菊福堂生物(08217) - 2021 Q1 - 季度财报

Report Overview Company Information and GEM Characteristics Luen Wong Group Holdings Limited (stock code 8217) operates in the high-risk GEM market for SMEs - Company Name: Luen Wong Group Holdings Limited[1] - Stock Code: 8217[1] - Place of Incorporation: Cayman Islands[1] - Report Type: First Quarterly Results Report 2020[2] - GEM Market Characteristics: A listing market for small and mid-sized companies with high investment risks, where securities may experience high market volatility and are not guaranteed to have high liquidity[3] Financial Highlights The Group's revenue fell sharply, turning from a profit in the prior period to a loss of HK$2.3 million this quarter Financial Highlights for the First Quarter of 2020 (For the three months ended June 30) | Indicator | 2020 (HKD) | 2019 (HKD) | Change | | :--- | :--- | :--- | :--- | | Revenue | 52,200,000 | 121,600,000 | Decrease 69,400,000 | | Total Performance | Loss 2,300,000 | Profit 9,900,000 | Turned from profit to loss | | Loss/Profit Attributable to Equity Holders | Loss 2,000,000 | Profit 300,000 | Turned from profit to loss | | Basic and Diluted Loss/Earnings Per Share | Loss 0.63 HK cents | Earnings 0.11 HK cents | Turned from profit to loss | - The Board of Directors does not recommend the payment of an interim dividend for the three months ended June 30, 2020[5] Financial Performance Condensed Consolidated Statement of Comprehensive Income Revenue declined 57% year-on-year, resulting in a period loss of HK$1,979 thousand Condensed Consolidated Statement of Comprehensive Income (Unaudited) | Indicator | 2020 (HK$ '000) | 2019 (HK$ '000) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 52,227 | 121,642 | -57.07% | | Cost of sales | (54,483) | (111,780) | -51.26% | | Gross (loss)/profit | (2,256) | 9,862 | Turned from profit to loss | | Other income or loss | 2,741 | (5,560) | Turned from loss to profit | | Administrative and other operating expenses | (2,456) | (3,385) | -27.43% | | Operating (loss)/profit | (1,971) | 917 | Turned from profit to loss | | (Loss)/profit before income tax | (1,979) | 908 | Turned from profit to loss | | Income tax expense | – | (565) | -100% | | (Loss)/profit and total comprehensive (loss)/income for the period attributable to equity holders of the Company | (1,979) | 343 | Turned from profit to loss | | Basic and diluted (loss)/earnings per share | (0.63) HK cents | 0.11 HK cents | Turned from profit to loss | Condensed Consolidated Statement of Changes in Equity Total equity attributable to owners decreased significantly to HK$29,242 thousand due to the period's loss Condensed Consolidated Statement of Changes in Equity (Unaudited) | Indicator | 30 June 2020 (HK$ '000) | 30 June 2019 (HK$ '000) | | :--- | :--- | :--- | | Share capital | 12,480 | 12,480 | | Share premium | 36,672 | 36,672 | | Share-based payment reserve | 4,329 | – | | Other reserve | 10,400 | 10,400 | | Capital reserve | 3,820 | 3,820 | | Retained earnings/(Accumulated losses) | (38,459) | 19,430 | | Total equity | 29,242 | 84,802 | - The total loss and comprehensive loss for the period amounted to HK$1,979 thousand, leading to a decrease in total equity[9] Notes to Financial Statements General Information The Company is incorporated in the Cayman Islands, primarily engaged in civil engineering and investment holding - Place of Incorporation: Cayman Islands[11] - Principal Activities: Providing civil engineering services and investment holding[12] - Listing Date and Venue: Listed on GEM of the Stock Exchange on April 12, 2016[13] - Ultimate Controlling Shareholders: Mr Wong Chi Keung and Mr Wong Wing Wah[12] Basis of Preparation The financial statements are prepared under HKFRS and GEM Listing Rules and presented in Hong Kong dollars - Basis of Preparation: Hong Kong Financial Reporting Standards (HKFRS) and GEM Listing Rules[14] - Accounting Policies: Consistent with the annual consolidated financial statements for the year ended March 31, 2020[14] - Presentation Currency: Hong Kong dollars (HKD)[15] - Audit Status: Unaudited, but reviewed by the Audit Committee[16] Revenue (Notes) The Group's revenue is derived entirely from the provision of civil engineering services - Source of Revenue: All revenue is derived from the provision of civil engineering services[18] Income Tax Expense (Notes) The Group's income tax expense was zero for the period due to a recorded loss Income Tax Expense | Indicator | 2020 (HK$ '000) | 2019 (HK$ '000) | | :--- | :--- | :--- | | Current tax - Hong Kong Profits Tax | – | 565 | | Deferred tax | – | – | | Income tax expense | – | 565 | - Hong Kong Profits Tax is levied under a two-tiered system, with the first HK$2 million of assessable profits taxed at 8.25% and the remainder at 16.5% for qualifying entities[19] - The directors consider that the two-tiered profits tax rates system has no material impact on the Group's current and deferred tax position[20] Dividends (Notes) The Board does not recommend the payment of an interim dividend for the three months ended June 30, 2020 and 2019 - Dividend Policy: The Board of Directors does not recommend the payment of an interim dividend[20] Earnings/(Loss) Per Share Basic and diluted loss per share was 0.63 HK cents, compared to earnings of 0.11 HK cents in the prior year period Earnings/(Loss) Per Share | Indicator | 2020 (HK$ '000) | 2019 (HK$ '000) | | :--- | :--- | :--- | | (Loss)/profit for the period attributable to equity holders of the Company | (1,979) | 343 | | Weighted average number of ordinary shares ('000) | 312,000 | 312,000 (Restated) | | Basic and diluted (loss)/earnings per share | (0.63) HK cents | 0.11 HK cents (Restated) | - The weighted average number of shares has been adjusted for the share consolidation (four shares into one) completed in March 2020[22] - The exercise of share options was not assumed in calculating diluted loss/earnings per share as it would result in a decrease in loss/earnings per share[22] Management Discussion and Analysis Business Review and Outlook The Group faces challenges from project completions and COVID-19 but remains confident due to government infrastructure investment - Core Business: Providing civil engineering services as a subcontractor in Hong Kong, including roads and drainage, structural engineering, and site formation[24] - Reasons for Performance Decline: The near completion of several large-scale projects and the impact of the COVID-19 pandemic on project progress[24] - Industry Challenges: Filibustering causing budget delays, social demonstrations, project delays, and labor shortages[24] - Industry Opportunities: Government's commitment to an average annual capital works expenditure of HK$100 billion on infrastructure projects in the coming years[24] - Future Strategy: Strengthening competitive advantages, prudently evaluating projects, controlling costs, and assessing the feasibility of expanding civil engineering operations to Japan and Thailand[25] Financial Review The Group's financial performance deteriorated significantly, with a sharp decline in revenue and a shift from profit to loss - The financial review details the changes in various financial indicators for the quarter, showing an overall trend of significant decline in revenue and profit[27][28][34] Revenue (Financial Review) Revenue decreased by approximately HK$69,415 thousand due to project completions and the COVID-19 pandemic Revenue Change | Indicator | 2020 (HK$ '000) | 2019 (HK$ '000) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 52,227 | 121,642 | -69,415 (-57.07%) | - The decrease in revenue was mainly due to the near completion of several large-scale projects and the impact of the COVID-19 outbreak on project progress[27] Gross Profit and Gross Margin The Group's gross profit turned from a profit of HK$9,862 thousand in 2019 to a loss of HK$2,256 thousand in 2020 Gross Profit Change | Indicator | 2020 (HK$ '000) | 2019 (HK$ '000) | Change | | :--- | :--- | :--- | :--- | | Gross (loss)/profit | (2,256) | 9,862 | Turned from profit to loss | - Gross profit margin varies significantly due to the cost-plus pricing model and differences between projects[28] Other Income or Loss Other income or loss shifted from a loss of HK$5,560 thousand in 2019 to an income of HK$2,741 thousand in 2020 Other Income or Loss Change | Indicator | 2020 (HK$ '000) | 2019 (HK$ '000) | Change | | :--- | :--- | :--- | :--- | | Other income or loss | 2,741 | (5,560) | Turned from loss to profit | - The change was mainly due to the reversal of over-provision for severance payments of approximately HK$1,505 thousand from previous periods[29] Administrative Expenses Administrative expenses decreased by approximately HK$929 thousand year-on-year to HK$2,456 thousand Administrative Expenses Change | Indicator | 2020 (HK$ '000) | 2019 (HK$ '000) | YoY Change | | :--- | :--- | :--- | :--- | | Administrative expenses | 2,456 | 3,385 | -929 (-27.43%) | - Administrative expenses mainly consist of staff costs, professional fees, depreciation, rental expenses, and other administrative expenses[30] Finance Costs The Group's finance costs remained stable at approximately HK$8 thousand Finance Costs Change | Indicator | 2020 (HK$ '000) | 2019 (HK$ '000) | | :--- | :--- | :--- | | Finance costs | 8 | 9 | Income Tax Expense (Financial Review) The Group's income tax expense decreased from HK$565 thousand in the prior year period to zero Income Tax Expense Change | Indicator | 2020 (HK$ '000) | 2019 (HK$ '000) | YoY Change | | :--- | :--- | :--- | :--- | | Income tax expense | – | 565 | -565 (-100%) | Loss/Profit and Total Comprehensive Loss/Income Attributable to Equity Holders The Group's performance attributable to equity holders shifted from a profit of HK$343 thousand to a loss of HK$1,979 thousand Performance Attributable to Equity Holders Change | Indicator | 2020 (HK$ '000) | 2019 (HK$ '000) | Change | | :--- | :--- | :--- | :--- | | (Loss)/profit and total comprehensive (loss)/income for the period attributable to equity holders | (1,979) | 343 | Turned from profit to loss | - The shift from profit to loss was mainly due to the decrease in revenue and gross profit[34] Equity Disclosure Directors' and Chief Executive's Interests in Shares, Underlying Shares and Debentures As of June 30, 2020, two executive directors each held 1% of the Company's issued share capital Directors' and Chief Executive's Shareholdings | Director Name | Nature of Interest | Number of Shares Held | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | So Kwok Hung | Personal Interest | 3,120,000 | 1% | | Yu Xiao | Personal Interest | 3,120,000 | 1% | Substantial Shareholders' Interests in Shares and Underlying Shares Luen Wong Investments Limited is the largest shareholder with a 26.20% stake Substantial Shareholders' Shareholdings | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held/Interested In | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Luen Wong Investments Limited | Beneficial owner | 81,757,500 | 26.20% | | Wong Chi Keung | Interest in a controlled corporation | 81,757,500 | 26.20% | | Law Oi Ling | Interest of spouse | 81,757,500 | 26.20% | | Wong Wing Wah | Interest in a controlled corporation | 81,757,500 | 26.20% | | Lai Siu Kuen | Interest of spouse | 81,757,500 | 26.20% | - Luen Wong Investments Limited is owned as to 50% by each of Mr Wong Chi Keung and Mr Wong Wing Wah[39] Other Information Purchase, Sale or Redemption of Listed Securities The Company and its subsidiaries did not purchase, sell, or redeem any of the Company's listed securities during the period - Securities Transactions: Neither the Company nor its subsidiaries engaged in the purchase, sale, or redemption of its listed securities[40] Compliance with Corporate Governance Code The Company has complied with all applicable code provisions of the Corporate Governance Code in Appendix 15 of the GEM Listing Rules - Corporate Governance: The Company has complied with all applicable code provisions of the Corporate Governance Code in Appendix 15 of the GEM Listing Rules[41] Model Code for Securities Transactions by Directors The Company has adopted the required code of conduct for securities transactions by directors, and all directors have confirmed compliance - Directors' Securities Transactions: All directors have confirmed full compliance with the required code of conduct[42] Dividends (Other Information) The Board recommends not to declare an interim dividend for the three months ended June 30, 2020 - Dividend Policy: No interim dividend will be distributed[43] Disclosure under GEM Listing Rule 17.50(2) As of the report date, the Board is not aware of any matters concerning directors that require disclosure under this rule - Disclosure Matters: There are no matters concerning directors that require disclosure under GEM Listing Rule 17.50(2)[44] Share Option Scheme The Company has granted 31,200,000 share options with an exercise price of HK$0.404 per share - Share Option Scheme Adoption Date: March 24, 2016[46] - Total Share Options Granted: 31,200,000[46] - Exercise Price Per Share: HK$0.404[47] - Exercise Period: 5 years[47] - Share Option Allocation: Executive Directors So Kwok Hung and Yu Xiao each received 3,120,000 options, 5 employees received a total of 15,600,000 options, and 3 consultants received a total of 9,360,000 options[47][48] Events After Reporting Period The Board is not aware of any significant events requiring disclosure that occurred after the reporting period - Subsequent Events: No significant subsequent events require disclosure[49] Audit Committee The Audit Committee has reviewed the unaudited financial statements and found them compliant with applicable standards - Committee Composition: Comprises three independent non-executive Directors: Mr Liu Hung Fai, Mr Wong Chi Kin, and Mr Tai Chin Chun[51] - Chairman: Mr Wong Chi Kin[51] - Responsibilities: Provides independent review and supervision of financial reporting, and ensures the effectiveness of internal controls and adequacy of audits[51] - Review Outcome: The committee has reviewed the quarterly financial statements and is satisfied that they comply with applicable accounting standards, GEM Listing Rules, and other legal requirements[51]