进智公共交通(00077) - 2019 - 年度财报

Company Information This section lists key company information including board members, authorized representatives, audit committee, company secretary, and auditors - The Board Chairman is Mr. Wong Ling Sun, and the Chief Executive Officer is Mr. Chan Man Chun[4] - The Audit Committee comprises Dr. Lee Peng Fee, Dr. Chan Yuen Tak Fai, and Mr. Kwong Ki Chi[4] - The company's auditor is Grant Thornton Hong Kong Limited[4] Group Overview The Group primarily operates public light bus passenger services in Hong Kong, with over 44 years of experience, and is a leading operator - The Group's main business is operating public light bus passenger services in Hong Kong, with over 44 years of experience[6] - As of the reporting period, the Group operates 69 scheduled public light bus routes (357 minibuses) and 5 resident bus routes (8 buses)[6] - The Group launched Hong Kong's first low-floor wheelchair-accessible minibus in January 2018 and partnered with Alipay HK for mobile payment services since January 2019[6] - The Group's computerized maintenance center has been ISO 9001 quality management system certified since 2011 (upgraded to ISO 9001:2015 in 2017)[6] Financial and Business Highlights This section summarizes key financial and business performance for the year ended March 31, 2019 2019 Fiscal Year Key Financial Data (Year Ended March 31) | Financial Metric (HK$ thousand) | 2019 | 2018 | Change | | :------------------------------ | :------- | :------- | :------- | | Revenue | 392,924 | 383,797 | +2.4% | | Profit for the year excluding public light bus license revaluation loss | 28,235 | 15,897 | +77.6% | | Public light bus license revaluation loss | 71,493 | 45,200 | +58.2% | | Loss attributable to owners of the Company | 43,258 | 29,303 | +47.6% | | Loss per share (HK cents) | 15.91 | 10.79 | +47.5% | | Proposed special dividend per ordinary share (HK cents) | 8.0 | 5.0 | +60.0% | | Profit margin (Loss attributable to owners/Revenue) | -11.0% | -7.6% | -3.4pp | | Return on equity (Loss attributable to owners/Shareholders' equity) | -33.8% | -15.5% | -18.3pp | | Borrowings | 149,667 | 159,444 | -6.1% | | Shareholders' equity | 128,120 | 189,381 | -32.3% | | Current ratio | 0.71 | 1.18 | -0.47 | | Gearing ratio | 145.6% | 101.7% | +43.9pp | 2019 Fiscal Year Key Business Data (Year Ended March 31) | Business Metric | 2019 | 2018 | Change | | :------------------------------ | :----- | :----- | :------- | | Number of public light buses in service at year-end | 358 | 363 | -1.4% | | Number of public buses in service at year-end | 8 | 6 | +33.3% | | Number of scheduled public light bus routes at year-end | 70 | 69 | +1.4% | | Number of resident bus routes at year-end | 5 | 4 | +25.0% | | Passenger volume (million) | 60.1 | 59.7 | +0.7% | | Number of trips (million) | 4.38 | 4.42 | -0.9% | | Total mileage (million km) | 41.1 | 41.4 | -0.7% | | Average fleet age at year-end (years) | 8.2 | 9.1 | -9.9% | | Average accident rate (per million km) | 2.7 | 2.8 | -3.6% | Chairman's Statement The Chairman's statement reviews the annual results, highlighting significant profit growth before revaluation loss, challenges from MTR expansion, and strategic responses - For the year ended March 31, 2019, profit before public light bus license revaluation loss was HK$28,235,000, a significant increase of 77.6% year-on-year[16] - Public light bus license revaluation loss increased to HK$71,493,000, resulting in a loss attributable to owners of the Company of HK$43,258,000[16] - The Board recommended a special dividend of 8.0 HK cents per ordinary share, an increase of 60% from the previous year[17] - The Group's revenue increased by 2.4% to HK$392,924,000 due to fare increases on 34 routes and a 3.9% increase in total seating capacity by replacing 16-seater minibuses with 19-seater models (approximately 41% of the fleet)[21] - The average fleet age was reduced to 8.2 years, leading to a 10.2% reduction in maintenance costs and a 1.0% decrease in direct costs[22] - The Group partnered with Alipay HK to launch the first mobile payment tool for public transport and plans to expand it to all routes[24] - Looking ahead, the Group will continue to enhance operational efficiency, optimize cost structure through route restructuring, fleet review, and upgrades, and apply for fare adjustments when appropriate[25][27] Management Discussion and Analysis This section details the Group's business strategies, financial performance, liquidity, and risk management for the 2018/19 fiscal year Business Review This fiscal year, the Group actively restructured routes, upgraded its fleet, and adjusted fares, leading to revenue growth and improved operational efficiency - The Group completed the restructuring of 7 scheduled public light bus routes and 1 resident bus route, increasing the number of public light bus routes to 70 and resident bus routes to 5[28] - While the public light bus fleet size decreased by 5 vehicles to 358, the number of 19-seater public light buses increased to 146 (approximately 41% of the fleet), resulting in a 3.9% actual increase in total seating capacity[28][29] - Fare increases on 34 routes (ranging from 2.4% to 14.3%) and a 0.7% increase in passenger volume to 60.1 million contributed to a 2.4% revenue growth to HK$392,924,000[30] - The replacement of 49 older minibuses with new 19-seater long-wheelbase models reduced the average fleet age to 8.2 years[31] Financial Review The Group reported a loss attributable to owners of HK$43,258,000, primarily due to a significant public light bus license revaluation loss - The loss attributable to owners for the year was HK$43,258,000, mainly due to a public light bus license revaluation loss of HK$71,493,000[34][35] - Excluding the public light bus license revaluation loss, profit for the year increased by 77.6% to HK$28,235,000[34][35] Major Cost Changes (Year Ended March 31) | Cost Item (HK$ thousand) | 2019 | 2018 | Change (HK$ thousand) | Change (%) | | :----------------------- | :------- | :------- | :-------------------- | :--------- | | Fuel costs | 54,162 | 49,809 | +4,353 | +8.7% | | Public light bus rental expenses | 69,523 | 73,439 | -3,916 | -5.3% | | Maintenance costs | 28,008 | 31,188 | -3,180 | -10.2% | | Driver costs | 154,247 | 155,272 | -1,025 | -0.7% | - Income tax expense significantly increased by 69.8% to HK$4,914,000, with an effective tax rate of 16.2%[42] - The fair value of public light bus licenses further decreased by 27.7% to HK$3,000,000 per license, reducing the total book value to HK$198,000,000[43] Cash Flow Net cash generated from operating activities increased, while cash used in investing activities rose due to asset purchases Cash Flow Summary (Year Ended March 31) | Cash Flow Category (HK$ thousand) | 2019 | 2018 | | :-------------------------------- | :------- | :------- | | Net cash generated from operating activities | 35,074 | 26,846 | | Net cash used in investing activities | (13,624) | (5,489) | | Net cash used in financing activities | (26,851) | (45,198) | | Net decrease in cash and cash equivalents | (5,401) | (23,841) | | Cash and cash equivalents at year-end | 32,829 | 38,230 | - Net cash generated from operating activities increased by HK$8,228,000 or 30.6% to HK$35,074,000, primarily due to an increase in operating profit for the year[43] - Net cash used in investing activities was HK$13,624,000, mainly for the purchase of new public light buses (HK$6,445,000) and two public bus licenses (HK$5,900,000)[43] Capital Structure, Liquidity, and Financial Resources The Group's liquidity deteriorated, with net current liabilities and an increased gearing ratio, necessitating refinancing efforts - Net current liabilities amounted to HK$18,614,000 (compared to net current assets of HK$7,436,000 last year), and the current ratio decreased to 0.71 times[45] - Total borrowings decreased by 6.1% to HK$149,667,000, but the current portion significantly increased from HK$9,849,000 to HK$29,674,000, mainly due to the reclassification of a HK$21,605,000 loan[47][48] - The gearing ratio increased to 145.6% (from 101.7% last year), primarily due to a HK$75,900,000 reduction in the book value of public light bus licenses[48] Borrowings Maturity Profile (As of March 31) | Maturity Period | 2019 (HK$ thousand) | 2018 (HK$ thousand) | | :-------------- | :------------------ | :------------------ | | Within 1 year | 29,674 | 9,849 | | In the 2nd year | 12,619 | 29,735 | | In the 3rd to 5th year | 23,863 | 28,493 | | After 5 years | 83,511 | 91,367 | | Total | 149,667 | 159,444 | Dividends and Dividend Policy The Board proposed a special dividend for the fiscal year, guided by a policy aimed at stable and sustainable shareholder returns - The Board recommended a special dividend of 8.0 HK cents per ordinary share (2018: 5.0 HK cents), totaling HK$21,753,000[49] - The company's dividend policy considers the Group's financial performance, working capital requirements, capital expenditure, future expansion plans, liquidity, and overall economic conditions[50] Pledge of Assets Certain public light bus licenses and property, plant, and equipment are pledged as security for the Group's bank facilities Pledged Assets (As of March 31) | Asset Category | 2019 (HK$ thousand) | 2018 (HK$ thousand) | | :---------------------- | :------------------ | :------------------ | | Public light bus licenses | 123,000 | 170,150 | | Property, plant and equipment | 9,744 | 5,285 | Capital Expenditure and Commitments Total capital expenditure for the year was HK$14,667,000, primarily for new vehicles and bus licenses, with future commitments for new minibuses - Total capital expenditure for the year was HK$14,667,000, mainly for the purchase of 9 new public light buses (HK$6,445,000) and 2 public bus licenses with bodies (HK$6,910,000)[55] - As of March 31, 2019, capital commitments amounted to HK$12,293,000, primarily for the purchase of new public light buses[55] Risk Management The Group manages various financial risks, including credit, foreign currency, interest rate, and fuel price fluctuations - The Group has no significant credit risk, as revenue is primarily received in cash or via Octopus Card Limited and Alipay HK[56] - The Group has no significant foreign exchange risk, as most operating activities, income, expenses, assets, and liabilities are denominated in Hong Kong dollars[57] - Interest rate risk primarily arises from floating-rate bank borrowings, which management considers not significant, with no material impact from reasonable market rate changes[58] - Fuel price fluctuations have a significant impact on operations, but the Group has not adopted a hedging policy and will continue to monitor market conditions closely[59] Employees and Remuneration Policy Employee costs represent a major operating expense, with the Group offering competitive remuneration and training to attract and retain talent - Employee costs accounted for 53.1% of the Group's total operating costs (excluding public light bus license revaluation loss)[61] - Employee benefit expenses for the year amounted to HK$198,595,000 (2018: HK$199,853,000)[61] - The Group provides benefits such as double pay, discretionary bonuses, share option schemes, retirement plans, and training programs[61] Environmental, Social and Governance Report This report, prepared in accordance with HKEX Listing Rules, details the Group's efforts in environmental protection, operational practices, employment, and community engagement Reporting Standards and Scope This ESG report adheres to HKEX Listing Rules, covering the Group's primary business of public light bus transport services in Hong Kong - The report is prepared in accordance with Appendix 27 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, covering the Group's principal business of providing scheduled public light bus transport services in Hong Kong[63] - The report focuses on four key performance areas: environmental protection, operating practices, employment practices, and serving the community[63] Environmental Protection The Group is committed to environmental protection through fleet upgrades, increased use of LPG minibuses, waste management, and office greening initiatives - The Group's fleet comprises 240 LPG minibuses (approximately 67%) and 118 diesel minibuses (approximately 33%), with average annual greenhouse gas emissions slightly reduced to 61.0 tonnes per vehicle[63] - The Group plans to replace approximately 66 older diesel public light buses with new LPG minibuses by the end of 2019, expecting further reduction in average greenhouse gas emissions next year[63] - Hazardous waste (spent batteries, waste oil filters, and lubricants) from the maintenance center is handled by licensed collectors, while non-hazardous waste (tires) is collected by agents for recycling[66] - The Group promotes "green" awareness in offices, encouraging reduced use of paper, water, and electricity, and offers electronic communication options to shareholders, successfully reducing paper consumption[67] Environmental Metrics Summary (Year Ended March 31) | Environmental Metric (Unit) | 2019 | 2018 | | :-------------------------- | :------- | :------- | | Total greenhouse gas emissions (tonnes) | 22,416 | 22,861 | | Average fleet size (vehicles) | 367.5 | 369.0 | | Average greenhouse gas emissions per vehicle (tonnes) | 61.0 | 62.0 | | Total diesel consumption (thousand litres) | 3,081 | 3,833 | | Total LPG consumption (thousand litres) | 8,369 | 7,466 | | Total lubricant oil used (thousand litres) | 33,125 | 35,447 | | Total spent batteries (units) | 398 | 419 | | Total tires (units) | 4,165 | 4,259 | Operating Practices Passenger and employee safety is paramount, achieved through continuous training, vehicle maintenance, ISO certification, and robust supply chain and anti-corruption measures - The Group enhances operational safety through road safety courses, strict codes of conduct, regular checks of driving licenses and health, periodic inspection of vehicle safety equipment, and replacement of older minibuses[73][75] - The maintenance center is ISO 9001:2015 quality management system certified, and the average accident rate decreased to 2.7 cases per million km[75][78] - The Group engages 63 Hong Kong suppliers and implements procurement guidelines to ensure product and service quality, timely delivery, and environmental compliance[76] - The Group has a code of conduct and whistleblowing policy to prevent corruption and protects passenger data and privacy through CCTV systems management[78] Employment Practices As of March 31, 2019, the Group had 1,300 employees, adhering to fair recruitment, diversity, competitive remuneration, and continuous training - As of March 31, 2019, the Group had 1,300 employees, adhering to open and fair recruitment principles and adopting a board diversity policy[80] - The remuneration policy is competitive, including basic salary, double pay, bonuses, annual leave, and allowances, and is reviewed annually[80] - The Group encourages employees to participate in internal or external training courses covering director responsibilities, legal regulations, occupational safety, driving behavior, and anti-corruption[80] Human Resources Metrics Summary (Year Ended March 31) | Human Resources Metric | 2019 | 2018 | | :--------------------- | :----- | :----- | | Number of employees at year-end | 1,300 | 1,275 | | Male (%) | 95.2 | 95.1 | | Female (%) | 4.8 | 4.9 | | Under 30 years old (%) | 1.5 | 2.0 | | 30-39 years old (%) | 8.6 | 9.7 | | 40-49 years old (%) | 13.2 | 14.4 | | 50-59 years old (%) | 27.9 | 29.8 | | Over 60 years old (%) | 48.8 | 44.1 | | Employee turnover rate (%) | 21.9 | 28.1 | | Employee training hours | 842 | 1,072 | Community Engagement The Group actively fulfills its corporate social responsibility through community sponsorships, fare concessions, and accessible transport services - The Group actively sponsors various community activities and encourages employee volunteer service, with total donations and sponsorships amounting to HK$1,158,000 for the year[85][86] - The Group expanded the coverage of its green minibus interchange scheme, offering fare concessions, and participates in government public transport fare concession schemes for the elderly and disabled[85] - In January 2018, the Group launched Hong Kong's first new low-floor minibus accessible to wheelchair users[85] Corporate Governance Report This report outlines the Group's compliance with the HKEX Corporate Governance Code, ensuring effective risk management, internal control, accountability, and transparency Board of Directors The Board comprises executive, non-executive, and independent non-executive directors, responsible for strategy, oversight, and maintaining a balanced composition - The Board of Directors comprises four executive directors, one non-executive director, and three independent non-executive directors, with Mr. Wong Ling Sun as Chairman[91] - The Board is responsible for setting the Group's overall objectives and strategies, overseeing operations and financial performance, and has established an Executive Committee, Remuneration Committee, Audit Committee, and Nomination Committee[91] - All independent non-executive directors have confirmed their independence, and the Board considers them to be independent[94] - The Board regularly reviews its composition to ensure a balance of professional knowledge, skills, experience, and diverse perspectives, and encourages directors to participate in continuous professional development[95] - Four regular Board meetings were held during the fiscal year to review and approve interim and annual results, financial statements, and risk management reports[97] Chairman and Chief Executive Officer The roles of Chairman and Chief Executive Officer are segregated to ensure a balance of power and authority within the Group - The functions of the Chairman and Chief Executive Officer are segregated, with Chairman Mr. Wong Ling Sun responsible for chairing Board meetings, ensuring sufficient information, and good corporate governance[103][104] - Chief Executive Officer Mr. Chan Man Chun is responsible for the Group's operations and management, implementing corporate strategies, leading the senior management team, and providing industry expertise to support the Board[104] Board Committees The Board has established Executive, Remuneration, Audit, and Nomination Committees, each with clear terms of reference, reporting to the Board Executive Committee The Executive Committee, chaired by the Chairman, oversees the Group's strategic direction, operational execution, and risk management - The Executive Committee is chaired by the Chairman, with the other four executive directors as members, and meets monthly[104] - Its main responsibilities include formulating strategic direction, monitoring strategy execution, daily operations and senior management performance, and establishing risk management and internal control systems[104] Remuneration Committee The Remuneration Committee, chaired by an independent non-executive director, recommends and reviews remuneration policies for directors and senior management - The Remuneration Committee is chaired by Independent Non-executive Director Dr. Lee Peng Fee and is responsible for recommending remuneration policies and structures for directors and senior management[108] - The Committee ensures that remuneration packages are fair and competitive, considering comparable company remuneration, job responsibilities, market conditions, and performance[110] - During the fiscal year, the Committee reviewed the remuneration policies and structures for non-executive and independent non-executive directors, as well as the remuneration packages for executive directors and senior management[108] Audit Committee The Audit Committee, composed of independent non-executive directors, oversees financial reporting, internal controls, risk management, and auditor functions - The Audit Committee comprises three independent non-executive directors, with Mr. Kwong Ki Chi as Chairman, and is responsible for reviewing the integrity, accuracy, and fairness of financial statements[110] - The Committee annually reviews the adequacy and effectiveness of internal control and risk management systems and oversees the work of internal and external auditors[110][112] - The Committee has established a whistleblowing mechanism for employees to raise concerns about potential misconduct[112] Nomination Committee The Nomination Committee, chaired by an independent non-executive director, reviews board structure, identifies candidates, assesses independence, and implements the diversity policy - The Nomination Committee is chaired by Independent Non-executive Director Dr. Chan Yuen Tak Fai and is responsible for regularly reviewing the Board's structure, size, and composition[113] - The Committee identifies qualified director candidates, assesses the independence of independent non-executive directors, and provides recommendations on director appointments, re-election, and succession planning[113] - The nomination policy considers factors such as candidates' skills, knowledge, experience, diversity (gender, age, education, professional background), character, integrity, and time commitment[116] - The Board Diversity Policy aims to enhance efficiency and performance quality, ensuring the Board comprises members with diverse talents, skills, geographical, and industry experience[117][118] Delegation to Management The Board delegates daily management and administrative functions to the Executive Committee and senior management team - The Board delegates daily management and administrative functions to the Executive Committee and senior management team[121] - The senior management team is responsible for executing daily business operations and assisting the Executive Committee in implementing approved strategic plans, policies, and objectives[121] Company Secretary The Company Secretary reports to the Chairman on governance matters and plays a crucial role in supporting the Board and facilitating communication - The Company Secretary reports to the Chairman on Board governance matters and plays an important role in supporting the Board, ensuring information flow, and facilitating communication between directors and shareholders/management[121] - During the fiscal year, the Company Secretary completed over 15 hours of relevant professional training[121] External Auditor The external auditor's primary responsibility is to audit and report on the annual financial statements - The external auditor's primary responsibility is to audit and report on the annual financial statements[121] - For the fiscal year ended March 31, 2019, total remuneration paid to the external auditor was HK$626,000, comprising HK$543,000 for audit fees and HK$83,000 for interim review services[121] Directors' and External Auditor's Responsibilities for Financial Statements Directors are responsible for preparing financial statements that fairly reflect the company's financial position, performance, and cash flows - Directors are responsible for preparing financial statements that give a true and fair view of the financial position, performance, and cash flows of the Company and the Group[121] - The Board members have made reasonable judgments and estimates and adopted applicable accounting policies in preparing the financial statements[121] Risk Management, Internal Control, and Internal Audit The Board oversees the Group's risk management and internal control systems, with an outsourced internal audit function reporting to the Audit Committee - The Board is collectively responsible for overseeing the risk management and internal control systems and annually reviews their effectiveness, confirming them to be effective and adequate[123] - The Group has established a comprehensive risk management framework, clearly defining the responsibilities of the Board, management, Group departmental heads, and internal auditors[124] - The internal control system includes a clear management structure, code of conduct, internal policies, and stringent procedures for financial and business activities[130] - The Group outsources its internal audit function to accounting professionals; the internal auditor is independent of the Group, conducts annual internal audits, and reports directly to the Audit Committee[134] - The internal auditor assesses the effectiveness of risk management and internal control systems based on the COSO framework, covering control environment, risk assessment, control activities, information and communication, and monitoring[135] Securities Dealing The company has adopted a securities dealing code for directors and relevant employees, including blackout periods before results announcements - The Company has adopted a Securities Dealing Code, whose terms are no less exacting than the Model Code set out in Appendix 10 of the Listing Rules, applicable to directors and relevant employees[141] - Directors and relevant employees are prohibited from dealing in the Company's securities during the 30-day period immediately preceding the publication date of interim results and the 60-day period immediately preceding the publication date of annual results[141] - All directors confirmed compliance with the Securities Dealing Code and the Model Code throughout the review fiscal year[140] Shareholder Communication Policy The company is committed to enhancing investor relations and communication, ensuring timely and equal dissemination of company information - The Company has established a shareholder communication policy to ensure that identical and timely company information is provided to shareholders and potential shareholders, avoiding selective disclosure[141] - The Company maintains close communication with investors through annual reports, interim reports, its website, interviews, and meetings, and encourages shareholders to attend general meetings for direct interaction with the Board or senior management[141] Shareholders' Right to Convene General Meetings Eligible shareholders holding at least one-tenth of the paid-up share capital can requisition an extraordinary general meeting at any time - Eligible shareholders holding not less than one-tenth of the paid-up share capital may at any time requisition the Board or the Company Secretary to convene an extraordinary general meeting to address specified matters[143] - The requisition must clearly state the shareholders' names, shareholdings, reasons for convening, and proposed agenda, and be signed by all relevant eligible shareholders[143] - If the Board fails to convene the meeting within 21 days, the eligible shareholders may convene it themselves, with reasonable expenses reimbursed by the Company[143] Profiles of Directors and Senior Management This section provides detailed biographies of the Group's executive, non-executive, independent non-executive directors, and senior management - Executive Directors include Mr. Wong Ling Sun (Chairman), Ms. Ng Shui Chun (Finance Director), Mr. Chan Man Chun (Chief Executive Officer), and Ms. Wong Wai Sum (Deputy Director of Human Resources and Finance)[147] - The Non-executive Director is Ms. Wong Wai Man, and Independent Non-executive Directors are Dr. Lee Peng Fee, Dr. Chan Yuen Tak Fai, and Mr. Kwong Ki Chi[149] - Senior management includes Mr. Wong Man Chiu (Engineering Manager), Ms. Wong Ka Yan (Financial Controller and Company Secretary), and Mr. Wong Yu Fung (Operations Manager)[152][153] - Many directors and senior management possess extensive experience and professional qualifications in transportation, finance, accounting, and management[147][149][152][153] Directors' Report The Directors' Report presents the audited financial statements for the year ended March 31, 2019, outlining the Group's principal business, results, and proposed dividend - The Group's principal business is providing scheduled public light bus passenger services in Hong Kong[155] - The Directors recommended a special dividend of 8.0 HK cents per ordinary share for the current year[156] - Total charitable donations for the fiscal year amounted to HK$156,000 (2018: HK$85,000)[157] - Executive Directors Mr. Wong Ling Sun, Mr. Chan Man Chun, and Ms. Wong Wai Sum, and Independent Non-executive Director Dr. Chan Yuen Tak Fai, will retire at the upcoming Annual General Meeting and are eligible for re-election[161] - For the year ended March 31, 2019, the Wong family (Mr. Wong Ling Sun, Ms. Ng Shui Chun, Ms. Wong Wai Sum, and Ms. Wong Wai Man) had indirect interests in minibus lease agreements, constituting continuing connected transactions[167] - As of March 31, 2019, directors held interests in the Company's shares and related shares, with Mr. Wong Ling Sun, Ms. Ng Shui Chun, Ms. Wong Wai Sum, and Ms. Wong Wai Man holding substantial shares through discretionary trusts[168] - For the Group's major suppliers, the largest supplier accounted for 7.4% of purchases, and the top five suppliers collectively accounted for 29.7%, with members of the Wong family being directors and beneficial owners of the top three suppliers[196] - In continuing connected transactions, public light bus rental paid to related companies was HK$65,619,000, and administrative fee income from related companies was HK$2,327,000[199] - Major shareholders include HSBC International Trustee, JETSUN, Metro Success, and Skyblue, with HSBC International Trustee holding 48.94% of the Company's shares through a discretionary trust[203] - The Company maintained sufficient public float as required by the Listing Rules as of the date of this annual report[210] Independent Auditor's Report Grant Thornton Hong Kong Limited issued an unqualified opinion on the consolidated financial statements, highlighting key audit matters regarding public light bus license valuation and goodwill impairment - The auditor issued an unqualified opinion on the consolidated financial statements, deeming them to give a true and fair view of the Group's financial position, performance, and cash flows[215] - Key audit matters include the valuation of public light bus licenses (involving significant judgment and estimates) and the assessment of goodwill impairment (involving significant management judgment and estimates)[216][221][236] - The auditor assessed the competence and independence of the external valuer and examined the valuation methodology and accuracy of input data[222] - The auditor evaluated the reasonableness of the valuation methodology and key assumptions used in management's goodwill impairment assessment and examined the basis of cash flow forecasts[237] Consolidated Financial Statements This section presents the Group's consolidated financial statements for the year ended March 31, 2019, including the income statement, balance sheet, cash flow statement, and detailed notes Consolidated Income Statement For the year ended March 31, 2019, the Group reported revenue of HK$392,924,000 and a net loss of HK$43,258,000, primarily due to public light bus license revaluation loss Consolidated Income Statement Summary (Year Ended March 31) | Metric (HK$ thousand) | 2019 | 2018 | | :------------------------------ | :------- | :------- | | Revenue | 392,924 | 383,797 | | Direct costs | (324,526)| (327,907)| | Gross profit | 68,398 | 55,890 | | Other income | 8,454 | 7,489 | | Other net income/(expenses) | 141 | (143) | | Administrative expenses | (40,065) | (39,675) | | Other operating expenses | (1,048) | (1,615) | | Operating profit | 35,880 | 21,946 | | Public light bus license revaluation loss | (71,493) | (45,200) | | Finance costs | (3,478) | (3,155) | | Share of profit of a joint venture | 747 | – | | Loss before income tax | (38,344) | (26,409) | | Income tax expense | (4,914) | (2,894) | | Loss for the year | (43,258) | (29,303) | | Basic loss per share (HK cents) | (15.91) | (10.79) | Consolidated Statement of Comprehensive Income For the year ended March 31, 2019, the Group's loss for the year was HK$43,258,000, with total comprehensive expense of HK$47,665,000 after other comprehensive expenses Consolidated Statement of Comprehensive Income Summary (Year Ended March 31) | Metric (HK$ thousand) | 2019 | 2018 | | :------------------------------ | :------- | :------- | | Loss for the year | (43,258) | (29,303) | | Other comprehensive expenses: Public light bus license revaluation loss | (4,407) | (17,500) | | Total comprehensive expense for the year | (47,665) | (46,803) | Consolidated Statement of Financial Position As of March 31, 2019, the Group's total assets less current liabilities were HK$250,184,000, with net assets of HK$128,120,000 Consolidated Statement of Financial Position Summary (As of March 31) | Metric (HK$ thousand) | 2019 | 2018 | | :------------------------------ | :------- | :------- | | Property, plant and equipment | 30,946 | 25,432 | | Public light bus licenses | 198,000 | 273,900 | | Public bus licenses | 15,184 | 9,284 | | Goodwill | 22,918 | 22,918 | | Total non-current assets | 268,798 | 332,720 | | Total current assets | 45,910 | 49,348 | | Total current liabilities | 64,524 | 41,912 | | Net current (liabilities)/assets | (18,614) | 7,436 | | Total assets less current liabilities | 250,184 | 340,156 | | Total non-current liabilities | 122,064 | 150,775 | | Net assets | 128,120 | 189,381 | | Total equity attributable to owners of the Company | 128,120 | 189,381 | Consolidated Statement of Changes in Equity For the year ended March 31, 2019, the Group's total equity decreased from HK$189,381,000 to HK$128,120,000, primarily due to the loss for the year and revaluation losses Consolidated Statement of Changes in Equity Summary (Year Ended March 31) | Equity Item (HK$ thousand) | March 31, 2019 | April 1, 2018 | | :------------------------------ | :------------- | :------------ | | Share capital | 27,191 | 27,191 | | Share premium | 74,612 | 74,612 | | Public light bus license revaluation reserve | 400 | 4,807 | | Share option reserve | 1,666 | 1,666 | | Capital reserve | 19,296 | 19,296 | | Retained profits | 4,955 | 61,809 | | Total Equity | 128,120 | 189,381 | | Loss for the year | (43,258) | (29,303) | | Public light bus license revaluation loss | (4,407) | (17,500) | | 2018 Special dividend | (13,596) | – | Consolidated Statement of Cash Flows For the year ended March 31, 2019, the Group generated HK$35,074,000 from operating activities, with a net decrease in cash and cash equivalents of HK$5,401,000 Consolidated Statement of Cash Flows Summary (Year Ended March 31) | Cash Flow Category (HK$ thousand) | 2019 | 2018 | | :-------------------------------- | :------- | :------- | | Net cash generated from operating activities | 35,074 | 26,846 | | Net cash used in investing activities | (13,624) | (5,489) | | Net cash used in financing activities | (26,851) | (45,198) | | Net decrease in cash and cash equivalents | (5,401) | (23,841) | | Cash and cash equivalents at beginning of year | 38,230 | 62,071 | | Cash and cash equivalents at end of year | 32,829 | 38,230 | Notes to the Consolidated Financial Statements These notes provide detailed explanations of accounting policies, new standards, key estimates, segment information, revenue, and financial risk management Summary of Principal Accounting Policies This section outlines the Group's key accounting policies, including the basis of preparation, consolidation, asset valuation, and revenue recognition, with a going concern assessment - The consolidated financial statements are prepared on a historical cost basis, except for public light bus licenses which are stated at fair value[280] - Despite net current liabilities of HK$18,614,000, the directors, based on operating profit, potential renewal of bank facilities, and cash flow forecasts, believe the Group can continue as a going concern[280] - Public light bus licenses are stated at open market value less accumulated impairment losses and are considered to have an indefinite useful life[300] - Goodwill is stated at cost less accumulated impairment losses and is tested for impairment annually[307] - Revenue primarily derives from providing scheduled public light bus and resident bus passenger services, recognized when services are rendered[344][349] Adoption of New and Revised HKFRSs The Group adopted HKFRS 9 and 15 with no significant impact, while HKFRS 16 on leases is expected to significantly affect accounting for public minibuses - The Group first applied HKFRS 9 "Financial Instruments" and HKFRS 15 "Revenue from Contracts with Customers," with no significant impact on the results and financial position for the current and prior periods[380][387] - HKFRS 9 introduced an expected credit loss model, but no significant expected credit losses were recognized as the total expected credit loss was not material[382][383] - HKFRS 16 "Leases," effective January 1, 2019, is expected to primarily impact the Group's accounting for public light buses as a lessee, leading to an increase in assets and liabilities and affecting the timing of expense recognition in the consolidated income statement[391] - Upon initial adoption of HKFRS 16, the opening balances of lease liabilities and corresponding right-of-use assets are expected to be adjusted to HK$94,633,000[392] Critical Accounting Estimates and Judgements This section highlights key accounting estimates and judgments, including goodwill impairment, public light bus license fair value, and impairment of receivables - Goodwill impairment assessment (net book value of HK$22,918,000) involves value-in-use calculations requiring estimates and assumptions, which may lead to significant future adjustments[396] - The estimated fair value of public light bus licenses (HK$198,000,000) is assessed by an independent valuer, assuming no change in government policy and a continuous open market[397] - The estimated impairment of public bus licenses (net book value of HK$15,184,000) is based on value-in-use calculations, involving estimates of future cash flows[398] - Impairment estimates for trade and other receivables (under HKFRS 9's expected credit loss model) are based on assumptions regarding default risk and expected loss rates[398] Segment Information The Group's scheduled public light bus and resident bus services are considered a single operating segment, with all revenue and non-current assets derived from Hong Kong - The Group's scheduled public light bus and resident bus services are considered the sole operating segment[399] - All revenue and non-current assets are derived from and located in Hong Kong, with no single customer accounting for more than 10% of the Group's revenue[400][401] Revenue and Other Income Group revenue primarily comes from public light bus and resident bus services in Hong Kong, with other income including government grants - Group revenue primarily derives from scheduled public light bus and resident bus services in Hong Kong, with all service income recognized when services are rendered[404][405] Other Income and Other Net Income/(Expenses) Summary (HK$ thousand) | Item | 2019 | 2018 | | :------------------------------ | :------- | :------- | | Advertising income | 3,978 | 3,978 | | Administrative fee income | 2,468 | 2,495 | | Government grants | 1,548 | 604 | | Interest income | 246 | 159 | | Management fee income | 198 | 238 | | Maintenance service income | 16 | 15 | | Total Other Income | 8,454| 7,489| | Loss on disposal of property, plant and equipment | (16) | (197) | | Miscellaneous income | 157 | 54 | | Total Other Net Income/(Expenses) | 141 | (143)| - Government grants primarily relate to the special grant scheme for the disposal of pre-Euro IV diesel commercial vehicles, amounting to HK$1,548,000 for the fiscal year[406] Finance Costs and Income Tax Expense Bank loan interest expense increased, and income tax expense rose significantly due to higher Hong Kong profits tax and non-deductible revaluation losses - Bank loan interest expense was HK$3,478,000, an increase of 10.2% year-on-year[407] - Income tax expense significantly increased by 69.8% to HK$4,914,000, mainly due to higher Hong Kong profits tax for the current period and a reduction in over-provision from prior years[409] - Hong Kong profits tax operates under a two-tiered system, with the first HK$2,000,000 of assessable profits taxed at 8.25% and the remainder at 16.5%[410] - The tax effect of non-deductible expenses, such as public light bus license revaluation loss, was a major reconciling item between income tax expense and accounting loss, amounting to HK$11,858,000 for the fiscal year[412] Dividends and Loss Per Share The Board proposed a special dividend of 8.0 HK cents per ordinary share, with basic and diluted loss per share of 15.91 HK cents - A special dividend of 8.0 HK cents per ordinary share, totaling HK$21,753,000, is proposed[415] - Basic loss per share for the year was 15.91 HK cents, and diluted loss per share was the same as basic loss per share due to the anti-dilutive effect of share options[417] Employee Benefit Expense and Highest Paid Individuals Employee benefit expenses totaled HK$198,595,000, with details on directors' emoluments and remuneration of the highest-paid individuals Employee Benefit Expense (HK$ thousand) | Item | 2019 | 2018 | | :------------------------------ | :------- | :------- | | Salaries and allowances | 192,177 | 193,161 | | Contributions to defined contribution plans | 6,418 | 6,692 | | Total | 198,595| 199,853| Total Directors' Emoluments (HK$ thousand) | Item | 2019 | 2018 | | :------------------------------ | :------- | :------- | | Fees | 4,296 | 4,093 | | Salaries, allowances, and benefits | 4,158 | 4,276 | | Discretionary bonuses | 300 | 300 | | Contributions to retirement benefit schemes | 72 | 72 | | Total | 8,826 | 8,741 | - Among the Group's five highest-paid individuals, three were directors, and the remaining two (one of whom is a senior management member) had total emoluments of HK$2,349,000[426] Property, Plant and Equipment As of March 31, 2019, the net book value of property, plant, and equipment increased, with additions primarily for public light buses and buses, and some assets pledged as collateral Property, Plant and Equipment Net Book Value (HK$ thousand) | Category | March 31, 2019 | March 31, 2018 | | :------------------------------ | :------------- | :------------- | | Land and buildings | 9,535 | 10,025 | | Leasehold improvements | 907 | 878 | | Furniture, fixtures and equipment | 1,071 | 1,256 | | Public light buses and public buses | 17,098 | 11,258 | | Motor vehicles | 2,335 | 2,015 | | Total | 30,946 | 25,432 | - Additions to property, plant, and equipment during the year amounted to HK$8,767,000, primarily for public light buses and public buses[429] - Property, plant, and equipment with a net book value of HK$9,744,000 were pledged as collateral for bank facilities[429] Public Light Bus Licenses As of March 31, 2019, the book value of public light bus licenses significantly decreased due to revaluation losses, with some licenses pledged as collateral Public Light Bus License Changes (HK$ thousand) | Item | 2019 | 2018 | | :------------------------------ | :------- | :------- | | At beginning of year | 273,900 | 336,600 | | Revaluation loss charged to consolidated income statement | (71,493) | (45,200) | | Revaluation loss dealt with in revaluation reserve | (4,407) | (17,500) | | At end of year | 198,000| 273,900| - Public light bus licenses are considered to have an indefinite useful life and are revalued by an independent valuer on an open market basis[432][437] - Public light bus licenses with a total book value of HK$123,000,000 were pledged as collateral for bank facilities[433] Public Bus Licenses As of March 31, 2019, the net book value of public bus licenses increased due to additions, with their recoverable amount based on value-in-use calculations Public Bus License Changes (HK$ thousand) | Item | 2019 | 2018 | | :------------------------------ | :------- | :------- | | Net book value at beginning of year | 9,284 | 9,284 | | Additions | 5,900 | – | | Net book value at end of year | 15,184 | 9,284 | - Public bus licenses are considered to have an indefinite useful life and are stated at cost less accumulated impairment losses[439] - The recoverable amount is calculated based on value-in-use, using a five-year financial budget, an estimated growth rate of 2.0%, and a pre-tax discount rate of 8.4%[440] Interests in Subsidiaries and Joint Ventures The Group holds 100% interests in subsidiaries providing transport and maintenance services, and a 50% interest in a joint venture for outdoor advertising - The Group holds 100% interests in several subsidiaries, primarily providing scheduled public light bus transport services, public light bus leasing, and maintenance services in Hong Kong[443][445] - The Group holds a 50% interest in the joint venture Starlink Media (Group) Limited, which primarily provides outdoor advertising services[447] - As of March 31, 2019, the Group's investment in Starlink had a book value of HK$747,000, and receivables from the joint venture amounted to HK$1,500,000[445] Goodwill As of March 31, 2019, goodwill had a net book value of HK$22,918,000, allocated to four cash-generating units and tested annually for impairment Goodwill Net Book Value (HK$ thousand) | Item | 2019 | 2018 | | :------------------------------ | :------- | :------- | | Net book value at beginning of year | 22,918 | 22,918 | | Net book value at end of year | 22,918 | 22,918 | - Goodwill has a net book value of HK$22,918,000 and is allocated to four cash-generating units for scheduled public light bus services[454][455] - The recoverable amount is calculated based on value-in-use, using a five-year financial budget, an estimated growth rate of 2.0%, and a pre-tax discount rate of 10.6%[454] Trade and Other Receivables As of March 31, 2019, total trade and other receivables amounted to HK$11,209,000, with low expected credit loss under HKFRS 9 Trade and Other Receivables Summary (HK$ thousand) | Item | 2019 | 2018 | | :------------------------------ | :------- | :------- | | Trade receivables – net | 3,795 | 3,039 | | Other receivables – net | 2,662 | 2,260 | | Deposits | 1,038 | 617 | | Prepayments | 3,714 | 3,512 | | Total | 11,209 | 9,428 | - Trade receivables primarily arise from scheduled public light bus service income, with credit terms generally ranging from 0 to 30 days[460] - Based on the expected credit loss assessment under HKFRS 9, the provision for expected credit losses on trade receivables is very low[520] Bank Balances and Cash As of March 31, 2019, total bank balances and cash were HK$32,829,000, including short-term deposits, with negligible credit risk Bank Balances and Cash Summary (HK$ thousand) | Item | 2019 | 2018 | | :------------------------------ | :------- | :------- | | Bank and cash in hand | 22,829 | 22,230 | | Short-term bank deposits | 10,000 | 16,000 | | Total | 32,829 | 38,230 | - Short-term bank deposits bear an annual interest rate of 1.70% and mature in 29 days[461] - The credit risk of bank balances and short-term bank deposits is considered negligible[523] Borrowings and Bank Facilities As of March 31, 2019, total borrowings were HK$149,667,000, primarily floating-rate, secured by Group assets and company guarantees Borrowings Summary (HK$ thousand) | Item | 2019 | 2018 | | :------------------------------ | :------- | :------- | | Current secured bank loans | 29,674 | 9,849 | | Non-current secured bank loans | 119,993 | 149,595 | | Total Borrowings | 149,667| 159,444| - Borrowings primarily bear interest at floating rates, ranging from 2.01% to 2.38% per annum[465] - The Group's total bank facilities amounted to HK$158,967,000, of which HK$149,667,000 was utilized[468] - These facilities are secured by certain of the Group's property, plant and equipment (net book value of HK$9,744,000), public light bus licenses (book value of HK$123,000,000), and a company guarantee (HK$228,030,000)[468] Trade and Other Payables As of March 31, 2019, total trade and other payables were HK$32,916,000, with trade payables of HK$4,604,000 and typical credit terms of 0 to 30 days Trade and Other Payables Summary (HK$ thousand) | Item | 2019 | 2018 | | :------------------------------ | :------- | :------- | | Trade payables | 4,604 | 4,968 | | Other payables and accrued expenses | 28,312 | 26,938 | | Total | 32,916 | 31,906 | - The Group is granted credit terms of 0 to 30 days by its suppliers[467] Share Capital and Share Option Scheme As of March 31, 2019, the Company's issued share capital was HK$27,191,000, with details of the 2013 share option scheme and outstanding options Share Capital Summary (Thousand shares/HK$ thousand) | Item | 2019 | 2018 | | :------------------------------ | :--------- | :--------- | | Authorized ordinary shares (HK$0.10 par value per share) | 1,000,000 | 100,000 | | Issued and fully paid ordinary shares (HK$0.10 par value per share) | 271,913 | 27,191 | - The Group has a 2013 Share Option Scheme designed to reward eligible participants who have contributed to the Group[472] Outstanding Share Options Summary | Item | Number of Share Options 2019 | Weighted Average Exercise Price 2019 (HK$) | | :------------------------------ | :--------------------------- | :----------------------------------------- | | Outstanding at year-end | 7,497,000 | 1.48 | | Exercisable at year-end | 7,497,000 | 1.48 | - The weighted average remaining contractual life of share options outstanding at the reporting date was 3.9 years[475] Company's Statement of Financial Position and Statement of Changes in Equity As of March 31, 2019, the Company's net assets were HK$277,788,000, with distributable reserves of HK$248,931,000, and corporate guarantees for subsidiary bank facilities Company's Statement of Financial Position Summary (HK$ thousand) | Item | 2019 | 2018 | | :------------------------------ | :------- | :------- | | Interests in subsidiaries | 99,322 | 99,322 | | Amounts due from subsidiaries | 259,807 | 258,174 | | Bank balances and cash | 119 | 352 | | Net current assets | 178,466 | 191,966 | | Net Assets | 277,788| 291,288| - The Company's distributable reserves as of March 31, 2019, amounted to HK$248,931,000[484] - The Company has executed corporate guarantees of HK$228,030,000 for bank facilities granted to its subsidiaries, with no provision made due to immaterial fair value and low probability of default[485] Deferred Taxation As of March 31, 2019, net deferred tax was HK$1,068,000, primarily from accelerated depreciation allowances and tax losses Deferred Taxation Changes (HK$ thousand) | Item | 2019 | 2018 | | :------------------------------ | :------- | :------- | | At beginning of year | (6) | (448) | | Charged to consolidated income statement | 1,074 | 442 | | At end of year | 1,068 | (6) | Deferred Taxation Assets/Liabilities Composition (HK$ thousand) | Item | 2019 | 2018 | | :------------------------------ | :------- | :------- | | Deferred tax assets | (1,003) | (1,186) | | Deferred tax liabilities | 2,071 | 1,180 | | Total | 1,068 | (6) | Operating Lease Commitments and Capital Commitments The Group has operating lease commitments as a lessee and lessor, and capital commitments primarily for new public light buses - As a lessee, the Group's total future minimum lease payments under non-cancellable operating leases payable within one year amounted to HK$5,619,000[489] - As a lessor, the Group's total future minimum lease receivables within one year amounted to HK$2,200,000[492] - The Group's capital commitments amounted to HK$12,293,000, primarily for the purchase of new public light buses[493] Related Party Transactions The Group engaged in significant continuing connected transactions with related companies for public light bus leases and administrative fees Related Company Transactions Summary (HK$ thousand) | Related Company Name | Nature of Transaction | 2019 | 2018 | | :------------------------------ | :---------------------- | :------- | :------- | | Chung Kong Transportation Consultants Limited | Public light bus rental paid | 21,161 | 22,265