英记茶庄集团(08241) - 2020 Q3 - 季度财报

Report Cover - This report is the third quarterly results report for the 2019/2020 financial year of Wing Kee Tea House Group Limited (Stock Code: 8241)[1] GEM Listing Characteristics and Disclaimer - The GEM market is positioned to provide a listing platform for small and medium-sized companies, involving higher investment risks, and investors should exercise caution[2] - Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this report and make no statement as to its accuracy or completeness[2] - The Company's directors jointly and severally accept full responsibility for the information in this report, confirming it is accurate, complete, and free from misleading or fraudulent statements[2] Third Quarterly Results Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the nine months ended December 31, 2019, the Group's revenue and gross profit decreased year-on-year, turning from profit to loss, with a net loss of HKD 5,177 thousand and a loss per share of HKD 1.44 cents Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the nine months ended December 31) | Indicator | 2019 (Thousand HKD) | 2018 (Thousand HKD) | Change (YoY) | | :--------------------------------------------------- | :------------------ | :------------------ | :----------- | | Revenue | 30,644 | 34,701 | -11.7% | | Cost of Sales | (6,738) | (7,464) | -9.7% | | Gross Profit | 23,906 | 27,237 | -12.2% | | Other Income | 476 | 464 | +2.6% | | Selling and Distribution Costs | (1,284) | (1,566) | -18.1% | | Administrative Expenses | (28,184) | (26,508) | +6.3% | | Finance Costs | (56) | (46) | +21.7% | | Profit/(Loss) Before Income Tax | (5,142) | (419) | -1127.2% | | Income Tax Expense | (35) | (934) | -96.3% | | Profit/(Loss) and Total Comprehensive Income/(Expense) for the Period | (5,177) | (1,353) | -282.6% | | Basic and Diluted Earnings/(Loss) Per Share (HK cents) | (1.44) | (0.38) | -278.9% | Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the three months ended December 31) | Indicator | 2019 (Thousand HKD) | 2018 (Thousand HKD) | Change (YoY) | | :--------------------------------------------------- | :------------------ | :------------------ | :----------- | | Revenue | 14,647 | 17,679 | -17.2% | | Cost of Sales | (2,924) | (3,713) | -21.2% | | Gross Profit | 11,723 | 13,966 | -16.0% | | Other Income | 84 | 120 | -30.0% | | Selling and Distribution Costs | (663) | (832) | -20.3% | | Administrative Expenses | (10,015) | (8,462) | +18.3% | | Finance Costs | (20) | – | N/A | | Profit/(Loss) Before Income Tax | 1,109 | 4,792 | -76.8% | | Income Tax Expense | (35) | (926) | -96.2% | | Profit/(Loss) and Total Comprehensive Income/(Expense) for the Period | 1,074 | 3,866 | -72.2% | | Basic and Diluted Earnings/(Loss) Per Share (HK cents) | 0.30 | 1.07 | -71.9% | Unaudited Condensed Consolidated Statement of Changes in Equity For the nine months ended December 31, 2019, the Group's total equity decreased to HKD 37,042 thousand, primarily due to a loss of HKD 5,177 thousand for the period, offset by a new share option reserve of HKD 987 thousand Condensed Consolidated Statement of Changes in Equity (For the nine months ended December 31) | Indicator | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :------------------------ | :------------------ | :------------------ | | Share Capital | 41,879 | 41,879 | | Capital Reserve | 990 | 990 | | Share Option Reserve | 987 | – | | (Accumulated Losses)/Retained Profits | (6,814) | (238) | | Total Equity | 37,042 | 42,631 | - As of April 1, 2019, audited total equity was HKD 41,232 thousand, with a loss of HKD 5,177 thousand for the period, resulting in total equity decreasing to HKD 37,042 thousand as of December 31, 2019[6] - The issuance of equity-settled share-based payments in 2019 led to an increase in share option reserve by HKD 987 thousand[6] Notes to the Unaudited Condensed Consolidated Financial Statements 1. General Information Wing Kee Tea House Group Limited was incorporated in Hong Kong on September 14, 2017, listed on GEM on April 16, 2018, primarily retailing Chinese tea, tea sets, and tea gift boxes in Hong Kong, and operating food and beverage retail under the 'Oi Cha' brand - The Company was incorporated in Hong Kong on September 14, 2017, and listed on GEM on April 16, 2018[8][9] - The Group's principal activities are the retail of Chinese tea, tea sets, and tea gift boxes in Hong Kong, and the retail of food and beverages such as Hong Kong-style coffee, fruit, and bubble tea under the name 'Oi Cha'[9] 2. Basis of Preparation The Group's unaudited condensed consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and GEM Listing Rules, on a historical cost basis, with HKD as the functional currency, and have been reviewed by the Audit Committee - The financial statements are prepared in accordance with all applicable Hong Kong Financial Reporting Standards and the GEM Listing Rules[10] - The statements are prepared on a historical cost basis, with the functional currency being Hong Kong Dollars, and all values are rounded to the nearest thousand HKD[10] - The statements have not been audited by an independent auditor but have been reviewed by the Company's Audit Committee[11] 3. Adoption of New and Revised Hong Kong Financial Reporting Standards The Group first applied new and revised Hong Kong Financial Reporting Standards during this period, with HKFRS 16 'Leases' having a significant impact on the financial statements, leading to the recognition of right-of-use assets and lease liabilities HKFRS 16 'Leases' The adoption of HKFRS 16 'Leases' resulted in the Group recognizing lease liabilities of HKD 1,896 thousand and measuring right-of-use assets, with no restatement of prior periods - The adoption of HKFRS 16 'Leases' has a significant impact on the preparation and presentation of the Group's results and financial position for the current and prior periods[13] - The Group has elected to apply the modified retrospective approach, recognizing the cumulative effect of adopting HKFRS 16 in equity[14] Reconciliation of Lease Liabilities (As of April 1, 2019) | Indicator | Thousand HKD | | :------------------------------------------------------------------ | :----------- | | Total operating lease commitments disclosed as at March 31, 2019 | 4,590 | | Recognition exemption – leases with remaining lease term of 12 months or less | (2,638) | | Operating lease liabilities before discounting | 1,952 | | Discounted using the incremental borrowing rate as at April 1, 2019 | (56) | | Total lease liabilities recognized under HKFRS 16 as at April 1, 2019 | 1,896 | | Classified as: Current lease liabilities | 1,896 | 4. Revenue For the nine months ended December 31, 2019, the Group's total revenue was HKD 30,644 thousand, primarily from tea product sales, with food and beverage retail contributing HKD 651 thousand Revenue Composition (For the nine months ended December 31) | Revenue Source | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :------------------- | :------------------ | :------------------ | | Sales of tea products | 29,993 | 34,701 | | Food and beverage retail | 651 | – | | Total Revenue | 30,644 | 34,701 | Revenue Composition (For the three months ended December 31) | Revenue Source | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :------------------- | :------------------ | :------------------ | | Sales of tea products | 14,485 | 17,679 | | Food and beverage retail | 162 | – | | Total Revenue | 14,647 | 17,679 | - Total revenue for the nine months of 2019 decreased by 11.7% year-on-year, primarily due to reduced sales of tea products[18] 5. Profit/(Loss) Before Income Tax For the nine months ended December 31, 2019, the Group's loss before income tax was HKD 5,142 thousand, mainly impacted by new expenses such as depreciation of right-of-use assets, short-term lease expenses, and variable lease payments Items for Profit/(Loss) Before Income Tax Calculation (For the nine months ended December 31) | Item | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :----------------------------------------- | :------------------ | :------------------ | | Auditor's remuneration | 300 | 245 | | Cost of inventories recognized as expense | 5,798 | 6,471 | | Depreciation of property, plant and equipment | 691 | 429 | | Depreciation of right-of-use assets | 1,037 | – | | Operating lease expenses (short-term leases and variable rents) | 8,857 | 7,004 | | Listing expenses | – | 4,000 | - For the nine months of 2019, new depreciation of right-of-use assets amounted to HKD 1,037 thousand, short-term lease expenses and leases with terms of less than 12 months amounted to HKD 8,538 thousand, and variable lease payments were HKD 319 thousand[20] - Listing expenses of HKD 4,000 thousand were incurred in the nine months of 2018, with no such expenses in the corresponding period of 2019[20] 6. Income Tax Expense For the nine months ended December 31, 2019, the Group's income tax expense was HKD 35 thousand, significantly lower than HKD 934 thousand in the prior year, primarily due to reduced taxable profit Income Tax Expense (For the nine months ended December 31) | Tax Type | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :--------------- | :------------------ | :------------------ | | Hong Kong Profits Tax | 35 | 934 | - Hong Kong profits tax is provided at a rate of 16.5%, with one subsidiary's first HKD 2,000,000 of assessable profits taxed at 8.25%[22] - As of December 31, 2019, the Group had no significant unrecognized deferred tax assets and liabilities[23] 7. Dividends The Board resolved not to declare any dividends for the nine months ended December 31, 2019, consistent with the prior year - For the nine months ended December 31, 2019, the Board did not declare any dividends[24] 8. Earnings/(Loss) Per Share For the nine months ended December 31, 2019, the loss attributable to equity holders of the Company was HKD 5,177 thousand, resulting in a basic and diluted loss per share of HKD 1.44 cents Earnings/(Loss) Per Share Calculation (For the nine months ended December 31) | Indicator | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :--------------------------------------------------- | :------------------ | :------------------ | | Profit/(Loss) attributable to equity holders of the Company for the period | (5,177) | (1,353) | | Weighted average number of ordinary shares (Thousand shares) | 360,000 | 356,073 | | Basic and Diluted Earnings/(Loss) Per Share (HK cents) | (1.44) | (0.38) | - For the nine months ended December 31, 2019, the effect of the exercise of share options on potential diluted shares was anti-dilutive and therefore not considered[27] Management Discussion and Analysis Financial Summary For the nine months ended December 31, 2019, the Group's revenue, gross profit, and profit/loss attributable to shareholders all decreased year-on-year, with net loss expanding to HKD 5.177 million Financial Summary (For the nine months ended December 31) | Indicator | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :------------------------------ | :------------------ | :------------------ | | Revenue | 30,644 | 34,701 | | Gross Profit | 23,906 | 27,237 | | Loss Before Tax | (5,142) | (419) | | Income Tax Expense | (35) | (934) | | Profit/(Loss) Attributable to Shareholders | (5,177) | (1,353) | | Loss Per Share (HK cents) | (1.44) | (0.38) | Business Review The Company, as an investment holding company, has its subsidiary Wing Kee Tea House Limited primarily selling tea, tea sets, and tea gift boxes through 12 retail outlets, while another subsidiary, Oi Cha Wing Kee Limited, sells Chinese tea and other beverages through one store - Wing Kee Tea House Limited sells tea, tea sets, and tea gift boxes through 12 retail stores and counters[31] - Oi Cha Wing Kee Limited sells Chinese tea, Italian coffee, fruit, and other ingredient beverages through one store[31] Financial Review During the reporting period, the Group's revenue and gross profit both decreased, and net loss expanded, primarily due to social events and economic uncertainties in Hong Kong. Selling and distribution costs decreased, but administrative expenses rose due to increased staff salaries, depreciation, and rent Revenue, Gross Profit and Net Loss For the nine months ended December 31, 2019, the Group's revenue decreased by 11.7% to HKD 30.6 million, gross profit decreased by 12.2% to HKD 23.9 million, and net loss expanded to HKD 5.2 million, primarily attributed to large-scale protests and economic recession in Hong Kong - Consolidated revenue for the reporting period was approximately HKD 30.6 million, a year-on-year decrease of approximately 11.7%[32] - Gross profit was approximately HKD 23.9 million, a year-on-year decrease of approximately 12.2%; gross profit margin was approximately 78.0%, a slight year-on-year decrease of 0.5%[32] - Net loss was approximately HKD 5.2 million, primarily due to revenue contraction caused by large-scale protests in Hong Kong and weak consumer sentiment triggered by social events[32] Selling and Distribution Costs Selling and distribution costs decreased by 18.0% to HKD 1.3 million, mainly benefiting from reduced entertainment expenses and sales commissions post-listing, but partially offset by increased social media advertising expenses - Selling and distribution costs decreased by approximately 18.0% to approximately HKD 1.3 million[34] - The decrease was primarily due to reduced entertainment expenses after listing and lower contractual sales commissions for sales employees[34] - Part of the decrease was offset by increased advertising development and maintenance expenses for Facebook, Instagram, and WeChat[34] Administrative Expenses Administrative expenses increased year-on-year, mainly due to higher staff salaries from hiring store assistants, depreciation of right-of-use assets from HKFRS 16 adoption, increased depreciation of fixed assets and rent due to new stores, and share option compensation expenses - Staff salaries increased by approximately 11.9% to approximately HKD 8.9 million, due to hiring store assistants for the Sha Tin counter and Oi Cha store[35] - New depreciation of right-of-use assets amounted to approximately HKD 1.0 million, due to the implementation of HKFRS 16[35] - Depreciation of fixed assets increased by approximately 61.1% to approximately HKD 0.7 million, and rent increased by approximately 30.8% to approximately HKD 9.2 million, both due to the new Sha Tin counter and Oi Cha store[35] - New share option compensation expenses amounted to approximately HKD 1.0 million[35] - The increased administrative expenses were offset by listing expenses of approximately HKD 4.0 million incurred in the corresponding period of 2018[36] Outlook and Prospects The Group faces severe challenges from global economic recession and ongoing social unrest in Hong Kong, anticipating stagnant or negative growth. Prudent cash management measures have been adopted, including rent negotiations and discretionary spending cuts. Part of the IPO proceeds were used for new store openings and system upgrades, but further retail store openings are deferred given market conditions - With global economic recession and ongoing social unrest in Hong Kong, the Group faces stagnant or negative growth[39] - Prudent cash management strategies have been adopted, including negotiating rent reductions and cutting discretionary expenses such as advertising, entertainment, and incentive bonuses[39] - Approximately HKD 25.2 million of the IPO proceeds have been used for opening the Sha Tin counter, Tsim Sha Tsui store, office and warehouse renovation, information system upgrades, hiring new staff, and repaying bank loans of approximately HKD 3.8 million[40] - Given the current market conditions, the Group has deferred opening the other two retail stores mentioned in the prospectus[40] Liquidity and Cash Flow Management The Group's liquidity primarily stems from cash generated from operations and proceeds from share offerings. As of December 31, 2019, both net current assets and cash and bank balances decreased, while the current ratio remained at a high level - The Group primarily funds its liquidity and capital requirements through cash generated from operations and proceeds from share offerings[41] Liquidity Position (As of December 31) | Indicator | 2019 (Thousand HKD) | March 31, 2019 (Thousand HKD) | Change | | :------------------------------- | :------------------ | :---------------------------- | :------- | | Net Current Assets | 32,500 | 37,700 | -13.8% | | Cash and Bank Balances | 8,200 | 10,200 | -19.5% | | Current Assets | 34,300 | 39,200 | -12.5% | | Current Liabilities | 1,800 | 1,500 | +20.0% | | Current Ratio | 18.7 times | 26.4 times | -29.2% | - Net current assets decreased by approximately HKD 5.2 million, primarily due to the withdrawal of cash and bank balances for working capital purposes[41] Gearing Ratio As of December 31, 2019, the Group's gearing ratio increased to 13.6%, primarily due to a decrease in retained profits - As of December 31, 2019, the gearing ratio was approximately 13.6%, higher than 7.8% as of March 31, 2019[44] - The increase in gearing ratio was primarily due to a decrease in retained profits[44] Capital Expenditure For the nine months ended December 31, 2019, the Group's capital expenditure was approximately HKD 1.9 million, mainly for furniture and fixtures for new counters and beverage stores - For the nine months ended December 31, 2019, capital expenditure was approximately HKD 1.9 million, slightly lower than HKD 2.0 million in the corresponding period last year[45] - Capital expenditure was primarily for furniture and fixtures for new counters and beverage stores[45] Foreign Exchange Risk The Group's principal operations and assets and liabilities are denominated in HKD, resulting in insignificant foreign exchange risk, with no hedging instruments employed - All of the Group's assets and liabilities are located in Hong Kong and denominated in HKD, and almost all revenue is derived from Hong Kong, resulting in insignificant foreign exchange risk[46] - No hedging instruments are used for RMB purchase payments, as they represent a small portion of total purchases and settlement within 60 days does not give rise to significant foreign exchange risk[46] Key Risks and Uncertainties The Group faces credit, interest rate, and liquidity risks, but manages these through stringent credit reviews, absence of bank borrowings, and cash flow forecasts Credit Risk The Group only transacts with reputable third parties and conducts stringent credit reviews for credit customers, resulting in immaterial bad debt risk - The Group only transacts with approved and reputable third parties[47] - Credit terms are subject to stringent credit review procedures, and receivable balances are continuously monitored, resulting in immaterial bad debt risk[47] Interest Rate Risk The Group had no bank borrowings at the end of the reporting period, thus no interest rate risk arising from borrowings - As of December 31, 2019, the Group had no bank borrowings, thus no interest rate risk arising from borrowings[48] - The risks arising from commercial bank deposits are not significant or immediate[48] Liquidity Risk The Group manages its funding shortage risk through monthly cash flow forecasts, aiming to maintain a balance between funding sustainability and flexibility - The Group uses monthly cash flow forecasts to monitor its funding shortage risk[49] - The objective is to maintain a balance between funding sustainability and flexibility through cash from fixed deposits and funds generated from operations[49] Employees and Remuneration Policy As of December 31, 2019, the Group's employee count increased to 70, total staff costs rose to HKD 11.7 million, and remuneration is determined based on qualifications, position, and performance, with training provided - As of December 31, 2019, the Group had 70 employees working in Hong Kong, an increase from 56 in the corresponding period last year[52] - Total staff costs (including directors' emoluments and mandatory provident fund contributions) were approximately HKD 11.7 million, higher than HKD 10.8 million in the corresponding period last year[52] - Employee remuneration is determined based on qualifications, position, and performance, including salaries, allowances, and discretionary bonuses, with various training provided[52] Dividends The Board has resolved not to declare any dividends for the nine months ended December 31, 2019, consistent with the prior year - For the nine months ended December 31, 2019, the Board did not declare any dividends[53] Contingent Liabilities As of December 31, 2019, the Group had no significant contingent liabilities - As of December 31, 2019, the Group had no significant contingent liabilities[54] Pledge of the Group's Assets As of December 31, 2019, the Group had no pledge of any assets - As of December 31, 2019, the Group had no pledge of any assets[55] Events After Reporting Period Subsequent to the reporting period, the Company's subsidiaries entered into a sale and purchase agreement with related party Chan Sing Hoi Enterprises Limited to acquire two properties for a total of HKD 95.5 million, partly paid by promissory notes. This acquisition constitutes a very substantial acquisition and connected transaction, subject to GEM Listing Rules' reporting, announcement, and shareholder approval requirements - On February 4, 2020, the Company's subsidiaries, Star Ocean Property Limited and Wing Luen Limited, entered into a sale and purchase agreement with related party Chan Sing Hoi Enterprises Limited[57] - Two properties were acquired for HKD 50.0 million for Property 1 and HKD 45.5 million for Property 2, totaling HKD 95.5 million[57] - Part of the consideration will be paid by promissory notes issued by the Company with principal amounts of HKD 25.0 million and HKD 25.5 million[57] - This acquisition constitutes a very substantial acquisition and connected transaction under the GEM Listing Rules, subject to reporting, announcement, and shareholder approval requirements[58] Other Information Corporate Governance Practices and Compliance Matters The Group is committed to maintaining high standards of corporate governance and has complied with all relevant provisions of the Corporate Governance Code set out in Appendix 15 of the GEM Listing Rules for the nine months ended December 31, 2019 - The Group is committed to maintaining high standards of corporate governance and complying with the Corporate Governance Code[62] - For the nine months ended December 31, 2019, the Company has complied with all relevant provisions of the Corporate Governance Code[62] Directors' Securities Transactions The Group has adopted a code of conduct for directors' securities transactions, and all directors confirmed compliance with the code during the reporting period - The Group has adopted a code of conduct for directors' securities transactions, with terms no less exacting than the required standards set out in the GEM Listing Rules[63] - Following specific enquiries, all directors confirmed compliance with the code of conduct for the nine months ended December 31, 2019[63] Purchase, Sale or Redemption of the Company's Listed Securities For the nine months ended December 31, 2019, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the nine months ended December 31, 2019, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[64] Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares or Debentures of the Company and its Associated Corporations As of December 31, 2019, several directors and the chief executive held long positions in the Company's ordinary shares and underlying shares, primarily through controlled corporation Profit Ocean Enterprises Limited holding 75% equity, and a small number of beneficially owned shares through the share option scheme Directors' and Chief Executive's Long Positions in Ordinary Shares and Underlying Shares of the Company (As of December 31, 2019) | Name of Director/Chief Executive | Capacity/Nature of Interest | Number of Shares/Underlying Shares Held/Interested | Approximate Percentage of Shareholding | | :------------------------------- | :-------------------------- | :------------------------------------------------ | :----------------------------------- | | Chan Kwong Yuen | Interest in controlled corporation | 270,000,000 | 75% | | | Beneficial owner | 3,200,000 | 0.89% | | Chan Kun Yuen | Interest in controlled corporation | 270,000,000 | 75% | | | Beneficial owner | 3,200,000 | 0.89% | | Chan Shu Yuen | Interest in controlled corporation | 270,000,000 | 75% | | | Beneficial owner | 3,200,000 | 0.89% | | Siu Tsz Ming | Beneficial owner | 200,000 | 0.06% | | Lee Wai Ho | Beneficial owner | 200,000 | 0.06% | | Wong Tsz Chung | Beneficial owner | 200,000 | 0.06% | - The 270,000,000 shares are held by Profit Ocean Enterprises Limited, which is equally owned by Mr. Chan Tat Yuen, Mr. Chan Kun Yuen, Mr. Chan Shu Yuen, and Mr. Chan Kwong Yuen[68] - The beneficially owned shares are derived from share options granted under the share option scheme adopted on March 14, 2018[70] Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares of the Company As of December 31, 2019, Profit Ocean Enterprises Limited was a substantial shareholder of the Company, holding 75% equity. Mr. Chan Tat Yuen and his spouse Ms. Chu Man, along with other directors and their spouses, held significant shares through controlled corporations or spouse interests Substantial Shareholders' and Other Persons' Long Positions in Ordinary Shares and Underlying Shares of the Company (As of December 31, 2019) | Name of Shareholder/Person | Nature and Capacity of Interest | Number of Shares/Underlying Shares Held/Interested | Approximate Percentage of Total Issued Shares | | :------------------------- | :------------------------------ | :------------------------------------------------ | :-------------------------------------------- | | Profit Ocean | Beneficial owner | 270,000,000 | 75% | | Tri-Luck | Interest in controlled corporation | 270,000,000 | 75% | | Wealth City | Interest in controlled corporation | 270,000,000 | 75% | | Tin King | Interest in controlled corporation | 270,000,000 | 75% | | Coastal Lion | Interest in controlled corporation | 270,000,000 | 75% | | Mr. Chan Tat Yuen | Interest in controlled corporation | 270,000,000 | 75% | | | Beneficial owner | 3,200,000 | 0.89% | | Ms. Chu Man | Spouse interest | 270,000,000 | 75% | | | | 3,200,000 | 0.89% | - The issued share capital of Profit Ocean is equally held by Tri-Luck, Wealth City, Tin King, and Coastal Lion, which are wholly-owned by Mr. Chan Tat Yuen, Mr. Chan Kun Yuen, Mr. Chan Shu Yuen, and Mr. Chan Kwong Yuen, respectively[78] - An acting in concert arrangement exists among Mr. Chan Tat Yuen, Mr. Chan Kun Yuen, Mr. Chan Shu Yuen, and Mr. Chan Kwong Yuen, each deemed to be interested in all shares held by Profit Ocean[78] - Spouses of several directors (e.g., Ms. Chu Man, Ms. Chan King Chi, Ms. Po Miu Kuen, Ms. Ng Wai Lam) are deemed to be interested in the relevant shares by virtue of spouse interests[79] Share Option Scheme The Company adopted a share option scheme on March 14, 2018, and for the nine months ended December 31, 2019, a total of 32,300,000 share options were granted, of which 31,550,000 remained unexercised, with an exercise price of HKD 0.189 - The Company adopted a share option scheme on March 14, 2018, aiming to grant share options to participants including employees, consultants, advisors, and directors[86] Details of Share Option Scheme Movements (For the nine months ended December 31, 2019) | Category of Participants | Date of Grant | Exercise Period | Exercise Price (HKD) | Granted During the Period | Unexercised (December 31, 2019) | | :----------------------- | :------------- | :------------------------- | :------------------- | :------------------------ | :------------------------------ | | Directors | September 9, 2019 | June 1, 2020 to May 31, 2023 | 0.189 | 10,200,000 | 10,200,000 | | Substantial Shareholders | September 9, 2019 | June 1, 2020 to May 31, 2023 | 0.189 | 3,200,000 | 3,200,000 | | Other Employees | September 9, 2019 | June 1, 2020 to May 31, 2023 | 0.189 | 18,900,000 | 18,150,000 | | Total | | | | 32,300,000 | 31,550,000 | - 750,000 share options for other employees lapsed during the period[87] Competing Interests The Directors are unaware of any business or interest held by Directors or controlling shareholders and their close associates that constitutes or may constitute a competing business or interest with the Group's business during the reporting period - The Directors are unaware of any business or interest held by Directors or the Company's controlling shareholders or any of their respective close associates that constitutes or may constitute a competing business or interest with the Group's business for the nine months ended December 31, 2019[91] Audit Committee The Company's Audit Committee comprises three independent non-executive directors, responsible for reviewing and overseeing financial reporting, risk management, and internal control systems, and has reviewed the current period's results, deeming them compliant with applicable accounting standards and GEM Listing Rules - The Audit Committee was established on March 14, 2018, comprising all three independent non-executive directors, with Mr. Siu Tsz Ming as Chairman[92] - Its primary responsibilities include reviewing and overseeing the Group's financial reporting process, risk management, and internal control systems, and reviewing financial information[92] - The Audit Committee has reviewed the Company's unaudited condensed consolidated results for the nine months ended December 31, 2019, and considers them to be in compliance with applicable accounting standards and the requirements of the GEM Listing Rules[92] Compliance Adviser's Interests The Company has appointed Kingston Corporate Finance Limited as its compliance adviser, and as of the reporting date, neither the compliance adviser nor its associates held any interests in the share capital of the Company or any member of the Group that are required to be disclosed to the Company - The Company has appointed Kingston Corporate Finance Limited as its compliance adviser[93] - As of December 31, 2019, and up to the date of this report, neither the compliance adviser nor its directors, employees, or close associates held any interests in the share capital of the Company or any member of the Group that are required to be disclosed to the Company[93] By Order of the Board This report was signed and released by Mr. Chan Kwong Yuen, Chairman of the Board, on February 12, 2020. The Board comprises three executive directors and three independent non-executive directors - This report was signed by Mr. Chan Kwong Yuen, Chairman of Wing Kee Tea House Group Limited, on February 12, 2020[94][95] - The Board comprises executive directors Mr. Chan Kwong Yuen, Mr. Chan Kun Yuen, and Mr. Chan Shu Yuen, and independent non-executive directors Mr. Wong Tsz Chung, Mr. Siu Tsz Ming, and Mr. Lee Wai Ho[94][95]