Financial Performance - The Group's revenue for the year ended December 31, 2020, decreased to approximately HK$101.13 million, a decline of approximately 45.28% compared to HK$184.81 million in 2019[16]. - Gross profit decreased by approximately HK$8.89 million to approximately HK$42.27 million, while the gross profit margin increased from approximately 27.68% in 2019 to approximately 41.80% in 2020[16]. - The loss for the year was approximately HK$106.15 million, compared to a loss of approximately HK$95.09 million in 2019, primarily due to an increase in net impairment of financial assets from approximately HK$20.92 million in 2019 to approximately HK$63.53 million in 2020[16]. - The proportion of revenue from the money lending business increased from 12.41% in 2019 to 24.81% in 2020, contributing to the higher gross profit margin[16]. - The group's revenue decreased to approximately HK$101,130,000 in 2020, a decline of about 45.28% compared to HK$184,810,000 in 2019[18]. - Gross profit fell by approximately HK$8,890,000 to about HK$42,270,000 in 2020, representing a decrease of approximately 17.38% from HK$51,160,000 in 2019[18]. - The loss for the year was approximately HK$106,150,000, compared to a loss of about HK$95,090,000 in 2019, indicating an increase in loss[18]. - Net impairment loss on financial assets increased from approximately HK$20,920,000 in 2019 to about HK$63,530,000 in 2020[18]. Revenue Breakdown - Income from the manufacturing of electronics products accounted for approximately 54.39% of total revenue in 2020, down from 71.35% in 2019[36]. - Interest income from money lending services rose to 24.81% of total revenue in 2020, up from 12.41% in 2019[36]. - Revenue from the manufacturing of electronics products decreased by 58.29% to approximately HK$55,005,000 in 2020 compared to HK$131,861,000 in 2019[37]. - Revenue from nursery education services dropped by 75.35% to approximately HK$1,756,000 in 2020, down from HK$7,124,000 in 2019[38]. - Revenue from electronic product manufacturing decreased by 58.29% to approximately HK$55,005,000 compared to HK$131,861,000 in 2019[41]. - Revenue from money lending services increased by 9.43% to approximately HK$25,095,000 compared to HK$22,933,000 in 2019[43]. - Revenue from regulated financial services decreased by 27.21% to approximately HK$8,042,000 compared to HK$11,048,000 in 2019[45]. - Revenue from early childhood education services decreased by 75.35% to approximately HK$1,756,000 compared to HK$7,124,000 in 2019[42]. Assets and Liabilities - Total assets as of December 31, 2020, were HK$1,360.94 million, a slight decrease from HK$1,389.72 million in 2019[13]. - Total liabilities increased to HK$802.36 million in 2020 from HK$772.76 million in 2019[13]. - Net assets decreased to HK$558.58 million in 2020 from HK$616.96 million in 2019[13]. - As of December 31, 2020, the Group's cash and cash equivalents were approximately HK$11,598,000, down from HK$26,088,000 in 2019[51]. - The Group's interest-bearing borrowings were approximately HK$498,952,000, a decrease from HK$502,549,000 in 2019[52]. - The gearing ratio of the Group increased to 0.87 from 0.77 in 2019, indicating a higher level of debt relative to equity[52]. - The net asset value of the Group as of December 31, 2020, was approximately HK$558,580,000, down from HK$616,964,000 in 2019[53]. Employee and Management Costs - The total staff costs incurred for 2020 were approximately HK$29,983,000, a decrease from approximately HK$40,818,000 in 2019[59]. - As of December 31, 2020, the group had approximately 250 employees, a decrease from about 300 employees in 2019, with total employee costs amounting to approximately HKD 29,983,000 in 2020, down from HKD 40,818,000 in 2019[62]. - Executive Directors waived part of their salaries, amounting to approximately HK$6,438,000 and HK$5,238,000 respectively, during the year[109]. Corporate Governance and Shareholder Information - The Company is a diversified investment holding company, with principal subsidiaries' activities detailed in the consolidated financial statements[77]. - The Directors' report includes audited consolidated financial statements for the year ended December 31, 2020[76]. - The Company has adopted all code provisions in the Corporate Governance Code and complied with applicable provisions throughout the year[188]. - The Board comprises five Directors, including two executive Directors and three independent non-executive Directors[190]. - Each independent non-executive director confirmed their independence in accordance with Rule 3.13 of the Listing Rules[200]. - The Company maintained a public float of not less than 25% of its issued shares as required under the Listing Rules[134]. - The Company did not purchase, sell, or redeem any of its listed securities during the year[144]. Dividend Policy - The Group did not recommend the payment of a final dividend for the year ended December 31, 2020, consistent with 2019, where no dividend was declared[78]. - The Company adopted a Dividend Policy on January 21, 2019, which considers financial results, prospects, and other factors when declaring dividends[79]. - The Company had no distributable reserves available for distribution to shareholders as of December 31, 2020[87]. - The Company does not have a pre-determined dividend distribution ratio, and the Board has discretion over dividend declarations[83]. Bond Issuance and Financial Strategy - The company issued bonds amounting to HK$300 million on December 29, 2017, with an interest rate of 8% per annum, to support funding needs for various operations[88]. - The company plans to use the bond proceeds for funding its debt business, capital expenditures in early childhood education, and general working capital[94]. - The company has extended the maturity date of the bonds to accommodate its financial strategy[96]. - The company is required to redeem HK$10,000,000 of the bonds by December 28, 2020, and a minimum of HK$20,000,000 by June 28, 2021[97]. - The interest rate on the bonds was increased from 8% to 10% per annum, and the final maturity date was extended to June 28, 2022[97]. - As of December 31, 2020, the outstanding principal amount of the bonds was HK$260,000,000 after partial repayments of HK$40,000,000[96]. Risk Management - The group did not engage in any derivative activities or undertake any financial instruments to hedge its financial risk as of December 31, 2020[61]. - The group has pledged equity interests in several subsidiaries as collateral for bonds issued on December 29, 2017[60]. - The group has pledged office properties and restricted bank deposits to secure loans[60]. Events After Reporting Period - There are no significant events requiring disclosure that occurred after December 31, 2020, up to the date of the report[156][160].

CONTENTS 目錄 | Corporate Information | 2 | | --- | --- | | 企業資料 | | | Management's Discussion and Analysis | 4 | | 管理層討論與分析 | | | Condensed Consolidated Statement of Profit or Loss | 10 | | 簡明綜合損益表 | | | Condensed Consolidated Statement of Comprehensive Income | 11 | | 簡明綜合全面收益表 | | | Condensed Consolidated Statement of Financial Position | 12 | | 簡明綜合財務狀況表 | | | Condensed Consolidated Statement of Changes in Equity | 14 | | 簡明綜合權益變動表 | | | Condensed Consolidated Statement of Cash Flows | 16 | | 簡明綜合現金流量表 | ...

Financial Performance - The Group's revenue decreased to approximately HK$184.81 million for the year ended December 31, 2019, down 22.19% from HK$237.53 million in 2018[17] - Gross profit increased by approximately HK$9.09 million to HK$51.16 million in 2019, with a gross profit margin rising from 17.71% in 2018 to 27.68% in 2019[17] - The loss for the year was approximately HK$95.09 million, an improvement from a loss of approximately HK$182.01 million in 2018[18] - Impairment of assets decreased significantly from approximately HK$107.86 million in 2018 to approximately HK$10.76 million in 2019[18] - The contribution from the money lending business increased from 7.00% of revenue in 2018 to 12.41% in 2019, reflecting a shift in revenue sources[17] - The Group's revenue decreased to approximately HK$184,810,000 for the year ended December 31, 2019, a decline of about 22.19% compared to HK$237,530,000 for the year ended December 31, 2018, primarily due to the disposal of Alford Group[20][36] - Gross profit increased by approximately HK$9,090,000 to HK$51,160,000 for the year ended December 31, 2019, representing an increase of about 21.60% from HK$42,070,000 in 2018[20][36] - The gross profit margin improved from approximately 17.71% in 2018 to 27.68% in 2019, attributed to the increase in the contribution of the money lending business from 7.00% in 2018 to 12.41% in 2019[20][36][45] - The Group recorded a loss of approximately HK$95,090,000 for the year ended December 31, 2019, a reduction from a loss of approximately HK$182,010,000 in 2018, mainly due to a decrease in asset impairment[21] Revenue Breakdown - Revenue from the manufacturing of transformers contributed approximately HK$44.28 million, representing 23.96% of the total revenue, but did not show significant growth as initially expected[23][27] - Revenue from baby monitors and semi-products manufacturing was approximately HK$87,580,000, down 49.74% from HK$174,238,000 in 2018, while transformer manufacturing revenue increased by 81.55% to approximately HK$44,281,000 from HK$24,390,000 in 2018[49] - The provision of nursery education services contributed approximately HK$7,124,000 to revenue, representing a decrease of 20.04% from HK$8,910,000 in 2018[51] - The provision of money lending services saw revenue increase by 37.94% to approximately HK$22,933,000 from HK$16,625,000 in 2018[52] - The provision of financial services generated approximately HK$11,048,000 in revenue, a decrease of 9.60% from HK$12,221,000 in 2018[58] - The management fee income from the Lijiang Underground Walkway project was approximately HK$11,846,000, significantly up from HK$1,141,000 in 2018[53] Assets and Liabilities - Total assets as of December 31, 2019, were HK$1,389.72 million, compared to HK$1,485.20 million in 2018[13] - Total liabilities increased slightly to HK$772.76 million in 2019 from HK$762.97 million in 2018[13] - Net assets decreased to HK$616.96 million in 2019 from HK$722.24 million in 2018[13] - The Group's equity attributable to owners was HK$625.47 million as of December 31, 2019[13] - The net asset value as of December 31, 2019, was HK$616,964,000, down from HK$722,238,000 in 2018[61] - The Group's interest-bearing borrowings increased to approximately HK$502,549,000 from HK$439,269,000 in 2018, with a gearing ratio of 0.77 compared to 0.57 in 2018[60] Employee and Operational Changes - As of December 31, 2019, the Group had approximately 300 employees, a decrease from approximately 600 employees in 2018, with total staff costs for 2019 amounting to approximately HK$40,818,000, down from approximately HK$52,690,000 in 2018[69] Corporate Governance and Shareholder Information - The Directors do not recommend the payment of a final dividend for the year ended December 31, 2019 (2018: nil)[89] - The Company adopted a dividend policy on January 21, 2019, considering financial results, prospects, and other factors when declaring dividends[90] - The Company is a diversified investment holding company with various principal subsidiaries[88] - The Company has adopted all code provisions in the Corporate Governance Code and complied with applicable provisions throughout the year[196] - The roles of chairman and CEO are not performed by the same individual, as the Company does not currently have a CEO[197] - The Board of Directors consists of five members, including two executive Directors and three independent non-executive Directors[199] - The Company maintained a public float of not less than 25% of its issued shares as required under the Listing Rules[142] Future Outlook - The Group anticipates that the operating results for 2020 will be adversely affected by the COVID-19 epidemic, although the potential impact on financial performance cannot yet be quantified[24][25] - The Group is continuously assessing the impact of the COVID-19 epidemic on its financial position and operating performance[164] Debt and Financing - The Company issued bonds for a principal amount of HK$300 million on December 29, 2017, with an interest rate of 8% per annum[105] - The Group partially repaid HK$20 million of the bond principal on July 23, 2018, and another HK$20 million on December 24, 2019[106] - The remaining outstanding principal amount of HK$260 million was extended to mature on December 28, 2020[106] Miscellaneous - The Group did not make any charitable donations during the year (2018: nil)[95] - The Company did not have a pre-determined dividend distribution ratio, and the declaration of dividends is at the Board's discretion[94] - The Company did not engage in any arrangements enabling Directors to acquire shares or debentures during the year[130] - There were no significant transactions or contracts involving Directors that had material interests during the year[128] - None of the Directors had interests in a competing business during the year[129]

[Corporate Information](index=2&type=section&id=Corporate%20Information) This section provides fundamental details about the company's structure and registration [Management's Discussion and Analysis](index=5&type=section&id=Management's%20Discussion%20and%20Analysis) This section provides an overview of the company's financial performance, business operations, and future outlook [Financial Review](index=5&type=section&id=FINANCIAL%20REVIEW) For H1 2019, the Group's revenue grew **40.84%** to **HKD 144 million**, gross margin improved to **17.01%**, and net loss narrowed to **HKD 21.4 million** due to a subsidiary disposal gain Key Financial Indicators for H1 2019 | Indicator | H1 2019 | H1 2018 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 143,565,000 | HKD 101,938,000 | +40.84% | | Gross Profit Margin | 17.01% | 15.75% | +1.26 percentage points | | Loss for the Period | (HKD 21,402,000) | (HKD 33,425,000) | Loss narrowed 36.0% | - The primary reason for the reduced loss for the period was a gain of approximately **HKD 13.39 million** from the disposal of a subsidiary[11](index=11&type=chunk)[13](index=13&type=chunk) [Business Review and Segment Analysis](index=5&type=section&id=BUSINESS%20REVIEW%20AND%20SEGMENT%20ANALYSIS) Since 2017, the Group has diversified from electronics manufacturing into money lending, regulated financial services, early childhood education, and property development, with electronics manufacturing remaining the largest segment at **83.24%** of total revenue, following the disposal of the baby monitor business to reduce US market reliance Revenue Contribution by Business Segment for H1 2019 | Business Segment | Revenue Contribution (2019 H1) | Revenue Contribution (2018 H1) | | :--- | :--- | :--- | | Manufacturing of Electronics Products | 83.24% | 82.55% | | Money Lending Services | 7.64% | 6.86% | | Regulated Financial Services | 3.82% | 5.74% | | Early Childhood Education Services | 2.77% | 4.85% | | Property Development | 2.53% | 0.00% | - The Group completed the disposal of Alford Group, primarily engaged in baby monitor design and distribution, on May 30, 2019, with the electronics manufacturing business subsequently focusing solely on transformer production[17](index=17&type=chunk)[19](index=19&type=chunk) [Manufacturing of Electronics Products](index=6&type=section&id=Manufacturing%20of%20Electronics%20Products) Revenue from electronics manufacturing grew **42.00%** to **HKD 119.5 million**, driven by baby monitors and transformers, with the baby monitor business (Alford Group) sold for **HKD 59 million** to reduce US market reliance Revenue Breakdown for Electronics Manufacturing Segment | Product Category | H1 2019 Revenue (HKD) | H1 2018 Revenue (HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Baby Monitors and Semi-finished Products | 87,580,000 | 84,152,000 | +4.07% | | Transformers | 31,920,000 | 0 | N/A | | **Total** | **119,500,000** | **84,152,000** | **+42.00%** | [Provision of Money Lending Services](index=7&type=section&id=Provision%20of%20Money%20Lending%20Services) Interest income from money lending services surged **56.83%** to approximately **HKD 10.97 million**, targeting high-quality clients with loan principals ranging from **HKD 2 million** to **HKD 51 million** at **6% to 15%** annual interest - Interest income from money lending services was approximately **HKD 10,969,000**, representing a **56.83%** increase from **HKD 6,994,000** in the prior year period[21](index=21&type=chunk)[24](index=24&type=chunk) [Provision of Regulated Financial Services](index=7&type=section&id=Provision%20of%20Regulated%20Financial%20Services) Service income from regulated financial services was approximately **HKD 5.48 million**, a **6.34%** decrease compared to the prior year period - Service income from regulated financial services was approximately **HKD 5,481,000**, a **6.34%** decrease from **HKD 5,852,000** in the prior year period[22](index=22&type=chunk)[25](index=25&type=chunk) [Provision of Early Childhood Education Services](index=7&type=section&id=Provision%20of%20nursery%20education%20services) Revenue from early childhood education services was approximately **HKD 3.98 million**, a **19.51%** decrease, primarily from operating a kindergarten and providing management services in Chengdu, China - Service income from early childhood education services was approximately **HKD 3,976,000**, a **19.51%** decrease from **HKD 4,940,000** in the prior year period[23](index=23&type=chunk)[26](index=26&type=chunk) [Property Development and Management](index=8&type=section&id=Property%20Development%20and%20Management) Property development and management centers on the Lijiang underground pedestrian street project in Yunnan, China, which is completed and delivering pre-sold shops, with the Group's subsidiary providing property management services - The Lijiang underground pedestrian street project, with a total gross floor area of approximately **36,583 square meters** and **741 saleable shops**, is completed and managed by the Group's subsidiary[28](index=28&type=chunk)[31](index=31&type=chunk) [Prospective and Outlook](index=8&type=section&id=PROSPECTIVE%20AND%20OUTLOOK) For H2 2019, the Group will strengthen existing businesses, promote the Lijiang project, and explore early childhood education in Southeast Asia to mitigate challenges from trade disputes and China's regulatory changes - The Group will focus on strengthening existing businesses, including promoting the Lijiang underground pedestrian street project, with plans for potential disposal at an opportune time[30](index=30&type=chunk)[32](index=32&type=chunk) - Due to increased regulation on private kindergarten mergers and acquisitions in China, the Group is researching and developing the early childhood education market in Southeast Asia[30](index=30&type=chunk)[32](index=32&type=chunk) [Liquidity, Financial Resources and Funding](index=9&type=section&id=LIQUIDITY,%20FINANCIAL%20RESOURCES%20AND%20FUNDING) As of June 30, 2019, the Group maintained a prudent financial policy with **HKD 13.43 million** in cash, **HKD 436 million** in interest-bearing borrowings, a gearing ratio of **0.65**, and a current ratio of **1.49**, indicating sufficient financial resources Key Financial Position Indicators (as of June 30, 2019) | Indicator | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Cash and Cash Equivalents | HKD 13,426,000 | HKD 28,464,000 | | Interest-bearing Borrowings | HKD 435,986,000 | HKD 439,269,000 | | Gearing Ratio | 0.65 | 0.57 | | Current Ratio | 1.49 | 1.49 | | Net Assets | HKD 657,102,000 | HKD 722,238,000 | [Charge on Assets](index=10&type=section&id=CHARGE%20ON%20ASSETS) As of June 30, 2019, equity in several subsidiaries involved in early childhood education, regulated financial services, equity investment, and transformer production, along with certain office properties, were pledged as collateral for the company's 2017 bonds and bank term loans - Equity in four of the Group's subsidiaries was pledged to secure bonds issued by the company in 2017[40](index=40&type=chunk)[44](index=44&type=chunk) - Certain office properties were mortgaged to banks to secure the Group's term loans[40](index=40&type=chunk)[44](index=44&type=chunk) [Employees](index=10&type=section&id=EMPLOYEES) As of June 30, 2019, the Group's employee count significantly decreased to approximately **250** from **600** at year-end 2018, primarily due to subsidiary disposal, with most employees based in China - As of June 30, 2019, the Group's employee count was approximately **250**, a significant decrease from approximately **600** as of December 31, 2018[42](index=42&type=chunk)[46](index=46&type=chunk) [Interim Dividend](index=10&type=section&id=INTERIM%20DIVIDEND) The Board does not recommend an interim dividend for the six months ended June 30, 2019, consistent with the prior year period - The Board does not recommend an interim dividend for 2019 (2018: nil)[43](index=43&type=chunk)[47](index=47&type=chunk) [Condensed Consolidated Statement of Profit or Loss](index=11&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) This statement presents the Group's revenues, expenses, and net profit or loss over a specific period [Summary of Profit or Loss](index=11&type=section&id=Summary%20of%20Profit%20or%20Loss) For the six months ended June 30, 2019, the company achieved **HKD 144 million** in revenue, a **40.8%** increase, with pre-tax loss narrowing to **HKD 15.55 million** and loss for the period at **HKD 21.4 million**, resulting in a basic and diluted loss per share of **1.02 HK cents** Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Item (HK$'000) | 2019 (Unaudited) | 2018 (Unaudited) | | :--- | :--- | :--- | | Revenue | 143,565 | 101,938 | | Gross profit | 24,423 | 16,056 | | Loss before tax | (15,549) | (31,416) | | Loss for the period | (21,402) | (33,425) | | Loss attributable to owners of the Company | (20,719) | (33,012) | | Loss per share (Basic and diluted) | (1.02) HK cents | (1.62) HK cents | [Condensed Consolidated Statement of Comprehensive Income](index=12&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) This statement presents the Group's net profit or loss and other comprehensive income, reflecting all changes in equity during the period [Summary of Comprehensive Income](index=12&type=section&id=Summary%20of%20Comprehensive%20Income) For the six months ended June 30, 2019, the company reported a loss for the period of **HKD 21.4 million**, with total comprehensive loss narrowing to **HKD 22.1 million** after accounting for other comprehensive income items like exchange differences and reclassification of reserves from subsidiary disposal Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Item (HK$'000) | 2019 (Unaudited) | 2018 (Unaudited) | | :--- | :--- | :--- | | Loss for the period | (21,402) | (33,425) | | Other comprehensive income for the period | (694) | 6,884 | | Total comprehensive income for the period | (22,096) | (26,541) | [Condensed Consolidated Statement of Financial Position](index=13&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement provides a snapshot of the Group's assets, liabilities, and equity at a specific point in time [Summary of Financial Position](index=13&type=section&id=Summary%20of%20Financial%20Position) As of June 30, 2019, the Group's total assets were approximately **HKD 1.42 billion**, total liabilities **HKD 763 million**, and net assets **HKD 657 million**, with net current assets at **HKD 281 million**, primarily comprising properties held for sale, property, plant and equipment, and loans receivable Summary of Financial Position | Item (HK$'000) | June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | | :--- | :--- | :--- | | Total non-current assets | 568,336 | 577,988 | | Total current assets | 851,529 | 907,215 | | **Total assets** | **1,419,865** | **1,485,203** | | Total current liabilities | 570,070 | 608,746 | | Total non-current liabilities | 192,693 | 154,219 | | **Total liabilities** | **762,763** | **762,965** | | **Net assets** | **657,102** | **722,238** | | **Total equity** | **657,102** | **722,238** | [Condensed Consolidated Statement of Changes in Equity](index=15&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement details the changes in the Group's equity components over the reporting period [Summary of Changes in Equity](index=15&type=section&id=Summary%20of%20Changes%20in%20Equity) For the six months ended June 30, 2019, total equity decreased from **HKD 722 million** to **HKD 657 million**, primarily due to a **HKD 43.04 million** adjustment from initial HKFRS 16 adoption and a total comprehensive loss of **HKD 22.1 million** for the period Summary of Changes in Equity (HK$'000) | Item | Amount | | :--- | :--- | | Total equity as at December 31, 2018 | 722,238 | | Impact of initial application of HKFRS 16 | (43,040) | | Adjusted balance as at January 1, 2019 | 679,198 | | Total comprehensive income for the period | (22,096) | | **Total equity as at June 30, 2019** | **657,102** | [Condensed Consolidated Statement of Cash Flows](index=17&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement reports the cash generated and used by the Group from operating, investing, and financing activities [Summary of Cash Flows](index=17&type=section&id=Summary%20of%20Cash%20Flows) For the six months ended June 30, 2019, cash and cash equivalents decreased from **HKD 28.46 million** to **HKD 13.43 million**, with net cash outflow from operating activities of **HKD 26.1 million**, net cash inflow from investing activities of **HKD 22.62 million** (due to subsidiary disposal), and net cash outflow from financing activities of **HKD 13.76 million** Summary of Cash Flows (For the six months ended June 30, HK$'000) | Item | 2019 (Unaudited) | 2018 (Unaudited) | | :--- | :--- | :--- | | Net cash from operating activities | (26,104) | (113,505) | | Net cash from investing activities | 22,616 | (333,862) | | Net cash from financing activities | (13,762) | 402,084 | | Net decrease in cash and cash equivalents | (17,250) | (45,283) | | Cash and cash equivalents at beginning of period | 28,464 | 108,131 | | **Cash and cash equivalents at end of period** | **13,426** | **63,496** | [Notes to the Condensed Consolidated Interim Financial Statements](index=18&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated interim financial statements [Note 2: Adoption of New or Revised HKFRSs](index=20&type=section&id=2.%20ADOPTION%20OF%20NEW%20OR%20REVISED%20HKFRSs) Effective January 1, 2019, the Group adopted HKFRS 16 Leases using the modified retrospective approach, resulting in the recognition of new right-of-use assets and lease liabilities, and a **HKD 43.04 million** negative adjustment to opening equity primarily due to impairment of right-of-use assets in the early childhood education segment - The Group first adopted HKFRS 16 effective January 1, 2019, using the modified retrospective approach without restating comparative information[81](index=81&type=chunk) Summary of HKFRS 16 Transition Impact (HK$'000) | Item | Impact Amount | | :--- | :--- | | Operating lease commitments (Dec 31, 2018) | 5,177 | | Adjusted lease liabilities (Jan 1, 2019) | 46,742 | | Right-of-use assets recognized | 4,029 | | Impact on net assets | (43,040) | - The Group recognized an impairment loss of **HKD 43,040,000** on right-of-use assets related to the early childhood education services segment, adjusted to equity as of January 1, 2019, due to the cash-generating unit's recoverable amount being close to zero[110](index=110&type=chunk)[111](index=111&type=chunk) [Note 3: Revenue and Segment Information](index=31&type=section&id=3.%20REVENUE%20AND%20SEGMENT%20INFORMATION) The Group operates five reportable segments: electronics manufacturing, early childhood education, money lending, property development and management, and regulated financial services, with total H1 2019 revenue of **HKD 144 million**, primarily from electronics (**HKD 120 million**), and the US as the largest market (**HKD 64.32 million**) H1 2019 Segment Revenue and Profit/(Loss) (HK$'000) | Segment | Revenue | Profit/(Loss) | | :--- | :--- | :--- | | Electronics Products | 119,500 | (16,655) | | Early Childhood Education | 3,976 | (1,082) | | Money Lending | 10,969 | 4,496 | | Property Development and Management | 3,639 | (5,494) | | Regulated Financial Services | 5,481 | 435 | | **Total** | **143,565** | **(18,300)** | H1 2019 Revenue by Geographical Location (HK$'000) | Region | Revenue | | :--- | :--- | | United States | 64,320 | | Mainland China | 39,981 | | United Kingdom | 18,990 | | Hong Kong | 16,451 | | Europe | 3,738 | | Others | 85 | | **Total** | **143,565** | [Note 19: Interest-Bearing Borrowings](index=49&type=section&id=19.%20INTEREST-BEARING%20BORROWINGS) As of June 30, 2019, the Group's total interest-bearing borrowings were **HKD 436 million**, with **HKD 287 million** due within one year, primarily comprising term loans and bonds payable, including **HKD 280 million** in 8% bonds maturing in December 2019 Composition of Interest-Bearing Borrowings (HK$'000) | Item | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Current borrowings | 286,565 | 286,565 | | Non-current borrowings | 149,421 | 152,704 | | **Total** | **435,986** | **439,269** | - Bonds with a principal amount of **HKD 280 million** will mature in December 2019, carrying an **8%** annual interest rate, and are secured by equity in four of the Group's subsidiaries[204](index=204&type=chunk) [Note 22: Disposal of Subsidiaries](index=55&type=section&id=22.%20DISPOSAL%20OF%20SUBSIDIARIES) On May 30, 2019, the Group completed the disposal of its baby monitor business subsidiary, Alford, to an independent third party for **HKD 59 million**, resulting in a **HKD 13.39 million** gain on disposal and **HKD 31.92 million** net cash inflow Summary of Alford Group Disposal Transaction (HK$'000) | Item | Amount | | :--- | :--- | | Consideration | 59,000 | | Net assets disposed of | (45,607) | | **Gain on disposal** | **13,393** | | Cash consideration | 59,000 | | Cash and cash equivalents disposed of | (27,085) | | **Net cash inflow from disposal** | **31,915** | [Other Information](index=61&type=section&id=Other%20Information) This section provides additional disclosures on corporate governance, share options, and directors' and substantial shareholders' interests [Directors' and Substantial Shareholders' Interests](index=61&type=section&id=DIRECTORS'%20AND%20SUBSTANTIAL%20SHAREHOLDERS'%20INTERESTS) As of June 30, 2019, Executive Directors Ms. Yeung So Lai and Mr. Li Chi Shing, through Super Fame Holdings Limited, collectively held **1,152,731,997 shares**, representing **56.71%** of the issued share capital, making them controlling shareholders - Executive Directors Ms. Yeung (55% stake) and Mr. Li (45% stake) jointly hold **56.71%** of the company's shares through Super Fame Holdings Limited[254](index=254&type=chunk)[257](index=257&type=chunk) [Share Option](index=65&type=section&id=SHARE%20OPTION) A new share option scheme was adopted on June 6, 2017, valid until June 5, 2027, with no share options granted under the scheme as of June 30, 2019 - As of June 30, 2019, no share options were granted under the company's existing share option scheme[271](index=271&type=chunk)[289](index=289&type=chunk) [Corporate Governance Code](index=68&type=section&id=CORPORATE%20GOVERNANCE%20CODE) During the reporting period, the company largely complied with the Corporate Governance Code, with two deviations: the roles of Chairman and Chief Executive were not separated, and two independent non-executive directors were absent from the 2019 AGM - The company did not have a Chief Executive Officer, and the roles of Chairman and Chief Executive were not separated, deviating from Code Provision A.2.1 of the Corporate Governance Code[295](index=295&type=chunk) - Two independent non-executive directors were unable to attend the Annual General Meeting on May 30, 2019, deviating from Code Provision A.6.7 of the Corporate Governance Code[296](index=296&type=chunk)

Financial Performance - Revenue for the year ended December 31, 2018, was HK$237,525,000, representing an increase of 15% compared to HK$206,526,000 in 2017[9] - Gross profit for 2018 was HK$42,069,000, up from HK$20,019,000 in 2017, indicating a significant improvement in profitability[9] - The company reported a loss before tax of HK$193,173,000 for 2018, compared to a profit of HK$79,048,000 in 2017, reflecting challenges faced during the year[9] - The net loss attributable to owners of the company for 2018 was HK$174,334,000, compared to a profit of HK$69,324,000 in 2017[9] - The company’s equity attributable to owners decreased to HK$717,640,000 in 2018 from HK$921,224,000 in 2017, reflecting the impact of the losses incurred[12] - The gross profit rose by approximately HK$22,050,000, reflecting an increase of approximately 110.15%, from HK$20,019,000 in 2017 to HK$42,069,000 in 2018[28] - The gross profit margin improved by approximately 8.02%, increasing from 9.69% in 2017 to 17.71% in 2018[28] Assets and Liabilities - Total assets increased to HK$1,485,203,000 in 2018 from HK$1,257,549,000 in 2017, showing a growth of approximately 18%[12] - Total liabilities rose to HK$762,965,000 in 2018, up from HK$326,203,000 in 2017, indicating a significant increase in financial obligations[12] - As of December 31, 2018, the Group's total interest-bearing borrowings amounted to approximately HK$439,269,000, a significant increase from HK$3,021,000 in 2017[66] - The Group's total assets to total bank and other borrowings ratio was 29.58% as of December 31, 2018, compared to 0.24% in 2017[66] - The Group's cash and cash equivalents decreased to approximately HK$28,464,000 in 2018 from HK$108,131,000 in 2017[62] - The net asset value of the Group as of December 31, 2018, was HK$722,238,000, down from HK$931,346,000 in 2017[67] - The liquidity ratio of the Group was 1.49 as of December 31, 2018, compared to 4.47 in 2017[67] Business Segments - The company is engaged in manufacturing electronics products and providing financial services, which were impacted by the Sino-US trade war[15] - The manufacturing segment for electronics products generated approximately HK$198,628,000 in revenue, a decrease of 0.89% compared to 2017[37] - Revenue from the manufacturing of baby monitors and semi-products decreased by 13.05% to approximately HK$174,238,000[37] - The provision of nursery education services contributed approximately HK$8,910,000 to revenue, representing a 71.74% increase compared to HK$5,188,000 in 2017[41] - The provision of money lending services generated approximately HK$16,625,000 in revenue, a significant increase of 1,679.99% from HK$934,000 in 2017[43] - The revenue from regulated financial services amounted to approximately HK$12,221,000, with no revenue reported in 2017[50] - The Group plans to reduce reliance on the US market for baby monitors and semi-products while increasing focus on transformer manufacturing in the PRC market[52] - The Group's new factory in Zhaoqing is expected to significantly increase transformer production capacity, enhancing business prospects[52] Regulatory and Market Conditions - The Sino-US trade war has negatively affected financial markets and consumer confidence, although signs of easing were noted by the end of 2018[16] - The nursery education business faced restrictions due to new regulations, leading to a suspension of expansion plans and a revised cash flow projection indicating negative cash flows[20] - The nursery education business expansion plan has been suspended due to new government regulations aimed at controlling tuition fees[55] - The impairment of assets was primarily related to the nursery education business, with management recognizing minimal commercial value for the license and goodwill[20] Corporate Governance and Management - The Company adopted a Dividend Policy on January 21, 2019, to enhance transparency and guide future dividend declarations based on financial results and other factors[91] - The Company does not have a pre-determined dividend distribution ratio, and the declaration of dividends is at the Board's discretion[95] - The Company has adopted all code provisions in the Corporate Governance Code as set out in Appendix 14 of the Listing Rules[197] - The roles of chairman and CEO are not performed by the same individual, as the Company does not currently have a CEO[198] - The Board comprises five Directors, including two executive Directors and three independent non-executive Directors[200] - The Company is committed to maintaining high standards of corporate governance practices to enhance corporate performance and accountability[196] Employee and Social Responsibility - The Group's total staff costs for 2018 were approximately HK$52,690,000, an increase from approximately HK$46,284,000 in 2017[72] - As of December 31, 2018, the group had approximately 600 employees, an increase from about 500 employees in 2017, with most based in China[74] - Total employee costs for 2018 amounted to approximately HKD 52,690,000, up from HKD 46,284,000 in 2017, reflecting a year-on-year increase of about 9.7%[74] - The company is committed to social responsibility, aiming to positively impact employees, business partners, local communities, and the environment[23] Financing Activities - The Company raised approximately HK$338.8 million through an open offer to acquire the entire equity interest in Shenzhen City Qianhai Wanke Financial Services Company Limited[105] - The net proceeds from the open offer, after expenses, are estimated to be approximately HK$336.4 million, fully allocated for the acquisition of Qianhai Wanke[106] - On December 29, 2017, the Company issued bonds amounting to HK$300 million with an interest rate of 8% per annum, maturing on December 28, 2019[108] - The proceeds from the bonds are intended to support the money lending operation, capital expenditures for nursery education development, and general working capital[108] - The first interest payment on the bonds was made on March 20, 2018[108] - The company received the bond proceeds on January 2, 2018, to support its bond issuance business and capital expenditures for early childhood education[109] Shareholder Information - As of December 31, 2018, Ms. Yeung So Lai and Mr. Lee Chi Shing Caesar each held 1,152,731,997 shares, representing 56.71% of the total shares in issue, which amounted to 2,032,571,385 shares[126] - The Company maintained a public float of not less than 25% of its issued shares as required under the Listing Rules[142] - Sales to the largest customer accounted for 41.36% of total revenues, while sales to the five largest customers accounted for 69.54%[155] - Purchases from the largest supplier accounted for 15.16% of total purchases, and purchases from the five largest suppliers accounted for 51.20%[155]