新世界mteam

2017-2018ContentsFinancialHighlights2Chairman'sStatement3ManagementDiscussionandAnalysis5ReportonReviewofInterimFinancialInformation17CondensedConsolidatedIncomeStatement—Unaudited18CondensedConsolidatedStatementofComprehensiveIncome—Unaudited19CondensedConsolidatedStatementofFinancialPosition20CondensedConsolidatedStatementofChangesinEquity—Unaudited21CondensedConsolidatedStatementofCashFlows—Unaudited22NotestotheCondensedConsolidatedInterimFinancialStatements23InterimDividend44OtherInformation45CorporateInformation48Thisinterimreportisprintedonenvironmentalpaper本中期報告經由環保紙印製FinancialHighlightsFSEEngineeringHoldingsLimited2Forthesixmonthsended31December20172016%ChangeHK$MHK$MRevenue:1,763.
31,769.
3(0.
3%)Grossprofit:206.
9195.
65.
8%Profitattributabletoequityholders:86.
882.
35.
5%Basicearningspershare:HK$0.
19HK$0.
185.
6%TheBoarddeclaredthepaymentofaninterimdividendofHK7.
8centspershareforthesixmonthsended31December2017(2016:HK7.
4cents).
InterimReport2017-20183Chairman'sStatementToOurShareholders:Onbehalfoftheboardofdirectors(the"Board")ofFSEEngineeringHoldingsLimited(the"Company",togetherwithoursubsidiaries,the"Group"),IampleasedtopresenttheunauditedcondensedconsolidatedinterimresultsoftheGroupforthesixmonthsended31December2017.
MARKETREVIEWWhiletheeconomicimpactofpoliticalchangesremainstobeseen,theglobaleconomyisexpectedtomaintainitsmomentumthrough2017andcarryovertotherestofthisyearwith3.
9%growth.
Inthebigpictureofabroad-basedeconomicupturnsupportedbysolidemployment,stableinflationenvironmentandfinancialmarketperformance,majoradvancedeconomiesarelikelytoshowfurthermoderateexpansionenhancedbyelevatedbusinessconfidenceandcorporateearnings.
Themainlandeconomyisalsosettosustainnotablegrowth,spanningfromconstructiontomanufacturing,tradeandservices.
However,therearechallengesanduncertaintiesintheglobalpoliticalandeconomicenvironmentthatnecessitateattention,liketheformalBrexitnegotiations,China'seconomicgrowthprospects,furtherbalance-sheetshrinkageandinterestratenormalisationmeasuresbytheUSFederalReserve,andmostrecentlytheuncleartradeandfiscalstimuluspoliciesinitiatedbytheUSpresident.
Withinthecurrentbroadlybenignglobaleconomicconditions,HongKongisanticipatedtomaintainreasonableeconomicgrowthbuttheoperatingenvironmentatlargeforbusinessesinthecitystillwarrantscautionandenterprisesshouldbewell-preparedforanypotentialimpactfromindustryvolatilities.
TheGroupalsoencountersamultitudeofchallengesmainlykeencompetitionandlabourshortageofskilledworkersinthemarketplacewhichimpacttheprofitmargin.
However,backedbyitsextensiveindustryexperience,amanagementteamwithprovenexpertiseandrelentlessinitsguidingefforts,andboastingareputationwell-appreciatedbycustomers,theGrouphasmanagedtoachievecommendablegrowthduringtheperiodunderreview.
ItsprofitattributabletoequityholdersincreasedbyHK$4.
5million,or5.
5%,testimonytoitsresilienceandcapabilitytocontinuouslygrowitsbusiness.
TheBoardhasdeclaredthepaymentofaninterimdividendofHK7.
8centspershareforthesixmonthsended31December2017,equivalenttoapayoutratioof40.
5%.
E&MENGINEERINGHongKongTheHongKongGovernmenthassetasideatotalofmorethanHK$70billionforthehousingreserveandiscommittedtocontinuingtorezonesites,steppinguplanddevelopmentandconductingreviewswiththeaimofoptimisinglanduse.
Thepublichousingsupplytargetforthe10-yearperiodfrom2018/19to2027/28hasbeenannouncedtobe280,000unitsincluding200,000publicrentalhousingunitsand80,000subsidisedsaleflatsandtheaverageE&Mconstructionworksexpenditureforthefiscalyear2018/19istobemorethanHK$20.
0billionforthepublicsectorandmorethanHK$28.
0billionfortheprivatesector.
PresumingtherewouldnotbeprolongeddebatesbytheHKSARlegislatureoninfrastructureprojects,newpublicworkscouldkickoffasscheduled,andanupswingininfrastructure,publichousingandprivatehousingprojectscouldbeexpected,whichwouldinturnhelpdrivehealthiergrowthintheconstruction,E&Mengineeringandenvironmentalmanagementservicessectors.
Toensureadequatepreparationtotakeonthevariousinfrastructureprojectsinthepipelineandalsobeginplanningforthetendersforhospitaldevelopment,theKaiTakSportsParkandtherelocationofthreegovernmentbuildingsinWanchai,theGroupisstrivingtomaintainastableandprofessionalE&MteamwithouradvancedtechnologicalcapabilitiesinareasincludingBuildingInformationModelling(BIM)technologythatcanenhanceengineeringdesignsandworkqualitytomeettherequirementsoftheseprojects.
Theseeffortssupportedbyastrongbalancesheetshouldfortifyourpresenceandleadershipinthispillarindustryofthecity.
Chairman'sStatementFSEEngineeringHoldingsLimited4MainlandChinaUndertheagendaofthe19thCommunistPartyCongress,thepolicyfocusistoreinforceeconomicstability.
Withtheimplementationofaproactivefiscalpolicytogetherwiththeneutralandprudentmonetarypolicy,theChinesegovernmenthasfoundagoodbalancebetweencurbingfinancialrisksandmaintainingsteadyeconomicgrowthat6.
9%in2017.
Inlinewithitsprinciplesofthe"NationalNew-typeUrbanisationPlan,theurbanisationrateandincomepercapitainMainlandChinahaveincreasedsteadilyinrecentyears.
TheChinesegovernmentclearlystatedthatitscontinuingpushforurbanisationwillnotonlybeconducivetoanupgradeofcoastalcities,butwillalsohelprejuvenateconstructionandeconomicactivitiesinurbanaswellasruralareasinthecentralandwesternregionsofthecountry.
ThisstrategicshiftofemphasisshouldencouragerebalancingoftheChineseeconomyandunleashtheenormousdemandforhousingandrelatedcommercialdevelopments,thereforepresentingfreshopportunitiestotheconstructionandE&Mengineeringindustry.
AstheGroupisoneofthefewHongKong-basedE&MgeneralengineeringcontractorswithClassIQualificationinMainlandChina,ithasanadvantageinforgingtieswiththeselectedpartnerstoexpanditsfootprintinthiscrucialmarket.
Whilebeingoptimisticaboutourprospectsinthemarket,wewillremainvigilantandkeepaclosewatchonanypossiblechangesintheeconomicclimateandpotentialrisksalongwithavailablebusinessopportunitiesinthisregion.
Leveragingourextensiveprojectexperienceandadvancedinformationtechnologyapplication,theGroupintendstofocusonidentifyingE&Mengineeringbusinessopportunitiesinrelationtothecountry'sBeltandRoadInitiative,theconstructionoftheGreaterBayAreaandthePan-PearlRiverDeltaregionalco-operation.
Asinpreviousyears,theGroupwillworkhardatmaintainingitspresenceinMainlandChina,adheringtoadisciplinedapproachtoitsbusinessdevelopment.
MacauTheMacaueconomyhascontinuedtoshowsignsoftransitioningtoasustainablemarketrecovery.
AnewCotaiferryterminalandtheHongKong-Zhuhai-MacaoBridgealsoexpectedtoopenin2018couldsignificantlyincreasetrafficflowandaccessibilityandfurtherenhancemarketgrowth.
AsrevealedunderitsFive-YearDevelopmentPlan(2016–2020),theMacauSARGovernmentwishestoattainabalancebetweenthegamingandnon-gamingsectors,developinganewurbanzone,promotingdevelopmentofintegratedtourismandreinforcingnon-gamingleisureandentertainmentprovisions,allofwhichwillseemorediversityinMacau'seconomyand,inturn,creatingampleopportunitiesfortheGroup.
ENVIRONMENTALMANAGEMENTSERVICESRegardingourenvironmentalmanagementservicesbusiness,growingpublicawarenessofenvironmentalissuesisboostingdemandforassociatedenvironmentalmanagementservicesandprojects.
TheGroupcontinuestocapitaliseonthistrendandprovidecustomerswithtotalsolutionsthatareenergyefficientaswellasenvironmentallyfriendly.
CONCLUSIONWithoursolidandhealthyfinancialposition,theGroupwillcontinuetodedicateoureffortstoconsistentlyseekingbusinessopportunitiesthatcanfurtherexpandourbusinessandmaximizeourshareholders'value.
OnbehalfoftheBoard,Iwouldliketoexpressmysinceregratitudetoallshareholders,customersandbusinesspartnersfortheirunwaveringsupporttotheGroup.
Iwishtoalsothankthemanagementteamandallfellowstaffmembersfortheirsteadfastdedication.
Asalways,weremainfullycommittedtoassuringtheGroup'slong-termdevelopmentandfairreturnstoshareholders.
Dr.
ChengKarShun,HenryChairmanHongKong,27February2018InterimReport2017-20185ManagementDiscussionandAnalysisBUSINESSREVIEWTheGroupmaintaineditspositionasoneoftheleadingE&M(electricalandmechanical)engineeringcompaniesinHongKong,capableofprovidingacomprehensiverangeofE&Mengineeringandenvironmentalmanagementservices.
ItalsocontinuedtorunstrongitsE&MengineeringoperationsinMainlandChinaandMacau.
Ontopofitsfullrangeoflicencesandqualificationsandeffectivenessinmanagingtenderingrisks,theGrouphasintegratedoperatingandcontrolprocedures,strongnetworksofwell-establishedcustomersandsuppliers,andanexperiencedandwell-trainedworkforcetosupportallofitsoperations.
Thus,theGrouphasstrongconfidenceinsecuringandundertakingintegratedE&MengineeringprojectsinHongKong,MainlandChinaandMacau.
Inaddition,theGroupiscommittedtocreatingagreenersociety.
Tohelpbuildasustainableenvironment,ithasbeenconstantlyoptimisingdesignandexploringinnovativemethods.
Attheprojectlevel,theGroupincorporatesgreenbuildingprinciplesintoapplicationofbuildingservicesequipment;andadoptsgreenbuildingdesign,modularisationandprefabricationtoreduceenergyusage,carbonemissionsandconstructionwaste.
Inordertohelpimproveitsoperationalefficiencyandprojectmanagement,theGroupinvestsininnovativeconstructiontechnologiessuchasBuildingInformationModelling(BIM),laserscanningandmobilesolutions.
TheGroup'senvironmentalmanagementservicesbusiness,anewgrowthdriver,continuestoprovideenvironmentalassessmentandenergyefficientsolutionstoassistitscustomersinachievingtheirenvironmentalprotectionandenergyconservationobjectives.
Goingahead,theGroupwillcontinuetofocusonapplyingitscorecompetenciestoraisecustomersatisfactionandensuresustainablegrowthandprofitabilityofitsbusiness.
Itshallgivefirstprioritytolarge-scaleprojectsincludingdesignandconstructioncontractsfromthegovernment,publicinfrastructureworks,hospitaldevelopmentprojects,publichousingandsubsidisedhousingprojects,aswellasprivatecommercialandresidentialbuildingprojects.
FinancialperformanceLeveragingonitscompetitivestrengthsasdescribedabove,theGroupdeliveredasolidfinancialperformancewithrevenueamountingtoHK$1,763.
3millionfortheperiodunderreview,decreasedbyHK$6.
0millionor0.
3%,ascomparedtoHK$1,769.
3millionforthesameperiodlastyear.
ProfitattributabletoequityholdersfortheperiodunderreviewwasHK$86.
8million,representinganincreaseofHK$4.
5millionor5.
5%againstHK$82.
3millionforthesameperiodlastyear.
Asat31December2017,theGroup'sprojectsencompassedawiderangeofbuildingsandfacilities,includingoffices,shoppingmalls,conventionandexhibitioncentres,hotels,integratedresorts,residentialproperties,universities,hospitals,airportandpublictransportationfacilitiesbuildingswithatotaloutstandingcontractsumofHK$5,609.
7million.
Fortheperiodunderreview,theGroupsubmittedtendersfor273E&Mengineeringandenvironmentalmanagementservicesprojects(withacontractsumequaltoorexceedingHK$1.
0millionforeachproject,ifawarded)withatotaltendersumofHK$9,218.
4million.
Duringtheperiodunderreview,theGroupwasawardednewcontractswithatotalvalueofHK$1,570.
9million,whichinclude64contracts(withanetcontractsumequaltoorexceedingHK$1.
0millionforeachproject)withatotalnetcontractsumofHK$1,440.
5million.
Amongthese64contracts,fiveofthemaremajorprojects(withnetcontractsumequaltoormorethanHK$100.
0millionforeachproject):HongKong:ElectricalandELVinstallationpackageBfortheLOHASPark(Package7),Mechanicalventilationandair-conditioningandFireservicesinstallation(PodiumPortion)forTaiWaiStationPropertyDevelopment,Mechanicalventilationandair-conditioningandElectricalinstallationforHongKongSanitoriumHospitalEasternDistrictAdvanceMedicalCentre,andPlumbing&drainageinstallation(ResidentialPortion)Phase2forTaiWaiStationPropertyDevelopment;MainlandChina:Heating,ventilationandair-conditioning(FittingOut)installation(SupplementalAgreement)forTianjinChowTaiFookFinancialCentre.
ManagementDiscussionandAnalysisFSEEngineeringHoldingsLimited6FINANCIALREVIEWRevenueDuringtheperiodunderreview,theGroup'srevenueslightlydroppedbyHK$6.
0millionor0.
3%toHK$1,763.
3millionfromHK$1,769.
3millionforthesameperiodlastyear,attributablemostlytothedeclineinrevenueofHK$9.
1millionoftheE&Mengineeringsegment.
ThefollowingtablepresentsabreakdownoftheGroup'srevenuebybusinesssegment:Forthesixmonthsended31December2017%oftotal2016%oftotalHK$'MrevenueHK$'MrevenueE&Mengineering*1,729.
498.
1%1,738.
598.
3%Environmentalmanagementservices*33.
91.
9%30.
81.
7%Total1,763.
3100.
0%1,769.
3100.
0%*Segmentrevenuedoesnotincludeinter-segmentsales.
E&M(electricalandmechanical)engineering:ThissegmentcontinuedtobethekeyturnoverdriveroftheGroupandcontributed98.
1%oftheGroup'stotalrevenue(2016:98.
3%).
Segmentrevenuedroppedslightlyby0.
5%fromHK$1,738.
5milliontoHK$1,729.
4millionfortheperiodended31December2017,owingmainlytothereducedrevenuecontributionfromanumberofE&MprojectsinHongKongandMainlandChinawhichhadbeensubstantiallycompletedinthesameperiodlastyear.
ThedecreasewaspartlymitigatedbytheincreaseincontributionfromMacauwithelectricalinstallationforMorpheusHotelatCityofDreamswhichhadsignificantprogressintheperiodunderreview.
Environmentalmanagementservices:TherevenuecontributionofthisbusinesssegmentincreasedfromHK$30.
8milliontoHK$33.
9million,representingagrowthof10.
1%ascomparedwiththesameperiodlastyear.
Theincreasewasmainlyattributabletotheincreaseinrevenuefromenvironmentally-relatedcontractingandmaintenanceservices,primarilywatertreatmentservices.
ThefollowingtablepresentsabreakdownofourGroup'srevenuegeographically:Forthesixmonthsended31December20172016Change%changeHK$'MHK$'MHK$'MHongKong1,326.
51,381.
6(55.
1)(4.
0%)MainlandChina249.
6274.
3(24.
7)(9.
0%)Macau187.
2113.
473.
865.
1%Total1,763.
31,769.
3(6.
0)(0.
3%)InterimReport2017-20187ManagementDiscussionandAnalysisHongKong:RevenuefromHongKongdecreasedbyHK$55.
1millionor4.
0%toHK$1,326.
5millionfortheperiodunderreviewfromHK$1,381.
6millionforthesameperiodlastyear.
ThedeclinemainlyresultedfromthereducedrevenuecontributionfromGleneaglesHongKongHospitalinWongChukHangwhichhadbeensubstantiallycompletedinthecorrespondingperiodlastyear.
Also,worksinrelationtoanumberofsizeableinstallationprojects,includingWestKowloonGovernmentOfficeinYauMaTei,HongKongAirlinesAviationTrainingCentreatChekLapKokandtworesidentialdevelopmentsatLOHASPark,wereatanearlystageandyettocontributesignificantrevenue.
MainlandChina:RevenuefromMainlandChinadecreasedby9.
0%fromHK$274.
3millionforthesixmonthsended31December2016toHK$249.
6millionfortheperiodunderreviewwithitsgeographicalcontributionslightlydecreasedfrom15.
5%to14.
2%.
ThedecreaseofHK$24.
7millionwasmainlyattributabletoreductioninrevenuecontributionfromtwomajorinstallationprojects,anofficebuildingdevelopmentandahoteldevelopmentinWuhanwhichhadbeensubstantiallycompletedinthesameperiodlastyearwhereasthetwosizeableinstallationprojects,includingacommercialcomplexdevelopmentinKunmingandTianjinChowTaiFookFinancialCentre,hadyettocontributesignificantrevenue.
Macau:RevenuefromMacauincreasedby65.
1%fromHK$113.
4millionforthesixmonthsended31December2016toHK$187.
2millionfortheperiodunderreview.
TheincreaseofHK$73.
8millionwasprimarilythesubstantialrevenuecontributionfromelectricalinstallationforMorpheusHotelatCityofDreamswhichmadesignificantprogressduringtheperiodunderreviewandliftedMacau'scontributiontotheGroup'stotalrevenuefrom6.
4%to10.
6%.
GrossprofitTheGroup'soverallgrossprofitincreasedbyHK$11.
3millionor5.
8%fromHK$195.
6millionforthesixmonthsended31December2016toHK$206.
9millionfortheperiodunderreview,whereasoverallgrossprofitmarginremainedrelativelystableat11.
7%(31December2016:11.
1%).
TheincreaseingrossprofitwasdrivenbytheE&Mengineeringbusinessrecordinganincreaseingrossprofitduringtheperiodunderreviewwithsegmentgrossprofitmarginimprovedfrom10.
8%to11.
5%.
Thegrossprofitmarginoftheenvironmentalmanagementservicessegmentremainedrelativelystableat25.
7%(31December2016:26.
6%)withgrossprofitroseby6.
1%fromHK$8.
2millionforthesixmonthsended31December2016toHK$8.
7millionfortheperiodunderreview,mainlyattributabletohigherrevenuecontributionfromwatertreatmentmaintenanceservices.
ThefollowingtablepresentsthebreakdownoftheGroup'sgrossprofitbybusinesssegment:Forthesixmonthsended31December20172016GrossprofitGrossprofitGrossprofitGrossprofitHK$'Mmargin%HK$'Mmargin%E&Mengineering198.
211.
5187.
410.
8Environmentalmanagementservices8.
725.
78.
226.
6Total206.
911.
7195.
611.
1ManagementDiscussionandAnalysisFSEEngineeringHoldingsLimited8Othergains/losses,netFortheperiodunderreview,othernetgains,whichamountedtoHK$2.
6million(31December2016:othernetlossesofHK$0.
2million),mainlyincludedthenetforeignexchangegain.
FinanceincomeTheGrouprecordedfinanceincomeofHK$9.
8million(31December2016:HK$6.
8million).
Theincreasewasmainlyduetotheinterestincomefrominvestmentinavailable-for-salefinancialassetsandfinancialassetsatfairvaluethroughprofitorloss.
GeneralandadministrativeexpensesGeneralandadministrativeexpensesoftheGroupfortheperiodunderreviewincreasedby12.
5%toHK$112.
6million,comparedtoHK$100.
1millionforthesameperiodlastyear.
TheincreaseofHK$12.
5millionwasmainlyattributabletotheincreaseinstaffcostfromannualsalaryincrementandemploymentofadditionalstafftocopewithbusinessexpansion,andadditionaldepreciationchargesforpropertyandassociatedleaseholdimprovementfortheGroup'sofficeacquiredinlastyear.
TaxationTheeffectivetaxrateoftheGroupslightlydeclinedfrom19.
3%to18.
7%ascomparedwiththesameperiodlastyearresultedfromthehigherprofitcontributionfromMacauwhichhasrelativelylowerapplicablecorporateincometaxrate.
ProfitattributabletoequityholdersAsaresultoftheforegoing,ourprofitfortheperiodunderreviewincreasedby5.
5%orHK$4.
5milliontoHK$86.
8million,comparedtoHK$82.
3millionforthelastcorrespondingperiod.
Theincreasewasmainlythecombinedresultofhighergrossprofitcontributionmostlyfromourcorebusinesssegmentandtheincreaseinfinanceincome,partlyoffsetbytheincreaseingeneralandadministrativeexpensesduetoadditionaldepreciationchargesandstaffcosts.
ThenetprofitmarginoftheGroupremainedstableat4.
9%fortheperiodunderreview(31December2016:4.
7%).
OthercomprehensivegainTheGrouprecordedothercomprehensivegainofHK$8.
1millionfortheperiodunderreview,reflectiveoftheincreaseinexchangereservefromtheappreciationoftheRenminbi("RMB")forconversionofthenetinvestmentsinMainlandChinaoperations.
InterimReport2017-20189ManagementDiscussionandAnalysisLiquidityandfinancialresourcesTheGroup'sfinanceandtreasuryfunctionsarecentrallymanagedandcontrolledatitsheadquartersinHongKong.
Asat31December2017,theGrouphadtotalcashandbankbalancesofHK$765.
9million,ofwhich57%,37%and6%weredenominatedinHongKongdollars,RMBandothercurrenciesrespectively(30June2017:55%,33%and12%respectively).
AscomparedtoHK$978.
3millionasat30June2017,theGroup'scashandbankbalancesdecreasedbyHK$212.
4milliontoHK$765.
9million,whichwasprimarilyduetothedistributionoffinaldividendofHK$36.
5millionfortheyearended30June2017,netinvestmentinavailable-for-salefinancialassetsandfinancialassetsatfairvaluethroughprofitorlossinsumofHK$90.
4millionandtheincreaseinnetcashoutflowfromoperatingactivities.
Adoptingaprudentfinancialmanagementapproachinimplementingitstreasurypolicies,theGroupmaintainedahealthyliquiditypositionthroughoutthereportingperiodwithnobankborrowingsandoutstandingborrowingsasat31December2017(30June2017:Nil),henceitsgearingratio(beingourtotalborrowingsdividedbyourtotalequity)wasmaintainedatzeroasat31December2017.
Asat31December2017,theGrouphadtotalbankingfacilitiesinrespectofbankoverdrafts,bankloans,bankguaranteesand/ortradefinancingofHK$1,286.
7million(30June2017:HK$1,091.
0million),ofwhichHK$267.
6million(30June2017:HK$323.
7million)hadbeenutilisedforbankguaranteesandtradefinance.
TheGroupbelievesithassufficientcommittedandunutilisedbankingfacilitiestomeetcurrentbusinessoperationandcapitalexpenditurerequirement.
ForeigncurrencyexposureTheGroupoperatesprimarilyinHongKong,MacauandMainlandChinaandisnotexposedtosignificantexchangerisk.
TheGroupdoesnothaveaforeigncurrencyhedgingpolicyandforeigncurrencyriskismanagedbycloselymonitoringthemovementoftheforeigncurrencyrates.
Itwillconsiderenteringintoforwardforeignexchangecontractstoreduceexposureshouldtheneedarise.
AspartofourbusinessiscarriedoutinMainlandChina,partofourassetsandliabilitiesaredenominatedinRMB.
ThemajorityoftheseassetsandliabilitieshadarisenfromthenetinvestmentsinMainlandChinaoperationswithnetassetsofHK$204.
0millionasat31December2017.
TheforeigncurrencytranslationarisingfromtranslationoftheseMainlandChinaoperations'financialstatementsfromRMB(functionalcurrencyoftheseMainlandChinaoperations)intoHongKongdollars(thegroup'spresentationcurrency)doesnotaffecttheGroup'sprofitbeforeandaftertax,andwillberecognisedinitsothercomprehensiveincome.
Duringtheperiodunderreview,thefluctuationofRMBagainstHongKongdollarswas5.
3%(comparingthehighestexchangeratewiththelowestexchangerateoftheRMBagainsttheHongKongdollarsduringtheperiodunderreview).
Asat31December2017,iftheHongKongdollarshadstrengthened/weakenedbyanother5.
0%againsttheRMBwithallothervariablesunchanged,theGroup'sothercomprehensiveincomewouldhavebeenHK$10.
2millionlower/higher.
ManagementDiscussionandAnalysisFSEEngineeringHoldingsLimited10UseofnetproceedsfromlistingBetween10December2015(dateoflistingoftheCompany)and31December2017,thenetproceedsofHK$264.
5millionreceivedfromtheGlobalOffering(referredtointheprospectusissuedbytheCompanyon26November2015)wereappliedasfollows:NetproceedsfromGlobalOfferingUtilisedUnutilisedHK$'MHK$'MHK$'MInvestmentin/acquisitionofcompaniesengagedintheinstallationandmaintenanceofELVsystem81.
63.
877.
8Developmentofenvironmentalmanagementbusiness51.
02.
848.
2OperationofE&Mengineeringprojectsonhandandprospectiveprojects47.
447.
4–Staff-relatedadditionalexpenses20.
014.
25.
8Developmentandenhancementofdesigncapability19.
315.
83.
5Enhancementofqualitytestinglaboratory12.
23.
88.
4Upgradeofcorporateinformationtechnologysystemandsoftware8.
04.
73.
3Generalworkingcapital25.
025.
0–Total264.
5117.
5147.
0Duringtheperiodunderreview,theGrouputilisedHK$8.
4millionofthenetproceeds.
TheGroupheldtheunutilisednetproceedsmainlyinshort-termdepositsortimedepositswithlicensedbanksandauthorisedfinancialinstitutionsinHongKong.
CapitalcommitmentsTheGrouphadcapitalcommitmentsofapproximatelyHK$16.
0millionasat31December2017inrelationtothepurchaseofproperty,plantandequipment(asat30June2017:HK$0.
2million).
ContingentliabilitiesTheGrouphadnomaterialcontingentliabilitiesasat31December2017(asat30June2017:Nil).
InterimReport2017-201811ManagementDiscussionandAnalysisEMPLOYEESANDREMUNERATIONPOLICYAsat31December2017,theGrouphadatotalof1,736employees(31December2016:1,622).
Staffcostfortheperiodunderreview,includingsalariesandbenefits,wasHK$302.
3million(sixmonthsended31December2016:HK$276.
0million).
Theincreaseintotalheadcountwastocopewithbusinessoperation.
Remunerationpackageincludingsalaries,bonusesgrantedtoemployeesaccordingtoindividualperformanceandarereviewedaccordingtogeneralmarketconditionseveryyear.
Tailoredandstructuredtrainingprogrammeswereprovidedtoemployeescontinuously,toenhancetheirskillsandabilitiesandfosteremployeeloyalty.
TheCompanyadoptedashareoptionschemeon20November2015,aimingatprovidingincentivestotheeligibleparticipants(includingtheemployeesoftheGroup)thattheywouldbeencouragedtocontributetotheGroup.
Theschemealsoenablesustoattractandrecruithigh-calibreemployeeswithknowledge,talentsandexperiencethatarevaluabletotheGroup.
AlltheemployeesoftheGroupinHongKonghavejoinedamandatoryprovidentfundscheme.
TheschemeisregisteredwiththeMandatoryProvidentFundSchemesAuthorityundertheMandatoryProvidentFundSchemesOrdinance(Chapter485oftheLawsofHongKong).
TheGrouphascompliedwithrelevantlawsandregulations,andhasmaderelevantcontributionsinaccordancewiththoserelevantlawsandregulations.
OUTLOOKOverviewLeveragedonitsmarketleadershipandbuttressedbyaproventrackrecord,awell-establishedcustomernetworkandamplefinancialreserves,theGroupwillbeabletocontinuouslyseekacquisitionopportunitiesandengagecompetentprofessionaltalenttohelpitexplorenewmarketopportunitiesandexpandgeographicalcoverageinHongKong,MacauandMainlandChina.
TheGroupwillstayfocusedonapplyingitscorecompetenciestoraisecustomersatisfactionandensurethesustainablegrowthandprofitabilityofitsbusiness.
TheBoardisconfidentthattheGroup,throughitsunwaveringefforts,canmaximiseshareholders'value,enhanceitscorporateimageaswellasitspositionintheE&Mengineeringindustry.
Currently,theE&MengineeringsegmentinHongKong,whichaccountsforover70%oftheGroup'stotalrevenue,remainsthecorebusinessoftheGroup.
However,whileproudofitsperformanceinthissegmentinHongKong,theGroupisstrivingtobolsteritsmarketpresenceinotherregions.
Extralowvoltage("ELV")BusinessRegardingtheELVbusiness,withmorepropertydevelopersadoptingITinfrastructureandadvancedtechnologiesintheirprojectstoenhancebuildingsustainabilityandenergycontrol,thispresentsgoodopportunitiestogeneratebusinessrevenuesandprofit.
Inearly2016,theGroupsetupanELVdivisionwhichcomplementstheworkoftheE&Mengineeringsegmentandprovidevaluedcustomersinthepropertydevelopmentone-stopELVservicesolutions—fromconceptdevelopmenttodesignandtocommissioning.
ManagementDiscussionandAnalysisFSEEngineeringHoldingsLimited12HoldingtheSecurityCompanyLicence(TypeIll)governedbytheSecurityandGuardingServicesIndustryAuthority(SGSIA)undertheSecurityBureau,theGroupiscarryingoutInstallation,Maintenance,RepairingandDesignofSecuritySystems.
TheGroupisalsoqualifiedontheDevelopmentBureau'sListofApprovedSuppliersofMaterialsandSpecialistContractorsforBroadcastReceptionInstallation(BRI)andBurglarAlarmandSecurityInstallation(BAS)forpublicworks.
SincetheestablishmentofthenewELVdivision,theGrouphasseveralELVprojectsincludingoneresidentialprojectonSaiYuenLaneinSaiYingPun,twopublichousingprojectsonTexacoRoadinTsuenWanandTungChungArea27respectively,anofficedevelopmentprojectatKing'sRoadinNorthPointandanAviationTrainingCentreatChekLapKok.
Lookingahead,theGroupwillkeepworkingwithvendorstocustomisethosesystemsaccordingtothespecificneedsofcustomers,usingadvancedtechnologiessuchasintelligentIP/IT-basedandmobileAppssystems.
TheGroupbelievesthatwithahighlyqualifiedandexperiencedstaffandsoundprojectmanagementskills,itcanfulfillitscommitmentofdeliveringqualityandprofessionalservicestoallitsvaluedcustomers.
E&Mengineeringsegment1.
HongKongAstheHongKongGovernmenthasunveiledaseriesofnewpoliciesandinitiativesinthepublicandinfrastructureprojects,theconstructionindustryaccountedfor5.
2%ofHongKong'stotalgrossdomesticprofitin2016.
AccordingtotheconstructionexpenditureforecastprovidedbytheConstructionIndustryCouncil,E&MconstructionworksexpenditurewillamounttooverHK$20billionforthepublicsectorandoverHK$28billionfortheprivatesectoroverthenextfewyears.
Projectsinthesetwosectorswilltogethercreatealargenumberofjobs,particularlycrucialforHongKongintimesofeconomicuncertainty.
Long-termHousingStrategyThelong-termhousingstrategyoftheHongKongGovernment,asstatedinthe2017PolicyAddress,aimsatcontinuingitsongoingeffortsinincreasingthelandandhousingsupply.
Accordingtothegovernmentprojection,460,000residentialflatswillbeprovidedinthenextdecadeincluding200,000publichousingunits,80,000subsidised-saleunits,and180,000privatehousingunits.
Asat2016,theproposedmajorpublichousingdevelopmentsincludethosedevelopmentsatLinCheungRoadinShamShuiPo,Queen'sHillinFanling,DiamondHillandAndersonRoadinKwunTong.
Theproposedmajorsubsidised-salehousingdevelopmentsincludethosedevelopmentsatDiamondHill,PingShaninYuenLongandShamShuiPo.
Inaddition,theHongKongGovernmenthasproposedtheaffordable"StarterHomes",andplannedtolaunchapilotschemebytheendof2018usingaresidentialsiteatAndersonRoadinKwunTongontheHongKongGovernment'sLandSaleProgrammetoprovideabout1,000residentialunits.
Forprivateresidentialdevelopments,accordingtothepreliminaryassessmentofknowntohaveorsoontobestartedondisposedsitesasatJune2017,itisprojectedthattheprivatesectorwillprovideahistoricallyhighrecordofabout98,000unitsinthecomingthreetofouryears.
TheproposedmajorprivatehousingdevelopmentsincludethosedevelopmentsatKaiTakdevelopmentarea,ChaKwoLing,PakShekinMaOnShan,PakShekKokinTaipoandApLeiChau,togetherwithrailwaypropertydevelopmentsincludingLOHASParkStation,TaiWaiStation,WongChukHangStation,HoManTinStation,KamSheungRoadStation,etc.
InterimReport2017-201813ManagementDiscussionandAnalysisNewDevelopmentFrontiersInaddition,theHongKongGovernmentispushingfullsteamaheadwiththenewdevelopmentareasandtheextensionofnewtowns,includingKwuTungNorth,FanlingNorth,TungChung,HungShuiKiuandYuenLongSouth,whichareexpectedtoprovide,alltogether,about198,100residentialflats.
TheHongKongGovernmentwillalsoexaminethedevelopmentofTseungKwanOArea137forresidentialandcommercialdevelopmentandotherrelevantpurposes.
OtherPublicFacilities&InfrastructureDevelopmentsToprepareforthechallengesbroughtbytheagingpopulation,theHongKongGovernmentearmarkedHK$200billionin2016foraten-yearhospitaldevelopmentplancovering,amongothers,theredevelopmentofQueenMaryHospital,KwongWahHospital,UnitedChristianHospitalandKwaiChungHospital,constructionofanewacutehospitalattheKaiTakDevelopmentAreaandtheredevelopmentorexpansionofvarioushospitalssuchastheTuenMunHospitalOperatingBlock,PrinceofWalesHospital,NorthDistrictHospital,PrincessMargaretHospitalandGranthamHospital.
Theaboveprojectswilltogetherprovide5,000additionalpublichospitalbedsand94newsurgicaltheatresinthenexttenyears.
Inaddition,theHongKongGovernmenthasdecidedtofinanceconstructionofaChinesemedicinehospitalinTseungKwanOin2019.
TopromotesportinthecommunityandmaintainHongKongasacentreformajorinternationalsportingevents,theHongKongGovernmentwillspendatotalofHK$20billioninthecomingfiveyearstolaunch26projectstodevelopneworimproveexistingsportsandrecreationfacilities.
Besides,theKaiTakSportsPark,thelargestsportprojectwithaninvestmentoverHK$31billion,isexpectedtobecompletedin2022/2023.
Apartfromtheabove,constructionoftheShatintoCentralLink,investmentintheWestKowloonCulturalDistrict,urbanrenewalredevelopmentprojects,residential,commercialandhoteldevelopmentsintheKaiTakDevelopmentArea,expansionofconventionandexhibitionvenuesinWanchai,HK$12billionUniversityhosteldevelopment,constructionofathirdrunwaysystem,expansionoftheexistingTerminal2andtheSKYCITYdevelopmentprojectsattheHongKongInternationalAirport,theLantaudevelopmentprojectsassociatedwiththeHongKong-Zhuhai-MacaoBridge,andthe"EnergisingKowloonEast"Initiativeasasmartcitypilotarea(includingKwunTongredevelopmentandtherevitalisationofindustrialbuildings)willdefinitelyhelpboosttheconstructionindustryinHongKonginthecomingdecade.
LoomingChallengesOfcourse,theconstructionengineeringsectorsinHongKongarealsofacingamultitudeofproblemsandseriouschallenges.
Accordingtotheforecast,therewillbeaseverelabourshortageofskilledworkersintheE&Mengineeringservicesindustryoverthenextfewyears,whichcoupledwiththeagingworkforce,aregoingtopushuplabourwagesandhenceconstructioncost.
ThefilibusteringintheLegislativeCouncilhasdelayedtheawardofnewpublicworkscontracts,whichaddstotherisingconstructioncost.
TheGrouphasthusstrivedtomaintainarelativelystableworkforceandretainloyalstaffmemberssoastopreserveitscompetitiveness.
ManagementDiscussionandAnalysisFSEEngineeringHoldingsLimited14MaintenanceServicesAsreflectedinthestatisticsavailable,therearecurrentlyover65%oftheexistingbuildings(approximately42,000)inHongKongincluding1,700commercialbuildings,1,600industrialbuildingsand24,000residentialbuildingsagedover20years.
Thus,themaintenancesectionoftheGroup'sE&Mengineeringservicesenvisagesagrowingdemandforthetermmaintenancecontractsfromdifferentprestigiouscommercialandresidentialbuildings,hospitals,thepublicsectorandeducationalinstitutionsseekingtheserviceofqualitycontractorstoassisttheminmaintainingtheirpropertiesinthebestpossibleshape.
TheGroupexpectsanincreaseinrevenuefromfitting-outworks,systemupgradeandreplacementworksfollowingtheimplementationoftheMandatoryBuildingInspectionScheme(MBIScheme)on30June2012.
Large-scalealterationandadditionandsystemretrofitworksarealsosettoprovidefavourablereturnstothemaintenancesection.
Morethanhalf(around55%)ofHongKong'stotalannualenergyend-useisintheformofelectricityconsumptionandbuildingstakeupabout90%ofourtotalelectricityconsumption.
Itisimperativetoreducetheuseofelectricityinbuildingstohelpuscombatclimatechangeandglobalwarming.
FollowingtheimplementationoftheBuildingEnergyEfficiencyOrdinance(Chapter610oftheLawsofHongKong)inSeptember2012,ElectricalandMechanicalServicesDepartment(EMSD)isalsoactivelypursuingthecost-effectiveprogramof"Retro-commissioning"todevelopascientificbasedoptimisationschemeandmakecontinuousimprovementtofurtherencourageenergyconservationworksinexistingbuildings.
TheGroupexpectsfavourablereturnsfromthesystemupgradeandreplacementworkstoimproveenergysavingforbuildingownersandtheindustry.
BuildingMaterialTradingTheGroup'sBuildingMaterialTradingsectionhasalsogeneratedstableincome.
TheGroupoffersawidevarietyoftilesimportedfromEuropetoitscustomersatfourretailstoresinHongKongandoneinMacau.
ItalsosuppliesE&Mengineeringequipmentandproductsincludingcastironandstainlesssteelpipesandfittings,variousgauges,buildingautomationsystems,heatingelements,ventilationandair-conditioningparts,heatexchangers,filters,smokeandgassensors,etc.
AllofthesesuppliedbuildingmaterialsaresourcedfromalargenumberofsuppliersintheUS,Europe,SouthEastAsiaandMainlandChinainaccordancewiththerelateddistributionagreementsorpurchaseordersthattheGrouphasenteredintowiththesuppliers.
WayForwardMovingforward,theGroupwillcontinuetofocusoncapturinglarge-scaleprojectsincludingdesignandconstructioncontractsfromthegovernment,publicinfrastructureworks,hospitaldevelopmentprojects,publicrentalandsubsidisedhousingprojects,privatecommercialandresidentialbuildingprojects.
TheGroupalsotargetstosecuremoretermmaintenancecontractsandalterationandadditionworksinthemaintenanceservicemarket.
InterimReport2017-201815ManagementDiscussionandAnalysis2.
MacauFortheyear2017,theMacaugamingmarketwith39casinosisexpectedtogeneratetotalgrossrevenuesofMOP265billion,aboutfivetimesthatofLasVegas.
Asaresult,theconstructionandE&MengineeringsectorsinMacauperformedverywellinthepastfewyears.
However,withsubstantialsizablecasinoprojectscompletedin2017andtheflaggingtourismandthegamingindustry,theconstructionandengineeringsectorsinMacauareexpectedtogothroughastageofconsolidation.
Nevertheless,thereisaconstantdemandforrenovationandimprovementworksforhotelsandcasinos.
Inaddition,therobustdemandforpublicandprivateresidentialhousing,thedevelopmentofGalaxyMacauPhase3and4(aboutaHK$43billioninvestment),theconstructionoftheIslandsDistrictMedicalComplex,andtherenewalofcasinolicencesin2020and2022areexpectedtocreateemergingbusinessopportunitiesfortheGroupinthecomingfewyears.
OngoingHousingandTourismDevelopmentTheMacauSARGovernmenthaslauncheditsfirstFive-yearDevelopmentPlanandinitiatedthereclamationprojectforNewUrbanZoneAreaAandtheZhuhai-Macaoman-madeislandsinassociationwiththeHongKongZhuhai-MacaoBridge,whichareexpectedtoprovidelandfor28,000publichousingunitsand4,000privatehousingunits.
Conductivetothegrowthofitstourismindustry,thecityprojectedthatitwillbeabletooffer44,000hotelroomsby2019versus37,100hotelroomsinNovember2017.
ReinforcingLeadershipinGamingandTourismThepositioningofMacauasaworldexemplarytourismandleisurecenteraddressesthatregion'sneedforadequateeconomicdiversificationandsustainabledevelopment.
TheMacauSARGovernmentisexpectedtokeeptrackofthepaceofdevelopmentofthegamingindustry,andatthesametimeactivelyfostergrowthofintegratedtourisminthecitybyreinforcingitsnon-gamingfacilities.
3.
MainlandChinaForthismarket,theGrouphasfollowedadisciplinedbusinessdevelopmentapproachfocusingontheprovisionofE&MengineeringservicestomajorpropertydevelopmentsofHongKongandforeigninvestors.
ApartfromthetwocorebasesinBeijingandShanghai,theGrouphasalsoestablisheditspresenceinotherfirst-andsecond-tiercitiesinMainlandChinasuchasTianjin,Dalian,Shenyang,Chengdu,Wuhan,ChangshaandNanjing.
"OneBelt,OneRoad"InitiativeInthe1990sand2000s,theGroupcompletedseveralprojectsinSoutheastAsiaincludingSingapore,Thailand,Malaysia,VietnamandthePhilippines.
IntheadventofChina's"OneBelt,OneRoad"initiativeelaboratedinher13thFive-YearPlan,theGroupisactivelyseekingtoparticipateinrelatedconstructionandinfrastructureprojectsbackedbytheAsianInfrastructureInvestmentBank(AIIB)intenmemberstatesofAssociationofSoutheastAsiaNations(ASEAN).
GuangdongPilotFreeTradeZonesInaddition,thethreerapidlydevelopingGuangdongPilotFreeTradeZones—Hengqin,QianhaiandNanshawillbringinnewbusinessopportunitiestotheGroup.
ManagementDiscussionandAnalysisFSEEngineeringHoldingsLimited16ProjectManagementServicesInrecentyears,theGrouphasbeenprovidingprojectmanagementservicesinMainlandChinatoaninternationalexhibitioncentredevelopmentinShenyang,twohigh-risebuildingcomplexesinTianjinandGuangzhou,andtwocommercialbuildingsinBeijing.
TheGroupfirmlybelievesthatduetoitshighmarketrecognitionandarmedwithstrongvalue-addedE&Mengineeringprojectmanagementexpertiseintheareasof,amongothers,integratedservicescoordination,coordinatedservicesdrawingproduction,BuildingInformationModelling(BIM)techniques,projectplanning,qualityassuranceandsystemtestingandcommissioning,theGroupwillbeapreferredpartnerofforeignandHongKong-baseddevelopersofhigh-endprojectsinMainlandChina.
LeveragingitsabundantE&MinstallationexperienceinMainlandChina,theGroupplanstoextendourE&Mengineeringprojectmanagementservicestocoverhigh-endprojectsinMainlandChinasoastogenerateanadditionalstablesourceofincome.
EnvironmentalmanagementservicesIncreasingpublicawarenessoftheimportanceofacleanenvironmenthasfuelledthedemandforenvironmentalmanagementservicesandproducts.
The2017PolicyAddressforHongKonghighlightstheHongKongGovernment'sdeterminationtopromoteenergyefficiencyanddevelopmentofrenewableenergyforbuildings.
"Goinggreen"isanobvioustrendtotheGroupspurringademandtoprovidecustomerswithtotalsolutionsforenergysavingandtheuseofrenewableenergyandenvironmentally-friendlytechnologies.
TheBuildingEnergyEfficiencyOrdinance(Chapter610oftheLawsofHongKong)enactedin2012continuestosupportthebusinessdevelopmentofourenvironmentalconsultancyservices.
Ourseawaterandfreshwatertreatmentandodourremovalproductssuchaselectro-chlorinationandbiotechdeodorisationsystemsrespectivelycontinuetobringsteadygrowthtoourenvironmentalmanagementservicessegment.
Throughrelentlesseffort,ourlaboratoryhasbeenaccreditedbytheHongKongAccreditationServiceundertheHongKongLaboratoryAccreditationScheme(HOKLAS)since2015,andcanprovidetestingthatcomplementstheworkoftheE&Mengineeringandenvironmentalmanagementservicessegments.
TheGrouphasanautomatedodour-freefoodwasteprocessoravailableinawiderangeofsizestoprovideatotalsolutioninconvertingfoodwasteintoenvironmentally-safewatereffluenttoaddressthepublicattentiononwastemanagementanddisposalwiththeaimtoalleviatethetremendouspressureonlandfills.
TheGroupisactivelyworkingwithstrategicpartnersandvendorstoinvestinstrengtheningourtechnologicalcapabilitieswithafocusonair,waterandwastetreatment.
TheGrouphadcollaboratedwithNanoandAdvancedMaterialsInstituteLimitedtoinvestanddevelopnano-bubbletechnologywhichgarneredagoldmedalatthe45thInternationalExhibitionofInventionsofGeneva2017.
ConclusionAstheGroupcanprovideacomprehensiverangeofE&Mengineeringandenvironmentalmanagementservicesandrunwell-establishedE&MengineeringoperationsinHongKong,MainlandChinaandMacau,itisreadytograsptheamplebusinessopportunitiesthatthedifferentabove-mentionedinfrastructureandlarge-scaleprojectsareexpectedtobring.
Weshallendeavourtomaintainastrongfinancialpositiontostaypoisedfornewinvestmentaswellasexploringforalternativebusinessopportunitiesasandwhentheyarise.
InterimReport2017-201817ReportonReviewofInterimFinancialInformationTOTHEBOARDOFDIRECTORSOFFSEENGINEERINGHOLDINGSLIMITED(incorporatedintheCaymanIslandswithlimitedliability)INTRODUCTIONWehavereviewedtheinterimfinancialinformationsetoutonpages18to43,whichcomprisesthecondensedconsolidatedstatementoffinancialpositionofFSEEngineeringHoldingsLimited(the"Company")anditssubsidiaries(together,the"Group")asat31December2017andtherelatedcondensedconsolidatedincomestatement,statementsofcomprehensiveincome,changesinequityandcashflowsforthesix-monthperiodthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatorynotes.
TheRulesGoverningtheListingofSecuritiesonTheStockExchangeofHongKongLimitedrequirethepreparationofareportoninterimfinancialinformationtobeincompliancewiththerelevantprovisionsthereofandHongKongAccountingStandard34"InterimFinancialReporting"issuedbytheHongKongInstituteofCertifiedPublicAccountants.
ThedirectorsoftheCompanyareresponsibleforthepreparationandpresentationofthisinterimfinancialinformationinaccordancewithHongKongAccountingStandard34"InterimFinancialReporting".
Ourresponsibilityistoexpressaconclusiononthisinterimfinancialinformationbasedonourreviewandtoreportourconclusionsolelytoyou,asabody,inaccordancewithouragreedtermsofengagementandfornootherpurpose.
Wedonotassumeresponsibilitytowardsoracceptliabilitytoanyotherpersonforthecontentsofthisreport.
SCOPEOFREVIEWWeconductedourreviewinaccordancewithHongKongStandardonReviewEngagements2410,"ReviewofInterimFinancialInformationPerformedbytheIndependentAuditoroftheEntity"issuedbytheHongKongInstituteofCertifiedPublicAccountants.
Areviewofinterimfinancialinformationconsistsofmakinginquiries,primarilyofpersonsresponsibleforfinancialandaccountingmatters,andapplyinganalyticalandotherreviewprocedures.
AreviewissubstantiallylessinscopethananauditconductedinaccordancewithHongKongStandardsonAuditingandconsequentlydoesnotenableustoobtainassurancethatwewouldbecomeawareofallsignificantmattersthatmightbeidentifiedinanaudit.
Accordingly,wedonotexpressanauditopinion.
CONCLUSIONBasedonourreview,nothinghascometoourattentionthatcausesustobelievethattheinterimfinancialinformationisnotprepared,inallmaterialrespects,inaccordancewithHongKongAccountingStandard34"InterimFinancialReporting".
PricewaterhouseCoopersCertifiedPublicAccountantsHongKong,27February2018CondensedConsolidatedIncomeStatement—UnauditedFSEEngineeringHoldingsLimited18Forthesixmonthsended31DecemberNote20172016HK$'000HK$'000Revenue51,763,3351,769,315Costofsales(1,556,387)(1,573,761)Grossprofit206,948195,554Othergains/(losses),net62,625(212)Generalandadministrativeexpenses(112,570)(100,142)Operatingprofit797,00395,200Financeincome9,7946,766Profitbeforeincometax106,797101,966Incometaxexpenses8(20,017)(19,666)ProfitfortheperiodattributabletoequityholdersoftheCompany86,78082,300EarningspershareforprofitattributabletoequityholdersoftheCompanyduringtheperiod(expressedinHK$pershare)—basicanddiluted90.
190.
18InterimReport2017-201819CondensedConsolidatedStatementofComprehensiveIncome—UnauditedForthesixmonthsended31December20172016HK$'000HK$'000Profitfortheperiod86,78082,300Othercomprehensiveincome:Itemsthatmaybesubsequentlyreclassifiedtocondensedconsolidatedincomestatement:Currencytranslationdifferences8,038(16,264)Reclassificationofrevaluationreservetoprofitorlossuponmaturityofavailable-for-salefinancialassets,netoftax60–Fairvaluechangeofavailable-for-salefinancialassets3–Deferredtaxonfairvaluechangeofavailable-for-salefinancialassets(1)–Othercomprehensiveincome,netoftax8,100(16,264)TotalcomprehensiveincomefortheperiodandattributabletoequityholdersoftheCompany94,88066,036CondensedConsolidatedStatementofFinancialPositionFSEEngineeringHoldingsLimited20AtAt31December30JuneNote20172017HK$'000HK$'000(unaudited)(audited)ASSETSNon-currentassetsProperty,plantandequipment11372,830382,754Landuserights1121,59021,655Intangibleassets1135,68134,951Deferredincometaxassets12,07411,725Available-for-salefinancialassets94,67247,654536,847498,739CurrentassetsInventories31,74723,034Amountsduefromcustomersforcontractworks281,126141,678Tradeandotherreceivables12894,706830,792Financialassetsatfairvaluethroughprofitorloss93,76831,489Available-for-salefinancialassets–20,327Cashandbankbalances13765,911978,3222,067,2582,025,642Totalassets2,604,1052,524,381EQUITYSharecapital1445,00045,000Reserves925,938867,508Totalequity970,938912,508LIABILITIESNon-currentliabilitiesDeferredincometaxliabilities18,99317,493CurrentliabilitiesAmountsduetocustomersforcontractworks311,124417,597Tradeandotherpayables151,265,4791,125,626Taxationpayable37,57151,1571,614,1741,594,380Totalliabilities1,633,1671,611,873Totalequityandliabilities2,604,1052,524,381Netcurrentassets453,084431,262Totalassetslesscurrentliabilities989,931930,001InterimReport2017-201821CondensedConsolidatedStatementofChangesinEquity—UnauditedSharecapitalReservesTotalHK$'000HK$'000HK$'000At1July201745,000867,508912,508Profitfortheperiod–86,78086,780Othercomprehensiveincome:Reclassificationofrevaluationreservetoprofitorlossuponmaturityofavailable-for-salefinancialassets,netoftax–6060Fairvaluechangeofavailable-for-salefinancialassets,netoftax–22Currencytranslationdifferences–8,0388,038Totalcomprehensiveincome–94,88094,880Transactionswithowners:Dividends–(36,450)(36,450)At31December201745,000925,938970,938At1July201645,000777,841822,841Profitfortheperiod–82,30082,300Othercomprehensiveincome:Currencytranslationdifferences–(16,264)(16,264)Totalcomprehensiveincome–66,03666,036Transactionswithowners:Dividends–(42,300)(42,300)At31December201645,000801,577846,577CondensedConsolidatedStatementofCashFlows—UnauditedFSEEngineeringHoldingsLimited22Forthesixmonthsended31DecemberNote20172016HK$'000HK$'000CashflowsfromoperatingactivitiesCash(usedin)/generatedfromoperations16(a)(73,720)75,117HongKongprofitstaxpaid(12,667)(8,980)MainlandChinaandMacauincometaxpaid(20,063)(3,585)Netcash(usedin)/generatedfromoperatingactivities(106,450)62,552CashflowsfrominvestingactivitiesPurchaseofproperty,plantandequipment(2,670)(6,360)Depositspaidfortheacquisitionofapropertyholdinggroup–(28,500)Proceedsfromdisposalofproperty,plantandequipment–16Decreaseintimedeposits—originalmaturitiesoverthreemonths10,00042,000Proceedsfromdisposalofavailable-for-salefinancialassetsuponmaturity20,311–Additiontootherintangibleassets(915)–Purchaseofavailable-for-salefinancialassets(47,000)–Purchaseoffinancialassetsatfairvaluethroughprofitorloss(63,722)–Interestreceived9,7946,766Netcash(usedin)/generatedfrominvestingactivities(74,202)13,922CashflowsfromfinancingactivitiesDividendpaid(36,450)(42,300)Netcashusedinfinancingactivities(36,450)(42,300)Net(decrease)/increaseincashandcashequivalentsduringtheperiod(217,102)34,174Cashandcashequivalentsatbeginningofperiod968,3221,273,926Exchangedifferences16(b)14,691(18,123)Cashandcashequivalentsatendofperiod765,9111,289,977Cashandbankbalances765,9111,299,977Timedeposits—originalmaturitiesoverthreemonths–(10,000)Cashandcashequivalents765,9111,289,977InterimReport2017-201823NotestotheCondensedConsolidatedInterimFinancialStatements1GENERALINFORMATIONFSEEngineeringHoldingsLimited(the"Company")isalimitedliabilitycompanyincorporatedintheCaymanIslandson22June2015.
TheaddressofitsregisteredofficeisCricketSquare,HutchinsDrive,POBox2681,GrandCayman,KY1-1111,CaymanIslands.
TheCompanyisaninvestmentholdingcompanyanditssubsidiaries(together,the"Group")areprincipallyengagedinprovisionofmechanicalandelectricalengineeringservices,tradingofbuildingmaterials,andtradingofenvironmentalproductsandprovisionofrelatedengineeringandconsultancyservicesinHongKong,MainlandChinaandMacau.
TheultimateholdingcompanyoftheCompanyisFSEHoldingsLimitedincorporatedintheCaymanIslands.
ThedirectorsconsiderMr.
DooWaiHoi,Williamtobetheultimatecontrollingshareholder(the"UltimateControllingShareholder").
TheCompanyhasitslistingontheMainBoardofTheStockExchangeofHongKongLimited.
ThiscondensedconsolidatedinterimfinancialinformationispresentedinHongKongdollars,unlessotherwisestated.
ThiscondensedconsolidatedinterimfinancialinformationhasbeenapprovedforissuebytheboardofdirectorsoftheCompany(the"Board")on27February2018.
2BASISOFPREPARATIONANDACCOUNTINGPOLICIESThisunauditedcondensedconsolidatedinterimfinancialinformationforthesixmonthsended31December2017hasbeenpreparedinaccordancewithHongKongAccountingStandard("HKAS")34,"Interimfinancialreporting"issuedbytheHongKongInstituteofCertifiedPublicAccountants("HKICPA").
Theinterimfinancialinformationshouldbereadinconjunctionwiththeannualfinancialstatementsfortheyearended30June2017,whichhasbeenpreparedinaccordancewithHongKongFinancialReportingStandards("HKFRSs").
Theaccountingpoliciesappliedareconsistentwiththosesetoutintheannualreportfortheyearended30June2017.
Taxesonincomeintheinterimperiodsareaccruedusingthetaxratethatwouldbeapplicabletoexpectedtotalannualearnings.
(a)AdoptionofamendmentstostandardsForthesixmonthsended31December2017,theGroupadoptedthefollowingamendmentstoexistingstandardswhichareeffectivefortheaccountingperiodsbeginningonorafter1January2017andrelevanttotheGroup'soperations:HKAS7AmendmentDisclosureinitiativeHKAS12AmendmentRecognitionofdeferredtaxassetsforunrealisedlossesHKFRS12AmendmentDisclosureofinterestsinotherentitiesTheadoptionoftheaboveamendmentstostandardshasnomaterialeffectontheresultsandfinancialpositionoftheGroupnoranysubstantialchangesintheGroup'saccountingpoliciesandthepresentationoftheconsolidatedfinancialstatements.
FSEEngineeringHoldingsLimited24NotestotheCondensedConsolidatedInterimFinancialStatements2BASISOFPREPARATIONANDACCOUNTINGPOLICIES(Continued)(b)NewstandardsandamendmentsandinterpretationstoexistingstandardsthathavebeenissuedbutnotyeteffectiveandhavenotbeenearlyadoptedbytheGroupThefollowingnewstandardsandamendmentsandinterpretationstoexistingstandards,thatarerelevanttotheGroup'soperation,havebeenissuedbutnotyeteffectiveforthefinancialyearoftheGroupbeginningon1July2017andhavenotbeenearlyadopted:EffectiveforaccountingperiodsbeginningonorafterHKFRS9Financialinstruments1January2018HKFRS15Revenuefromcontractswithcustomers1January2018HKFRS15AmendmentClarificationstoHKFRS151January2018HK(IFRIC)—Int22Foreigncurrencytransactionsandadvanceconsideration1January2018HKFRS9AmendmentPrepaymentfeatureswithnegativecompensationandmodificationsoffinancialliabilities1January2019HKFRS16Leases1January2019HK(IFRIC)—Int23Uncertaintyoverincometaxtreatments1January2019HKFRS10andHKAS28AmendmentsSaleorcontributionofassetsbetweenaninvestoranditsassociateorjointventureTobedeterminedTheGrouphasalreadycommencedanassessmentoftheimpacttotheGroupandconsideredthattherewillnotbeanysubstantialchangestotheGroup'ssignificantaccountingpoliciesandpresentationofconsolidatedfinancialstatements,exceptforthefollowingsetoutbelow:HKFRS9,"Financialinstruments"HKFRS9addressestheclassification,measurementandderecognitionoffinancialassetsandfinancialliabilities,andintroducesanewimpairmentmodelforfinancialassets.
TheGrouphasdecidednottoadoptHKFRS9untilitbecomesmandatoryfortheyearending30June2019.
TheGroupexpectstheadoptionwillhavepossiblechangeinclassificationoftheGroup'sfinancialassets.
TherewillbenoimpactontheGroup'saccountingforfinancialliabilities,asthenewrequirementsonlyaffecttheaccountingforfinancialliabilitiesthataredesignatedatfairvaluethroughprofitorlossandtheGroupdoesnothaveanysuchliabilities.
ThederecognitionruleshavebeentransferredfromHKAS39FinancialInstruments:RecognitionandMeasurementandhavenotbeenchanged.
Thenewimpairmentmodelrequirestherecognitionofimpairmentprovisionsbasedonexpectedcreditlosses(ECL)ratherthanonlyincurredcreditlossesasisthecaseunderHKAS39.
Itappliestofinancialassetsclassifiedatamortisedcost,debtinstrumentsmeasuredatfairvaluethroughothercomprehensiveincome,contractassetsunderHKFRS15RevenuefromContractswithCustomers,leasereceivables,loancommitmentsandcertainfinancialguaranteecontracts.
TheGroupexpectstherewillnotbeanymaterialeffectontheresultsandfinancialpositionsintheimpairmentprovisionoffinancialassets.
InterimReport2017-201825NotestotheCondensedConsolidatedInterimFinancialStatements2BASISOFPREPARATIONANDACCOUNTINGPOLICIES(Continued)(b)NewstandardsandamendmentsandinterpretationstoexistingstandardsthathavebeenissuedbutnotyeteffectiveandhavenotbeenearlyadoptedbytheGroup(Continued)HKFRS9,"Financialinstruments"(Continued)Thenewstandardalsointroducesexpandeddisclosurerequirementsandchangesinpresentation.
TheseareexpectedtochangethenatureandextentoftheGroup'sdisclosuresaboutitsfinancialinstrumentsparticularlyintheyearoftheadoptionofthenewstandard.
HKFRS15,"Revenuefromcontractswithcustomers"TheHKICPAhasissuedanewstandardfortherecognitionofrevenue.
ThiswillreplaceHKAS18whichcoversrevenuearisingfromthesaleofgoodsandtherenderingofservicesandHKAS11whichcoversconstructioncontracts.
Thenewstandardisbasedontheprinciplethatrevenueisrecognisedwhencontrolofagoodorservicetransferstoacustomer.
Thestandardpermitseitherafullretrospectiveoramodifiedretrospectiveapproachfortheadoption.
Thenewstandardiseffectiveforfirstinterimperiodswithinannualreportingperiodsbeginningonorafter1January2018.
TheGroupwilladoptthenewstandardfrom1July2018.
Basedonpreliminaryassessmentconducted,theGroupexpectstherewillnotbeanymaterialeffectontheresultsandfinancialpositions,butwillneedtopresentmoredisclosuresinthefinancialstatements.
HKFRS16,"Leases"HKFRS16wasissuedinJanuary2016.
Itwillresultinalmostallleasesbeingrecognisedonthestatementoffinancialposition,asthedistinctionbetweenoperatingandfinanceleasesisremoved.
Underthenewstandard,anasset(therighttousetheleaseditem)andafinancialliabilitytopayrentalsarerecognised.
Theonlyexceptionsareshort-termandlow-valueleases.
Theaccountingforlessorswillnotsignificantlychange.
ThestandardwillaffectprimarilytheaccountingfortheGroup'soperatingleases.
Asatthereportingdate,theGrouphasnon-cancellableoperatingleasecommitmentsofHK$40.
5million.
TheadoptionofHKFRS16willresultintherecognitionofanassetandaliabilityforfuturepayments,andtheGroupexpectstherewillnotbeanymaterialeffectontheprofitorloss.
Someofthecommitmentsmaybecoveredbytheexceptionforshort-termandlow-valueleasesandsomecommitmentsmayrelatetoarrangementsthatwillnotqualifyasleasesunderHKFRS16.
Thestandardismandatoryforfirstinterimperiodswithinannualreportingperiodsbeginningonorafter1January2019.
Atthisstage,theGroupdoesnotintendtoadoptthestandardbeforeitseffectivedate.
FSEEngineeringHoldingsLimited26NotestotheCondensedConsolidatedInterimFinancialStatements3FINANCIALRISKMANAGEMENT3.
1FinancialriskfactorsTheGroup'sactivitiesexposeittoavarietyoffinancialrisks:creditrisk,liquidityrisk,interestraterisk,foreignexchangeriskandpricerisk.
Thecondensedconsolidatedinterimfinancialinformationdoesnotincludeallfinancialriskmanagementinformationanddisclosuresrequiredintheannualfinancialstatements,andshouldbereadinconjunctionwiththeGroup's30June2017annualfinancialstatements.
Therehavebeennochangesintheriskmanagementpoliciessinceyearend.
3.
2FairvalueestimationThetablebelowanalysestheGroup'sfinancialinstrumentscarriedatfairvaluesbylevelofinputstovaluationtechniquestomeasurefairvalues.
Suchinputsarecategorisedintothreelevelswithinafairvaluehierarchyasfollows:Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities(level1).
Inputsotherthanquotedpricesincludedinlevel1thatareobservablefortheassetorliabilityeitherdirectly(thatis,asprices)orindirectly(thatis,derivedfromprices)(level2).
Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(thatis,unobservableinputs)(level3).
ThefollowingtablepresentstheGroup'sfinancialassetsandfinancialliabilitiesthataremeasuredatfairvalues:AtAt31December30June20172017Level1Level1HK$'000HK$'000AssetsFinancialassetsatfairvaluethroughprofitorloss93,76831,489Available-for-salefinancialassets94,67267,981188,44099,470TheGroupusesquotedmarketpricesforfinancialassetsincludedinlevel1.
Thequotedpricewhichisused,isthepricewithinthebid-askspreadthatismostrepresentativeofthefairvalue.
Therewerenotransfersoffinancialinstrumentsbetweenlevelsinthehierarchyfortheperiodended31December2017.
At31December2017,thecarryingamountsofotherfinancialassetsandliabilitiesapproximatetheirfairvaluesduetotheshort-termmaturitiesoftheseassetsandliabilities.
Thereisnootherfinancialinstrumentrequiringdisclosureoffairvaluemeasurementbylevelonfairvaluemeasurementhierarchy.
InterimReport2017-201827NotestotheCondensedConsolidatedInterimFinancialStatements4ESTIMATESThepreparationofinterimfinancialinformationrequiresmanagementtomakejudgements,estimatesandassumptionsthataffecttheapplicationofaccountingpoliciesandthereportedamountsofassetsandliabilities,incomeandexpense.
Actualresultsmaydifferfromtheseestimates.
Inpreparingthiscondensedconsolidatedinterimfinancialinformation,thesignificantjudgementsmadebymanagementinapplyingtheGroup'saccountingpoliciesandthekeysourcesofestimationuncertaintywerethesameasthosethatappliedtotheconsolidatedfinancialstatementsfortheyearended30June2017.
5REVENUEANDSEGMENTINFORMATIONTheexecutivedirectorsaretheGroup'schiefoperatingdecision-makers("CODM").
ManagementhasdeterminedtheoperatingsegmentsbasedontheinformationreviewedbytheCODMforthepurposesofallocatingresourcesandassessingperformance.
TheGroup'srevenuerepresentstheelectricalandmechanical("E&M")engineeringservicesincome,environmentalservicesincomeandincomefromtradingofbuildingmaterials.
AnanalysisoftheGroup'srevenueisasfollows:Forthesixmonthsended31December20172016HK$'000HK$'000RevenueContracting1,651,2641,648,355Maintenanceservices62,52256,058Salesofgoods49,54964,9021,763,3351,769,315FSEEngineeringHoldingsLimited28NotestotheCondensedConsolidatedInterimFinancialStatements5REVENUEANDSEGMENTINFORMATION(Continued)TheCODMconsidersthebusinessfromproductandserviceperspectivesandtheGroupisorganisedintotwomajorbusinesssegmentsaccordingtothenatureofproductsandservicesprovided:(i)E&Mengineering—Provisionofengineeringservicesandtradingofbuildingmaterials;and(ii)Environmentalmanagementservices—Tradingofenvironmentalproductsandprovisionofrelatedengineeringandconsultancyservices.
TheCODMassessestheperformanceoftheoperatingsegmentsbasedoneachsegment'soperatingprofit.
Themeasurementofsegmentoperatingprofitexcludestheeffectsofunallocatedcorporateexpensesandnon-recurringevents.
Inaddition,financeincomeandcostsarenotallocatedtosegments.
Operatingexpensesofafunctionalunitareallocatedtotherelevantsegmentwhichisthepredominantuseroftheservicesprovidedbytheunit.
Operatingexpensesofothersharedserviceswhichcannotbeallocatedtoaspecificsegmentandcorporateexpensesareincludedasunallocatedcorporateexpenses.
Segmentassetsarethoseoperatingassetsthatareemployedbyasegmentinitsoperatingactivities.
Segmentassetsaredeterminedafterdeductingrelatedallowancesthatarereportedasdirectoffsetsinthestatementoffinancialposition.
Segmentassetsconsistprimarilyoflanduserights,property,plantandequipment,intangibleassets,deferredincometaxassets,inventories,amountsduefromcustomersforcontractworks,tradeandotherreceivablesandcashandbankbalances.
Segmentliabilitiesarethoseoperatingliabilitiesthatresultfromtheoperatingactivitiesofasegment.
Segmentliabilitiesdonotincludeotherliabilitiesthatareincurredforfinancingratherthanoperatingpurposesunlessthesegmentisengagedinfinancingactivities.
Asat31December2017,unallocatedassetsandunallocatedliabilitiesrepresentedtheassetsandliabilitiesnotarisingfromtheoperationoftheoperatingsegments.
Capitalexpenditurecomprisesmainlyadditionstoproperty,plantandequipment(Note11).
InterimReport2017-201829NotestotheCondensedConsolidatedInterimFinancialStatements5REVENUEANDSEGMENTINFORMATION(Continued)(a)Asatandforthesixmonthsended31December2017Thesegmentresultsforthesixmonthsended31December2017andothersegmentitemsincludedinthecondensedconsolidatedincomestatementareasfollows:E&MengineeringEnvironmentalmanagementservicesInter-segmenteliminationTotalHK$'000HK$'000HK$'000HK$'000Revenue—external1,729,48333,852–1,763,335Revenue—internal61,004(1,010)–Totalrevenue1,763,335Operatingprofitbeforeunallocatedcorporateexpenses95,8263,344–99,170Unallocatedcorporateexpenses(2,167)Operatingprofit97,003Financeincome9,794Profitbeforeincometax106,797Incometaxexpenses(20,017)Profitfortheperiod86,780OtheritemsDepreciation(Note11)11,8191,025–12,844Amortisationofintangibleassets(Note11)185––185Amortisationoflanduserights(Note11)300––300Thesegmentassetsandliabilitiesasat31December2017andcapitalexpenditureforthesixmonthsended31December2017areasfollows:E&MengineeringEnvironmentalmanagementservicesTotalHK$'000HK$'000HK$'000Segmentassets2,078,06135,9062,113,967Unallocatedassets490,138Totalassets2,604,105Segmentliabilities1,616,00314,0711,630,074Unallocatedliabilities3,093Totalliabilities1,633,167Capitalexpenditure2,4871832,670Unallocatedcapitalexpenditure–Totalcapitalexpenditure2,670FSEEngineeringHoldingsLimited30NotestotheCondensedConsolidatedInterimFinancialStatements5REVENUEANDSEGMENTINFORMATION(Continued)(b)Forthesixmonthsended31December2016andasat30June2017Thesegmentresultsforthesixmonthsended31December2016andothersegmentitemsincludedinthecondensedconsolidatedincomestatementareasfollows:E&MengineeringEnvironmentalmanagementservicesInter-segmenteliminationTotalHK$'000HK$'000HK$'000HK$'000Revenue—external1,738,48230,833–1,769,315Revenue—internal42,391(2,395)–Totalrevenue1,769,315Operatingprofitbeforeunallocatedcorporateexpenses94,2303,211–97,441Unallocatedcorporateexpenses(2,241)Operatingprofit95,200Financeincome6,766Profitbeforeincometax101,966Incometaxexpenses(19,666)Profitfortheperiod82,300OtheritemsDepreciation(Note11)4,7481,054–5,802Amortisationofintangibleassets(Note11)185––185Amortisationoflanduserights(Note11)301––301Thesegmentassetsandliabilitiesasat30June2017andcapitalexpenditurefortheyearthenendedareasfollows:E&MEngineeringEnvironmentalmanagementservicesTotalHK$'000HK$'000HK$'000Segmentassets2,092,58035,9502,128,530Unallocatedassets395,851Totalassets2,524,381Segmentliabilities1,596,09312,8771,608,970Unallocatedliabilities2,903Totalliabilities1,611,873Capitalexpenditure32,4081,02533,433Unallocatedcapitalexpenditure–Totalcapitalexpenditure33,433InterimReport2017-201831NotestotheCondensedConsolidatedInterimFinancialStatements5REVENUEANDSEGMENTINFORMATION(Continued)Revenuefromexternalcustomersbygeographicalareasisbasedonthegeographicallocationofthecustomers.
Revenueisallocatedbasedontheregionsinwhichthecustomersarelocatedasfollows:Forthesixmonthsended31December20172016HK$'000HK$'000RevenueHongKong1,326,5041,381,569MainlandChina249,628274,353Macau187,203113,3931,763,3351,769,315Thenon-currentassetsexcludingdeferredtaxassetsareallocatedbasedontheregionsinwhichthenon-currentassetsarelocatedasfollows:AtAt31December30June20172017HK$'000HK$'000Non-currentassets,otherthandeferredtaxassetsHongKong468,101430,481MainlandChina25,99725,572Macau30,67530,961524,773487,0146OTHERGAINS/(LOSSES),NETForthesixmonthsended31December20172016HK$'000HK$'000Exchangegain/(loss),net3,929(160)Lossondisposalofproperty,plantandequipment,net–(291)Fairvaluelossonfinancialassetsatfairvaluethroughprofitorloss(1,443)–Reclassificationofrevaluationreservetoprofitorlossuponmaturityofavailable-for-salefinancialassets(72)–Sundries2112392,625(212)FSEEngineeringHoldingsLimited32NotestotheCondensedConsolidatedInterimFinancialStatements7OPERATINGPROFITForthesixmonthsended31December20172016HK$'000HK$'000Operatingprofitisstatedaftercharging/(crediting):Changesininventoriesoffinishedgoodsandworkinprogress25,78336,611Rawmaterialsandconsumablesused418,225406,707Subcontractingfees820,782831,773Provisionforinventories721285Reversalofprovisionforinventories(487)–Reversalofimpairmentlossontradereceivables(104)(40)Amortisationoflanduserights300301Amortisationofintangibleassets185185Depreciationofproperty,plantandequipment12,8445,802Operatingleaserentalforlandandbuildings15,44916,020Less:Operatingleaserentalcapitalisedundercontractsinprogress(2,065)(1,993)Staffcosts(includingdirectors'emoluments)Salariesandallowances289,821264,272Pensioncostondefinedcontributionschemes12,50311,770Add:Recognitionofstaffcostspreviouslycapitalisedundercontractsinprogress6,7316568INCOMETAXEXPENSESForthesixmonthsended31December20172016HK$'000HK$'000CurrentincometaxHongKongprofitstax7,7858,973MainlandChinataxation9,1248,169Macautaxation1,9691,440Under-provisioninprioryears–119Deferredincometaxexpense1,13996520,01719,666HongKongprofitstaxhasbeenprovidedattherateof16.
5%(2016:16.
5%)ontheestimatedassessableprofit.
TaxationonMainlandChinaandMacauprofitshasbeencalculatedontheestimatedassessableprofitfortheperiodattheratesoftaxationprevailinginthejurisdictionsinwhichtheGroupoperates.
Theseratesrangefrom12%to25%forthesixmonthsended31December2016and2017.
InterimReport2017-201833NotestotheCondensedConsolidatedInterimFinancialStatements9EARNINGSPERSHARE(a)BasicBasicearningspershareiscalculatedbydividingtheprofitattributabletoownersoftheCompanybytheweightedaveragenumberofordinarysharesinissueduringthesixmonthsended31December2017and2016.
Forthesixmonthsended31December20172016HK$'000HK$'000ProfitattributabletoownersoftheCompany86,78082,300Weightedaveragenumberofordinarysharesinissue(sharesinthousands)450,000450,000Basicearningspershare(HK$)0.
190.
18(b)DilutedAstheCompanydidnothaveanydilutivepotentialordinarysharesduringthesixmonthsended31December2017and2016,thedilutedearningspershareequalsthebasicearningspershare.
10DIVIDENDSTheBoardhasresolvedtodeclareaninterimdividendofHK7.
8centspershareforthesixmonthsended31December2017(2016:HK7.
4centspershare).
Theinterimdividendwillbepaidincash.
11PROPERTY,PLANTANDEQUIPMENT,LANDUSERIGHTS,ANDINTANGIBLEASSETSProperty,plantandequipmentLanduserightsOtherintangibleassetsHK$'000HK$'000HK$'000Sixmonthsended31December2017Openingnetbookvalueasat1July2017382,75421,65534,951Additions2,670–915Exchangedifferences250235–Depreciationandamortisationcharges(12,844)(300)(185)Closingnetbookvalueasat31December2017372,83021,59035,681FSEEngineeringHoldingsLimited34NotestotheCondensedConsolidatedInterimFinancialStatements11PROPERTY,PLANTANDEQUIPMENT,LANDUSERIGHTS,ANDINTANGIBLEASSETS(Continued)Property,plantandequipmentLanduserightsOtherintangibleassetsHK$'000HK$'000HK$'000Sixmonthsended31December2016Openingnetbookvalueasat1July201694,41423,08735,321Additions6,360––Disposals(307)––Exchangedifferences(247)(237)–Depreciationandamortisationcharges(5,802)(301)(185)Closingnetbookvalueasat31December201694,41822,54935,13612TRADEANDOTHERRECEIVABLESAtAt31December30June20172017HK$'000HK$'000TradereceivablesThirdparties160,567121,525Relatedcompanies(Note17(c))88,54871,400249,115192,925Less:provisionforimpairmentThirdparties(3,861)(3,972)245,254188,953RetentionreceivablesThirdparties158,983143,322Relatedcompanies(Note17(c))221,969216,398380,952359,720Accruedcontractrevenue234,442243,341Otherreceivablesandprepayments34,05838,778649,452641,839894,706830,792Generally,nocreditperiodwasgrantedtoretailcustomersfortradingofbuildingmaterials.
Thecreditperiodsgenerallygrantedtoothercustomersat30-60daysforE&MengineeringandEnvironmentalmanagementservices.
InterimReport2017-201835NotestotheCondensedConsolidatedInterimFinancialStatements12TRADEANDOTHERRECEIVABLES(Continued)TheageinganalysisoftheGroup'stradereceivables(includingamountsduefromrelatedpartiesoftradinginnature),basedontheinvoiceduedate,andnetofprovisionforimpairment,isasfollows:AtAt31December30June20172017HK$'000HK$'000Currentto90days221,136167,33391–180days16,12712,264Over180days7,9919,356245,254188,95313CASHANDBANKBALANCESAtAt31December30June20172017HK$'000HK$'000Timedeposits—originalmaturitieswithinthreemonths632,777808,705Timedeposits—originalmaturitiesoverthreemonths–10,000Othercashatbankandinhand133,134159,617765,911978,32214SHARECAPITALThenumbersoftheCompany'ssharesauthorisedandissuedareasfollows:NumberofsharesHK$'000Ordinaryshares,authorised:Asat30June2017and31December20171,000,000,000100,000Ordinaryshares,issuedandfullypaid:Asat30June2017and31December2017450,000,00045,000FSEEngineeringHoldingsLimited36NotestotheCondensedConsolidatedInterimFinancialStatements15TRADEANDOTHERPAYABLESAtAt31December30June20172017HK$'000HK$'000TradepayablesThirdparties227,56662,711BillspayableThirdparties–9,355RetentionpayablesThirdparties222,973207,815Accruedexpenses60,40491,888Provisionforcontractingcosts669,679660,915Othercreditorsandaccruals84,85792,9421,265,4791,125,626TheageinganalysisoftheGroup'stradepayables(includingamountsduetorelatedpartiesoftradinginnature)basedoninvoicedateisasfollows:AtAt31December30June20172017HK$'000HK$'0001–90days218,33255,09491–180days4,5446,227Over180days4,6901,390227,56662,711InterimReport2017-201837NotestotheCondensedConsolidatedInterimFinancialStatements16NOTESTOCONDENSEDCONSOLIDATEDSTATEMENTOFCASHFLOWS(a)Reconciliationofoperatingprofittocash(usedin)/generatedfromoperations:Forthesixmonthsended31December20172016HK$'000HK$'000Profitbeforeincometax106,797101,966Interestincome(9,794)(6,766)Amortisationoflanduserights300301Amortisationofintangibleassets185185Depreciationofproperty,plantandequipment12,8445,802Provisionforinventories721285Reversalofprovisionforinventories(487)–Reversalofimpairmentlossontradereceivables(104)(40)Lossondisposalofproperty,plantandequipment–291Lossondisposalofavailable-for-salefinancialassetsuponmaturity72–Fairvaluelossonfinancialassetsatfairvaluethroughprofitorloss1,443–Unrealisedexchangedifferences(3,440)(2,092)Operatingcashflowsbeforechangesinworkingcapital108,53799,932Changesinworkingcapital:—Inventories(8,947)2,127—Netamountsduetocustomersforcontractworks(248,839)(197,321)—Tradeandotherreceivables(56,629)117,697—Tradeandotherpayables132,15852,682Cash(usedin)/generatedfromoperations(73,720)75,117(b)TheexchangedifferencesofcashandcashequivalentsduringtheperiodaremainlyarisingfromtheremeasurementoftheGroup'sforeigncurrencydenominatedcashandbankbalancesattheperiodendexchangerate.
FSEEngineeringHoldingsLimited38NotestotheCondensedConsolidatedInterimFinancialStatements17RELATEDPARTYTRANSACTIONSSaveasdisclosedelsewhereinthecondensedconsolidatedinterimfinancialinformation,theGroupundertookthefollowingtransactionswithrelatedparties,whichintheopinionofthedirectorsoftheCompany,werecarriedoutinthenormalcourseofbusinessduringthesixmonthsended31December2016and2017.
(a)ThedirectorsoftheCompanyareoftheviewthattherelatedpartiesthathadtransactionswiththeGrouparelistedbelow:NameRelationshipDMIDevelopmentLimitedNoteiFungSengDiamondCompanyLimitedNoteiGeneralSecurity(H.
K.
)LimitedNoteiGreatCityDevelopmentsCompanyLimitedNoteiHongKongIslandLandscapeCompanyLimitedNoteiInternationalPropertyManagementLimitedNoteiKenbaseEngineeringLimitedNoteiKiuLokServiceManagementCompanyLimitedNoteiNewChinaLaundryLimitedNoteiNovaInsuranceConsultantsLimitedNoteiOngloryInternationalLimitedNoteiPowerEstateInvestmentsLimitedNoteiTheDynastyClubLimitedNoteiUrbanPropertyManagementLimitedNoteiUrbanManagementServicesLimitedNoteiWaihongEnvironmentalServicesLimitedNoteiWaihongIntegratedGreenServicesLimited(FormerlyknownasWaihongPestControlServicesLimited)Notei上海豐昌物業管理有限公司Notei上海上實南洋大酒店有限公司Notei上海上實南洋大酒店有限公司上海四季酒店Notei上海新尚賢坊房地產發展有限公司Notei新豐福貿易(上海)有限公司NoteiAnwayLimitedNoteiiATLLogisticsCentreHongKongLimitedNoteiiBroadway-NassauInvestmentsLimitedNoteiiBrightLinkEngineeringLimitedNoteiiBuildKingConstructionLtdNoteiiChowTaiFookJewelleryCompanyLimitedNoteiiChowTaiFookJewelleryandWatchCompany(Macau)LimitedNoteiiChowTaiFookEnterprisesLimitedNoteiiDiscoveryParkCommercialServicesLimitedNoteiiEastConceptInvestmentsLimitedNoteiiEverLightLimitedNoteiiGammon—HipHingJointVentureNoteiiGHHotelCompanyLimitedNoteiiHeadStepLimitedT/APentahotelHKKowloonNoteiiHH—CWJointVentureNoteiiInterimReport2017-201839NotestotheCondensedConsolidatedInterimFinancialStatementsNameRelationshipHipHingJointVentureNoteiiHKConvention&ExhibitionCentreNoteiiHipHingBuildersCompanyLimitedNoteiiHipHingConstructionCompanyLimitedNoteiiHipHingEngineeringCompanyLimitedNoteiiHipSengConstructionCompanyLimitedNoteiiHipHing—HanisonJointVentureNoteiiHongKongIslandDevelopmentLimitedNoteiiHongKongGolf&TennisAcademyManagementCompanyLimitedNoteiiK11ConceptsLimitedNoteiiK11SelectLimitedNoteiiKiuLokPropertiesServices(China)LtdNoteiiNewTownProjectManagementLimitedNoteiiNewWorldStrategicInvestmentLimitedNoteiiNewWorldTMTLimitedNoteiiNewWorldTowerCompanyLimitedNoteiiNewWorldHarbourviewHotelCompanyLimitedNoteiiNewWorldConstructionCompanyLimitedNoteiiNWSHoldingsLimitedNoteiiNewWorldDevelopmentCompanyLimitedNoteiiNewWorldFacilitiesManagementCompanyLimitedNoteiiNewWorldPropertyManagementCompanyLimitedNoteiiNWProjectManagementLimitedNoteiiNewWorldChinaLandLimitedNoteiiPridemaxLimitedNoteiiRenaissanceHarbourViewHotelHKNoteiiSpaceEnterprisesLimitedNoteiiTheAutomallLimitedNoteiiUltimateVantageLimitedNoteiiVibro(HK)LimitedNoteiiVibroConstructionCompanyLimitedNoteiiVictoriaNurseryNoteii大連僑樂物業服務有限公司Noteii大連新世界大廈有限公司Noteii北京僑樂房地產管理服務有限公司Noteii北京祥和物業管理有限公司Noteii北京京廣中心有限公司Noteii北京麗高房地產開發有限公司Noteii北京新策項目管理諮詢服務有限公司Noteii北京祟文.
新世界房地產發展有限公司Noteii17RELATEDPARTYTRANSACTIONS(Continued)(a)ThedirectorsoftheCompanyareoftheviewthattherelatedpartiesthathadtransactionswiththeGrouparelistedbelow:(Continued)FSEEngineeringHoldingsLimited40NotestotheCondensedConsolidatedInterimFinancialStatementsNameRelationship湖南成功新世紀投資有限公司Noteii湖南新城新世界物業服務有限公司Noteii湖南梓山湖置業有限公司Noteii天津新世界百貨有限公司Noteii天津新世界環渤海房地產開發有限公司Noteii寧波公泰置業有限公司Noteii寧波新立房地產開發有限公司Noteii上海三聯物業發展有限公司Noteii鹽城新世界百貨有限公司Noteii廣州市新禦房地產開發有限公司Noteii深圳拓勁房地產開發有限公司Noteii鄭州新世界百貨有限公司Noteii清遠新世界旅遊發展有限公司Noteii新協中建築有限公司(Formerlyknownas協興建築(中國)有限公司)Noteii周大福鐘錶(香港)有限公司Noteii新世界百貨集團上海匯雅百貨有限公司Noteii新世界(瀋陽)房地產開發有限公司Noteii新世界(瀋陽)房地產開發第五有限公司Noteii新世界嘉業(武漢)有限公司Noteii新世界安信(天津)發展有限公司Noteii新世界發展(武漢)有限公司NoteiiNotes:(i)ThesecompaniesarecommonlycontrolledbytheUltimateControllingShareholder.
(ii)TheserelatedcompaniesincludecompaniesofwhichthekeymanagementpersonnelareclosememberofthefamilyoftheUltimateControllingShareholder.
17RELATEDPARTYTRANSACTIONS(Continued)(a)ThedirectorsoftheCompanyareoftheviewthattherelatedpartiesthathadtransactionswiththeGrouparelistedbelow:(Continued)InterimReport2017-201841NotestotheCondensedConsolidatedInterimFinancialStatements17RELATEDPARTYTRANSACTIONS(Continued)(b)TransactionwithrelatedpartiesForthesixmonthsended31December20172016HK$'000HK$'000Contractrevenue(Notei)RelatedcompaniescommonlycontrolledbytheUltimateControllingShareholder59,89619,593Otherrelatedcompanies694,266903,921754,162923,514Insurancebrokingserviceexpenses(Noteii)RelatedcompaniescommonlycontrolledbytheUltimateControllingShareholder16,14512,446Rentalexpenses(Noteiii)RelatedcompaniescommonlycontrolledbytheUltimateControllingShareholder3,4554,205Otherrelatedcompanies971323,5524,337Notes:(i)Revenuefromprovisionofcontractingworkisprincipallychargedinaccordancewithrespectivecontracts.
(ii)Insurancebrokingserviceexpenseswereprincipallychargedinaccordancewithrespectiveinsurancepolicies.
(iii)Rentalexpenseswereprincipallychargedinaccordancewithrespectiverentalagreements(iv)Theabovetransactionswithrelatedpartiesarebaseduponmutuallyagreedtermsandconditions.
FSEEngineeringHoldingsLimited42NotestotheCondensedConsolidatedInterimFinancialStatements17RELATEDPARTYTRANSACTIONS(Continued)(c)BalanceswithrelatedpartiesAtAt31December201730June2017HK$'000HK$'000TradereceivablesRelatedcompaniescommonlycontrolledbytheUltimateControllingShareholder11,28811,385Otherrelatedcompanies77,26060,01588,54871,400AmountsduefromcustomersforcontractworksRelatedcompaniescommonlycontrolledbytheUltimateControllingShareholder5,0284,825Otherrelatedcompanies106,32340,180111,35145,005AmountsduetocustomersforcontractworksRelatedcompaniescommonlycontrolledbytheUltimateControllingShareholder7,1568,046Otherrelatedcompanies177,415257,003184,571265,049RetentionreceivablesRelatedcompaniescommonlycontrolledbytheUltimateControllingShareholder5741,622Otherrelatedcompanies221,395214,776221,969216,398(d)KeymanagementcompensationKeymanagementincludesdirectorsandseniormanagementoftheGroup.
Thecompensationpaidorpayabletokeymanagementforemployeeservicesisshownbelow:Forthesixmonthsended31December20172016HK$'000HK$'000Fees706575Salariesandotheremoluments19,66417,384Contributionstodefinedcontributionschemes86876421,23818,723InterimReport2017-201843NotestotheCondensedConsolidatedInterimFinancialStatements18CAPITALCOMMITMENTSAtAt31December30June20172017HK$'000HK$'000Contractedbutnotprovidedfor15,98718019SUBSEQUENTEVENTOn27February2018,FSEFacilityServicesGroupLimited("FSGL"),awholly-ownedsubsidiaryoftheCompany,aspurchaserandFSEManagementCompanyLimited("FMC"),afellowsubsidiary,asvendorenteredintoconditionalsalesandpurchaseagreement,pursuanttowhichFMCagreedtosell,andFSGLagreedtopurchase,theentireissuedsharecapitalinCrystalBrilliantLimitedanditssubsidiaries(the"TargetGroup")atacashconsiderationofHK$502million(subjecttoadjustment,ifany).
TheTargetGroupisprincipallyengagedintheprovisionoffacilityservicesincludingcleaningandlaundryservices.
Thecompletionofthetransactionissubjecttothefulfilmentofcertainconditionsincludingtheindependentshareholders'approval.
Uponcompletionofthetransaction,theGroupwillaccountforitasabusinesscombinationundercommoncontrol.
FSEEngineeringHoldingsLimited44InterimDividendTheBoardhasresolvedtodeclareaninterimdividendofHK7.
8centspershareforthesixmonthsended31December2017(2016:HK7.
4cents).
TheinterimdividendwillbepaidincashtoshareholderswhosenamesappearontheregisterofmembersoftheCompanyatthecloseofbusinessonThursday,15March2018.
ItisexpectedthatthedividendwarrantswillbepostedtoshareholdersonoraboutThursday,22March2018.
CLOSUREOFREGISTEROFMEMBERSForthepurposeofdeterminingshareholders'entitlementtotheinterimdividend,theregisterofmembersoftheCompanywillbeclosed.
Detailsofsuchclosurearesetoutbelow:Ex-dividenddate12March2018Latesttimetolodgetransferdocumentsforregistration4:30pmon13March2018Closureofregisterofmembers14to15March2018(bothdatesinclusive)Recorddate15March2018Interimdividendpaymentdateonorabout22March2018Duringtheaboveclosureperiod,notransferofshareswillberegistered.
Inordertoqualifyfortheinterimdividend,allproperlycompletedtransferformsaccompaniedbytherelevantsharecertificatesmustbelodgedforregistrationwiththeCompany'sbranchshareregistrarandtransferoffice,TricorInvestorServicesLimited,atLevel22,HopewellCentre,183Queen'sRoadEast,HongKongnolaterthanthelatesttimespecifiedabove.
InterimReport2017-201845OtherInformationREVIEWOFINTERIMRESULTSTheAuditCommitteeoftheCompanywasestablishedbytheBoardforthepurposesof,amongotherthings,reviewingandprovidingsupervisionovertheGroup'sfinancialreportingprocessandinternalcontrols.
Itcurrentlycomprisesfourindependentnon-executivedirectorsoftheCompany.
TheAuditCommitteehasreviewedtheGroup'sunauditedcondensedconsolidatedinterimfinancialstatementsforthesixmonthsended31December2017anddiscussedfinancialrelatedmatterswiththemanagementandtheexternalauditorsoftheCompany.
TheunauditedcondensedconsolidatedinterimfinancialstatementsoftheGroupforthesixmonthsended31December2017havebeenreviewedbytheCompany'sexternalauditor,PricewaterhouseCoopers,inaccordancewithHongKongStandardonReviewEngagement2410"ReviewofInterimFinancialInformationPerformedbytheIndependentAuditoroftheEntity"issuedbytheHongKongInstituteofCertifiedPublicAccountants.
CORPORATEGOVERNANCECODETheCompanyiscommittedtomaintaininghighstandardsofcorporategovernancetosafeguardtheinterestsofshareholdersandenhancecorporatevalue.
Throughoutthesixmonthsended31December2017,theCompanyhadcompliedwithallthecodeprovisionssetoutintheCorporateGovernanceCodecontainedinAppendix14totheRulesGoverningtheListingofSecuritiesonTheStockExchangeofHongKongLimited(the"ListingRules"),withtheexceptionofcodeprovisionE.
1.
2.
CodeprovisionE.
1.
2requiresthechairmanoftheboardtoattendtheannualgeneralmeeting.
Dr.
ChengKarShun,Henry,theChairmanoftheBoard,wasunabletoattendtheannualgeneralmeetingoftheCompanyheldon29November2017(the"AGM")duetootherimportantengagement.
Mr.
LamWaiHon,Patrick,theVice-ChairmanoftheBoard,whotookthechairoftheAGM,togetherwithmembersoftheBoardwhoattendedtheAGM,wereofsufficientcaliberforansweringquestionsattheAGM.
DIRECTORS'DEALINGSINTHECOMPANY'SSECURITIESTheCompanyhasadopteditsownSecuritiesDealingCode,whichisnolessexactingthantherequiredstandardoftheModelCodeforSecuritiesTransactionsbyDirectorsofListedIssuers(the"ModelCode")setoutinAppendix10totheListingRules,asthecodefordealinginsecuritiesoftheCompanybyitsdirectors.
AlldirectorsoftheCompanyconfirmed,followingspecificenquirybytheCompany,thattheyhadcompliedwiththerequiredstandardsetoutintheSecuritiesDealingCodeadoptedbytheCompanythroughoutthesixmonthsended31December2017.
UPDATEONDIRECTORS'INFORMATIONPursuanttoRule13.
51B(1)oftheListingRules,thechangesininformationofthedirectorssincethepublicationoftheCompany's2016-2017AnnualReportaresetoutbelow:1.
Mr.
LeeKwanHungresignedasanindependentnon-executivedirectorofFutongTechnologyDevelopmentHoldingsLimitedwitheffectfrom18November2017.
2.
Mr.
DooWilliamJuniorGuilherme'sappointmentasaStandingCommitteeMemberoftheTwelfthChinesePeople'sPoliticalConsultativeConferenceinBeijingofthePRC("CPPCCinBeijing")endedinJanuary2018andhewasreappointedasaStandingCommitteeMemberoftheThirteenthCPPCCinBeijing.
Exceptasmentionedabove,thereisnochangeininformationofeachdirectoroftheCompanythatisrequiredtobedisclosedunderRules13.
51B(1)and13.
51(2)oftheListingRulessincethepublicationoftheCompany's2016-2017AnnualReport.
FSEEngineeringHoldingsLimited46OtherInformationDIRECTORS'ANDCHIEFEXECUTIVE'SINTERESTSINSECURITIESAsat31December2017,theinterestsandshortpositionsofthedirectorsandchiefexecutiveoftheCompanyintheshares,underlyingsharesanddebenturesoftheCompanyoranyofitsassociatedcorporations(withinthemeaningofPartXVoftheSecuritiesandFuturesOrdinance(the"SFO"))asrecordedintheregisterrequiredtobekeptunderSection352oftheSFOorasotherwisenotifiedtotheCompanyandTheStockExchangeofHongKongLimitedpursuanttotheModelCodewereasfollows:Longpositioninordinarysharesofassociatedcorporation—FSEHoldingsLimitedNameCapacity/natureofinterestNumberofsharesPercentageofshareholding(6)Dr.
ChengKarShun,HenryBeneficialinterest90,000,000(1)18%Mr.
LamWaiHon,PatrickInterestofcontrolledcorporation10,000,000(2)2%Mr.
DooWilliamJuniorGuilhermeInterestofcontrolledcorporations45,000,000(3)9%Mr.
LeeKwokBongInterestofcontrolledcorporation5,000,000(4)1%Mr.
WongKwokKin,AndrewInterestofcontrolledcorporation35,000,000(5)7%Notes:1.
ThesharesareheldbyChowTaiFookNomineeLimited("CTFNominee")forDr.
ChengKarShun,Henry.
2.
ThesharesareheldbyEqualMeritHoldingsLimited("EqualMerit"),theentireissuedsharecapitalofwhichissolelyandbeneficiallyownedbyMr.
LamWaiHon,Patrick.
3.
ThesharesareheldbyMasterEmpireGroupLimited("MasterEmpire")asto25,000,000sharesandSupremeWinEnterprisesLimited("SupremeWinEnterprises")asto20,000,000shares,theentireissuedsharecapitalofeachofwhichissolelyandbeneficiallyownedbyMr.
DooWilliamJuniorGuilherme.
4.
ThesharesareheldbyLagoonTreasureLimited("LagoonTreasure"),theentireissuedsharecapitalofwhichissolelyandbeneficiallyownedbyMr.
LeeKwokBong.
5.
ThesharesareheldbyFrontierStarLimited("FrontierStar"),theentireissuedsharecapitalofwhichissolelyandbeneficiallyownedbyMr.
WongKwokKin,Andrew.
6.
Thepercentageofshareholdingiscalculatedonthebasisof500,000,000sharesinissueasat31December2017.
Saveasdisclosedabove,noneofthedirectorsorchiefexecutiveoftheCompanyhadanyinterestsorshortpositionsintheshares,underlyingsharesordebenturesoftheCompanyoranyofitsassociatedcorporations(withinthemeaningofPartXVoftheSFO)asat31December2017.
InterimReport2017-201847OtherInformationSUBSTANTIALSHAREHOLDERS'INTERESTSINSECURITIESAsat31December2017,theinterestsandshortpositionsofpersonsinthesharesandunderlyingsharesoftheCompanyasrecordedintheregisterrequiredtobekeptunderSection336oftheSFOwereasfollows:LongpositioninordinarysharesoftheCompany(the"Shares")NameCapacity/natureofinterestsNumberofSharesPercentageofshareholding(4)FSEHoldingsLimitedBeneficialinterests337,500,000(1)75.
00%SinoSpringGlobalLimited("SinoSpring")Interestofacontrolledcorporation337,500,000(1&2)75.
00%Mr.
DooWaiHoi,William("Mr.
Doo")Interestofacontrolledcorporation337,500,000(1&2)75.
00%Mrs.
DooChengSauHa,Amy("Mrs.
Doo")Interestofspouse337,500,000(1,2&3)75.
00%ValuePartnersGroupLimitedInterestofcontrolledcorporations27,499,0006.
11%ValuePartnersHigh-DividendStocksFundBeneficialinterests23,133,0005.
14%Notes:1.
FSEHoldingsLimitedisbeneficiallyownedasto63%bySinoSpring,18%byDr.
ChengKarShun,Henry(throughCTFNominee),7%byFrontierStar,5%byMasterEmpire,4%bySupremeWinEnterprises,2%byEqualMeritand1%byLagoonTreasure.
ByvirtueofPartXVoftheSFO,SinoSpringisdeemedtobeinterestedinallSharesheldbyFSEHoldingsLimited.
2.
SinoSpringisaninvestmentholdingcompanywhollyownedbyMr.
Doo.
ByvirtueofPartXVoftheSFO,Mr.
DooisdeemedtobeinterestedinallSharesinwhichSinoSpringisinterested.
3.
Mrs.
DooisthespouseofMr.
DooandisthereforetakentobeinterestedinallSharesinwhichMr.
DooisinterestedbyvirtueofPartXVoftheSFO.
4.
Thepercentageofshareholdingiscalculatedonthebasisof450,000,000Sharesinissueasat31December2017.
Saveasdisclosedabove,nootherpersonwasrecordedintheregisterrequiredtobekeptundersection336oftheSFOashavinganinterestorshortpositioninthesharesorunderlyingsharesoftheCompanyasat31December2017.
SHAREOPTIONSCHEMETheCompanyadoptedashareoptionscheme(the"Scheme")on20November2015.
NoshareoptionhasbeengrantedundertheSchemesinceitsadoption.
PURCHASE,SALEORREDEMPTIONOFTHECOMPANY'SLISTEDSECURITIESNeithertheCompanynoranyofitssubsidiarieshaspurchased,soldorredeemedanyoftheCompany'slistedsecuritiesduringthesixmonthsended31December2017.
FSEEngineeringHoldingsLimited48CorporateInformationPRINCIPALBANKERSBankofChina(HongKong)LimitedBNPParibasHongKongBranchCréditAgricoleCorporateandInvestmentBankHongKongBranchHangSengBankLimitedTheHongkongandShanghaiBankingCorporationLimitedJPMorganChaseBankNA,SingaporeNanyangCommercialBank,LimitedStandardCharteredBank(HongKong)LimitedREGISTEREDOFFICECricketSquare,HutchinsDriveP.
O.
Box2681GrandCaymanKY1-1111CaymanIslandsHEADOFFICEANDPRINCIPALPLACEOFBUSINESSUnits801–810,8thFloor,ChevalierCommercialCentre,8WangHoiRoad,KowloonBay,Kowloon,HongKongPRINCIPALSHAREREGISTRARANDTRANSFEROFFICEConyersTrustCompany(Cayman)LimitedCricketSquare,HutchinsDriveP.
O.
Box2681GrandCaymanKY1-1111CaymanIslandsBRANCHSHAREREGISTRARANDTRANSFEROFFICETricorInvestorServicesLimitedLevel22HopewellCentre183Queen'sRoadEastHongKongSTOCKCODE331INVESTORRELATIONSStrategicFinancialRelationsLimited2401–02,AdmiraltyCentreI18HarcourtRoadHongKongTel:(852)28644806Email:ir@fseng.
com.
hkWEBSITEwww.
fseng.
com.
hkBOARDOFDIRECTORSNon-executiveDirectorsDr.
ChengKarShun,Henry(Chairman)Mr.
WongKwokKin,AndrewExecutiveDirectorsMr.
LamWaiHon,Patrick(Vice-Chairman)Mr.
PoonLockKee,Rocky(ChiefExecutiveOfficer)Mr.
DooWilliamJuniorGuilhermeMr.
LeeKwokBongMr.
SoonKweongWahMr.
WongShuHungIndependentNon-executiveDirectorsMr.
KwongCheKeung,GordonMr.
HuiChiuChung,StephenMr.
LeeKwanHungDr.
TongYukLun,PaulAUDITCOMMITTEEMr.
KwongCheKeung,Gordon(Chairman)Mr.
HuiChiuChung,StephenMr.
LeeKwanHungDr.
TongYukLun,PaulREMUNERATIONCOMMITTEEMr.
HuiChiuChung,Stephen(Chairman)Mr.
LeeKwanHungDr.
TongYukLun,PaulMr.
LamWaiHon,PatrickMr.
PoonLockKee,RockyNOMINATIONCOMMITTEEMr.
LeeKwanHung(Chairman)Mr.
HuiChiuChung,StephenDr.
TongYukLun,PaulMr.
PoonLockKee,RockyMr.
DooWilliamJuniorGuilhermeJOINTCOMPANYSECRETARIESMr.
LeeKwokBongMr.
ChanJuWaiAUDITORPricewaterhouseCoopers22/FPrince'sBuildingCentralHongKong