F8企业(08347) - 2020 - 中期财报

Corporate Information Board of Directors The company's Board of Directors comprises executive and independent non-executive directors, with Mr. Fong Chun Man as Chairman, Ms. Lo Pui Yee as Vice Chairman, and Mr. Chan Chi Fai as Chief Executive Officer - Board members include Mr. Fong Chun Man (Chairman), Ms. Lo Pui Yee (Vice Chairman), Mr. Chan Chi Fai (Chief Executive Officer), and Mr. Lee Hok Yin as executive directors, along with Mr. Cui Zhi Ren, Mr. Kwong Yuk Lap, and Mr. Wang An Yuan as independent non-executive directors[12][13] Committees The company has established Audit, Remuneration, and Nomination Committees, each chaired by an independent non-executive director, to ensure robust and independent corporate governance structures - The Audit Committee is chaired by Mr. Cui Zhi Ren, the Remuneration Committee by Mr. Wang An Yuan, and the Nomination Committee by Mr. Kwong Yuk Lap[12][13] Key Administrative Information The company is registered in the Cayman Islands, with its Hong Kong headquarters in Kowloon Bay, and has appointed Boardroom Share Registrars (HK) Limited as its Hong Kong share registrar and Guotai Junan Capital Limited as compliance adviser - The company's registered office is in the Cayman Islands, with its Hong Kong headquarters and principal place of business at Unit 3304, 33/F, Tower 1, Enterprise Square Five, 38 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong[13][14] - The Hong Kong share registrar is Boardroom Share Registrars (HK) Limited, and the compliance adviser is Guotai Junan Capital Limited[15][16] Highlight Financial Performance Overview For the six months ended September 30, 2019, the Group's revenue significantly increased by 63.7% to HK$206.7 million, and profit attributable to owners grew by 69.5% to HK$7.7 million, primarily driven by increased diesel and marine diesel sales and fair value changes of contingent consideration Key Financial Indicators for the Six Months Ended September 30, 2019 | Metric | 2019 (HK$ Million) | 2018 (HK$ Million) | Change (HK$ Million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 206.7 | 126.2 | 80.5 | 63.7% | | Profit attributable to owners of the company | 7.7 | 4.6 | 3.2 | 69.5% | | Profit excluding one-off fair value changes | 4.1 | 4.6 | (0.5) | (9.2%) | - The increase in profit was primarily due to increased sales of diesel and marine diesel, and the recognition of a fair value change of contingent consideration of approximately HK$3.6 million[19][21] - The Board does not recommend the payment of any dividend for the six months ended September 30, 2019[20][22] Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Profit or Loss Performance The Group's revenue for the six months ended September 30, 2019, was HK$206.7 million, representing a 63.7% increase from the same period last year, with profit for the period at HK$7.9 million and basic and diluted earnings per share at HK$0.97 cents Summary of Profit or Loss Statement for the Six Months Ended September 30, 2019 | Metric | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 206,722 | 126,248 | | Cost of sales | (193,993) | (114,090) | | Gross profit | 12,729 | 12,158 | | Operating profit | 9,196 | 5,535 | | Profit before taxation | 8,843 | 5,533 | | Profit for the period | 7,931 | 4,567 | | Profit attributable to owners of the company | 7,744 | 4,567 | | Basic and diluted earnings per share (HK cents) | 0.97 | 0.57 | - Total other comprehensive income for the period was HK$8.340 million, of which total comprehensive income attributable to owners of the company was HK$7.981 million[26] Unaudited Condensed Consolidated Statement of Financial Position Assets and Liabilities Overview As of September 30, 2019, the Group's total assets less current liabilities amounted to HK$121.997 million, with net assets of HK$112.273 million, and a significant increase in net current assets to HK$111.149 million, primarily due to higher trade receivables, prepayments, and pledged bank deposits Summary of Financial Position as of September 30, 2019 and March 31, 2019 | Metric | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Non-current assets | 10,848 | 10,166 | | Current assets | 158,374 | 88,105 | | Current liabilities | (47,225) | (14,251) | | Net current assets | 111,149 | 82,907 | | Total assets less current liabilities | 121,997 | 93,073 | | Non-current liabilities | (9,724) | (4,522) | | Net assets | 112,273 | 88,551 | | Total equity attributable to owners of the company | 96,532 | 88,551 | | Non-controlling interests | 15,741 | – | - Current assets increased from HK$88.105 million as of March 31, 2019, to HK$158.374 million as of September 30, 2019, primarily due to increases in inventories, trade receivables, prepayments, and pledged bank deposits[28] - Non-current liabilities increased from HK$4.522 million as of March 31, 2019, to HK$9.724 million as of September 30, 2019, mainly due to the recognition of bonds payable[29] Unaudited Condensed Consolidated Statement of Changes in Equity Equity Movements For the six months ended September 30, 2019, the Group's total equity increased from HK$88.551 million at the beginning of the period to HK$112.273 million, mainly influenced by profit for the period, exchange differences, and non-controlling interests from the incorporation of a subsidiary Summary of Changes in Equity for the Six Months Ended September 30, 2019 | Item | Apr 1, 2019 (HK$ Thousand) | Profit for the Period (HK$ Thousand) | Exchange Differences (HK$ Thousand) | Incorporation of Subsidiary (HK$ Thousand) | Sep 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total equity attributable to owners of the company | 88,551 | 7,744 | 210 | – | 96,532 | | Non-controlling interests | – | 187 | 172 | 15,382 | 15,741 | | Total | 88,551 | 7,931 | 382 | 15,382 | 112,273 | - Profit for the period was HK$7.931 million, of which HK$7.744 million was attributable to owners of the company and HK$0.187 million to non-controlling interests[31] - Non-controlling interests increased by HK$15.382 million due to the incorporation of a subsidiary[31] Unaudited Condensed Consolidated Statement of Cash Flows Cash Flow Summary For the six months ended September 30, 2019, the Group's net cash used in operating activities was HK$31.447 million, net cash generated from investing activities was HK$8.308 million, and net cash generated from financing activities was HK$22.521 million, resulting in a net decrease of HK$0.618 million in cash and cash equivalents Summary of Cash Flows for the Six Months Ended September 30, 2019 | Activity Type | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Net cash used in operating activities | (31,447) | (2,191) | | Net cash generated from/(used in) investing activities | 8,308 | (10,014) | | Net cash generated from financing activities | 22,521 | 3,892 | | Net decrease in cash and cash equivalents | (618) | (8,313) | | Cash and cash equivalents at end of period | 5,626 | 4,866 | - Net cash used in operating activities significantly increased from HK$2.191 million in 2018 to HK$31.447 million in 2019[33] - Investing activities shifted from cash used to cash generated, primarily due to the disposal of a subsidiary[33] Notes to the Unaudited Condensed Consolidated Financial Statements 1 General Information The company, incorporated in the Cayman Islands, primarily engages in diesel sales and transportation in Hong Kong and steel product distribution in China, ultimately controlled by Mr. Fong Chun Man - The company is an investment holding company, and its subsidiaries are principally engaged in the sale and transportation of diesel fuel and related products in Hong Kong, and the distribution of steel products in the People's Republic of China[36][39] - The company's immediate and ultimate holding company is Grand Honour Limited, controlled by Mr. Fong Chun Man, a director of the company[35][39] 2 Basis of Preparation and Principal Accounting Policies These interim financial statements are prepared in accordance with the GEM Listing Rules and HKAS 34, with the first-time application of HKFRS 16 Leases leading to the recognition of right-of-use assets and lease liabilities 2(a) Basis of preparation The interim financial statements are prepared in accordance with Appendix 16 of the GEM Listing Rules and HKAS 34, consistent with the accounting policies adopted in the 2019 annual report, except for new and revised HKFRSs effective from April 1, 2019 - The unaudited condensed consolidated interim financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Listing Rules and Hong Kong Accounting Standard 34 'Interim Financial Reporting'[38][40] - The accounting policies adopted are consistent with those used in the Group's audited annual financial statements for the year ended March 31, 2019, except for the new and revised HKFRSs effective for the financial year beginning April 1, 2019[42][44] 2(b) Application of new and revised HKFRSs The Group first applied HKFRS 16 Leases during this interim period, with retrospective application and cumulative impact recognized on April 1, 2019, resulting in the recognition of approximately HK$1.469 million in lease liabilities and HK$1.469 million in right-of-use assets - The Group has first applied HKFRS 16 'Leases' during the current interim period, which supersedes HKAS 17 'Leases'[50][57] - The Group has applied HKFRS 16 retrospectively, with the cumulative effect of initial application recognized on April 1, 2019[89][92] Impact of HKFRS 16 Application (April 1, 2019) | Item | Amount (HK$ Thousand) | | :--- | :--- | | Lease liabilities | 1,469 | | Right-of-use assets | 1,469 | - The lessee's incremental borrowing rate is 3.67%[98][100] 3 Revenue For the six months ended September 30, 2019, the Group's total revenue was HK$206.722 million, primarily derived from the sale of diesel and related products, and new contributions from steel product sales Revenue Classification for the Six Months Ended September 30, 2019 | Product Category | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Diesel | 138,425 | 108,164 | | Marine diesel | 32,338 | 3,511 | | Lubricants | 374 | 844 | | Health food sales | – | 13,729 | | Steel product sales | 35,585 | – | | Total Revenue | 206,722 | 126,248 | - Sales of diesel and related products remain the largest contributor to the Group's revenue, while steel product sales became a new revenue source in 2019[112] 4 Segment Information The Group's business is segmented into diesel sales and transportation, health food sales, and steel product sales, with diesel sales and transportation contributing the majority of revenue and segment results for the six months ended September 30, 2019, and steel product sales emerging as a new revenue source Segment Revenue and Results for the Six Months Ended September 30, 2019 | Segment | 2019 Revenue (HK$ Thousand) | 2018 Revenue (HK$ Thousand) | 2019 Segment Result (HK$ Thousand) | 2018 Segment Result (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Diesel sales and transportation | 171,137 | 112,519 | 12,135 | 12,484 | | Health food sales | – | 13,729 | – | (326) | | Steel product sales | 35,585 | – | 513 | – | | Total | 206,722 | 126,248 | 12,648 | 12,158 | Geographical Revenue for the Six Months Ended September 30, 2019 | Region | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Hong Kong | 171,137 | 112,519 | | China | 35,585 | 13,729 | | Total | 206,722 | 126,248 | - Customer A and Customer B were major customers during the reporting period, contributing significant revenue[122] 5 Other Gains and Losses For the six months ended September 30, 2019, the Group recorded total other gains and losses of HK$0.857 million, primarily comprising fair value changes of financial assets at fair value through profit or loss and miscellaneous income Other Gains and Losses for the Six Months Ended September 30, 2019 | Item | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Gain on disposal of property, plant and equipment | 160 | – | | Exchange gain/(loss) | 104 | 12 | | Loss on disposal of a subsidiary | (27) | – | | Fair value change of financial assets at fair value through profit or loss | 292 | 1,263 | | Miscellaneous income | 328 | 121 | | Total | 857 | 1,396 | - Fair value changes of financial assets at fair value through profit or loss decreased from HK$1.263 million in 2018 to HK$0.292 million in 2019[126] 6 Finance Costs For the six months ended September 30, 2019, the Group's finance costs significantly increased to HK$0.353 million, mainly due to interest expenses on bank borrowings, bonds payable, and lease liabilities Finance Costs for the Six Months Ended September 30, 2019 | Item | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Interest expense on bank borrowings | 79 | – | | Interest expense on bank overdrafts | 1 | – | | Interest expense on bonds payable | 254 | – | | Interest expense on lease liabilities | 19 | – | | Total | 353 | 2 | - New interest expense on bonds payable of HK$0.254 million in 2019 was the primary reason for the increase in finance costs[128] 7 Profit Before Taxation For the six months ended September 30, 2019, the Group's profit before taxation was net of directors' remuneration of HK$1.192 million, staff costs of HK$2.631 million, cost of inventories of HK$191.813 million, and depreciation expenses of HK$1.712 million (including right-of-use assets depreciation) Deductions from Profit Before Taxation for the Six Months Ended September 30, 2019 | Item | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Directors' remuneration | 1,192 | 1,133 | | Other staff costs | 2,631 | 2,879 | | Auditor's remuneration | 350 | 300 | | Cost of inventories recognized as an expense | 191,813 | 111,058 | | Depreciation of property, plant and equipment | 1,100 | 1,330 | | Depreciation of right-of-use assets | 612 | – | | Operating lease rental expense for office premises | – | 942 | - Due to the application of HKFRS 16, depreciation of right-of-use assets of HK$0.612 million was recognized in 2019, while operating lease rental expenses decreased to zero[130] - Cost of inventories recognized as an expense significantly increased from HK$111.058 million in 2018 to HK$191.813 million in 2019[130] 8 Income Tax Expenses For the six months ended September 30, 2019, the Group's income tax expense was HK$0.912 million, with Hong Kong profits tax applying a two-tiered rate and Chinese subsidiaries taxed at 25% Income Tax Expenses for the Six Months Ended September 30, 2019 | Item | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Hong Kong profits tax | 930 | 1,017 | | Deferred tax (current credit) | (18) | (51) | | Total | 912 | 966 | - The two-tiered profits tax rate applies to the Group in Hong Kong, with the first HK$2 million of assessable profits taxed at 8.25% and the remainder at 16.5%[134][137] - Chinese subsidiaries are taxed at a rate of 25%, while no income tax is payable in the Cayman Islands and British Virgin Islands[136][137] 9 Dividends The Board does not recommend the payment of any dividend for the six months ended September 30, 2019 - For the six months ended September 30, 2019, the Board did not recommend the payment of any dividend, consistent with the same period in 2018[139][140] 10 Earnings Per Share For the six months ended September 30, 2019, basic and diluted earnings per share attributable to owners of the company were HK$0.97 cents, an increase from HK$0.57 cents in the prior year Earnings Per Share Data for the Six Months Ended September 30, 2019 | Metric | 2019 (HK$ Thousand/Thousand Shares) | 2018 (HK$ Thousand/Thousand Shares) | | :--- | :--- | :--- | | Profit for the period attributable to owners of the company | 7,744 | 4,567 | | Weighted average number of ordinary shares | 800,000 | 800,000 | | Basic and diluted earnings per share (HK cents) | 0.97 | 0.57 | - As there were no dilutive potential ordinary shares outstanding for the six months ended September 30, 2019, and 2018, diluted earnings per share were the same as basic earnings per share[143][145] 11 Movements in Property, Plant and Equipment During the reporting period, the Group disposed of property, plant and equipment amounting to approximately HK$0.2 million - For the six months ended September 30, 2019, the Group disposed of property, plant and equipment amounting to approximately HK$0.2 million[144][146] 12 Trade Receivables As of September 30, 2019, the Group's net trade receivables were HK$79.508 million, an increase from March 31, 2019, with provisions for impairment losses recognized 12(a) Ageing analysis As of September 30, 2019, total trade receivables amounted to HK$80.866 million, with HK$20.199 million due within 30 days, and an average credit period ranging from 3 to 120 days Ageing Analysis of Trade Receivables as of September 30, 2019 | Ageing | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Within 30 days | 20,199 | 18,911 | | 31 to 60 days | 22,053 | 14,581 | | 61 to 90 days | 17,612 | 13,951 | | 91 to 120 days | 3,716 | 6,501 | | Over 120 days | 17,286 | 18,691 | | Total | 80,866 | 72,635 | - The average credit period granted by the Group to its customers generally ranges from 3 to 120 days, and strict control is maintained over overdue receivables[151] 12(b) Impaired trade receivables The Group has recognized an accumulated impairment loss provision of HK$1.358 million for trade receivables, with an additional credit provision of approximately HK$0.109 million required during the reporting period Trade Receivables and Impairment Provisions | Item | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Trade receivables | 80,866 | 72,635 | | Less: Accumulated impairment loss provision for trade receivables | (1,358) | (1,249) | | Net | 79,508 | 71,386 | - The Directors believe that a credit provision of approximately HK$0.109 million for impairment of trade receivables is required during the reporting period[153] 12(c) Ageing analysis of trade receivables which are past due but not impaired Past due but not impaired trade receivables are from independent customers with good payment histories, and management believes these balances are fully recoverable - Management believes that no impairment provision is required for trade receivables that are past due but not impaired, as there has been no significant change in credit quality and the balances are still considered fully recoverable[155][157] 13 Financial Assets at Fair Value Through Profit or Loss As of September 30, 2019, the Group's financial assets at fair value through profit or loss primarily consisted of equity securities listed in Malaysia, valued at HK$1.891 million Financial Assets at Fair Value Through Profit or Loss | Item | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Equity securities listed in Malaysia | 1,891 | 1,495 | - These financial assets are measured at fair value, determined by reference to quoted bid prices in the market[161] 14 Trade and Bills Payables As of September 30, 2019, the Group's total trade and bills payables were HK$6.906 million, with an average credit period from suppliers of 3 to 30 days, and all amounts due within 30 days Trade and Bills Payables as of September 30, 2019 | Item | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Trade payables | 6,906 | 5,796 | | Bills payable | – | 1,141 | | Total | 6,906 | 6,937 | - The average credit period granted by suppliers ranges from 3 to 30 days, and all trade and bills payables are due within 30 days[165][166] 15 Bank Borrowings As of September 30, 2019, the Group's secured bank borrowings significantly increased to HK$15.856 million from March 31, 2019, collateralized by corporate guarantees and fixed deposits, bearing floating interest rates Bank Borrowings | Item | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Secured bank borrowings | 15,856 | 3,000 | - Bank borrowings are secured by corporate guarantees and fixed deposits of the Group, bearing floating interest rates ranging from 3.79% to 4.88% per annum[168][169] 16 Share Capital As of September 30, 2019, the company's authorized share capital was HK$20.000 million, with issued and fully paid share capital of HK$8.000 million, maintaining an unchanged capital structure Share Capital Structure | Item | Number of Shares | Amount (HK$ Thousand) | | :--- | :--- | :--- | | Authorized share capital (HK$0.01 per share) | 2,000,000,000 | 20,000 | | Issued and fully paid share capital (HK$0.01 per share) | 800,000,000 | 8,000 | - There have been no changes in the company's authorized and issued share capital since April 1, 2018[171] 17 Disposal of Subsidiary The company completed the disposal of 90% equity interest in China Forest Food Limited on April 9, 2019, for a consideration of HK$8.148 million, retaining a 10% stake as a passive investment - The company disposed of 90% equity interest in China Forest Food Limited for a consideration of HK$8.148 million, and the company is no longer a subsidiary of the Group[172][173] - The company retained a 10% equity interest in China Forest Food as a passive investment due to its overall positive outlook on the Chinese health food industry[173] 18 Fair Value Measurement of Financial Instruments The Group's financial assets are measured at fair value on a recurring basis and classified using a three-level hierarchy, with Malaysian-listed equity securities as Level 1 and unlisted securities in China as Level 3 Fair Value Hierarchy of Financial Instruments | Financial Asset | Fair Value Level | Valuation Techniques and Key Inputs | Significant Unobservable Inputs | | :--- | :--- | :--- | :--- | | Financial assets at fair value through profit or loss: Equity securities listed in Malaysia | Level 1 | Quoted bid prices in active markets | Not applicable | | Financial assets at fair value through other comprehensive income: Unlisted securities in China | Level 3 | Discounted cash flows | Discount rate determined using capital model cost of 21% | - Level 1 fair value measurements are derived from quoted prices in active markets, while Level 3 measurements use valuation techniques with unobservable market data[176] 19 Pledge of Assets As of September 30, 2019, the Group had pledged bank deposits of HK$14.0 million as collateral for bank financing Pledged Assets | Item | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Pledged bank deposits | 14,000 | 4,000 | - Pledged bank deposits increased from HK$4.0 million as of March 31, 2019, to HK$14.0 million as of September 30, 2019[182] 20 Capital Commitments For the six months ended September 30, 2019, the Group had no significant capital expenditures contracted but not provided for the acquisition of property, plant and equipment - The Group had no capital expenditures contracted but not provided for during the reporting period[183][184] 21 Material Related Party Transactions During the reporting period, the Group engaged in product sales transactions with related parties and had outstanding trade receivables balances, involving close family members of the company's executive directors 21(a) Transactions with related parties For the six months ended September 30, 2018, the Group conducted product sales with Yuk Shing Engineering Company Limited, Kit Ho Engineering Company Limited, and Kit Ho Geotechnical & Construction Company Limited Product Sales with Related Parties for the Six Months Ended September 30, 2018 | Related Party Name | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Yuk Shing Engineering Company Limited | – | 1,399 | | Kit Ho Engineering Company Limited | – | 7 | | Kit Ho Geotechnical & Construction Company Limited | – | 1,076 | 21(b) Balances with related parties As of March 31, 2019, the Group had trade receivables balances with Yuk Shing Engineering Company Limited and Kit Ho Geotechnical & Construction Company Limited Trade Receivables with Related Parties as of March 31, 2019 | Related Party Name | Sep 30, 2019 (HK$ Thousand) | Mar 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Yuk Shing Engineering Company Limited | – | 1,244 | | Kit Ho Geotechnical & Construction Company Limited | – | 427 | 21(c) Compensation of key management personnel The company's directors are identified as the Group's key management personnel, with their remuneration details provided in Note 7 - The company's directors are identified as the Group's key management personnel, and their remuneration during the reporting period is set out in Note 7[188][189] Management Discussion and Analysis Business Review The Group primarily engages in diesel sales and transportation in Hong Kong, disposed of 90% of its health food business equity during the reporting period, and established a steel product sales joint venture in China, driving significant revenue growth - The Group primarily engages in the sale and transportation of diesel and related products in Hong Kong, owning ten diesel tanker trucks and one marine diesel barge[190][195] - The company disposed of 90% equity interest in China Forest Food during the six months ended September 30, 2019, and its financial results are no longer consolidated into the Group's consolidated financial statements[191][195] - The Group established a joint venture in China with Xinyu Iron & Steel Group Co., Ltd. and Xinyu City Investment Holding Co., Ltd., primarily engaged in steel product processing, motor accessories, and finished product manufacturing and processing, with the Group holding a 55% interest[193][197] Sale and transportation of diesel oil and related products business For the six months ended September 30, 2019, revenue from diesel and related product sales and transportation was approximately HK$171.1 million, a 52.1% year-on-year increase, primarily due to increased demand from an existing customer project and three new clients for marine diesel Revenue from Sale and Transportation of Diesel Oil and Related Products Business | Metric | 2019 (HK$ Million) | 2018 (HK$ Million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 171.1 | 112.5 | 52.1% | - This business accounted for approximately 82.8% of the Group's total revenue[192][196] - The increase in revenue was primarily due to increased demand from an existing customer project that commenced in October 2018, and increased demand for marine diesel from three new customers[192][196] Sale of steel product business For the six months ended September 30, 2019, the steel product sales business recorded revenue of approximately HK$35.6 million, accounting for about 17.2% of the Group's total revenue Revenue from Sale of Steel Product Business | Metric | 2019 (HK$ Million) | | :--- | :--- | | Revenue | 35.6 | | Share of Total Revenue (%) | 17.2% | Future Prospects The Board remains optimistic about the Hong Kong diesel and marine diesel market outlook, supported by public infrastructure investment and logistics sector recovery, and will continue to enhance diesel business development and marketing strategies while actively seeking potential business opportunities - The sales trend in the Hong Kong diesel and marine diesel market remains optimistic, primarily due to stable high-level investments in public infrastructure (including railway networks), the development of marine engineering projects (including the Hong Kong International Airport Third Runway project), and the recovery of Hong Kong's logistics industry[200][203] - The Group will continue to allocate more resources to talent recruitment and strengthen its business development and marketing strategies for diesel, while actively seeking potential business opportunities to expand revenue streams and enhance shareholder value[201][203] Financial Review The Group's revenue grew 63.7% year-on-year to HK$206.7 million, primarily due to increased diesel and marine diesel sales and steel product contributions; gross margin declined due to bulk purchase discounts, but net profit increased due to a one-off fair value change Revenue The Group's revenue increased by 63.7% to HK$206.7 million for the six months ended September 30, 2019, from HK$126.2 million in the prior year, mainly driven by increased diesel and marine diesel sales and steel product contributions Revenue Composition for the Six Months Ended September 30, 2019 | Product Category | 2019 Revenue (HK$ Million) | Share of Total Revenue (%) | 2018 Revenue (HK$ Million) | Share of Total Revenue (%) | | :--- | :--- | :--- | :--- | :--- | | Diesel | 138.4 | 67.0% | 108.2 | 85.7% | | Marine diesel | 32.3 | 15.6% | 3.5 | 2.7% | | Lubricants | 0.4 | 0.2% | 0.8 | 0.6% | | Steel products | 35.6 | 17.2% | – | – | - The increase in diesel demand was primarily due to increased demand from an existing customer project that commenced in October 2018, and the increase in marine diesel demand was attributable to the demand from three new customers[207][210] Cost of sales For the six months ended September 30, 2019, the cost of sales for diesel and related product sales and transportation was approximately HK$159.0 million, a 59.0% year-on-year increase, consistent with the overall revenue growth Cost of Sales for Diesel and Related Products | Metric | 2019 (HK$ Million) | 2018 (HK$ Million) | Change (%) | | :--- | :--- | :--- | :--- | | Cost of sales | 159.0 | 100.0 | 59.0% | - Cost of sales primarily includes the cost of diesel, marine diesel, lubricants, direct labor costs, and depreciation, with procurement costs referenced to price indicators such as European Brent crude oil spot prices[209][212] Gross profit and gross profit margin The Group's gross profit slightly increased by HK$0.6 million to HK$12.7 million, but the gross profit margin decreased from 9.6% to 6.2%, primarily due to bulk purchase discounts offered to a major customer during the reporting period Gross Profit and Gross Profit Margin | Metric | 2019 (HK$ Million) | 2018 (HK$ Million) | Change (HK$ Million) | | :--- | :--- | :--- | :--- | | Gross profit | 12.7 | 12.2 | 0.6 | | Gross profit margin | 6.2% | 9.6% | (3.4%) | - The decrease in gross profit margin was primarily due to bulk purchase discounts granted to a major customer during the reporting period[213][218] Profit for the period The Group's net profit increased by HK$3.4 million to HK$7.9 million for the six months ended September 30, 2019, from HK$4.6 million in the prior year, with net profit margin rising from 3.6% to 3.8%, mainly influenced by a one-off fair value change of contingent consideration Net Profit and Net Profit Margin for the Period | Metric | 2019 (HK$ Million) | 2018 (HK$ Million) | Change (HK$ Million) | | :--- | :--- | :--- | :--- | | Net profit | 7.9 | 4.6 | 3.4 | | Net profit margin | 3.8% | 3.6% | 0.2% | - The increase in net profit and net profit margin was primarily due to a one-off fair value change of contingent consideration during the reporting period[214][219] Liquidity and Capital Resources As of September 30, 2019, the Group reported net current assets of HK$111.1 million, a current ratio of approximately 3.4 times, and a gearing ratio of approximately 14.1%, indicating a robust liquidity position Liquidity Indicators as of September 30, 2019 | Metric | Amount (HK$ Million) | | :--- | :--- | | Net current assets | 111.1 | | Current assets | 158.4 | | Current liabilities | 47.2 | | Current ratio | 3.4 times | | Gearing ratio | 14.1% | | Available bank facilities limit | 41.0 | | Utilized bank facilities | 15.9 | - The Group finances its operations through interest-bearing borrowings and bond placements[215][220] Capital Structure For the six months ended September 30, 2019, the Group's capital structure included equity attributable to owners of approximately HK$96.5 million, with share capital consisting solely of ordinary shares and remaining unchanged since the listing date - The Group's capital structure includes equity attributable to owners of the company of approximately HK$96.5 million[223][228] - The Group's share capital comprises only ordinary shares, and there have been no changes in the capital structure since its listing on April 12, 2017[223][228] Foreign Currency Exposure Risks The Group primarily faces foreign exchange risks from steel product transactions settled in RMB and financial assets denominated in Malaysian Ringgit, but did not enter into any derivative agreements or hedging during the reporting period - The Group primarily faces foreign exchange risks related to steel product distribution transactions settled in RMB and financial assets denominated in Malaysian Ringgit[224][229] - During the six months ended September 30, 2019, the Group did not enter into any derivative agreements and had no commitments to use any financial instruments to hedge foreign exchange risks[224][229] Treasury Policies The Group adopts a prudent financial management approach, committed to maintaining a sound liquidity position, and manages risks through continuous credit assessment and liquidity monitoring - The Group has adopted a prudent financial management approach for its treasury policies and maintained a sound liquidity position throughout the six months ended September 30, 2019[225][230] - The Group is committed to mitigating credit risk through continuous credit assessment and evaluation of its customers' financial standing, and closely monitors its liquidity position to meet funding requirements[225][230] Material Acquisitions and Disposal of Subsidiaries, Associates or Joint Ventures Except for disclosed matters, the Group had no other material investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures for the six months ended September 30, 2019 - For the six months ended September 30, 2019, the Group held no other significant investments, material acquisitions, or disposals of subsidiaries, associates, or joint ventures[226][231] Capital Commitments and Contingent Liabilities As of September 30, 2019, the Group had no other significant capital commitments or contingent liabilities, apart from those disclosed regarding the use of proceeds - As of September 30, 2019, the Group had no other significant capital commitments or contingent liabilities[227][232] Dividends The Board does not recommend the payment of any dividend for the six months ended September 30, 2019, and 2018 - The Board does not recommend the payment of any dividend for the six months ended September 30, 2019, and 2018[233][235] Pledge of Assets As of September 30, 2019, the Group had pledged short-term bank deposits of HK$14.0 million as collateral for bank financing Pledged Bank Deposits | Date | Amount (HK$ Million) | | :--- | :--- | | Sep 30, 2019 | 14.0 | Comparison of Implementation Plans for Business Strategies with Actual Implementation Progress The Group made progress in expanding its diesel tanker fleet, developing marine fuel supply, upgrading IT systems, and strengthening manpower, though some plans are ongoing or adjusted - Regarding the expansion of the diesel tanker fleet, two new diesel tanker trucks have been purchased and one existing diesel tanker truck replaced, with the remaining new vehicles expected to be delivered by the end of December 2020[238][239] - The marine fuel supply business commenced trial operations in April 2018 and full operations in July 2018, with ongoing marketing activities[241] - Minor upgrades to the IT system have been completed, and the new office administrative IT system is still under negotiation with potential suppliers[241] - In terms of manpower, two logistics assistants have been hired, a safety supervisor was recruited through job reallocation, and the marine fuel supply business operates under contract with a service company[243] Use of Proceeds The actual net proceeds from the share offer were HK$45.1 million, with HK$23.8 million utilized as of September 30, 2019, leaving HK$21.3 million unutilized Actual Use of Net Proceeds as of September 30, 2019 | Planned Use | Approximate Percentage of Total Net Proceeds (%) | Actual Use (HK$ Million) | Unutilized Total Net Proceeds (HK$ Million) | | :--- | :--- | :--- | :--- | | Purchase of diesel tanker trucks | 17.3% | 3.9 | 3.9 | | Purchase of marine diesel barge | 31.0% | 8.5 | 5.5 | | Further strengthening of manpower | 13.6% | 1.7 | 4.4 | | Enhancement of IT system | 7.9% | 0.1 | 3.5 | | Working capital for operating new diesel tanker trucks and marine fuel supply business | 20.2% | 5.1 | 4.0 | | Working capital | 10.0% | 4.5 | – | | Total | 100.0% | 23.8 | 21.3 | - The actual net proceeds were HK$45.1 million, lower than the HK$50.9 million estimated in the prospectus[244][245] - The Group implements its business strategies and utilizes net proceeds based on actual business and industry developments, as well as market conditions[249][253] Financial Assets As of September 30, 2019, the Group's total investment in a Malaysian-listed company was approximately HK$2.6 million, recording a net unrealized gain of approximately HK$0.1 million Financial Asset Investments as of September 30, 2019 | Item | Amount (HK$ Million) | | :--- | :--- | | Total investment in a Malaysian-listed company | 2.6 | | Net unrealized gain | 0.1 | Employees and Remuneration Policies As of September 30, 2019, the Group had 27 employees (including directors), with total staff costs of approximately HK$3.8 million; remuneration policy is based on performance, qualifications, experience, position, and Group performance Employee and Remuneration Data | Metric | Sep 30, 2019 | Sep 30, 2018 | | :--- | :--- | :--- | | Total number of employees | 27 | 53 | | Total staff costs (HK$ Million) | 3.8 | 4.0 | - Remuneration packages are maintained at market levels and reviewed regularly, with employee compensation and related benefits determined based on performance, qualifications, experience, position, and the Group's business performance[251][255] Environment Policies and Performance The Group complies with Hong Kong environmental laws and regulations, implementing various measures to minimize environmental impact, and has not faced any prosecutions or fines for violations as of the reporting date - The Group's principal businesses are regulated by environmental laws and regulations in Hong Kong, such as the Air Pollution Control Ordinance and Water Pollution Control Ordinance[257][261] - The Group has implemented various environmental protection measures to minimize the impact of its operations on the environment and natural resources[257][261] - As of the date of this report, the Group has not been subject to any prosecutions, fines, or penalties for non-compliance with any environmental laws or regulations[258][262] Events After the Reporting Period As of the reporting date, the Board is unaware of any significant events requiring disclosure that occurred between September 30, 2019, and the date of this report, other than those disclosed herein - To the best of the Board's knowledge, no significant events requiring disclosure have occurred between September 30, 2019, and the date of this report[259][263] Significant Investment, Material Acquisitions and Disposals of Subsidiaries Except as disclosed above, the Group had no significant investments, material acquisitions, or disposals of subsidiaries and associates for the six months ended September 30, 2019 - For the six months ended September 30, 2019, the Group had no significant investments, material acquisitions, or disposals of subsidiaries and associates[260][264] Other Information Purchase, Sale or Redemption of the Company's Listed Securities For the six months ended September 30, 2019, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - For the six months ended September 30, 2019, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities[266][268] Interests and short positions of Directors and chief executive in the shares, underlying shares and debentures of the Company and its associated corporations As of September 30, 2019, the company's directors and chief executive held interests in the company's shares, primarily through controlled corporations or spouse interests Shareholdings of Directors and Chief Executive as of September 30, 2019 | Director Name | Capacity/Nature of Interest | Number of Shares Held | Shareholding Percentage | | :--- | :--- | :--- | :--- | | Mr. Fong Chun Man | Interest in controlled corporation | 440,000,000 | 55% | | Ms. Lo Pui Yee | Spouse interest | 440,000,000 | 55% | | Mr. Lee Hok Yin | Beneficial owner | 49,456,000 | 6.18% | - Mr. Fong Chun Man holds a 55% equity interest through Grand Honour Limited, and Ms. Lo Pui Yee, as his spouse, is also deemed to have the same interest[270][274] Interests and short positions of the substantial shareholders and other persons in the shares, underlying shares and debentures of the Company and its associated corporations As of September 30, 2019, substantial shareholder Grand Honour Limited held a 55% equity interest in the company, while Ms. Cheung Yee Lok (spouse of Mr. Lee Hok Yin) was deemed to have a 6.182% interest Shareholdings of Substantial Shareholders and Other Persons as of September 30, 2019 | Shareholder Name/Name | Capacity/Nature of Interest | Number of Shares Held | Shareholding Percentage | | :--- | :--- | :--- | :--- | | Grand Honour Limited | Beneficial owner | 440,000,000 | 55% | | Ms. Cheung Yee Lok | Spouse interest | 49,456,000 | 6.182% | - Grand Honour Limited is 100% owned by Mr. Fong Chun Man, and Ms. Cheung Yee Lok is the spouse of Mr. Lee Hok Yin[277][278][280] Share Option Scheme The company conditionally adopted a share option scheme on March 23, 2017, but no options have been granted or remain outstanding from the adoption date to September 30, 2019 - The company conditionally adopted a share option scheme on March 23, 2017, which became unconditional after the listing date[282][286] - No share options have been granted or remain outstanding from the adoption date up to September 30, 2019[283][286] - As of September 30, 2019, the company had 80,000,000 shares available for issue under the share option scheme, representing 10% of the existing issued share capital[283][286] Competing Interests The directors confirm that, during the reporting period and up to the date of this report, no controlling shareholder or director, or their respective close associates, held interests in any business directly or indirectly competing or potentially competing with the Group's business - The directors confirm that no controlling shareholder or director, or their respective close associates, held interests in any business competing with the Group's business[284][287] Interests of the Compliance Adviser Guotai Junan Capital Limited, the compliance adviser, and its directors, employees, or close associates, hold no interests in the share capital of the company or any Group member, except for its role as listing sponsor and