WT集团(08422) - 2022 - 年度财报

Company Information Company Information The company's board comprises executive and independent non-executive directors, with key contact and listing information provided - Board composition includes executive directors Mr. Kam Kin Pan (Chairman) and Ms. Wong Mei Chun (appointed July 28, 2021), with Mr. Hung Cheung Fai retiring December 30, 2021. Independent non-executive directors include Ms. Chan Sin Wah (appointed July 28, 2021), Mr. Yu Tat Chi (appointed September 20, 2021), and Ms. Yip Tan (appointed August 30, 2022), alongside former members Mr. Leung Chi Hung, Ms. Wong Lai Na, and Mr. Yim Kwun Wing[8] - Key contact information includes Mr. Li Wai Chi as Company Secretary, Evergreen (HK) Certified Public Accountants Limited as auditor, stock code 8422, and company website http://www.hklistco.com.com/8422[9](index=9&type=chunk)[10] Chairman's Report and Management Discussion and Analysis Business Review The Group primarily provides specialized and general building engineering services in Hong Kong, achieving revenue and gross profit growth in FY22, but still recorded a net loss due to impairment losses, share-based payments, and expected credit loss provisions - Core business involves providing specialized engineering (foundation, site formation, demolition, ground investigation) and general building engineering (superstructure, slope maintenance, hoarding, alteration and addition, renovation) services in Hong Kong[13] Key Financial Data for Business Review in FY2022 | Metric | June 30, 2022 (HK$ million) | June 30, 2021 (HK$ million) | | :--- | :--- | :--- | | Revenue | 65.3 | 33.8 | | Gross Profit | 8.2 | 2.1 | | Loss and Total Comprehensive Loss | 8.9 | 7.4 | Financial Review During the reporting period, the Group's revenue significantly increased and gross profit margin improved, but administrative expenses rose due to share-based payments, and impairment losses on property, plant and equipment and right-of-use assets were recognized, leading to an expanded net loss Key Financial Data for Financial Review in FY2022 | Metric | June 30, 2022 (HK$ million) | June 30, 2021 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Revenue | 65.3 | 33.8 | Increased by 93.2% | | Gross Profit Margin | 12.6% | 6.3% | Increased by 6.3 percentage points | | Administrative Expenses | 12.8 | 8.5 | Increased by 50.6% | | Impairment Loss on Property, Plant and Equipment | 1.2 | 0.1 | Increased by 930.1% | | Impairment Loss on Right-of-Use Assets | 0.3 | 0.7 | Decreased by 57.1% | | Net Loss | 8.9 | 7.4 | Loss expanded by 20.3% | - The increase in administrative expenses was primarily due to the recognition of share-based payment expenses of approximately HK$3.1 million for the year ended June 30, 2022[16] Outlook Facing uncertainties from the COVID-19 pandemic and intense competition, the Group maintains cautious optimism for the construction and renovation market, focusing on foundation, site formation, superstructure, and renovation projects while adhering to prudent financial management and exploring other investment opportunities to diversify revenue - Market challenges: The operating environment is expected to be challenging, with COVID-19 increasing uncertainties in project execution[20] - Business strategy: Focus on foundation and site formation works, superstructure construction, and renovation projects to seize business opportunities[20] - Financial strategy: Adhere to prudent financial management principles to ensure sustainable growth and capital adequacy[20] - Diversified income: Consider other investment opportunities to expand revenue sources while being mindful of associated risks[21] Liquidity and Financial Resources As of June 30, 2022, the Group maintained a sound financial position with a decrease in cash and bank balances but a high current ratio, a slight increase in gearing ratio, and raised HK$8.1 million through share placement for construction projects and general working capital Key Data for Liquidity and Financial Resources in FY2022 | Metric | June 30, 2022 (HK$ million) | June 30, 2021 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 30.7 | 49.4 | Decreased by 37.8% | | Restricted Cash Balances | 0.7 | 2.1 | Decreased by 66.7% | | Current Ratio | 7.2 times | 8.3 times | Decreased by 13.25% | | Gearing Ratio | 1.8% | 1.2% | Increased by 0.6 percentage points | - Fundraising activities: Net proceeds of approximately HK$8.1 million were raised through share placement on November 16, 2021, fully utilized for construction projects (HK$5.1 million) and general working capital (HK$3.0 million)[24] - Asset pledge: Approximately HK$0.7 million in deposits placed with an insurance company are pledged as collateral for performance guarantees[26] - Foreign exchange risk: The majority of business transactions are denominated in HKD, posing no significant foreign exchange fluctuation risk, and no foreign currency hedging policy has been adopted[28] - Capital structure: Share consolidation became effective on April 12, 2022, where every ten shares of HK$0.01 each were consolidated into one share of HK$0.1 each[29] - Contingent liabilities: Performance guarantees of approximately HK$2.6 million were provided for construction contracts, with directors believing the likelihood of claims from customers to be low[33] Employees and Remuneration Policy As of June 30, 2022, the company employed 26 staff, with staff costs increasing to HK$12.6 million, and provides remuneration based on position, qualifications, and performance, along with training and a share option scheme to incentivize employees Staff Situation in FY2022 | Metric | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Number of Employees | 26 employees | 21 employees | | Staff Costs | 12.6 HK$ million | 8.8 HK$ million | - Remuneration structure: Based on basic salary, bonuses (referencing Group performance and employee performance) and a share option scheme[35] - Share option scheme: 10,000,000 share options have been granted to directors and employees[35] Dividends and Dividend Policy The company has adopted a dividend policy where the Board will consider financial performance, retained earnings, working capital needs, future business plans, liquidity, and overall economic conditions to determine dividend distribution, and no final dividend is recommended for the year ended June 30, 2022 - Dividend policy: The Board determines dividend distribution based on various factors including financial performance, earnings, working capital, business plans, liquidity, and economic conditions[36] - FY2022 dividends: No final dividend is recommended for declaration[37] Biographical Details of Directors Biographical Details of Directors This section provides biographical details for the company's directors, including their age, appointment dates, responsibilities, and extensive experience in the construction and engineering industries - Mr. Kam Kin Pan (Executive Director, Chairman): 65 years old, appointed Executive Director since July 2017, responsible for daily management and tender bidding, with over 39 years of experience in the Hong Kong construction industry, holding a Diploma in Civil Engineering since 1982[39][40] - Ms. Wong Mei Chun (Executive Director): 62 years old, appointed July 28, 2021, with over 25 years of experience in the construction and electrical engineering industries, specializing in project management, production operations, and financial management[40] - Independent Non-Executive Directors: Ms. Chan Sin Wah (43 years old, appointed July 28, 2021, extensive accounting and auditing experience), Ms. Yip Tan (30 years old, appointed August 30, 2022, experience in building design and construction), and Mr. Yu Tat Chi (57 years old, appointed September 20, 2021, extensive experience in accounting, corporate finance, and asset management, serving as independent non-executive director for several listed companies)[41][42] Corporate Governance Report Introduction The company is committed to achieving and maintaining a high standard of corporate governance, which it believes is crucial for gaining trust from shareholders and stakeholders, effective management, accountability, and transparency to create long-term value - Objective: Achieve and maintain a high standard of corporate governance to build trust, effective management, accountability, and transparency[44] - Compliance: During the reporting period, the company complied with all applicable code provisions, except for the Chairman and Executive Director Mr. Kam Kin Pan simultaneously overseeing Board management and daily business operations, deviating from code provision A.2.1[46][47] Board of Directors The Board is responsible for overseeing all significant company matters and fulfilling corporate governance duties, comprising executive and independent non-executive directors who meet GEM Listing Rules requirements, and despite a deviation from the chairman/CEO separation, the company has adopted a board diversity policy and provides continuous training for directors - Board responsibilities: Oversee company strategy, business performance, financial performance, internal controls, risk management, and corporate governance policies[50][51] - Chairman and Chief Executive roles: Mr. Kam Kin Pan concurrently serves as Chairman and manages daily business operations, deviating from Corporate Governance Code Provision A.2.1, but the Board believes this arrangement enhances management efficiency and business development[53] - Independent Non-Executive Directors: During the reporting period, there were three independent non-executive directors, comprising over one-third of the Board, all possessing appropriate professional qualifications or experience and confirming their independence[52] - Board Diversity Policy: Adopted a diversity policy considering factors such as gender, age, cultural background, education, professional experience, skills, and knowledge[56] - Directors' Continuous Training: All directors participate in continuous professional development to update their knowledge and skills, and are provided with the latest information on relevant laws, regulations, and business developments[59][60] - Directors' Securities Transactions: Directors have confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers under GEM Listing Rules 5.48 to 5.67[61] Board Committees The company has an Audit Committee, Nomination Committee, and Remuneration Committee, each with clear terms of reference and responsibilities, chaired by independent non-executive directors, with the report detailing their composition, main functions, meeting attendance, and director participation during the reporting period - Audit Committee: Responsible for recommending auditor appointment, reviewing financial statements, and monitoring internal control and risk management systems, chaired by Mr. Yu Tat Chi, with all members being independent non-executive directors[63][64] - Nomination Committee: Responsible for reviewing Board structure, identifying director candidates, and assessing the independence of independent non-executive directors, chaired by Ms. Chan Sin Wah[66][67] - Remuneration Committee: Responsible for formulating remuneration policy and reviewing remuneration packages for directors and senior management, chaired by Ms. Chan Sin Wah[68][69] Attendance at Board and Committee Meetings During the Reporting Period | Director Name | Board Meetings | Audit Committee Meetings | Nomination Committee Meetings | Remuneration Committee Meetings | Annual General Meetings | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Kam Kin Pan | 12/12 | N/A | 1/1 | 1/1 | 2/2 | | Ms. Wong Mei Chun | 8/8 | N/A | N/A | N/A | 2/2 | | Ms. Chan Sin Wah | 8/8 | 4/4 | 2/2 | 2/2 | 2/2 | | Mr. Yu Tat Chi | 7/7 | 4/4 | 2/2 | 2/2 | 2/2 | Directors' and Auditor's Responsibilities for the Consolidated Financial Statements The Board confirms its responsibility to ensure that the consolidated financial statements are prepared truly and fairly in accordance with applicable accounting standards and disclosure requirements, and to maintain proper accounting records and internal controls, while the auditor is responsible for expressing an independent audit opinion on the consolidated financial statements - Directors' responsibilities: Ensure consolidated financial statements are true and fair, comply with the Companies Ordinance and accounting standards, and maintain proper accounting records and internal controls[72] - Auditor's responsibilities: Express an independent audit opinion on the consolidated financial statements and communicate audit scope, timing, and significant findings to the Audit Committee[72][173] - Auditor's remuneration: For the year ended June 30, 2022, audit service fees payable to Evergreen (HK) Certified Public Accountants Limited were approximately HK$0.45 million[73] Company Secretary and Compliance Officer Mr. Li Wai Chi serves as the Company Secretary, assisting the Board in complying with policies and procedures and providing corporate governance advice, while Mr. Kam Kin Pan serves as the Compliance Officer - Company Secretary: Mr. Li Wai Chi, responsible for assisting the Board in complying with policies and procedures and providing corporate governance advice[74] - Compliance Officer: Mr. Kam Kin Pan[75] Corporate Governance Functions The company has not established a separate corporate governance committee, with its corporate governance functions performed by the Board, including formulating and reviewing corporate governance policies, codes of conduct, training for directors and senior management, compliance with laws and regulations, and disclosure of corporate governance reports - Function performer: The Board performs corporate governance functions, without a separate committee established[76] - Key functions: Formulate and review corporate governance policies, codes of conduct, training, compliance with laws and regulations, and report disclosure[76] Shareholders' Rights and Communication The company ensures convenient, equal, and timely access to company information for shareholders and potential investors through various channels, including individual resolutions at general meetings, voting by poll, corporate communications, regular announcements, and the company website, also providing a platform for shareholders to express their views - General meetings: Individual resolutions are proposed, and all resolutions are voted on by poll[77] - Information disclosure: Information is provided through annual reports, quarterly reports, interim reports, circulars, HKEX announcements, and the company website[82][83] - Communication channels: General meetings provide a platform, the Hong Kong share registrar offers services, and investor suggestions are welcomed[82] Risk Management and Internal Control The Group maintains effective internal control and risk management systems, with the Board reviewing their effectiveness at least annually, and has established risk management procedures including identification, assessment, and mitigation of risks, with the Board believing that sufficient and effective internal control and risk management measures have been implemented - System effectiveness: Maintain effective internal control and risk management systems, reviewed by the Board at least annually[84] - Risk management procedures: Include risk identification, risk assessment (impact and likelihood), and risk mitigation (control activities)[85] - Internal audit: Given the relatively simple company structure, no internal audit department has been established at present[85] Dividend Policy The company has adopted a dividend policy where the Board will decide on dividend distribution and levels after considering multiple factors, including financial performance, earnings, working capital, business plans, liquidity, and economic conditions, but does not guarantee the payment of any specific amount of dividends - Decision factors: Financial performance, retained earnings, working capital, capital expenditure, future business plans, liquidity position, economic conditions, legal restrictions, etc[87][91] - No guaranteed dividends: The dividend policy does not constitute a legally binding commitment to pay any specific amount of dividends[88] Inside Information and Constitutional Documents The Group complies with the Securities and Futures Ordinance and GEM Listing Rules, ensuring timely disclosure of inside information and maintaining confidentiality, with no significant changes to constitutional documents during the reporting period - Inside information disclosure: Comply with the Securities and Futures Ordinance and GEM Listing Rules, ensuring timely, clear, and balanced disclosure of inside information, and maintaining confidentiality[89] - Constitutional documents: No significant changes during the reporting period[90] Directors' Report Principal Activities and Business Review The company, as an investment holding company, primarily provides specialized and general building engineering services in Hong Kong through its subsidiaries, including foundation, site formation, demolition, superstructure construction, and renovation, with details of the year's business review available in the Chairman's Report - Company nature: Investment holding company[93] - Core business: Provides specialized engineering (foundation, site formation, demolition, ground investigation) and general building engineering (superstructure, slope maintenance, hoarding, alteration and addition, renovation) services in Hong Kong[93] - No significant change in business: No significant change in the nature of principal activities during the year[93] Environmental Policies and Compliance with Laws and Regulations The company is committed to environmental protection and sustainable development, complying with relevant laws and regulations, and has adopted effective environmental practices, with no significant non-compliance events affecting the Group's operations identified for the year ended June 30, 2022 - Environmental commitment: Committed to environmental protection, pursuing environmental and social sustainable development, and complying with environmental laws and regulations[96] - Legal compliance: No significant non-compliance with laws and regulations for the year ended June 30, 2022[98] Key Risks and Uncertainties The Group's business faces several risks and uncertainties, including project bidding uncertainty, inaccurate cost estimation, reliance on subcontractors, customer credit risk, and the impact of the Hong Kong construction industry and overall economic and political conditions - Project bidding uncertainty: Revenue depends on successful bidding or quotation for non-recurring engineering projects[104] - Cost estimation risk: Project cost estimates are inaccurate or project delays may lead to cost overruns or losses[104] - Subcontractor reliance: Reliance on subcontractors, whose poor performance or inadequate services may affect operations and profitability[104] - Customer credit risk: Customers' failure to pay on time or in full may adversely affect liquidity[104] - Industry and economic risk: Performance is affected by trends in the Hong Kong construction industry, market conditions, and overall economic and political situations[104] Results and Financial Summary The Group recorded a loss for the year ended June 30, 2022, and the Board does not recommend a final dividend, with a summary of past five years' results, assets, and liabilities available on page 91 of the report - Annual results: Recorded a loss for the year ended June 30, 2022[100] - Dividends: No final dividend is recommended for declaration[100] - Financial summary: A summary of the past five years' results, assets, and liabilities can be found on page 91[101] Share Capital and Share Option Scheme Details of the company's share capital are in Note 24, and the share option scheme adopted on December 1, 2017, aims to incentivize employees and directors, with 100,000,000 options granted on October 8, 2021, including 40,000,000 to directors, and their fair value estimated using a binomial option pricing model has been recognized as share-based payment expense - Share capital changes: 200,000,000 shares were placed on November 16, 2021, raising net proceeds of approximately HK$8.1 million. Share consolidation occurred on April 12, 2022, where every ten shares of HK$0.01 each were consolidated into one share of HK$0.1 each[24][29][84] - Share option scheme purpose: Attract and retain talent, provide additional incentives, and promote business development[106] - Share option grants: 100,000,000 share options were granted on October 8, 2021, with 40,000,000 granted to directors, at an exercise price of HK$0.056 (HK$0.56 after share consolidation)[115] - Share option fair value: For the year ended June 30, 2022, the fair value of share options was approximately HK$3.115 million, recognized as share-based payment expense[118] - Unexercised share options: As of the date of this annual report, the total number of shares available for issue is 12,000,000, representing approximately 10% of the company's issued share capital on that date[119] Reserves and Distributable Reserves Details of changes in the company's and Group's reserves are provided in Note 33 to the consolidated financial statements and the consolidated statement of changes in equity, and as of June 30, 2022, the company had no distributable reserves - Reserve changes: Details are provided in Note 33 to the consolidated financial statements and the consolidated statement of changes in equity[120] - Distributable reserves: As of June 30, 2022, the company had no distributable reserves[123] Major Customers and Suppliers For the year ended June 30, 2022, the Group's customer and supplier concentration decreased, but the top five customers and suppliers still accounted for a significant portion of revenue and purchases Major Customer and Supplier Concentration in FY2022 | Metric | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Revenue from Largest Customer | 18.2% | 59.7% | | Revenue from Top Five Customers | 58.7% | 97.1% | | Purchases from Largest Supplier | 19.9% | 40.9% | | Purchases from Top Five Suppliers | 58.7% | 68.6% | - Related party interests: No directors, their close associates, or shareholders holding more than 5% of the shares held beneficial interests in the top five customers or suppliers[124] Relationship with Customers, Suppliers, Subcontractors, Employees and Shareholders The Group's success relies on the support of various stakeholders, with the company committed to maintaining good relationships with customers through ISO 9001 quality management, fostering long-term cooperation with suppliers and subcontractors, valuing employees with competitive remuneration and training, and aiming to enhance shareholder returns - Customer relationships: Emphasize timely delivery, maintain ISO 9001 quality management system, regularly communicate, and foster good business relationships[126] - Supplier and subcontractor relationships: Maintain good business relationships, have an internal approved list, evaluate multiple factors for partner selection, and had no significant disputes during the year[127][128] - Employee relationships: Value employee talent, provide a good working environment, competitive remuneration, and training, maintaining good relationships[129] - Shareholder relationships: Aim to enhance shareholder returns by developing core businesses for sustainable profitable growth and considering dividend payouts to shareholders[130] Directors and Senior Management This report lists the Board members as of the report date and explains the rotation and re-election mechanism for directors, with the Nomination Committee responsible for nominating and selecting director candidates and ensuring board diversity, and the company has arranged liability insurance for directors and senior officers, also disclosing the remuneration range for senior management - Board members: As of the report date, Board members include executive directors Mr. Kam Kin Pan and Ms. Wong Mei Chun, and independent non-executive directors Ms. Chan Sin Wah, Ms. Yip Tan, and Mr. Yu Tat Chi[131] - Directors' rotation: One-third of directors retire by rotation annually and are eligible for re-election, with each director retiring at least once every three years[131] - Independence confirmation: Ms. Chan Sin Wah and Ms. Yip Tan meet the independence criteria of the GEM Listing Rules and are considered independent of the Group by the Board[133] - Indemnity provisions: Directors are entitled to be indemnified by the company for losses or liabilities incurred as directors, and the company has arranged directors' and officers' liability insurance[134] Senior Management Remuneration Range in FY2022 | Remuneration Range | Number of Individuals | | :--- | :--- | | HK$1,000,000 or below | 4 | | HK$1,000,001 to HK$2,000,000 | 1 | | Above HK$2,000,000 | – | - Remuneration policy: Remuneration includes a fixed component (basic salary) and a variable component (discretionary bonuses and other incentives), considering experience, responsibilities, performance, Group profit, and market conditions[139] Disclosure of Directors' Interests and Other Matters The report discloses the interests of directors and chief executives in the company's shares or related shares, as well as major shareholders' holdings, confirms that the company has maintained sufficient public float, mentions the change of auditors, and confirms that directors are unaware of any conflicts of interest Directors' Long Positions in Shares or Related Shares as of June 30, 2022 | Director Name | Capacity | Number of Unlisted Share Options | Percentage of Total Issued Share Capital of the Company | | :--- | :--- | :--- | :--- | | Mr. Kam Kin Pan | Beneficial Owner | 1,000,000 | 0.83% | | Ms. Wong Mei Chun | Beneficial Owner | 1,000,000 | 0.83% | | Ms. Chan Sin Wah | Beneficial Owner | 1,000,000 | 0.83% | | Mr. Yu Tat Chi | Beneficial Owner | 1,000,000 | 0.83% | Major Shareholders' Long Positions in Shares as of June 30, 2022 | Shareholder Name | Capacity | Number of Shares Held/Interested | Approximate Percentage of Total Issued Share Capital of the Company | | :--- | :--- | :--- | :--- | | Ms. Zhao Xuemei | Beneficial Owner | 8,999,000 | 7.49% | - Public float: For the year ended June 30, 2022, and up to the date of this report, the company maintained the minimum public float required by the GEM Listing Rules[147] - Auditor change: PricewaterhouseCoopers resigned on July 9, 2020, and Grant Thornton took over; Grant Thornton resigned on July 12, 2022, and Evergreen took over[148] - Conflicts of interest: Directors are unaware of any business or interest that directly or indirectly competes with the Group's business[149] Independent Auditor's Report Independent Auditor's Report Independent auditor Evergreen (HK) Certified Public Accountants Limited issued an unmodified opinion on the consolidated financial statements for the year ended June 30, 2022, which were prepared in accordance with Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance, highlighting key audit matters related to revenue recognition and expected credit loss provisions - Audit opinion: Independent auditor Evergreen (HK) Certified Public Accountants Limited issued an unmodified opinion on the consolidated financial statements for the year ended June 30, 2022[156] - Basis of preparation: Consolidated financial statements were properly prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance[156] - Key audit matters: 1. Revenue recognition for construction contracts (involving significant management estimates and judgments on the value of work completed); 2. Expected credit loss provisions for trade receivables and contract assets (involving significant judgment and complexity)[158][161][163] - Directors' responsibilities: Directors are responsible for preparing consolidated financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards and the Companies Ordinance, and for internal controls[169] - Auditor's responsibilities: The objective is to obtain reasonable assurance that the consolidated financial statements are free from material misstatement and to communicate audit findings to the Audit Committee[171][173] Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Profit or Loss and Other Comprehensive Income The consolidated statement of profit or loss and other comprehensive income for FY2022 shows a significant increase in revenue and gross profit, but also a substantial rise in administrative expenses, impairment losses, and expected credit loss provisions, leading to an expanded net loss attributable to owners of the company and an increased basic loss per share Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income in FY2022 | Metric (HK$ thousand) | 2022 | 2021 (Restated) | Change | | :--- | :--- | :--- | :--- | | Revenue | 65,331 | 33,826 | Increased by 93.1% | | Cost of Sales | (57,124) | (31,702) | Increased by 80.2% | | Gross Profit | 8,207 | 2,124 | Increased by 286.4% | | Other Income | 215 | 737 | Decreased by 70.8% | | Administrative Expenses | (12,849) | (8,533) | Increased by 50.6% | | Finance Costs | (51) | (41) | Increased by 24.4% | | Impairment Loss on Property, Plant and Equipment | (1,164) | (113) | Increased by 930.1% | | Impairment Loss on Right-of-Use Assets | (334) | (706) | Decreased by 52.7% | | Provision for Expected Credit Losses | (2,972) | 60 | Turned from reversal to provision | | Loss Before Tax | (8,948) | (6,472) | Loss expanded by 38.3% | | Loss and Total Comprehensive Loss Attributable to Owners of the Company for the Year | (8,948) | (7,396) | Loss expanded by 20.9% | | Basic Loss Per Share (HK cents) | (8.0) | (7.4) | Loss expanded by 8.1% | Consolidated Statement of Financial Position Consolidated Statement of Financial Position The consolidated statement of financial position as of June 30, 2022, shows significant increases in trade receivables and contract assets, a decrease in cash and cash equivalents, and an overall increase in net assets and total equity Key Data from Consolidated Statement of Financial Position in FY2022 | Metric (HK$ thousand) | June 30, 2022 | June 30, 2021 | Change | | :--- | :--- | :--- | :--- | | Non-Current Assets | | | | | Property, Plant and Equipment | 71 | – | Significantly increased | | Right-of-Use Assets | 602 | – | Significantly increased | | Current Assets | | | | | Trade Receivables | 18,747 | 271 | Increased by 6814% | | Contract Assets | 17,433 | 12,301 | Increased by 41.7% | | Cash and Cash Equivalents | 30,710 | 49,447 | Decreased by 37.9% | | Current Liabilities | | | | | Trade Payables and Retention Payables | 6,400 | 5,094 | Increased by 25.6% | | Net Assets | 59,748 | 57,445 | Increased by 4.0% | | Total Equity | 59,748 | 57,445 | Increased by 4.0% | Consolidated Statement of Changes in Equity Consolidated Statement of Changes in Equity The consolidated statement of changes in equity for FY2022 reflects an increase in share capital and share premium due to share placement, the recognition of a new share option reserve from share-based payments, and an expansion of accumulated losses, resulting in an overall increase in total equity Key Data from Consolidated Statement of Changes in Equity in FY2022 | Metric (HK$ thousand) | June 30, 2022 | June 30, 2021 | Change | | :--- | :--- | :--- | :--- | | Share Capital | 12,000 | 10,000 | Increased by 20% | | Share Premium | 42,991 | 36,855 | Increased by 16.6% | | Share Option Reserve | 3,115 | – | Newly recognized | | Retained Earnings/(Accumulated Losses) | (8,458) | 490 | Turned from earnings to losses | | Total Equity | 59,748 | 57,445 | Increased by 4.0% | - Share-based payment expense: HK$3,115 thousand in share-based payment expense was recognized[183] - Share placement: Share placement resulted in an increase in share capital of HK$2,000 thousand and share premium of HK$6,136 thousand[183] - Loss for the year: Loss and total comprehensive loss for the year amounted to HK$8,948 thousand[183] Consolidated Statement of Cash Flows Consolidated Statement of Cash Flows The consolidated statement of cash flows for FY2022 shows a significant shift from net cash inflow to outflow from operating activities, increased outflow from investing activities, and a shift from outflow to inflow from financing activities, resulting in a net decrease in cash and cash equivalents by year-end Key Data from Consolidated Statement of Cash Flows in FY2022 | Metric (HK$ thousand) | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Net Cash From/(Used in) Operating Activities | (24,489) | 12,080 | Shifted from inflow to outflow | | Net Cash (Used in)/From Investing Activities | (1,676) | 62 | Outflow increased | | Net Cash From/(Used in) Financing Activities | 7,428 | (691) | Shifted from outflow to inflow | | (Decrease)/Increase in Cash and Cash Equivalents | (18,737) | 11,451 | Shifted from increase to decrease | | Cash and Cash Equivalents at Year-End | 30,710 | 49,447 | Decreased by 37.9% | - Operating activities cash outflow reasons: Primarily affected by loss before tax and increases in trade receivables and contract assets[187] - Financing activities cash inflow reasons: Primarily from proceeds of share placement amounting to HK$8,136 thousand[187] Notes to the Consolidated Financial Statements General Information WT Group Holdings Limited was incorporated in the Cayman Islands as an exempted company on July 11, 2017, primarily engaged in investment holding and providing specialized and general building engineering services in Hong Kong through its subsidiaries, with its shares listed on GEM of the Stock Exchange on December 28, 2017 - Registration information: Incorporated in the Cayman Islands as an exempted company on July 11, 2017[189] - Principal activities: Investment holding, providing specialized and general building engineering services in Hong Kong through subsidiaries[190] - Listing information: Listed on GEM of the Stock Exchange on December 28, 2017[191] Basis of Preparation and Adoption of New and Revised Hong Kong Financial Reporting Standards The consolidated financial statements are prepared in accordance with all applicable Hong Kong Financial Reporting Standards issued by the HKICPA and comply with GEM Listing Rules and the Hong Kong Companies Ordinance, with new and revised standards adopted this year having no significant impact on financial position or performance - Basis of preparation: Prepared in accordance with Hong Kong Financial Reporting Standards issued by the HKICPA, GEM Listing Rules, and the Hong Kong Companies Ordinance[192] - Impact of new standards: New and revised Hong Kong Financial Reporting Standards applied this year had no significant impact on financial position or performance[194] - Assessment of future standards: Currently assessing new standards issued but not yet effective, which are not expected to have a significant impact on the consolidated financial statements[197] Significant Accounting Policies This section details the significant accounting policies adopted by the Group in preparing the consolidated financial statements, including consolidation, foreign currency translation, property, plant and equipment, leases, contract assets and liabilities, revenue recognition for construction contracts, financial instruments, employee benefits, share-based payments, taxation, and impairment of assets, providing a foundation for understanding the financial statements - Consolidation: Subsidiaries are consolidated from the date control is transferred, with intercompany transactions, balances, and unrealized profits eliminated[201][202] - Property, plant and equipment: Recognized at cost less accumulated depreciation and impairment losses, with depreciation calculated using the straight-line method[206] - Leases (Lessee): Right-of-use assets and lease liabilities are recognized, except for short-term leases and leases of low-value assets. Right-of-use assets are measured at cost less accumulated depreciation and impairment losses[208][209] - Revenue recognition for construction contracts: Revenue is recognized over time using the output method, based on the value of work completed and certified, adjusted for uncertified estimated work value[216] - Impairment of financial assets and contract assets: Expected credit loss provisions are recognized, with trade receivables and contract assets measured using the simplified approach (lifetime expected credit losses)[248] - Share-based payments: Equity-settled share-based payments are measured at fair value at the grant date and expensed over the vesting period[237] Critical Judgements and Key Estimates This section discloses management's critical judgments and key estimates made in applying accounting policies, which significantly impact the amounts recognized in the consolidated financial statements, including assessing significant increases in credit risk, estimating revenue and profit recognition for construction contracts, evaluating impairment of property, plant and equipment and right-of-use assets, and valuing impairment of trade receivables, contract assets, and share-based payment transactions - Significant increase in credit risk: When assessing whether the credit risk of financial instruments has significantly increased, reasonable and supportable qualitative and quantitative forward-looking information is considered[265] - Revenue and profit recognition for construction contracts: Revenue recognition is based on certified work measurements and estimates of uncertified work value[267] - Asset impairment: When assessing impairment of property, plant and equipment and right-of-use assets, judgments are required regarding indicators of events, recoverable amounts (value in use), and key assumptions (cash flow forecasts, discount rates)[269] - Impairment of trade receivables and contract assets: Expected credit loss amounts are estimated based on the difference between contractual cash flows and expected cash flows, discounted at the original effective interest rate[270] - Share-based payment valuation: The fair value of share options is valued using a binomial option pricing model, involving key input data such as dividend yield, expected volatility, risk-free interest rate, and expected option life[271] Financial Risk Management The Group's financial risk management program aims to mitigate potential adverse effects of foreign currency risk, credit risk, liquidity risk, and interest rate risk on financial performance, with the report detailing strategies for managing each risk, including customer credit risk assessment, expected credit loss provisions for trade receivables and contract assets, regular monitoring of liquidity needs, and the limited impact of interest rate risk - Foreign currency risk: Minimal, as most transactions are denominated in HKD, and no foreign currency hedging policy has been adopted[275] - Credit risk: Primarily arises from trade receivables and contract assets, managed through customer credit assessment and expected credit loss provisions[276][278] Expected Credit Loss Provisions for Trade Receivables and Contract Assets as of June 30, 2022 | Metric | June 30, 2022 (HK$ thousand) | | :--- | :--- | | Provision for Trade Receivables | 3,084 | | Provision for Contract Assets | 579 | - Liquidity risk: Regularly monitored to ensure sufficient cash reserves are maintained[289] - Interest rate risk: Lease liabilities bear interest at fixed rates, other interest-bearing assets and liabilities are not significant, and income and operating cash flows are generally unaffected by market interest rate changes[292] Segment Information The Group's primary operating decision-maker assesses all businesses as a single operating segment for evaluation and resource allocation, thus no operating segment information is presented, with all activities and revenue derived from external customers in Hong Kong - Operating segments: All businesses are considered a single operating segment, and no separate segment information is presented[297] - Geographical information: All activities and revenue are derived from Hong Kong[298] - Customer concentration: For the year ended June 30, 2022, revenue from 2 customers each accounted for over 10% of total revenue[298] Revenue and Other Income For the year ended June 30, 2022, the Group's revenue primarily came from construction contracts, with contract revenue recognized over time amounting to HK$65,331 thousand, while other income mainly included government grants and sundry income, with government grants decreasing due to COVID-19 related subsidies Revenue and Other Income in FY2022 | Metric (HK$ thousand) | 2022 | 2021 | | :--- | :--- | :--- | | Contract Revenue | 65,331 | 33,826 | | Government Grants | 192 | 672 | | Sundry Income | 23 | 65 | | Total Other Income | 215 | 737 | - Revenue source: Primarily construction contract revenue, recognized over time[299] - Government grants: Primarily related to COVID-19 employment support schemes[301] Finance Costs and Loss Before Tax For the year ended June 30, 2022, the Group's finance costs primarily consisted of interest expense on lease liabilities, amounting to HK$51 thousand, and the loss before tax was HK$8,948 thousand, mainly influenced by construction costs, administrative expenses (including share-based payment expenses), asset depreciation and impairment losses, and expected credit loss provisions Key Data for Finance Costs and Loss Before Tax in FY2022 | Metric (HK$ thousand) | 2022 | 2021 | | :--- | :--- | :--- | | Interest Expense on Lease Liabilities | 51 | 41 | | Loss Before Tax | (8,948) | (6,472) | | Construction Costs | 57,124 | 31,702 | | Employee Benefit Expenses (including Directors' Emoluments) | 7,572 | 4,092 | | Share-Based Payment Expenses | 3,115 | – | | Impairment Loss on Property, Plant and Equipment | 1,164 | 113 | | Provision for Expected Credit Losses | 2,972 | (60) | Directors' and Chief Executive's Emoluments This section details the remuneration components for directors and chief executives for the year ended June 30, 2022, including fees, salaries, discretionary bonuses, allowances and benefits in kind, employer's contributions to pension schemes, and share-based payments, with total emoluments amounting to HK$4,850 thousand, of which HK$1,304 thousand was from share-based payments Directors' and Chief Executive's Emoluments in FY2022 | Emolument Type (HK$ thousand) | 2022 | 2021 | | :--- | :--- | :--- | | Fees | 486 | 540 | | Salaries | 2,424 | 2,539 | | Discretionary Bonuses | 325 | 233 | | Allowances and Benefits in Kind | 284 | 301 | | Employer's Contributions to Pension Schemes | 27 | 41 | | Share-Based Payments | 1,304 | – | | Total | 4,850 | 3,654 | - Remuneration determination: Determined by the Remuneration Committee after considering performance and market trends[313] - No additional emoluments: No directors received rewards for joining the Group or compensation for loss of office during the year[311] Income Tax Expense For the year ended June 30, 2022, the Group recognized no income tax expense, compared to HK$924 thousand in 2021, as Hong Kong profits tax is levied under a two-tiered system, but no provision was made due to the absence of assessable profits or sufficient tax losses to offset for the Group's Hong Kong entities Income Tax Expense in FY2022 | Metric (HK$ thousand) | 2022 | 2021 | | :--- | :--- | :--- | | Income Tax Expense | – | 924 | - Hong Kong Profits Tax: Profits up to HK$2,000,000 are taxed at 8.25%, and profits exceeding this amount are taxed at 16.5%[314] - Reason for no provision: Hong Kong entities had no assessable profits or sufficient tax losses to carry forward[314] - Tax differences: The difference between the theoretical tax amount on loss before tax and actual income tax expense primarily arises from non-deductible expenses, non-taxable income, unrecognized tax losses, and utilized unrecognized tax losses[317] Loss Per Share For the year ended June 30, 2022, the basic loss per share attributable to owners of the company was 8.0 HK cents, an increase from 7.4 HK cents in 2021, and diluted loss per share is not presented as share options would not result in a diluted loss per share Loss Per Share in FY2022 | Metric | 2022 | 2021 (Restated) | | :--- | :--- | :--- | | Loss Attributable to Owners of the Company (HK$ thousand) | (8,948) | (7,396) | | Weighted Average Number of Ordinary Shares for Basic and Diluted Loss Per Share (thousand shares) | 111,475 | 100,000 | | Basic Loss Per Share (HK cents) | (8.0) | (7.4) | - Diluted loss: Unexercised share options would not result in a diluted loss per share for the year ended June 30, 2022[320] - 2021 restatement: The weighted average number of ordinary shares for basic loss per share in 2021 has been adjusted to reflect the impact of the share consolidation[320] Property, Plant and Equipment and Right-of-Use Assets As of June 30, 2022, the net book value of property, plant and equipment was HK$71 thousand, and right-of-use assets was HK$602 thousand, with additions of HK$1,676 thousand and HK$1,209 thousand respectively during the year, and impairment losses of HK$1,164 thousand for property, plant and equipment and HK$334 thousand for right-of-use assets were recognized due to impairment assessment Net Book Value of Property, Plant and Equipment and Right-of-Use Assets in FY2022 | Metric (HK$ thousand) | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Net Book Value of Property, Plant and Equipment | 71 | – | | Net Book Value of Right-of-Use Assets | 602 | – | - Additions during the year: Property, plant and equipment additions of HK$1,676 thousand, and right-of-use asset additions of HK$1,209 thousand[321][324] - Impairment losses: Impairment loss on property, plant and equipment of HK$1,164 thousand, and impairment loss on right-of-use assets of HK$334 thousand[321][322][324] - Impairment assessment: Based on the value in use of the renovation works cash-generating unit, using a 5-year financial budget and a pre-tax discount rate of 13%[321] Trade Receivables and Contract Assets As of June 30, 2022, net trade receivables amounted to HK$18,747 thousand and net contract assets to HK$17,433 thousand, with trade receivables having a credit period of 30 to 60 days, and contract assets primarily comprising uncertified work in progress and retention receivables, for which the Group has made corresponding expected credit loss provisions Trade Receivables and Contract Assets in FY2022 | Metric (HK$ thousand) | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Gross Trade Receivables | 21,831 | 651 | | Less: Provision for Expected Credit Losses | (3,084) | (380) | | Net Trade Receivables | 18,747 | 271 | | Gross Contract Assets | 18,012 | 12,636 | | Less: Provision for Expected Credit Losses | (579) | (335) | | Net Contract Assets | 17,433 | 12,301 | - Trade receivables aging: As of June 30, 2022, trade receivables overdue for more than 1 year amounted to HK$715 thousand[328] - Contract assets composition: Uncertified work in progress of HK$7,214 thousand and retention receivables of HK$10,798 thousand[330] - Increase in contract assets: The increase in 2022 was primarily due to an increase in uncertified construction services[332] Deposits, Prepayments and Other Receivables As of June 30, 2022, net deposits, prepayments, and other receivables amounted to HK$1,319 thousand, with a non-current portion of HK$45 thousand, and the Group has made an expected credit loss provision of HK$53 thousand for these items Deposits, Prepayments and Other Receivables in FY2022 | Metric (HK$ thousand) | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Deposits and Other Receivables | 1,043 | 1,130 | | Prepayments | 329 | 120 | | Less: Provision for Expected Credit Losses | (53) | (29) | | Net Amount | 1,319 | 1,221 | | Non-Current Portion | (45) | (68) | Restricted Cash and Cash and Cash Equivalents As of June 30, 2022, restricted cash amounted to HK$748 thousand, primarily pledged as collateral for performance guarantees, and cash and cash equivalents were HK$30,710 thousand, a decrease from the previous year Restricted Cash and Cash and Cash Equivalents in FY2022 | Metric (HK$ thousand) | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Restricted Cash | 748 | 2,100 | | Cash and Cash Equivalents | 30,710 | 49,447 | - Restricted cash usage: Pledged as collateral for performance guarantees with an insurance company, non-interest bearing[336] Trade Payables and Retention Payables As of June 30, 2022, total trade payables and retention payables amounted to HK$6,400 thousand, with trade payables generally having an average credit period of 30 days Trade Payables and Retention Payables in FY2022 | Metric (HK$ thousand) | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Trade Payables | 3,544 | 2,881 | | Retention Payables | 2,856 | 2,213 | | Total | 6,400 | 5,094 | - Credit period: Average credit period for trade payables is 30 days[338] - Long-term retention payables: Retention payables expected to be settled after 12 months amounted to approximately HK$1,775 thousand[339] Accruals and Other Payables As of June 30, 2022, total accruals and other payables amounted to HK$2,432 thousand, primarily comprising accrued legal and professional fees and other accrued expenses Accruals and Other Payables in FY2022 | Metric (HK$ thousand) | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Accrued Legal and Professional Fees | 712 | 1,016 | | Other Accrued Expenses and Other Payables | 1,720 | 1,261 | | Total | 2,432 | 2,277 | Lease Liabilities As of June 30, 2022, the present value of lease liabilities was HK$1,050 thousand, mainly comprising leased properties, with these liabilities bearing interest at fixed rates ranging from 2.5% to 7.3% per annum Present Value of Lease Liabilities in FY2022 | Metric (HK$ thousand) | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Present Value of Lease Liabilities | 1,050 | 679 | | Due within 1 year | (726) | (528) | | Due after 1 year | 324 | 151 | - Composition: Primarily leased properties, with some hire-purchase vehicles[341] - Interest rate: Incremental borrowing interest rates range from 2.5% to 7.3% per annum[341] Share Capital and Dividends As of June 30, 2022, the company's issued share capital was HK$12,000 thousand, with shares issued through placement and a share consolidation during the year, and the Group's capital management objective is to safeguard its ability to continue as a going concern and optimize shareholder returns, with no dividends paid or declared for the year ended June 30, 2022 Share Capital in FY2022 | Metric (HK$ thousand) | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Authorized Share Capital | 50,000 | 50,000 | | Issued and Fully Paid Share Capital | 12,000 | 10,000 | - Placement: 200,000,000 shares were placed on November 16, 2021, with net proceeds of approximately HK$8,100 thousand[342] - Share consolidation: Became effective on April 12, 2022, where every ten shares of HK$0.01 each were consolidated into one share of HK$0.1 each[343] - Capital management objective: Safeguard the ability to continue as a going concern and maximize returns to shareholders through optimizing the debt and equity balance[343] - Dividends: No dividends were paid or declared for the year ended June 30, 2022[344] Deferred Taxation As of June 30, 2022, the Group's net deferred tax assets/liabilities were zero, and while the Group has unutilized tax losses of approximately HK$13,628 thousand, no deferred tax assets were recognized due to the unpredictability of future profit sources - Net deferred tax: Zero as of June 30, 2022[345] - Unutilized tax losses: Approximately HK$13,628 thousand (2021: HK$12,287 thousand), available to offset future profits[346] - Unrecognized deferred tax assets: No deferred tax assets were recognized for unutilized tax losses due to the unpredictability of future profit sources[346] Share Option Scheme The company adopted a share option scheme on December 1, 2017, to incentivize employees, and on October 8, 2021, granted 100,000,000 share options to directors and employees with an exercise price of HK$0.056 (HK$0.56 after share consolidation) and an expiry date of October 7, 2023, with the fair value calculated using a binomial pricing model and recognized as HK$3,115 thousand in share-based payment expense - Scheme purpose: Attract and retain talent, provide additional incentives, and promote business development[347] - Grant details: 100,000,000 share options granted on October 8, 2021, with 40,000,000 to directors and 60,000,000 to employees[348] - Exercise price and term: Exercise price of HK$0.056 before share consolidation, HK$0.56 after consolidation, with an exercise period until October 7, 2023[348] - Fair value and expense: Fair value of share options approximately HK$3,115 thousand, recognized as share-based payment expense for the year ended June 30, 2022[349][350] - Unexercised share options: As of the end of the reporting period, 10,000,000 share options remained unexercised[350] Related Party Transactions This section discloses key management personnel compensation as related party transactions, with total key management personnel compensation amounting to HK$4,850 thousand for the year ended June 30, 2022, including HK$1,304 thousand in share-based payments Key Management Personnel Compensation in FY2022 | Metric (HK$ thousand) | 2022 | 2021 | | :--- | :--- | :--- | | Salaries, Bonuses, Other Allowances and Benefits in Kind | 3,519 | 3,613 | | Retirement Benefit Costs – Defined Contribution Plans | 27 | 41 | | Equity-Settled Share-Based Payments | 1,304 | – | | Total | 4,850 | 3,654 | Reconciliation of Liabilities Arising from Financing Activities This section provides a reconciliation of changes in lease liabilities during the reporting period, including the impact of financing cash flows, new leases, terminated leases, and interest expense, with total lease liabilities amounting to HK$1,050 thousand as of June 30, 2022 Reconciliation of Lease Liabilities in FY2022 | Metric (HK$ thousand) | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Lease Liabilities at Beginning of Year | 679 | 630 | | Financing Cash Flows | (708) | (691) | | New Leases | 1,209 | 783 | | Terminated Leases | (181) | – | | Interest Expense | 51 | 41 | | Lease Liabilities at End of Year | 1,050 | 679 | Principal Subsidiaries The company's principal subsidiaries include Vision Perfect Ventures Limited and Hong Yun Holdings Limited (investment holding), as well as Victor Foundation Engineering Limited (foundation and building engineering) and Million Ocean Development Limited (interior fitting-out and alteration works), all of which are wholly-owned - Directly held: Vision Perfect Ventures Limited (British Virgin Islands, investment holding), Hong Yun Holdings Limited (British Virgin Islands, investment holding)[355] - Indirectly held: Victor Foundation Engineering Limited (Hong Kong, foundation and building engineering), Million Ocean Development Limited (Hong Kong, interior fitting-out and alteration works)[355] - Ownership percentage: All principal subsidiaries are wholly-owned (100%) by the company[355] Non-Cash Transactions and Contingent Liabilities During the year, the Group entered into new lease agreements, recognizing HK$1,209 thousand each in right-of-use assets and lease liabilities, and as of June 30, 2022, provided performance guarantees of approximately HK$2,552 thousand for construction contracts, with directors believing the likelihood of claims from customers to be low - Non-cash transactions: New lease agreements resu