WT集团(08422) - 2020 - 中期财报

Company Information The report discloses fundamental company information including board members, committee compositions, registered office, principal bankers, and auditors - The report discloses fundamental company information including board members, committee compositions, registered office, principal bankers, and auditors[2][3] Key Management and Advisory Team | Role | Personnel/Institution | | :--- | :--- | | Executive Directors | Mr. Yip Siu Ching (Chairman), Mr. Hung Cheung Fai, Mr. Kam Kin Bun | | Independent Non-Executive Directors | Mr. Leung Chi Hung, Ms. Wong Lai Na, Ms. Yim Kwan Wing | | Audit Committee Chairman | Mr. Leung Chi Hung | | Compliance Advisor | Ascent Partners Corporate Finance Limited | | Auditor | PricewaterhouseCoopers | Financial Performance The company's financial performance for the period shows a significant decline in profit, a slight decrease in total assets, and improved operating cash flow, with detailed notes on accounting policies and key accounts Summary of Consolidated Statement of Comprehensive Income For the six months ended December 31, 2019, the Group's revenue decreased by 9.1% year-on-year, with gross profit significantly declining by 43.6%, leading to a 97.3% drop in profit for the period from HK$3.66 million to HK$0.1 million Consolidated Statement of Comprehensive Income (For the six months ended December 31) | Indicator | 2019 (HK$ '000) | 2018 (HK$ '000) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 34,289 | 37,731 | -9.1% | | Gross Profit | 4,451 | 7,896 | -43.6% | | Operating Profit | 87 | 3,642 | -97.6% | | Profit Before Income Tax | 99 | 3,659 | -97.3% | | Profit for the Period | 101 | 3,659 | -97.2% | | Basic Earnings Per Share (HK Cents) | 0.01 | 0.37 | -97.3% | - The company did not recommend the payment of any dividends for the reporting period[4][41] Summary of Consolidated Statement of Financial Position As of December 31, 2019, total assets were HK$79.89 million, a slight decrease from June 30, 2019, while total equity remained stable at HK$70.82 million, with notable declines in trade receivables and contract assets within current assets Summary of Consolidated Statement of Financial Position | Indicator | December 31, 2019 (HK$ '000) | June 30, 2019 (HK$ '000) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 79,885 | 82,630 | -3.3% | | Non-Current Assets | 1,154 | 991 | +16.4% | | Current Assets | 78,731 | 81,639 | -3.6% | | Total Liabilities | 9,069 | 11,915 | -23.9% | | Total Equity | 70,816 | 70,715 | +0.1% | - The decrease in current assets was primarily due to trade receivables falling from HK$20.54 million to HK$8.05 million, and contract assets decreasing from HK$20.25 million to HK$16.38 million[5] Summary of Consolidated Statement of Cash Flows For the six months ended December 31, 2019, the Group's operating cash flow shifted from a net outflow to a net inflow, primarily due to improved working capital, with cash and cash equivalents increasing to HK$43.23 million at period-end Summary of Cash Flow Statement (For the six months ended December 31) | Indicator | 2019 (HK$ '000) | 2018 (HK$ '000) | | :--- | :--- | :--- | | Net Cash from/(used in) Operating Activities | 13,909 | (5,016) | | Net Cash used in Investing Activities | (45) | (24) | | Net Cash used in Financing Activities | (361) | (76) | | Increase/(Decrease) in Cash and Cash Equivalents | 13,503 | (5,116) | | Cash and Cash Equivalents at End of Period | 43,229 | 24,929 | Summary of Notes to Financial Statements The notes explain the basis of financial statement preparation, disclose the impact of adopting new accounting standards (HKFRS 16 'Leases'), and detail the composition and changes in key items such as revenue, trade receivables, and related party transactions - The Group adopted HKFRS 16 'Leases' effective July 1, 2019, resulting in the recognition of HK$0.776 million in right-of-use assets and HK$0.776 million in lease liabilities on July 1, 2019, with no material impact on profit for the period[11][14] - All of the Group's operations are engaged in specialized and general building works in Hong Kong, considered a single operating segment, thus no segment information is presented[22] - As of December 31, 2019, total trade receivables amounted to HK$9.36 million, with HK$6.49 million (approximately 69%) overdue for more than one year[32] - The Directors do not recommend the payment of any dividend for the six months ended December 31, 2019[41] Management Discussion and Analysis This section reviews the Group's business performance, financial position, liquidity, and key risks, outlining management's outlook and strategies amidst challenging market conditions Business Review and Future Prospects The Group, primarily engaged in specialized and general building works in Hong Kong, experienced a significant decline in net profit due to lower project gross margins and fewer projects; management anticipates a challenging and competitive year for the Hong Kong construction industry amidst economic uncertainty and social unrest, while remaining cautiously optimistic and focused on core business and new opportunities - For the six months ended December 31, 2019, the Group's net profit was approximately HK$0.1 million, a significant decrease from HK$3.7 million in the prior year, primarily due to lower overall project gross margins and fewer construction projects[45] - Management anticipates the Hong Kong construction industry will face difficulties and increased market competition in the coming year due to uncertain economic prospects and ongoing social unrest[46] - Future strategy will continue to focus on foundation, site formation, and superstructure building projects in Hong Kong, while exploring other investment opportunities to diversify revenue streams[46][47] Financial Review During the reporting period, the Group experienced significant declines in revenue, gross profit, and gross profit margin, with revenue decreasing by 9.0% due to fewer construction projects, and gross profit and margin falling due to reduced project volume and lower overall project profitability Financial Performance Review (For the six months ended December 31) | Indicator | 2019 | 2018 | Primary Reason | | :--- | :--- | :--- | :--- | | Revenue | HK$34.3 million | HK$37.7 million | Fewer construction projects undertaken | | Gross Profit | HK$4.5 million | HK$7.9 million | Lower overall project gross profit and fewer projects | | Gross Profit Margin | 13.0% | 20.9% | Lower overall project gross profit margin and fewer projects | | Administrative Expenses | HK$4.4 million | HK$4.3 million | No significant change | Liquidity and Financial Resources The Group maintains a robust financial position with cash and bank balances increasing to HK$43.20 million as of December 31, 2019, a current ratio of approximately 8.9 times indicating ample liquidity, and a very low gearing ratio (calculated based on lease liabilities) of only 1.1% - As of December 31, 2019, the Group's bank balances and cash amounted to approximately HK$43.20 million, a significant increase from HK$29.70 million as of June 30, 2019[53] - The current ratio is approximately 8.9 times, and the gearing ratio is approximately 1.1%, indicating a sound financial position[53][54] - The Group's working capital is primarily derived from funds generated from operations and net proceeds from share offer[58] Key Risks and Uncertainties Key risks include reliance on non-recurring project wins, inaccurate cost estimates leading to overruns, dependence on subcontractors, client credit risk, and the impact of the overall Hong Kong construction industry and macroeconomic-political conditions - Revenue is dependent on successfully securing non-recurring construction projects, leading to uncertainty[60] - Inaccurate project cost estimates or project delays may lead to cost overruns or even losses[60] - The Group relies on subcontractors, and their poor performance could adversely affect operations[64] - The Group's performance is contingent on trends in the Hong Kong construction industry and the overall economic and political conditions in Hong Kong[64] Use of Proceeds The report details the use of approximately HK$31.7 million in net IPO proceeds, with HK$27.6 million utilized as of December 31, 2019, primarily for performance bonds, upfront project costs, and working capital, leaving HK$4.1 million unutilized, following a change in use of proceeds in July 2019 Use of IPO Proceeds (As of December 31, 2019) | Purpose | Revised Net Amount (HK$ Million) | Amount Utilized (HK$ Million) | Unutilized Balance (HK$ Million) | | :--- | :--- | :--- | :--- | | Obtaining performance bonds | 2.9 | 2.9 | – | | Funding upfront project costs and working capital | 22.1 | 19.0 | 3.1 | | Strengthening workforce | 4.1 | 3.1 | 1.0 | | General working capital | 2.6 | 2.6 | – | | Total | 31.7 | 27.6 | 4.1 | - The company announced a change in use of proceeds on July 23, 2019, reallocating approximately HK$5.7 million originally designated for performance bonds to upfront costs and working capital needs for new projects[72] Other Disclosures This section covers directors' and major shareholders' interests, public float compliance, significant company developments, and adherence to corporate governance principles Directors' and Major Shareholders' Interests Executive Directors Mr. Hung Cheung Fai, Mr. Yip Siu Ching, and Mr. Kam Kin Bun collectively hold 64.86% of the company's shares through their holding company, Tak Wing Ventures Limited, and a concert party agreement, with other major shareholders' holdings also disclosed - Executive Directors Mr. Hung, Mr. Yip, and Mr. Kam are deemed to have interests in 648,600,000 shares (representing 64.86% of total share capital) through their holding company, Tak Wing, and a concert party agreement[73][75] - Major shareholder China Silver Asset Management Limited holds a 11.04% long position and a 3.50% short position[77] Public Float As of the report date, the company's public float was approximately 24.10%, below the 25% minimum required by GEM Listing Rules, with the company actively communicating with controlling shareholders and exploring options to restore the public float by end of February 2020 - The company's public float is approximately 24.10%, which is below the 25% requirement under Rule 11.23(7) of the GEM Listing Rules[79] - The company is actively taking measures to restore the public float, targeting completion by the end of February 2020[80] Inside Information and Company Developments Several significant events occurred during the period: a former employee was charged and pleaded guilty to accepting advantages by the ICAC, deemed not to have a material impact on the Group; the company cancelled its proposed name change; an executive director resigned; and a new independent non-executive director was appointed following a death to ensure compliance with listing rules - A former assistant project manager was charged by the ICAC for conspiracy to accept advantages and pleaded guilty; the Board believes the charge has no material impact on the Group's operations and financial position[81] - Following the passing of Independent Non-Executive Director Ms. Hung Siu Wun, the company temporarily fell short of listing rule requirements for board and audit committee member numbers; compliance was restored with the appointment of Ms. Yim Kwan Wing[86][88] - Executive Director Ms. Du Juan resigned, and the company decided not to proceed with the proposed change of company name[84][85] Corporate Governance The company has complied with most Corporate Governance Code provisions, with two deviations: the Chairman also performing management roles (no CEO), and a temporary shortfall in independent non-executive directors; the Audit Committee has reviewed this interim report and financial statements - The company deviates from Corporate Governance Code provision A.2.1 as Chairman Mr. Yip Siu Ching also manages daily Group operations without a separate Chief Executive Officer position, which the Board believes enhances management efficiency[92] - The Audit Committee, comprising three independent non-executive directors, has reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended December 31, 2019[97][98]