进智公共交通(00077) - 2021 - 中期财报

Independent Auditor's Review Report This report presents the independent auditor's review of the condensed consolidated interim financial information for the six months ended September 30, 2020 Introduction The auditor reviewed the Group's condensed consolidated interim financial information for the six months ended September 30, 2020, prepared under HKAS 34, with the Board responsible for its presentation - The auditor reviewed the Group's condensed consolidated interim financial information for the six months ended September 30, 2020[2] - The financial information was prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[2] - The directors of the company are responsible for the preparation and presentation of the condensed consolidated interim financial information in accordance with HKAS 34[2] Scope of Review The review was conducted under HKSRE 2410, which is less extensive than an audit, thus no audit opinion is expressed - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants[3] - As the scope of a review is substantially less than that of an audit conducted in accordance with Hong Kong Standards on Auditing, it does not enable the auditor to obtain assurance that they would become aware of all significant matters that might be identified in an audit, and accordingly, no audit opinion is expressed[3] Conclusion Based on the review, no matters were found to suggest that the condensed consolidated interim financial information was not prepared in accordance with HKAS 34 - Based on our review, we have not become aware of any matter that causes us to believe that the condensed consolidated interim financial information is not prepared, in all material respects, in accordance with HKAS 34[3] Condensed Consolidated Interim Financial Information This section presents the Group's condensed consolidated interim financial statements, including income, comprehensive income, financial position, equity changes, and cash flows Condensed Consolidated Statement of Profit or Loss The Group recorded a profit of HKD 2,696 thousand for the six months ended September 30, 2020, a significant improvement from the prior year's loss, driven by government subsidies and cost control Condensed Consolidated Statement of Profit or Loss Key Data (For the six months ended September 30) | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 144,930 | 195,073 | (50,143) | -25.7% | | Gross Profit | 6,845 | 33,791 | (26,946) | -79.7% | | Other Gains | 3,527 | 5,807 | (2,280) | -39.3% | | Other Income | 34,000 | 119 | 33,881 | 28471.4% | | Operating Profit | 23,149 | 18,904 | 4,245 | 22.5% | | Revaluation Deficit on Public Light Bus Licenses | (18,480) | (23,400) | 4,920 | -21.0% | | Impairment Provision for Public Bus Licenses | (2,680) | – | (2,680) | Not Applicable | | Finance Costs | (1,789) | (2,863) | 1,074 | -37.5% | | Profit/(Loss) for the Period | 2,696 | (9,422) | 12,118 | Not Applicable | | Basic Earnings/(Loss) Per Share (HK cents) | 0.99 | (3.47) | 4.46 | Not Applicable | | Diluted Earnings/(Loss) Per Share (HK cents) | 0.99 | (3.47) | 4.46 | Not Applicable | Condensed Consolidated Statement of Comprehensive Income Total comprehensive income for the period was HKD 2,696 thousand, a substantial improvement from the prior year's total comprehensive expense, primarily due to the profit turnaround and reduced revaluation deficit Condensed Consolidated Statement of Comprehensive Income Key Data (For the six months ended September 30) | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Profit/(Loss) for the Period | 2,696 | (9,422) | 12,118 | Not Applicable | | Other Comprehensive Expense – Revaluation Deficit on Public Light Bus Licenses | – | (360) | 360 | -100.0% | | Total Comprehensive Income/(Expense) for the Period | 2,696 | (9,782) | 12,478 | Not Applicable | Condensed Consolidated Statement of Financial Position As of September 30, 2020, the Group's total net assets decreased to HKD 64,133 thousand, while net current liabilities significantly reduced, improving the liquidity ratio Condensed Consolidated Statement of Financial Position Key Data (As at September 30) | Indicator | 2020 (thousand HKD) | March 31, 2020 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Non-current Assets | 210,174 | 267,343 | (57,169) | -21.4% | | Current Assets | 47,553 | 33,121 | 14,432 | 43.6% | | Current Liabilities | 50,134 | 84,032 | (33,898) | -40.3% | | Net Current Liabilities | (2,581) | (50,911) | 48,330 | -94.9% | | Total Assets Less Current Liabilities | 207,593 | 216,432 | (8,839) | -4.1% | | Non-current Liabilities | 143,460 | 146,838 | (3,378) | -2.3% | | Net Assets | 64,133 | 69,594 | (5,461) | -7.8% | | Total Equity | 64,133 | 69,594 | (5,461) | -7.8% | - Net current liabilities significantly decreased from HKD 50,911 thousand to HKD 2,581 thousand, and the liquidity ratio increased to 0.95 times (March 31, 2020: 0.39 times), primarily due to reduced lease liabilities and increased bank balances and cash[11][84] Condensed Consolidated Statement of Changes in Equity Total equity decreased from HKD 69,594 thousand to HKD 64,133 thousand for the six months ended September 30, 2020, influenced by profit for the period of HKD 2,696 thousand and special dividend payments of HKD 8,157 thousand Condensed Consolidated Statement of Changes in Equity Key Data (For the six months ended September 30) | Item | Share Capital (thousand HKD) | Share Premium (thousand HKD) | Public Light Bus Licenses Revaluation Reserve (thousand HKD) | Share Option Reserve (thousand HKD) | Capital Reserve (thousand HKD) | Accumulated Losses (thousand HKD) | Total (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | As at April 1, 2020 (Audited) | 27,191 | 74,612 | – | 1,666 | 19,296 | (53,171) | 69,594 | | Profit and Total Comprehensive Income for the Period | – | – | – | – | – | 2,696 | 2,696 | | 2020 Special Dividend | – | – | – | – | – | (8,157) | (8,157) | | As at September 30, 2020 (Unaudited) | 27,191 | 74,612 | – | 1,666 | 19,296 | (58,632) | 64,133 | Condensed Consolidated Statement of Cash Flows Net cash inflow from operating activities was HKD 55,832 thousand, net cash inflow from investing activities was HKD 2,559 thousand, and net cash outflow from financing activities was HKD 48,317 thousand, leading to a net increase in cash and cash equivalents of HKD 10,074 thousand Condensed Consolidated Statement of Cash Flows Key Data (For the six months ended September 30) | Activity | 2020 (thousand HKD) | 2019 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Cash Inflow from Operating Activities | 55,832 | 56,854 | (1,022) | -1.8% | | Net Cash Inflow/(Outflow) from Investing Activities | 2,559 | (6,610) | 9,169 | Not Applicable | | Net Cash Outflow from Financing Activities | (48,317) | (53,988) | 5,671 | -10.5% | | Net Increase/(Decrease) in Cash and Cash Equivalents | 10,074 | (3,744) | 13,818 | Not Applicable | | Cash and Cash Equivalents at End of Period, Representing Bank Balances and Cash | 31,337 | 29,085 | 2,252 | 7.7% | Notes to the Unaudited Condensed Consolidated Interim Financial Information This section provides detailed notes on the company's information, accounting policies, new standards, revenue, other income, segment information, and financial items 1. Company Information The company, incorporated in the Cayman Islands and listed in Hong Kong, primarily provides scheduled public light bus and resident bus passenger services in Hong Kong - The company was incorporated in the Cayman Islands as an exempted company on March 18, 2003[18] - The company is an investment holding company, and its subsidiaries are principally engaged in the provision of scheduled public light bus and resident bus passenger services in Hong Kong[19] - The company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since April 15, 2004[18] 2. Basis of Preparation and Principal Accounting Policies The condensed consolidated interim financial information is prepared under HKAS 34 and Listing Rules, on a historical cost basis (except public light bus licenses) and going concern basis, consistent with annual financial statements - The unaudited condensed consolidated interim financial information has been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange[20] - This unaudited condensed consolidated interim financial information has been prepared on the historical cost basis, except for public light bus licenses which are stated at fair value[20] - In preparing the unaudited condensed consolidated interim financial information, the directors have given careful consideration to the Group's future liquidity in light of its net current liabilities of HKD 2,581,000 as at September 30, 2020, and have prepared it on a going concern basis[21] 3. Adoption of New and Revised Hong Kong Financial Reporting Standards New and revised HKFRSs adopted in the period had no significant impact on the Group's results or financial position, and future standards are not expected to have a material effect - During the current interim period, the Group has applied for the first time the following new and revised Hong Kong Financial Reporting Standards ("HKFRSs") issued by the HKICPA, which are relevant to the Group's operations and effective for annual periods beginning on or after April 1, 2020[23] - The adoption of these new and revised HKFRSs has had no impact on the preparation and presentation of the Group's results and financial position for the current and prior periods[24] - The directors anticipate that all of the pronouncements will be adopted in the Group's accounting policies for the first period beginning on or after the effective date of the pronouncements, and the new and revised HKFRSs are not expected to have a significant impact on the Group's condensed consolidated interim financial information[25] 4. Revenue The Group's revenue is primarily derived from providing scheduled public light bus and resident bus passenger services in Hong Kong, recognized when services are rendered - The Group is principally engaged in the provision of scheduled public light bus and resident bus passenger services in Hong Kong[26] - The Group's revenue represents the amounts received and receivable for the provision of these services for the six months ended September 30, 2020 and 2019, with all revenue recognized when scheduled public light bus and resident bus passenger services are provided[26] 5. Other Gains and Other Income Total other gains and other income significantly increased to HKD 37,527 thousand, mainly due to HKD 33,922 thousand in government subsidies from the Anti-epidemic Fund Other Gains and Other Income (For the six months ended September 30) | Item | 2020 (thousand HKD) | 2019 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other Gains | | | | | | Advertising income | 2,200 | 2,200 | 0 | 0.0% | | Government subsidies (Note 1) | – | 2,188 | (2,188) | -100.0% | | Administrative fee income | 1,210 | 1,224 | (14) | -1.1% | | Interest income | 9 | 104 | (95) | -91.3% | | Others | 108 | 91 | 17 | 18.7% | | Subtotal | 3,527 | 5,807 | (2,280) | -39.3% | | Other Income | | | | | | Government subsidies (Note 2) | 33,922 | – | 33,922 | Not Applicable | | Gain on disposal of property, plant and equipment | 27 | 101 | (74) | -73.3% | | Miscellaneous income | 51 | 18 | 33 | 183.3% | | Subtotal | 34,000 | 119 | 33,881 | 28471.4% | | Total | 37,527 | 5,926 | 31,601 | 533.3% | - Due to the outbreak of COVID-19, the Group received HKD 33,922,000 in subsidies from the Hong Kong Government's Anti-epidemic Fund for the six months ended September 30, 2020, which included wage and fuel subsidies, and a one-off subsidy of HKD 10,620,000 to green minibus operators[28] 6. Segment Information The executive directors consider scheduled public light bus and resident bus passenger services as the sole operating segment, with all revenue and non-current assets originating from and located in Hong Kong - The executive directors regard the Group's scheduled public light bus and resident bus passenger services as the sole operating segment and assess the Group's operating performance and allocate resources on an overall basis[29] - As the Group's revenue and non-current assets are all derived from and located in Hong Kong, which is also the place of operation, no geographical information is presented[30] 7. Finance Costs Total finance costs decreased by 37.5% to HKD 1,789 thousand, primarily due to reduced interest expenses on bank borrowings and lower finance charges on lease liabilities Finance Costs (For the six months ended September 30) | Item | 2020 (thousand HKD) | 2019 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Interest expense on bank borrowings | 1,603 | 1,791 | (188) | -10.5% | | Finance charges on lease liabilities | 186 | 1,072 | (886) | -82.6% | | Total | 1,789 | 2,863 | (1,074) | -37.5% | 8. Profit/(Loss) Before Income Tax Profit before income tax was HKD 462 thousand, a significant improvement from the prior year's loss of HKD 6,914 thousand, primarily influenced by government subsidies and reduced fuel and employee benefit costs Profit/(Loss) Before Income Tax Impact Items (For the six months ended September 30) | Item | 2020 (thousand HKD) | 2019 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Fuel costs under direct costs | 19,363 | 27,074 | (7,711) | -28.5% | | Employee benefit expenses (including directors' emoluments) | 88,039 | 101,027 | (12,988) | -12.9% | | Lease payments: short-term leases and leases with lease term of less than 12 months | 11 | – | 11 | Not Applicable | | Depreciation of right-of-use assets | 34,225 | 33,483 | 742 | 2.2% | | Depreciation of property, plant and equipment | 2,698 | 2,220 | 478 | 21.5% | | Depreciation of investment properties | 1 | – | 1 | Not Applicable | | Gain on disposal of property, plant and equipment | (27) | (101) | 74 | -73.3% | 9. Income Tax Credit/(Expense) The period recorded an income tax credit of HKD 2,234 thousand, compared to an income tax expense of HKD 2,508 thousand in the prior year, mainly due to increased deferred tax credit and the two-tiered profits tax regime Income Tax Credit/(Expense) (For the six months ended September 30) | Item | 2020 (thousand HKD) | 2019 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Current tax | (678) | (1,541) | 863 | -56.0% | | Deferred tax | 2,912 | (967) | 3,879 | Not Applicable | | Total | 2,234 | (2,508) | 4,742 | Not Applicable | - Hong Kong Profits Tax is provided at a rate of 16.5% on the estimated assessable profits for the period, except for one subsidiary where the profits tax rate on the first HKD 2,000,000 of assessable profits is reduced to 8.25% under the two-tiered profits tax regime[33] - The effective tax rate for the period was 16.8%, after considering the non-deductible impact of the revaluation deficit on public light bus licenses and impairment provision for public bus licenses, and the non-taxable impact of government subsidies[80] 10. Dividends The Board did not recommend an interim dividend, but a special dividend of 3.0 HK cents per share, totaling HKD 8,157 thousand, was paid during the period, a decrease from the prior year - The Board does not recommend the payment of any interim dividend for the six months ended September 30, 2020 and 2019[36] Special Dividends Paid (For the six months ended September 30) | Item | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Special dividend per ordinary share | 3.0 HK cents | 8.0 HK cents | (5.0 HK cents) | | Total | 8,157 thousand HKD | 21,753 thousand HKD | (13,596 thousand HKD) | 11. Earnings/(Loss) Per Share Basic earnings per share were 0.99 HK cents, a turnaround from the prior year's loss per share of 3.47 HK cents. Diluted earnings per share were the same as basic earnings per share due to out-of-the-money share options Earnings/(Loss) Per Share (For the six months ended September 30) | Indicator | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Basic Earnings/(Loss) Per Share (HK cents) | 0.99 | (3.47) | 4.46 | | Diluted Earnings/(Loss) Per Share (HK cents) | 0.99 | (3.47) | 4.46 | - Basic earnings per share for the period are calculated based on the profit attributable to equity holders of the company of HKD 2,696,000 (2019: loss of HKD 9,422,000) and the weighted average number of ordinary shares in issue of 271,913,000 shares[38] - As the exercise price of the company's share options was higher than the average market price of the company's shares during the period, the share options had no dilutive effect, thus diluted earnings per share for the six months ended September 30, 2020, were the same as basic earnings per share[39] 12. Capital Expenditure and Goodwill A revaluation deficit of HKD 18,480 thousand was recognized due to a decrease in public light bus licenses' fair value, and an impairment provision of HKD 2,680 thousand for public bus licenses. Total capital expenditure for the period was HKD 322 thousand, a significant decrease from the prior year Capital Expenditure and Goodwill Changes (For the six months ended September 30) | Item | April 1, 2020 (thousand HKD) | Additions (thousand HKD) | Reclassification (thousand HKD) | Revaluation Deficit/Impairment (thousand HKD) | Depreciation (thousand HKD) | September 30, 2020 (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Property, plant and equipment | 42,063 | 87 | (54) | – | (2,698) | 39,398 | | Investment properties | – | – | 54 | – | (1) | 53 | | Right-of-use assets | 34,029 | 235 | – | – | (34,225) | 39 | | Public light bus licenses | 150,480 | – | – | (18,480) | – | 132,000 | | Public bus licenses | 14,784 | – | – | (2,680) | – | 12,104 | | Goodwill | 22,918 | – | – | – | – | 22,918 | - As at September 30, 2020, the fair value of each public light bus license decreased to HKD 2,000,000 (March 31, 2020: HKD 2,280,000), resulting in a revaluation deficit of HKD 18,480,000[43][77] - The Group recognized an impairment provision of HKD 2,680,000 for public bus licenses during the period, as their recoverable amount further decreased due to the economic downturn[78] - The fair value of public light bus licenses is determined using the market approach by reference to recent average market quotations from various market dealers, and this measurement is classified within Level 2 of the fair value hierarchy[43][44] 13. Trade and Other Receivables Total trade and other receivables increased to HKD 14,478 thousand as of September 30, 2020, from HKD 8,989 thousand as of March 31, 2020, primarily due to an increase in government subsidy receivables Trade and Other Receivables (As at September 30) | Item | 2020 (thousand HKD) | March 31, 2020 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Trade receivables – net | 1,763 | 1,827 | (64) | -3.5% | | Other receivables – net | 7,995 | 3,829 | 4,166 | 108.8% | | Deposits | 1,167 | 1,131 | 36 | 3.2% | | Prepayments | 3,553 | 2,202 | 1,351 | 61.4% | | Total | 14,478 | 8,989 | 5,489 | 61.1% | - Receivables from government subsidies amounted to HKD 5,873,000, primarily from the Hong Kong Government's Anti-epidemic Fund[28][48] - The majority of the Group's revenue is derived from scheduled public light bus services, which are collected in cash or through Octopus Cards Limited and remitted to the Group on the next business day after service provision, with credit terms ranging from 0 to 30 days[48] 14. Trade and Other Payables Total trade and other payables slightly increased to HKD 35,865 thousand as of September 30, 2020, from HKD 34,581 thousand as of March 31, 2020, mainly comprising accrued salaries and bonuses Trade and Other Payables (As at September 30) | Item | 2020 (thousand HKD) | March 31, 2020 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Trade payables | 3,138 | 3,968 | (830) | -20.9% | | Other payables and accrued expenses | 32,727 | 30,613 | 2,114 | 6.9% | | Total | 35,865 | 34,581 | 1,284 | 3.7% | - The Group is granted credit terms ranging from 0 to 30 days by its suppliers[52] - Other payables primarily include accrued salaries and bonuses, unused annual leave, and staff welfare provisions[52] 15. Lease Liabilities As of September 30, 2020, the present value of lease liabilities significantly decreased to HKD 41 thousand, primarily due to the expiry of lease agreements for 286 public light buses Lease Liabilities (As at September 30) | Item | 2020 (thousand HKD) | March 31, 2020 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total minimum lease payments: due within one year | 41 | 34,377 | (34,336) | -99.9% | | Future finance charges on lease liabilities | – | (186) | 186 | -100.0% | | Present value of lease liabilities | 41 | 34,191 | (34,150) | -99.9% | - The significant improvement in net current liabilities and liquidity ratio is mainly due to: 1) the reduction in lease liabilities as the minibus lease agreements for 286 public light buses expired on September 30, 2020; and 2) an increase in bank balances and cash during the period[84] - The Group has renewed the minibus lease agreements with the lessors for a period of three years, commencing from October 1, 2020, and therefore, the balances of right-of-use assets and lease liabilities related to these lease arrangements are expected to increase significantly in the next reporting period[84] 16. Share Capital As of September 30, 2020, the company's authorized share capital and issued and fully paid share capital remained unchanged at HKD 100,000 thousand and HKD 27,191 thousand, respectively Share Capital Structure (As at September 30) | Item | September 30, 2020 (thousand shares) | September 30, 2020 (thousand HKD) | March 31, 2020 (thousand shares) | March 31, 2020 (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Authorized: Ordinary shares of HKD 0.10 par value each | 1,000,000 | 100,000 | 1,000,000 | 100,000 | | Issued and fully paid: Ordinary shares of HKD 0.10 par value each | 271,913 | 27,191 | 271,913 | 27,191 | 17. Share-based Payments As of September 30, 2020, the company had 7,497,000 outstanding share options with a weighted average exercise price of HKD 1.48, unchanged from the beginning of the period Outstanding Share Options (As at September 30) | Item | September 30, 2020 Number of Share Options | September 30, 2020 Weighted Average Exercise Price (HKD) | September 30, 2019 Number of Share Options | September 30, 2019 Weighted Average Exercise Price (HKD) | | :--- | :--- | :--- | :--- | :--- | | Outstanding at beginning and end of period (Unaudited) | 7,497,000 | 1.48 | 7,497,000 | 1.48 | | Exercisable at end of period (Unaudited) | 7,497,000 | 1.48 | 7,497,000 | 1.48 | - For the six months ended September 30, 2020, no share options were granted, cancelled, lapsed, or exercised[106] 18. Bank Facilities As of September 30, 2020, the Group's total bank facilities amounted to HKD 222,022 thousand, of which HKD 154,722 thousand was utilized. The facilities are secured by property, plant and equipment, public light bus licenses, and company guarantees Bank Facilities and Collateral (As at September 30) | Item | 2020 (thousand HKD) | March 31, 2020 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total bank facilities | 222,022 | 206,008 | 16,014 | 7.8% | | Utilized facilities | 154,722 | 158,708 | (3,986) | -2.5% | | Unutilized facilities | 67,300 | 47,300 | 20,000 | 42.3% | - These facilities are secured by: (i) pledges of certain of the Group's property, plant and equipment with a net book value of HKD 21,059,000 as at September 30, 2020; (ii) pledges of certain public light bus licenses with a book value of HKD 88,000,000 as at September 30, 2020; and (iii) a company guarantee of HKD 301,785,000 as at September 30, 2020[57] 19. Commitments As of September 30, 2020, the Group's contracted but unprovided capital commitments totaled HKD 14,348 thousand, primarily for 23 ordered but undelivered public light buses. As a lessor, total future minimum lease payments receivable amounted to HKD 2,347 thousand Capital Commitments (As at September 30) | Item | 2020 (thousand HKD) | March 31, 2020 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Contracted but not provided for: Property, plant and equipment | 14,348 | 14,098 | 250 | 1.8% | - As at September 30, 2020, the Group's contracted but unprovided capital commitments amounted to HKD 14,348,000, mainly representing the remaining balance for 23 public light buses ordered but not yet delivered[92] Total Future Minimum Lease Payments Receivable as Lessor (As at September 30) | Item | 2020 (thousand HKD) | March 31, 2020 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Within one year | 2,254 | 2,200 | 54 | 2.5% | | In the second to fifth year inclusive | 93 | – | 93 | Not Applicable | | Total | 2,347 | 2,200 | 147 | 6.7% | 20. Related Party Transactions The Group engaged in various transactions with key management personnel and related companies, including salaries, administrative fee income, and public light bus lease payments, all on agreed terms Key Management Personnel Remuneration (For the six months ended September 30) | Item | 2020 (thousand HKD) | 2019 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Salaries, allowances and benefits in kind | 5,570 | 5,611 | (41) | -0.7% | | Contributions to retirement benefit schemes | 63 | 63 | 0 | 0.0% | | Total | 5,633 | 5,674 | (41) | -0.7% | Related Company Transactions (For the six months ended September 30) | Related Company Name | Nature of Transaction | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | :--- | | Chung Kong Transportation Consultants Limited | Administrative fee income received | 374 | 374 | | | Public light bus lease payments | 10,563 | 10,447 | | Man Shing Transportation Company Limited | Administrative fee income received | 420 | 420 | | | Public light bus lease payments | 12,004 | 11,980 | | Tai Sum Limited | Administrative fee income received | 407 | 394 | | | Public light bus lease payments | 11,772 | 11,052 | - Related party transactions were conducted in the ordinary course of the Group's business at prices and on terms agreed between the parties[66] Management Discussion and Analysis This section provides an overview of the Group's interim results, business and financial performance, cash flow, capital structure, and future outlook Interim Results and Dividends Despite the pandemic's impact, the Group achieved a profit of HKD 2,696 thousand due to cost control and government subsidies, reversing the prior year's loss, but no interim dividend was recommended - Since the outbreak of COVID-19 in January 2020, the Group's passenger volume and revenue have significantly declined. The negative impact on operating results for the period was offset by the Group's cost control measures and subsidies received from the Hong Kong Government's Anti-epidemic Fund[68] - Including non-cash revaluation deficit on public light bus licenses and impairment provision for public bus licenses of approximately HKD 21,160,000, the Group recorded a profit of HKD 2,696,000 for the six months ended September 30, 2020 (2019: loss of HKD 9,422,000)[68] - In line with past practice, the Board does not recommend the payment of any interim dividend for the six months ended September 30, 2020[68] Business Review and Financial Review The pandemic severely impacted the public transport sector, leading to a significant decline in passenger volume and revenue, which the Group addressed through service adjustments, fleet deferrals, and hygiene measures, supported by government subsidies - Since January 2020, the COVID-19 pandemic in Hong Kong has severely impacted the local public transport industry, with green minibus passenger volume decreasing by 28%, and the Group's scheduled public light bus service passenger volume decreasing by 25.6% to 21,998,000 passengers compared to the same period last year[68][69] - To cope with the significant drop in passenger demand, the Group adjusted service frequencies as much as possible to enhance resource utilization efficiency, resulting in a reduction of total mileage by approximately 18.5% to about 16.3 million kilometers during the period[69] - To conserve financial resources to address the challenges posed by COVID-19, the Group deferred its fleet renewal plan, resulting in only one 16-seater public light bus being replaced by a new 19-seater public light bus during the period[70] - The Group has adopted a series of anti-epidemic measures, including frequent cleaning and disinfection of vehicle interiors with bleach or disinfectant, and applying antibacterial coatings to vehicle interiors and air conditioning filters across the entire fleet, to provide a clean environment for passengers and employees[71] Consolidated Interim Results Details (For the six months ended September 30) | Item | 2020 (thousand HKD) | 2019 (thousand HKD) | Increase/(Decrease) (thousand HKD) | % | | :--- | :--- | :--- | :--- | :--- | | Revenue | 144,930 | 195,073 | (50,143) | -25.7% | | Other gains and other income | 37,527 | 5,926 | 31,601 | 533.3% | | Direct costs | (138,085) | (161,282) | (23,197) | -14.4% | | Administrative expenses | (20,392) | (20,259) | 133 | 0.7% | | Other operating expenses | (831) | (554) | 277 | 50.0% | | Finance costs | (1,789) | (2,863) | (1,074) | -37.5% | | Share of results of a joint venture | 262 | 445 | (183) | -41.1% | | Income tax credit/(expense) | 2,234 | (2,508) | (4,742) | Not Applicable | | Profit for the period excluding revaluation deficit on public light bus licenses and impairment provision for public bus licenses | 23,856 | 13,978 | 9,878 | 70.7% | | Revaluation deficit on public light bus licenses | (18,480) | (23,400) | (4,920) | -21.0% | | Impairment provision for public bus licenses | (2,680) | – | 2,680 | Not Applicable | | Profit/(Loss) for the period | 2,696 | (9,422) | 12,118 | Not Applicable | - Revenue for the period decreased by HKD 50,143,000 or 25.7% to HKD 144,930,000 compared to the same period last year, primarily due to a significant drop in passenger volume, with fare adjustments having a negligible impact on revenue[73] - Other gains and other income for the period increased by HKD 31,601,000 or 533.3% to HKD 37,527,000 compared to the previous period, due to the Group receiving HKD 33,922,000 in subsidies under the Hong Kong Government's Anti-epidemic Fund (including the "Employment Support Scheme")[74] - Direct costs for the period decreased by HKD 23,197,000 or 14.4% to HKD 138,085,000 compared to the same period last year, mainly due to a reduction in fuel costs of HKD 7,711,000 or 28.5% and a reduction in driver labor costs of HKD 13,342,000 or 17.2%[76] - Repair and maintenance costs decreased by HKD 2,646,000 or 19.8% to HKD 10,684,000, benefiting from a lower average fleet age of 6.6 years and reduced minibus utilization[77] - The fair value of public light bus licenses decreased by HKD 280,000 or 12.3% to HKD 2,000,000, resulting in a revaluation deficit of HKD 18,480,000; an impairment provision of HKD 2,680,000 was recognized for public bus licenses[77][78] - Finance costs for the period decreased by 37.5% to HKD 1,789,000, primarily due to a decrease in the average interest rate on bank borrowings by approximately 34 basis points and a reduction in finance charges on lease liabilities as the lease liability balance decreased[79] - Income tax credit for the period was HKD 2,234,000, with an effective tax rate of 16.8%, after considering non-deductible impacts and non-taxable impacts[80] Cash Flows Net cash inflow from operating activities slightly decreased, investing activities turned to net inflow, and net cash outflow from financing activities reduced, resulting in a net increase in cash and cash equivalents of HKD 10,074 thousand Cash Flow Summary (For the six months ended September 30) | Activity | 2020 (thousand HKD) | 2019 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net cash inflow from operating activities | 55,832 | 56,854 | (1,022) | -1.8% | | Net cash inflow/(outflow) from investing activities | 2,559 | (6,610) | 9,169 | Not Applicable | | Net cash outflow from financing activities | (48,317) | (53,988) | 5,671 | -10.5% | | Net increase/(decrease) in cash and cash equivalents | 10,074 | (3,744) | 13,818 | Not Applicable | - Net cash inflow from operating activities slightly decreased by HKD 1,022,000 or 1.8% compared to the previous period, but improved with increased operating profit, considering recognized but not yet received government subsidies[83] - Net cash inflow from investing activities for the period was HKD 2,559,000 (2019: net cash outflow of HKD 6,610,000), including dividend income of HKD 1,600,000 and loan repayments of HKD 1,000,000 received from a joint venture[83] - Net cash outflow from financing activities for the period decreased by HKD 5,671,000 or 10.5% to HKD 48,317,000 compared to the previous period, primarily due to reduced dividend payments to shareholders[83] Capital Structure, Liquidity, Financial Resources and Policies The Group's liquidity significantly improved with a substantial reduction in net current liabilities and an increased liquidity ratio, alongside a slight decrease in total bank borrowings and an improved gearing ratio - The Group's net current liabilities decreased to HKD 2,581,000 as at September 30, 2020 (March 31, 2020: HKD 50,911,000), and the liquidity ratio increased to 0.95 times (March 31, 2020: 0.39 times)[84] - The significant improvement in net current liabilities and liquidity ratio is mainly due to: 1) the reduction in lease liabilities as the minibus lease agreements for 286 public light buses expired on September 30, 2020; and 2) an increase in bank balances and cash during the period[84] - The Group's bank balances and cash amounted to HKD 31,337,000 (March 31, 2020: HKD 21,263,000)[85] - The Group's total bank borrowings balance decreased by HKD 3,986,000 or 2.5% to HKD 154,722,000, primarily due to scheduled repayment of bank borrowings during the period[85] Bank Borrowings Maturity Profile (As at September 30) | Maturity Period | 2020 (thousand HKD) | March 31, 2020 (thousand HKD) | | :--- | :--- | :--- | | Within one year | 13,679 | 15,258 | | In the second year | 10,802 | 10,425 | | In the third to fifth year inclusive | 30,341 | 30,350 | | After five years | 99,900 | 102,675 | | Total | 154,722 | 158,708 | - The Group's gearing ratio (defined as total bank borrowings less bank balances and cash divided by shareholders' equity) was 192.4% (March 31, 2020: 197.5%), with the decrease mainly due to an increase in bank balances and cash as at September 30, 2020[87] Assets Pledged (As at September 30) | Item | 2020 (thousand HKD) | March 31, 2020 (thousand HKD) | | :--- | :--- | :--- | | Public light bus licenses | 88,000 | 100,320 | | Property, plant and equipment | 21,059 | 22,228 | - The majority of the Group's revenue from its scheduled public light bus business is collected in cash or through Octopus Cards Limited and remitted to the Group on the next business day, so the Group does not face any significant credit risk[88] - The majority of the Group's operating revenue and expenses, as well as monetary assets and liabilities, are denominated in Hong Kong Dollars, so the Group does not face significant foreign exchange risk[89] - The Group's interest rate risk primarily arises from its bank balances and borrowings, all of which are denominated in Hong Kong Dollars and bear floating interest rates, and management believes the Group does not face significant interest rate risk[91] - The Group faces fuel price risk, but after careful assessment, the Board believes that entering into hedging contracts may not be an effective tool to manage fuel price risk, and therefore the Group did not adopt any hedging policy for its expected fuel consumption during the period[91] Capital Expenditure and Commitments Total capital expenditure significantly decreased to HKD 322 thousand due to deferred fleet upgrades, with contracted but unprovided capital commitments primarily for 23 ordered public light buses - The Group's total capital expenditure for the period was HKD 322,000 (2019: HKD 15,562,000), a significant decrease because the timetable for upgrading the public light bus fleet was deferred due to the outbreak of COVID-19[92] - As at September 30, 2020, the Group's contracted but unprovided capital commitments amounted to HKD 14,348,000, mainly representing the remaining balance for 23 public light buses ordered but not yet delivered[92] Contingent Liabilities As of September 30, 2020, the Group had no significant contingent liabilities - As at September 30, 2020 and March 31, 2020, the Group had no significant contingent liabilities[92] Employees and Remuneration Policy Employee costs constitute a major portion of total operating costs, with employee benefit expenses decreasing by 12.9% to HKD 88,039 thousand due to reduced labor costs. The Group provides basic remuneration, discretionary bonuses, and other benefits - Employee costs constitute a major portion of the Group's total operating costs. Employee benefit expenses incurred during the reporting period amounted to HKD 88,039,000 (2019: HKD 101,027,000), accounting for 55.4% of total costs[93] - The decrease in employee benefit expenses was due to the reduction in labor costs as mentioned above[93] - In addition to basic remuneration, the Group also provides double pay and/or discretionary bonuses to eligible employees, as well as share option schemes, retirement schemes, and training programs[93] - As at September 30, 2020, the Group had 1,295 employees[93] Prospects The Group maintains a conservative short-term financial outlook, as passenger traffic recovery depends on the pandemic's development and economic recovery. Future plans include route restructuring, fleet upgrades, and seeking strategic cooperation opportunities to enhance operational efficiency, while actively seeking fare adjustments - In the future, the recovery of local public transport passenger traffic will still depend on the development of the COVID-19 pandemic and the progress of Hong Kong's economic recovery, and management remains conservative about the Group's short-term financial performance[95] - The Group will continue to enhance its operational efficiency through route restructuring and fleet upgrades, and has recently participated in a technical study launched by the Transport Department regarding the detection of seat occupancy and seat belt usage in green minibuses[96] - The Group will continue to identify and seize development and strategic cooperation opportunities in the market to create sustainable value for shareholders[96] - Management will actively seek support from the local community and the government to ensure the service quality of scheduled public light bus passenger services to meet public demand and seek fare adjustments[96] Directors' Interests in Shares As of September 30, 2020, several directors and their associates held long positions in the company's shares and related shares, with Mr. Wong Ling Sun and Ms. Ng Shui Chun holding significant shares through discretionary trusts Directors' Long Positions in Shares and Related Shares of the Company (As at September 30, 2020) | Director's Name | Capacity/Nature of Interest | Number of Ordinary Shares Held | Number of Underlying Shares of Share Options Held | Total | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Wong Ling Sun | Beneficiary of a discretionary trust/Other | 117,677,000 | – | 117,677,000 | 43.27% | | | Beneficial owner/Personal | 25,362,500 | – | 25,362,500 | 9.32% | | | Executor of the estate of the late Mr. Wong Man Kit/Other | 23,256,000 | – | 23,256,000 | 8.56% | | | Spouse of Ms. Law Wai Sze/Family | 352,000 | – | 352,000 | 0.12% | | | Father of Mr. Wong Tin Yan/Family | 2,000,000 | – | 2,000,000 | 0.74% | | | Father of Mr. Wong Tin Yu/Family | 2,000,000 | – | 2,000,000 | 0.74% | | | Father of Ms. Wong Tin Lam/Family | 2,000,000 | – | 2,000,000 | 0.74% | | Ms. Ng Shui Chun | Beneficiary of a discretionary trust/Other | 117,677,000 | – | 117,677,000 | 43.27% | | | Beneficial owner/Personal | 11,350,300 | – | 11,350,300 | 4.17% | | | Spouse of the late Mr. Wong Man Kit/Family | 23,256,000 | – | 23,256,000 | 8.56% | | Mr. Chan Man Chun | Beneficial owner/Personal | 3,539,500 | – | 3,539,500 | 1.30% | | | Spouse of Ms. Chan Lai Ling/Family | 220,000 | – | 220,000 | 0.08% | | Ms. Wong Wai Sum | Beneficiary of a discretionary trust/Other | 117,677,000 | – | 117,677,000 | 43.27% | | | Beneficial owner/Personal | 3,357,000 | – | 3,357,000 | 1.24% | | Ms. Wong Wai Man | Beneficiary of a discretionary trust/Other | 117,677,000 | – | 117,677,000 | 43.27% | | | Mother of Ms. Au Tsz Yu/Family | 2,200,000 | – | 2,200,000 | 0.81% | | | Mother of Mr. Au Chun Hei/Family | 2,000,000 | – | 2,000,000 | 0.74% | | Dr. Chan Yuen Tak Fai | Beneficial owner/Personal | 588,000 | 300,000 | 888,000 | 0.33% | | Mr. Kwong Ki Chi | Beneficial owner/Personal | 588,000 | 300,000 | 888,000 | 0.33% | - A total of 117,677,000 ordinary shares of the company are held by Skyblue Group Limited, a wholly-owned subsidiary of Metro Success Investments Limited. Metro Success is a wholly-owned subsidiary of JETSUN UT Company (PTC) Limited, which is the trustee of The JetSun Unit Trust, wholly owned by HSBC International Trustee Limited as trustee of The JetSun Trust. The JetSun Trust is a discretionary trust, and its discretionary objects include Mr. Wong Ling Sun, Ms. Ng Shui Chun, Ms. Wong Wai Sum, and Ms. Wong Wai Man[101] Share Options As of September 30, 2020, the company had 7,497,000 outstanding share options with a weighted average exercise price of HKD 1.48, with no grants, cancellations, lapses, or exercises during the period Details of Outstanding Share Options (As at September 30, 2020) | Grantee Name | Date of Grant | Number of Share Options | Exercisable Period | Exercise Price Per Share Option (HKD) | Outstanding as at April 1, 2020 | Granted During the Period | Exercised During the Period | Lapsed During the Period | Outstanding as at September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Directors: Dr. Chan Yuen Tak Fai | 20/10/2011 | 300,000 | 20/10/2011-19/10/2021 | 1.60 | 300,000 | – | – | – | 300,000 | | Mr. Kwong Ki Chi | 20/10/2011 | 300,000 | 20/10/2011-19/10/2021 | 1.60 | 300,000 | – | – | – | 300,000 | | Total for Directors | | 600,000 | | | 600,000 | – | – | – | 600,000 | | Other Eligible Employees: Total | 20/10/2011 | 4,050,000 | 20/10/2011-19/10/2021 | 1.60 | 4,000,000 | – | – | – | 4,000,000 | | | 23/9/2015 | 3,096,000 | 23/9/2015-22/9/2025 | 1.25 | 2,339,000 | – | – | – | 2,339,000 | | Total for All Employees | | | | | 7,497,000 | – | – | – | 7,497,000 | - On August 30, 2013, the company terminated the share option scheme adopted on March 22, 2004 ("2004 Scheme") and adopted a new share option scheme ("2013 Scheme") on the same day, aiming to provide a platform for the company to reward and incentivize eligible participants who have contributed to the Group[111] - All outstanding share options vested immediately upon the date of grant. For the six months ended September 30, 2020, no share options were granted, cancelled, lapsed, or exercised[106] Substantial Shareholders As of September 30, 2020, HSBC International Trustee and its associated entities (JETSUN, Metro Success, Skyblue) were substantial shareholders, collectively holding 48.94% of the shares, along with The Seven International Holdings (L) Limited Substantial Shareholders' Shareholding (As at September 30, 2020) | Shareholder Name | Number of Shares/Underlying Shares Held | Percentage of Total Issued Shares of the Company as at September 30, 2020 | | :--- | :--- | :--- | | HSBC International Trustee | 133,077,000 | 48.94% | | JETSUN UT Company (PTC) Limited | 117,677,000 | 43.27% | | Metro Success Investments Limited | 117,677,000 | 43.27% | | Skyblue Group Limited | 117,677,000 | 43.27% | | The Seven International Holdings (L) Limited | 14,850,000 | 5.46% | | The Seven Capital Limited | 14,850,000 | 5.46% | - HSBC International Trustee indirectly holds shares through its wholly-owned subsidiaries JETSUN and Metro Success, while Mr. Wong Ling Sun, Ms. Ng Shui Chun, Ms. Wong Wai Sum, and Ms. Wong Wai Man are beneficiaries of The JetSun Trust[112] Corporate Governance The company generally complied with the Listing Rules' Corporate Governance Code, with a temporary non-compliance regarding independent non-executive directors and audit committee composition, which was subsequently rectified - The company has complied with the code provisions set out in Appendix 14 "Corporate Governance Code and Corporate Governance Report" of the Listing Rules for the six months ended September 30, 2020[116] - Due to the passing of former independent non-executive director Dr. Li Pang Fei on May 15, 2020, the number of independent non-executive directors on the Board was temporarily less than two, and their proportion of the Board members was less than one-third. Additionally, the company's Audit Committee then consisted of only two members, and the position of Chairman of the Remuneration Committee became vacant[116] - On June 19, 2020, Mr. Fong Man Kit was appointed as an independent non-executive director, Chairman of the Remuneration Committee, and a member of the Audit Committee and Nomination Committee. Consequently, the Board did not comply with the requirements under Listing Rules 3.10(1), 3.10A, 3.21, and 3.25 during the period from May 15, 2020, to June 19, 2020[116] - Following specific inquiries, all directors confirmed that they had complied with the required standards for directors' securities transactions as set out in the Model Code and its code of conduct during the review period[116] - The Audit Committee, comprising three independent non-executive directors, held a meeting on November 27, 2020, to review the Group's unaudited condensed consolidated interim financial information and interim results announcement, and provided advice and recommendations to the Board[117] Board of Directors As of the interim report date, the Board comprised four executive directors, one non-executive director, and three independent non-executive directors, with Mr. Wong Ling Sun as Chairman and Mr. Chan Man Chun as Chief Executive Officer - As of the date of this interim report, the executive directors are Mr. Wong Ling Sun (Chairman), Ms. Ng Shui Chun, Mr. Chan Man Chun (Chief Executive Officer), and Ms. Wong Wai Sum[119] - The non-executive director is Ms. Wong Wai Man[119] - The independent non-executive directors are Dr. Chan Yuen Tak Fai, Mr. Kwong Ki Chi, and Mr. Fong Man Kit[119]