F8企业(08347) - 2021 - 中期财报

GEM Market Characteristics and Report Declaration This section outlines the GEM market's positioning for small and medium-sized companies and the directors' responsibility for report accuracy GEM Market Positioning and Risk Disclosure The GEM market targets small and medium-sized companies, carrying higher investment risks and potential market volatility than the Main Board - GEM market is positioned to provide a listing platform for high-investment-risk small and medium-sized companies[1][5] - GEM securities may be subject to higher market volatility risks and do not guarantee high liquidity[2][5] - The directors of F8 Enterprise (Holdings) Group Limited assume full responsibility for the content of this report, confirming its accuracy, completeness, and lack of misleading information[4][6] Corporate Information This section details the company's board members, committees, registration, and contact information Board and Committee Members The Board of Directors comprises executive and independent non-executive directors, with established audit, remuneration, and nomination committees - The Board of Directors includes three executive directors and three independent non-executive directors[9] - The company has established an Audit Committee, a Remuneration Committee, and a Nomination Committee, with specified chairpersons for each[9] - Mr. Fong Chun Man serves concurrently as Chairman of the Board, authorized representative, and compliance officer[9][10] Company Registration and Contact Information The company is registered in the Cayman Islands with its Hong Kong headquarters in Kowloon Bay, detailing key contact information - The company's registered office is in the Cayman Islands, with its Hong Kong headquarters and principal place of business located in Kowloon Bay, Hong Kong[10][11][12] - The company has appointed BDO Limited as its auditor, Cheung & Dai Solicitors as its legal advisor, and The Hongkong and Shanghai Banking Corporation Limited as its principal banker[13] Highlights This section provides a concise overview of the company's key financial and operational performance Financial Highlights Revenue increased by 11.9% to HK$231.4 million, while net profit decreased, but adjusted net profit rose by 56.3% Financial Highlights for the Six Months Ended September 30, 2020 | Indicator | 2020 (HK$ million) | 2019 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 231.4 | 206.7 | +24.7 | +11.9% | | Net Profit | 6.8 | 7.9 | -1.2 | -15.2% | | Adjusted Net Profit (excluding one-off fair value change) | 6.8 | 4.3 | +2.4 | +56.3% | - The decline in net profit was primarily due to losses from steel product sales and the fair value change of contingent consideration in 2019[17][19] - The Board does not recommend any dividend payment for the six months ended September 30, 2020[18][20] Financial Statements This section presents the unaudited condensed consolidated financial statements, including profit or loss, financial position, equity changes, and cash flows Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended September 30, 2020, the group reported revenue of HK$231.4 million and profit for the period of HK$6.8 million Key Profit or Loss and Other Comprehensive Income Data (Six Months Ended September 30) | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 231,376 | 206,722 | +24,654 | +11.9% | | Cost of sales | (212,434) | (193,993) | +18,441 | +9.5% | | Gross Profit | 18,942 | 12,729 | +6,213 | +48.8% | | Operating Profit | 9,008 | 9,196 | -188 | -2.0% | | Profit Before Tax | 8,287 | 8,843 | -556 | -6.3% | | Profit for the Period | 6,774 | 7,931 | -1,157 | -14.6% | | Profit for the Period Attributable to Owners of the Company | 7,289 | 7,744 | -455 | -5.9% | | Basic and Diluted Earnings Per Share (HK cents) | 0.84 | 0.97 | -0.13 | -13.4% | - The 2019 profit for the period included a fair value change of contingent consideration of HK$3,598 thousand, which was not present in 2020[23] - Profit for the period attributable to non-controlling interests changed from a profit of HK$187 thousand in 2019 to a loss of HK$515 thousand in 2020[24] Unaudited Condensed Consolidated Statement of Financial Position As of September 30, 2020, total assets less current liabilities were HK$139.3 million, with net assets of HK$129.8 million Key Financial Position Data (As of September 30) | Indicator | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Non-current Assets | 56,462 | 34,103 | +22,359 | +65.6% | | Current Assets | 147,992 | 118,704 | +29,288 | +24.7% | | Current Liabilities | 65,148 | 36,775 | +28,373 | +77.2% | | Net Current Assets | 82,844 | 81,929 | +915 | +1.1% | | Total Assets Less Current Liabilities | 139,306 | 116,032 | +23,274 | +20.1% | | Net Assets | 129,808 | 106,534 | +23,274 | +21.8% | | Total Equity Attributable to Owners of the Company | 115,587 | 91,772 | +23,815 | +26.0% | - Non-current assets, specifically property, plant and equipment, increased from HK$20,494 thousand to HK$25,822 thousand, and intangible assets from zero to HK$16,246 thousand[26] - Current liabilities, particularly trade payables, significantly increased from HK$7,729 thousand to HK$25,867 thousand, and bank borrowings from HK$16,090 thousand to HK$22,817 thousand[26] Unaudited Condensed Consolidated Statement of Changes in Equity Total equity attributable to owners increased from HK$91.8 million to HK$115.6 million, driven by profit and new share issuance Key Equity Changes Data (Six Months Ended September 30) | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Total Equity Attributable to Owners of the Company at Beginning of Period | 91,772 | 88,551 | | Profit for the Period (Attributable to Owners of the Company) | 7,289 | 7,744 | | Issue of Shares | 16,380 | - | | Total Equity Attributable to Owners of the Company at End of Period | 115,587 | 96,532 | | Non-controlling Interests at End of Period | 14,221 | 15,741 | | Total Equity at End of Period | 129,808 | 112,273 | - On April 21, 2020, the company allotted and issued 78,000,000 new shares at HK$0.21 per share to the vendor under a general mandate, increasing share capital by HK$780 thousand and share premium by HK$15,600 thousand[30][32] - Non-controlling interests decreased from HK$14,762 thousand on April 1, 2020, to HK$14,221 thousand on September 30, 2020[30] Unaudited Condensed Consolidated Statement of Cash Flows Net cash generated from operating activities was HK$2.9 million, with a closing cash and bank balance of HK$11.5 million Key Cash Flow Data (Six Months Ended September 30) | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Net Cash Generated From/(Used In) Operating Activities | 2,936 | (31,447) | | Net Cash (Used In)/Generated From Investing Activities | (5,550) | 8,308 | | Net Cash Generated From Financing Activities | 7,785 | 22,521 | | Net Increase/(Decrease) in Cash and Cash Equivalents | 5,171 | (618) | | Cash and Cash Equivalents at End of Period | 11,537 | 5,626 | - Operating cash flow significantly improved from a net outflow of HK$31.4 million in 2019 to a net inflow of HK$2.9 million in 2020[34] - Investing cash flow shifted from a net inflow of HK$8.3 million in 2019 to a net outflow of HK$5.6 million in 2020[34] Notes to the Unaudited Condensed Consolidated Financial Statements This section provides detailed notes explaining the basis of preparation, significant accounting policies, and specific line items in the financial statements 1. General Information F8 Enterprise (Holdings) Group Limited, incorporated in the Cayman Islands, primarily sells and transports diesel and related products in Hong Kong and China, and manufactures and sells steel products in China - The company was incorporated in the Cayman Islands on March 30, 2016, with Grand Tycoon Limited, controlled by Mr. Fong Chun Man, as the ultimate holding company[36][40] - Principal activities include sales and transportation of diesel and related products in Hong Kong and China, and manufacturing and sales of steel products in China[37][40] 2. Basis of Preparation and Principal Accounting Policies Interim financial statements are prepared under GEM Listing Rules and HKAS 34, consistent with annual policies, with no material impact from new HKFRSs - Interim financial statements are prepared in accordance with Appendix 16 of the GEM Listing Rules and Hong Kong Accounting Standard 34[39][41] - Accounting policies are consistent with the audited annual financial statements for the year ended March 31, 2020, with the adoption of new and revised HKFRSs effective April 1, 2020[43][48] - The application of new and revised HKFRSs had no material impact on the group's financial performance and position for the current and prior periods[49][50] 3. Revenue Notes Total revenue for the six months ended September 30, 2020, was HK$231.4 million, with diesel and related products contributing HK$202.0 million Revenue from Contracts with Customers by Type of Goods or Services (Six Months Ended September 30) | Type of Goods or Services | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Diesel | 153,070 | 138,425 | +14,645 | +10.6% | | Marine Diesel | 40,352 | 32,338 | +8,014 | +24.8% | | Lubricants | 8,592 | 374 | +8,218 | +2197.3% | | Total Diesel and Related Product Sales | 202,014 | 171,137 | +30,877 | +18.0% | | Steel Product Sales | 29,362 | 35,585 | -6,223 | -17.5% | | Total Revenue | 231,376 | 206,722 | +24,654 | +11.9% | - Lubricant sales significantly increased from HK$374 thousand in 2019 to HK$8,592 thousand in 2020[54] - Steel product sales decreased by 17.5% from HK$35,585 thousand to HK$29,362 thousand[54] 4. Segment Information Notes The group operates in diesel and steel product segments, with the diesel segment generating HK$202.0 million in revenue and HK$9.8 million in segment results Segment Revenue and Results (Six Months Ended September 30) | Segment | 2020 Revenue (HK$ thousand) | 2019 Revenue (HK$ thousand) | 2020 Segment Results (HK$ thousand) | 2019 Segment Results (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Diesel Sales and Transportation | 202,014 | 171,137 | 9,842 | 6,190 | | Steel Product Sales | 29,362 | 35,585 | (1,145) | (415) | | Unallocated | - | - | (1,762) | 2,564 | | Total | 231,376 | 206,722 | 6,935 | 8,339 | Revenue by Geographical Location of Customers (Six Months Ended September 30) | Region | 2020 Revenue (HK$ thousand) | 2019 Revenue (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong | 193,810 | 171,137 | | China | 37,566 | 35,585 | | Total | 231,376 | 206,722 | - Customers A and B contributed a significant portion of the group's total revenue in 2020, with Customer B emerging as a new major customer[65] 5. Other Gains and Losses Total other gains and losses increased to HK$2.1 million, driven by realized gains from financial assets at fair value through profit or loss, diesel vehicle rental income, and government grants Other Gains and Losses (Six Months Ended September 30) | Item | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Realized gains on financial assets at fair value through profit or loss | 390 | - | | Diesel vehicle rental income | 850 | - | | Government grants | 705 | - | | Miscellaneous income | 128 | 328 | | Gain on disposal of property, plant and equipment | - | 160 | | Unrealized gains on financial assets at fair value through profit or loss | - | 292 | | Unrealized exchange gains on financial assets at fair value through profit or loss | - | 104 | | Loss on disposal of a subsidiary | - | (27) | | Total | 2,073 | 857 | - New government grants of HK$705 thousand were recognized in 2020, primarily from the Anti-epidemic Fund[69][70] - Diesel vehicle rental income of HK$850 thousand was recorded in 2020, with no comparable item in 2019[69] 6. Finance Costs Total finance costs increased to HK$721 thousand, mainly due to higher interest expenses on bank borrowings and bonds payable Finance Costs (Six Months Ended September 30) | Item | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Interest expense on bank borrowings | 245 | 79 | | Interest expense on bank overdrafts | 2 | 1 | | Interest expense on bonds payable | 440 | 254 | | Interest expense on lease liabilities | 20 | 19 | | Interest expense on finance lease payables | 14 | - | | Total | 721 | 353 | - Interest expense on bank borrowings increased from HK$79 thousand in 2019 to HK$245 thousand in 2020[73] - Interest expense on bonds payable increased from HK$254 thousand in 2019 to HK$440 thousand in 2020[73] 7. Notes to Profit Before Taxation Profit before taxation for the six months ended September 30, 2020, was stated after deducting directors' remuneration, staff costs, auditor's remuneration, inventory costs, and depreciation Deductions from Profit Before Taxation (Six Months Ended September 30) | Item | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Directors' remuneration | 1,227 | 1,192 | | Other staff costs (salaries and benefits) | 4,419 | 2,485 | | Other staff costs (retirement benefits) | 250 | 146 | | Auditor's remuneration | 350 | 350 | | Cost of inventories recognized as expense | 209,053 | 191,813 | | Depreciation of property, plant and equipment | 1,304 | 1,100 | | Depreciation of right-of-use assets | - | 612 | | Office operating lease rental expense | 628 | - | - Other staff costs (salaries and other benefits) increased from HK$2,485 thousand in 2019 to HK$4,419 thousand in 2020[76] - New office operating lease rental expense of HK$628 thousand was incurred in 2020[76] 8. Income Tax Expenses Income tax expense increased to HK$1.5 million, with Hong Kong profits tax calculated under a two-tiered system and Chinese subsidiaries taxed at 25% Income Tax Expenses (Six Months Ended September 30) | Item | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong Profits Tax | 1,512 | 930 | | China Corporate Income Tax | 1 | - | | Deferred Tax (Current Credit) | - | (18) | | Total | 1,513 | 912 | - Hong Kong profits tax uses a two-tiered system, with the first HK$2 million of assessable profits taxed at 8.25% and the remainder at 16.5%[79][80] - The corporate income tax rate for Chinese subsidiaries remained at 25% for both reporting periods[81][82] 9. Dividends Notes The Board does not recommend any dividend payment for the six months ended September 30, 2020, consistent with the prior year - The Board does not recommend any dividend payment for the six months ended September 30, 2020[83][84] 10. Earnings Per Share Basic and diluted earnings per share attributable to owners decreased to HK$0.84 cents, influenced by lower profit and an increased weighted average number of shares Earnings Per Share Data (Six Months Ended September 30) | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Profit for the Period Attributable to Owners of the Company (HK$ thousand) | 7,289 | 7,744 | | Weighted Average Number of Ordinary Shares (thousand shares) | 869,475 | 800,000 | | Basic and Diluted Earnings Per Share (HK cents) | 0.84 | 0.97 | - The decrease in basic earnings per share is primarily due to lower profit attributable to owners and an increased weighted average number of shares[86][87] - Diluted earnings per share is the same as basic earnings per share as there were no dilutive potential ordinary shares during the reporting period[87][89] 11. Movements in Property, Plant and Equipment The group acquired approximately HK$7.7 million in property, plant and equipment during the period, with no disposals - For the six months ended September 30, 2020, the group acquired approximately HK$7.7 million in property, plant and equipment[88][90] - There were no disposals of property, plant and equipment in the current reporting period, compared to HK$0.2 million in the prior period[88][90] 12. Trade Receivables Net trade receivables increased to HK$88.7 million as of September 30, 2020, with an average credit period of 3 to 150 days Trade Receivables (As of September 30) | Indicator | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Gross Trade Receivables | 90,433 | 78,367 | | Less: Provision for Impairment Losses | (1,771) | (1,771) | | Net Trade Receivables | 88,662 | 76,596 | Ageing Analysis of Trade Receivables (As of September 30) | Ageing | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Within 30 days | 28,927 | 20,298 | | 31 to 60 days | 18,356 | 10,825 | | 61 to 90 days | 16,511 | 13,023 | | 91 to 120 days | 11,331 | 25,009 | | 121 to 150 days | 15,308 | 9,190 | | Over 150 days | - | 22 | | Total | 90,433 | 78,367 | - As of September 30, 2020, a provision for expected credit losses on trade receivables of approximately HK$1,249 thousand was recognized[97][100] 13. Financial Assets at Fair Value Through Profit or Loss Total financial assets at fair value through profit or loss were HK$4.7 million, comprising non-current assets, primarily life insurance policies for key management personnel Financial Assets at Fair Value Through Profit or Loss (As of September 30) | Item | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Malaysian listed equity investments | - | 750 | | Life insurance policies for key management personnel | 4,678 | 4,678 | | Total | 4,678 | 5,428 | | Of which: Current assets | - | 750 | | Of which: Non-current assets | 4,678 | 4,678 | - For the six months ended September 30, 2020, the group disposed of all its Malaysian listed equity investments[105] - The fair value of life insurance policies for key management personnel is determined by the surrender value reported by the insurance company, with a total sum insured of approximately HK$20.28 million[105] 14. Trade Payables Total trade payables significantly increased to HK$25.9 million as of September 30, 2020, with an average credit period of 3 to 90 days Trade Payables (As of September 30) | Indicator | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Trade Payables | 25,867 | 7,729 | Ageing Analysis of Trade Payables (As of September 30) | Ageing | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Within 30 days | 15,028 | 7,727 | | 31 to 60 days | 6,959 | - | | 61 to 90 days | 2,726 | 2 | | 91 to 120 days | 1,154 | - | | Total | 25,867 | 7,729 | - The significant increase in trade payables is concentrated in the 30-day and 31-60-day ageing categories[108] 15. Bank Borrowings Total bank borrowings increased to HK$22.8 million as of September 30, 2020, all secured and repayable within one year Bank Borrowings (As of September 30) | Indicator | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Secured Bank Borrowings | 22,817 | 16,090 | | Total | 22,817 | 16,090 | - Bank borrowings are secured by corporate guarantees, time deposits, and life insurance policies[111] - Bank borrowing interest rates range from 3.57% to 4.88% and 2.76% to 3.97% per annum[112] 16. Share Capital As of September 30, 2020, the company's authorized share capital was HK$20.0 million, with issued and fully paid share capital of HK$8.8 million, following a new share issuance Share Capital Structure (As of September 30) | Indicator | Number of Shares | Amount (HK$ thousand) | | :--- | :--- | :--- | | Authorized Ordinary Shares (HK$0.01 per share) | 2,000,000,000 | 20,000 | | Issued and Fully Paid Ordinary Shares (April 1, 2020) | 800,000,000 | 8,000 | | Issue of Shares | 78,000,000 | 780 | | Issued and Fully Paid Ordinary Shares (September 30, 2020) | 878,000,000 | 8,780 | - On April 21, 2020, the company allotted and issued 78,000,000 new shares at HK$0.21 per share to the vendor under a general mandate[115][117] 17. Acquisition of Subsidiaries On April 21, 2020, the group acquired 51% equity interest in Mega Shell (Global) Lubricant Technology Co., Limited for approximately HK$16.4 million, paid by issuing new shares - The acquisition of 51% equity interest in Mega Shell (Global) Lubricant Technology Co., Limited was completed on April 21, 2020[116][118] - The total consideration for the acquisition was approximately HK$16.4 million, settled by issuing 78,000,000 new shares, with no impact on cash flow[116][118][122] - Mega Shell Group contributed approximately HK$8.2 million in revenue and HK$2.3 million in profit, recognized in the profit for the period ended September 30, 2020[124] 18. Fair Value Measurement of Financial Instruments The group uses a three-level fair value hierarchy for financial instruments, with life insurance policies measured at Level 2 and unlisted equity investments at Level 3 - The group uses a Level 1, Level 2, and Level 3 fair value hierarchy to determine the fair value of financial instruments[126][127] - Life insurance policies for key management personnel are measured at Level 2 fair value, determined by the surrender value reported by the insurance company[129] - Unlisted equity investments in Hong Kong are measured at Level 3 fair value, using a market approach and considering a 16% discount for lack of marketability[129] 19. Pledge of Assets Notes As of September 30, 2020, the group pledged assets totaling HK$16.7 million, including life insurance policies and pledged bank deposits, as collateral for bank borrowings Pledged Assets (As of September 30) | Item | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Financial assets at fair value through profit or loss (life insurance policies) | 4,678 | 4,678 | | Pledged bank deposits | 12,025 | 12,025 | | Total | 16,703 | 16,703 | - Pledged assets are used to secure the group's bank borrowings[131] 20. Capital Commitments Notes As of September 30, 2020, capital commitments included contracted but unprovided capital expenditure for construction in progress, capital injection to a subsidiary, and acquisition of right-of-use assets Capital Commitments (As of September 30) | Item | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Capital expenditure contracted but not provided for in respect of construction in progress | 9,469 | 15,883 | | Capital injection payable to a subsidiary | 12,014 | 12,014 | | Acquisition of right-of-use assets | 28,570 | 28,570 | - Capital expenditure for construction in progress decreased from HK$15.9 million as of March 31, 2020, to HK$9.5 million as of September 30, 2020[134] 21. Material Related Party Transactions The group engaged in related party transactions including product sales and purchases, and an executive director provided personal guarantees for bank borrowings Related Party Transactions (Six Months Ended September 30) | Related Party Name | Nature of Transaction | 2020 (HK$ thousand) | 2019 (HK$ thousand) | | :--- | :--- | :--- | :--- | | Keen Gain Limited | Product sales | 143 | - | | Keen Gain Limited | Rental expenses | 639 | 802 | | Fast Shine Steel Limited | Product sales | 776 | 670 | | Jet Ho Geotechnical Engineering Limited | Product sales | 975 | 1,680 | | MCC South (Xinyu) Cold Rolling New Material Technology Co., Ltd. | Product purchases | 26,946 | - | Balances with Related Parties (As of September 30) | Related Party Name | Nature of Balance | 2020 (HK$ thousand) | March 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | :--- | | Keen Gain Limited | Trade receivables | 57 | - | | Fast Shine Steel Limited | Trade receivables | 776 | 443 | | Jet Ho Geotechnical Engineering Limited | Trade receivables | 784 | 768 | | MCC South (Xinyu) Cold Rolling New Material Technology Co., Ltd. | Prepayments | 5,754 | 58 | - The group's bank borrowings are secured by personal guarantees from Executive Director Mr. Fong Chun Man, life insurance policies, and properties owned by him[142][144] Management Discussion and Analysis This section provides an overview of the group's business, industry, financial performance, liquidity, and future outlook Business Review The group's diesel and related product sales grew by 18.0% to HK$202.0 million, while steel product sales declined by 17.5% - The group's principal businesses are diesel and related product sales and transportation in Hong Kong, and steel product manufacturing and sales in China[147][150] Business Segment Revenue Changes (Six Months Ended September 30) | Business Segment | 2020 Revenue (HK$ million) | 2019 Revenue (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Diesel and Related Product Sales and Transportation | 202.0 | 171.1 | +18.0% | | Steel Product Sales | 29.4 | 35.6 | -17.5% | - Growth in diesel and related product sales was primarily due to the acquisition of Mega Shell (Global) Lubricant Technology Co., Limited's lubricant business and new Hong Kong customer demand for marine diesel[149][151] Industry Review International oil prices fluctuated significantly in 2020, and the COVID-19 pandemic introduced short-term uncertainties requiring long-term responses despite government fiscal plans - International oil prices fluctuated significantly and declined in 2020, with the COVID-19 pandemic introducing short-term uncertainties[156][160] - Governments have implemented emergency fiscal plans to support labor and businesses, but the pandemic crisis requires a long-term response[156][160] Future Prospects The group plans to manage COVID-19 risks, strengthen its diesel business, and actively seek new opportunities to expand revenue and enhance shareholder value - Directors will continue to closely monitor and manage economic risks arising from the COVID-19 pandemic[157][161] - The group will prudently invest more resources in talent recruitment, diesel business development, and marketing strategies[158][161] - The group will actively seek potential business opportunities to expand revenue sources and increase shareholder value[158][161] Financial Review Revenue increased by 11.9% to HK$231.4 million, gross profit rose by 48.8% to HK$18.9 million, and adjusted net profit grew by 56.3% Revenue Composition and Changes (Six Months Ended September 30) | Revenue Source | 2020 (HK$ million) | Share (%) | 2019 (HK$ million) | Share (%) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Diesel Sales | 153.1 | 66.2% | 138.4 | 74.2% | +10.6% | | Marine Diesel Sales | 40.4 | 17.4% | 32.3 | 9.4% | +24.8% | | Lubricant Sales | 8.6 | 3.7% | 0.4 | 3.7% | +2150.0% | | Steel Product Sales | 29.4 | 12.7% | 35.6 | - | -17.4% | | Total Revenue | 231.4 | 100% | 206.7 | 100% | +11.9% | Gross Profit and Net Profit Changes (Six Months Ended September 30) | Indicator | 2020 (HK$ million) | 2019 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cost of Sales | 212.4 | 194.0 | +18.4 | +9.5% | | Gross Profit | 18.9 | 12.7 | +6.2 | +48.8% | | Gross Profit Margin | 8.2% | 6.2% | +2.0pp | - | | Net Profit | 6.8 | 7.9 | -1.2 | -15.2% | | Net Profit Margin | 2.9% | 3.8% | -0.9pp | - | | Adjusted Net Profit (excluding one-off fair value change) | 6.8 | 4.3 | +2.4 | +56.3% | - The decline in net profit was primarily due to losses from steel product sales and the fair value change of contingent consideration recognized in 2019[171][175] Liquidity and Capital Resources As of September 30, 2020, the group reported net current assets of HK$82.8 million, a current ratio of 2.3 times, and a gearing ratio of 25.8% Key Liquidity and Capital Structure Data (As of September 30) | Indicator | 2020 (HK$ million) | | :--- | :--- | | Current Assets | 148.0 | | Current Liabilities | 65.1 | | Net Current Assets | 82.8 | | Current Ratio | 2.3 | | Available Bank Financing Limit | 65.0 | | Utilized Bank Financing | 22.8 | | Gearing Ratio | 25.8% | | Equity Attributable to Owners of the Company | 115.6 | - The group's bank borrowings are secured by corporate guarantees, time deposits, and life insurance policies[177][182] - Operating primarily in Hong Kong, the group faces foreign exchange risks from Renminbi and Malaysian Ringgit denominated transactions but does not use derivative instruments for hedging[180][184] Material Acquisitions and Disposals of Subsidiaries, Associates or Joint Ventures The group acquired 51% of Mega Shell (Global) Lubricant Technology Co., Limited for HK$16.4 million, with no other significant investment activities during the period - On April 21, 2020, the acquisition of 51% equity interest in Mega Shell (Global) Lubricant Technology Co., Limited was completed for a consideration of HK$16.4 million, paid by issuing 78,000,000 new shares[187][193] - This acquisition expanded the company's issued share capital to 878,000,000 shares[187][193] - Other than the aforementioned disclosure, there were no other material investments, acquisitions, or disposals during the reporting period[188][193] Capital Commitments and Contingent Liabilities As of September 30, 2020, the group had no material capital commitments or contingent liabilities beyond those disclosed in the financial statements notes - As of September 30, 2020, the group had no other material capital commitments or contingent liabilities, with disclosed commitments detailed in the notes to the financial statements[189][194] Comparison of Implementation Plans for Business Strategies with Actual Implementation Progress The group made progress in expanding its diesel tanker fleet, developing marine fuel oil supply, upgrading IT systems, and strengthening its workforce Business Strategy Implementation Plans vs. Actual Progress (As of September 30, 2020) | Business Strategy | Plan (April 1, 2017 to September 30, 2020) | Actual Progress (As of September 30, 2020) | | :--- | :--- | :--- | | Expand and improve diesel tanker fleet | Purchase three new vehicles, replace three existing vehicles | Two new vehicles purchased, two existing vehicles replaced; remaining new vehicle expected to be delivered by end of March 2022 | | Develop and expand marine fuel oil supply business | Commence trial run and full operation, conduct market promotion | Trial run commenced in April 2018, full operation in July 2018; market promotion conducted and orders received | | Enhance information technology and systems | Purchase and update new office administration and IT systems | Minor upgrades completed; new system still under negotiation with potential suppliers | | Strengthen workforce | Recruit drivers, logistics assistants, safety supervisors, seamen, etc. | One logistics assistant hired; safety supervisors hired through job re-allocation; marine fuel oil supply business operated by outsourced service company | - The marine fuel oil bunkering vessel was delivered in November 2017 and commenced full operation in July 2018[202][216] - Regarding staffing, one logistics assistant has been hired, with other personnel expected to be recruited around March 2022[204] Use of Proceeds Net proceeds from the share offer were HK$45.1 million, with HK$29.5 million utilized and the remaining HK$15.6 million allocated for future use by March 31, 2022 Actual Use of Net Proceeds (As of September 30, 2020) | Planned Use | Planned Use Share (%) | Actual Use (HK$ million) | Unutilized Proceeds (HK$ million) | Expected Timetable for Remaining Funds | | :--- | :--- | :--- | :--- | :--- | | Purchase of diesel tanker vehicles | 17.3% | 5.0 | 2.8 | Before March 31, 2022 | | Purchase of marine diesel bunkering vessel | 31.0% | 8.5 | 5.5 | Before March 31, 2022 | | Further strengthening of workforce | 13.6% | 2.5 | 3.6 | Before March 31, 2022 | | Enhancement of information technology and systems | 7.9% | 0.1 | 3.5 | Before March 31, 2022 | | Working capital for operating new diesel tanker vehicles and marine fuel oil supply business | 20.2% | 8.9 | 0.2 | Before March 31, 2022 | | Working capital | 10.0% | 4.5 | - | - | | Total | 100.0% | 29.5 | 15.6 | - | - Actual net proceeds were HK$45.1 million, lower than the estimated HK$50.9 million in the prospectus[205][206] - The expected timetable for utilizing the remaining available proceeds will vary based on future market developments[213][216] Employees and Remuneration Policies The group's employee count significantly increased to 63, with total staff costs of HK$5.9 million, and remuneration policies are performance-based and regularly reviewed Employee Count and Staff Costs (Six Months Ended September 30) | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Total Number of Employees (including directors) | 63 | 27 | | Total Staff Costs (HK$ million) | 5.9 | 3.8 | - The number of employees significantly increased, leading to a corresponding rise in total staff costs[217][221] - Remuneration policies are based on performance, qualifications, experience, position, and the group's business performance, and are regularly reviewed[217][221] Environmental Policies and Performance The group operates under Hong Kong environmental regulations, implementing measures to minimize environmental impact and ensuring compliance without any reported violations - The group's operations are regulated by Hong Kong environmental laws, including the Air Pollution Control Ordinance and Water Pollution Control Ordinance[218][222] - The group has implemented various environmental protection measures and continuously monitors its operations to ensure compliance with all applicable laws and regulations[218][222][223] - As of the reporting date, the group has not been subject to any prosecutions, fines, or penalties for violating environmental laws and regulations[219][224] Events After the Reporting Period As of the report date, the Board found no significant events requiring disclosure since September 30, 2020 - As of the report date, the Board found no significant events requiring disclosure since September 30, 2020[220][225] Continuing Connected Transactions The group engaged in continuing connected transactions for steel material procurement with New Steel (Shanghai) Trading Co., Ltd. and MCC South (Xinyu) Cold Rolling New Material Technology Co., Ltd., totaling approximately HK$27 million - The group's procurement of steel materials from New Steel (Shanghai) Trading Co., Ltd. and MCC South (Xinyu) Cold Rolling New Material Technology Co., Ltd. constitutes continuing connected transactions[227][230][231] - For the six months ended September 30, 2020, the procurement transaction amount was approximately HK$27 million[228][231] - These transactions were conducted on normal commercial terms or better, approved by the Board (including independent non-executive directors), and comply with GEM Listing Rules exemption conditions[235][237][240][243][245] Significant Investment, Material Acquisitions and Disposals of Subsidiaries and Future Plans for Material Investments or Capital Assets Apart from the disclosed acquisition of Mega Shell (Global) Lubricant Technology Co., Limited, the group had no other material investments, acquisitions, or disposals of subsidiaries or associates, nor future plans for significant investments - Apart from the disclosed acquisition, the group had no other material investments, acquisitions, or disposals of subsidiaries and associates during the reporting period[241][244] - The group currently has no other future plans for material investments or capital assets[241][244] Other Information The company did not purchase, sell, or redeem listed securities, and disclosed interests of directors, chief executives, and substantial shareholders, while adhering to corporate governance codes - For the six months ended September 30, 2020, the company did not purchase, sell, or redeem any listed securities[246][248] Interests of Directors and Substantial Shareholders in Company Shares (As of September 30, 2020) | Name | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Fong Chun Man | Interest in controlled corporation | 451,000,000 | 51.4% | | Ms. Lo Pui Yee | Spouse's interest | 451,000,000 | 51.4% | | Grand Tycoon Limited | Beneficial owner | 451,000,000 | 51.4% | - The company has adopted a share option scheme, but no share options have been granted from its adoption date to September 30, 2020[258][259][262] - The company has established an Audit Committee, Nomination Committee, and Remuneration Committee, and complies with the Corporate Governance Code in Appendix 15 of the GEM Listing Rules[266][270][272][277][279][280][284][289]