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F8企业(08347) - 2021 Q3 - 季度财报
F8 ENTF8 ENT(HK:08347)2021-02-10 22:11

Report Overview and Disclaimer This section covers GEM market characteristics, investment risks, and the directors' responsibility statement GEM Market Characteristics and Investment Risks The GEM market provides a listing platform for high-risk small and medium-sized companies, whose securities may face high market volatility and uncertain liquidity, requiring prudent investor consideration - GEM market aims to accommodate small and medium-sized companies, with investment risks higher than other listed companies on the Stock Exchange15 - GEM securities may be subject to high market volatility risks, and high liquidity cannot be guaranteed25 Directors' Responsibility Statement The company's directors collectively and individually assume full responsibility for this report's content, confirming its accuracy, completeness, and absence of misleading or fraudulent information in all material aspects - The company's directors jointly and severally assume full responsibility for the content of this report46 - Directors confirm that the information in the report is accurate, complete, and not misleading or fraudulent in all material aspects46 Financial Highlights This section provides an overview of key financial indicators, including revenue, net profit, and dividend policy for the period Overview of Key Financial Indicators For the nine months ended December 31, 2020, group revenue decreased by 5.1% to HKD 352.9 million, and net profit declined by HKD 1.4 million to HKD 6.7 million, though it grew 47.9% excluding one-off fair value changes, with no dividend recommended Key Financial Data for the Nine Months Ended December 31, 2020 | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) | Year-on-year Change (thousand HKD) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 352,900 | 371,900 | (19,000) | -5.1% | | Net Profit | 6,700 | 8,100 | (1,400) | -17.3% | | Net Profit excluding one-off fair value changes | 6,700 | 4,500 | 2,200 | 47.9% | - The decrease in net profit was primarily due to reduced steel product sales and the recognition of a fair value change of contingent consideration payable of approximately HKD 3.6 million in 2019911 - The Board does not recommend the payment of any dividend for the nine months ended December 31, 20201012 Unaudited Condensed Consolidated Third Quarterly Results This section presents the unaudited condensed consolidated statements of profit or loss and other comprehensive income, and changes in equity for the period Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the nine months ended December 31, 2020, the group reported HKD 352.9 million in revenue, HKD 25.3 million in gross profit, HKD 6.7 million in profit for the period, and 0.87 HK cents basic and diluted earnings per share attributable to owners Summary of Consolidated Statement of Profit or Loss and Other Comprehensive Income for the Nine Months Ended December 31, 2020 | Indicator | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Revenue | 352,869 | 371,856 | | Cost of Sales | 327,616 | (353,432) | | Gross Profit | 25,253 | 18,424 | | Operating Profit | 10,436 | 10,045 | | Profit Before Tax | 8,783 | 9,438 | | Profit for the Period | 6,713 | 8,138 | | Profit for the Period Attributable to Owners of the Company | 7,559 | 8,145 | | Basic and Diluted Earnings Per Share (HK cents) | 0.87 | 1.02 | Unaudited Condensed Consolidated Statement of Changes in Equity As of December 31, 2020, total equity attributable to owners increased to HKD 115.981 million from HKD 96.521 million in 2019, primarily due to profit for the period and new share issuance Summary of Changes in Equity for the Nine Months Ended December 31, 2020 | Indicator | December 31, 2020 (thousand HKD) | December 31, 2019 (thousand HKD) | | :--- | :--- | :--- | | Share Capital | 8,780 | 8,000 | | Share Premium | 64,821 | 49,221 | | Retained Earnings | 18,928 | 14,850 | | Subtotal Attributable to Owners of the Company | 115,981 | 96,521 | | Non-controlling Interests | 13,902 | 15,209 | | Total | 129,883 | 111,730 | - On April 21, 2020, the company allotted and issued 78,000,000 new shares at HKD 0.21 per share to the vendor under a general mandate, resulting in an increase in share capital and share premium1820 Notes to the Unaudited Condensed Consolidated Financial Statements This section provides detailed notes on general information, accounting policies, revenue, segment information, other gains and losses, finance costs, profit before taxation, income tax, dividends, and earnings per share General Information F8 Enterprise (Holdings) Group Limited, registered in the Cayman Islands, primarily engages in diesel and related product sales and transportation, and steel product manufacturing and sales in Hong Kong and China, controlled by Macro Rich Limited - The company's principal activities include the sale and transportation of diesel oil and related products in Hong Kong and the PRC, and the manufacture and sale of steel products in the PRC2327 - The company is controlled by Macro Rich Limited, which is controlled by Mr. Fong Chun Man2227 Basis of Preparation and Principal Accounting Policies The unaudited condensed consolidated financial statements are prepared in accordance with HKFRS, HKAS, and GEM Listing Rules, using consistent accounting policies with no material impact from new HKFRS revisions, and have been reviewed by the Audit Committee - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards, and the GEM Listing Rules2528 - The new and revised Hong Kong Financial Reporting Standards applied during the period had no material impact on the amounts reported in the financial statements3134 - The third quarterly results are unaudited by the auditor but have been reviewed by the Audit Committee3234 Revenue Analysis For the nine months ended December 31, 2020, total group revenue was HKD 352.9 million, with HKD 301.7 million from diesel and related product sales and HKD 51.2 million from steel product sales Revenue Breakdown for the Nine Months Ended December 31, 2020 | Type of Goods or Services | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Diesel Oil | 227,835 | 221,586 | | Marine Diesel Oil | 62,157 | 46,412 | | Lubricant Oil | 11,665 | 534 | | Total Sales of Diesel Oil and Related Products | 301,657 | 268,532 | | Sales of Steel Products | 51,212 | 103,324 | | Total Revenue | 352,869 | 371,856 | - The group primarily operates in two segments: sales of diesel oil and related products, and sales of steel products37 Segment Information The group operates in two reportable segments: diesel sales and transportation, and steel product sales, generating HKD 301.7 million and HKD 51.2 million respectively for the nine months ended December 31, 2020, with operations primarily in Hong Kong and China Segment Revenue and Results for the Nine Months Ended December 31, 2020 | Segment | 2020 Revenue (thousand HKD) | 2019 Revenue (thousand HKD) | 2020 Segment Results (thousand HKD) | 2019 Segment Results (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Diesel Oil Sales and Transportation | 301,657 | 268,532 | 11,507 | 8,376 | | Steel Product Sales | 51,212 | 103,324 | (1,880) | (15) | | Unallocated | – | – | (2,506) | 295 | | Total | 352,869 | 371,856 | 7,121 | 8,656 | Revenue by Geographical Location for the Nine Months Ended December 31, 2020 | Region | 2020 Revenue (thousand HKD) | 2019 Revenue (thousand HKD) | | :--- | :--- | :--- | | Hong Kong | 290,653 | 268,532 | | PRC | 62,216 | 103,324 | | Total | 352,869 | 371,856 | Other Gains and Losses For the nine months ended December 31, 2020, the group recorded total other gains and losses of HKD 3.315 million, primarily from government grants, diesel vehicle rental income, and realized gains on financial assets at fair value through profit or loss Other Gains and Losses for the Nine Months Ended December 31, 2020 | Item | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Realized gain on financial assets at fair value through profit or loss | 390 | – | | Bank interest income | 1 | – | | Rental income from diesel vehicles | 1,252 | – | | Government grants | 1,358 | – | | Miscellaneous income | 314 | 519 | | Total | 3,315 | 1,389 | - Government grants primarily refer to subsidies under the Anti-epidemic Fund50 Finance Costs For the nine months ended December 31, 2020, total group finance costs significantly increased to HKD 1.653 million, mainly due to higher interest expenses on bank borrowings and bonds payable Finance Costs for the Nine Months Ended December 31, 2020 | Item | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Interest expense on bank borrowings | 948 | 103 | | Interest expense on bank overdrafts | 2 | 5 | | Interest expense on bonds payable | 660 | 474 | | Interest expense on lease liabilities | 20 | – | | Interest expense on finance lease payables | 23 | 25 | | Total | 1,653 | 607 | Profit Before Taxation For the nine months ended December 31, 2020, the group's profit before taxation was HKD 8.783 million, with major expenses including staff costs (salaries and benefits), cost of inventories, and depreciation Components of Profit Before Taxation for the Nine Months Ended December 31, 2020 | Item | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Directors' remuneration | 1,840 | 1,787 | | Other staff costs (salaries and benefits) | 6,730 | 4,898 | | Contributions to retirement benefit schemes | 404 | 233 | | Auditor's remuneration | 531 | 525 | | Cost of inventories recognized as expense | 321,257 | 349,987 | | Depreciation of property, plant and equipment | 1,937 | 1,648 | | Depreciation of right-of-use assets | – | 918 | | Office operating lease rental expense | 1,026 | 172 | Income Tax Expenses For the nine months ended December 31, 2020, group income tax expenses totaled HKD 2.070 million, comprising Hong Kong profits tax and PRC enterprise income tax, with Hong Kong applying a two-tiered tax system and PRC subsidiaries taxed at 25% Income Tax Expenses for the Nine Months Ended December 31, 2020 | Item | 2020 (thousand HKD) | 2019 (thousand HKD) | | :--- | :--- | :--- | | Hong Kong Profits Tax | 1,950 | 1,318 | | PRC Enterprise Income Tax | 120 | – | | Deferred Tax | – | (18) | | Total | 2,070 | 1,300 | - Hong Kong profits tax is subject to a two-tiered tax rate, with the first HKD 2 million of assessable profits taxed at 8.25% and the remainder at 16.5%596062 - PRC subsidiaries are subject to an enterprise income tax rate of 25%6162 Dividends Policy The Board does not recommend paying any dividends for the nine months ended December 31, 2020, consistent with the prior period - The Board does not recommend the payment of any dividend for the nine months ended December 31, 20206364 Earnings Per Share For the nine months ended December 31, 2020, basic and diluted earnings per share attributable to owners decreased to 0.87 HK cents from 1.02 HK cents in the prior period, calculated based on profit attributable to owners and weighted average ordinary shares Earnings Per Share Data for the Nine Months Ended December 31, 2020 | Indicator | 2020 (thousand HKD/HK cents) | 2019 (thousand HKD/HK cents) | | :--- | :--- | :--- | | Profit for the Period Attributable to Owners of the Company | 7,559 | 8,145 | | Weighted Average Number of Ordinary Shares (thousands) | 872,327 | 800,000 | | Basic and Diluted Earnings Per Share (HK cents) | 0.87 | 1.02 | - Diluted earnings per share are the same as basic earnings per share as there were no dilutive potential ordinary shares in issue during the reporting period6768 Management Discussion and Analysis This section provides a comprehensive review of the group's business, industry outlook, financial performance, liquidity, capital resources, and other significant operational and governance matters Business Review The group primarily operates in diesel and related product sales and transportation, and steel product manufacturing and sales in Hong Kong and China; for the nine months ended December 31, 2020, diesel revenue grew 12.3% due to acquisition and new demand, while steel product revenue declined 50.4% due to economic challenges and strict credit policies - The group's principal businesses are the sale and transportation of diesel oil and related products, and the manufacture and sale of steel products7073 - On March 23, 2020, the group conditionally acquired 51% equity interest in Mega Shell (Global) Lubricant Technology Co., Ltd., which was completed on April 21, 2020, and its financial statements have been consolidated7173 Sale and Transportation of Diesel Oil and Related Products Business For the nine months ended December 31, 2020, diesel and related product sales revenue increased by 12.3% to approximately HKD 301.7 million, accounting for 85.5% of total revenue, driven by a lubricant company acquisition and new Hong Kong marine diesel demand Diesel and Related Product Sales Revenue | Indicator | 2020 (million HKD) | 2019 (million HKD) | Year-on-year Change (million HKD) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | :--- | | Diesel and related product sales revenue | 301.7 | 268.6 | 33.1 | 12.3% | - The increase in revenue for this business was mainly attributable to the acquisition of Mega Shell (Global) Lubricant Technology Co., Ltd. and new customer demand for marine diesel oil in Hong Kong7274 Sale of Steel Product Business For the nine months ended December 31, 2020, steel product sales revenue significantly decreased by 50.4% to approximately HKD 51.2 million, representing 14.5% of total revenue, primarily due to economic challenges and stringent customer selection and credit control policies Steel Product Sales Revenue | Indicator | 2020 (million HKD) | 2019 (million HKD) | Year-on-year Change (million HKD) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | :--- | | Steel product sales revenue | 51.2 | 103.3 | (52.1) | -50.4% | - The decrease in revenue was mainly due to challenging economic conditions, stringent customer selection, and credit control policies implemented by the group7682 Industry Review and Future Prospects In 2020, international oil prices fluctuated significantly, and the COVID-19 pandemic introduced uncertainties; the group will closely monitor and manage risks, planning to invest more resources in talent acquisition, business development, and marketing strategies for the Hong Kong diesel market, while actively seeking potential opportunities to diversify revenue streams - International oil prices fluctuated significantly in 2020, and the COVID-19 pandemic brought short-term uncertainties7983 - The group will closely monitor and manage risks related to the pandemic8084 - Future plans include investing more resources in talent acquisition, business development, and marketing strategies for the diesel business, and seeking potential business opportunities8184 Financial Review For the nine months ended December 31, 2020, group revenue decreased by 5.1% to HKD 352.9 million, while cost of sales fell 7.3% to HKD 327.6 million, leading to a 37% gross profit increase to HKD 25.3 million and a 7.2% gross profit margin; profit for the period declined 17.3% to HKD 6.7 million, but grew 47.9% excluding one-off fair value changes Revenue Analysis For the nine months ended December 31, 2020, total group revenue was HKD 352.9 million, a 5.1% decrease, with diesel sales as the largest contributor at 64.6%, marine diesel at 17.6%, lubricant sales at 3.3%, and steel product sales at HKD 51.2 million or 14.5% of total revenue Revenue Contribution by Business Segment | Business | 2020 Revenue (million HKD) | 2020 Contribution (%) | 2019 Revenue (million HKD) | 2019 Contribution (%) | | :--- | :--- | :--- | :--- | :--- | | Diesel Sales | 227.9 | 64.6% | 221.6 | 59.6% | | Marine Diesel Sales | 62.2 | 17.6% | 46.4 | 12.5% | | Lubricant Sales | 11.7 | 3.3% | 0.5 | 0.1% | | Steel Product Sales | 51.2 | 14.5% | 103.3 | 27.8% | | Total Revenue | 352.9 | 100% | 371.9 | 100% | - The increase in sales of diesel and related products was offset by a decrease in steel product sales, leading to an overall decline in total revenue8890 Cost of Sales For the nine months ended December 31, 2020, group cost of sales was approximately HKD 327.6 million, a 7.3% decrease from the prior period, primarily comprising costs of diesel, marine diesel, lubricants, direct labor, and depreciation Cost of Sales | Indicator | 2020 (million HKD) | 2019 (million HKD) | Year-on-year Change (million HKD) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cost of Sales | 327.6 | 353.4 | (25.8) | -7.3% | - Cost of sales was mainly affected by the purchase prices of diesel oil, marine diesel oil, lubricant oil, and raw material costs for steel products8991 Gross Profit and Gross Profit Margin For the nine months ended December 31, 2020, group gross profit increased by HKD 6.8 million to HKD 25.3 million, with the gross profit margin rising from 5.0% to 7.2%, primarily due to a slower increase in cost of sales compared to revenue Gross Profit and Gross Profit Margin | Indicator | 2020 (million HKD) | 2019 (million HKD) | Year-on-year Change (million HKD) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | 25.3 | 18.4 | 6.8 | 37.0% | | Gross Profit Margin | 7.2% | 5.0% | 2.2% | - | - The increase in gross profit was mainly due to the increase in cost of sales being lower than the increase in revenue9397 Profit for the Period For the nine months ended December 31, 2020, group net profit was HKD 6.7 million, a HKD 1.4 million decrease year-on-year, with the net profit margin falling from 2.2% to 1.9%, though it increased 47.9% to HKD 6.7 million when excluding one-off fair value changes Profit for the Period and Net Profit Margin | Indicator | 2020 (million HKD) | 2019 (million HKD) | Year-on-year Change (million HKD) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Profit | 6.7 | 8.1 | (1.4) | -17.3% | | Net Profit Margin | 1.9% | 2.2% | -0.3% | - | | Net Profit excluding one-off fair value changes | 6.7 | 4.5 | 2.2 | 47.9% | - The decrease in net profit was mainly affected by reduced steel product sales and the recognition of a fair value change of contingent consideration payable of approximately HKD 3.6 million in 20199498 Liquidity and Capital Resources As of December 31, 2020, the group reported net current assets of approximately HKD 83.0 million, a current ratio of 2.1 times, and a gearing ratio of 31.5%, funding operations through interest-bearing bank borrowings while maintaining prudent financial management without foreign exchange hedging Financial Resources and Liquidity As of December 31, 2020, the group's net current assets were approximately HKD 83.0 million, with current assets of HKD 161.7 million, current liabilities of HKD 78.1 million, and a current ratio of 2.1 times Liquidity Position | Indicator | December 31, 2020 (million HKD) | | :--- | :--- | | Net Current Assets | 83.0 | | Current Assets | 161.7 | | Current Liabilities | 78.1 | | Current Ratio | 2.1 | Gearing Ratio As of December 31, 2020, the group's gearing ratio was 31.5%, with bank financing facilities of approximately HKD 65.0 million, of which HKD 18.5 million was utilized, secured by company guarantees, time deposits, and life insurance policies Gearing Ratio and Bank Financing | Indicator | December 31, 2020 (million HKD/%) | | :--- | :--- | | Bank Financing Facilities Limit | 65.0 | | Utilized Bank Financing | 18.5 | | Gearing Ratio | 31.5% | - Bank borrowings are secured by company guarantees, time deposits, and life insurance policies101106 Capital Structure As of December 31, 2020, the group's capital structure primarily consisted of equity attributable to owners of approximately HKD 116.0 million, with share capital solely comprising ordinary shares, and no significant changes since its listing on April 12, 2017 Capital Structure | Indicator | December 31, 2020 (million HKD) | | :--- | :--- | | Equity Attributable to Owners of the Company | 116.0 | - The group's share capital consists solely of ordinary shares, and there have been no significant changes to the capital structure since the listing date103107 Foreign Currency Exposure Risks Operating primarily in Hong Kong, the group faces foreign exchange risks from RMB-denominated lubricant and steel product sales and Malaysian Ringgit financial assets, with no derivative or financial instruments used for hedging during the reporting period - The group faces foreign exchange risks from RMB-denominated lubricant and steel product sales, as well as Malaysian Ringgit financial assets104108 - During the reporting period, the group did not enter into any derivative agreements or financial instruments to hedge foreign exchange risks104108 Treasury Policies The group adopts prudent financial management, maintaining a robust liquidity position, mitigating credit risk through continuous assessment, and closely monitoring liquidity to meet funding requirements - The group adopts a prudent financial management approach, maintaining a sound liquidity position105109 - Credit risk is mitigated through continuous credit assessment, and liquidity is closely monitored to meet funding needs105109 Material Acquisitions and Disposals On March 23, 2020, the company conditionally agreed to acquire 51% equity in Mega Shell (Global) Lubricant Technology Co., Ltd. for approximately HKD 16.38 million, settled by issuing 78,000,000 new shares, completed on April 21, 2020, with no other material acquisitions or disposals during the period - On March 23, 2020, the company entered into an agreement for the conditional acquisition of 51% equity interest in Mega Shell (Global) Lubricant Technology Co., Ltd110116 - The total consideration for the acquisition was approximately HKD 16.38 million, paid by issuing 78,000,000 new shares, and completed on April 21, 2020110116 - Save as disclosed above, there were no other material investments, acquisitions, or disposals during the reporting period111116 Capital Commitments and Contingent Liabilities As of December 31, 2020, the group had no other significant capital commitments or contingent liabilities beyond those already disclosed - As of December 31, 2020, the group had no other significant capital commitments or contingent liabilities112117 Pledge of Assets As of December 31, 2020, the group pledged approximately HKD 12.0 million in short-term bank deposits and HKD 4.7 million in life insurance policies as collateral for bank financing Pledged Assets | Asset Type | Amount (million HKD) | | :--- | :--- | | Pledged short-term bank deposits | 12.0 | | Pledged life insurance policies | 4.7 | - These assets serve as collateral for the group's bank financing115120 Use of Proceeds Net proceeds from the share offer amounted to HKD 45.1 million, lower than the estimated HKD 50.9 million; as of December 31, 2020, HKD 30.5 million was utilized, with the remaining HKD 14.6 million earmarked for diesel tank trucks, marine diesel barges, enhanced staffing, and IT system upgrades, expected to be fully used by March 31, 2022 Actual Use of Net Proceeds (as of December 31, 2020) | Planned Use | Planned Use (%) | Actual Use (million HKD) | Unutilized Amount (million HKD) | Expected Timeline for Remaining Funds | | :--- | :--- | :--- | :--- | :--- | | Purchase of diesel tank trucks | 17.3% | 5.0 | 2.8 | Before March 31, 2022 | | Purchase of marine diesel barges | 31.0% | 8.5 | 5.5 | Before March 31, 2022 | | Further enhancement of manpower | 13.6% | 2.9 | 3.2 | Before March 31, 2022 | | Enhancement of information technology and systems | 7.9% | 0.5 | 3.1 | Before March 31, 2022 | | Working capital for operating new diesel tank trucks and marine fuel supply business | 20.2% | 9.1 | – | Before March 31, 2022 | | Working capital | 10.0% | 4.5 | – | – | | Total | 100.0% | 30.5 | 14.6 | | - The actual use of net proceeds is consistent with the plans in the prospectus, but specific implementation will be adjusted based on business and market conditions128130 Financial Assets Through Profit and Loss As of December 31, 2020, the group had divested all equity in its Malaysia Exchange-listed company and held HKD 4.7 million in key management life insurance, realizing a net gain of approximately HKD 0.3 million from this investment - The group has disposed of all its equity interests in a company listed on the Malaysia Exchange129131 - The group holds HKD 4.7 million in key management life insurance129131 - This investment recorded a net realized gain of approximately HKD 0.3 million129131 Employees and Remuneration Policies As of December 31, 2020, the group employed 66 staff (including directors) with total staff costs of approximately HKD 9.0 million; remuneration policies are regularly reviewed based on market levels, employee performance, qualifications, experience, position, and group performance Employees and Staff Costs | Indicator | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total Number of Employees | 66 | 27 | | Total Staff Costs (million HKD) | 9.0 | 6.9 | - Remuneration (including employee benefits) is maintained at market levels and is regularly reviewed, determined based on performance, qualifications, experience, position, and the group's business performance133137 Environmental Policies and Performance The group's operations are regulated by Hong Kong environmental laws, with measures implemented to minimize environmental impact; the group continuously monitors operations for compliance and has not faced prosecution or fines for environmental violations as of the reporting date - The group's operations are regulated by environmental laws and regulations in Hong Kong, such as the Air Pollution Control Ordinance and Water Pollution Control Ordinance134138 - The group has implemented various environmental measures to minimize the impact of its operations on the environment and natural resources134138 - As of the date of this report, the group has not been subject to any prosecution, fines, or penalties for non-compliance with any environmental laws or regulations135139140 Events After the Reporting Period As of the report date, the Board has not identified any other material post-reporting period events requiring disclosure, apart from those already presented - As of the date of this report, the Board has not identified any other material events after the reporting period that require disclosure136141 Continuing Connected Transactions For the nine months ended December 31, 2020, the group engaged in approximately HKD 27 million in steel material procurement transactions with Xinguang (Shanghai) Trading Co., Ltd. and MCC South (Xinyu) Cold Rolling New Material Technology Co., Ltd., which constitute continuing connected transactions approved by the Board under GEM Listing Rules exemption conditions - The group conducted steel material procurement transactions with Xinguang (Shanghai) Trading Co., Ltd. and MCC South (Xinyu) Cold Rolling New Material Technology Co., Ltd143146 Continuing Connected Transaction Amounts | Indicator | 2020 (million HKD) | | :--- | :--- | | Procurement Transaction Amount | 27 | - These transactions constitute continuing connected transactions under the GEM Listing Rules but have been approved by the Board (including independent non-executive directors) and meet the exemption conditions145147151153156159 Significant Investment, Material Acquisitions and Disposals, and Future Plans for Material Investments or Capital Assets Excluding disclosed acquisitions, for the nine months ended December 31, 2020, the group had no other significant investments, material acquisitions or disposals of subsidiaries and associates, nor any other plans for material investments or capital assets - Save for the acquisition disclosed, there were no other significant investments, material acquisitions or disposals of subsidiaries and associates during the nine months ended December 31, 2020157160 - The group currently has no other plans for material investments or capital assets157160 Other Information This section details information on securities transactions, directors' and substantial shareholders' interests, share option schemes, competing interests, and corporate governance practices Purchase, Sale or Redemption of the Company's Listed Securities For the nine months ended December 31, 2020, the company did not engage in any purchase, sale, or redemption of its listed securities - For the nine months ended December 31, 2020, the company did not purchase, sell, or redeem any of its listed securities162164 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 December 31, 2020, Mr. Fong Chun Man and his spouse, Ms. Lo Pui Yee, each held a 51.5% long position in the company's shares through Macro Rich Limited, with no other directors or chief executives holding disclosable interests or short positions Shareholdings of Directors and Chief Executive | Director Name | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Fong Chun Man | Interest in controlled corporation (long position) | 452,264,000 | 51.5% | | Ms. Lo Pui Yee | Spouse's interest (long position) | 452,264,000 | 51.5% | - Mr. Fong Chun Man holds shares through Macro Rich Limited, and his spouse, Ms. Lo Pui Yee, is deemed to have the same interest166 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 December 31, 2020, Macro Rich Limited beneficially held a 51.5% long position in the company's shares, and the Board was unaware of any other substantial shareholders or persons holding disclosable interests or short positions Shareholdings of Substantial Shareholders | Shareholder Name/Name | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Macro Rich Limited | Beneficial owner (long position) | 452,264,000 | 51.5% | - Macro Rich Limited is wholly owned by Mr. Fong Chun Man, who is deemed to be interested in all shares held by it173 Share Option Scheme The company conditionally adopted a share option scheme on March 23, 2017, to grant options to eligible participants; as of December 31, 2020, no options were granted or outstanding, with 80,000,000 shares remaining available for issuance under the scheme - The company adopted a share option scheme on March 23, 2017, to grant share options to eligible participants, including directors and employees174178 - As of December 31, 2020, no share options had been granted, and there were no outstanding share options175178 - There are still 80,000,000 shares available for issuance under the scheme, representing 10% of the issued share capital on the listing date175178 Directors' Rights to Acquire Shares and Debentures Excluding the share option scheme, for the nine months ended December 31, 2020, neither the company, its holding company, nor any subsidiaries entered into arrangements enabling directors to acquire benefits through shares or debentures of the company or any other body corporate - Save for the share option scheme, during the nine months ended December 31, 2020, neither the company, its holding company, nor any of its subsidiaries entered into any arrangements enabling directors to acquire benefits through the acquisition of shares or debentures of the company or any other body corporate176179 Competing Interests The directors confirm that as of the report date, neither the company's controlling shareholders, directors, nor their close associates held any interests in businesses competing or potentially competing with the group's operations - The directors confirm that as of the date of this report, neither the controlling shareholders, directors, nor their close associates held any interests in any business that competes or may compete with the group's business181185 Audit Committee Established on March 23, 2017, the Audit Committee, comprising three independent non-executive directors chaired by Mr. Tsui Chi Yan, primarily provides independent opinions on internal control and risk management system effectiveness, oversees financial statement balance, transparency, and integrity, and reviews the relationship with external auditors - The Audit Committee comprises three independent non-executive directors, with Mr. Tsui Chi Yan as the chairman182186 - Its primary responsibilities include providing independent opinions on the effectiveness of internal control and risk management systems, and overseeing the balance, transparency, and integrity of financial statements183186 - The Audit Committee has reviewed the unaudited condensed consolidated financial statements for the nine months ended December 31, 2020, and considers them to be in compliance with applicable accounting standards and the GEM Listing Rules184186 Nomination Committee Established on March 23, 2017, the Nomination Committee, comprising Mr. Fong Chun Man and two independent non-executive directors chaired by Mr. Kwong Yuk Lap, primarily reviews board diversity policy, structure, size, and composition, identifies qualified board members, assesses independent non-executive directors' independence, and advises on director appointments - The Nomination Committee comprises Mr. Fong Chun Man and two independent non-executive directors, with Mr. Kwong Yuk Lap as the chairman188193 - Its primary responsibilities include reviewing the board diversity policy, structure, size, and composition, identifying qualified board members, and assessing the independence of independent non-executive directors189193 Remuneration Committee Established on March 23, 2017, the Remuneration Committee, comprising two independent non-executive directors and Mr. Fong Chun Man, chaired by Mr. Wong On Yuen, primarily advises the Board on the overall remuneration policy and structure for all directors and senior management, and reviews and approves management's remuneration proposals - The Remuneration Committee comprises two independent non-executive directors and Mr. Fong Chun Man, with Mr. Wong On Yuen as the chairman191195 - Its primary responsibilities are to advise the Board on the overall remuneration policy and structure for all directors and senior management of the group, and to review and approve management's remuneration proposals192195 - The Remuneration Committee determines remuneration levels by reference to market benchmarks and considering individual directors' capabilities, responsibilities, performance, and the group's results197203 Directors' Securities Transactions The company has adopted a code of conduct for directors' securities transactions, with terms no less exacting than those in the GEM Listing Rules, and all directors have confirmed compliance upon specific enquiry - The company has adopted a code of conduct for directors' securities transactions, with terms no less exacting than the required standards of the GEM Listing Rules199204 - All directors have confirmed compliance with the code upon specific enquiry199204 Corporate Governance The company is committed to maintaining high corporate governance standards, continuously reviewing and improving them, and has complied with the Corporate Governance Code provisions in Appendix 15 of the GEM Listing Rules for the nine months ended December 31, 2020 - The company is committed to maintaining high standards of corporate governance and continuously reviews and improves them200205 - For the nine months ended December 31, 2020, the company has complied with the provisions of the Corporate Governance Code set out in Appendix 15 of the GEM Listing Rules200205