Company: FEBO
Filing Date: 2025-05-14
Form Type: 20-F
Source: 0001641172-25-010075
Chunk: 98

Company: Fenbo Holdings Ltd
Filing Date: 2025-05-14
Form: 20-F
Item: Item 5
Chunk 98
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direct labor (including wages and social security contributions), manufacturing overhead (such as consumables, depreciation, direct rental
expense and utilities) and taxes. We currently do not hedge our raw materials position, and we monitor raw material price trends closely
to manage our production needs.

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For the fiscal year ended December
31, 2024, cost of sales increased to HK$108.1 million (US$13.9 million), representing an increase of HK$11.1 million from HK$97.0 million
in the same period in 2023. The fluctuation in cost of sales was in line with the increase in our revenue during the same period. For
the fiscal year ended December 31, 2023, cost of sales decreased to HK$97.0 million (US$12.4 million), representing a decrease of HK$3.9
million from HK$100.9 million in the same period in 2022. The fluctuation in cost of sales was in line with the decrease in our revenue
during the same period.

Gross profit

As a result of the foregoing,
gross profit for the fiscal year ended December 31, 2024, was HK$24.8 million (US$3.2 million), an increase of HK$2.7 million from HK$22.1
million for the same period in 2023. Gross profit for the fiscal year ended December 31, 2023, was HK$22.1 million (US$2.8 million), an
increase of HK$3.3 million from HK$18.8 million for the same period in 2022.

During our fiscal year ended December
31, 2024, the adverse impacts of the COVID-19 pandemic were largely dissipating as economic activities returned to normal. The supply
and prices of raw materials became stable during the year, and thus led to the decrease in the Group’s average unit costs and increase
in gross profit for the year. However, at the same time, the Group continued to face macroeconomic uncertainties such as political risks
resulting from the US presidential election and the new session of the US Government, as the Group is primarily engaged in export sales.
New policies imposed or measures taken by Mainland China may affect the Group financially as the Group may be subject to additional expenditures
and other financial impacts. In view of the challenging general outlook of the industry and the business environment, the Group has been
facing