伟工控股(01793) - 2019 - 年度财报

Corporate Information Provides essential details about the company's governance, registered offices, professional advisors, and stock information Directors The Board of Directors comprises three executive and three independent non-executive directors, with Mr. Tsang Ka Yip as Chairman and Executive Director - Executive Directors include Mr. Tsang Ka Yip (Chairman), Mr. Tsang Tsz Him, and Mr. Tsang Tsz Kit[5] - Independent Non-Executive Directors include Dr. Lau Chi Keung, Mr. Chan Tim Yiu, and Mr. Sze Kwok Wing, all appointed on January 21, 2019[5] Company Secretary Ms. Tsang Li Mui was appointed as the Company Secretary on June 25, 2018 - Ms. Tsang Li Mui was appointed as the Company Secretary on June 25, 2018[5] Committees The company has Audit, Remuneration, and Nomination Committees, each chaired by an independent non-executive director - The Audit Committee is chaired by Mr. Sze Kwok Wing, with members Dr. Lau Chi Keung and Mr. Chan Tim Yiu[5] - The Remuneration Committee is chaired by Mr. Chan Tim Yiu, with members Mr. Sze Kwok Wing and Mr. Tsang Ka Yip[5] - The Nomination Committee is chaired by Dr. Lau Chi Keung, with members Mr. Sze Kwok Wing and Mr. Tsang Ka Yip[5] Registered Office and Principal Place of Business The company is registered in the Cayman Islands with its principal place of business in Hong Kong - The registered office is located at Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111, Cayman Islands[5] - The principal place of business in Hong Kong is on the 18th Floor, ASEAN Commercial Building, 244-252 Des Voeux Road Central, Hong Kong[8] Legal Adviser, Auditor and Principal Bankers The company engages Woo Kwan Lee & Lo as Hong Kong legal adviser, Ernst & Young as auditor, and maintains accounts with major banks - The Hong Kong legal adviser is Woo Kwan Lee & Lo[8] - The auditor is Ernst & Young[8] - Principal bankers include The Hongkong and Shanghai Banking Corporation Limited, Bank of China (Hong Kong), and Standard Chartered Bank (Hong Kong) Limited[8] Share Registrars The principal share registrar is in the Cayman Islands, with Tricor Investor Services Limited as the Hong Kong branch registrar - The principal share registrar is Conyers Trust Company (Cayman) Limited[8] - The Hong Kong branch share registrar is Tricor Investor Services Limited[8] Stock Code and Website The company's stock code is 01793, and its official website is http://www.wecon.com.hk - The stock code is 01793[8] - The company website is http://www.wecon.com.hk[8](index=8&type=chunk) Chairman's Statement The Chairman's statement provides an overview of the company's listing, financial performance, future outlook, and acknowledgments Listing on the Stock Exchange The company successfully listed on the Main Board of the Stock Exchange on February 27, 2019, raising approximately HK$93.5 million net proceeds - The company's shares were successfully listed on the Main Board of the Stock Exchange on February 27, 2019[12][15] Listing Proceeds | Metric | Amount (HKD) | | :--- | :--- | | Number of shares offered | 200,000,000 shares | | Net proceeds | Approximately HK$93.5 million | - The Board believes the listing will enhance the Group's image, bring market opportunities, and provide necessary capital for long-term development[12][15] Financial Highlights The group's total revenue slightly decreased for the year ended March 31, 2019, but adjusted net profit increased after excluding listing expenses FY2019 Financial Highlights | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | Approximately HK$980.6 million | Approximately HK$980.8 million | Decrease of approximately HK$0.2 million (0.02%) | | Profit attributable to equity holders | Approximately HK$37.2 million | Approximately HK$41.4 million | Decrease of approximately HK$4.2 million | | Adjusted Net Profit (excluding listing expenses) | Approximately HK$50.3 million | Approximately HK$46.0 million | Increase of approximately HK$4.3 million | Prospects The company anticipates continued growth in construction demand, leveraging listing proceeds to expand market share and invest in employee development - Demand for construction projects in both public and private sectors is expected to grow, with government initiatives for revitalizing industrial buildings and urban renewal providing ample opportunities[19][23] - The net proceeds of approximately HK$93.5 million from the listing will be used to expand market share, compete for larger contracts, and attract experienced management talent[20][23] - The Group will continue to invest in employee development, focus on efficient project execution, and seek expansion opportunities through other construction-related businesses to maximize shareholder returns and Group value[21][23] Appreciation The Chairman expresses gratitude to shareholders, clients, subcontractors, suppliers, management, and employees for their support and dedication - The Chairman thanks shareholders, clients, subcontractors, and suppliers for their continued trust and support[22][24] - The Chairman also expresses gratitude to management and employees for their hard work and loyalty to the Group[22][24] Management Discussion and Analysis This section reviews the group's business, financial performance, key risks, and future outlook Business Review Wecon Holdings is a long-established general contractor in Hong Kong, specializing in building construction and RMAA services, with 9 major projects in hand - The Group is a general contractor in Hong Kong, primarily providing building construction services and RMAA engineering services to both private and public sector clients[26][30] - As of March 31, 2019, the Group had 9 major projects (contract value of HK$10.0 million or more) in hand and had completed 3 major projects[27][31] Prospects_MD&A The company maintains cautious optimism for the Hong Kong construction industry, despite facing market competition and rising costs, benefiting from its listing - The listing has enhanced the Group's image, and the net proceeds will support long-term development and growth[28][32] - The Group faces operational risks from intense competition in the Hong Kong building construction and RMAA market, cautious client attitudes towards project evaluation, and continuously rising direct labor and material costs[29][32] - Benefiting from the Hong Kong government's infrastructure development and housing supply policies, the Board remains cautiously optimistic about the industry's prospects[35][37] Principal Risks and Uncertainties Key risks include tender success uncertainty, client concentration, subcontractor performance, cash flow mismatches, material price volatility, and performance bond impact on liquidity - Revenue relies on non-recurring tender or quotation processes, with no guarantee of continuous success[36][38] - Significant reliance on major and key clients poses concentration risk[36][38] - Fluctuations in subcontracting costs, poor performance, or inability to source subcontractors may affect operations and profitability[36][38] - Mismatches between client progress payments and payments to suppliers and subcontractors may lead to insufficient cash flow[36][38] - Changes in raw material prices and supply may have a significant adverse impact on operating results[36][38] - Providing performance bonds may affect the Group's liquidity position[36][38] Segment Information The group's reportable operating segments are building construction services and renovation, maintenance, alteration, and addition (RMAA) engineering services - The Group's reportable and operating segments are (i) building construction services and (ii) renovation, maintenance, alteration, and addition (RMAA) engineering services[41][46] Financial Review For the year ended March 31, 2019, the group's total revenue slightly decreased, but gross profit and margin improved, while net profit declined due to listing expenses Revenue Total group revenue slightly decreased by 0.02%, with building construction services revenue down 3.7% and RMAA services revenue up 18.3% Revenue Overview | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | Approximately HK$980.6 million | Approximately HK$980.8 million | Decrease of approximately HK$0.2 million (0.02%) | | Building Construction Services Revenue | Approximately HK$787.6 million | Approximately HK$817.7 million | Decrease of approximately HK$30.1 million (3.7%) | | RMAA Engineering Services Revenue | Approximately HK$193.0 million | Approximately HK$163.1 million | Increase of approximately HK$29.9 million (18.3%) | - The decrease in building construction services revenue was primarily due to significant progress and practical completion of major projects in hand during the year ended March 31, 2018[43] - The increase in RMAA engineering services revenue was primarily due to revenue growth from a large project during the year ended March 31, 2019[43] Cost of Sales Group sales cost decreased by 1.5%, primarily due to lower subcontracting costs, partially offset by increases in material, direct staff, and site overhead costs Cost of Sales | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Cost of Sales | Approximately HK$890.1 million | Approximately HK$903.5 million | Decrease of approximately HK$13.4 million (1.5%) | - Cost of sales primarily includes subcontracting costs, material costs, direct staff costs, and site overheads[49][52] Gross Profit and Gross Profit Margin Group gross profit increased to HK$90.5 million, gross profit margin improved by 1.3% to 9.2%, driven by improved margins in building construction services Gross Profit and Gross Profit Margin | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Gross Profit | Approximately HK$90.5 million | Approximately HK$77.3 million | Increase of approximately HK$13.2 million | | Gross Profit Margin | Approximately 9.2% | Approximately 7.9% | Increase of approximately 1.3% | - Gross profit from building construction services increased by approximately HK$15.6 million to HK$67.9 million, with the gross profit margin rising from 6.4% to 8.6%, mainly due to the contribution from a high-margin industrial building development project[51][54] - Gross profit from RMAA engineering services decreased by approximately HK$2.4 million to HK$22.6 million, with the gross profit margin falling from 15.3% to 11.7%, primarily due to a large project having a lower gross profit margin due to increased subcontracting costs for gas and electrical installations[56][58] Other Income and Gains Group other income and gains decreased by approximately HK$1.7 million, mainly due to lower dividend income, interest from financial assets, and foreign exchange gains Other Income and Gains | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Other Income and Gains | Approximately HK$4.1 million | Approximately HK$5.8 million | Decrease of approximately HK$1.7 million | - The decrease was primarily due to lower dividend income, interest income from other financial assets measured at amortized cost, and foreign exchange gains[57][59] Administrative Expenses Administrative expenses increased by approximately HK$15.1 million, or 46.7%, primarily due to higher listing expenses, staff costs, and foreign exchange losses Administrative Expenses | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Administrative Expenses | Approximately HK$47.4 million | Approximately HK$32.3 million | Increase of approximately HK$15.1 million (46.7%) | - The increase was primarily due to higher listing expenses, staff costs, and foreign exchange losses[57][59] Finance Costs Finance costs increased by approximately HK$356,000, mainly due to higher interest expenses on bank borrowings and finance leases Finance Costs | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Finance Costs | Approximately HK$600,000 | Approximately HK$244,000 | Increase of approximately HK$356,000 | - The increase was primarily due to higher interest expenses on bank borrowings and finance leases[57][59] Income Tax Expenses Income tax expenses increased by approximately HK$0.5 million, or 5.6%, primarily due to higher revenue from building construction services and non-deductible listing expenses Income Tax Expenses | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Income Tax Expenses | Approximately HK$9.4 million | Approximately HK$8.9 million | Increase of approximately HK$0.5 million (5.6%) | | Effective Tax Rate | Approximately 20.2% | Approximately 17.7% | Increase of approximately 2.5% | - The increase was primarily attributable to higher revenue generated from building construction services and an increase in non-deductible listing expenses[61][64] Net Profit and Adjusted Net Profit Profit for the year decreased by 10.1%, but adjusted net profit, excluding listing expenses, increased to HK$50.3 million, with a slight 0.4% rise in adjusted net profit margin Net Profit and Adjusted Net Profit | Metric | 2019 (HKD) | 2018 (HKD) | Change | | :--- | :--- | :--- | :--- | | Profit for the Year | Approximately HK$37.2 million | Approximately HK$41.4 million | Decrease of approximately HK$4.2 million (10.1%) | | Adjusted Net Profit (excluding listing expenses) | Approximately HK$50.3 million | Approximately HK$46.0 million | Increase of approximately HK$4.3 million | | Adjusted Net Profit Margin | Approximately 5.1% | Approximately 4.7% | Increase of approximately 0.4% | - Listing expenses were approximately HK$13.1 million for 2019 and HK$4.6 million for 2018, respectively[62][65] Employees and Remuneration Policies As of March 31, 2019, the group had 181 full-time employees with total staff costs of approximately HK$76.1 million, offering competitive remuneration and benefits Employees and Remuneration Policies | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Number of Full-time Employees | 181 | 141 | | Total Staff Costs (excluding directors' emoluments) | Approximately HK$76.1 million | Approximately HK$60.8 million | - Remuneration policies are regularly reviewed based on individual performance, merit, responsibilities, and market conditions, with benefits including MPF contributions, medical insurance, annual leave, and share options[63][66] Significant Investments, Material Acquisitions and Disposal of Subsidiaries and Associated Companies The company was incorporated on March 23, 2018, and completed a group reorganization on December 21, 2018, with no other significant investments or disposals during the year - The company was incorporated in the Cayman Islands on March 23, 2018[68][69] - The Group completed its reorganization on December 21, 2018, with the company becoming the holding company of the Group[68][69] - For the year ended March 31, 2019, other than the reorganization, there were no significant investments, material acquisitions, or disposals of subsidiaries and associated companies[68][69] Capital Commitments As of March 31, 2019, the group had capital commitments of approximately HK$1.3 million for computer hardware and software, with HK$1.1 million to be settled by listing proceeds Capital Commitments | Metric | 2019 (HKD) | | :--- | :--- | | Total for purchase of computer hardware and software | Approximately HK$1.3 million | | To be settled by net proceeds | Approximately HK$1.1 million | Operating Lease Commitments As of March 31, 2019, the group's total future minimum lease payments under non-cancellable operating leases payable within one year were approximately HK$2.5 million, a decrease from 2018 Operating Lease Commitments | Metric | 2019 (HKD) | 2018 (HKD) | | :--- | :--- | :--- | | Total minimum lease payments payable within one year | Approximately HK$2.5 million | Approximately HK$4.2 million | | Total minimum lease payments payable in the second to fifth years | None | Approximately HK$2.2 million | - Operating lease payments are primarily for office properties, car parks, warehouses, and staff quarters, with lease terms ranging from one to two years[72][74] Contingent Liabilities As of March 31, 2019, the group had no significant contingent liabilities other than those disclosed in Note 26 to the consolidated financial statements - As of March 31, 2019, the Group had no significant contingent liabilities, details of which are provided in Note 26[77][82] Foreign Exchange Exposure The group faces minimal foreign exchange risk as most business transactions and assets/liabilities are denominated in Hong Kong Dollars, requiring no hedging policy - The Group's foreign exchange risk is minimal as most business transactions and assets and liabilities are denominated in Hong Kong Dollars[78][83] - The Directors believe that no foreign currency hedging policy is currently required[78][83] Liquidity and Financial Resources and Capital Structure The group's liquidity is primarily funded by shareholder contributions, bank borrowings, and operating cash flows, maintaining a healthy current ratio and sufficient working capital - The Group's primary sources of funding are shareholder contributions, bank borrowings, and net cash generated from operating activities[79][85] Liquidity and Capital Structure Metrics | Metric | As of March 31, 2019 | As of March 31, 2018 | | :--- | :--- | :--- | | Pledged bank deposits, time deposits, and cash and bank balances | Approximately HK$194.8 million | Approximately HK$86.7 million | | Gearing Ratio | Approximately 4.6% | None | | Current Ratio | Approximately 1.9 times | Approximately 1.7 times | - The Directors believe the Group has sufficient working capital to meet its future requirements[81][85] Debts and Charge on Assets As of March 31, 2019, the group's total interest-bearing bank borrowings were approximately HK$11.1 million, primarily secured by pledged bank deposits and corporate guarantees Debts and Charge on Assets | Metric | As of March 31, 2019 (HKD) | As of March 31, 2018 (HKD) | | :--- | :--- | :--- | | Total interest-bearing bank borrowings (including bank loans and finance lease payables) | Approximately HK$11.1 million | None | - Bank facilities are secured by the Group's pledged bank deposits and corporate guarantees[93] - Borrowings are denominated in Hong Kong Dollars and primarily bear interest at floating rates, with the Group currently having no interest rate hedging policy[93] Use of Proceeds As of March 31, 2019, the group utilized approximately HK$9.7 million of listing proceeds to enhance engineering capabilities, strengthen human resources, and for general working capital, with delays in office upgrades and technology innovation Use of Proceeds (As of March 31, 2019) | Purpose | Planned Total Proceeds (HK$ million) | Actual Proceeds Used (HK$ million) | Remaining Balance (HK$ million) | | :--- | :--- | :--- | :--- | | Enhance capacity to undertake more building construction and RMAA projects | 66.7 | 5.2 | 61.5 | | Strengthen human resources | 14.4 | 0.5 | 14.4 | | Office upgrade and renovation | 3.6 | – | 3.6 | | Research and development of innovative engineering and technology | 2.9 | – | 2.9 | | General working capital | 5.9 | 2.0 | 3.9 | | Total | 93.5 | 7.2 | 86.3 | - The delay in utilizing funds for office upgrades and renovation, and research and development of innovative engineering and technology, was mainly due to delays in new office expansion[100][102] - The Group will continue to apply the net proceeds as planned in the prospectus as soon as practicable[100][102] Environmental Policies and Performance The group is committed to environmental protection through green office practices and will publish a separate Environmental, Social and Governance Report - The Group is committed to supporting environmental protection and implements green office practices, including using energy-efficient lighting, recycling paper, switching off idle electrical appliances, and using environmentally friendly products[101][103] - An independent Environmental, Social and Governance Report will be published on the Stock Exchange website and the company's website within three months after the publication of this annual report, as required by the Listing Rules[101][103] Corporate Governance Report This report details the company's corporate governance practices, board structure, committees, and compliance with regulatory standards Corporate Governance Practices The company is committed to high standards of corporate governance, adhering to the Corporate Governance Code, with a noted deviation regarding the Chairman and CEO roles - The company is committed to achieving and maintaining the highest standards of corporate governance, based on principles of transparency, accountability, and independence[106][109] - The company has complied with the Corporate Governance Code, except for the deviation where the roles of Chairman (Mr. Tsang Ka Yip) and Chief Executive Officer are combined, which deviates from Code Provision A.2.1[107][108][110][111] Model Code for Securities Transactions by Directors The company adopted the Model Code for Securities Transactions by Directors, and all directors confirmed full 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 to the Listing Rules[113][116] - All Directors confirmed full compliance with the Model Code during the period from the Listing Date to March 31, 2019[113][116] Board of Directors_CG The Board is responsible for overall strategy and oversight, comprising six directors, including three independent non-executive directors, ensuring independence and diversity Composition The Board consists of three executive and three independent non-executive directors, with one independent director possessing professional accounting expertise, meeting listing requirements - The Board comprises six directors, including three executive directors and three independent non-executive directors[115][118] - Independent non-executive directors constitute half of the Board, with Mr. Sze Kwok Wing possessing professional accounting or financial management expertise, fulfilling Listing Rule 3.10(2) requirements[115][120] - All independent non-executive directors meet the independence guidelines under Listing Rule 3.13[121][124] - Directors are subject to retirement by rotation and are eligible for re-election, ensuring Board renewal[122][124] Meetings and Attendance The Board and its committees held meetings during the period, with a deviation from the code regarding separate meetings between the Chairman and non-executive directors - The Board held one meeting during the period from the Listing Date to March 31, 2019[129][132] - The Audit Committee, Nomination Committee, and Remuneration Committee each held one meeting[131] - The separate meeting between the Chairman and Executive Director, Mr. Tsang Ka Yip, and non-executive directors was not held due to practical infeasibility, deviating from Code Provision A.2.7, but independent non-executive directors can communicate directly through other means[130][135] Directors' Training and Professional Development To comply with corporate governance code, the company arranged continuous professional training for all directors by Hong Kong legal advisers, covering Listing Rules, corporate governance code, and inside information disclosure - All Directors participate in continuous professional development to update their knowledge and skills, ensuring they receive the latest information on Listing Rules and other regulatory requirements[138][139] - For the year ended March 31, 2019, the company arranged training for all Directors by its Hong Kong legal advisers, covering Listing Rules, the Corporate Governance Code, and disclosure of inside information[138][139] Board Diversity Policy The Board adopted a diversity policy considering gender, age, cultural background, professional experience, and other factors, aiming to enhance board performance and gradually increase the proportion of female directors to achieve gender equality - The Board has adopted a Board Diversity Policy to enhance the quality of the company's performance[138][139] - Diversity considerations include gender, age, cultural background, educational background, ethnicity, professional experience and qualifications, skills, knowledge, and length of service[140][143] - Director selection is based on strengths and contributions, considering diversity benefits and Board needs, without over-reliance on a single diversity aspect[141][143] - The Board will gradually increase the proportion of female directors, with the ultimate goal of achieving gender equality[142][143] Board Committees_CG The Board established Audit, Nomination, and Remuneration Committees to assist in specific oversight functions, each with defined written terms of reference Audit Committee Established on January 21, 2019, the Audit Committee, composed of three independent non-executive directors, oversees auditor relations, financial reporting, and risk management - The Audit Committee was established on January 21, 2019, with clear terms of reference[146] - Its primary responsibilities include maintaining relations with the auditor, reviewing financial information, overseeing financial reporting, risk management, internal control systems, and monitoring continuing connected transactions[146] - The Committee comprises three independent non-executive directors: Mr. Sze Kwok Wing (Chairman), Dr. Lau Chi Keung, and Mr. Chan Tim Yiu[146] - From the Listing Date to March 31, 2019, the Audit Committee held one meeting with the external auditor to discuss the scope of the statutory audit and pre-audit plan[146] Nomination Committee Established on January 21, 2019, the Nomination Committee reviews board structure, identifies suitable director candidates, advises on appointments and succession planning, and assesses independent non-executive directors' independence - The Nomination Committee was established on January 21, 2019, with clear terms of reference[148] - Its primary responsibilities include reviewing the Board structure, identifying suitable director candidates, making recommendations on director appointments and succession planning, and assessing the independence of independent non-executive directors[148] - The Committee comprises three members: Dr. Lau Chi Keung (Chairman), Mr. Sze Kwok Wing, and Mr. Tsang Ka Yip[148] - From the Listing Date to March 31, 2019, the Nomination Committee held one meeting to review the Board's composition, director succession plan, and terms of reference[148] Nomination criteria Nomination policy for directors considers character, integrity, professional qualifications, skills, knowledge, experience, diversity factors, measurable objectives, independence, and time commitment - Nomination criteria include character and integrity, professional qualifications, skills, knowledge, experience, and diversity factors under the Board Diversity Policy[152] - Measurable objectives adopted by the Board for achieving diversity and the independence of independent non-executive directors are considered[152] - Candidates are assessed for their potential contributions to the Board in terms of qualifications, skills, experience, independence, and gender diversity[152] - Candidates are required to be willing and able to devote sufficient time to fulfill their responsibilities as Board members[152] Nomination Procedures The company has procedures for appointing new directors and re-electing existing ones, including multi-channel candidate sourcing, Nomination Committee screening, and shareholder nomination procedures - When appointing new directors, the Board will identify suitable candidates through various channels, and the Nomination Committee will screen them based on selection criteria[154][155][158] - For re-election of directors, the Board will consider and recommend eligible retiring directors for re-appointment[156][158] - Shareholders may nominate individuals for election as directors by submitting written nominations, consent letters from candidates, and biographical details within a specified period[157][158] Remuneration Committee Established on January 21, 2019, the Remuneration Committee advises on remuneration policies and structures for directors and senior management, and approves executive directors' compensation - The Remuneration Committee was established on January 21, 2019, with clear terms of reference[161][164] - Its primary responsibilities include making recommendations on the remuneration policy and structure for directors and senior management, and determining and approving the remuneration packages of individual executive directors and senior management[162][164] - The Committee comprises three members: Mr. Chan Tim Yiu (Chairman), Mr. Tsang Ka Yip, and Mr. Sze Kwok Wing[163][165] - From the Listing Date to March 31, 2019, the Remuneration Committee held one meeting to review and approve the remuneration packages of executive directors[163][165] Senior management's remuneration For the year ended March 31, 2019, senior management remuneration was primarily below HK$1,000,000, with one individual earning between HK$1,000,001 and HK$1,500,000 Senior Management Remuneration Range (As of March 31, 2019) | Remuneration Range (HKD) | Number of Individuals | | :--- | :--- | | Zero to 1,000,000 | 5 | | 1,000,001 to 1,500,000 | 1 | Independent Auditor's Remuneration For the year ended March 31, 2019, the company paid Ernst & Young HK$4,510,000 in total remuneration, including HK$1,300,000 for audit services and HK$3,210,000 for non-audit services Independent Auditor's Remuneration (As of March 31, 2019) | Service Category | Amount (HK$ thousand) | | :--- | :--- | | Annual audit services | 1,300 | | Acting as reporting accountants for listing | 3,200 | | Other non-audit services | 10 | | Total | 4,510 | Dividend Policy The company adopted a dividend policy on January 21, 2019, balancing shareholder interests with prudent capital management by considering financial position, capital, and market conditions - The company adopted a dividend policy on January 21, 2019[176] - The Board will consider the Group's financial position, capital and debt levels, future cash needs, business strategies, market conditions, and other relevant factors when determining dividends[176] - Dividend payments are subject to restrictions under the Companies Law of the Cayman Islands and the company's Articles of Association[176] - The Board aims to balance shareholder interests with prudent capital management through a sustainable dividend policy[176] Directors' and Auditor's Responsibility for the Financial Statements All directors confirm responsibility for preparing the group's financial statements, with the auditor's reporting responsibilities detailed in the independent auditor's report, and no material uncertainties regarding going concern - All Directors confirm responsibility for preparing the Group's financial statements[178][180] - The reporting responsibilities of the auditor, Ernst & Young, are set out in the Independent Auditor's Report[178][180] - There are no material uncertainties that cast significant doubt upon the company's ability to continue as a going concern[179][181] Company Secretary_CG Ms. Tsang Li Mui, also the Financial Controller, serves as Company Secretary, ensuring compliance with board policies and providing corporate governance advice, having completed required training - Ms. Tsang Li Mui, the Company Secretary, is also the company's Financial Controller and a full-time employee[179] - The Company Secretary is responsible for supporting the Board in complying with policies and procedures and providing advice on corporate governance matters[179] - For the year ended March 31, 2019, Ms. Tsang completed no less than 15 hours of relevant professional training, meeting Listing Rules requirements[179] Communication with Shareholders and Shareholders' Rights The company communicates with shareholders through general meetings, corporate communications, and its website, providing procedures for calling extraordinary general meetings and nominating directors - General meetings are the primary opportunity for communication between shareholders and the Board, with the first AGM scheduled for August 29, 2019[184] - Shareholders holding not less than one-tenth of the paid-up share capital have the right to request an extraordinary general meeting[184] - Shareholders nominating directors must submit written nominations and candidate consent letters within a specified period[186][188] - Shareholders can submit written inquiries to the company's principal place of business in Hong Kong, and the company will respond as soon as practicable[187][189] Investor Relations The company adopted a shareholder communication policy to ensure timely, transparent, and accurate information dissemination to shareholders and potential investors through various channels - The company has adopted a shareholder communication policy to ensure timely, transparent, and accurate communication between shareholders and the company[192] - Communication methods include annual general meetings, annual reports, interim reports, meeting notices, circulars, proxy forms, regular announcements, and the company website[192] - Tricor Investor Services Limited, the Hong Kong branch share registrar, provides services to shareholders for share registration, dividend payments, and related matters[192] Constitutional Documents There have been no changes to the company's Memorandum and Articles of Association from the listing date to the date of this annual report - There have been no changes to the company's Memorandum and Articles of Association from the Listing Date to the date of this annual report[194][198] Internal Control and Risk Management The Board regularly reviews internal control and risk management systems to ensure their effectiveness. The group has an internal audit function and strict regulations on handling and disseminating inside information - The Board is committed to regularly reviewing internal control and risk management systems to ensure their effectiveness and efficiency[195][199] - The internal audit function aims to identify, monitor, and manage key risk areas in business activities and provide improvement recommendations to the Audit Committee[196][199] - The Group's employee handbook strictly prohibits unauthorized use of confidential or inside information[197][200] - Prior to listing, the company arranged training for directors on inside information disclosure[197][200] Compliance of Non-Competition Undertaking Controlling shareholders Mr. Tsang Ka Yip and Triple Arch Limited entered into a non-competition undertaking on January 21, 2019, which has been complied with - Controlling shareholders Mr. Tsang Ka Yip and Triple Arch Limited entered into a non-competition undertaking on January 21, 2019[339] - The independent non-executive directors have reviewed and confirmed that the controlling shareholders have not breached the non-competition undertaking from the Listing Date to March 31, 2019[339] Sufficiency of Public Float Based on public information and the directors' knowledge, the company has maintained a public float of at least 25% as required by the Listing Rules from its listing date to the date of this annual report - The company has maintained a public float of at least 25% as required by the Listing Rules from the Listing Date to the date of this annual report[369][376] Permitted Indemnity Provision The company's articles of association provide for indemnification of directors for liabilities incurred in their duties, excluding fraud or dishonesty, and appropriate insurance is in place - The company's articles of association stipulate that each director is entitled to be indemnified out of the company's assets and profits for all actions, costs, charges, losses, damages, and expenses they may suffer or incur in the performance of their duties, except for matters involving fraud or dishonesty[378][384] - For the year ended March 31, 2019, the company has arranged appropriate insurance coverage for directors and officers against legal actions they may face due to corporate activities[379][385] Environmental, Social and Governance Report_CG The group is committed to environmental protection through green office practices and will publish a separate Environmental, Social and Governance Report within three months of this annual report - The Group is committed to supporting environmental protection and implements green office practices to reduce energy and natural resource consumption[380][386] - An independent Environmental, Social and Governance Report is expected to be published on the Stock Exchange website and the company's website within three months after the publication of this annual report[381][387] Biographical Details of Directors and Senior Management This section provides biographical details of the group's directors and senior management, highlighting their extensive experience in the construction industry and relevant professional fields Executive Directors This section details the biographies of the three executive directors, including Mr. Tsang Ka Yip (Chairman and CEO), Mr. Tsang Tsz Him, and Mr. Tsang Tsz Kit, who possess extensive industry experience - Mr. Tsang Ka Yip (66 years old) is the Group's Chairman and Chief Executive Officer, with over 40 years of experience in civil engineering, building construction, and the construction industry, responsible for overall strategic planning and business development[203][205][206][208][209][210] - Mr. Tsang Tsz Him (37 years old) is an Executive Director, responsible for overall construction project management and daily operations, having joined the Group in 2008[212][213][215] - Mr. Tsang Tsz Kit (32 years old) is an Executive Director, responsible for overall administration, information systems, finance, and human resources planning, having joined the Group in 2010[214] Independent Non-Executive Directors This section introduces the three independent non-executive directors, Dr. Lau Chi Keung, Mr. Chan Tim Yiu, and Mr. Sze Kwok Wing, who bring diverse professional expertise to the Board - Dr. Lau Chi Keung (64 years old) was appointed as an Independent Non-Executive Director on January 21, 2019, with over 40 years of engineering experience, and is a member of various professional institutions and a Registered Professional Engineer[217][218][219][221][222][223][224] - Mr. Chan Tim Yiu (60 years old) was appointed as an Independent Non-Executive Director on January 21, 2019, with over 33 years of legal professional experience as a practicing solicitor[224][225][226][227][229] - Mr. Sze Kwok Wing (62 years old) was appointed as an Independent Non-Executive Director on January 21, 2019, with over 38 years of commercial and administrative management experience, and is a member of CPA Australia[230][231][232][233][235][236] Senior Management This section outlines the biographies of the group's senior management, including project managers, financial controllers, and HR and safety managers, who are crucial for daily operations - Mr. Wu Wing Lun (41 years old) is a Project Manager at Wecon Limited, with over 17 years of experience in civil engineering, building construction, and the construction industry[242][243][245] - Ms. Tsang Li Mui (49 years old) is the Financial Controller and Company Secretary of Wecon Limited, with over 24 years of accounting experience, and is an accountant of the Hong Kong Institute of Certified Public Accountants[247][248][250][251] - Ms. Hui Pik Yu (46 years old) is the Human Resources and Administration Manager of Wecon Limited, with over 20 years of experience in business management, human resources, and company secretarial matters[253][254][255][256] - Mr. Choi Ying Tung (44 years old) is the Safety and Environmental Manager of Wecon Limited, with over 21 years of experience in civil engineering, building construction, and the construction industry, and is a Registered Safety Officer and Registered Safety Auditor[257][259][261][262][263] - Mr. Ho Chi Ming (57 years old) is the Assistant General Manager of Wecon Limited, with over 34 years of experience in building construction and the construction industry[265][266] - Mr. Yu Fei Hung (40 years old) is the Quality Manager of Wecon Limited, with over 17 years of experience in engineering, building construction, and the construction industry[268][269][270] Report of the Directors This report covers the group's principal activities, reorganization, compliance, major stakeholders, financial results, dividends, and other corporate matters Principal Activities The company's principal business is investment holding, with its subsidiaries primarily engaged in building construction and RMAA services - The company is an investment holding company[275] - The Group's subsidiaries are primarily engaged in providing building construction services and renovation, maintenance, alteration, and addition (RMAA) services[275] Group Reorganisation The company was incorporated on March 23, 2018, completed a group reorganization on December 21, 2018, and listed its shares on the Stock Exchange on February 27, 2019 - The company was incorporated in the Cayman Islands on March 23, 2018[275] - The Group completed its reorganization on December 21, 2018, with the company becoming the holding company of the Group[275] - The company's shares were listed on the Stock Exchange on February 27, 2019[275] Compliance with the Laws and Regulations For the year ended March 31, 2019, and up to the date of this annual report, the group has complied with all material laws and regulations, with no serious breaches or non-compliance - The Group has complied in all material respects with relevant laws and regulations that have a significant impact on its business and operations[278][283] - From the Listing Date to March 31, 2019, and up to the date of this annual report, the Group has not seriously breached or failed to comply with applicable laws and regulations[278][283] Major Customers and Suppliers For the year ended March 31, 2019, the group's top five customers accounted for 81.1% of total revenue, with the largest customer contributing 31.2%. The top five subcontractors accounted for 26.1% of total subcontracting costs, and the top five suppliers accounted for 70.4% of total construction material purchases. No directors, close associates, or major shareholders held beneficial interests in these major customers, suppliers, or subcontractors Major Customer, Subcontractor, and Supplier Concentration (As of March 31, 2019) | Category | 2019 | 2018 | | :--- | :--- | :--- | | Top five customers as % of total revenue | Approximately 81.1% | Approximately 91.0% | | Largest customer as % of total revenue | Approximately 31.2% | Approximately 29.3% | | Top five subcontractors as % of total subcontracting costs | Approximately 26.1% | Approximately 25.8% | | Largest subcontractor as % of total subcontracting costs | Approximately 7.2% | Approximately 7.6% | | Top five suppliers as % of total construction material purchases | Approximately 70.4% | Approximately 54.8% | | Largest supplier as % of total construction material purchases | Approximately 46.5% | Approximately 18.4% | - No Director, their close associates, or any shareholder holding more than 5% interest in the company's issued share capital had any beneficial interest in the Group's top five customers, suppliers, or subcontractors[282][284] Relationship with Customers, Suppliers, Subcontractors and Employees The group actively maintains relationships with customers, striving to provide quality services; retains a list of approved subcontractors and suppliers; and values employees as assets, offering competitive remuneration and training. No significant disputes occurred during the reporting period - The Group maintains active relationships with customers, exploring business opportunities and striving to deliver high-quality services on time[286] - The Group maintains an approved list of subcontractors and suppliers based on factors such as past experience, skills, workload, quotations, and quality[286] - The Group regards employees as valuable assets, offering competitive remuneration, good benefits, and continuous professional training to attract and retain talent[286] - For the year ended March 31, 2019, there were no significant disputes or disagreements between the Group and its customers, subcontractors, suppliers, and employees[286] Results and Dividends The group's profit and financial position for the year ended March 31, 2019, are disclosed in the consolidated financial statements. Prior to listing, certain subsidiaries declared and paid an interim dividend of HK$50,000,000. Directors recommend a final dividend of HK$0.014 per share, totaling approximately HK$11.2 million - The Group's profit and financial position for the year ended March 31, 2019, are set out in the consolidated financial statements[286] - Prior to listing, certain subsidiaries declared and paid an interim dividend of HK$50,000,000 to their then sole shareholder[286] - The Directors recommend a final dividend of HK$0.014 per share, totaling approximately HK$11.2 million, for the year ended March 31, 2019, subject to shareholder approval[286] Annual General Meeting and Closure of Register of Members The company's 2019 Annual General Meeting is scheduled for August 29, 2019. To determine eligibility for attendance and voting, the register of members will be closed from August 26 to 29, 2019. To determine entitlement to the final dividend, the register of members will be closed from September 4 to 5, 2019 - The company's 2019 Annual General Meeting is scheduled for Thursday, August 29, 2019[289] - To determine eligibility for attending and voting, the register of members will be closed from Monday, August 26, 2019, to Thursday, August 29, 2019[289] - To determine entitlement to the final dividend, the register of members will be closed from Wednesday, September 4, 2019, to Thursday, September 5, 2019[291][292] - The final dividend is expected to be paid on Monday, September 30, 2019[291][292] Charitable Contributions For the year ended March 31, 2019, the group's charitable contributions amounted to approximately HK$150,000, a decrease from HK$230,000 in 2018 Charitable Contributions | Year | Amount (HKD) | | :--- | :--- | | March 31, 2019 | Approximately HK$150,000 | | March 31, 2018 | Approximately HK$230,000 | Share Options Scheme The company adopted a share option scheme on January 21, 2019, to incentivize employees and attract talent. The scheme specifies eligible participants, maximum share numbers, individual allocation limits, conditions for granting options to core connected persons, and acceptance and exercise periods and subscription prices - The company's Share Option Scheme was approved and adopted on January 21, 2019, aiming to incentivize or reward eligible participants who have contributed to the Group and to recruit and retain outstanding employees[293][296] - Eligible participants include employees (including directors), suppliers, customers, technical support providers, shareholders, and other individuals who have contributed to the Group's development[296] - The maximum number of shares that may be issued upon exercise of all outstanding share options shall not exceed 30% of the company's issued share capital from time to time[301][303] - The total number of shares that may be issued upon exercise of options granted to each eligible participant in any 12-month period shall not exceed 1% of the company's issued share capital[310][312] - Granting share options to core connected persons requires approval from independent non-executive directors, and if exceeding certain thresholds, requires approval at a general meeting[311][312][315] - The offer period for share options is a maximum of 21 days, and the exercise period is determined by the Board, up to a maximum of 10 years[315][317][320] - The subscription price for shares shall not be less than the highest of the closing price of the shares on the offer date, the average closing price for the five business days immediately preceding the offer date, and the nominal value of the shares[323] Pre-emptive Rights Neither the company's articles of association nor Cayman Islands law provides for pre-emptive rights, meaning new shares are not required to be offered proportionally to existing shareholders - Neither the company's Articles of Association nor the laws of the Cayman Islands provide for pre-emptive rights, meaning the company is not required to offer new shares proportionally to existing shareholders[324][327] Reserves Details of the company's and group's reserves and their movements for the year ended March 31, 2019, are presented in Note 25 and the consolidated statement of changes in equity - Details of the company's and Group's reserves and their movements for the year ended March 31, 2019, are set out in Note 25 to the consolidated financial statements and the consolidated statement of changes in equity[325][328] Purchase, Sale or Redemption of Listed Securities Neither the company nor its subsidiaries purchased, sold, or redeemed any of its listed securities from the listing date to March 31, 2019 - Neither the company nor any of its subsidiaries purchased, sold, or redeemed any of its listed securities from the Listing Date to March 31, 2019[326][329] Disclosure of Interests As of March 31, 2019, Mr. Tsang Ka Yip held a 75% long position in the company's ordinary shares through Triple Arch Limited. In addition to the directors, Ms. Lai Yuk Lin (Mr. Tsang Ka Yip's spouse) is also deemed to hold a 75% interest in the company's shares Directors' Long Position in the Company's Ordinary Shares (As of March 31, 2019) | Director Name | Capacity/Nature | Number of Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Tsang Ka Yip | Interest in controlled corporation | 600,000,000 | 75% | - Mr. Tsang Ka Yip holds shares in the company through Triple Arch Limited, which he wholly owns[333] Major Shareholders' Interests in the Company's Shares (As of March 31, 2019) | Name | Nature of Interest | Number of Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Triple Arch Limited | Beneficial owner | 600,000,000 | 75% | | Ms. Lai Yuk Lin | Interest in controlled corporation and spouse's interest | 600,000,000 | 75% | - Ms. Lai Yuk Lin is the spouse of Mr. Tsang Ka Yip and is therefore deemed to have an interest in the company's shares in which Mr. Tsang Ka Yip has an interest[336] Directors' Interests in Competing Business For the year ended March 31, 2019, and up to the date of this annual report, no director or their close associates had any interests in businesses directly or indirectly competing with the group's business - For the year ended March 31, 2019, and up to the date of this annual report, no Director or their close associates had any interest in any business that directly or indirectly competes or may compete with the Group's business[338][340] Directors' Service Contracts No directors nominated for re-election at the upcoming AGM have service contracts with the company that are not terminable within one year without compensation (other than statutory compensation) - No Director nominated for re-election at the forthcoming Annual General Meeting has a service contract with the company that is not terminable by the company within one year without payment of compensation (other than statutory compensation)[346][349] Remuneration of Directors and Five Highest Paid Individuals Details of remuneration for di