Interim Report 2024 (ENG)

2024

INTERIM REPORT

CORPORATE INFORMATION

2 Vico International Holdings Limited INTERIM REPORT 2024

CORPORATE INFORMATION

HONG KONG BRANCH SHARE

REGISTRAR AND TRANSFER

OFFICE

Tricor Investor Services Limited

17/F, Far East Finance Centre

16 Harcourt Road

Hong Kong

AUDITORS

Prism Hong Kong Limited

Certified Public Accountants

Registered Public Interest Entity Auditor

Units 1903A-1905, 8 Observatory Road

Tsim Sha Tsui, Kowloon

Hong Kong

PRINCIPAL BANKERS

Bank of China (Hong Kong) Limited

Chong Hing Bank Limited

STOCK CODE

1621

COMPANY WEBSITE

www.vicointernational.hk

MANAGEMENT DISCUSSION AND ANALYSIS

The board (the "Board") of directors (the "Directors") of Vico International Holdings Limited (the "Company") hereby presents the interim report of the Company and its subsidiaries (collectively referred to as the "Group" or "we") for the six months ended 30 September 2024 (the "Current Period").

BUSINESS REVIEW

The Group is principally engaged in the distribution of third-party branded petrochemicals, the sales of the self-branded lubricant oil and provides fleet card services in Hong Kong. The petrochemical products of the Group include (i) diesel; (ii) lubricant oil (including self- branded lubricant oil and third-party branded lubricant oil); and (iii) other petrochemicals such as bitumen.

The Group sourced semi-finished lubricant oil in bulk volume and finished lubricant oil from overseas suppliers for the in-house blending and repackaging into wholesale and retail packs for sales in Hong Kong.

The Group is also an authorized reseller of fleet cards. As at 30 September 2024, the Group operated a total number of 50,392 fleet card accounts (2023: 54,897 fleet card accounts).

Leveraging the Group's experience and competitive strengths, the Group's revenue, gross profit, and net profit for the Current Period were approximately HK$810.0 million, HK$24.4 million, and HK$9.6 million, respectively. This represents an increase of 11.5% in revenue, a decrease of 16.7% in gross profit, and a decrease of 22.0% in net profit compared with the Corresponding Period. The decline in profit for the Current Period was primarily due to the increase in costs of sales and the decrease in other income.

4 Vico International Holdings Limited INTERIM REPORT 2024

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS PROSPECTS

The local economic landscape remains tough in 2024, with slow growth, cautious consumer spending, and challenges across key sectors like construction and logistics. Adding to the uncertainty, the government's growing budget deficit raises concerns about its ability to support major public infrastructure projects. Despite these headwinds, the Company sees opportunities to grow both locally and abroad through strategic planning and adaptability.

In construction, private projects have stalled as developers grapple with high costs and uncertain returns. While public infrastructure initiatives like Route 11 and new housing developments could drive demand for fuels, fiscal constraints might lead to delays or scaled-back projects. To mitigate this risk, the Company will diversify its focus by targeting smaller private projects while closely monitoring public works.

The logistics sector continues to face rising operational costs and fluctuating trade volumes. However, the essential nature of this industry means demand for fuel remains stable. The Company plans to strengthen its position by offering tailored fleet card solutions that help logistics businesses manage costs. Loyalty programs and strategic partnerships will support both customer acquisition and retention.

Sustainability is another key focus. As demand grows for cleaner, more efficient fuels, the Company is promoting products like ultra-low-sulfur diesel and exploring emissions- reducing technologies. These efforts align with global trends and enhance the Company's reputation as a forward-thinking leader in the energy market.

To reduce reliance on the volatile economy of the domestic market, the Company is also actively exploring overseas markets, particularly in Southeast Asia and other emerging regions. By understanding local market needs and building partnerships, the Company aims to expand its footprint and diversify revenue streams.

MANAGEMENT DISCUSSION AND ANALYSIS

At the same time, improving operational efficiency remains critical. Streamlining supply chains, renegotiating supplier contracts, and leveraging data-driven insights will help the Company stay agile and cost-effective.

While challenges persist, the Company is confident in its ability to adapt. By staying responsive to market needs, prioritizing sustainability, and expanding beyond Hong Kong, the Company is well-positioned to overcome uncertainties and achieve sustainable growth.

FINANCIAL REVIEW

Revenue

During the Current Period, the Group's revenue amounted to approximately HK$810.0 million, which increased by 11.5% as compared to that of approximately HK$726.7 million during the Corresponding Period. The increase in revenue was driven by heightened demand for diesel, supported by the steady recovery and improvement in cross-boundary land cargo logistics, as well as the ongoing development of public infrastructure projects.

Sales of diesel

Our revenue from sales of diesel represents the sales of our diesel products, which mainly include automotive diesel and industrial diesel. For the Current Period and the Corresponding Period, our revenue generated from the sales of diesel amounted to approximately HK$768.3 million and HK$685.3 million respectively, representing 94.9% and 94.3% of the total revenue respectively.

Sales of lubricant oil

Our revenue from sales of lubricant oil mainly include (i) the sales of our self-branded lubricant oil, namely "AMERICO", "Dr. Lubricant" and "U-LUBRICANT"; and (ii) the sales of third party branded lubricant oil.

For the Current Period and the Corresponding Period, our revenue from the sales of lubricant oil amounted to approximately HK$20.5 million and HK$22.1 million respectively, representing 2.5% and 3.0% of the total revenue respectively.

6 Vico International Holdings Limited INTERIM REPORT 2024

MANAGEMENT DISCUSSION AND ANALYSIS

Provision of fleet cards service

Our income from our provision of fleet cards service increased by approximately HK$2.9 million or 18.8% from approximately HK$15.4 million for the Corresponding Period to approximately HK$18.3 million for the Current Period. The increase was mainly a result of the carried-out marketing campaigns which stimulated the consumption of customers.

Sales of other products

Our revenue from sales of other products mainly represents the sales of bitumen, kerosene and diesel exhaust fluid. For the Current Period and the Corresponding Period, our revenue from the sales of other products amounted to approximately HK$2.9 million and HK$3.8 million respectively, representing 0.4% and 0.5% of the total revenue respectively.

Cost of sales

Our cost of sales primarily consists of diesel costs, lubricant oil costs, other petrochemicals costs and sales commissions. Our purchase cost for diesel and third-party lubricant oil depends on the domestic purchase price offered by our oil suppliers, with reference to the price index such as Europe Brent spot crude price.

For the Current Period and the Corresponding Period, our cost of sales amounted to approximately HK$785.6 million and HK$697.3 million respectively, increased by 12.7%. The trend of movement of our cost of sales for the Current Period was generally in line with the revenue.

Gross profit and gross profit margin

The gross profit represented the Group's revenue less cost of sales. The Group recorded an decrease in gross profit by approximately HK$4.9 million or approximately 16.7% from approximately HK$29.3 million for the Corresponding Period to approximately HK$24.4 million for the Current Period.

MANAGEMENT DISCUSSION AND ANALYSIS

Selling and distribution expenses

Our selling and distribution expenses mainly consist of truck drivers' costs, packing and commission paid. Selling and distribution expenses increased by approximately HK$0.5 million or 62.5% to approximately HK$1.3 million for the Current Period from approximately HK$0.8 million for the Corresponding Period. The increase is mainly attributed to the higher consumption of oil containers and the incentives provided to salesman.

Administrative and other operating expenses

Administrative and other operating expenses slightly decreased by approximately HK$0.7 million or 5.5%, from approximately HK$12.8 million for the Corresponding Period to approximately HK$12.1 million for the Current Period.

Finance costs

Our finance costs mainly consist of the interest on our interest-bearing bank borrowings and lease liabilities. Finance costs slightly decreased by approximately HK$35 thousand or 4.9% to approximately HK$684 thousand for the Current Period from approximately HK$719 thousand for the Corresponding Period, primarily due to the rate-cut decision in by the Federal Reserve in the US during Current Period.

Income tax expenses

Income tax expenses decreased by approximately HK$3.0 million or 65.2%, from approximately HK$4.6 million for the Corresponding Period to approximately HK$1.6 million for the Current Period, primarily due to the profitable companies resulted in lower profit comparing with the Corresponding Period.

8 Vico International Holdings Limited INTERIM REPORT 2024

MANAGEMENT DISCUSSION AND ANALYSIS

Profit for the Current Period

Profit for the Current Period decreased by approximately HK$2.7 million or 22.0% from approximately HK$12.3 million for the Corresponding Period to approximately HK$9.6 million for the Current Period, and the Group's net profit margin was approximately 1.2% and 1.7% for the Current Period and the Corresponding Period respectively.

EMPLOYEES AND REMUNERATION POLICIES

As at 30 September 2024, the Group employed a total of 29 full-time employees (as at 31 March 2024: 31 full-time employees). The Group remunerates its employees based on their performance, experience and prevailing industry practice. The remuneration packages are subject to review on a regular basis.

PURCHASE, SALE AND REDEMPTION OF LISTED SECURITIES

During the Current Period, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed securities (including sales of treasury shares (the "Treasury Shares") within the meaning under the Listing Rules). As at 30 September 2024, the Company did not hold any Treasury Shares.

INTERIM DIVIDEND

The Board does not recommend the payment of interim dividend for the six months ended 30 September 2024 (for the six months ended 30 September 2023: nil).

MATERIAL ACQUISITION AND DISPOSAL OF SUBSIDIARIES AND ASSOCIATED COMPANIES

The Group had no material acquisitions or disposals of subsidiaries, associates and joint ventures during the Current Period.