裕丰昌控股(08631) - 2023 Q1 - 季度财报

GEM Characteristics and Report Statement GEM Market Risk Disclosure The GEM market is designed for small and medium-sized companies, carrying higher investment risks, and securities may face high market volatility and low liquidity risks - GEM market positioning: provides a listing platform for small and medium-sized companies, with higher investment risks[1][5] - Potential risks: securities may experience significant market volatility, and high liquidity is not guaranteed[2][5] Directors' Responsibility Statement The Board confirms that this report's content is accurate, complete, and not misleading, assuming full responsibility; the Stock Exchange is not responsible for the report's content - The Board confirms that the information in this report is accurate, complete, and not misleading, and assumes full responsibility[4][5] - The Stock Exchange takes no responsibility for the content of this report and does not guarantee its accuracy or completeness[3][5] HIGHLIGHTS For the three months ended June 30, 2022, the Group's revenue significantly decreased by 70.2% to HK$19.1 million, turning from profit to a loss of HK$0.7 million, while gross profit margin improved; the Board does not recommend a dividend 2022 Q1 Key Financial Indicators Comparison | Indicator | 2022 Q1 (HK$ million) | 2021 Q1 (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 19.1 | 64.0 | -70.2% | | Gross profit margin | 5.6% | 3.3% | +2.3pp | | (Loss)/Profit for the period | (0.7) | 0.1 | -800% (from profit to loss) | - The Board does not recommend the payment of any dividend for the three months ended June 30, 2022[7] UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS This section presents the Group's unaudited condensed consolidated financial statements for the three months ended June 30, 2022, including the statement of profit or loss and other comprehensive income and statement of changes in equity, with comparative data for the same period in 2021 UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the three months ended June 30, 2022, the Group's revenue significantly decreased, leading to a loss from a profit in the prior year, with a loss per share of HK$0.18 cents Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the three months ended June 30) | Indicator | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 19,129 | 63,966 | | Cost of sales | (18,051) | (61,874) | | Gross profit | 1,078 | 2,092 | | Other income | 344 | – | | Administrative and other operating expenses | (2,061) | (1,962) | | Finance costs | (92) | (56) | | (Loss)/Profit before taxation | (731) | 74 | | Income tax expense | – | – | | (Loss)/Profit and total comprehensive (loss)/income for the period | (731) | 74 | | (Loss)/Earnings per share (HK cents) Basic and diluted | (0.18) | 0.02 | UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY As of June 30, 2022, the Group's total equity decreased to HK$51,293 thousand due to the loss for the period, compared to HK$55,232 thousand in the prior year Unaudited Condensed Consolidated Statement of Changes in Equity (For the three months ended June 30) | Indicator | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | April 1 (audited) | 52,024 | 55,158 | | (Loss)/Profit and total comprehensive (loss)/income for the period | (731) | 74 | | June 30 (unaudited) | 51,293 | 55,232 | NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS This section provides detailed notes to the unaudited condensed consolidated financial statements, covering general information, accounting policies, revenue and expense breakdowns, earnings per share calculation, and dividend policy 1. GENERAL INFORMATION Sun Kong Holdings Limited was incorporated in the Cayman Islands, primarily engaged in the sale of diesel and related products in Hong Kong, and listed on GEM of the Stock Exchange on January 8, 2019 - Company registration: Cayman Islands, registered on October 31, 2017[13][17] - Principal business: sale of diesel and related products in Hong Kong[14][18] - Listing information: listed on GEM of the Stock Exchange on January 8, 2019[14][18] 2. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES The condensed consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards, using the historical cost basis, consistent with the accounting policies adopted for the annual financial statements for the year ended March 31, 2022, except for the adoption of certain new and revised standards 2. (a) Basis of preparation The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards (HKFRSs), using the historical cost basis, and involve management judgments, estimates, and assumptions - Preparation basis: Hong Kong Financial Reporting Standards (HKFRSs) and GEM Listing Rules[20][22] - Measurement basis: historical cost basis[24][26] - Important note: should be read in conjunction with the audited annual financial information for the year ended March 31, 2022[21][22] 2. (b) Adoption of new/revised HKFRSs The Group adopted new and revised Hong Kong Financial Reporting Standards, but these adoptions had no material impact on the results and financial position for the current or prior periods, nor did they lead to significant changes in accounting policies - Standards adopted: Amendments to HKAS 39, HKFRS 4, HKFRS 7, HKFRS 9 and HKFRS 16 (Interest Rate Benchmark Reform – Phase 2), and Amendment to HKFRS 16 (Covid-19-Related Rent Concessions)[28][31] - Impact: no material impact on the results and financial position for the current or prior periods, and no significant changes in accounting policies[28][32][33] 3. REVENUE For the three months ended June 30, 2022, the Group's revenue primarily derived from diesel sales, totaling HK$19,129 thousand, a significant decrease from the prior year Revenue Composition (For the three months ended June 30) | Revenue Source | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | Diesel sales | 18,930 | 63,845 | | AdBlue sales | 199 | 121 | | Total Revenue | 19,129 | 63,966 | 4. (LOSS)/PROFIT BEFORE TAXATION For the three months ended June 30, 2022, the Group recorded a loss before taxation of HK$731 thousand, primarily influenced by staff costs, administrative expenses, and depreciation (Loss)/Profit Before Taxation Composition (For the three months ended June 30) | Item | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | Directors' emoluments | 582 | 372 | | Salaries and other benefits | 1,070 | 1,329 | | Contributions to retirement benefit schemes | 61 | 73 | | Total staff costs | 1,713 | 1,774 | | Auditor's remuneration | 120 | 120 | | Depreciation of property, plant and equipment | 754 | 710 | 5. FINANCE COSTS For the three months ended June 30, 2022, the Group's finance costs increased to HK$92 thousand, mainly comprising interest on bank overdrafts and new bank loans Finance Costs (For the three months ended June 30) | Item | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | Interest on bank overdrafts | 50 | 49 | | Imputed interest on lease liabilities | 3 | 7 | | Interest on bank loans | 39 | – | | Total | 92 | 56 | 6. INCOME TAX EXPENSES For the three months ended June 30, 2022, the Group incurred no income tax expense in Hong Kong due to the absence of assessable profit, while entities in the Cayman Islands and BVI are exempt from income tax - Hong Kong profits tax: zero for both 2022 and 2021 due to no assessable profit[39][40] - Tax exemption: entities in the Cayman Islands and British Virgin Islands are exempt from income tax[39][40] 7. (LOSS)/EARNINGS PER SHARE For the three months ended June 30, 2022, the Group's basic and diluted loss per share was HK$0.18 cents, compared to earnings per share of HK$0.02 cents in the prior year (Loss)/Earnings Per Share (For the three months ended June 30) | Indicator | 2022 (HK$ thousand) | 2021 (HK$ thousand) | | :--- | :--- | :--- | | (Loss)/Profit for the period attributable to owners of the Company | (731) | 74 | | Weighted average number of ordinary shares | 400,000,000 | 400,000,000 | | (Loss)/Earnings per share (HK cents) | (0.18) | 0.02 | - No diluted (loss)/earnings per share: no potential ordinary shares were issued in either period[43][45] 8. DIVIDEND The Board does not recommend the payment of any dividend for the three months ended June 30, 2022, consistent with the prior year - Dividend policy: the Board does not recommend the payment of any dividend for the three months ended June 30, 2022[44][46] MANAGEMENT DISCUSSION AND ANALYSIS This section reviews the Group's business performance during the reporting period, noting that rising crude oil prices and declining market demand due to the pandemic and the Russia-Ukraine war led to a significant drop in revenue and profit; the Group plans to monitor the pandemic and adjust business plans for recovery BUSINESS REVIEW The Group primarily sells diesel and related products in Hong Kong to logistics and construction companies; during the reporting period, COVID-19 and the Russia-Ukraine war caused crude oil prices to surge, the Hong Kong economy to worsen, and cross-border transport demand to fall, leading to a significant decline in the Group's revenue and profit - Principal business: sale of diesel and related products in Hong Kong, with customers mainly logistics and construction companies[48][51] - Market environment: crude oil prices surged (Brent crude reached US$125/barrel), Hong Kong's economy contracted by 4.0%, and cross-border transport demand significantly decreased[49][50][51] - Financial performance: revenue decreased by 70.2% year-on-year to HK$19.1 million, turning from a profit of HK$0.1 million in the prior year to a loss of HK$0.7 million[53][54][57] FUTURE PROSPECTS Facing uncertainties and challenges from the COVID-19 pandemic, the Group will continuously monitor pandemic developments, strengthen cash flow management, integrate resources, and actively adjust business plans to ensure operational stability and prepare for business recovery once the pandemic is controlled - Challenges: COVID-19 pandemic creates an extremely challenging operating environment[55][58] - Response strategies: closely monitor pandemic developments, strengthen cash flow management, integrate existing resources, and actively adjust business plans[55][58] - Goal: ensure operational stability and be fully prepared for business recovery once the pandemic is controlled[55][58] - Risk management: continuously review the pandemic situation prudently, reduce business operating risks, and take preventive measures to ensure the safety of employees and partners[56][58] FINANCIAL REVIEW This section analyzes the Group's financial performance during the reporting period, including changes and key reasons for revenue, sales volume, selling price, cost of sales, gross profit, administrative expenses, income tax, capital commitments, post-reporting events, capital expenditure, other income, and loss for the period Revenue Group revenue significantly decreased by 70.2% year-on-year to HK$19.1 million, primarily from diesel sales (accounting for 99.0%) and AdBlue sales (accounting for 1.0%) Revenue Composition and Change (For the three months ended June 30) | Revenue Source | 2022 (HK$ million) | 2021 (HK$ million) | Change (HK$ million) | Change (%) | Share (2022) | Share (2021) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Diesel sales | 18.9 | 63.9 | -45.0 | -70.4% | 99.0% | 99.8% | | AdBlue sales | 0.2 | 0.1 | +0.1 | +100.0% | 1.0% | 0.2% | | Total Revenue | 19.1 | 64.0 | -44.9 | -70.2% | 100.0% | 100.0% | Sales quantity Diesel sales volume significantly decreased by 86.3% year-on-year to 2.2 million liters, while AdBlue sales volume increased by 60.6% to 53 thousand liters Sales Quantity Change (For the three months ended June 30) | Product | 2022 (Unit) | 2021 (Unit) | Change (%) | | :--- | :--- | :--- | :--- | | Diesel | 2.2 million liters | 16.0 million liters | -86.3% | | AdBlue | 53 thousand liters | 33 thousand liters | +60.6% | Selling price The average selling price of diesel significantly increased by 114.5% year-on-year to HK$8.56 per liter, mainly due to rising market prices; the average selling price of AdBlue remained stable Average Selling Price Change (For the three months ended June 30) | Product | 2022 (HK$/liter) | 2021 (HK$/liter) | Change (%) | | :--- | :--- | :--- | :--- | | Diesel | 8.56 | 3.99 | +114.5% | | AdBlue | 3.73 | 3.72 | +0.3% | - Reason for diesel average selling price increase: upward trend in prevailing market prices[66][71] Cost of sales Cost of sales decreased by 70.8% year-on-year to HK$18.1 million, consistent with the revenue decline; diesel cost remains the largest component, but unit purchase cost significantly increased by 99.2% - Total cost of sales: HK$18.1 million in 2022 Q1, a year-on-year decrease of 70.8%[68][72] - Diesel cost: accounted for 91.2% of cost of sales (2022), with unit purchase cost increasing by 99.2% year-on-year to HK$7.47 per liter[69][72] - Direct labor cost: HK$0.6 million in 2022 Q1, slightly lower than the prior year[73][78] - Depreciation expense: increased to HK$0.6 million in 2022 Q1, mainly from diesel tank trucks[74][78] Gross profit and gross profit margin Gross profit decreased by 47.6% year-on-year to HK$1.1 million, but gross profit margin improved from 3.3% to 5.6%, primarily due to reduced repair and related costs for diesel tank trucks Gross Profit and Gross Profit Margin Change (For the three months ended June 30) | Indicator | 2022 (HK$ million) | 2021 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Gross profit | 1.1 | 2.1 | -1.0 | -47.6% | | Gross profit margin | 5.6% | 3.3% | +2.3pp | N/A | - Reason for gross profit margin improvement: mainly due to lower repair and related costs for operating diesel tank trucks[75][79] Administrative and other operating expenses Administrative and other operating expenses slightly increased by 5.0% year-on-year to HK$2.1 million, primarily including administrative staff costs, professional service fees, rent, and rates - Total: HK$2.1 million in 2022 Q1, an increase of HK$0.1 million or 5.0% year-on-year[76][80] - Main components: administrative staff costs, professional service fees, rent and rates, etc[76][80] Income tax expenses The Group had no assessable profit during the reporting period, resulting in zero Hong Kong income tax expense - Income tax: zero for both 2022 and 2021 due to no assessable profit[77][81] Capital commitments and contingent liabilities As of June 30, 2022, the Group had no capital commitments related to the acquisition of property, plant, and equipment - No capital commitments: as of June 30, 2022, the Group had no capital commitments[83][89] Events after the Reporting Period No significant events occurred after the reporting period up to the date of this report - No significant events: no significant events occurred after the reporting period up to the date of this report[84][90] Capital expenditure For the three months ended June 30, 2022, the Group's capital expenditure was zero - Capital expenditure: zero for both 2022 and 2021[85][91] Other income Other income primarily originated from the 2022 Employment Support Scheme under the Anti-epidemic Fund, aimed at providing wage subsidies to retain existing employees - Main source: wage subsidies provided by the 2022 Employment Support Scheme[86][92] - Purpose: to retain existing employees and hire more when business recovers[86][92] Loss for the period The Group turned from a profit of HK$0.1 million in the prior year to a loss of HK$0.7 million, with net profit margin decreasing from 0.1% to -3.8% (Loss)/Profit for the Period and Net Profit Margin Change (For the three months ended June 30) | Indicator | 2022 (HK$ million) | 2021 (HK$ million) | Change (HK$ million) | | :--- | :--- | :--- | :--- | | (Loss)/Profit for the period | (0.7) | 0.1 | -0.8 | | Net profit margin | -3.8% | 0.1% | -3.9pp | USE OF PROCEEDS The Group's net proceeds from its 2019 listing were HK$34.8 million, with HK$27.2 million utilized as of June 30, 2022; the expected timeline for some uses (e.g., purchasing diesel tank trucks and upgrading IT systems) has been extended to March 31, 2023 - Listing date: January 8, 2019[95][96] - Net proceeds: HK$34.8 million[95][96] Actual Use of Net Proceeds (As of June 30, 2022) | Purpose | Proposed allocation in prospectus (HK$ million) | Revised allocation (HK$ million) | Actual use (HK$ million) | Total unutilized (HK$ million) | Expected timeline for full utilization | | :--- | :--- | :--- | :--- | :--- | :--- | | Purchase of diesel tank trucks | 15.0 | 15.0 | 12.4 | 2.6 | Before March 31, 2023 | | Expansion of workforce | 12.5 | 1.7 | 1.7 | – | N/A | | Upgrade of IT system | 5.0 | 5.0 | – | 5.0 | Before March 31, 2023 | | Working capital | 2.3 | 13.1 | 13.1 | – | N/A | | Total | 34.8 | 34.8 | 27.2 | 7.6 | | - Timeline delay: unutilized proceeds for purchasing diesel tank trucks and upgrading IT systems are expected to be fully utilized by March 31, 2023[99] ENVIRONMENT POLICIES AND PERFORMANCE The Group's operations are regulated by Hong Kong environmental laws and regulations, and it has implemented various environmental protection measures to reduce its operational impact and ensure compliance; as of the reporting date, the Group has not been penalized for environmental violations - Regulation: governed by Hong Kong environmental laws and regulations such as the Air Pollution Control Ordinance and Water Pollution Control Ordinance[102][105] - Measures: implemented environmental protection measures to reduce air pollutant emissions and prevent leaks of petroleum products or other harmful substances[103][105] - Compliance: continuously monitors business operations to ensure compliance with all applicable laws and regulations, with no violations recorded as of the reporting date[104][106] OTHER INFORMATION This section discloses other important information for the reporting period, including listed securities transactions, interests of directors and substantial shareholders, share option scheme, competing interests, and the composition and functions of corporate governance committees Purchase, Sale or Redemption of the Company's Listed Securities As of June 30, 2022, the Company had no purchases, sales, or redemptions of its listed securities - No transactions: as of June 30, 2022, the Company had no purchases, sales, or redemptions of any listed securities[108][110] Interests and short positions of Directors and chief executive in the Shares, underlying Shares or debentures of the Company and its associated corporations As of June 30, 2022, Mr. Law Ming Yik, Chairman and Executive Director, held a 62.78% long position in the Company's shares through a controlled corporation Directors' Long Positions in Shares (As of June 30, 2022) | Name of Director | Capacity/Nature of interest | Number of Shares | Percentage of issued share capital | | :--- | :--- | :--- | :--- | | Mr. Law Ming Yik | Interest in controlled corporation | 251,110,000 shares | 62.78% | - Mr. Law Ming Yik holds Company shares through Full Fortress, which he wholly owns[115][117] - No other disclosures: no other Directors or chief executive had disclosable interests or short positions besides those mentioned above[114][116] Interests and short positions of the substantial Shareholders and other persons in the shares, underlying shares and debentures of the Company and its associated corporations As of June 30, 2022, substantial shareholders Mr. Law Ming Yik and Full Fortress Group Limited each held a 62.78% long position in the Company's shares Substantial Shareholders' Long Positions in Shares (As of June 30, 2022) | Name of Shareholder | Capacity/Nature of interest | Number of Shares held | Percentage of shareholding | | :--- | :--- | :--- | :--- | | Mr. Law Ming Yik | Interest in controlled corporation | 251,110,000 shares | 62.78% | | Full Fortress Group Limited | Beneficial owner | 251,110,000 shares | 62.78% | - Mr. Law Ming Yik is deemed to be interested in all shares held by Full Fortress[121][123] - No other disclosures: no other persons had disclosable interests or short positions besides those mentioned above[122][123] Share Option Scheme The Company's Share Option Scheme was conditionally adopted on December 11, 2018, effective from the listing date; no share options were granted, exercised, lapsed, or cancelled, nor were there any outstanding share options during or as of the reporting date - Adoption date: December 11, 2018[124][129] - Effective date: listing date[124][129] - Status: no share options were granted, exercised, lapsed, or cancelled, nor were there any outstanding share options during or as of the reporting date[125][130] Competing Interests The Directors confirm that as of the reporting date, neither the Company's controlling shareholders, Directors, nor their close associates held any interests in businesses competing with the Group's operations - No competing interests: Directors confirm that controlling shareholders, Directors, and their close associates have no interests competing with the Group's business[126][131] Audit Committee The Audit Committee, established on December 11, 2018, comprises three independent non-executive Directors, chaired by Mr. Ho Cheung Ki; the Committee reviewed the unaudited condensed consolidated financial statements and deemed them compliant with applicable accounting standards and GEM Listing Rules - Establishment date: December 11, 2018[127][132] - Composition: three independent non-executive Directors (Mr. Ho Cheung Ki, Mr. Wong Ka Chun, Mr. Fan Tak Wai), with Mr. Ho Cheung Ki as Chairman[127][132] - Functions: reviewed the unaudited condensed consolidated financial statements and confirmed their compliance with accounting standards and GEM Listing Rules[128][133] Nomination Committee The Nomination Committee, established on December 11, 2018, comprises two independent non-executive Directors and one executive Director, chaired by Mr. Law Ming Yik; its main responsibilities include regularly reviewing Board composition, identifying qualified director candidates, assessing independent directors' independence, and making appointment recommendations - Establishment date: December 11, 2018[135][138] - Composition: two independent non-executive Directors (Mr. Wong Ka Chun, Mr. Fan Tak Wai) and one executive Director (Mr. Law Ming Yik), with Mr. Law Ming Yik as Chairman[135][138] - Main functions: review Board diversity, structure, size, and composition; identify qualified director candidates; assess independent directors' independence; and make recommendations for director appointments or re-appointments[136][138] - Meeting frequency: should hold at least one meeting annually[137][139] Remuneration Committee The Remuneration Committee, established on December 11, 2018, comprises two independent non-executive Directors and one executive Director, chaired by Mr. Fan Tak Wai; its primary responsibility is to advise the Board on the overall remuneration policy and structure for Directors and senior management - Establishment date: December 11, 2018[142][145] - Composition: two independent non-executive Directors (Mr. Fan Tak Wai, Mr. Ho Cheung Ki) and one executive Director (Mr. Law Ming Yik), with Mr. Fan Tak Wai as Chairman[142][145] - Main functions: advise the Board on remuneration policy and structure for Directors and senior management; review and approve management remuneration proposals; ensure Directors do not determine their own remuneration[143][145] - Remuneration determination: references market benchmarks and considers individual capabilities, responsibilities, performance, and Group results[144][146] - Meeting frequency: should hold at least one meeting annually[144][146] Directors' Securities Transactions The Company has adopted a code of conduct for Directors' securities transactions, and all Directors confirm compliance with this code and the trading standards stipulated by the GEM Listing Rules - Code of conduct: the Company has adopted a code of conduct for Directors' securities transactions, with terms no less exacting than those required by the GEM Listing Rules[148][150] - Compliance: all Directors confirm compliance with the code and stipulated trading standards[148][150] Corporate Governance The Company is committed to maintaining high corporate governance standards and has complied with the Corporate Governance Code in Appendix 15 of the GEM Listing Rules from its listing date to June 30, 2022 - Commitment: committed to maintaining and ensuring high corporate governance standards[149][151] - Compliance: has complied with the Corporate Governance Code in Appendix 15 of the GEM Listing Rules from its listing date to June 30, 2022[149][151] SUFFICIENCY OF PUBLIC FLOAT As of the date of this report, the Company has maintained a sufficient public float as required by the GEM Listing Rules - Public float: as of the reporting date, the Company has maintained a sufficient public float as required by the GEM Listing Rules[153][155]