浙江联合投资(08366) - 2020 Q3 - 季度财报

Financial Highlights Overview of Financial Highlights The company's revenue declined while its net loss widened significantly during the reporting period, with no dividend recommended Key Financial Indicators | Indicator | Nine Months Ended Jan 31, 2020 (HK$ thousands) | Nine Months Ended Jan 31, 2019 (HK$ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 95,600 | 111,000 | -13.8% | | Loss Attributable to Equity Holders | 19,800 | 7,200 | 175.0% (Loss Widened) | | Basic Loss Per Share | 1.26 HK cents | 0.5 HK cents | 152.0% (Loss Widened) | - The Board does not recommend the payment of a dividend for the nine months ended 31 January 2020[7] Management Discussion and Analysis Business Review and Outlook The company faces construction market challenges but remains cautiously optimistic while actively diversifying into the 5G telecommunications sector - The Group, primarily engaged in slope, foundation, and general building works in Hong Kong, faces a more severe competitive environment and rising operating costs[8] - The Board holds a cautiously optimistic view on the slope works industry, anticipating increased demand from ongoing government infrastructure projects[9] - The Group is actively expanding into the telecommunications industry, particularly 5G services, and has signed cooperation agreements with a global IC chip supplier, Baicells Technologies, and Arima Communications to diversify its revenue streams[10][11] Financial Review A revenue decline, sharply lower gross profit, and increased administrative expenses led to a significantly wider loss attributable to owners Revenue Total revenue decreased by 13.8% to HK$95.6 million, driven by declines in both slope works and foundation works segments Revenue Breakdown | Revenue Source | Nine Months Ended Jan 31, 2020 (HK$ thousands) | Nine Months Ended Jan 31, 2019 (HK$ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | 95,557 | 110,881 | -13.8% | | Slope Works Revenue | 86,817 | 93,304 | -7.0% | | Foundation Works Revenue | 8,740 | 17,502 | -50.3% | - The decrease in slope works revenue was mainly due to a reduction in the scale of projects from a major customer[12] - The decrease in foundation works revenue was primarily attributable to a smaller number of foundation projects undertaken by the Group[12] Gross Profit and Gross Profit Margin Gross profit plummeted by 77.5% to HK$0.7 million and the gross profit margin narrowed to 0.8% due to increased competition and costs Gross Profit Performance | Indicator | Nine Months Ended Jan 31, 2020 (HK$ thousands) | Nine Months Ended Jan 31, 2019 (HK$ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Gross Profit | 745 | 3,316 | -77.5% | | Gross Profit Margin | 0.8% | 3.0% | -2.2 p.p. | - The decrease in gross profit margin was mainly due to increased subcontracting fees and overall construction costs for existing projects, resulting from a more severe competitive and challenging operating environment in the Hong Kong construction market[13] Direct Costs Direct costs decreased by 11.9% to HK$94.8 million, primarily due to reduced subcontracting expenses from fewer projects Direct Costs Analysis | Indicator | Nine Months Ended Jan 31, 2020 (HK$ thousands) | Nine Months Ended Jan 31, 2019 (HK$ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Direct Costs | 94,800 | 107,600 | -11.9% | - The decrease in direct costs was mainly due to a reduction in our subcontracting expenses as a result of a smaller number of projects[14] Other Income Other income fell sharply by 69.9% to HK$1.0 million, mainly due to the absence of rental income from machinery and net exchange gains Other Income Analysis | Indicator | Nine Months Ended Jan 31, 2020 (HK$ thousands) | Nine Months Ended Jan 31, 2019 (HK$ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Other Income | 1,000 | 3,300 | -69.9% | - The decrease in other income was mainly due to the absence of rental income from leasing machinery and net exchange gains during the nine months ended 31 January 2020, as compared to the same period last year[15] Administrative Expenses Administrative expenses surged by 59.2% to HK$21.5 million, largely driven by HK$8.0 million in share-based payment expenses Administrative Expenses Analysis | Indicator | Nine Months Ended Jan 31, 2020 (HK$ thousands) | Nine Months Ended Jan 31, 2019 (HK$ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Administrative Expenses | 21,500 | 13,500 | +59.2% | - The increase in administrative expenses was mainly due to the share-based payment expenses of approximately HK$8.0 million related to the grant of share options[16] Net Loss The loss attributable to owners of the Company widened from HK$7.2 million to HK$19.8 million due to the aforementioned factors Net Loss Analysis | Indicator | Nine Months Ended Jan 31, 2020 (HK$ thousands) | Nine Months Ended Jan 31, 2019 (HK$ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Loss Attributable to Owners | 19,800 | 7,200 | 175.0% (Loss Widened) | Disclosure of Interests Interests and Short Positions of Directors and Chief Executive in Shares, Underlying Shares and Debentures As of January 31, 2020, Mr. Zhou Ying held an indirect interest in 68.48% of the company's shares through a controlled corporation Director's Shareholding | Name of Director | Capacity/Nature | Number of Shares Held/Interested In | Approx. Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Zhou Ying | Interest in a controlled corporation | 1,080,000,000 | 68.48% | - Mr. Zhou Ying beneficially owns the entire issued share capital of Century Investment Holdings Limited, which in turn wholly owns the shares of United Financial Holding Group Limited; therefore, Mr. Zhou is deemed to be interested in all the shares of the Company held by United Financial Holding Group Limited under the SFO[18] Interests and Short Positions of Substantial Shareholders and Other Persons in Shares, Underlying Shares and Debentures United Financial Holding Group Limited held a 68.48% beneficial interest in the company's shares as of January 31, 2020 Substantial Shareholders' Interests | Name | Capacity/Nature | Number of Shares Held/Interested In | Approx. Percentage of Shareholding | | :--- | :--- | :--- | :--- | | United Financial Holding Group Limited | Beneficial owner | 1,080,000,000 | 68.48% | | Century Investment Holdings Limited | Interest in a controlled corporation | 1,080,000,000 | 68.48% | Other Information Competing Interests No directors, controlling shareholders, or their associates held interests in businesses that significantly compete with the Group during the period - None of the Directors, controlling shareholders, or substantial shareholders, nor their respective associates, held any position or interest in any business or company that competes or may compete with the Group's business, nor did any conflict of interest arise[21] Purchase, Sale or Redemption of the Company's Listed Securities The Company and its subsidiaries did not purchase, sell, or redeem any of the Company's listed securities during the reporting period - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's securities during the nine months ended 31 January 2020 and up to the date of this report[22] Corporate Governance Code The Company complied with the Corporate Governance Code, except for the deviation where the roles of Chairman and CEO were not separated - The Company has complied with the applicable code provisions of the Corporate Governance Code as set out in Appendix 15 to the GEM Listing Rules during the nine months ended 31 January 2020 and up to the date of this report, except that the roles of Chairman and Chief Executive Officer are not separated and are performed by the same individual[23] - The Board believes that vesting the roles of both Chairman and Chief Executive Officer in Mr. Zhou is beneficial to the business operations and management of the Group and provides strong and consistent leadership[23] - The Board considers that the balance of power and authority is ensured by the operation of the Board, which comprises three independent non-executive Directors representing half of the Board, ensuring no single individual has unfettered decision-making power[23] Code of Conduct for Directors' Securities Transactions The Group adopted a code for directors' securities transactions, and all directors confirmed compliance throughout the reporting period - The Group has adopted a code of conduct regarding securities transactions by Directors on terms no less exacting than the required standard of dealings set out in Rules 5.48 to 5.67 of the GEM Listing Rules[24] - Having made specific enquiry of the Directors, all Directors confirmed that they have complied with the required standard set out in the code of conduct during the nine months ended 31 January 2020 and up to the date of this report[24] Dividend The Board of Directors does not recommend the payment of any dividend for the nine months ended January 31, 2020 - The Board does not recommend the payment of any dividend for the nine months ended 31 January 2020[25] Share Option Scheme The company has a share option scheme adopted in 2015, with 60,000,000 share options outstanding as of January 31, 2020 - The Company adopted a share option scheme on 15 October 2015[26] - As at 31 January 2020, 60,000,000 share options granted on 23 September 2019 under the scheme remained outstanding[26] Audit Committee The Audit Committee, comprising three independent non-executive directors, reviewed the unaudited results and found them compliant with relevant standards - The Company established an audit committee on 14 October 2015, which consists of three independent non-executive Directors, with Mr. Wong Man Hin, who has professional qualifications and experience in accounting, serving as the chairman[27] - The Audit Committee has reviewed with management the unaudited condensed consolidated results of the Group for the nine months ended 31 January 2020 and is of the opinion that such results complied with the applicable accounting standards, the requirements of the GEM Listing Rules, and other applicable legal requirements, and that adequate disclosures have been made[28] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Unaudited) Overview of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the nine months ended January 31, 2020, the Group recorded a loss of HK$20,053 thousand on revenue of HK$95,557 thousand Unaudited Condensed Consolidated Financial Results | Indicator | Nine Months Ended Jan 31, 2020 (HK$ thousands) | Nine Months Ended Jan 31, 2019 (HK$ thousands) | | :--- | :--- | :--- | | Revenue | 95,557 | 110,881 | | Direct costs | (94,812) | (107,565) | | Gross profit | 745 | 3,316 | | Other income | 953 | 3,253 | | Administrative expenses | (21,516) | (13,513) | | Finance costs | (235) | (9) | | Loss before income tax | (20,053) | (6,953) | | Income tax expense | – | (200) | | Loss for the period | (20,053) | (7,153) | | Loss for the period attributable to owners of the Company | (19,836) | (7,153) | | Basic loss per share (HK cents) | (1.26) | (0.50) | Condensed Consolidated Statement of Changes in Equity (Unaudited) Overview of Condensed Consolidated Statement of Changes in Equity Total equity increased to HK$99,323 thousand, mainly due to the placement of new shares, offset by the period's loss Equity Position | Equity Item | As at Jan 31, 2020 (HK$ thousands) | As at May 1, 2019 (HK$ thousands) | | :--- | :--- | :--- | | Share capital | 15,772 | 14,400 | | Share premium | 72,131 | 24,457 | | Merger reserve | 18,001 | 18,001 | | Share-based payment reserve | 7,962 | – | | Exchange reserve | (1,710) | (1,027) | | Retained earnings (Accumulated losses) | (12,615) | 7,221 | | Total attributable to owners of the Company | 99,541 | 63,052 | | Non-controlling interests | (218) | – | | Total equity | 99,323 | 63,052 | - Key movements include a loss for the period of HK$20,053 thousand, proceeds from placement of new shares of HK$50,078 thousand, and recognition of equity-settled share-based payment expenses of HK$7,962 thousand[31] Notes to the Condensed Consolidated Financial Statements 1. General Information The company, incorporated in the Cayman Islands and listed on GEM, is an investment holding company engaged in construction and telecommunications - The Company was incorporated in the Cayman Islands as an exempted company with limited liability on 20 May 2015, and its shares were listed on GEM of the Stock Exchange on 2 November 2015[33] - The Company is an investment holding company, and its subsidiaries are principally engaged in slope works, foundation works, other general building works, and telecommunications business[33] - Mr. Zhou Ying indirectly controls 68.48% of the Company's shares through the wholly-owned Century Investment Holdings Limited[33] 2. Basis of Preparation The unaudited financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards and GEM Listing Rules - The unaudited condensed consolidated financial statements for the nine months ended 31 January 2020 have been prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of the Rules Governing the Listing of Securities on GEM of The Stock Exchange of Hong Kong Limited[34] - The accounting policies adopted by the Group are consistent with those in the financial statements for the year ended 30 April 2019, and the financial statements have been prepared on the historical cost basis[34][35] 3. Revenue, Other Income and Segment Information The Group's revenue is primarily derived from construction contracts in Hong Kong, which is considered a single operating segment Revenue from Contracts with Customers | Revenue Source | Nine Months Ended Jan 31, 2020 (HK$ thousands) | Nine Months Ended Jan 31, 2019 (HK$ thousands) | | :--- | :--- | :--- | | Revenue from contracts | 95,557 | 110,806 | | Consultancy fee | – | 75 | | Total Revenue | 95,557 | 110,881 | - The Group is principally engaged in slope works, foundation works and other general building works in Hong Kong; the Board considers the construction business as a single operating segment and since revenue and non-current assets are primarily within a single geographical region (Hong Kong), no segment or geographical segment information is presented[36][37] Major Customers | Customer | Nine Months Ended Jan 31, 2020 (HK$ thousands) | Nine Months Ended Jan 31, 2019 (HK$ thousands) | | :--- | :--- | :--- | | Customer A | 56,863 | 50,502 | | Customer B | 14,106 | 34,104 | | Customer C | 13,130 | N/A¹ | ¹ Revenue from this customer accounted for less than 10% of the Group's total revenue Other Income Breakdown | Other Income Item | Nine Months Ended Jan 31, 2020 (HK$ thousands) | Nine Months Ended Jan 31, 2019 (HK$ thousands) | | :--- | :--- | :--- | | Gain on disposal of property, plant and equipment | – | 2 | | Interest income | 163 | 89 | | Rental income from leasing machinery and income from site supervision | – | 925 | | Net exchange gain | – | 1,637 | | Sundry income | 790 | 600 | | Total | 953 | 3,253 | 4. Finance Costs Finance costs increased significantly to HK$235 thousand for the period, primarily consisting of interest on lease liabilities Finance Costs Breakdown | Finance Costs Item | Nine Months Ended Jan 31, 2020 (HK$ thousands) | Nine Months Ended Jan 31, 2019 (HK$ thousands) | | :--- | :--- | :--- | | Interest on finance leases | – | 9 | | Interest on lease liabilities | 235 | – | | Total | 235 | 9 | 5. Loss Before Income Tax The loss before tax was HK$20,053 thousand, with key expenses including subcontracting charges, share-based payments, and employee costs Deducted Items in Loss Before Tax | Deducted Item | Nine Months Ended Jan 31, 2020 (HK$ thousands) | Nine Months Ended Jan 31, 2019 (HK$ thousands) | | :--- | :--- | :--- | | Total staff costs | 4,785 | 4,472 | | Depreciation on plant and equipment | 514 | 478 | | Depreciation on right-of-use assets | 3,414 | – | | Share-based payment expenses | 7,962 | – | | Operating lease expenses: land and buildings | – | 5,694 | | Rental expenses on short-term leases | 192 | – | | Subcontracting expenses (included in direct costs) | 94,019 | 106,502 | | Net exchange loss | 1,788 | – | 6. Income Tax Expense The Group recorded no income tax expense for the period, compared to HK$200 thousand in the prior year period Income Tax Provision | Indicator | Nine Months Ended Jan 31, 2020 (HK$ thousands) | Nine Months Ended Jan 31, 2019 (HK$ thousands) | | :--- | :--- | :--- | | Provision for Hong Kong Profits Tax | – | 200 | - Hong Kong Profits Tax has been provided at the rate of 16.5% on the estimated assessable profits of the Company for the period; subsidiaries of the Group established in China are subject to China Enterprise Income Tax at a statutory rate of 25%[43] - No provision for deferred tax has been made in the unaudited condensed consolidated financial statements as there were no significant temporary differences at the end of the reporting period[43] 7. Dividend The Board of Directors does not recommend the payment of any dividend for the nine months ended January 31, 2020 - The Directors do not recommend the payment of a dividend for the nine months ended 31 January 2020[44] 8. Loss Per Share Basic loss per share was 1.26 HK cents, and diluted loss per share was the same due to the anti-dilutive effect of outstanding share options Loss Per Share Calculation | Indicator | Nine Months Ended Jan 31, 2020 (HK cents) | Nine Months Ended Jan 31, 2019 (HK cents) | | :--- | :--- | :--- | | Basic loss per share | (1.26) | (0.50) | - The computation of diluted loss per share does not assume the conversion of the Company’s outstanding share options (if any) since their exercise would have an anti-dilutive effect on the basic loss per share for the three months and nine months ended 31 January 2020[47]