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Public company info - Geotech Holdings Ltd. , 01707.HK
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Geotech Holdings Ltd., 01707.HK - Company Profile
Chairman Chen Zhi
Share Issued (share) 1,680,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Construction & Decoration
Corporate Profile Business Summary: The Group is principally engaged in provision of construction and engineering services and property-related services. Performance for the year: Revenue of the Group for the year ended 31 December 2019 amounted to approximately HK$355.3 million (2018: approximately HK$257.4 million). Gross profit of the Group for the year ended 31 December 2019 amounted to approximately HK$10.9 million (2018: approximately HK$24.4 million). Loss attributable to equity holders of the Company for the year ended 31 December 2019 amounted to approximately HK$12.5 million (2018: Profit attributable to equity holders of the Company approximately HK$5.3 million). Business Review: Construction and Engineering Services Geotech Engineering Limited (“Geotech Engineering”), an indirect wholly-owned subsidiary of the Company, is principally engaged in construction and engineering services and a leading slope works contractor in Hong Kong with over 20 years’ of experience in the civil engineering industry. It is an approved specialist contractor included in the List of Approved Specialist Contractors for Public Works maintained by the Development Bureau under the categories of “Landslip preventive/remedial works to slopes/retaining walls” (confirmed status) and “Ground investigation field work” (Group I status) and also an approved contractor included in the List of Approved Contractors for Public Works under the category of “Site formation” (Group B probationary status). In addition, Geotech Engineering is also registered as a specialist contractor in the categories of site formation works and ground investigation field works with the Building Authority. Total revenue of construction and engineering services for the year ended 31 December 2019 amounted to approximately HK$353.3 million, representing an increase of approximately 37.3% as compared with total revenue of approximately HK$257.4 million last year. Revenue in this segment continued to be deriving from slope works and ground investigation field works, with public sector projects including those from the Landslip Prevention and Mitigation Programme (the “Programme”) commissioned by the Civil Engineering and Development Department*, other government departments and statutory bodies, amounted to approximately 95.4% of total revenue in this segment (2018: approximately 94.3%). However, the effect from the increase in revenue was dragged down by the thin gross margin of 3.1% for the year ended 31 December 2019 as compared with gross margin of 9.5% last year. Such a squeeze in margin was mainly due to (i) a significant increase in construction projects with relatively low gross profit margin; (ii) the Group’s continuing proactive pricing strategy; as well as (iii) unexpected geological difficulties in certain major contracts. In addition, other external factors including the social unrest and overall economic environments in Hong Kong since the second half of 2019 also had a negative impact on the Group in terms of cash flow, operational efficiencies and completion progress on certain projects. As at 31 December 2019, the Group had 60 construction contracts on hand, including contracts in progress and contracts yet to commence (31 December 2018: 22 contracts) with a total outstanding contract sum of approximately HK$595.9 million (31 December 2018: approximately HK$711.7 million) and these contracts are expected to be completed during or before 2022. Subsequent to the year ended 31 December 2019 and up to the date of this announcement, the Group has secured certain construction contracts with an aggregate total contract sum of approximately HK$2.2 million and these contracts are expected to be completed during 2020. Property-related Services As the Directors expect that the industry conditions of the construction and engineering services, in particular the slope works sector in Hong Kong, to remain challenging in the coming years, the Group has been actively exploring other suitable development opportunities to diversify its revenue base that are beneficial to the long-term development of the Group. As part of this strategy, the Group expanded its business into property-related services during the year. In light of an increasing property supply giving rise to an increasing demand for various services such as property management and property agency in the property market in Hong Kong in the long run, and the Group’s management experiences and knowledge gained in the industry, the Directors consider that it would be a good opportunity to participate in the property-related services sector in Hong Kong in order to capitalise on the potential in the industry. The Group has expanded its business in the property-related services sector in Hong Kong since August 2019 by entering into a property management consultancy services agreement with a property owner in Hong Kong and Mr. Chen Zhi, the chairman of the Board, an executive Director and the controlling shareholder of the Company, is the ultimate controlling shareholder of the property owner. For further details of the property management consultancy services agreement, please refer to section headed “CONTINUING CONNECTED TRANSACTIONS” in this announcement. With the accumulation of solid experience including leasing related consultancy services during the period, the Group will continue to provide similar consultancy services and further expand its professional services into the provision of property leasing agency and other property management related services in order to benefit from such market opportunities. An indirect wholly-owned subsidiary of the Company has successfully obtained the Estate Agent’s Licence (Company) from the Estate Agents Authority in Hong Kong in June 2019 to carry on estate agency works as an estate agent. Prospects: The Directors expect that the Outbreak would result in short-term delay in completion progress of works of certain construction projects, in the opinion of the Directors, it is not practicable to provide a quantitative estimate of the potential impact of this Outbreak on the Group’s financial statements. The Group would assess the risks and uncertainties arising from the Outbreak and take various measures to mitigate the potential adverse impact from such disruptions. Following the close of mandatory unconditional cash offer in early January 2019, the Board has reviewed the operation and business activities of the Group. Apart from focusing on construction and engineering services in Hong Kong, the Group considered to explore other business and seek to expand geographically in order to enhance the future development and strengthen the revenue bases of the Group. The Board believes that the Group’s strategy to diversify its business could provide a better return to the shareholders of the Company (the “Shareholders”). In line with the Board’s strategy as stated above, the Group is taking an active approach for further expansion: • having considered the above, the Board expects that the industry conditions of the construction and engineering services, in particular the slope work sector in Hong Kong, to remain challenging in the coming years. The Group will closely monitor the market and respond to changes in market conditions. Going forward, in order to broaden the types of works in the construction and engineering sector other than slope works and ground investigation field works, Geotech Engineering strives to partner with other potential partner(s) for tendering projects in various types of civil engineering works; • despite the positive outlook in the long run as set out under the section headed “BUSINESS REVIEW”, it is envisaged that the market environment for the Group’s propertyrelated services will be challenging in 2020 given the uncertainties in the external economic and trading environment under the Outbreak. However, by leveraging the Group’s management experiences and knowledge gained in the industry, the Group will strive to seek various property-related services opportunities; and • following an initial study in the property industry in the Kingdom of Cambodia (“Cambodia”), the Directors believe that there will be business opportunities including but not limited to site formation, construction and decoration works. To leverage the Group’s construction and engineering experience in Hong Kong and expand geographically into the provision of construction and decoration services in Cambodia, the Group has set up a wholly-owned subsidiary in Cambodia in February 2019.

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