宏强控股(08262) - 2020 Q1 - 季度财报

First Quarterly Report 2019/20 Overview Characteristics of the GEM Market and Directors' Responsibility Statement The company's shares are listed on GEM, a market for high-risk SMEs, and directors affirm this report's accuracy - The company's shares are listed on GEM of The Stock Exchange of Hong Kong Limited, a market positioned for small and mid-sized companies with high investment risks[3] - The directors confirm that the information in this report is accurate, complete, and not misleading or deceptive in all material respects, with no omission of other matters[3] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The Group's revenue and gross profit declined significantly, resulting in a 67% year-on-year drop in total comprehensive income Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the three months ended September 30) | Metric | 2019 (HK$'000) | 2018 (HK$'000) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 85,397 | 124,929 | -31.6% | | Cost of sales | (78,402) | (110,680) | -29.2% | | Gross profit | 6,995 | 14,249 | -50.9% | | Other income | 180 | 73 | +146.6% | | Administrative expenses | (5,762) | (10,025) | -42.5% | | Finance costs | (54) | (110) | -50.9% | | Profit before tax | 1,359 | 4,187 | -67.5% | | Income tax expense | (308) | (975) | -68.4% | | Profit and total comprehensive income for the period | 1,051 | 3,212 | -67.2% | | Profit and total comprehensive income attributable to owners of the Company | 1,051 | 3,168 | -66.8% | | Basic and diluted earnings per share (HK cents) | 0.13 | 0.40 | -67.5% | Condensed Consolidated Statement of Changes in Equity Total equity attributable to owners was HK$165,230 thousand, slightly increasing due to profit contributions during the period Summary of Condensed Consolidated Statement of Changes in Equity (As at September 30) | Metric | 30 September 2019 (HK$'000) | 30 September 2018 (HK$'000) | | :--- | :--- | :--- | | Share capital | 8,000 | 8,000 | | Share premium | 40,903 | 40,903 | | Capital injection | 11,572 | 11,572 | | Share option reserve | 3,784 | 3,649 | | Retained earnings | 100,971 | 105,560 | | Sub-total attributable to owners of the Company | 165,230 | 169,684 | | Non-controlling interests | — | 5,458 | | Total | 165,230 | 175,142 | - As at 30 September 2019, total equity attributable to owners of the Company was HK$165,230 thousand, an increase of HK$1,051 thousand from HK$164,179 thousand as at 1 July 2019, consistent with the total profit for the period[6] Notes to the Financial Statements 1. General Information The Group, incorporated in the Cayman Islands and listed on GEM in 2016, primarily provides property construction services in Hong Kong - The Company was incorporated in the Cayman Islands on 22 September 2015 and listed on the GEM of the Stock Exchange on 30 March 2016[8] - The Group's principal activity is the provision of property construction services in Hong Kong[9] 2. Basis of Preparation and Accounting Policies Financial statements are prepared per HKFRS and GEM Listing Rules, with no material impact from new standards adopted this period - The financial statements have been prepared in accordance with Hong Kong Generally Accepted Accounting Principles, Hong Kong Financial Reporting Standards, and the applicable disclosure requirements of the GEM Listing Rules[10] - The adoption of new or revised Hong Kong Financial Reporting Standards has had no material impact on the Group's reported results and financial position[10] - The accounting policies and calculation methods used are consistent with those for the annual financial statements for the year ended 30 June 2019, detailing the accounting for equity-settled share-based payment transactions[12][13] 3. Revenue Composition The Group's revenue is primarily from general building works, as building management services have been discontinued - Revenue represents the fair value of amounts received and receivable for services provided to external customers, net of discounts[15] Revenue by Operating Segment (For the three months ended September 30) | Operating Segment | 2019 (HK$'000) | 2018 (HK$'000) | | :--- | :--- | :--- | | General building works | 85,397 | 100,361 | | Specialised building works | — | — | | Building management services | — | 24,568 | | Total | 85,397 | 124,929 | 4. Income Tax Expense Income tax expense decreased significantly year-on-year due to a reduction in assessable profits Income Tax Expense (For the three months ended September 30) | Metric | 2019 (HK$'000) | 2018 (HK$'000) | | :--- | :--- | :--- | | Hong Kong Profits Tax | 308 | 975 | - Hong Kong Profits Tax has been provided at a rate of 16.5% on the estimated assessable profits of the Group for the period[19] 5. Dividend Policy The Board of Directors does not recommend the payment of an interim dividend for the period, consistent with the prior year - The Board does not recommend the payment of an interim dividend for the period (2018: Nil)[21] 6. Earnings Per Share Calculation Basic earnings per share decreased significantly due to lower profit attributable to owners, with no diluted EPS presented Earnings Per Share Calculation (For the three months ended September 30) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Profit for the period attributable to owners of the Company (HK$'000) | 1,051 | 3,168 | | Weighted average number of ordinary shares | 800,759,000 | 800,000,000 | | Basic and diluted earnings per share (HK cents) | 0.13 | 0.40 | - As there were no potential dilutive ordinary shares in issue during the review period, diluted earnings per share has not been presented[23] Management Discussion and Analysis Financial Review The Group's key financial metrics declined significantly due to the disposal of a subsidiary and fewer construction orders - Revenue decreased by approximately 31.6% to HK$85.4 million, mainly due to the disposal of a subsidiary and a decrease in construction orders[25] - Gross profit decreased by approximately 50.7% to HK$7.0 million, driven by lower revenue and projects with lower gross profit margins[27] - Administrative expenses decreased by approximately 42.0% to HK$5.8 million, primarily due to the disposal of a subsidiary[29] - Profit and total comprehensive income attributable to owners of the Company decreased by approximately 65.6% to HK$1.1 million, mainly due to the decrease in gross profit[32] Business Review and Outlook The Group will adopt a prudent strategy focusing on high-yield projects and exploring new business opportunities to diversify risk - The Group is principally engaged in general building works and specialised building works in Hong Kong[33] - The directors maintain a conservative view of the Hong Kong property market, which is expected to have a significant impact on the business[33] - A strategic business plan will be formulated, focusing on projects with reasonable returns while balancing risk and reward for each potential investment[33] - A joint venture has been established for business development and land horticulture in Sai Kung, New Territories, potentially integrating operations from property construction to land development and leisure parks[33] Other Information A. Disclosure of Interests of Directors and Chief Executive The Chairman, Mr Kwok Tung Keung, and the CEO, Mr Ko Chun Hay, hold significant interests in the company's shares and options Long Positions of Directors and Chief Executive in Shares (as at 30 September 2019) | Name of Director | Nature of Interest | Number of Shares Held/Interested | Number of Share Options | Approximate Percentage of Shareholding (%) | | :--- | :--- | :--- | :--- | :--- | | Mr Kwok Tung Keung | Interest in a controlled corporation | 250,000,000 | — | 31.25% | | | Beneficial owner | — | 13,000,000 | 1.63% | | Mr Ko Chun Hay | Beneficial owner | 189,500,000 | — | 23.69% | | | Beneficial owner | — | 13,000,000 | 1.63% | - Mr Kwok Tung Keung beneficially owns 100% of the share capital of Best Brain Investments Limited and is therefore deemed to be interested in the shares held by Best Brain[36] Long Positions of Directors in Ordinary Shares of Associated Corporations (as at 30 September 2019) | Name of Director | Name of Associated Corporation | Nature of Interest | Number of Shares Interested | Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | Mr Kwok | Best Brain | Beneficial owner | 7,500 | 100% | B. Disclosure of Interests of Substantial Shareholders Best Brain Investments Limited and Chong Gao are the company's substantial shareholders, holding 31.25% and 20.00% respectively Long Positions of Substantial Shareholders in Shares (as at 30 September 2019) | Name of Shareholder | Nature of Interest | Number of Shares Held/Interested | Long/Short Position | Percentage of Total Issued Share Capital of the Company | | :--- | :--- | :--- | :--- | :--- | | Best Brain | Beneficial owner | 250,000,000 | Long | 31.25% | | Chong Gao | Beneficial owner | 160,000,000 | Long | 20.00% | Competing Interests No directors, controlling shareholders, or their close associates held any business interests that compete with the Group's business - To the best knowledge of the directors, none of the directors, the controlling shareholders of the Company, or their respective close associates have any business or interest that competes or may compete with the business of the Group[41] Purchase, Sale or Redemption of Listed Securities Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the period - During the relevant period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[42] Compliance with Corporate Governance Code The company complied with the Corporate Governance Code, separating the roles of Chairman and CEO effective August 9, 2019 - The Company's corporate governance practices are based on the principles and code provisions set out in the Corporate Governance Code and Corporate Governance Report in Appendix 15 of the GEM Listing Rules[43] - To comply with Code Provision A.2.1 of the Corporate Governance Code, Mr Kwok Tung Keung resigned as CEO, and Mr Ko Chun Hay was appointed as CEO effective from 9 August 2019[43] Code of Conduct for Directors' Securities Transactions The Group has adopted a strict code for directors' securities transactions, with which all directors have complied - The Group has adopted a code of conduct for securities transactions by directors on terms no less stringent than the required standard of dealings set out in Rules 5.48 to 5.67 of the GEM Listing Rules[44] - Following specific enquiry of the directors, all directors have confirmed that they have complied with the required standard set out in the code of conduct during the relevant period[44] Dividend The Board does not recommend the payment of any interim dividend for the period, consistent with the prior year - The Board does not recommend the payment of any interim dividend for the relevant period (2018: Nil)[46] Details of Share Option Scheme A total of 36,100,000 share options remained outstanding as of the period end, with no options granted, exercised, or cancelled - The Company's shareholders approved and adopted the Share Option Scheme by way of a written resolution on 9 March 2016[47] - As at 30 September 2019, 36,100,000 share options were outstanding[47] Details of Outstanding Share Options (as at 30 September 2019) | Grantee | Date of Grant | Exercise Price (HK$) | Outstanding at 30 September 2019 | | :--- | :--- | :--- | :--- | | Mr Kwok Tung Keung | 29 November 2017 | 0.371 | 7,900,000 | | | 3 December 2018 | 0.307 | 7,900,000 | | Mr Ko Chun Hay | 29 November 2017 | 0.371 | 7,900,000 | | | 3 December 2018 | 0.307 | 7,900,000 | | Mr Wu Si Cheng | 3 December 2018 | 0.307 | 3,000,000 | | Other employees | 29 November 2017 | 0.371 | 500,000 | | | 3 December 2018 | 0.307 | 1,000,000 | | Total | | | 36,100,000 | Audit Committee Report The Audit Committee, comprising three independent non-executive directors, has reviewed the unaudited financial statements and internal controls - The Audit Committee was established on 9 March 2016 and consists of three independent non-executive directors, with Ms Wong Shuk Fong serving as the chairlady[48] - The primary duties of the Audit Committee are to review and supervise the Group's financial reporting process and internal control systems, nominate and monitor external auditors, and provide advice to the Board on corporate governance matters[48] - The Audit Committee has reviewed this report, the Group's unaudited condensed consolidated financial statements for the relevant period, and the effectiveness of the internal control systems[48] Board of Directors' Signature and List of Directors This report was signed by the Chairman, Mr Kwok Tung Keung, on November 11, 2019, and includes the current list of directors - This report was signed and issued by the Chairman of the Board, Mr Kwok Tung Keung, on 11 November 2019[49][50] - The Executive Directors are Mr Kwok Tung Keung and Mr Ko Chun Hay; the Non-executive Director is Mr Wu Si Cheng; and the Independent Non-executive Directors are Mr Shiu Ting Man, Mr So Chi Wai, and Ms Wong Shuk Fong[50]