Company: FEBO
Filing Date: 2025-05-14
Form Type: 20-F
Source: 0001641172-25-010075
Chunk: 81

Company: Fenbo Holdings Ltd
Filing Date: 2025-05-14
Form: 20-F
Item: Item 4
Chunk 81
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 the
date of this Annual Report, except for a temporary impact on the supply chain resulting from COVID-19, we have not experienced
significant inflationary pressures on material or labor costs negatively affecting our ongoing business since the national consumer
price index increased by only 0.9 percent in 2021 over the previous year, according to the National Bureau of Statistics of China.
Although we have not been materially affected by inflation in the past, we may be affected if China experiences higher rates of
inflation in the future. If there is any surge in the inflation rate, in order to mitigate the inflationary pressures, we plan to
(i) monitor our labor costs carefully in our day-to-day operations; (ii) outsource or contract certain nonessential employees to
reduce labor-related administrative costs; and (iii) establish a supplier management system and selectively cooperate with key
suppliers.

After more than three years since
the outbreak of COVID-19, the pandemic has impacted the global business environment and the livelihood of people and caused a widespread
global supply chain disruption. The Group’s revenue had been adversely affected due to severe supply chain shortage as well as constraint
on manpower resources and our export sales volume was therefore affected. During our fiscal year ended December 31, 2021, a temporary
supply chain disruption led to the decrease in our Group’s gross profit margin to approximately 16.5% for FY2021 (FY2020: 18.9%).
Nevertheless, recently some countries had been gradually reopening borders with caution due to high vaccination rate. The directors believe
that the impact of the COVID-19 pandemic is only temporary and would not result in a material or long-term disruption to the Group’s
business operations. The Group’s gross profit margin for the years ended December 31, 2023 and 2022, remained relatively stable
at approximately 18.6% and 15.7%, respectively. The overall market and the business operation of the Group is expected to gradually recover
and improve when the adverse impacts of the pandemic to wane as economic activities resume to normal. For instant, on December 9, 2022,
China announced that China’s dynamic zero-COVID policy, which had been adhered to for nearly 3 years, has officially moved towards
reopening. The travel restrictions of China and Hong Kong were lifted gradually. Our Group will closely monitor the development of the
COVID-19 pandemic and will continuously assess its potential impact on our supply chain. If