Interim Report 2020-2021 3 Chairman’S Statement

(Incorporated in the Cayman Islands with limited liability) Stock Code: 331 Interim ReportInterim FSE Services Group Limited 豐盛服務集團有限公司 Interim Report 中期報告 2020-2021 中期報告 About FSE Services Group Limited FSE Services Group Limited (Hong Kong Stock Code: 331) is one of the leading diversified service providers in Hong Kong, which has 4 major competences: electrical and mechanical (“E&M”) engineering, environmental services, cleaning and waste management as well as property and facility management. FSE Services’ competences are being delivered through 4 major groups of companies which have all been the market leaders in the respective industries. They include FSE Engineering Group, FSE Environmental Technologies Group, Waihong Services Group (“Waihong”) and FSE Property and Facility Management Services Group which comprises Urban Group (“Urban”) and Kiu Lok Service Management Group (“Kiu Lok”). With their professionalism and expertise, together with the extensive synergies generated among the companies under FSE Services, the Group is able to build up a strong network and offer a full range of professional services to renowned clients and main contractors who are often engaged in property developments, public infrastructures, education and transportation facilities as well as entertainment and travel industries in Hong Kong, Macau and the Mainland China. Our Vision Better Life, Better Home, Better Quality to You Everyday Our Mission We offer superior service, we create an integrated, convenient and safe living environment. We are devoted to serve: Our Customers — We provide customised service and maintain long term partnership. Our Staff — We promote work-life balance and create a strong sense of belonging. Our Community — We maintain sustainable development and contribute to community. Our Core Values Quality Teamwork Integrity Caring Passion Innovation Contents Financial Highlights 2 Chairman’s Statement 3 Management Discussion and Analysis 6 Report on Review of Interim Financial Information 24 Condensed Consolidated Income Statement — Unaudited 25 Condensed Consolidated Statement of Comprehensive Income — Unaudited 26 Condensed Consolidated Statement of Financial Position — Unaudited 27 Condensed Consolidated Statement of Changes in Equity — Unaudited 29 Condensed Consolidated Statement of Cash Flows — Unaudited 30 Notes to the Condensed Consolidated Interim Financial Statements 31 Interim Dividend 59 Other Information 60 Corporate Information 64 This interim report is printed on environmental paper 本中期報告經由環保紙印製 Financial Highlights For the six months ended 31 December 2020 2019 % Change HK$M HK$M Revenue 2,758.8 2,420.3 +14.0% Gross profit 553.9 372.9 +48.5% Profit attributable to shareholders of the Company 329.1 144.0 +128.5% Basic earnings per share HK$0.72 HK$0.32 +125.0% The Board declared the payment of an interim dividend of HK28.9 cents (Six months ended 31 December 2019: HK12.8 cents) per ordinary share to the ordinary shareholders of the Company for the six months ended 31 December 2020(i). Note (i) The interim dividend for the six months ended 31 December 2020 of HK28.9 cents (Six months ended 31 December 2019: HK12.8 cents) per ordinary share to be paid in March 2021 represents a dividend payout ratio of 40.0% (Six months ended 31 December 2019: 40.1%), calculated based on the Group’s adjusted profit for the six months ended 31 December 2020 attributable to ordinary shareholders of HK$324.8M (Six months ended 31 December 2019: HK$143.7M) (i.e. after excluding preferred distribution to the holder of convertible preference shares of HK$4.3M (Six months ended 31 December 2019: HK$0.3M) from profit attributable to shareholders of the Company for the six months ended 31 December 2020 of HK$329.1M (Six months ended 31 December 2019: HK$144.0M)). 2 FSE Services Group Limited Chairman’s Statement To Our Shareholders: On behalf of the board of directors (the “Board”) of FSE Services Group Limited (the “Company”, together with our subsidiaries, the “Group”), I am pleased to present the unaudited condensed consolidated interim results of the Group for the six months ended 31 December 2020 (the “period under review”). TRANSFORMATION SPANNING THE PAST FIVE YEARS 2020 marked the fifth anniversary of the Company’s listing in Hong Kong. Since its listing on 10 December 2015, the Group has sought to grow and create value for its shareholders. Consequently, over the past five years, the Group has expanded its business scale by completing two strategic acquisitions, including the facility services business in April 2018 and property and facility management services business in December 2019. Such acquisitions have provided the Group with broader and more diversified revenue streams and enhanced its profit sources. Moreover, the Group has successfully transformed from a single-line engineering focused business to a multi-line leading city lifestyle services conglomerate, engaging in a comprehensive range of management services in Hong Kong. With the Group’s expanded and better balanced business portfolio, its consolidated revenue and profit attributable to shareholders for the year ended 30 June 2020 significantly grew by more than 40% and 90% to HK$4.9 billion and HK$309.6 million respectively while its earnings per share increased more than 60%, compared with the amounts recorded for the year ended 30 June 2016, with its integrated property and facilities services segment which provides city essential services contributing more than half of its gross profit and net profit at present. Whilst the Group has completed two major acquisitions during the past five years, sound financial management remains a priority, which enabled the Group’s net gearing ratio remaining unchanged at 0%. Such development has also helped the Group mitigate the cyclical risk that it was exposed to five year ago when its business was mostly focused on the engineering sector which enabled our Shareholders to enjoy a consistent dividend yield average at about 7%. Through continued mergers & acquisitions and organic growth, the Group continues to focus on developing new services lines and to create synergies amongst its existing business units. MARKET REVIEW — BUILDING RESILIENCY Though 2020 marked our fifth anniversary as a public company, it was also a challenging year, with the outbreak of the novel coronavirus (“COVID-19”) pandemic profoundly affecting economies all over the world. Following the outsized contraction of economic activities, the revival of local economic outlook will hinge very much on the epidemic situation and the timeliness of a successful vaccine rollout. With this in mind, our Group shall be heavily qualified with caution in the face of uncertainties. During the period under review, we took the opportunity to sell our loss-making laundry operation, enabling the Group to focus its resources on its more profitable business segments. Our management has also adopted various immediate measures to cushion the adverse impacts of the pandemic, including proactive review of project execution, a well-defined sanitation management process and continuing its effective cost management. Looking ahead, our plans for performance growth are focused on leveraging our well-established and trusted brand, embracing cost effectiveness and capitalising on innovative technologies and professional expertise. In addition, we will continue to nurture our pool of young talents with diversified and tailor-made training. Our management team is well positioned and remains fully confident that opportunity abounds even amid these challenging times, allowing us to maintain and grow the Group’s performance during the post-pandemic business landscape. For the period under review, with the above efforts and support from government grants received, and despite a modest setback incurred by our E&M engineering business amid the competitive business environment, the Group’s profit attributable to shareholders reached HK$329.1 million, a testimony again to its resilience and capability for sustainable business growth, while maintaining a net cash position at the end of the period. The Board has declared an interim dividend of HK28.9 cents per ordinary share to its ordinary shareholders for the six months ended 31 December 2020, which represents an increase of 125.8% compared with last period and a dividend payout ratio of 40.0%. Interim Report 2020-2021 3 Chairman’s Statement E&M ENGINEERING & ENVIRONMENTAL SERVICES Hong Kong While building and construction activities are expected to consolidate in 2021 due to the lingering impacts of the pandemic and prevailing political uncertainties, the Hong Kong Government continues to increase infrastructure investment and maintain steady land supply. Average E&M construction works expenditure for the fiscal year 2021/22 is expected to exceed HK$25 billion for the public sector and over HK$24 billion for the private sector according to the medium-term construction expenditure forecast provided by the Construction Industry Council. The Group’s E&M engineering business currently enjoys a position as one of the two dominant players in the Hong Kong market and is adequately prepared to take on different sizeable infrastructure and building projects. Notable among these are our major submitted tenders: The Chai Wan Government Offices cum Vehicle Depot, the mixed-used developments at the former Kai Tak runway and Mass Transit Railway Corporation (“MTRC”) Wong Chuk Hang station, currently under negotiations. Preparations are also underway

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