荣尊国际控股(01780) - 2024 - 中期业绩

Financial Highlights Financial Highlights For the six months ended September 30, 2023, the Group's revenue increased by 10.2% year-on-year to HKD 108.1 million, but gross profit turned into a gross loss with a gross loss margin of 17.8%, resulting in a pre-tax loss of approximately HKD 25 million and basic loss per share of 4.03 HK cents, with no interim dividend recommended Summary of 2023 Interim Results | Metric | For the six months ended Sep 30, 2023 | For the six months ended Sep 30, 2022 | | :--- | :--- | :--- | | Revenue | Approx. HKD 108.1 million | Approx. HKD 98.1 million | | Gross (Loss) / Profit | Gross loss approx. HKD 19.2 million (Gross loss margin 17.8%) | Gross profit approx. HKD 12.8 million (Gross profit margin 13.0%) | | (Loss) / Profit Before Tax | Loss approx. HKD 25 million | Profit approx. HKD 8.8 million | | (Loss) / Profit for the Period | Loss approx. HKD 25 million | Profit approx. HKD 8.8 million | | Basic (Loss) / Earnings Per Share | Loss 4.03 HK cents | Profit 1.42 HK cents | | Interim Dividend | Not paid | Nil | Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income During the reporting period, the company recorded revenue of HKD 108 million, a 10.1% year-on-year increase, but direct costs surged by 49.1% to HKD 127 million, turning a gross profit of HKD 12.78 million into a gross loss of HKD 19.22 million, ultimately resulting in a loss of HKD 24.99 million for the period, compared to a profit of HKD 8.82 million in the prior year Key Items from Consolidated Statement of Profit or Loss | Item (HKD '000) | 2023 H1 (Unaudited) | 2022 H1 (Unaudited) | | :--- | :--- | :--- | | Revenue | 108,056 | 98,131 | | Direct Costs | (127,275) | (85,355) | | Gross (Loss) / Profit | (19,219) | 12,776 | | Administrative Expenses | (6,706) | (6,030) | | (Loss) / Profit Before Tax | (24,986) | 8,820 | | (Loss) / Profit for the Period | (24,986) | 8,820 | Condensed Consolidated Statement of Financial Position As of September 30, 2023, the Group's total assets were HKD 261 million, total liabilities HKD 90 million, and net assets HKD 171 million, a decrease from HKD 196 million as of March 31, 2023, with net current assets declining from HKD 170 million to HKD 146 million, indicating weakened liquidity Summary of Consolidated Statement of Financial Position | Item (HKD '000) | Sep 30, 2023 (Unaudited) | Mar 31, 2023 (Audited) | | :--- | :--- | :--- | | Non-current Assets | 25,890 | 25,990 | | Current Assets | 235,196 | 242,148 | | Current Liabilities | 89,652 | 71,718 | | Net Current Assets | 145,544 | 170,430 | | Net Assets | 171,434 | 196,420 | | Total Equity | 171,434 | 196,420 | Notes to the Financial Statements The notes to the financial statements detail the company's accounting policies, composition, and changes in financial data, highlighting that revenue primarily stems from alteration and addition works and civil engineering, with the civil engineering segment showing significant losses, basic loss per share at 4.03 HK cents, increases in both trade receivables and payables, and post-period events including a change in controlling shareholder and a new performance bond Revenue and Segment Information The Group's total revenue increased by 10.1% year-on-year, with civil engineering services revenue surging by 115.9% to HKD 51.21 million, while alteration and addition works revenue decreased by 23.6% to HKD 56.84 million; segment results show alteration and addition works profit declined by 75.6%, and the civil engineering segment turned from profit to a significant loss of HKD 22.14 million, which is the primary cause of the Group's overall loss Revenue and Results by Segment (HKD '000) | Item | 2023 H1 (Unaudited) | 2022 H1 (Unaudited) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Segment Revenue | | | | | Alteration and Addition Works | 56,844 | 74,410 | -23.6% | | Civil Engineering | 51,212 | 23,721 | +115.9% | | Total | 108,056 | 98,131 | +10.1% | | Segment Results | | | | | Alteration and Addition Works | 2,439 | 9,989 | -75.6% | | Civil Engineering | (22,144) | 3,490 | N/A (Turned from profit to loss) | | Total | (19,705) | 13,479 | N/A (Turned from profit to loss) | Dividends The Board does not recommend paying any interim dividend for the six months ended September 30, 2023, consistent with the policy for the same period last year - The Board does not recommend paying an interim dividend for the six months ended September 30, 2023, and September 30, 2022[49] (Loss) / Earnings Per Share Due to the company turning from profit to loss, basic earnings per share shifted from a profit of 1.42 HK cents in the prior period to a loss of 4.03 HK cents, while the weighted average number of ordinary shares used for calculation remained unchanged Basic (Loss) / Earnings Per Share Calculation | Item | 2023 H1 (Unaudited) | 2022 H1 (Unaudited) | | :--- | :--- | :--- | | (Loss) / Profit for the Period (HKD '000) | (24,986) | 8,820 | | Weighted Average Number of Ordinary Shares ('000 shares) | 620,000 | 620,000 | | Basic (Loss) / Earnings Per Share (HK cents) | (4.03) | 1.42 | Events After Reporting Period Significant events occurred after the reporting period, including the change in the company's controlling shareholder to Kyosei Technology Inc. on September 11, 2023, which acquired 75% of the company's shares, and the Group obtaining a performance bond of approximately HKD 2.5 million in November 2023 - On September 11, 2023, Kyosei Technology Inc. completed the acquisition of 465 million shares (representing 75%) of the company, becoming the new controlling shareholder[99] - In November 2023, the Group obtained a performance bond of approximately HKD 2.5 million from a bank to guarantee the fulfillment of its customer contracts[47] Management Discussion and Analysis Business Review and Outlook The Group is a professional alteration and addition works and civil engineering contractor in Hong Kong, primarily serving property asset management companies, developers, and contractors, focusing on private sector projects during the reporting period; management remains cautious about short-term business and financial performance due to intense market competition and anticipated low profitability of new contracts, despite Hong Kong's gradual economic recovery - The company is a professional contractor in Hong Kong engaged in alteration and addition works and civil engineering, holding all necessary licenses[31] - Management maintains a cautious outlook on short-term business prospects, anticipating intense market competition and lower profitability for new contracts[34] Financial Review Financial performance significantly deteriorated this period; although revenue grew by 10.1% due to increased construction work, direct costs surged by 49.1% due to design changes, unexpected complexities, and rework on specific projects, causing gross profit to turn negative with a 150.4% decline, ultimately resulting in a pre-tax loss of HKD 25 million compared to a profit of HKD 8.8 million in the prior year - Revenue increased by 10.1% to HKD 108.1 million, primarily due to increased construction works completed during the period[35] - Direct costs significantly increased by 49.1% to HKD 127.3 million, mainly due to design changes, unexpected complexities, and rework on certain projects in both alteration and addition works and civil engineering segments, leading to substantial increases in subcontracting costs and provisions for onerous contracts[36] - Gross profit turned into a gross loss of HKD 19.2 million from a gross profit of HKD 12.8 million in the prior period, representing a decrease of approximately 150.4%, primarily due to increased direct costs and a decline in gross profit margins across both business segments[25] - Profit before tax turned into a loss of HKD 25 million from a profit of HKD 8.8 million in the prior period, mainly due to the shift from gross profit to gross loss[30] Liquidity, Financial Resources and Capital Structure The Group primarily relies on internal financial resources for operations, with cash and cash equivalents of approximately HKD 130.6 million at period-end; the company's issued share capital is HKD 6.2 million, comprising 620 million ordinary shares, and a zero gearing ratio indicates no bank borrowings, with minimal foreign exchange risk as all Group business is settled in HKD Cash and Deposit Status (HKD million) | Item | Sep 30, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | 130.6 | 142.9 | | Bank deposits with original maturity over three months | 10.4 | 22.2 | | Restricted bank deposits | 24.2 | 24.2 | - As of September 30, 2023, the Group's gearing ratio was zero, consistent with March 31, 2023[96] - The Group's operations are solely in Hong Kong, with all transactions settled in HKD, leading the Directors to consider foreign exchange risk to be minimal[95] Human Resources As of September 30, 2023, the Group employed 52 full-time staff, a slight increase from 50 in the prior year, with total staff costs for the period amounting to approximately HKD 12.4 million, representing a year-on-year increase of about 5.1% Staff and Remuneration Overview | Item | Sep 30, 2023 | Sep 30, 2022 | | :--- | :--- | :--- | | Number of full-time employees | 52 | 50 | | Total staff costs (for the six months ended Sep 30) | Approx. HKD 12.4 million | Approx. HKD 11.8 million | Corporate Governance and Other Information Disclosure of Shareholders' Interests After the reporting period, the company's controlling shareholder changed to Kyosei Technology Inc., which, along with ultimate controlling party Mr. Kenichi Yanase, jointly holds 75% of the company's shares, with no disclosable interests for directors and chief executives in the company's securities - On September 11, 2023, Kyosei Technology Inc. completed the acquisition of 465 million shares (representing 75%) of the company, becoming the new controlling shareholder[99] Major Shareholders' Shareholding (as of Sep 30, 2023) | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Kyosei Technology Inc. | Beneficial Interest | 465,000,000 | 75% | | Mr. Kenichi Yanase | Beneficial Interest | 465,000,000 | 75% | Compliance and Governance The company has adopted and complied with the Corporate Governance Code and the Model Code for Securities Transactions by Directors of Listed Issuers under the Listing Rules; no share options have been granted since the adoption of the share option scheme in 2019, and neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities during the period - The company has consistently complied with the Corporate Governance Code throughout the reporting period and up to the date of this announcement[122] - Since the adoption of the share option scheme, no share options have been granted, exercised, cancelled, or lapsed under the scheme[125] - Neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the period[126] Public Float Following the close of the mandatory cash offer, the company's public float temporarily fell below the minimum 25% requirement, for which the company applied for and obtained a temporary waiver from the Stock Exchange; subsequently, the controlling shareholder sold a small number of shares in the market, restoring the company's minimum 25% public float requirement on November 17, 2023 - After the close of the mandatory cash offer on November 10, 2023, the public float temporarily fell below the 25% minimum requirement, failing to meet Listing Rules[128] - As of November 17, 2023, the company has restored the 25% minimum public float requirement through the controlling shareholder's sale of shares in the market[110] Audit Committee The Audit Committee, comprising three independent non-executive directors, has reviewed and approved the unaudited interim financial results for the period, deeming their preparation compliant with accounting standards and disclosure requirements - The Audit Committee is composed of three independent non-executive Directors, with Mr. Yeung Tsz Long as Chairman[130] - The Audit Committee has reviewed the Group's interim financial results for the six months ended September 30, 2023, and considers that adequate disclosures have been made[135]