Financial Performance - For the six months ended June 30, 2021, the Group recorded a net loss of approximately HK$10.0 million, compared to a net profit of approximately HK$11.0 million for the same period in 2020, indicating a significant decrease in profitability [19]. - The Group reported a net loss of approximately HK$10.0 million for the Review Period, compared to a net profit of approximately HK$11.0 million for the six months ended 30 June 2020, primarily due to increased overall construction costs and delays caused by the COVID-19 pandemic [22]. - Revenue decreased by approximately HK$145.1 million or approximately 70.0%, from approximately HK$207.4 million for the six months ended 30 June 2020 to approximately HK$62.3 million for the Review Period, mainly due to substantial completion of projects [26][28]. - The gross loss for the Review Period amounted to approximately HK$5.9 million, representing a decrease of approximately 133.0% compared to a gross profit of approximately HK$17.9 million for the six months ended 30 June 2020 [27][29]. - Total comprehensive loss for the period was HK$9,998, compared to a profit of HK$11,006 in the same period of 2020 [73]. Cost and Expenses - The significant increase in overall construction costs was identified as a primary reason for the decrease in net profit [19]. - The Group's gross profit margin is under pressure due to competitive project pricing, which affects overall financial performance [20]. - Other income decreased by 78.2% to approximately HK$52,000, down HK$186,000 from approximately HK$238,000 for the six months ended 30 June 2020, primarily due to reduced government subsidies and rental income [32][36]. - Administrative expenses decreased by approximately 3.8% to approximately HK$4.3 million, down from approximately HK$4.5 million for the six months ended 30 June 2020, mainly due to reduced professional and administrative staff costs [33][37]. - Finance costs increased by approximately 34.2% to approximately HK$216,000, compared to approximately HK$161,000 for the six months ended 30 June 2020, driven by increased interest on bank borrowings [34][38]. Business Strategy and Market Position - The Group plans to explore other business opportunities and expand its geographical coverage beyond the Hong Kong market to enhance future development and revenue bases [21]. - The Group aims to maintain its market share in the wet trades works industry by closely monitoring market conditions and responding accordingly [20]. - The Directors are confident in the Group's reputation and experienced management team to compete effectively in the market [20]. - The Group will continue to seek opportunities to expand its customer base and undertake more wet trades projects to enhance shareholder value [20]. - The Group aims to maintain its market share in the civil engineering sector by closely monitoring market conditions and responding to changes, while continuing to seek opportunities to expand its customer base and project portfolio [22]. Liquidity and Financial Position - The Group's liquidity position is closely monitored to ensure it meets funding requirements at all times [44]. - As of June 30, 2021, the Group's gearing ratio was approximately 11.6%, an increase from 7.8% as of December 31, 2020, primarily due to increased borrowings for working capital [47]. - The Group had approximately HK$6.2 million of net book value of leasehold land and buildings pledged for banking facilities as of June 30, 2021 [45]. - The Group's assets and liabilities are primarily denominated in Hong Kong dollars, minimizing foreign exchange risk [46]. - The Group's financial performance is being closely monitored in light of ongoing assessments of new accounting standards [118]. Employee and Operational Changes - The number of employees decreased to 18 as of June 30, 2021, down from 21 as of December 31, 2020 [56]. - Total staff costs for the Review Period amounted to approximately HK$4.8 million, a decrease from approximately HK$8.0 million for the six months ended June 30, 2020 [56]. - The Group's accrued expenses decreased to HK$1,011,000 as of June 30, 2021, from HK$1,892,000 as of December 31, 2020, reflecting a decline of approximately 46.61% [187]. - The Group's other payables were recorded at HK$1,240,000 as of June 30, 2021, down from HK$2,523,000 as of December 31, 2020 [187]. Revenue Recognition and Accounting Standards - The Group's revenue recognition practices are aligned with the performance obligations outlined in customer contracts, ensuring compliance with accounting standards [126]. - The Group is currently assessing the impact of new and amended Hong Kong Financial Reporting Standards (HKFRSs) but expects no material impact on its financial position [118]. - The adoption of new HKFRSs is unlikely to significantly affect the Group's results of operations and financial position according to the directors [121]. - The financial statements have been prepared in accordance with Hong Kong Accounting Standard 34, with no material impact from the adoption of new or amended HKFRSs [106]. Investments and Capital Management - The net proceeds from the listing were approximately HK$90.0 million, with approximately HK$70.8 million utilized for upfront costs for projects, a revision from the previously disclosed HK$39.9 million [63][64]. - The company made investments in financial assets at fair value through profit or loss amounting to HK$3,003,000 during the reporting period [94]. - The Group did not engage in any derivatives agreement or financial instruments to hedge foreign exchange exposure during the Review Period [46]. - The Group did not add any machinery and equipment during the six months ended June 30, 2021, while it had additions of HK$2,652,000 in the same period of 2020 [164].
恒新丰控股(01920) - 2021 - 中期财报