菊福堂生物(08217) - 2019 Q3 - 季度财报

Report Cover and Disclaimer This section presents the report's cover, outlines GEM market characteristics and disclaimers, and details directors' responsibilities Report Cover This report is the Q3 2018 earnings report published by LUEN WONG GROUP HOLDINGS LIMITED (Stock Code: 8217) - LUEN WONG GROUP HOLDINGS LIMITED released its Q3 2018 earnings report, stock code 8217[1] GEM Characteristics and Disclaimer The GEM market targets small and medium-sized companies with higher investment risks, requiring investors to exercise caution; HKEX and the Stock Exchange disclaim responsibility for this report's content - The GEM market is positioned for small and medium-sized companies with higher investment risks compared to other companies listed on the Stock Exchange, requiring investors to make investment decisions with careful consideration[2] - Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this report and make no representation as to its accuracy or completeness[2] Directors' Responsibility Statement The company's directors jointly and individually assume full responsibility for this report, confirming its accuracy, completeness, and absence of misleading or fraudulent content in all material aspects - The company's directors jointly and individually accept full responsibility for this report[2] - The directors confirm that the information contained in this report is accurate and complete in all material respects, free from misleading or fraudulent content, and without omissions that would render any statement or the report itself misleading[2] Results Announcement This section presents the unaudited condensed consolidated results, comprehensive income, and equity changes for the reporting periods Performance Summary The Board announces the unaudited condensed consolidated results for the three and nine months ended December 31, 2018, with comparative figures for 2017 - This report contains the unaudited condensed consolidated results of the Company and its subsidiaries for the three and nine months ended December 31, 2018[3] Condensed Consolidated Statement of Comprehensive Income (Unaudited) The Group experienced significant year-on-year declines in revenue and gross profit for the nine months ended December 31, 2018, with a loss recorded for the third quarter Condensed Consolidated Statement of Comprehensive Income Key Data (HKD thousands) | Metric | Oct-Dec 2018 (3 months) (HKD thousands) | Oct-Dec 2017 (3 months) (HKD thousands) | Apr-Dec 2018 (9 months) (HKD thousands) | Apr-Dec 2017 (9 months) (HKD thousands) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 112,184 | 206,982 | 360,757 | 592,820 | | Cost of sales | (114,776) | (213,181) | (358,116) | (567,461) | | Gross (loss)/profit | (2,592) | (6,199) | 2,641 | 25,359 | | Operating (loss)/profit | (2,055) | (8,005) | 11,386 | 14,698 | | (Loss)/profit for the period | (2,072) | (6,833) | 9,113 | 11,724 | | (Loss)/earnings per share (HK cents) | (0.17) | (0.55) | 0.73 | 0.94 | - For the nine months ended December 31, 2018, revenue decreased by 39.15% year-on-year to HKD 360,757 thousand, and gross profit decreased by 89.56% year-on-year to HKD 2,641 thousand[4] - For the nine months ended December 31, 2018, profit for the period decreased by 22.27% year-on-year to HKD 9,113 thousand, and earnings per share decreased by 22.34% year-on-year to 0.73 HK cents[4] Condensed Consolidated Statement of Changes in Equity (Unaudited) As of December 31, 2018, total equity attributable to owners of the company was HKD 112,591 thousand, an increase from April 1, 2018, primarily due to profit for the period Total Equity Attributable to Owners of the Company (HKD thousands) | Date | Total Equity (HKD thousands) | | :--- | :--- | | April 1, 2017 (Audited) | 106,361 | | December 31, 2017 (Unaudited) | 118,085 | | April 1, 2018 (Audited) | 103,478 | | December 31, 2018 (Unaudited) | 112,591 | - As of December 31, 2018, total equity attributable to owners of the company was HKD 112,591 thousand, an increase of HKD 9,113 thousand from HKD 103,478 thousand on April 1, 2018, primarily driven by profit for the period[6] Notes to the Unaudited Condensed Consolidated Financial Statements This section provides essential notes on the unaudited condensed consolidated financial statements, covering general information, basis of preparation, revenue, income tax, dividends, and earnings per share General Information This section outlines the company's registration, principal place of business, main operations, and listing status, providing foundational context for the financial statements Company Profile - The company was incorporated in the Cayman Islands as an exempted company on October 16, 2015[8] - The company's registered office is in the Cayman Islands, and its principal place of business is in Sheung Wan, Hong Kong[8] Principal Activities - The Group is principally engaged in providing civil engineering services and investment holding[9] Listing Information - The company's shares were listed on GEM of the Stock Exchange on April 12, 2016[10] Basis of Preparation The Group's unaudited condensed consolidated financial statements adhere to HKFRS and GEM Listing Rules, are prepared on a historical cost basis, and presented in HKD, with no material impact from new standards - The financial statements comply with Hong Kong Financial Reporting Standards issued by the HKICPA and the applicable disclosure requirements of the GEM Listing Rules[11] - The statements are prepared on a historical cost basis, except for available-for-sale financial assets measured at fair value, and are presented in Hong Kong Dollars[12] - New and revised HKFRSs have no material impact on the preparation and presentation of the Group's financial performance and position in current or prior accounting periods[11] Revenue The Group's revenue primarily represents the received and receivable consideration for providing civil engineering services - Revenue refers to the consideration received and receivable for providing civil engineering services[13] Income Tax (Credit)/Expense The Group's income tax expense is accrued at a Hong Kong profits tax rate of 16.5%, totaling HKD 2,255 thousand for the nine months ended December 31, 2018, a year-on-year decrease - Hong Kong income tax is provided at a rate of 16.5% on the estimated assessable profits[15] Income Tax (Credit)/Expense (HKD thousands) | Metric | Oct-Dec 2018 (3 months) (HKD thousands) | Oct-Dec 2017 (3 months) (HKD thousands) | Apr-Dec 2018 (9 months) (HKD thousands) | Apr-Dec 2017 (9 months) (HKD thousands) | | :--- | :--- | :--- | :--- | :--- | | Current tax – Hong Kong profits tax | – | (1,007) | 252 | 2,455 | | Deferred tax | – | (181) | 2,003 | 281 | | Income tax (credit)/expense | – | (1,188) | 2,255 | 2,736 | Dividends The Board recommends not to declare an interim dividend for the nine months ended December 31, 2018, and 2017 - The Board recommends not to declare an interim dividend for the nine months ended December 31, 2018, and 2017[16] (Loss)/Earnings Per Share For the nine months ended December 31, 2018, basic earnings per share were 0.73 HK cents, a year-on-year decrease, with no dilutive ordinary shares (Loss)/Earnings Per Share (HK cents) | Metric | Oct-Dec 2018 (3 months) | Oct-Dec 2017 (3 months) | Apr-Dec 2018 (9 months) | Apr-Dec 2017 (9 months) | | :--- | :--- | :--- | :--- | :--- | | (Loss)/profit for the period attributable to owners of the Company (HKD thousands) | (2,072) | (6,833) | 9,113 | 11,724 | | Weighted average number of ordinary shares (thousands) | 1,248,000 | 1,248,000 | 1,248,000 | 1,248,000 | | Basic and diluted (loss)/earnings per share (HK cents) | (0.17) | (0.55) | 0.73 | 0.94 | - For the nine months ended December 31, 2018, basic earnings per share were 0.73 HK cents, a decrease from 0.94 HK cents in the same period last year[17] - There were no potentially dilutive ordinary shares for the periods ended December 31, 2018, and 2017, thus diluted (loss)/earnings per share equal basic (loss)/earnings per share[18] Management Discussion and Analysis This section provides an overview of the Group's business, future outlook, and a detailed financial review for the reporting period Business Review The Group has over 19 years of civil engineering subcontracting experience in Hong Kong, with 38 contracts totaling approximately HKD 2.089 billion and 5 new contracts worth HKD 56.95 million awarded this period - The Group has over 19 years of experience providing civil engineering services as a subcontractor in Hong Kong[20] - Principal activities include road and drainage works, structural works, and site formation works[20] - As of December 31, 2018, the Group had 38 contracts on hand, with a total contract sum of approximately HKD 2,089,141,600[20] - During the period, 5 new contracts with a total contract sum of approximately HKD 56,951,600 were awarded[20] Prospects The Group anticipates both opportunities from government infrastructure spending and challenges from site conditions and client changes in 2019, aiming to enhance shareholder returns through competitive advantages and cost control - 2019 is expected to be a year of both opportunities and challenges, with government infrastructure public expenditure creating more business opportunities[21] - Difficult geological conditions, adverse weather, client changes to construction plans, and other unforeseen issues may affect the Group's profit as a subcontractor[21] - The Group will continue to strengthen its competitive advantages, prudently evaluate projects, and control overall costs to enhance shareholder returns[21] Financial Review The Group's financial performance for the nine months ended December 31, 2018, shows significant declines in revenue and gross profit due to large project completions, despite increased other income and reduced expenses, resulting in lower profit for the period Revenue - The Group's revenue is entirely derived from providing civil engineering services[23] - For the nine months ended December 31, 2018, revenue decreased by HKD 232,063 thousand (39.15%) year-on-year to HKD 360,757 thousand[23] - The decrease in revenue was primarily due to a few large construction projects reaching completion stages[23] Gross Profit and Gross Profit Margin - For the nine months ended December 31, 2018, gross profit significantly decreased by HKD 22,718 thousand (89.56%) year-on-year to HKD 2,641 thousand[24] - Gross profit margin decreased by approximately 3.6 percentage points from 4.3% in the same period of 2017 to 0.7% in the same period of 2018[24] - The decrease in gross profit margin was mainly attributable to the project phases and the cost-plus pricing model[24] Other Income - For the nine months ended December 31, 2018, other income increased by HKD 15,642 thousand (6410.66%) year-on-year to HKD 15,886 thousand[25] - The increase was primarily due to the net effect of forfeiture of deposits, write-off of retention payables, and realized gains and unrealized fair value changes from the disposal of listed securities investments[25] Administrative and Other Operating Expenses - For the nine months ended December 31, 2018, administrative and other operating expenses decreased by HKD 3,764 thousand (34.52%) year-on-year to HKD 7,141 thousand[26] - The decrease was mainly attributable to a reduction in staff costs recorded[26] Finance Costs - For the nine months ended December 31, 2018, finance costs decreased by HKD 220 thousand (92.44%) year-on-year to HKD 18 thousand[28] - The decrease in finance costs was mainly due to the completion of repayments for certain finance lease liabilities[28] Income Tax Expense - For the nine months ended December 31, 2018, income tax expense decreased by HKD 481 thousand (17.58%) year-on-year to HKD 2,255 thousand[29] - This decrease is consistent with the reduction in profit before income tax for the nine months ended December 31, 2018[29] Profit and Total Comprehensive Income Attributable to Owners of the Company for the Period - For the nine months ended December 31, 2018, profit and total comprehensive income attributable to owners of the company decreased by HKD 2,611 thousand (22.27%) year-on-year to HKD 9,113 thousand[30] - The decrease primarily resulted from the net effect of increased cost of sales and reduced gross profit, administrative and other operating expenses, and income tax expense[30] Disclosure of Interests This section details the interests and short positions of directors, chief executives, and substantial shareholders in the company's shares and related securities Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company As of December 31, 2018, no directors or chief executives held disclosable interests or short positions in the company's shares, underlying shares, or debentures - As of December 31, 2018, no directors or chief executives of the company held any interests or short positions in the shares, underlying shares, or debentures of the company or any of its associated corporations that are required to be disclosed to the company and the Stock Exchange[31] Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares As of December 31, 2018, Luen Wong Investment Limited and its associates (Wong Chi Kwok, Law Oi Ling, Wong Wing Wah, Lai Siu Kuen) were substantial shareholders, holding a 26.20% equity interest in the company Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares | Name of Shareholder | Capacity/Nature of Interest | Number of Shares Held/Interested | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Luen Wong Investment Limited | Beneficial owner | 327,030,000 | 26.20% | | Wong Chi Kwok | Interest in controlled corporation | 327,030,000 | 26.20% | | Law Oi Ling | Spouse's interest | 327,030,000 | 26.20% | | Wong Wing Wah | Interest in controlled corporation | 327,030,000 | 26.20% | | Lai Siu Kuen | Spouse's interest | 327,030,000 | 26.20% | - Luen Wong Investment Limited is owned 50% by Mr. Wong Chi Kwok and 50% by Mr. Wong Wing Wah, both of whom are deemed to have an interest in the shares held by Luen Wong[35] - Ms. Law Oi Ling is the spouse of Mr. Wong Chi Kwok, and Ms. Lai Siu Kuen is the spouse of Mr. Wong Wing Wah; for the purposes of the Securities and Futures Ordinance, they are deemed or taken to be interested in all shares in which their respective spouses are interested[35] Other Information This section covers competitive interests, compliance advisor interests, post-reporting period events, securities transactions, corporate governance, directors' securities dealing code, dividends, GEM Listing Rule disclosures, share option scheme, and the audit committee Competing Interests Directors confirm that as of December 31, 2018, and up to the report date, no controlling shareholders, directors, or their close associates had interests competing with the Group's business - The directors confirm that neither the controlling shareholders nor the directors and their respective close associates have any interests in any business that competes or is likely to compete, directly or indirectly, with the Group's business[36] Compliance Advisor's Interests The Group has appointed TC Capital International Limited as its compliance advisor, which has no other disclosable interests related to the company beyond the compliance advisor agreement - The Group has appointed TC Capital International Limited as its compliance advisor, and save for the compliance advisor agreement, neither the compliance advisor, its directors, employees, nor close associates have any interests in relation to the company that are required to be disclosed to the Group under Rule 6A.32 of the GEM Listing Rules[37] Events After Reporting Period As of the date of this quarterly report, there have been no significant events after the reporting period for the company or the Group since December 31, 2018 - There have been no significant events after the reporting period for the company or the Group from December 31, 2018, up to the date of this quarterly report[38] Purchase, Sale or Redemption of the Company's Listed Securities Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the nine months ended December 31, 2018 - Neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the nine months ended December 31, 2018[39] Corporate Governance Code The company has complied with all applicable code provisions of the Corporate Governance Code as set out in Appendix 15 of the GEM Listing Rules - The company has complied with all applicable code provisions of the Corporate Governance Code and Corporate Governance Report as set out in Appendix 15 of the GEM Listing Rules[40] Code of Conduct for Securities Transactions by Directors The company adopted the GEM Listing Rules' required standard of conduct for directors' securities transactions, and all directors confirm full compliance - The company has adopted the required standard of conduct as set out in Rules 5.48 to 5.67 of the GEM Listing Rules as the code of conduct for directors' securities transactions in the company's shares[42] - All directors have confirmed that they have fully complied with the required dealing standards set out in the code of conduct for the nine months ended December 31, 2018, and up to the date of this report[42] Dividends The Board recommends not to declare an interim dividend for the nine months ended December 31, 2018 - The Board recommends not to declare an interim dividend for the nine months ended December 31, 2018[43] Disclosure Required Under Rule 17.50(2) of the GEM Listing Rules As of the report date, there are no other matters concerning directors' appointments or information requiring disclosure under Rule 17.50(2) of the GEM Listing Rules - As of the date of this report, there are no other matters concerning the appointment of directors that need to be brought to the attention of shareholders, nor is there any information regarding directors that is required to be disclosed under Rule 17.50(2) of the GEM Listing Rules[44] Share Option Scheme The company's share option scheme was adopted on March 24, 2016, but no options have been granted or remain outstanding as of December 31, 2018 - The company's share option scheme was adopted by way of shareholders' written resolutions on March 24, 2016, with terms determined in accordance with Chapter 23 of the GEM Listing Rules[45] - No share options have been granted since the adoption of the share option scheme, and there were no outstanding share options as of December 31, 2018[46] Audit Committee The Audit Committee, comprising three independent non-executive directors chaired by Mr. Wong Chi Kam, has reviewed the unaudited consolidated financial statements and found them compliant with applicable standards and disclosure requirements - The Audit Committee comprises three independent non-executive directors: Mr. Wong Chi Kam (Chairman), Mr. Liu Hung Ho, and Mr. Tai Chin[48] - The Audit Committee has reviewed the Group's unaudited consolidated financial statements for the nine months ended December 31, 2018, and is of the opinion that the results comply with applicable accounting standards, principles and policies, requirements of the GEM Listing Rules, and other applicable legal requirements, and that adequate disclosures have been made[48] Board Approval This report was approved for release by the Board of Directors on February 1, 2019 - This report was approved for release by Mr. So Kwok Hung, Chairman and Executive Director of the Board, on February 1, 2019[48]