建成控股(01630) - 2024 - 年度财报

Company Information This section provides core company information for Build King Holdings Limited, including its directors, committee members, and essential corporate contact details - The report provides core company information for Build King Holdings Limited, including its executive and non-executive directors, committee members, company secretary, registered office, principal place of business, share registrar, principal bankers, and company website[3][5] Chairman's Statement The Chairman's Statement reviews the year ended March 31, 2024, highlighting a 162.1% revenue increase but a turn to a HKD 43.8 million loss attributable to owners, with future plans focusing on prudent capital management and business diversification amid industry challenges FY2024 Performance Summary | Indicator | FY2024 | FY2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | Approximately HKD 1,200 million | Approximately HKD 474.8 million | +162.1% | | Gross Profit | Approximately HKD 31.6 million | Approximately HKD 15.3 million | +106.5% | | (Loss) / Profit Attributable to Owners of the Company | Approximately (HKD 43.8) million | Approximately HKD 11.9 million | Turned from profit to loss | - Revenue growth was primarily driven by large tender contracts awarded in early 2023 entering their peak construction phase[7] - Gross margin remained at a low level, mainly due to increased wages for experienced workers, additional on-site costs, and intense competition for new contracts[7] - Looking ahead, the formwork engineering industry is expected to continue facing challenges from intensified market competition and uncertain labor costs; the Group will expand project types and client base while adopting prudent capital and liquidity risk management[9] Management Discussion and Analysis This section provides a detailed analysis of the Group's business operations, financial performance, risk management strategies, and human resources policies for the reporting period Business Overview The Group's core business is formwork engineering, supplemented by building construction and financial instrument investments, with formwork engineering contributing approximately HKD 1.245 billion in revenue in FY2024, and private sector projects accounting for 70.8% of total revenue - The Group's principal business is formwork engineering, categorized into traditional timber formwork and metal formwork systems[15] Revenue Distribution by Sector | Project Sector | FY2024 Revenue (million HKD) | Percentage of Total Revenue | FY2023 Revenue (million HKD) | Percentage of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Private Sector | Approximately 882 | 70.8% | Approximately 405 | 85.4% | | Public Sector | Approximately 363 | 29.2% | Approximately 69 | 14.6% | Financial Review This fiscal year, the Group's revenue significantly increased to approximately HKD 1.245 billion due to large contracts, but gross margin slightly decreased to 2.5%, leading to a loss of HKD 43.8 million from last year's profit of HKD 11.9 million, primarily due to the absence of government wage subsidies, unrealized losses from investment securities, and increased expected credit loss provisions Revenue For the year ended March 31, 2024, the Group's revenue significantly increased from HKD 475 million to HKD 1.245 billion, driven by several large tender contracts awarded in early 2023 entering their peak construction phase, with the number of high-revenue projects (over HKD 50 million) increasing from 4 to 9 Number of Projects by Revenue Recognized | Revenue Recognized (HKD) | Number of Projects 2024 | Number of Projects 2023 | | :--- | :--- | :--- | | Over 100,000,001 | 3 | 2 | | 50,000,001 to 100,000,000 | 6 | 2 | | 10,000,001 to 50,000,000 | 6 | 5 | | 1,000,000 to 10,000,000 | 10 | 9 | | Less than 1,000,000 | 4 | 11 | | Total | 29 | 29 | Gross Profit and Gross Margin This fiscal year, gross profit increased by 107.1% to HKD 31.6 million due to higher revenue, stable raw material prices, and foreign worker employment, yet gross margin slightly decreased from 3.2% to 2.5% due to rising experienced worker wages, additional on-site costs, and intense market competition Gross Profit and Gross Margin Performance | Indicator | FY2024 | FY2023 | Change | | :--- | :--- | :--- | :--- | | Gross Profit | HKD 31.6 million | HKD 15.3 million | +107.1% | | Gross Margin | 2.5% | 3.2% | -0.7pp | Other (Losses) / Income, Net Other income turned into an other loss of HKD 9.4 million this year from HKD 20.6 million last year, a 145.5% decrease, primarily due to the absence of approximately HKD 16.6 million in government wage subsidies and a net loss of approximately HKD 13.8 million from trading securities investments, compared to a gain of HKD 2.4 million last year - Absence of approximately HKD 16.6 million in 'Employment Support Scheme' wage subsidies received in the prior year[29] - Trading and investment activities recorded a net loss of approximately HKD 13.8 million, compared to a gain of approximately HKD 2.4 million in the prior year[29] Loss Attributable to Owners of the Company The Group turned from a profit of HKD 11.9 million last year to a loss of approximately HKD 43.8 million attributable to owners of the company this year, mainly due to the absence of government wage subsidies, losses from trading securities investments, and an increase in expected credit loss provisions of approximately HKD 40.7 million - Three main reasons for the turn from profit to loss: - Absence of approximately HKD 16.6 million in government wage subsidies from the prior year - Trading securities investments recorded a net loss of approximately HKD 13.8 million (compared to a gain of HKD 2.4 million last year) - Provision for expected credit loss impairment of approximately HKD 40.7 million (compared to a reversal of approximately HKD 0.2 million last year)[34] Company Finance and Risk Management The Group maintains a sound financial position with cash and cash equivalents increasing to HKD 169 million and no bank borrowings, despite a rise in the gearing ratio to 125.4%, while also disclosing a significant lawsuit, detailing its investment portfolio, and outlining key operational risks Liquidity and Financial Resources As of March 31, 2024, the Group's cash and cash equivalents increased to approximately HKD 169 million from HKD 150 million last year, with no bank borrowings, while the gearing ratio (total debt/total equity) rose from 91.1% to 125.4% Liquidity and Capital Structure | Indicator | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Cash and Cash Equivalents | HKD 169 million | HKD 150 million | | Bank Borrowings | 0 | 0 | | Gearing Ratio | 125.4% | 91.1% | Litigation and Claims A Group subsidiary is involved in a legal dispute with a supplier, where the Group claims approximately HKD 20.72 million for delayed material delivery, while the supplier counter-sues for approximately HKD 9.8 million for breach of contract and outstanding payments, with the case (HCA 1556/2022) proceeding to mediation without confirmed liability or claim possibility yet - The Group claims approximately HKD 20.72 million from a supplier, while the supplier counter-sues for approximately HKD 9.8 million[42] - The case, HCA 1556/2022, is currently in its early stages and will proceed to mediation[42] Significant Investments Held by the Group To diversify its business, the Group invested in several Hong Kong-listed securities, including Hong Kong Exchanges and Clearing, China Construction Bank, and China Mobile, with the portfolio recording fair value losses during the reporting period, notably a HKD 12.04 million loss on Hong Kong Exchanges and Clearing investments Details of Significant Investments as of March 31, 2024 | Investment Name (Stock Code) | Investment Cost (thousand HKD) | Fair Value (thousand HKD) | Change in Fair Value (thousand HKD) | Dividends Received (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Hong Kong Exchanges and Clearing (388) | 32,449 | 22,780 | (12,040) | 841 | | China Construction Bank (939) | 5,028 | 4,720 | (370) | 380 | | China Mobile (941) | 3,890 | 5,018 | 248 | 313 | | BOC Hong Kong (2388) | 8,400 | 6,285 | (1,050) | 431 | | Ping An Insurance (2318) | 6,426 | 4,958 | (2,707) | 366 | Key Risks and Uncertainties The Group faces key risks including the non-recurring nature of its business, inaccurate project cost estimations, significant increases in construction material costs, potential construction litigation, and liquidity impacts from delayed progress payments and retention money recovery - Key risks faced by the Group include: - Revenue primarily derived from non-recurring projects, leading to uncertainty in securing new contracts - Inaccurate project cost estimations or ineffective cost management potentially adversely impacting financial performance - Significant increases in construction material costs potentially adversely impacting financial position - Construction litigation and disputes potentially adversely impacting performance - Delays in progress payments or retention money payments potentially adversely impacting liquidity[50] Employees and Remuneration Policy As of March 31, 2024, the Group's Hong Kong employee count significantly increased from 883 to 2,179, with total annual remuneration costs rising from HKD 176 million to HKD 579 million, and remuneration policies determined by performance, experience, and industry practice, offering discretionary bonuses, provident funds, and education subsidies Changes in Employees and Remuneration Costs | Indicator | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Number of Employees | 2,179 persons | 883 persons | | Total Remuneration Costs | Approximately HKD 579 million | Approximately HKD 176 million | Biographies of Directors and Senior Management This section details the personal biographies of the company's executive directors, independent non-executive directors, and senior management, including their age, positions, professional experience, academic backgrounds, and roles in other listed companies - The executive director team comprises Mr. Leung Chi Kit (Chairman), Ms. Cho Yuk Ching, Mr. Chow Tik Keung (Chief Executive Officer), and Mr. Chan Sik Mau, all possessing extensive experience in the formwork engineering and construction industries[56][57][58] - The independent non-executive directors are Mr. Lam Kai Yeung, Mr. Wong Yuk Lun, and Mr. Lam Wai Hung, who possess professional expertise in accounting, financial management, and corporate governance[60][61][64] - Senior management includes Executive Officer Ms. Cheng Wai Man and Company Secretary Ms. Tsui Wai Ting[68] Corporate Governance Report This section details the Group's corporate governance framework, including its adherence to best practices, the composition and functions of its Board of Directors and various committees, and the effectiveness of its internal control and risk management systems Corporate Governance Practices The Company is committed to maintaining high standards of corporate governance, having adopted and complied with all applicable code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules for the year ended March 31, 2024, and all directors have confirmed compliance with the adopted Model Code for Securities Transactions - The Company has adopted and complied with the applicable code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules[71][72] - The Company has adopted the Model Code for Securities Transactions by Directors, and all directors confirmed compliance during the reporting period[73] Board of Directors The Board of Directors, comprising four executive and three independent non-executive directors, meets Listing Rules requirements, with distinct roles for the Chairman (Mr. Leung Chi Kit) and CEO (Mr. Chow Tik Keung), and all directors attended all four meetings during the reporting period, overseeing group leadership, strategy, and management performance - The Board of Directors comprises 4 executive directors and 3 independent non-executive directors, meeting Listing Rules requirements[76][77] - The roles of Chairman and Chief Executive Officer are segregated and performed by different individuals to ensure clear division of responsibilities; Chairman Mr. Leung Chi Kit is responsible for the Board's operation and strategy formulation, while Chief Executive Officer Mr. Chow Tik Keung oversees the Group's daily management and operational decisions[86] Board Meeting Attendance (FY2024) | Director Name | Board Meeting Attendance Rate | | :--- | :--- | | Mr. Leung Chi Kit | 4/4 | | Ms. Cho Yuk Ching | 4/4 | | Mr. Chow Tik Keung | 4/4 | | Mr. Chan Sik Mau | 4/4 | | Mr. Lam Kai Yeung | 4/4 | | Mr. Wong Yuk Lun | 4/4 | | Mr. Lam Wai Hung | 4/4 | Board Committees The Company has established Audit, Remuneration, Nomination, and Investment Committees, each with specific responsibilities for overseeing financial reporting, internal controls, remuneration policies, board composition, and investment decisions, and all committees regularly convene to fulfill their duties - The Audit Committee, chaired by Mr. Lam Kai Yeung, comprises three independent non-executive directors and is responsible for reviewing financial statements, internal controls, and risk management systems[89][91] - The Remuneration Committee, chaired by Mr. Wong Yuk Lun, comprises two executive directors and three independent non-executive directors, responsible for approving management remuneration packages and making recommendations to the Board[92] - The Nomination Committee, chaired by Mr. Leung Chi Kit, comprises two executive directors and three independent non-executive directors, responsible for reviewing Board composition, nominating candidates, and assessing director independence[98] - The Investment Committee, chaired by Mr. Chow Tik Keung, comprises one executive director and two independent non-executive directors, responsible for overseeing the Company's investment activities and strategies[109] Internal Control and Risk Management The Board is fully responsible for maintaining the Group's internal control and risk management systems to safeguard assets, ensure proper accounting records, and comply with regulations, and despite lacking an independent internal audit department, procedures are in place to ensure adequate resources for internal audit functions, with the Board deeming the current systems effective and adequate after review - The Board of Directors bears full responsibility for the internal control and risk management systems and regularly reviews their effectiveness[114] - The Group has not established an independent internal audit department but has implemented procedures to perform internal audit functions, including an annual review of the effectiveness of risk management and internal controls[114] - The Board of Directors considers the Group's risk management and internal control systems to be effective and adequate during the reporting period[116] Environmental, Social and Governance Report This report details the Group's environmental, social, and governance performance, outlining its commitment to sustainability, stakeholder engagement, and management of key ESG issues, including environmental impacts, social responsibilities, and governance practices ESG Report Overview This report covers the Group's ESG performance in formwork engineering, building construction, and securities investment from April 1, 2023, to March 31, 2024, adhering to the HKEX ESG Reporting Guide, with the Board overseeing governance and identifying occupational health and safety, construction safety and quality control, and anti-corruption as highly material ESG issues through stakeholder engagement and materiality assessment - The report's scope aligns with the annual report, covering three major business segments: formwork engineering, building construction, and securities investment[130] - The Board of Directors bears overall responsibility for the Group's ESG governance and has appointed an ESG working group to assist with monitoring[131] - Through materiality assessment, 'Occupational Health and Safety,' 'Construction Safety and Quality Control,' and 'Anti-corruption' were identified as highly material ESG issues[143] A. Environmental In environmental aspects, the Group manages operational impacts, with total emissions, greenhouse gas emissions, non-hazardous waste, and energy consumption increasing due to expanded project scale, but emissions and energy consumption intensity per revenue decreased, and the Group has established relevant policies and reduction targets while assessing and responding to climate change-related physical and transition risks FY2024 Greenhouse Gas Emissions Performance | Indicator | Unit | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Total Greenhouse Gas Emissions | tonnes of CO2 equivalent | 132.57 | 117.05 | | Intensity (per project) | tonnes of CO2 equivalent/project | 4.57 | 4.04 | | Intensity (per revenue) | tonnes of CO2 equivalent/million HKD revenue | 0.11 | 0.25 | FY2024 Energy Consumption Performance | Indicator | Unit | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Total Energy Consumption | kWh | 477,773.02 | 426,550.12 | | Intensity (per project) | kWh/project | 16,474.93 | 14,708.62 | | Intensity (per revenue) | kWh/million HKD revenue | 383.89 | 898.44 | - The Group identified physical risks (e.g., typhoons, heavy rain) and transition risks (e.g., tightening policies and regulations) from climate change and has developed response measures, including closely monitoring weather information, purchasing insurance, and tracking regulatory changes[166][168] B. Social In social responsibility, the Group's workforce increased to 2,179 persons, committed to providing a safe work environment despite increased injuries but no fatalities, offering training, adhering to labor standards, prohibiting child and forced labor, implementing stringent policies for supply chain, quality, and anti-corruption, and making community donations - As of March 31, 2024, the total number of employees was 2,179 persons, a significant increase from 883 persons last year[169] - During the reporting period, 49 work-related injuries were recorded, resulting in 5,206 lost workdays, but there were no work-related fatalities in the past three years[173] - The Group adopts a zero-tolerance approach to forced or child labor and conducts strict verification during the recruitment process[179][180] - The Group has established a Whistleblowing Policy to address corruption incidents and provided anti-corruption training to directors and senior management[194] - In January 2024, the Group donated HKD 8,000 to the Hong Kong Construction Association, fulfilling its social responsibility[195] Directors' Report The Directors' Report outlines the Group's principal businesses, performance, financial position, and shareholder returns, noting a turn from profit to loss and no final dividend recommendation, while also disclosing directors' and major shareholders' interests, related party transactions, and compliance with non-competition undertakings, highlighting a high client concentration - The Board of Directors recommends no final dividend payment for the year ended March 31, 2024[215] - Controlling shareholders Mr. Leung Chi Kit, Ms. Cho Yuk Ching, and Mr. Chow Siu Yu collectively hold 75% of the Company's issued share capital through Wuzhou Enterprise Limited[231][234][235] - For the year ended March 31, 2024, the top five clients collectively accounted for 85.7% of the Group's total turnover, with the largest client contributing 40.1%[237] - During the reporting period, the Group engaged in tool and material procurement transactions totaling HKD 2,985,000 with related party King Fook Plastic Limited, controlled by a relative of Executive Director Ms. Cho Yuk Ching[246] Independent Auditor's Report Independent auditor BDO Limited issued an unmodified opinion on the Group's consolidated financial statements for the year ended March 31, 2024, affirming they present a true and fair view, with key audit matters including revenue recognition for construction contracts and recoverability of receivables and contract assets, and the report details the audit procedures performed - The auditor issued an unmodified opinion on the consolidated financial statements[259] - Key audit matters include: 1. Revenue Recognition for Construction Contracts: Due to its significant impact on the statement of profit or loss and the management's judgment involved 2. Recoverability of Trade and Other Receivables and Contract Assets: Due to their significant balances and the significant judgment involved in estimating expected credit losses[261][264][266] - The auditor performed corresponding procedures, including reviewing contracts, assessing budget reasonableness, testing actual costs, and evaluating the basis and judgment for expected credit losses, to address the key audit matters[265][269] Consolidated Financial Statements This section presents the Group's consolidated financial statements, including the statement of profit or loss, financial position, cash flows, and detailed notes, providing a comprehensive overview of its financial performance and health Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended March 31, 2024, the Group's revenue significantly increased to HKD 1.245 billion from HKD 475 million last year, but due to increased direct costs, impairment losses, and administrative expenses, the Group recorded a pre-tax loss of HKD 43.81 million, compared to a profit of HKD 11.89 million in the prior year, resulting in a basic loss per share of 2.92 HK cents Consolidated Statement of Profit or Loss Summary (thousand HKD) | Indicator | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | 1,244,556 | 474,768 | | Gross Profit | 31,620 | 15,266 | | Impairment losses under expected credit loss model | (40,720) | 154 | | Loss / Profit before tax | (43,810) | 11,887 | | Loss / Profit for the year | (43,810) | 11,887 | | Basic Loss / Earnings per share (HK cents) | (2.92) | 0.79 | Consolidated Statement of Financial Position As of March 31, 2024, the Group's total assets increased to HKD 483.88 million from HKD 425.96 million last year, primarily driven by increases in contract assets and cash, while total liabilities rose from HKD 259.85 million to HKD 361.58 million due to higher trade and other payables and amounts due to related companies, resulting in a decrease in net assets from HKD 166.11 million to HKD 122.30 million Consolidated Statement of Financial Position Summary (thousand HKD) | Indicator | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Non-current assets | 29,442 | 28,265 | | Current assets | 454,437 | 397,695 | | Total assets | 483,879 | 425,960 | | Liabilities and Equity | | | | Current liabilities | 360,228 | 259,048 | | Non-current liabilities | 1,350 | 801 | | Total liabilities | 361,578 | 259,849 | | Net assets | 122,301 | 166,111 | | Total equity | 122,301 | 166,111 | Consolidated Statement of Cash Flows This year, net cash generated from operating activities significantly decreased to HKD 28 million from HKD 57.3 million last year, mainly due to a substantial increase in contract assets, while net cash used in investing activities was HKD 5.9 million, primarily for property, plant, and equipment purchases, and net cash used in financing activities was HKD 3.2 million, resulting in a net increase in cash and cash equivalents of HKD 18.9 million, with an ending balance of HKD 169.3 million Consolidated Statement of Cash Flows Summary (thousand HKD) | Indicator | 2024 | 2023 | | :--- | :--- | :--- | | Net cash generated from operating activities | 27,978 | 57,259 | | Net cash used in investing activities | (5,932) | (40,879) | | Net cash used in financing activities | (3,189) | (2,350) | | Net increase in cash and cash equivalents | 18,857 | 14,030 | | Cash and cash equivalents at beginning of year | 150,451 | 136,421 | | Cash and cash equivalents at end of year | 169,308 | 150,451 | Notes to the Consolidated Financial Statements The notes to the financial statements provide detailed analysis of key accounting policies, critical accounting estimates, and various statement items, highlighting revenue recognition, segment information showing formwork engineering as core, a significant increase in expected credit loss provisions, related party transactions, and financial instrument risk management - Revenue Recognition (Note 5): Revenue from the Group's formwork engineering and related services is recognized over time using the output method; as of the end of the reporting period, the total amount of signed but uncompleted performance obligations (contract backlog) was approximately HKD 1.008 billion[376][379][380] - Segment Information (Note 6): The Group is divided into three segments: formwork engineering, building construction, and trading and investment; the formwork engineering segment contributed HKD 1.245 billion in total revenue but recorded a segment loss of HKD 22.9 million, while the trading and investment segment recorded a loss of HKD 10.95 million[381][382] - Expected Credit Losses (Notes 8, 33): The net impairment loss on expected credit losses recognized this year was HKD 40.72 million, significantly higher than last year's reversal of HKD 0.154 million, primarily due to impairment provisions of HKD 33.06 million for contract assets[396][459] - Related Party Transactions (Note 30): The Group purchased HKD 2.985 million in tools and materials from King Fook Plastic Limited, controlled by a relative of Executive Director Ms. Cho Yuk Ching, and also paid HKD 2.7 million in interest expenses to a company controlled by Director Mr. Leung Chi Kit[443] Five-Year Financial Summary This section provides a summary of the Group's key financial data for the past five fiscal years (2020-2024), showing that while revenue generally increased to a five-year high in FY2024, profitability has been unstable with losses in three out of five years, and both total assets and liabilities expanded over the period, with net assets declining in 2024 Five-Year Performance Summary (thousand HKD) | For the year ended March 31 | 2024 | 2023 | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,244,556 | 474,768 | 600,863 | 523,949 | 434,647 | | Loss / Profit for the year | (43,810) | 11,887 | (12,497) | 2,631 | (10,831) | Five-Year Assets and Liabilities Summary (thousand HKD) | As of March 31 | 2024 | 2023 | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total assets | 483,879 | 425,960 | 379,276 | 391,130 | 366,556 | | Total liabilities | 361,578 | 259,849 | 225,052 | 224,409 | 202,466 | | Net assets | 122,301 | 166,111 | 154,224 | 166,721 | 164,090 |