of 3.49 HK cents Summary of Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--- | :--- | :--- | | Revenue | 168,202 | 192,258 | | Cost of services | (147,543) | (171,387) | | Gross profit | 20,659 | 20,871 | | Other income and net other gains | 4,348 | 4,315 | | Administrative expenses | (8,980) | (8,854) | | Finance costs | (83) | (52) | | Profit before income tax | 15,944 | 16,280 | | Income tax expense | (2,002) | (1,805) | | Profit and total comprehensive income for the year | 13,942 | 14,475 | | Earnings per share attributable to equity holders of the Company (Basic and diluted) | 3.49 HK cents | 3.62 HK cents | Consolidated Statement of Financial Position Net current assets decreased to HKD 137.2 million by year-end 2023, with total assets less current liabilities at HKD 144 million and net assets at HKD 143.1 million Summary of Consolidated Statement of Financial Position | Indicator | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--- | :--- | :--- | | Property, plant and equipment | 6,859 | 9,974 | | Current assets | 160,199 | 196,979 | | Current liabilities | 23,019 | 35,738 | | Net current assets | 137,180 | 161,241 | | Total assets less current liabilities | 144,039 | 171,215 | | Non-current liabilities | 959 | 2,077 | | Net assets | 143,080 | 169,138 | | Equity attributable to equity holders of the Company | 143,080 | 169,138 | Notes to Consolidated Financial Statements This section provides detailed notes to the consolidated financial statements, covering general information, accounting policies, revenue, expenses, dividends, earnings per share, and various assets and liabilities General Information and Basis of Preparation Fengcheng Holdings Limited, incorporated in the Cayman Islands, primarily conducts slope works in Hong Kong, with its shares listed on the HKEX Main Board, and financial statements prepared on a historical cost basis - The Company is an investment holding company, and the Group is principally engaged in slope works in Hong Kong[43] - The Company's shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited[11] - The consolidated financial statements are prepared on a historical cost basis, presented in Hong Kong dollars, and all values are rounded to the nearest thousand (HKD thousands)[46] Significant Accounting Policies and HKFRS Adoption The Group's financial statements adhere to HKFRS, with new and revised standards having no significant impact on current or prior period results, and future standards are not expected to cause material changes - These consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards (HKFRS) issued by the Hong Kong Institute of Certified Public Accountants (HKICPA) and generally accepted accounting principles in Hong Kong[56] - The adoption of new and revised HKFRSs has had no significant impact on the results and financial position for the current and prior periods presented[47] - The Directors anticipate that new and revised HKFRSs will not have a material impact on the Group’s consolidated financial statements upon adoption[60] Revenue and Segment Information The Group's 2023 revenue of HKD 168.2 million primarily from public slope works in Hong Kong, with no segment analysis due to single business focus, and HKD 294 million in future revenue expected in 2024 - The Group’s principal activities are disclosed in note 1 to the consolidated financial statements, with revenue generated from providing slope works to external customers and recognized over time[50] Revenue Sources | Revenue Source | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--- | :--- | :--- | | Provision of slope works - Public projects | 146,409 | 170,932 | | Provision of slope works - Private projects | 21,793 | 21,326 | | Total Revenue | 168,202 | 192,258 | Expected Remaining Performance Obligations | Expected Settlement Year | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--- | :--- | :--- | | December 31, 2023 | – | 197,170 | | December 31, 2024 | 294,147 | 135,650 | | December 31, 2025 | 97,372 | 47,404 | | December 31, 2026 | 41,242 | 38,026 | | Total | 432,761 | 418,250 | Other Income and Net Other Gains Other income and net other gains remained stable at HKD 4.3 million in 2023, driven by increased bank interest income offset by reduced government grants Details of Other Income and Net Other Gains | Item | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--- | :--- | :--- | | Bank interest income | 4,338 | 928 | | Gain on disposal of property, plant and equipment | 10 | 1 | | Government grants | – | 3,386 | | Total | 4,348 | 4,315 | - The difference was mainly due to an increase in bank interest income of approximately HKD 3.4 million for the year ended December 31, 2023, partially offset by a decrease in government grants from the Anti-epidemic Fund of approximately HKD 3.4 million[120] Finance Costs Finance costs rose from HKD 52 thousand in 2022 to HKD 83 thousand in 2023, mainly due to increased interest expenses from lease liabilities Details of Finance Costs | Item | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--- | :--- | :--- | | Finance expenses on lease liabilities | 82 | 52 | | Interest expenses on bank overdrafts | 1 | – | | Total | 83 | 52 | - Finance costs increased from approximately HKD 52,000 in 2022 to approximately HKD 83,000 in 2023, primarily due to full-year interest expenses from increased lease liabilities in the prior year[122] Profit Before Income Tax and Income Tax Expense Profit before income tax was HKD 15.9 million, with income tax expense rising 10.9% to HKD 2 million, mainly due to reduced depreciation, and Hong Kong profits tax applies a two-tiered system Summary of Profit Before Income Tax and Income Tax Expense | Indicator | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--- | :--- | :--- | | Profit before income tax | 15,944 | 16,280 | | Income tax expense | 2,002 | 1,805 | | Hong Kong profits tax provision - Current tax | 2,309 | 1,381 | | Deferred tax | (306) | 462 | - The Group’s income tax expense increased by approximately HKD 0.2 million or 10.9% to approximately HKD 2.0 million in 2023, primarily due to a decrease in depreciation provision for property, plant and equipment[123] - Under the two-tiered profits tax regime, qualifying corporations are taxed at 8.25% on the first HKD 2,000,000 of assessable profits and 16.5% on assessable profits above HKD 2,000,000[172] Dividends The company declared an interim dividend of 2.5 HK cents per share, totaling HKD 10 million, but did not recommend a final dividend for 2023, unlike the 7.5 HK cents per share in 2022 Dividend Distribution | Dividend Type | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--- | :--- | :--- | | Proposed final dividend for the year ended December 31, 2022 (7.5 HK cents per share) | – | 30,000 | | Interim dividend for the year ended December 31, 2023 (2.5 HK cents per share) | 10,000 | – | | Total | 10,000 | 30,000 | - The Board declared an interim dividend of 2.5 HK cents per ordinary share, amounting to HKD 10,000,000, which was paid on September 29, 2023[94] - The Board did not recommend the payment of a final dividend for the year ended December 31, 2023[95] Earnings Per Share Basic earnings per share decreased to 3.49 HK cents in 2023 from 3.62 HK cents in 2022, with diluted EPS remaining equal due to no potential dilutive ordinary shares Earnings Per Share Calculation | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Profit for the purpose of calculating basic earnings per share (Profit for the year) (HKD thousands) | 13,942 | 14,475 | | Weighted average number of ordinary shares for the purpose of calculating basic earnings per share (thousands of shares) | 400,000 | 400,000 | | Basic and diluted earnings per share | 3.49 HK cents | 3.62 HK cents | - There were no potential dilutive ordinary shares for the years ended December 31, 2023 and 2022, thus diluted earnings per share equaled basic earnings per share[114] Trade and Other Receivables Trade and other receivables significantly decreased to HKD 12 million by year-end 2023, with trade receivables having a typical 30-60 day credit period and no material fair value difference Details of Trade and Other Receivables | Item | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--- | :--- | :--- | | Trade receivables | 6,495 | 14,968 | | Prepayments | 3,866 | 6,344 | | Other receivables and utility deposits | 1,668 | 1,580 | | Total | 12,029 | 22,892 | Ageing Analysis of Trade Receivables | Ageing | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--- | :--- | :--- | | 0–30 days | 62 | 448 | | 31–90 days | 1,141 | 9,544 | | 91–365 days | 5,292 | 4,976 | | Total | 6,495 | 14,968 | - The Group grants credit periods of 30 to 60 days from the invoice date for trade receivables to its customers[116] Contract Assets Contract assets increased to HKD 33.6 million by year-end 2023, driven by higher unbilled revenue, with expected credit loss provisions assessed as immaterial Details of Contract Assets | Item | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--- | :--- | :--- | | Unbilled revenue | 28,669 | 20,835 | | Retention receivables | 4,946 | 5,885 | | Total | 33,615 | 26,720 | - Changes in contract assets were mainly due to variations in unbilled revenue from completed and certified contract works and changes in retention receivables from ongoing and completed contracts under defect liability periods[81][119][24] - As at December 31, 2023 and 2022, the Group assessed that the loss allowance and expected credit loss rate under HKFRS 9 were immaterial[101][174] Trade and Other Payables Trade and other payables decreased to HKD 21.6 million by year-end 2023, with trade payables having credit terms of 0 to 45 days Details of Trade and Other Payables | Item | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--- | :--- | :--- | | Trade payables | 20,066 | 31,967 | | Accruals and other payables | 1,566 | 1,817 | | Total | 21,632 | 33,784 | Ageing Analysis of Trade Payables | Ageing | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--- | :--- | :--- | | 0–30 days | 14,356 | 25,907 | | 31–60 days | 318 | 5,441 | | 61–90 days | 26 | – | | 91–365 days | – | 603 | | Over 365 days | 5,366 | 16 | | Total | 20,066 | 31,967 | - The credit terms granted by suppliers to the Group range from 0 to 45 days[28] Lease Liabilities Total lease liabilities significantly decreased to HKD 769 thousand by year-end 2023, with HKD 465 thousand due within one year and HKD 304 thousand due after one year Remaining Contractual Period of Lease Liabilities | Term | 2023 (HKD thousands) | 2022 (HKD thousands) | | :--- | :--- | :--- | | Within one year | 465 | 572 | | Over one year but within two years | 304 | 1,116 | | Total present value of minimum lease payments | 769 | 1,688 | - For the year ended December 31, 2023, total cash outflow for leases was approximately HKD 1,416,000 (2022: HKD 11,643,000)[15] Share Capital As of year-end 2023 and 2022, authorized share capital was HKD 10 million, with issued and fully paid capital at HKD 4 million, consisting of 400 million ordinary shares of HKD 0.01 each Share Capital Structure | Share Capital Type | Number of Shares | HKD thousands | | :--- | :--- | :--- | | Authorized share capital (Ordinary shares of HKD 0.01 each) | 1,000,000,000 | 10,000 | | Issued and fully paid share capital (Ordinary shares of HKD 0.01 each) | 400,000,000 | 4,000 | Contingent Liabilities The Group faces potential litigation for employee compensation and personal injury claims as of year-end 2023, but directors do not expect a material impact on financial statements, thus no provision is made - As at December 31, 2023 and 2022, the Group was involved in potential litigations and claims for employee compensation and personal injury, which the Directors believe will not have a material impact on the consolidated financial statements, and thus no provision has been made[17] Management Discussion and Analysis This section reviews the Group's 2023 business performance, financial position, and outlook, highlighting robust financials despite talent shortages, with cautious optimism for future slope works demand Business Review The Group, a Hong Kong slope works contractor, secured 42 contracts totaling HKD 838.9 million in 2023, benefiting from the government's HKD 1.1 billion landslide prevention program in 2024 - The Group is a slope works contractor in Hong Kong, specializing in landslide preventive and remedial works to improve or maintain slope and retaining wall stability[19] - Jin Shing Construction Company Limited, the Group’s principal operating subsidiary, is an approved specialist contractor for public works under the category of “Landslide Preventive/Remedial Works to Slopes/Retaining Walls”[20][34] - For the year ended December 31, 2023, the Group was awarded 42 contracts with an aggregate sum of approximately HKD 838.9 million, completing 29 contracts totaling approximately HKD 166.5 million, and had 13 ongoing contracts worth approximately HKD 672.4 million[36] - The Hong Kong Government expects expenditure on landslide prevention and mitigation to reach HKD 1.1 billion in 2024, as stated in the 2023-2024 Budget[37] Outlook and Challenges The construction industry faces a talent shortage, projected to reach 48,500-55,000 by 2027, leading to conservative bidding strategies despite anticipated economic improvement and increased demand for slope works - The construction industry faces a shortage of 17,500 to 24,000 workers and professionals, projected to increase to 48,500 to 55,000 by 2027, compelling the Group to adjust its tendering strategy and adopt a conservative approach to new projects[39] - While the Hong Kong economy is expected to improve in mid-to-late 2024, increasing demand for slope works, the Group remains affected by manpower shortages[41] - The Directors will focus on existing projects and adopt a conservative approach to new tenders until sufficient labor and resources are available, maintaining a cautious outlook for 2024[41] Financial Review This section analyzes the 2023 changes in revenue, cost of services, gross profit, other income, administrative expenses, finance costs, income tax, and total comprehensive income, along with their primary drivers Number of Projects Contributing to Revenue | Project Type | 2023 | 2022 | | :--- | :--- | :--- | | Public projects | 16 | 17 | | Private projects | 31 | 25 | | Total | 47 | 42 | - The Group’s revenue decreased by approximately 12.5% or HKD 24.1 million to approximately HKD 168.2 million in 2023, primarily due to reduced revenue from larger-scale projects[42] - Gross profit decreased by approximately HKD 0.2 million or 1.0% to approximately HKD 20.7 million in 2023, while gross profit margin increased from 10.9% to 12.3%, mainly due to reduced revenue and significant cost savings from short-term machinery leases[102] - Profit and total comprehensive income decreased by approximately HKD 0.5 million or 3.7% to approximately HKD 13.9 million in 2023, primarily due to the decrease in revenue and gross profit compared to 2022[124] - Adjusted profit and total comprehensive income (excluding government grants related to the Anti-epidemic Fund) increased by approximately HKD 2.9 million or 25.7% to approximately HKD 13.9 million in 2023[106] Liquidity and Financial Resources The Group maintains a robust financial position with HKD 114.6 million in cash, HKD 137.2 million in net current assets, a current ratio of 7.0x, and a gearing ratio of 0.5%, with no outstanding bank borrowings - Cash and bank balances decreased by approximately HKD 32.8 million or 22.3% to approximately HKD 114.6 million in 2023, mainly due to a dividend payment of approximately HKD 40.0 million during the year[108] - Net current assets decreased by approximately HKD 24.0 million to approximately HKD 137.2 million in 2023, while the current ratio increased from approximately 5.5 times to approximately 7.0 times[153] - The Group’s gearing ratio decreased from approximately 1.0% in 2022 to approximately 0.5% in 2023, primarily due to a 54.4% decrease in lease liabilities outweighing a 15.4% decrease in equity attributable to equity holders[128] - As at December 31, 2023 and 2022, the Group had no outstanding bank borrowings[110] Employees and Remuneration Policy As of year-end 2023, the Group employed 119 staff (excluding directors) with total staff costs of HKD 57.1 million, and remuneration policies align with market practices based on performance and experience - As at December 31, 2023, the Group had 119 employees (2022: 137 employees), excluding directors, with total staff costs (excluding directors’ emoluments) of approximately HKD 57.1 million (2022: HKD 56.5 million)[112] - The Group’s remuneration policy for employees includes salaries and discretionary bonuses, aligning with market practices and determined by individual performance and experience[112] Capital Expenditure and Investments In 2023, the Group invested HKD 400 thousand in property, plant, and equipment, funded internally, with no significant acquisitions, disposals, or material investment plans during the reporting period - For the year ended December 31, 2023, the Group invested approximately HKD 0.4 million in property, plant and equipment, primarily funded by internal resources[131] - For the years ended December 31, 2023 and 2022, the Group did not hold any material investments[133] - For the year ended December 31, 2023 and up to the date of this announcement, the Group did not make any material acquisitions and disposals of subsidiaries, associates and joint ventures[134] - The Group has no other plans regarding material investments or capital assets[135] Corporate Governance The Group is committed to high corporate governance standards, adhering to the HKEX Listing Rules' Corporate Governance Code, with the Board confirming full compliance and internal controls for conflict management - The Group is committed to achieving high standards of corporate governance, believing that sound practices are essential to safeguard shareholders’ interests, enhance corporate value, formulate strategies, and improve transparency and accountability[157] - The Group has adopted the principles and code provisions of the Corporate Governance Code (CG Code) in Appendix C1 to the Listing Rules as the basis for its corporate governance practices[158] - The Board confirms that the Group has complied with all applicable code provisions of the CG Code for the year ended December 31, 2023, and up to the date of this announcement[139] Compliance with Corporate Governance Code The Group complied with all Corporate Governance Code provisions and its securities dealing code, with no breaches by directors or employees identified during the reporting period - The Group has adopted a code of conduct for securities transactions with terms no less exacting than the Model Code for Securities Transactions by Directors of Listed Issuers (Model Code) in Appendix C3 to the Listing Rules[140] - All Directors confirmed compliance with the requirements of the Model Code for the year ended December 31, 2023, following specific enquiries[140] Share Option Scheme and Public Float The company adopted a ten-year share option scheme, maintains a public float of at least 25% as per Listing Rules, and will suspend share transfer registration from May 15-21, 2024, for the AGM - The Company conditionally adopted a Share Option Scheme on November 25, 2019, which became effective on December 13, 2019, and will be valid for a period of ten years[143] - As at the date of this announcement, the Company’s public float is not less than 25% of its issued shares, meeting Listing Rules requirements[165] - The register of members will be closed from Wednesday, May 15, 2024, to Tuesday, May 21, 2024, to determine shareholders’ entitlement to attend and vote at the forthcoming annual general meeting[165] Audit Committee and Auditor's Work The four-member Audit Committee reviewed and approved the 2023 annual results, confirming compliance with accounting standards, and the auditor, Grant Thornton, verified consistency with the audited financial statements - As at the date of this announcement, the Audit Committee comprises four members: Mr. CHO Bing Chung (Chairman), Ms. CHIU Siu Ling, Mr. KWONG Chi Shing, and Mr. LING Siu Tsang[166] - The Company’s Audit Committee reviewed the annual results for the year ended December 31, 2023, confirming compliance with applicable accounting standards and adequate disclosures[166] - Grant Thornton Hong Kong Limited, the Company’s auditor, confirmed that the figures in the preliminary results announcement for 2023 are consistent with the audited consolidated financial statements[167] Other Information This section provides acknowledgements to stakeholders, outlines the publication of annual results and reports, and lists the Board of Directors - The Board extends sincere gratitude to the Group’s shareholders, customers, subcontractors, suppliers, business partners, management, and staff for their continuous support, hard work, dedication, and contribution to the Group’s growth[170] - This annual results announcement will be published on the HKEX website (www.hkexnews.hk) and the Company’s website (www.maxicity.com.hk), with the annual report to be despatched to shareholders and published online in due course[168] - As at the date of this announcement, the Board comprises executive Directors Mr. TSE Shing Kee (Chairman) and Mr. HO Ka Ki (Chief Executive Officer), and independent non-executive Directors Ms. CHIU Siu Ling, Mr. KWONG Chi Shing, Mr. LING Siu Tsang, and Mr. CHO Bing Chung[171]