现恒建筑(01500) - 2021 - 中期财报

Corporate Information This section provides details on the company's governance structure, including board members, committees, key personnel, and contact information BOARD OF DIRECTORS This chapter lists the company's board members, including executive and independent non-executive directors - Executive Directors include Liu Bowen, Zheng Rongchang, and Guan Jiexin[5] - Independent Non-executive Directors include Leung Tsz Kin, Lam Chi Hung, and Yau Tsz Man[5] AUDIT COMMITTEE The Audit Committee members are responsible for overseeing the company's financial reporting and internal controls - Audit Committee members are Leung Tsz Kin, Lam Chi Hung, and Yau Tsz Man[5] REMUNERATION COMMITTEE The Remuneration Committee is responsible for formulating and reviewing remuneration policies for directors and senior management - Remuneration Committee members are Yau Tsz Man, Guan Jiexin, and Leung Tsz Kin[5] NOMINATION COMMITTEE The Nomination Committee is responsible for evaluating board composition and nominating new directors - Nomination Committee members are Lam Chi Hung, Zheng Rongchang, and Yau Tsz Man[5] AUTHORISED REPRESENTATIVES The company's authorized representatives are Guan Jiexin and Wong Sin Yee - Authorized representatives are Guan Jiexin and Wong Sin Yee[5] COMPANY SECRETARY The company secretary is Wong Sin Yee - Company secretary is Wong Sin Yee[5] AUDITOR The company's auditor is KPMG, a registered public interest entity auditor - Auditor is KPMG[5] PRINCIPAL BANKERS The company's principal bankers include Bank of China (Hong Kong) Limited, Wing Lung Bank Limited, and HSBC - Principal bankers include Bank of China (Hong Kong) Limited, Wing Lung Bank Limited, and The Hongkong and Shanghai Banking Corporation Limited[5] REGISTERED OFFICE The company's registered office is located in the Cayman Islands - Registered office is located at Windward 3, Regatta Office Park PO Box 1350 Grand Cayman KY1-1108, Cayman Islands[7] HEADQUARTERS AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG The company's headquarters and principal place of business in Hong Kong are located in Causeway Bay - Principal place of business in Hong Kong is located at 26/F, Parkview Centre, 5 Moreton Terrace, Causeway Bay, Hong Kong[7] HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE The Hong Kong branch share registrar and transfer office is Tricor Investor Services Limited - Hong Kong branch share registrar and transfer office is Tricor Investor Services Limited[7] CAYMAN ISLANDS PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE The Cayman Islands principal share registrar and transfer office is Ocorian Trust (Cayman) Ltd - Cayman Islands principal share registrar and transfer office is Ocorian Trust (Cayman) Ltd[7] WEBSITE The company's website is www.inconstruction.hk - Company website is www.inconstruction.hk[7](index=7&type=chunk) STOCK CODE The company's stock code on the Hong Kong Stock Exchange is 1500 - Hong Kong Stock Exchange stock code is 1500[7] Highlights This section presents a concise overview of the company's key financial performance indicators Financial Highlights The company achieved significant financial growth in the first half of 2020, with substantial increases in revenue, gross profit, and net profit, alongside improved gross profit margin | Indicator | H1 2021 (HK$ million) | H1 2020 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 252.7 | 188.6 | +64.1 | +34.0% | | Gross Profit | 37.6 | 14.8 | +22.8 | +154.1% | | Net Profit | 21.4 | 2.5 | +18.9 | +756.0% | | Earnings Per Share (HK cents) | 2.6 | 0.3 | +2.3 | +766.7% | | Gross Profit Margin | 14.9% | 7.8% | +7.1% | - | Management Discussion and Analysis This section provides an in-depth review of the company's operational performance, financial position, and future outlook BUSINESS AND FINANCIAL REVIEW The Group primarily operates as a contractor in the Hong Kong foundation industry, focusing on design and build projects, with significant business and financial growth driven by new projects and cost-effective solutions - The Group primarily operates as a foundation industry contractor in Hong Kong, undertaking foundation and related works, including demolition, site formation, ground investigation, and general building works[10] - The company focuses on design and build projects, achieving cost-effectiveness through alternative designs to offer more competitive prices[10] Business Review For the six months ended September 30, 2020, the company secured one new project with a contract sum of HK$17.9 million and completed two existing projects, with seven projects ongoing and an uncompleted contract sum of HK$378.1 million at period-end - One new project was secured with a contract sum of HK$17.9 million for the six months ended September 30, 2020[11] - Two existing projects were completed during the period[11] - As of September 30, 2020, seven projects were ongoing, with an uncompleted contract sum of HK$378.1 million[11] Financial Review For the six months ended September 30, 2020, the company's revenue, gross profit, and net profit all significantly increased, with a notable improvement in gross profit margin, primarily due to new projects and successful project extensions | Indicator | H1 2020 (HK$ million) | H1 2019 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 252.7 | 188.6 | +64.1 | +34.0% | | Gross Profit | 37.6 | 14.8 | +22.8 | +154.1% | | Net Profit | 21.4 | 2.5 | +18.9 | +756.0% | | Gross Profit Margin | 14.9% | 7.8% | +7.1% | - | - Administrative and other operating expenses increased by approximately HK$3.0 million to HK$15.5 million, primarily due to an increase of HK$6.0 million in impairment provision for trade and other receivables[14][16] LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE As of September 30, 2020, the company's liquidity and gearing ratios improved, cash and bank balances increased, capital structure is sound, and it possesses sufficient unutilized bank facilities | Indicator | As of Sep 30, 2020 | As of Mar 31, 2020 | Change | | :--- | :--- | :--- | :--- | | Current Ratio | 3.2 | 3.0 | +0.2 | | Gearing Ratio | 11.3% | 17.2% | -5.9% | | Cash and Bank Balances (HK$ million) | 51.9 | 46.1 | +5.8 | | Restricted Bank Deposits (HK$ million) | 40.8 | 35.6 | +5.2 | - The gearing ratio decreased by 5.9%, mainly due to the repayment of a HK$10 million bank loan[19] - As of September 30, 2020, the company had equity of HK$270.0 million and debt of HK$30.5 million[19] - The company has bank facilities of HK$170.0 million, of which HK$129.4 million remains unutilized and unrestricted[19] EMPLOYEES As of September 30, 2020, the company had 50 full-time employees, offering competitive remuneration and benefits including salaries, performance bonuses, training, and provident funds - As of September 30, 2020, the company had 50 full-time employees, consistent with March 31, 2020[21] - The company provides competitive remuneration and benefits based on market levels and employee performance, including salaries, performance bonuses, training, and provident funds[21] CAPITAL COMMITMENTS As of September 30, 2020, the company had no capital commitments - As of September 30, 2020, the company had no capital commitments[21] CHARGE ON GROUP ASSETS Except for charges disclosed in notes 9 and 10 to the financial statements, the company had no other significant charges on group assets as of September 30, 2020 - Except as disclosed in notes 9 and 10 to the financial statements, the company had no other significant charges on group assets as of September 30, 2020[21] CONTINGENT LIABILITIES Except for contingent liabilities disclosed in note 17 to the financial statements, the company had no other contingent liabilities as of September 30, 2020 - Except as disclosed in note 17 to the financial statements, the company had no other contingent liabilities as of September 30, 2020[21] SIGNIFICANT INVESTMENTS HELD, MATERIAL ACQUISITIONS OR DISPOSALS OF SUBSIDIARIES AND AFFILIATED COMPANIES, AND PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS For the six months ended September 30, 2020, the company held no significant investments, made no material acquisitions or disposals of subsidiaries and affiliated companies, and had no other plans for material investments or capital assets - For the six months ended September 30, 2020, the company held no significant investments, nor made any material acquisitions or disposals of subsidiaries and affiliated companies[21] - As of September 30, 2020, the company had no other plans for material investments or capital assets[21] USE OF NET PROCEEDS FROM LISTING The net proceeds from the company's listing were primarily allocated for hiring additional staff, acquiring machinery, and financing performance bonds for future projects, with some delays in utilization due to project requirements Use of Net Proceeds from Listing | Purpose | Planned Use (HK$ million) | Actual Use as of Sep 30, 2020 (HK$ million) | | :--- | :--- | :--- | | Recruitment of additional staff | 2.9 | 2.9 | | Acquisition of additional machinery and equipment | 29.9 | 29.9 | | Financing for issuing performance bonds for future projects | 56.7 | 51.3 | - Unutilized net proceeds for financing performance bonds for future projects, originally expected by March 31, 2020, were delayed as some projects did not require performance bonds or needed smaller amounts[28] - Unutilized net proceeds are expected to be used by March 31, 2022[23] FUTURE PROSPECTS The company anticipates a long-term recovery in the Hong Kong foundation industry and plans to maintain competitiveness by expanding capacity, enhancing design and project management capabilities, and offering flexible solutions, while continuing to assess COVID-19 impacts - The company expects a long-term recovery in the foundation industry due to HKSAR Government policies on increasing land supply and infrastructure investment[30] - The company will maintain competitiveness by expanding capacity, enhancing foundation design and project management skills, and providing high-quality, flexible solutions[30] - The impact of the COVID-19 pandemic on the Hong Kong foundation industry is relatively low, but the company will continue to assess its effects and implement precautionary measures[30] Disclosure of Interests This section details the shareholdings of directors, chief executives, and substantial shareholders in the company's securities DIRECTORS' AND CHIEF EXECUTIVES' INTEREST IN SECURITIES As of September 30, 2020, the company's directors and chief executives held long positions in the company's shares, with Mr. Liu Bowen, Mr. Zheng Rongchang, and Ms. Guan Jiexin holding substantial shares through controlled corporations and spouse interests Directors' and Chief Executives' Interest in Securities | Director Name | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Liu Bowen | Interest in controlled corporation (In Play Limited) | 270,000,000 | 32.53% | | | Spouse's interest (Ms. Guan Jiexin) | 60,000,000 | 7.23% | | | Beneficial owner | 7,520,000 | 0.91% | | Total | | 337,520,000 | 40.67% | | Mr. Zheng Rongchang | Interest in controlled corporation (Wealth Celebration Limited) | 270,000,000 | 32.53% | | | Beneficial owner | 5,900,000 | 0.71% | | Total | | 275,900,000 | 33.24% | | Ms. Guan Jiexin | Interest in controlled corporation (Kinetic Kingdom Limited) | 60,000,000 | 7.23% | | | Spouse's interest (Mr. Liu Bowen) | 277,520,000 | 33.44% | | Total | | 337,520,000 | 40.67% | | Mr. Yau Tsz Man | Beneficial owner | 2,970,000 | 0.36% | - Mr. Liu Bowen wholly owns 270 million shares through In Play Limited and is deemed to own an additional 60 million shares through his spouse, Ms. Guan Jiexin[34][35][38] - Mr. Zheng Rongchang wholly owns 270 million shares through Wealth Celebration Limited[35][38] - Ms. Guan Jiexin wholly owns 60 million shares through Kinetic Kingdom Limited and is deemed to own an additional 277.52 million shares through her spouse, Mr. Liu Bowen[36][38] SUBSTANTIAL SHAREHOLDERS' INTERESTS IN SECURITIES As of September 30, 2020, besides the directors, In Play Limited, Wealth Celebration Limited, and Kinetic Kingdom Limited were substantial shareholders holding significant long positions in the company's securities Substantial Shareholders' Interests in Securities | Substantial Shareholder Name | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | In Play Limited | Beneficial owner | 270,000,000 | 32.53% | | Wealth Celebration Limited | Beneficial owner | 270,000,000 | 32.53% | | Kinetic Kingdom Limited | Beneficial owner | 60,000,000 | 7.23% | Corporate Governance and Other Information This section outlines the company's corporate governance practices, dividend policy, and other relevant disclosures INTERIM DIVIDEND The Board resolved not to declare an interim dividend for the six months ended September 30, 2020, consistent with the prior year - The Board resolved not to declare an interim dividend for the six months ended September 30, 2020 (2019: nil)[43][46] PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities[44][46] EVENTS AFTER THE REPORTING PERIOD As of the report date, the Board was not aware of any significant events after September 30, 2020, requiring disclosure - The Board is not aware of any significant events after September 30, 2020, up to the date of this report that require disclosure[42][45] CORPORATE GOVERNANCE The company is committed to high standards of corporate governance and complies with the Corporate Governance Code in Appendix 14 of the Listing Rules, noting that the Chairman and Chief Executive are the same person (Mr. Liu Bowen), which the company believes ensures strategic consistency, while the diverse background of independent non-executive directors and board composition provide sufficient independence - The company is committed to achieving high standards of corporate governance and complies with the Corporate Governance Code in Appendix 14 of the Listing Rules[50][52] - The roles of Chairman and Chief Executive are combined and held by Mr. Liu Bowen, a deviation from Code Provision A.2.1, but the Board believes this arrangement ensures strategic consistency and continuous execution[51][52] - The diverse background of independent non-executive directors and the board's composition with an equal number of independent non-executive and executive directors ensure a balance of power and independent decision-making[51][52] COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules, and all directors confirmed compliance during the reporting period - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules as its code of conduct for directors' dealings in the company's securities[53][54] - All directors confirmed compliance with the Model Code for the six months ended September 30, 2020[53][54] REVIEW OF INTERIM RESULTS The interim financial report for the six months ended September 30, 2020, was unaudited but reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410. The Audit Committee reviewed the Group's accounting principles, practices, and interim results and financial report - The interim financial report was unaudited but reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[55] - The Audit Committee reviewed the Group's accounting principles and practices, as well as the interim results and financial report for the six months ended September 30, 2020[55] SPECIFIC PERFORMANCE OF CONTROLLING SHAREHOLDERS UNDER RULE 13.18 OF THE LISTING RULES The company, as guarantor, and its indirect wholly-owned subsidiary, as borrower, entered into general banking and term loan facilities totaling HK$80 million and an installment loan of HK$25 million with a bank, requiring controlling shareholders Mr. Liu Bowen, Mr. Zheng Rongchang, and Ms. Guan Jiexin to maintain a combined beneficial interest of not less than 50% and one of them to remain as Chairman, with non-compliance constituting an event of default - The company entered into general banking and term loan facilities totaling HK$80 million and an installment loan of HK$25 million with a bank[55] - Controlling shareholders Mr. Liu Bowen, Mr. Zheng Rongchang, and Ms. Guan Jiexin committed to maintaining a combined beneficial interest of not less than 50% of the company's issued share capital[55] - The financing agreement requires any one of Mr. Liu Bowen, Mr. Zheng Rongchang, and Ms. Guan Jiexin to remain as the company's Chairman[55] - Violation of these undertakings constitutes an event of default, allowing the lender to cancel or suspend facilities and demand repayment[55] Consolidated Statement of Profit or Loss and Other Comprehensive Income This section presents the company's financial performance, including revenue, expenses, and net profit for the period Profit or Loss and Other Comprehensive Income For the six months ended September 30, 2020, the company experienced significant growth in revenue and profit, a notable improvement in gross profit margin, and a substantial increase in basic earnings per share Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | For the six months ended Sep 30, 2020 (HK$ thousand) | For the six months ended Sep 30, 2019 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 252,739 | 188,587 | | Direct costs | (215,161) | (173,808) | | Gross profit | 37,578 | 14,779 | | Other income | 3,576 | 1,152 | | Administrative and other operating expenses | (15,545) | (12,505) | | Operating profit | 25,609 | 3,426 | | Finance costs | (531) | (575) | | Profit before taxation | 25,078 | 2,851 | | Income tax | (3,727) | (322) | | Profit and total comprehensive income for the period | 21,351 | 2,529 | | Basic and diluted earnings per share (HK cents) | 2.57 | 0.30 | Consolidated Statement of Financial Position This section provides a snapshot of the company's assets, liabilities, and equity at a specific point in time Assets and Liabilities As of September 30, 2020, the company's total assets less current liabilities and net assets both increased, with a significant rise in net current assets, indicating a robust financial position Consolidated Statement of Financial Position | Indicator | As of Sep 30, 2020 (HK$ thousand) | As of Mar 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Non-current assets | | | | Property, plant and equipment | 114 | 184 | | Lease receivables | 12,781 | 15,159 | | Deferred tax assets | 73 | 69 | | Total non-current assets | 12,968 | 15,412 | | Current assets | | | | Contract assets | 221,423 | 189,499 | | Inventories | 706 | 868 | | Lease receivables | 4,708 | 4,606 | | Trade and other receivables | 111,836 | 129,182 | | Tax recoverable | 598 | 4,187 | | Cash and bank balances | 51,873 | 46,125 | | Total current assets | 391,144 | 374,467 | | Current liabilities | | | | Contract liabilities | 1,563 | 4,027 | | Trade and other payables | 101,877 | 94,330 | | Lease liabilities | 4,715 | 4,615 | | Tax payable | 172 | 93 | | Bank loan – secured | – | 10,000 | | Loan from a shareholder | 13,000 | 13,000 | | Total current liabilities | 121,327 | 126,065 | | Net current assets | 269,817 | 248,402 | | Total assets less current liabilities | 282,785 | 263,814 | | Non-current liabilities | | | | Lease liabilities | 12,765 | 15,145 | | Net assets | 270,020 | 248,669 | | Total equity | 270,020 | 248,669 | Consolidated Statement of Changes in Equity This section illustrates the movements in the company's equity over the reporting period Changes in Equity For the six months ended September 30, 2020, the company's total equity significantly increased due to the profit and total comprehensive income for the period Consolidated Statement of Changes in Equity | Indicator | Share Capital (HK$ thousand) | Share Premium (HK$ thousand) | Capital Reserve (HK$ thousand) | Retained Profits (HK$ thousand) | Total Equity (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | As of April 1, 2020 | 8,300 | 75,453 | (35,952) | 200,868 | 248,669 | | Profit and total comprehensive income for the period | – | – | – | 21,351 | 21,351 | | As of September 30, 2020 | 8,300 | 75,453 | (35,952) | 222,219 | 270,020 | - As of September 30, 2020, the company's total equity increased from HK$248,669 thousand on April 1, 2020, to HK$270,020 thousand, primarily due to a profit of HK$21,351 thousand for the period[66] Condensed Consolidated Cash Flow Statement This section summarizes the cash inflows and outflows from operating, investing, and financing activities Cash Flow Activities For the six months ended September 30, 2020, the company's operating cash flow turned positive, investment cash outflow increased, and financing cash outflow significantly rose, resulting in a net increase in cash and cash equivalents Condensed Consolidated Cash Flow Statement | Indicator | For the six months ended Sep 30, 2020 (HK$ thousand) | For the six months ended Sep 30, 2019 (HK$ thousand) | | :--- | :--- | :--- | | Net cash generated from/(used in) operating activities | 17,423 | (26,416) | | Net cash (used in)/generated from investing activities | (4,033) | 4,240 | | Net cash (used in)/generated from financing activities | (12,811) | 20,373 | | Net increase/(decrease) in cash and cash equivalents | 579 | (1,803) | | Cash and cash equivalents at end of period | 11,113 | 7,033 | - Net cash inflow from operating activities was HK$17,423 thousand, a significant improvement from a net outflow of HK$26,416 thousand in the prior year[68] - Net cash outflow from financing activities was HK$12,811 thousand, primarily due to the repayment of a HK$10,000 thousand bank loan[68] Notes to the Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements GENERAL INFORMATION In Construction Holdings Limited and its subsidiaries primarily operate as foundation industry contractors in Hong Kong, incorporated in the Cayman Islands on September 29, 2014, and listed on the Stock Exchange on April 16, 2015 - The company primarily operates as a foundation industry contractor in Hong Kong[70] - The company was incorporated in the Cayman Islands on September 29, 2014, and listed on the Stock Exchange on April 16, 2015[70] BASIS OF PREPARATION The interim financial report is prepared in accordance with applicable disclosure provisions of the Hong Kong Listing Rules and Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA, and was reviewed by KPMG - The interim financial report is prepared in accordance with the Hong Kong Listing Rules and Hong Kong Accounting Standard 34 "Interim Financial Reporting"[70] - The report was unaudited but reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[71][75] CHANGES IN ACCOUNTING POLICIES Revisions to Hong Kong Financial Reporting Standards issued by the HKICPA had no significant impact on the Group's results or financial position for the current period, and no new standards or interpretations not yet effective were applied - Revisions to Hong Kong Financial Reporting Standards issued by the HKICPA had no significant impact on the Group's results and financial position for the current accounting period[73][76] - The Group has not applied any new standards or interpretations that are not yet effective for the current accounting period[73][76] REVENUE AND SEGMENT INFORMATION Revenue represents construction contract revenue earned during the period, and as the chief operating decision-maker views the Group's business as a single operating segment solely in Hong Kong, no segment information is presented - Revenue represents construction contract revenue earned during the period[74] - The chief operating decision-maker views the Group's business as a single operating segment and operates solely in Hong Kong, thus no segment information is presented[74] OTHER REVENUE For the six months ended September 30, 2020, the company's other revenue significantly increased, primarily due to higher government grants and scrap sales Other Revenue | Item | For the six months ended Sep 30, 2020 (HK$ thousand) | For the six months ended Sep 30, 2019 (HK$ thousand) | | :--- | :--- | :--- | | Bank interest income | 210 | 335 | | Interest income from lease receivables | 457 | 503 | | Sales of scrap materials | 1,190 | 296 | | Government grants | 1,630 | – | | Others | 89 | 18 | | Total | 3,576 | 1,152 | - The company successfully applied for a HK$1,630 thousand subsidy under the HKSAR Government's Anti-epidemic Fund "Employment Support Scheme" to cover employee salaries[81][82] PROFIT BEFORE TAXATION For the six months ended September 30, 2020, the company's profit before taxation significantly increased, driven by higher revenue and gross profit, despite an increase in impairment provision for trade and other receivables within administrative and other operating expenses Profit Before Taxation | Item | For the six months ended Sep 30, 2020 (HK$ thousand) | For the six months ended Sep 30, 2019 (HK$ thousand) | | :--- | :--- | :--- | | Finance costs | | | | Interest on bank overdrafts | 12 | 1 | | Interest on bank loans | 136 | 71 | | Interest on lease liabilities | 383 | 503 | | Total finance costs | 531 | 575 | | Staff costs | | | | Contributions to defined contribution retirement plans | 379 | 399 | | Salaries, wages and other benefits | 14,772 | 15,286 | | Total staff costs | 15,151 | 15,685 | | Other items | | | | Depreciation | 70 | 125 | | Lease charges for short-term leases | 596 | 596 | | Impairment provision for trade and other receivables | 6,115 | 120 | - Impairment provision for trade and other receivables significantly increased from HK$120 thousand in the prior year to HK$6,115 thousand in the current period[80] INCOME TAX For the six months ended September 30, 2020, the company's income tax provision significantly increased due to higher profits, with Hong Kong profits tax calculated at an estimated effective annual rate of 16.5%, and a two-tiered tax rate applicable to some subsidiaries Income Tax | Item | For the six months ended Sep 30, 2020 (HK$ thousand) | For the six months ended Sep 30, 2019 (HK$ thousand) | | :--- | :--- | :--- | | Current tax: Hong Kong profits tax provision for the period | 3,731 | 331 | | Deferred tax: Origination and reversal of temporary differences | (4) | (9) | | Total income tax | 3,727 | 322 | - Hong Kong profits tax provision is calculated at an estimated effective annual tax rate of 16.5%[88][92] - A two-tiered profits tax rate applies to some subsidiaries, with the first HK$2 million of assessable profits taxed at 8.25% and the remainder at 16.5%[89][92] EARNINGS PER SHARE For the six months ended September 30, 2020, the company's basic earnings per share significantly increased to 2.57 HK cents, primarily due to a substantial rise in profit for the period, with no potential dilutive shares Earnings Per Share | Indicator | For the six months ended Sep 30, 2020 | For the six months ended Sep 30, 2019 | | :--- | :--- | :--- | | Profit attributable to equity shareholders of the company (HK$ thousand) | 21,351 | 2,529 | | Weighted average number of shares in issue | 830,000,000 | 830,000,000 | | Basic earnings per share (HK cents) | 2.57 | 0.30 | - There were no potential dilutive shares during the period, thus basic and diluted earnings per share are the same[90][93] TRADE AND OTHER RECEIVABLES As of September 30, 2020, the company's total trade and other receivables were HK$111,836 thousand, a decrease from HK$129,182 thousand as of March 31, 2020, with changes in the aging structure of trade receivables and HK$31,841 thousand in deposits pledged for performance bonds Trade and Other Receivables | Item | As of Sep 30, 2020 (HK$ thousand) | As of Mar 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Trade receivables (net of loss allowance) | | | | Within 1 month | 6,824 | 12,965 | | 1 to 2 months | 11,288 | 38,288 | | 2 to 3 months | 12,092 | 5,076 | | Over 3 months | 13,678 | 1,240 | | Subtotal | 43,882 | 57,569 | | Deposits, prepayments and other receivables | 34,160 | 38,101 | | Retention receivables | 33,784 | 33,502 | | Amount due from a shareholder | 10 | 10 | | Total | 111,836 | 129,182 | - As of September 30, 2020, HK$31,841 thousand of deposits were pledged for performance bonds[96][98] - Trade receivables are normally due within 14 to 30 days from the invoice date[96][98] CASH AND BANK BALANCES As of September 30, 2020, the company's total cash and bank balances were HK$51,873 thousand, of which HK$40,760 thousand were restricted bank deposits pledged for performance bonds and bank facilities Cash and Bank Balances | Item | As of Sep 30, 2020 (HK$ thousand) | As of Mar 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Cash and bank on hand | 11,113 | 10,534 | | Bank deposits | 40,760 | 35,591 | | Cash and bank balances in the consolidated statement of financial position | 51,873 | 46,125 | | Less: Restricted bank deposits | (40,760) | (35,591) | | Cash and cash equivalents in the condensed consolidated cash flow statement | 11,113 | 10,534 | - Restricted bank deposits are pledged to secure performance bonds and bank facilities[102][103] CONTRACT ASSETS AND CONTRACT LIABILITIES As of the reporting period end, all contract assets and contract liabilities respectively arose from the performance of construction contracts and advances received for construction contracts - All contract assets and contract liabilities arose from the performance of construction contracts and advances received for construction contracts, respectively[104][105] TRADE AND OTHER PAYABLES As of September 30, 2020, the company's total trade and other payables were HK$101,877 thousand, an increase from HK$94,330 thousand as of March 31, 2020, with changes in the aging structure of trade payables and a new amount payable to a shareholder Trade and Other Payables | Item | As of Sep 30, 2020 (HK$ thousand) | As of Mar 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Trade payables | | | | Within 1 month | 42,257 | 38,166 | | 1 to 2 months | 7,608 | 13,377 | | 2 to 3 months | 13,187 | 4,498 | | Over 3 months | 23,013 | 29,998 | | Subtotal | 86,065 | 86,039 | | Other payables and accrued expenses | 14,984 | 8,291 | | Amount due to a shareholder | 828 | – | | Total | 101,877 | 94,330 | - As of September 30, 2020, the amount payable to a shareholder was unsecured, interest-free, and expected to be repaid within one year[107][108] BANK LOAN – SECURED As of September 30, 2020, the company had fully repaid its bank loan, which was HK$10,000 thousand as of March 31, 2020, secured by HK$13,500 thousand in bank deposits at an annual interest rate of 4.3% Bank Loan – Secured | Item | As of Sep 30, 2020 (HK$ thousand) | As of Mar 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Within one year or on demand | – | 10,000 | - The bank loan was fully repaid during the period ended September 30, 2020[110][112] - The bank loan as of March 31, 2020, was secured by HK$13,500 thousand in bank deposits at an annual interest rate of 4.3%[110][112] LOAN FROM A SHAREHOLDER The shareholder loan is unsecured, interest-free, and repayable with two months' prior notice - The shareholder loan is unsecured, interest-free, and repayable with two months' prior notice[111][112] DIVIDENDS The Board resolved not to declare an interim dividend for the six months ended September 30, 2020, consistent with the prior year - The Board resolved not to declare an interim dividend for the six months ended September 30, 2020 (2019: nil)[114][120] FAIR VALUES MEASUREMENT OF FINANCIAL INSTRUMENTS As of September 30, 2020, and March 31, 2020, there were no significant differences between the carrying amounts and fair values of the company's financial instruments measured at amortized cost - As of September 30, 2020, and March 31, 2020, there were no significant differences between the carrying amounts and fair values of the company's financial instruments measured at amortized cost[113][120] CONTINGENT LIABILITIES As of September 30, 2020, the company had contingent liabilities of HK$94,207 thousand for performance bonds related to its subsidiaries' projects, an increase from HK$87,587 thousand as of March 31, 2020 - As of September 30, 2020, the company had contingent liabilities of HK$94,207 thousand for performance bonds (March 31, 2020: HK$87,587 thousand)[115][120] - Performance bonds are expected to be released according to the terms of each construction contract[115][120] MATERIAL RELATED PARTY TRANSACTIONS During the reporting period, the company engaged in material related party transactions, including key management personnel compensation and rental expenses paid to an associated company, which the Board considers to be in the ordinary course of business Material Related Party Transactions | Item | For the six months ended Sep 30, 2020 (HK$ thousand) | For the six months ended Sep 30, 2019 (HK$ thousand) | | :--- | :--- | :--- | | Key management personnel compensation | 2,921 | 3,367 | | Rental expenses paid to an associated company | 596 | 596 | - The Board considers the related party transactions to be entered into in the ordinary course of business[116][121] Review Report to the Board of Directors This section presents the independent review report on the interim financial information INTRODUCTION KPMG reviewed In Construction Holdings Limited's interim financial report for the six months ended September 30, 2020, which includes the consolidated statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, and condensed consolidated cash flow statement, with directors responsible for its preparation under HKAS 34 - KPMG reviewed the interim financial report for the six months ended September 30, 2020[123] - Directors are responsible for preparing and presenting the interim financial report in accordance with Hong Kong Accounting Standard 34[123] SCOPE OF REVIEW KPMG conducted the review in accordance with Hong Kong Standard on Review Engagements 2410, which has a narrower scope than an audit, thus providing no assurance of detecting all material matters and no audit opinion is expressed - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, primarily involving inquiries of personnel responsible for financial and accounting matters, and analytical and other review procedures[123] - The scope of a review is substantially less than an audit conducted in accordance with Hong Kong Standards on Auditing, therefore no audit opinion is expressed[123] CONCLUSION Based on the review, KPMG found no matters suggesting that the interim financial report for the six months ended September 30, 2020, was not prepared in all material respects in accordance with Hong Kong Accounting Standard 34 - KPMG found no matters that lead them to believe the interim financial report for the six months ended September 30, 2020, was not prepared in all material respects in accordance with Hong Kong Accounting Standard 34[124][125]