裕丰昌控股(08631) - 2022 - 中期财报

Performance Highlights Performance Highlights The Group achieved a significant turnaround to profitability for the six months ended September 30, 2021, with total revenue up 6.1%, gross margin doubling to 3.5%, and a net profit of approximately HKD 0.3 million compared to a prior-year loss of HKD 1.2 million, with no interim dividend declared 2021/2022 Interim Performance Highlights | Metric | For the Six Months Ended September 30, 2021 | For the Six Months Ended September 30, 2020 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | Approx. HKD 133.2 million | Approx. HKD 125.5 million | ▲ 6.1% | | Gross Margin | Approx. 3.5% | Approx. 1.7% | ▲ 1.8 percentage points | | Profit (Loss) Attributable to Owners of the Company | Profit Approx. HKD 0.3 million | Loss Approx. HKD 1.2 million | Turned to Profit | | Proposed Dividend | Not Declared | N/A | - | Condensed Consolidated Financial Statements Statement of Profit or Loss and Other Comprehensive Income For the six months ended September 30, 2021, the company reported revenue of HKD 133 million, up 6.1%, with gross profit significantly increasing to HKD 4.59 million from HKD 2.07 million, leading to a net profit of HKD 0.25 million and basic earnings per share of 0.06 HK cents, reversing a prior-year loss of HKD 1.21 million Condensed Consolidated Statement of Profit or Loss (For the Six Months Ended September 30) | Item | 2021 (HKD thousands) | 2020 (HKD thousands) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 133,165 | 125,476 | ▲ 6.1% | | Gross Profit | 4,594 | 2,071 | ▲ 121.8% | | Profit (Loss) Before Tax | 250 | (1,613) | Turned to Profit | | Profit (Loss) for the Period | 250 | (1,211) | Turned to Profit | | Basic Earnings (Loss) Per Share | 0.06 HK cents | (0.30) HK cents | Turned to Profit | Statement of Financial Position As of September 30, 2021, the company reported total assets of HKD 76.335 million, total liabilities of HKD 20.927 million, and net assets of HKD 55.408 million, a slight increase from March 31, 2021, with net current assets stable at HKD 46.257 million, and significant growth in trade receivables and payables indicating business expansion Summary of Statement of Financial Position | Item | September 30, 2021 (HKD thousands) | March 31, 2021 (HKD thousands) | | :--- | :--- | :--- | | Non-current Assets | 9,227 | 9,687 | | Current Assets | 67,108 | 55,185 | | Of which: Trade Receivables | 65,609 | 50,058 | | Current Liabilities | 20,851 | 9,415 | | Of which: Trade Payables | 10,623 | 5,033 | | Net Current Assets | 46,257 | 45,770 | | Non-current Liabilities | 76 | 299 | | Net Assets | 55,408 | 55,158 | | Total Equity | 55,408 | 55,158 | Statement of Changes in Equity For the six months ended September 30, 2021, the company's total equity increased from HKD 55.158 million at the beginning of the period to HKD 55.408 million at the end, with this increase solely attributable to the HKD 0.25 million net profit recorded during the period, and no other equity movements - The increase in total equity during the period was solely attributable to the HKD 0.25 million profit recorded for the period[13] Statement of Cash Flows During the reporting period, the company's operating cash flow turned to a net outflow of HKD 3.804 million from a prior-year net inflow of HKD 1.869 million, with investing activities showing a net outflow of HKD 1.031 million, resulting in a negative cash and cash equivalents balance of HKD 4.266 million at period-end primarily due to increased bank overdrafts Condensed Consolidated Statement of Cash Flows (For the Six Months Ended September 30) | Item | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Net Cash From Operating Activities | (3,804) | 1,869 | | Net Cash Used in Investing Activities | (1,031) | (1,877) | | Net Cash Used in Financing Activities | (217) | (209) | | Net Decrease in Cash and Cash Equivalents | (5,052) | (217) | | Cash and Cash Equivalents at End of Period | (4,266) | 409 | Notes to the Condensed Consolidated Financial Statements General Information and Accounting Policies Sun Kong Holdings Limited, incorporated in the Cayman Islands, primarily sells diesel and related products in Hong Kong, and its unaudited interim financial statements have been reviewed by the audit committee and prepared in accordance with HKAS 34 'Interim Financial Reporting,' maintaining consistent accounting policies with the prior year's financial statements - The company's principal business is the sale of diesel and related products in Hong Kong[17][20] - These condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting'[22] Revenue and Segment Information All company revenue is derived from a single operating segment in Hong Kong, the sale of diesel and related products, with diesel sales contributing HKD 132.9 million, or 99.8% of total revenue, for the six months ended September 30, 2021 Revenue Composition (For the Six Months Ended September 30) | Revenue Source | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Diesel Sales | 132,912 | 125,095 | | AdBlue Sales | 253 | 201 | | Ancillary Transportation Services | – | 180 | | Total | 133,165 | 125,476 | - The Group has only one operating and reportable segment, which is the sale of diesel and related products in Hong Kong[36] Other Income During the reporting period, other income significantly decreased from HKD 1.246 million in the prior period to HKD 0.02 million, primarily due to the absence of government grants related to the 'Employment Support Scheme' received in the previous year - Other income significantly decreased, primarily due to HKD 1.246 million in government grants received in the prior period, with no such income in the current period[40] Taxation No Hong Kong profits tax provision was made as the Group incurred a tax loss during the reporting period, and entities in the Cayman Islands and British Virgin Islands are exempt from income tax - No Hong Kong profits tax provision was made as the Group incurred a tax loss for the six months ended September 30, 2021[46] Dividends The Board does not recommend the payment of any dividend for the six months ended September 30, 2021, consistent with the prior period's policy - The Board does not recommend the payment of any dividend for the six months ended September 30, 2021[50] Earnings (Loss) Per Share For the six months ended September 30, 2021, basic earnings per share were 0.06 HK cents, calculated based on a net profit of HKD 0.25 million and 400 million weighted average ordinary shares, compared to a loss of 0.30 HK cents per share in the prior period, with no diluted earnings per share presented due to the absence of potential ordinary shares Earnings Per Share Calculation | Item | For the Six Months Ended September 30, 2021 | For the Six Months Ended September 30, 2020 | | :--- | :--- | :--- | | Profit (Loss) Attributable to Shareholders (HKD thousands) | 250 | (1,211) | | Weighted Average Number of Ordinary Shares | 400,000,000 | 400,000,000 | Trade Receivables As of September 30, 2021, net trade receivables increased to HKD 65.609 million from HKD 50.058 million on March 31, with an increase in receivables over 90 days, and high credit risk concentration as the top five customers accounted for 81% of total receivables - Trade receivables increased from HKD 50.058 million to HKD 65.609 million[70] - Credit risk is concentrated, with the largest customer and top five customers accounting for 38% and 81% respectively of total trade receivables[74] Banking Facility As of September 30, 2021, the Group had a HKD 5 million banking facility, with HKD 4.978 million utilized as bank overdrafts, leaving only HKD 0.022 million unutilized, indicating a very high credit facility utilization rate - As of September 30, 2021, the Group had a banking facility of HKD 5 million, with an unutilized amount of HKD 0.022 million[99][100] Events After Reporting Period Subsequent to the reporting period, the company's wholly-owned subsidiary, Wing Ko, secured new general banking facilities totaling HKD 11 million from Bank of China (Hong Kong), comprising a HKD 6 million 96-month installment loan and a HKD 5 million renewed bank overdraft, which will significantly improve the company's liquidity position - Subsequent to the reporting period, the company secured new banking facilities totaling HKD 11 million, including a HKD 6 million installment loan and a HKD 5 million bank overdraft[102][103] Management Discussion and Analysis Business Review and Future Prospects The Group, primarily selling diesel in Hong Kong to logistics and construction companies, faced reduced demand due to volatile crude oil prices and COVID-19 restrictions, but a recovery in local construction activities supported performance, leading to a turnaround to profitability, with future uncertainties from COVID-19 remaining a key challenge requiring close cash flow management for post-pandemic recovery - The Group primarily engages in the sale of diesel and related products in Hong Kong, with customers mainly comprising logistics and construction companies[105] - Significant fluctuations in crude oil prices and the impact of the COVID-19 pandemic on cross-border transportation reduced diesel demand from the logistics industry[106][107] - The recovery of Hong Kong's construction industry stimulated a rebound in diesel demand, helping the company achieve a net profit of approximately HKD 0.3 million for the six months ended September 30, 2021, compared to a net loss of HKD 1.2 million in the prior period[108][111] Financial Review The period's financial performance was driven by 'price up, volume down': despite a 35.8% decrease in diesel sales volume, a 65.7% surge in average selling price boosted total revenue by 6.1% to HKD 133.2 million, with gross margin improving from 1.7% to 3.5% and gross profit increasing by 119.0% to HKD 4.6 million, culminating in a net profit of HKD 0.3 million Sales Volume and Selling Price Changes (For the Six Months Ended September 30) | Item | 2021 | 2020 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Diesel Sales Volume | 31.6 million liters | 49.2 million liters | ▼ 35.8% | | Average Diesel Selling Price | HKD 4.21/liter | HKD 2.54/liter | ▲ 65.7% | - The average unit procurement cost of diesel increased by 61.9% year-on-year, from HKD 2.44/liter to HKD 3.95/liter[125] - Gross profit increased by 119.0% from HKD 2.1 million to HKD 4.6 million, with gross margin improving from 1.7% to 3.5%[132] - Administrative and other operating expenses decreased by 10.42% year-on-year, primarily due to a reduction in bad debt provision[133] Liquidity and Capital Resources As of September 30, 2021, the Group maintained a sound financial position with net current assets of HKD 46.3 million and a current ratio of 3.2, indicating strong short-term solvency, while a low gearing ratio of 9.0% reflected minimal leverage, with financial resources primarily derived from shareholders' funds Key Liquidity and Capital Resources Indicators (As of September 30, 2021) | Metric | Value | | :--- | :--- | | Net Current Assets | Approx. HKD 46.3 million | | Cash and Bank Balances | Approx. HKD 0.7 million | | Current Ratio | Approx. 3.2 | | Gearing Ratio | Approx. 9.0% | Use of Proceeds The company, listed in January 2019, had net proceeds of approximately HKD 34.8 million, with HKD 27.2 million utilized and HKD 7.6 million remaining unutilized as of September 30, 2021, noting delays in funds for diesel tank lorries and IT system upgrades, with all unutilized amounts expected to be fully deployed by March 31, 2023 Use of Net Proceeds from Listing (As of September 30, 2021) | Purpose | Revised Allocation (HKD millions) | Actual Usage (HKD millions) | Unutilized (HKD millions) | Expected Full Utilization Date | | :--- | :--- | :--- | :--- | :--- | | Purchase of Diesel Tank Lorries | 15.0 | 12.4 | 2.6 | By March 31, 2023 | | Expansion of Workforce | 1.7 | 1.7 | – | N/A | | Upgrade of Information Technology System | 5.0 | – | 5.0 | By March 31, 2023 | | Working Capital | 13.1 | 13.1 | – | N/A | | Total | 34.8 | 27.2 | 7.6 | | Other Information Interests of Directors and Substantial Shareholders As of September 30, 2021, Mr. Lo Ming Yik, Chairman and Executive Director, held 251,110,000 shares, representing 62.78% of the issued share capital, through his wholly-owned company Fully Fort Group Limited, making him the controlling shareholder - Executive Director Mr. Lo Ming Yik holds 62.78% of the company's shares through his wholly-owned company, Fully Fort Group Limited[180][182] Share Option Scheme The company adopted a share option scheme on December 11, 2018, with no options granted, exercised, lapsed, or cancelled during the reporting period or up to the reporting date, and no outstanding share options as of September 30, 2021 - There was no activity under the share option scheme during the reporting period, and no outstanding share options at period-end[190] Corporate Governance The company is committed to maintaining high corporate governance standards, complying with the GEM Listing Rules' Corporate Governance Code, and has established audit, nomination, and remuneration committees, with the unaudited condensed consolidated financial statements for the period reviewed by the audit committee - The company has established an Audit Committee, a Nomination Committee, and a Remuneration Committee, each comprising three independent non-executive directors[198][200][209] - This interim financial report is unaudited but has been reviewed by the Audit Committee[199][218]