| --- | --- | --- | --- | --- | --- | --- | --- | --- | |-------|-------|-------|-------|-------|-------|-------|-------------------------|------------------------------------------------------------------------------------------------------------------------------------------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 年報 ANNUAL REPORT | | | | | | | | | | | th n a | | | | | | | | | | 中网奥紫控股有限公司 CHINA INVESTMENTS HOLDINGS LIMITEDf ...

Revenue Performance - The Group recorded total revenue of approximately HK$95,611,000 for the six months ended June 30, 2020, representing a significant year-on-year increase of 61%[11]. - Revenue for the six months ended June 30, 2020, was HK$95,611,000, a 61% increase from HK$59,343,000 in the same period of 2019[86]. - Consultancy service income from financial leasing increased significantly to HK$32,220,000 in 2020 from HK$16,637,000 in 2019, marking a growth of about 94%[199]. - Revenue from contracts with customers recognized at a point in time for the construction of internet platforms was HK$5,435,000, down from HK$7,078,000 in 2019, a decrease of approximately 23%[199]. - Revenue from contracts recognized over time for the construction of internet platforms was HK$6,967,000, up from HK$2,509,000 in 2019, indicating a growth of around 177%[199]. - Total interest income from financial leasing was HK$4,124,000, slightly down from HK$4,965,000 in the previous year[199]. Financial Performance - The Group experienced a net loss of approximately HK$17,939,000 in the first half of the year, a decline attributed to increased financing costs and impairment losses[12]. - The company reported a loss for the period of HK$17,939,000, a decline from a profit of HK$25,699,000 in the previous year[88]. - Total comprehensive expense for the period was HK$62,228,000, compared to a comprehensive income of HK$19,986,000 in 2019[88]. - Basic loss per share was HK$1.82 cents, compared to earnings of HK$0.87 cents per share in the same period last year[88]. - The company reported a total comprehensive income for the period was a loss of HK$88,442,000 for the six months ended June 30, 2020, compared to a profit of HK$6,214,000 for the same period in 2019[97]. Business Segments - Operating income from the financial leasing business increased by approximately HK$37,418,000, while the big data business contributed approximately HK$2,815,000[11]. - Operating income from the financial leasing segment reached approximately HK$76,179,000, with an operating profit of approximately HK$42,409,000, reflecting increases of 97% and 135% respectively compared to the same period last year[16]. - The big data business achieved an operating income increase of 29% year-on-year to approximately HK$12,402,000, with a net profit of approximately HK$1,042,000, reflecting a 145% increase over the same period last year[30]. - Operating income from the Smart Elderly Care Services Platform decreased by 31% year-on-year to approximately HK$170,000, with an operating loss of approximately HK$1,739,000, an increase of 70% in loss compared to the same period last year[26]. - The hotel business experienced a 35% year-on-year decrease in average occupancy rate to 18.46%, with operating income dropping by 53% year-on-year to approximately HK$2,735,000[31]. Asset and Liability Management - The Group's total assets as of June 30, 2020, were HK$5,199,450,000, with total liabilities of HK$3,567,218,000, resulting in a gearing ratio of 68.6%[43]. - The Group's net current assets decreased to HK$80,015,000, with a current ratio of approximately 1.05 times[44]. - Non-current assets decreased to HK$3,646,796,000 from HK$3,221,917,000 as of December 31, 2019[90]. - Current liabilities included borrowings of HK$1,284,891,000, slightly down from HK$1,303,788,000 at the end of 2019[90]. - Borrowings rose to HK$895,897,000 as of June 30, 2020, up from HK$846,249,000 as of December 31, 2019, reflecting an increase of approximately 5.8%[93]. Strategic Initiatives - The Group anticipates that the financial leasing segment will become its main source of profit in the future[16]. - The Group plans to develop a new energy industrial park in Danzao Town, Nanhai District, Foshan City, China, to generate revenue as soon as possible[53]. - The Group aims to enhance its core competitiveness in financial leasing within the environmental protection segment, focusing on stability while seeking progress[53]. - The Group will continue its R&D efforts in the big data industry, aiming to create key products that meet market demands as a main driver for future profit growth[53]. - The Group plans to focus on market expansion and new product development to improve future performance[94]. Risk Management - The impact of the COVID-19 epidemic and Sino-US relations has created pressure on the financial leasing industry, but the Group is confident in managing risks effectively[16]. - The Group's financial risk management objectives and policies remain consistent with those disclosed in the annual financial statements for the year ended December 31, 2019, showing stability in risk management practices[193]. - The Group's long-term outlook suggests that RMB will stabilize and not expose the Group to significant long-term adverse foreign exchange risk[49]. Corporate Governance - The company did not declare an interim dividend for the six months ended June 30, 2020, consistent with the previous year where no dividend was declared[75]. - The audit committee reviewed the unaudited interim results for the six months ended June 30, 2020, focusing on accounting principles and internal controls[78]. - The company has complied with all provisions of the Corporate Governance Code during the reporting period[75]. - The company has adopted the Model Code for Securities Transactions by Directors and confirmed compliance for the six months ended June 30, 2020[77].

Financial Performance - For the year ended December 31, 2019, the Group recorded total revenue of HK$161,107,000, representing a significant increase of 102.5% year-on-year[11] - The increase in revenue was attributed to approximately HK$55,310,000 from the financial leasing business and HK$6,824,000 from the newly developed big data business[11] - Income from the disposal of development properties increased by approximately HK$13,278,000 due to further sales of shopping mall units in Shantou Commercial Plaza[11] - The Group posted a net profit of approximately HK$79,912,000 for the year, representing a significant increase of 43.2% year-on-year[12] - The Group's overall rental income in 2019 was approximately HK$9,879,000, representing an increase of 45.7% year-on-year[21] Business Segments - The segment of financial leasing recorded operating income of approximately HK$80,531,000, a significant increase of 2.2 times year-on-year[18] - The Smart Elderly Care Services Platform recorded operating income of approximately HK$7,877,000, representing an increase of 78.8% year-on-year[31] - The big data business segment achieved operating income of approximately HK$18,881,000, reflecting a year-on-year increase of 56.6%, with a slight net profit of approximately HK$29,000[42] - The operating profit from the financial leasing segment was approximately HK$35,457,000, expected to fuel future earnings growth[18] - Guangdong Yibai Health Technology Co., Ltd. recorded operating income of approximately HK$7,877,000, representing a year-on-year increase of 78.8%, resulting in a slight operating profit of approximately HK$1,088,000, reversing previous losses[32] Investments and Assets - As of December 31, 2019, the Group's total assets increased to HK$1,705,970,000, up from HK$1,331,320,000 on December 31, 2018, representing a growth of approximately 28.1%[60] - The Group's net current assets rose to HK$505,514,000, compared to HK$212,713,000 as of December 31, 2018, indicating a significant increase of approximately 137.5%[60] - The Group's investment in Nanhai Changhai Power Company Limited generated an operating profit of approximately HK$229,700,000, contributing earnings of approximately HK$73,564,000, representing a 16.46% increase year-on-year[48] Corporate Governance - The Company emphasizes corporate governance and has adopted all code provisions under the Corporate Governance Code as its own governance code[70] - For the year ended December 31, 2019, the Company complied with all code provisions under the Corporate Governance Code[70] - The Board comprises eight directors, including five executive directors and three independent non-executive directors, ensuring a balanced governance structure[83] - The Board is responsible for establishing the Group's development direction, formulating targets, and monitoring senior management performance[90] Risk Management - The Group has adopted a corporate risk management policy to identify, evaluate, and manage significant risks, with risk mitigation plans established for major risks[164] - The Board considers the Group's risk management and internal control systems to be effective, providing reasonable assurance against material misstatement or loss[168] - The Group conducts an annual review of its risk management and internal control systems, assessing resources, staff qualifications, and compliance with Listing Rules[168] Future Outlook - The Group anticipates that the demand for Changhai Power's services will be affected in 2020 due to some customers not resuming normal operations[54] - The Group's overall outlook for 2020 remains cautious due to ongoing uncertainties in the tourism and hospitality sectors[48] - The Group plans to focus on developing a new energy industrial park in Danzao Town, Nanhai District, Foshan City, China, leveraging its experience in property development[66] Shareholder Engagement - The company has established a shareholders' communication policy to provide timely and relevant information to shareholders and investors[177] - Shareholders holding not less than one-tenth of the paid-up capital have the right to requisition a special general meeting[184] - The company encourages shareholder participation in general meetings, providing notices that include the agenda and proposed resolutions[178]

Financial Performance - For the six months ended June 30, 2019, the Group recorded total revenue of approximately HK$59,343,000, representing a significant increase of 162.9% compared to the same period last year [9]. - The net profit for the first half of 2019 was approximately HK$25,699,000, turning losses into gains after deducting financing costs and other factors [10]. - Profit before taxation for the period was HK$51,798,000, compared to a loss of HK$26,099,000 in the previous year [77]. - Profit for the period attributable to owners of the Company was HK$14,813,000, a recovery from a loss of HK$7,469,000 in 2018 [80]. - Total comprehensive income for the period was HK$19,986,000, compared to a loss of HK$22,848,000 in the same period last year [80]. - The profit for the period ended June 30, 2019, was HK$25,699,000, compared to a loss of HK$7,824,000 in the same period of 2018, representing a significant turnaround in performance [104]. Revenue Sources - The financial leasing business generated operating income of approximately HK$38,761,000, a substantial increase of 20.7 times compared to the same period last year, with an operating profit of approximately HK$18,064,000 [13]. - The Group's overall rental income in the first half of 2019 was approximately HK$4,965,000, representing an increase of 53.5% compared to the same period last year [17]. - The Group gained other incomes totaling approximately HK$68,162,000, including government subsidies and compensation related to its development of the industrial park in Danzao [10]. - Revenue from financial leasing consultancy services increased significantly to HK$16,637,000 from HK$1,483,000, representing a growth of 1,020% [138]. - Total revenue from contracts with customers recognized over time amounted to HK$23,949,000, up from HK$12,288,000, indicating a growth of 95% [138]. Asset Management - As of June 30, 2019, the Group's total assets were HK$4,645,130,000, with total liabilities of HK$3,184,104,000, resulting in a gearing ratio of 68.5% [43]. - Non-current assets increased to HK$3,145,080,000 as of June 30, 2019, from HK$1,857,307,000 at the end of 2018 [83]. - Total segment assets increased to HK$4,645,130,000 from HK$3,460,537,000, reflecting a growth of 34.3% [152]. - The right-of-use assets increased to HKD 1,001,749,000 as of June 30, 2019, compared to HKD 148,255,000 at the end of 2018, reflecting significant growth in leased premises [197]. Investment and Expansion - The Group has established a subsidiary, Canton Risen Financial Leasing Co., Ltd., to further develop financial leasing businesses focusing on public utilities, energy conservation, and new energy projects [13]. - The Group plans to focus on industrial parks/property development, finance, technology, and wellness elderly care for future growth [49]. - The Group will continue to develop the new energy industrial park in Danzao Town, Nanhai District, Foshan City, China [49]. - The Group plans to expand the Smart Elderly Care Services Platform to other towns in Nanhai District and surrounding areas [26]. - The Group is exploring potential acquisitions to strengthen its market position and diversify its portfolio [97]. Challenges and Risks - The Group anticipates that the outlook for the financial leasing industry remains positive despite rising risks related to bad debts due to the ongoing China-US trade war [13]. - Guangdong Financial Leasing Co., Ltd., a 25%-owned associate, faced significant challenges, resulting in a decrease in operating profit to approximately HK$6,254,000 and a profit contribution of approximately HK$1,564,000, down 85.7% year-on-year [38]. - The Group's income tax expense for the six months ended June 30, 2019, was HK$26,099,000, compared to HK$4,251,000 in the same period of 2018, representing a significant increase of 514% [177]. Corporate Governance - The company did not declare any interim dividend for the six months ended June 30, 2019, consistent with the previous year [70]. - The company has adopted all code provisions under the Corporate Governance Code and has complied with all provisions for the six months ended June 30, 2019 [70]. - The company confirmed compliance with the Model Code for Securities Transactions by Directors for the six months ended June 30, 2019 [70]. Employee and Operational Metrics - The total number of employees in the group increased to approximately 206 as of June 30, 2019, up from 183 as of December 31, 2018 [67]. - The total staff costs for the period were HK$15,981,000, compared to HK$8,704,000 in the previous year [187]. Financial Position - The Group's net current assets were HK$34,130,000, with a current ratio of approximately 1.02 times, indicating sufficient liquidity for future operations [43]. - Bank savings and cash amounted to HK$1,117,997,000, down from HK$1,221,671,000 as of December 31, 2018, but still adequate for capital requirements [43]. - The total equity of the company reached HK$1,461,036,000, indicating a growth of 12.5% year-over-year [90].

[Corporate Information](index=3&type=section&id=Corporate%20Information) The report details core company information including board members, committee structures, registered office, principal place of business, share registrar, principal bankers, auditor, and company secretary - The report details core company information including board members, committee structures, registered office, principal place of business, share registrar, principal bankers, auditor, and company secretary[6](index=6&type=chunk)[10](index=10&type=chunk) [Chairman's Statement](index=5&type=section&id=Chairman's%20Statement) This section provides an overview of the Group's performance, strategic initiatives, and future outlook across its diverse business segments [Business Review and Financial Performance](index=5&type=section&id=Business%20Review%20and%20Financial%20Performance) In 2018, the Group achieved significant growth with total revenue increasing by **167% to HK$79.55 million** and net profit by **102% to HK$55.82 million**, driven by new businesses, hotel recovery, and government subsidies 2018 Annual Key Financial Indicators | Indicator | 2018 (HK$) | 2017 (HK$) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | 79,550,000 | 29,846,000 (See Five-Year Financial Summary) | +167% | | **Net Profit** | 55,815,000 | 27,630,000 | +102% | - Revenue growth was primarily driven by **financial leasing business** contributing approximately **HK$25.22 million**, **big data business** contributing approximately **HK$12.06 million**, and the recovery of **Guilin Sightseeing Hotel business** adding approximately **HK$8.81 million**[13](index=13&type=chunk)[16](index=16&type=chunk) - The Group received other income, including government subsidies for the Danzao Industrial Park project, totaling approximately **HK$74.77 million**, significantly contributing to the substantial increase in annual net profit[14](index=14&type=chunk)[16](index=16&type=chunk) [Financial Leasing Business](index=5&type=section&id=Financial%20Leasing%20Business) The Group expanded its financial leasing business through Guangdong Yueshengke Financial Leasing Co., Ltd., focusing on public utilities, environmental protection, new energy, and telecommunications, generating **HK$25.22 million** in revenue and **HK$14.50 million** in operating profit 2018 Financial Leasing Business Performance | Indicator | Amount (HK$) | | :--- | :--- | | **Operating Revenue** | 25,221,000 | | **Operating Profit** | 14,498,000 | - The Group is optimistic about the prospects of China's financial leasing industry and has established a wholly-owned subsidiary to deepen business expansion, focusing on public utilities, environmental protection, new energy, and telecommunications sectors[15](index=15&type=chunk)[17](index=17&type=chunk) [Property Investments](index=6&type=section&id=Property%20Investments) Overall rental income increased by **6% to HK$6.78 million** in 2018, driven by improved occupancy at Foshan Zhongkong Building, while property sales generated **HK$17.10 million** in cash and **HK$8.24 million** in profit, with new industrial park development underway - Overall rental income increased by **6%**, with Foshan Zhongkong Building's rental income significantly growing by **54%** due to improved facilities and an **82% occupancy rate**[21](index=21&type=chunk)[24](index=24&type=chunk) - During the period, the Group completed the sale of seven units in Huizhou Guoshang Building and 33 units in Shantou International Commercial Building, generating approximately **HK$17.10 million** in cash and **HK$8.24 million** in profit[22](index=22&type=chunk)[25](index=25&type=chunk) - The Group is developing an industrial park in Danzao Town, Nanhai, Foshan, for new energy vehicle production, R&D, and supporting facilities through its 80%-owned joint venture, Zhongyan Taike, with construction expected to start in the first half of 2019 and complete in 2020[23](index=23&type=chunk)[25](index=25&type=chunk) [Wellness and Elderly Care Business](index=7&type=section&id=Wellness%20and%20Elderly%20Care%20Business) Guangdong Yibaijian, 70% owned by the Group, launched its smart elderly care service platform in Nanhai District, recording **HK$4.41 million** in revenue but a net loss of **HK$1.17 million** during its initial investment and promotion phase 2018 Wellness and Elderly Care Business Performance | Indicator | Amount (HK$) | | :--- | :--- | | **Operating Revenue** | 4,406,000 | | **Loss** | 1,165,000 | - The business centers on a 'smart elderly care service platform,' with Phase II construction completed and value-added health management services being explored, aiming to build a three-tier elderly care system encompassing institutional, community, and home-based care[27](index=27&type=chunk)[28](index=28&type=chunk) [Big Data Business](index=8&type=section&id=Big%20Data%20Business) The Group officially entered the big data business in February 2018 through its wholly-owned subsidiary, Guangdong Xinxing Technology Co., Ltd., achieving **HK$12.06 million** in revenue and **HK$0.78 million** in gross profit, despite a slight operating loss of **HK$0.39 million** in its initial investment phase 2018 Big Data Business Performance | Indicator | Amount (HK$) | | :--- | :--- | | **Operating Revenue** | 12,057,000 | | **Gross Profit** | 782,000 | | **Operating Loss** | 387,000 | - The 'Industrial Internet Identification Secondary Node (Foshan)' project was selected as a national pilot demonstration project, the National Safety Industry Big Data Platform (South China) node officially launched, and Alibaba Cloud Innovation Center (Foshan) began recruiting enterprises[31](index=31&type=chunk)[33](index=33&type=chunk) [Hotel Business](index=8&type=section&id=Hotel%20Business) Guilin Sightseeing Hotel's operations recovered in 2018 after renovation, with revenue increasing by **199% to HK$13.23 million** and operating loss narrowing by **65% to HK$6.02 million**, while a new homestay business incurred an initial operating loss of **HK$3.64 million** - Guilin Sightseeing Hotel's revenue increased by **199% to HK$13,233,000**, and its operating loss narrowed by **65% to HK$6,015,000**[32](index=32&type=chunk)[34](index=34&type=chunk) - To diversify hotel-related businesses, the Group established Xingye Homestay Mutual Aid Co., Ltd. (51% owned), offering comprehensive services including T-BOX® mobile homes, direct sales management software, and financing solutions, but currently recorded an operating loss of **HK$3,642,000**[36](index=36&type=chunk)[37](index=37&type=chunk) [Profit from Investments in Associates](index=9&type=section&id=Profit%20from%20Investments%20in%20Associates) Associates significantly contributed to profitability, with Nanhai Changhai Power's contribution increasing by **7% to HK$63.17 million**, Guangdong Yueke Financial Leasing's contribution decreasing by **41% to HK$9.79 million** due to accounting changes, and a new investment in Guangdong Tiannuo Civil Explosives contributing **HK$5.26 million** 2018 Key Associate Profit Contributions | Associate | Equity Stake | Profit Contribution (HK$) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | **Nanhai Changhai Power** | 32.636% | 63,169,000 | +7% | | **Guangdong Yueke Financial Leasing** | 25% | 9,785,000 | -41% | | **Guangdong Tiannuo Civil Explosives** | 49% | 5,264,000 | N/A | - The Group completed its investment in Guangdong Tiannuo Civil Explosives Co., Ltd. in August 2018, acquiring a **49% equity stake** to expand into the domestic civil explosives market[44](index=44&type=chunk)[45](index=45&type=chunk) [Financial Position and Analysis](index=11&type=section&id=Financial%20Position%20and%20Analysis) As of year-end 2018, total assets increased to **HK$3.46 billion**, total liabilities to **HK$2.13 billion**, raising the debt-to-asset ratio from **48.3% to 61.5%**, with **HK$1.22 billion** in bank deposits and cash ensuring a robust financial position, while timely USD-RMB conversion generated exchange gains Financial Position Summary (As of Year-End) | Indicator | 2018 (HK$) | 2017 (HK$) | | :--- | :--- | :--- | | **Total Assets** | 3,460,537,000 | 2,277,412,000 | | **Total Liabilities** | 2,129,217,000 | 1,099,553,000 | | **Debt-to-Asset Ratio** | 61.5% | 48.3% | | **Bank Deposits and Cash** | 1,221,671,000 | 886,861,000 | | **Total Assets Pledged** | 899,816,000 | 387,660,000 | - Despite significant RMB asset exposure to depreciation risk, the Group effectively hedged by timely converting **US$70 million** of registered capital into RMB in the second half, offsetting losses and recording an exchange gain of **HK$5.79 million**[52](index=52&type=chunk)[53](index=53&type=chunk) [Outlook](index=13&type=section&id=Outlook) The Group will focus on four core segments: industrial park/property development, finance, technology, and wellness/elderly care, pursuing strategic initiatives to achieve stable shareholder returns - The Group has identified four key future development segments: **Industrial Park/Property Development and Investment** (centered on Foshan Danzao New Energy Vehicle Industrial Park), **Finance** (expanding financial leasing), **Technology** (developing big data with smart city opportunities), and **Wellness and Elderly Care** (building a three-tier system based on smart elderly care platforms)[55](index=55&type=chunk)[56](index=56&type=chunk) [Corporate Governance Report](index=14&type=section&id=Corporate%20Governance%20Report) This report outlines the company's governance framework, board operations, committee functions, risk management, internal controls, and shareholder rights, demonstrating adherence to corporate governance codes [Corporate Governance Structure and Board Operations](index=14&type=section&id=Corporate%20Governance%20Structure%20and%20Board%20Operations) The company adheres strictly to the Corporate Governance Code, maintaining a balanced board of five executive and three independent non-executive directors, with all directors demonstrating high engagement by attending all nine board meetings in 2018 - The company consistently complied with all code provisions of the Corporate Governance Code throughout 2018[60](index=60&type=chunk) - The Board comprises **8 directors**, including **5 executive directors** and **3 independent non-executive directors**, ensuring a balanced and effective structure[68](index=68&type=chunk)[70](index=70&type=chunk) 2018 Board Meeting Attendance | Director Name | Position | Meetings Attended/Held | Attendance Rate | | :--- | :--- | :--- | :--- | | He Xiangming | Chairman | 9/9 | 100% | | Lin Pingwu | Managing Director | 9/9 | 100% | | You Guangwu | Director | 9/9 | 100% | | Huang Zhihe | Director and Deputy Managing Director | 9/9 | 100% | | Wang Xin | Director and Deputy Managing Director | 9/9 | 100% | | Chen Guowei | Independent Non-Executive Director | 9/9 | 100% | | Chen Dacheng | Independent Non-Executive Director | 9/9 | 100% | | Deng Hongping | Independent Non-Executive Director | 9/9 | 100% | [Board Committees](index=21&type=section&id=Board%20Committees) The company maintains Audit, Remuneration, and Nomination Committees, each chaired by an independent non-executive director, ensuring independence and expertise, with all members fully attending meetings and fulfilling key responsibilities including financial review, executive compensation, and board diversity - **Audit Committee**: Composed of **three independent non-executive directors**, held **two meetings** in 2018, reviewing annual and interim financial statements and internal control systems[108](index=108&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - **Remuneration Committee**: Composed of **three independent non-executive directors** and **two executive directors**, held **one meeting** in 2018, reviewing remuneration policies and bonus schemes[114](index=114&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - **Nomination Committee**: Composed of **three independent non-executive directors** and **two executive directors**, held **one meeting** in 2018, reviewing board structure, assessing independent directors' independence, and reviewing the board diversity policy[123](index=123&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) [Risk Management and Internal Control](index=25&type=section&id=Risk%20Management%20and%20Internal%20Control) The Group has established a risk management framework involving the Board, Audit Committee, and senior management, with an effective system for managing risks and internal controls, subject to annual review, and a robust inside information disclosure policy ensuring compliance and transparency - The Board oversees the design, implementation, and monitoring of risk management and internal control systems, aiming to manage rather than eliminate risks, and conducts annual effectiveness reviews[148](index=148&type=chunk)[151](index=151&type=chunk) - The Group has an internal audit function to assist the Board and Audit Committee in continuous system monitoring, identifying deficiencies, and proposing improvements[150](index=150&type=chunk)[151](index=151&type=chunk) - The company has adopted an inside information disclosure policy to regulate the handling and release of inside information, ensuring timeliness, accuracy, and confidentiality of disclosures[154](index=154&type=chunk) [Shareholders' Rights](index=30&type=section&id=Shareholders'%20Rights) The report clearly defines shareholders' rights and procedures for exercising them, including convening extraordinary general meetings, nominating director candidates, and proposing resolutions at general meetings, thereby safeguarding shareholder participation and oversight - Shareholders holding not less than **10%** of the voting rights are entitled to request the convening of an extraordinary general meeting[165](index=165&type=chunk)[167](index=167&type=chunk) - Shareholders may nominate director candidates in writing according to prescribed procedures at least **7 days** before a general meeting[166](index=166&type=chunk)[168](index=168&type=chunk) - Shareholders holding not less than **5%** of the voting rights or at least **100 registered shareholders** may propose resolutions at a general meeting according to procedures[170](index=170&type=chunk)[172](index=172&type=chunk) [Directors' Report](index=32&type=section&id=Directors'%20Report) This report provides a review of the Group's business, key risks, and compliance with relevant laws and regulations, directing readers to the Chairman's Statement for detailed analysis [Business Review and Key Risks](index=32&type=section&id=Business%20Review%20and%20Key%20Risks) This section offers a fair review of the Group's business, referring readers to the Chairman's Statement for detailed analysis, and acknowledges multiple business, operational, and financial management risks while confirming compliance with all material laws and regulations - The Group's business review, future development, key risks, stakeholder relationships, and compliance are detailed in the Chairman's Statement, subsequent paragraphs of this report, and the Environmental, Social and Governance Report[177](index=177&type=chunk)[183](index=183&type=chunk) - The Group confirms that its financial position, operating results, and prospects are influenced by multiple uncertainties, including business risks, operational risks, and financial management risks[179](index=179&type=chunk)[185](index=185&type=chunk) [Directors' and Major Shareholders' Interests](index=35&type=section&id=Directors'%20and%20Major%20Shareholders'%20Interests) The report discloses the Board members and their biographies as of year-end 2018, noting that only Chairman He Xiangming holds a **0.08%** personal stake, while Guangdong Nanhai Holding Investment Co., Ltd. is the major shareholder with **84.18%** of the company's shares - Chairman He Xiangming holds **1,441,000 ordinary shares**, representing **0.08%** of the issued shares, making him the only director with a shareholding[232](index=232&type=chunk) Major Shareholder Holdings (As of December 31, 2018) | Shareholder Name | Number of Shares Held | Capacity | Shareholding Percentage | | :--- | :--- | :--- | :--- | | Guangdong Nanhai Holding Investment Co., Ltd. | 1,441,439,842 | Corporate Interest | 84.18% | | Nam Keng Van Investment Company Limited | 121,864,487 | Beneficial Owner | 7.12% | [Employees and Other Disclosures](index=42&type=section&id=Employees%20and%20Other%20Disclosures) As of year-end 2018, the Group's total workforce increased to **183 employees**, with an employee share option scheme in place but no options granted since its adoption in 2013, and a moderate concentration of suppliers and customers - The Group's total number of employees increased from **113 in 2017 to 183 in 2018**[258](index=258&type=chunk) - The company adopted a ten-year share option scheme on April 26, 2013, but no share options have been granted to date[243](index=243&type=chunk)[248](index=248&type=chunk) - The largest supplier accounted for **18%** of total purchases, with the top five suppliers accounting for **42%**; the largest customer accounted for **15%** of total turnover, with the top five customers accounting for **41%**[253](index=253&type=chunk)[256](index=256&type=chunk) [Environmental, Social and Governance Report](index=45&type=section&id=Environmental,%20Social%20and%20Governance%20Report) This report details the Group's commitment to environmental protection, social responsibility, and robust governance practices, including energy conservation, waste reduction, fair employment, and anti-corruption measures [Environmental Performance](index=45&type=section&id=Environmental%20Performance) The Group prioritizes environmental protection, particularly in its hotel business, implementing energy-saving and emission reduction measures through clean energy, efficient equipment, and enhanced resource management, effectively controlling waste gas, greenhouse gas emissions, and water consumption, with Guilin Sightseeing Hotel maintaining its "Silver Leaf Green Tourism Hotel" certification since 2007 - The hotel business reduced harmful gas emissions by converting fuel from diesel to natural gas and installing flue gas purification devices[268](index=268&type=chunk) - Electricity consumption was reduced through enhanced solar systems and LED lighting, with total electricity consumption in 2018 at **2,051,789 kWh** and greenhouse gas emissions at **1,562.2 tons**, increasing year-on-year due to the hotel's full operational recovery[272](index=272&type=chunk) - Total water consumption in 2018 was **33,516 cubic meters**, a decrease from **38,690 cubic meters in 2017**, achieved through water-saving fixtures and improved water usage protocols[274](index=274&type=chunk)[278](index=278&type=chunk)[281](index=281&type=chunk) [Social Performance](index=49&type=section&id=Social%20Performance) The Group is committed to corporate social responsibility, providing equal employment opportunities, a safe working environment, and continuous training for employees, while strictly adhering to labor laws, prohibiting child and forced labor, and establishing comprehensive supply chain management, product responsibility, and anti-corruption mechanisms, alongside active community investment Employee Composition (As of Year-End) | Category | 2018 | 2017 | | :--- | :--- | :--- | | **Total Employees** | 183 | 113 | | **Male Employee Ratio** | 52% | 48% | | **Female Employee Ratio** | 48% | 52% | | **Under 30 Ratio** | 22% | 13% | | **31-50 Age Ratio** | 60% | 67% | | **Over 50 Age Ratio** | 18% | 20% | - The company provides safety production training and fire drills for employees, along with annual free professional health check-ups, ensuring employee health and safety[297](index=297&type=chunk)[300](index=300&type=chunk) - In 2018, hotel employees received an average of **12 days** of training across **6 courses**, an increase from **8 days in 2017**[302](index=302&type=chunk)[304](index=304&type=chunk) - The company maintains a zero-tolerance policy towards bribery, fraud, and money laundering, establishing an Integrity and Safety Work Supervision and Inspection Team in June 2018[315](index=315&type=chunk)[318](index=318&type=chunk) [Independent Auditor's Report](index=54&type=section&id=Independent%20Auditor's%20Report) This report presents the independent auditor's opinion on the Group's consolidated financial statements and highlights key audit matters requiring significant attention and professional judgment [Auditor's Opinion](index=54&type=section&id=Auditor's%20Opinion) The auditor, Hengjian Certified Public Accountants LLP, concluded that the consolidated financial statements fairly and accurately represent the Group's financial position as of December 31, 2018, and its financial performance and cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance - The auditor issued a standard unqualified opinion on the company's 2018 financial statements[323](index=323&type=chunk) [Key Audit Matters](index=55&type=section&id=Key%20Audit%20Matters) The auditor identified five key audit matters requiring particular attention and professional judgment, primarily concerning the impairment assessment of finance lease receivables, valuation of investment and hotel properties, application of HKFRS 15 (Revenue), and accounting for and impairment assessment of interests in associates - **Impairment of Finance Lease Receivables**: Deemed a key audit matter due to its materiality to the financial statements and management's significant judgment in assessing recoverability; as of year-end, the carrying amount was **HK$608 million**[328](index=328&type=chunk) - **Valuation of Investment Properties and China Hotel Properties**: Considered a key audit matter because fair value determination relies on significant management judgments regarding key assumptions like market rent; as of year-end, fair values were **HK$230 million** and **HK$115 million**, respectively[357](index=357&type=chunk)[367](index=367&type=chunk) - **Revenue Recognition**: Became a key audit matter due to the adoption of new Hong Kong Financial Reporting Standard 15, which requires significant management judgment and estimation in revenue recognition[369](index=369&type=chunk) - **Accounting for and Impairment Assessment of Interests in Associates**: Listed as a key audit matter due to the significant impact of associates on the Group's financial statements and the complex adjustments required to convert their financial information from Chinese accounting standards to Hong Kong Financial Reporting Standards; as of year-end, the carrying amount of interests in associates was **HK$822 million**[375](index=375&type=chunk)[381](index=381&type=chunk)[383](index=383&type=chunk) [Consolidated Financial Statements](index=67&type=section&id=Consolidated%20Financial%20Statements) This section presents the Group's comprehensive financial performance, position, and cash flows for the reporting period, along with detailed notes on accounting policies and significant estimates [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=67&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For FY2018, the Group achieved total revenue of **HK$79.55 million**, a **167%** increase, with gross profit significantly rising to **HK$42.02 million**; pre-tax profit reached **HK$87.93 million**, up **176%**, driven by other operating income and associate contributions, resulting in a net profit of **HK$55.82 million**, a **102%** increase 2018 Consolidated Statement of Profit or Loss Summary | Item (HK$ thousands) | 2018 | 2017 | | :--- | :--- | :--- | | **Revenue** | 79,550 | 29,846 | | **Gross Profit** | 42,016 | 7,295 | | **Other Operating Income** | 118,221 | 12,741 | | **Share of Profit of Associates** | 78,218 | 75,494 | | **Finance Costs** | (86,296) | (25,449) | | **Profit Before Tax** | 87,930 | 31,901 | | **Profit for the Year** | 55,815 | 27,630 | | **Profit Attributable to Owners of the Company** | 42,383 | 31,266 | | **Basic Earnings Per Share** | 2.48 cents | 1.83 cents | [Consolidated Statement of Financial Position](index=69&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of year-end 2018, total assets increased by **52%** from **HK$2.28 billion to HK$3.46 billion**, driven by new finance lease receivables and increased cash, while total liabilities rose by **94%** from **HK$1.10 billion to HK$2.13 billion** due to significant borrowings, bringing total equity to **HK$1.33 billion** 2018 Year-End Consolidated Statement of Financial Position Summary | Item (HK$ thousands) | 2018 | 2017 | | :--- | :--- | :--- | | **Non-Current Assets** | 1,857,307 | 1,270,348 | | *Of which: Interests in Associates* | 821,682 | 745,571 | | *Of which: Finance Lease Receivables* | 365,465 | – | | **Current Assets** | 1,603,230 | 1,007,064 | | *Of which: Cash and Cash Equivalents* | 1,221,671 | 886,861 | | **Total Assets** | **3,460,537** | **2,277,412** | | **Current Liabilities** | 1,390,517 | 762,287 | | **Non-Current Liabilities** | 738,700 | 337,266 | | **Total Liabilities** | **2,129,217** | **1,099,553** | | **Total Equity** | **1,331,320** | **1,177,859** | [Consolidated Statement of Cash Flows](index=73&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) In 2018, the Group reported a net cash outflow from operating activities of **HK$556.45 million**, primarily due to a significant increase in finance lease receivables, a net cash outflow from investing activities of **HK$94.08 million** for associate acquisitions, and a net cash inflow from financing activities of **HK$972.81 million** from new borrowings, resulting in a net increase of **HK$322.27 million** in cash and cash equivalents for the year 2018 Consolidated Statement of Cash Flows Summary | Item (HK$ thousands) | 2018 | 2017 | | :--- | :--- | :--- | | **Net Cash Outflow from Operating Activities** | (556,452) | (10,072) | | **Net Cash Outflow from Investing Activities** | (94,083) | (57,958) | | **Net Cash Inflow from Financing Activities** | 972,807 | 814,456 | | **Net Increase in Cash and Cash Equivalents** | 322,272 | 746,426 | | **Cash and Cash Equivalents at Beginning of Year** | 886,861 | 134,356 | | **Cash and Cash Equivalents at End of Year** | 1,166,858 | 886,861 | [Notes to the Consolidated Financial Statements](index=76&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section details the company's accounting policies, critical judgments, and estimates, highlighting the first-time application of HKFRS 9 (Financial Instruments), HKFRS 15 (Revenue), and early adoption of HKFRS 16 (Leases) in 2018, which impacted financial asset impairment, revenue recognition, and lease accounting - The company applied new Hong Kong Financial Reporting Standards **HKFRS 9, HKFRS 15**, and early adopted **HKFRS 16** starting January 1, 2018[447](index=447&type=chunk)[453](index=453&type=chunk) - The application of **HKFRS 9** introduced the Expected Credit Loss (ECL) model for assessing financial asset impairment[454](index=454&type=chunk)[481](index=481&type=chunk) - Early adoption of **HKFRS 16** resulted in the company recognizing **HK$148 million** in right-of-use assets and **HK$150 million** in lease liabilities[493](index=493&type=chunk)[499](index=499&type=chunk) [Five-Year Financial Summary](index=246&type=section&id=Five-Year%20Financial%20Summary) This section provides a concise overview of the Group's key financial performance and position indicators over the past five years, offering a historical perspective on its financial trends 2014-2018 Financial Summary (HK$ thousands) | Indicator | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | 79,550 | 29,846 | 24,554 | 39,275 | 32,448 | | **Profit/(Loss) for the Year** | 55,815 | 27,630 | (2,703) | 5,773 | 81,038 | | **Total Assets** | 3,460,537 | 2,277,412 | 1,316,578 | 1,352,241 | 1,458,734 | | **Total Liabilities** | 2,129,217 | 1,099,553 | 385,291 | 377,822 | 463,152 | | **Equity Attributable to Owners of the Company** | 993,115 | 1,020,234 | 931,287 | 974,419 | 995,582 | [Particulars of Major Properties](index=247&type=section&id=Particulars%20of%20Major%20Properties) This section lists the Group's significant properties held as of year-end 2018, including hotel, commercial, and commercial/residential properties in various locations - The report lists the Group's major properties held as of year-end 2018, including hotel properties in Guilin, commercial properties in Hong Kong and Foshan, and commercial/residential properties held for sale in Shantou[1220](index=1220&type=chunk)[1223](index=1223&type=chunk)[1249](index=1249&type=chunk)