香港交易及結算所有限公司及香港聯合交易所有限公司對本公佈之內容概不負責，對 其準確性或完整性亦不發表任何聲明，並明確表示概不就因本公佈全部或任何部分內 容而產生，或因依賴該等內容而引致之任何損失承擔任何責任。 SUNWAH KINGSWAY CAPITAL HOLDINGS LIMITED 新 華 滙 富 金 融 控 股 有 限 公 司 （於百慕達註冊成立之有限公司） （股份代號：00188） 截 至 二 零 二 三 年 六 月 三 十 日 止 年 度 ...

Financial Performance - Total revenue for the six months ended December 31, 2022, was HKD 18,855,000, a decrease of 50.5% compared to HKD 38,012,000 for the same period in 2021[10]. - The company reported a loss before tax of HKD 46,350,000, compared to a loss of HKD 24,509,000 in the previous year, representing an increase in losses of 89.1%[10]. - Basic and diluted loss per share was HKD 6.30, compared to HKD 3.65 in the prior year, indicating a 72.9% increase in loss per share[10]. - The company recorded a net loss of HKD 67,064,000 for the period, compared to a net loss of HKD 22,046,000 in the previous year, marking an increase in total comprehensive loss of 204.5%[13]. - The company reported a total comprehensive loss of HKD 66,720,000 for the period ending December 31, 2022, compared to a loss of HKD 21,807,000 for the same period in 2021, indicating a significant increase in losses[17]. - The cash flow from operating activities showed a net outflow of HKD 20,547,000 for the six months ending December 31, 2022, a decline from a net inflow of HKD 96,321,000 in the previous year[20]. - The group recorded a post-tax loss of HKD 46 million in the first half of the 2023 fiscal year, compared to a loss of HKD 26 million in the same period of 2022[94]. - Total comprehensive expenses for the first half of the 2023 fiscal year amounted to HKD 66 million, up from HKD 22 million in the first half of 2022[94]. Asset and Liability Management - Non-current assets decreased from HKD 587,537,000 as of June 30, 2022, to HKD 513,002,000 as of December 31, 2022, a decline of 12.6%[15]. - Total assets decreased from HKD 1,078,165,000 to HKD 977,659,000, reflecting a reduction of 9.3%[15]. - The company’s total equity attributable to shareholders decreased to HKD 835,981,000 as of December 31, 2022, from HKD 963,086,000 at the end of 2021[17]. - The company’s total reserves decreased to HKD 762,942,000 as of December 31, 2022, down from HKD 891,141,000 at the end of 2021[18]. - The company reported a decrease in bank balances and cash, which amounted to HKD 177,254,000, down from HKD 199,346,000 in the previous year[20]. - The company’s total other payables and accrued liabilities amounted to HKD 478,111,000 as of December 31, 2022, down from HKD 591,509,000 on June 30, 2022, a decrease of approximately 19.2%[65]. - The total amount of secured borrowings was approximately HKD 66 million, funding the group's investment portfolio[108]. Revenue Sources - Commission and fee income from brokerage services decreased to HKD 3,649,000, down 66.2% from HKD 10,802,000 year-on-year[34]. - Corporate finance income dropped to HKD 2,485,000, a decline of 82.3% compared to HKD 14,020,000 in the previous year[34]. - Interest income from bank deposits increased significantly to HKD 3,981,000, up from HKD 297,000, marking a growth of 1,239.4%[34]. - The total income from contract customers was HKD 8,145,000, with significant contributions from brokerage services and corporate finance[37]. - The brokerage and lending department's total revenue decreased to HKD 12 million in the first half of 2023 from HKD 20 million in the same period of 2022[97]. - The corporate finance and capital markets department's total revenue fell to HKD 3 million in the first half of 2023 from HKD 14 million in the same period of 2022[98]. - The asset management department's total revenue was HKD 2 million in the first half of 2023, down from HKD 3 million in the same period of 2022[99]. Investments and Future Plans - The company plans to continue focusing on its core values to drive future business growth[5]. - The company has committed to invest RMB 330 million in a joint venture in Chongqing, China, which will focus on regulated securities brokerage and asset management services[74]. - The company is actively pursuing market expansion in Southeast Asia, with plans to open three new offices by the end of the fiscal year[139]. - The firm has introduced a new asset management product, which has already attracted HKD 300 million in investments within the first month of launch[139]. - The company is exploring the promotion of investment funds focused on Vietnam to generate additional revenue[99]. Market Conditions and Economic Impact - The average monthly total turnover on the main board and GEM decreased by 23% to HKD 235.6 billion in the first half of the fiscal year 2023, down from HKD 306.9 billion in the same period of fiscal year 2022[93]. - The local GDP in Hong Kong contracted by 4.2% year-on-year in Q4 2022, following a 4.6% decline in Q3 2022[93]. - The geopolitical tensions between the US and China remain a concern, impacting market conditions[105]. Corporate Governance and Compliance - The company has adopted the corporate governance code as per the Stock Exchange Listing Rules and confirmed compliance during the review period[122][128]. - The audit committee reviewed the financial reporting and risk management systems, ensuring compliance with accounting principles[130]. - The independent review report confirmed that the interim financial information complies with Hong Kong Accounting Standards[134].

Financial Performance - The company recorded a post-tax loss of HKD 79 million for the fiscal year 2022, compared to a post-tax profit of HKD 31 million in the fiscal year 2021[13]. - Total comprehensive expenses amounted to HKD 72 million in fiscal year 2022, while total comprehensive income was HKD 29 million in fiscal year 2021[13]. - The company confirmed a revaluation surplus (after tax) of HKD 8 million in fiscal year 2022, compared to a loss of HKD 7 million in fiscal year 2021[13]. - Commission and fee income for the financial intermediary business in FY2022 was HKD 45 million, down from HKD 61 million in FY2021[14]. - Interest income in FY2022 was HKD 18 million, compared to HKD 23 million in FY2021[14]. - The net loss from financial assets and liabilities at fair value through profit or loss in FY2022 was HKD 23 million, a significant decline from a net gain of HKD 87 million in FY2021[14]. - General and administrative expenses decreased by HKD 27 million to HKD 79 million in FY2022, down from HKD 106 million in FY2021[14]. - The total revenue for the brokerage and lending segment in FY2022 was HKD 36 million, down from HKD 54 million in FY2021[19]. - The total revenue for the corporate finance and capital markets segment in FY2022 was HKD 24 million, compared to HKD 28 million in FY2021[22]. - The asset management segment reported total revenue of HKD 4 million in FY2022, an increase from HKD 1 million in FY2021[23]. - The total revenue for the property investment segment in the fiscal year 2022 was HKD 4 million, with a revaluation loss of HKD 4 million compared to a loss of HKD 5 million in fiscal year 2021[26]. - The self-investment segment reported total revenue of HKD 6 million in fiscal year 2022, up from HKD 5 million in fiscal year 2021, but incurred a net loss of HKD 16 million compared to a profit of HKD 92 million in the previous year[27]. Market Conditions - The Hang Seng Index fell by 24% during the fiscal year 2022, contrasting with an 18% increase in the previous fiscal year[9]. - The average daily turnover in the stock market for FY2022 was HKD 141 billion, a 14% decrease from HKD 165 billion in FY2021[19]. - The number of new listings in FY2022 dropped by 40% to 77 companies, compared to 128 companies in FY2021[15]. Strategic Initiatives - The company plans to launch a new boutique fund in September 2022, focusing on asset management services[8]. - The company is adjusting its holding periods and investment portfolios in response to challenging market conditions, including credit tightening in mainland China[9]. - The company aims to adopt a more defensive strategy in its proprietary business until there are clear signs of market recovery[10]. - The company is focusing on asset management within its intermediary business due to ongoing challenges in the brokerage and related services[10]. Human Resources - The company has experienced a reduction in employee numbers, but the core team remains stable[11]. - The number of full-time employees decreased to 79 as of June 30, 2022, down from 95 in the previous year[32]. Financial Position - Total assets as of June 30, 2022, amounted to HKD 1.666 billion, with approximately 65% being liquid assets[30]. - The company had cash and cash equivalents of HKD 163 million as of June 30, 2022, primarily denominated in HKD[30]. - The total amount of secured borrowings was approximately HKD 105 million, used to finance the investment portfolio[30]. - The cumulative provision for expected credit losses in the loan portfolio as of June 30, 2022, was HKD 66 million, up from HKD 41 million as of June 30, 2021[20]. - The company maintains a capital debt ratio of approximately 12% as of June 30, 2022[30]. Corporate Governance - The board consists of seven directors, including the chairman and the CEO, with a clear division of responsibilities between the board and management[39]. - The board held five meetings during the year, addressing key matters such as approving interim and final results, assessing business performance, and considering major transactions[45]. - The company has adopted a standard code for securities trading by directors, ensuring compliance with regulations throughout the review year[38]. - The board is responsible for long-term strategy formulation and oversight, dividend declaration, and ensuring good corporate governance and compliance with regulations[41]. - All independent non-executive directors have confirmed their independence in accordance with listing rules, ensuring compliance with governance standards[45]. - The company provides ongoing professional training to directors and licensed staff, ensuring they are updated on regulatory changes and corporate governance practices[48]. - The company emphasizes good corporate governance practices, with all committees comprising independent non-executive directors[59]. - The company aims to ensure that no director participates in determining their own remuneration, maintaining fairness in compensation practices[63]. - The company has adopted a nomination policy outlining the criteria and procedures for appointing or reappointing directors, considering factors such as experience, integrity, and time commitment[68]. - The board has achieved appropriate diversity in terms of age, gender, education, and professional experience, with no significant changes recommended for the board composition[69]. Risk Management - The company has a strong focus on risk management and internal control systems, ensuring effective oversight of management performance[41]. - The board is responsible for evaluating and determining the nature and extent of risks acceptable to the group in achieving strategic objectives[77]. - The company has established various committees, including the Investment Committee and Risk Management Committee, to identify, assess, and manage risks[84]. - The Risk Management Committee monitors the group's proprietary trading activities and investment policies according to parameters set by the board[87]. - The Credit Committee is responsible for establishing credit approval procedures for the group's brokerage clients and assessing credit risks[89]. - The Financial Committee aims to minimize credit risks arising from the group's general lending activities and to develop internal policies for loan assessment and approval[91]. - The ESG Committee was formed to oversee the development and implementation of environmental, social, and governance strategies and policies[93]. - The group faces significant operational risks, including market risks influenced by interest rates and global investment conditions[95]. - Credit risk arises from various areas, including counterparty defaults during settlement processes[97]. - The group is exposed to foreign exchange risks primarily from proprietary investments, affected by macroeconomic performance and capital movements[101]. - New regulations introduced by exchanges and regulatory bodies may adversely impact the company's operating performance[102]. - The group has implemented security control procedures to mitigate cybersecurity threats, although it cannot guarantee that such threats will not significantly impact business and financial performance[103]. Audit and Compliance - The internal audit function is executed by the Legal and Compliance Department, reporting directly to the CEO and Chairman, with no restrictions on auditing the group's business activities[104]. - The company has established internal procedures for handling and disclosing insider information, ensuring confidentiality and compliance with securities regulations[106]. - The independent auditor, Ernst & Young, has been appointed to audit the financial statements for the year ending June 30, 2022[183]. - The audit identified the assessment of impairment for receivables as a key audit matter due to the significant estimates involved[191]. - The audit procedures included evaluating the appropriateness of the valuation methods used for Level 3 securities and assessing the reasonableness of the valuation results[198]. - The audit opinion does not cover other information and no assurance is provided on that information[200]. - If significant misstatements are identified in other information, the company is required to report that fact[200]. - No significant misstatements were reported in the audit process[200]. Shareholder Communication - The company emphasizes the importance of maintaining good communication with shareholders, utilizing various formal channels for timely information dissemination[108]. - The company has a website that provides updates on business progress and regulatory announcements, enhancing shareholder communication[109]. - The company encourages direct communication with shareholders for any inquiries regarding the board[118]. - Shareholders holding at least 10% of the voting rights can request the board to convene a special general meeting within two months of the request date[113]. - The company must notify shareholders of any proposed resolutions at the annual general meeting if requested by shareholders holding at least 5% of the voting rights[114]. - The company has a structured approach to shareholder meetings, requiring requests for resolutions to be submitted at least six weeks prior to the meeting[117]. - The company maintains a focus on corporate governance and encourages shareholder participation in decision-making processes[118]. Dividends and Reserves - The interim dividend of HKD 0.01 per ordinary share was paid on March 31, 2022, with a proposed final dividend of HKD 0.01 per ordinary share subject to shareholder approval at the upcoming annual general meeting[142]. - As of June 30, 2022, the distributable reserves available for shareholders amounted to HKD 600,453,000, a decrease from HKD 611,245,000 in 2021[150]. - The company has adopted a dividend policy aimed at allowing shareholders to share in profits while retaining sufficient reserves for future development[112]. Share Capital and Ownership - The total number of shares available for issuance under the share option plan is 71,945,286, representing 9.85% of the total issued share capital[154]. - The maximum number of shares that can be granted to any participant under the plan is capped at 1% of the issued shares within any twelve-month period[154]. - Dr. Cai Guanshen holds a total of 215,987,808 shares, representing 29.57% of the issued shares, while Mr. Cai Guanming holds 40,380,951 shares, representing 5.53%[162]. - The company has a total of 215,987,808 shares issued, with Dr. Cai Guanshen holding 56.13% directly[167]. - World Developments Limited and Sunwah International Limited each hold 25.42% of the company's shares, indicating significant overlapping interests[167]. - The company did not repurchase or sell any of its own shares during the year[171]. - Publicly held shares exceed 25% of the total issued shares, ensuring sufficient public float[176]. Corporate Social Responsibility - The group emphasizes corporate social responsibility and environmental protection, with detailed disclosures in the ESG report[178].

Financial Performance - Total revenue for the six months ended December 31, 2021, was HKD 38,012,000, a decrease of 7.5% from HKD 41,730,000 in the same period of 2020[7]. - The company reported a net loss of HKD 26,475,000 for the period, compared to a profit of HKD 1,597,000 in the previous year, indicating a significant decline in performance[10]. - Basic and diluted loss per share was HKD 3.65, compared to earnings of HKD 0.3 per share in the prior year[7]. - Commission and fee income decreased to HKD 27,539,000, down 1.8% from HKD 28,054,000 year-on-year[7]. - Interest income from financial assets at amortized cost was HKD 6,617,000, a decline of 36.5% from HKD 10,438,000 in the previous year[7]. - The company experienced a net loss of HKD 12,683,000 from impairment losses on financial instruments, compared to a loss of HKD 11,248,000 in the previous year[7]. - Other income and gains decreased significantly to HKD 310,000 from HKD 3,356,000, reflecting a challenging operating environment[7]. - The company reported a decrease in general and administrative expenses to HKD 43,687,000, down from HKD 51,166,000 in the previous year, indicating cost control efforts[7]. - The fair value change of investment properties resulted in a loss of HKD 305,000, compared to a gain of HKD 159,000 in the previous year[7]. Assets and Liabilities - Total assets decreased from HKD 1,416,215,000 to HKD 1,303,987,000, a decline of approximately 7.9%[12]. - Non-current assets slightly decreased from HKD 558,614,000 to HKD 541,561,000, a reduction of about 3.1%[12]. - Current assets decreased from HKD 857,601,000 to HKD 762,426,000, representing a decline of approximately 11.1%[12]. - Cash and cash equivalents increased from HKD 168,610,000 to HKD 199,346,000, an increase of about 18.2%[12]. - Total liabilities decreased from HKD 947,126,000 to HKD 850,628,000, a reduction of approximately 10.2%[12]. - Net assets decreased from HKD 996,957,000 to HKD 964,322,000, a decline of about 3.3%[12]. - Shareholders' equity attributable to the company decreased from HKD 995,685,000 to HKD 963,086,000, a reduction of approximately 3.3%[12]. - The company reported a decrease in receivables from HKD 332,533,000 to HKD 307,907,000, a decline of about 7.4%[12]. - The company’s investment properties remained stable at HKD 82,269,000 compared to HKD 82,574,000[12]. - The company’s goodwill remained unchanged at HKD 1,149,000[12]. Cash Flow - The net cash generated from operating activities was HKD 96,321,000 for the six months ended December 31, 2021, compared to a cash used of HKD 69,090,000 in the same period of 2020[19]. - The cash and cash equivalents increased by HKD 26,694,000, reaching HKD 195,617,000 as of December 31, 2021, compared to HKD 168,610,000 at the beginning of the period[19]. - The group reported a decrease in operating cash flow before changes in working capital of HKD 13,271,000 for the six months ended December 31, 2021, compared to an increase of HKD 11,925,000 in the same period of 2020[19]. - The group experienced a decrease in accounts payable and other payables amounting to HKD 32,419,000 for the six months ended December 31, 2021, compared to a decrease of HKD 152,203,000 in the same period of 2020[19]. - The group recorded a financial asset fair value adjustment increase of HKD 25,187,000 for the six months ended December 31, 2021, compared to a decrease of HKD 19,806,000 in the same period of 2020[19]. - The group had a total bank borrowings of HKD 3,111,973,000, with repayments amounting to HKD 175,000,000 during the financing activities[19]. - The group reported a net cash used in financing activities of HKD 69,627,000 for the six months ended December 31, 2021, compared to cash generated of HKD 51,494,000 in the same period of 2020[19]. Revenue Segments - Total revenue from contract customers for the six months ended December 31, 2021, was HKD 27,539,000, a decrease of 1.8% from HKD 28,054,000 in the same period of 2020[42]. - Commission and fee income from brokerage services was HKD 10,802,000, down 26.5% from HKD 14,595,000 year-on-year[43]. - Corporate finance revenue increased significantly to HKD 14,020,000, up 50.5% from HKD 9,327,000 in the previous year[43]. - Asset management revenue rose to HKD 23,000, compared to HKD 15,000 in the same period last year, marking a 53.3% increase[43]. - Interest income from margin and cash clients decreased to HKD 666,000 from HKD 3,329,000, a decline of 80%[35]. - Total income from debt securities was HKD 628,000, down from HKD 869,000, reflecting a decrease of 27.7%[35]. - The total income from other services was HKD 2,694,000, slightly up from HKD 2,648,000, indicating a growth of 1.7%[43]. Future Plans and Strategies - The company aims to leverage its core values to drive future business growth despite the current financial challenges[3]. - The company plans to expand its market presence and enhance its product offerings in the upcoming quarters[46]. - The company is exploring the promotion of investment funds focused on Vietnam and plans to establish a new small investment fund in Hong Kong[118]. - The group is in the process of establishing a joint venture in Chongqing, China, with an investment of RMB 330 million, representing a 22% equity stake[91]. - The group is seeking investment opportunities in the Hong Kong real estate market through a project company in which it holds a 30% stake, with a maximum capital commitment of HKD 45 million[124]. Shareholder Information - The company declared an interim dividend of HKD 0.01 per share, totaling HKD 7,304,000, compared to HKD 10,792,000 for the previous year[59]. - Dr. Cai Guanshen holds a personal interest of 186,648,139 ordinary shares, representing 25.94% of the total issued shares, and a corporate interest of 215,987,808 shares, representing 30.02%[136]. - Major shareholders include Dr. Cai Guanshen with a total interest of 55.96% and World Developments Limited holding 25.81%[140]. - The board declared an interim dividend of HKD 0.01 per ordinary share for the six months ended December 31, 2021, compared to HKD 0.015 for the same period in 2020[134]. Corporate Governance - The company has complied with the corporate governance code as per the Stock Exchange's listing rules during the reporting period[142]. - The company has adopted the standard code of conduct as per the listing rules and confirmed compliance by all directors during the review period[148]. - The Audit Committee has reviewed the accounting principles and practices adopted by the group, including the interim report for the six months ended December 31, 2021[151]. - The interim financial data includes the consolidated financial position and related income statement for the six months ended December 31, 2021[155]. - The company has not identified any matters that would lead to a belief that the interim financial data is not prepared in accordance with Hong Kong Accounting Standard 34[157].

SUNWAH KINGSWAY 新華滙富 Sunwah Kingsway Capital Holdings Limited 新 華 滙 富 金 融 控 股 有 限 公 司 於 百 慕 達 註 冊 成 立 之 有 限 公 司 股份代號：00188 凝聚實力 推動增長 rears 商界展關懷 aringcompany ons Council of Souncil of Souncil of Souncil of Souncil of Souncil of Souncil of Souncil of Souncil of Seation Council of Series Mi 度報 穩固的業務平台 新華滙富一向專注所長，力臻至善。新華滙富矢志成為香港最佳的 本地金融服務供應商，以熱誠及誠信為本地及國際客戶創建價值。 | --- | --- | --- | --- | --- | --- | --- | |---------------------|------------------------|-----------------------------|---------------------|------- ...

Company Information [Company Information Overview](index=3&type=section&id=Company%20Information%20Overview) This section outlines the basic information of Sunwah Kingsway Financial Holdings Limited, including board members, legal advisors, auditors, registered and principal offices, and principal bankers - The company's Chairman is **Dr. Jonathan Choi Koon Shum**, and the Chief Executive Officer is **Mr. Choi Koon Ming**[8](index=8&type=chunk) - The auditor is **Ernst & Young**[8](index=8&type=chunk) - The Hong Kong share registrar is **Hong Kong Central Share Registrar Limited**[8](index=8&type=chunk) Condensed Consolidated Statement of Profit or Loss [Financial Performance Overview](index=4&type=section&id=Financial%20Performance%20Overview) During the reporting period, the company turned a loss of HKD 13,252 thousand in the prior year to a profit of HKD 1,597 thousand, primarily due to a significant increase in net gains from financial assets and liabilities at fair value through profit or loss Profit / (Loss) for the Period | Indicator | 2020 (HKD '000) | 2019 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Profit / (Loss) for the period | 1,597 | (13,252) | Turned loss to profit | | Attributable to owners of the Company | 1,959 | (13,253) | Turned loss to profit | | Non-controlling interests | (362) | 1 | Decreased | Major Revenue and Gains Changes | Indicator | 2020 (HKD '000) | 2019 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Total revenue | 41,730 | 48,206 | Decreased 13.3% | | Commission and fee income | 28,054 | 29,315 | Decreased 4.3% | | Interest income from financial assets at amortized cost | 10,438 | 14,817 | Decreased 29.5% | | Net gains from financial assets and liabilities at fair value through profit or loss | 27,169 | 8,201 | Increased 231.3% | Major Expense Changes | Indicator | 2020 (HKD '000) | 2019 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | General and administrative expenses | (51,166) | (58,346) | Decreased 12.3% | | Net impairment losses on financial instruments | (11,248) | (6,229) | Increased 80.6% | - Basic and diluted earnings / (loss) per share changed from **(1.9) HK cents in 2019 to 0.3 HK cents in 2020**[10](index=10&type=chunk) Condensed Consolidated Statement of Comprehensive Income [Comprehensive Income Overview](index=5&type=section&id=Comprehensive%20Income%20Overview) During the reporting period, the company's total comprehensive expense significantly decreased, mainly due to a lower revaluation deficit on land and buildings held for own use and a reversal from loss to gain in exchange differences arising from translation of financial statements of overseas subsidiaries Total Comprehensive Expense for the Period | Indicator | 2020 (HKD '000) | 2019 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Total comprehensive expense for the period | (15,110) | (33,747) | Decreased 55.2% | | Attributable to owners of the Company | (14,748) | (33,748) | Decreased 56.3% | - Revaluation deficit on land and buildings held for own use (net of income tax effect) decreased from **(HKD 19,657 thousand) in 2019 to (HKD 20,390 thousand) in 2020**[13](index=13&type=chunk) - Exchange differences arising from translation of financial statements of overseas subsidiaries changed from a **(HKD 838 thousand) loss in 2019 to a HKD 3,683 thousand gain in 2020**[13](index=13&type=chunk) Condensed Consolidated Statement of Financial Position [Assets and Liabilities Overview](index=6&type=section&id=Assets%20and%20Liabilities%20Overview) As of December 31, 2020, the company's total assets and total equity slightly decreased, but net current assets increased, with reductions in property and equipment and loans receivable, and a significant decrease in trade and other payables Assets and Liabilities Overview | Indicator | December 31, 2020 (HKD '000) | June 30, 2020 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Total assets | 1,882,285 | 1,996,113 | Decreased 5.7% | | Net assets | 961,274 | 981,236 | Decreased 2.0% | | Net current assets | 462,099 | 457,067 | Increased 1.1% | Non-Current Assets Changes | Indicator | December 31, 2020 (HKD '000) | June 30, 2020 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Property and equipment | 337,281 | 367,765 | Decreased 8.3% | | Loans receivable | 12,410 | 14,989 | Decreased 17.2% | Current Liabilities Changes | Indicator | December 31, 2020 (HKD '000) | June 30, 2020 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Accruals, trade and other payables | 741,831 | 883,615 | Decreased 16.0% | | Bank loans | 110,000 | 60,000 | Increased 83.3% | Condensed Consolidated Statement of Changes in Equity [Equity Changes Overview](index=7&type=section&id=Equity%20Changes%20Overview) During the reporting period, the company's total equity slightly decreased, mainly affected by property revaluation deficit and dividends payable, while retained profits slightly reduced, and non-controlling interests turned from negative to positive Total Equity Changes | Indicator | December 31, 2020 (HKD '000) | July 1, 2020 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Total equity | 961,274 | 981,236 | Decreased 2.0% | | Equity attributable to owners of the Company | 959,563 | 981,439 | Decreased 2.2% | | Non-controlling interests | 1,711 | (203) | Turned from negative to positive | - Retained profits decreased from **HKD 246,656 thousand on July 1, 2020, to HKD 241,487 thousand on December 31, 2020**, primarily due to dividends payable[18](index=18&type=chunk) - Property revaluation reserve decreased by **HKD 20,390 thousand** due to revaluation deficit[18](index=18&type=chunk) - Exchange reserve increased by **HKD 3,683 thousand** due to exchange differences arising from translation of financial statements of overseas subsidiaries[18](index=18&type=chunk) Condensed Consolidated Statement of Cash Flows [Cash Flow Overview](index=8&type=section&id=Cash%20Flow%20Overview) During the reporting period, net cash used in operating activities increased, cash outflow from investing activities remained stable, while net cash inflow from financing activities significantly grew, mainly due to the drawdown of bank loans Cash Flow Overview | Indicator | 2020 (HKD '000) | 2019 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | (69,090) | (54,227) | Outflow increased 27.4% | | Net cash used in investing activities | (131) | (315) | Outflow decreased 58.5% | | Net cash generated from financing activities | 51,494 | 14,248 | Inflow increased 261.4% | | Net decrease in cash and cash equivalents | (17,727) | (40,294) | Decrease narrowed | - In operating activities, bank balances and cash - trust accounts decreased by **HKD 72,448 thousand**, compared to a decrease of HKD 316,070 thousand in the prior period[21](index=21&type=chunk) - In financing activities, proceeds from bank loans drawn significantly increased from **HKD 50,000 thousand in 2019 to HKD 3,111,973 thousand in 2020**[21](index=21&type=chunk) - Repayment of bank loans significantly increased from **HKD 35,000 thousand in 2019 to HKD 3,061,973 thousand in 2020**[21](index=21&type=chunk) Notes to the Condensed Consolidated Financial Statements [Basis of Preparation](index=9&type=section&id=1%20Basis%20of%20Preparation) The condensed consolidated financial statements are prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants - Prepared in accordance with the Listing Rules of the Stock Exchange of Hong Kong and Hong Kong Accounting Standard 34 issued by the HKICPA[23](index=23&type=chunk) [Significant Accounting Policies](index=9&type=section&id=2%20Significant%20Accounting%20Policies) The financial statements are primarily prepared under the historical cost convention, with certain financial assets/liabilities measured at revalued amounts or fair value; the current period saw the first-time adoption of the "Conceptual Framework for Financial Reporting 2018" and revised HKFRSs, but with no significant impact on financial position and performance - Preparation convention: **historical cost convention**, with certain assets/liabilities measured at revalued amounts or fair value[24](index=24&type=chunk) - First-time adoption of the **"Conceptual Framework for Financial Reporting 2018"** and revised HKFRS 3, 9, 39, 7, 1, and 8 in the current period[25](index=25&type=chunk)[26](index=26&type=chunk) - New standards have **no significant impact** on the Group's financial position and performance[27](index=27&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [Revenue](index=11&type=section&id=3%20Revenue) The Group's main revenue sources include commission and fee income, interest income from financial assets, interest income from debt securities, dividend income, and rental income; commission and fee income slightly decreased this period, but brokerage income from stocks, options, funds, futures, and commodity futures significantly increased - The Group is primarily engaged in **securities investment, securities brokerage and margin financing, provision of financial advisory services, money lending, other securities-related financial services, and investment property rental**[33](index=33&type=chunk) Revenue Sources | Revenue Type | 2020 (HKD '000) | 2019 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Commission and fee income | 28,054 | 29,315 | Decreased 4.3% | | Interest income from financial assets at amortized cost | 10,438 | 14,817 | Decreased 29.5% | | Interest income from debt securities | 869 | 1,944 | Decreased 55.3% | | Dividend income | 881 | 768 | Increased 14.7% | | Rental income | 1,488 | 1,362 | Increased 9.2% | Commission and Fee Income Details | Commission and Fee Type | 2020 (HKD '000) | 2019 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Brokerage for stocks, options, funds, futures and commodity futures | 14,595 | 8,928 | Increased 63.5% | | Corporate finance | 9,327 | 15,747 | Decreased 40.8% | Geographical Market Revenue (2020) | Region | Revenue (HKD '000) | | :--- | :--- | | Hong Kong | 26,849 | | China | 1 | | Other countries | 1,204 | [Net Gains or Losses from Financial Assets and Liabilities at Fair Value Through Profit or Loss](index=13&type=section&id=4%20Net%20Gains%20or%20Losses%20from%20Financial%20Assets%20and%20Liabilities%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) During the reporting period, net gains from financial assets and liabilities at fair value through profit or loss significantly increased, primarily driven by substantial gains from listed equity securities and unlisted investment loans Net Gains Composition | Category | 2020 (HKD '000) | 2019 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Listed equity securities | 20,407 | 6,262 | Increased 225.9% | | Listed debt securities | 445 | (1,935) | Turned loss to gain | | Unlisted investment loans | 5,282 | 1,238 | Increased 326.6% | | Unlisted investment funds | 3,430 | 2,188 | Increased 56.8% | | Total net gains | 27,169 | 8,201 | Increased 231.3% | [Segment Information](index=14&type=section&id=5%20Segment%20Information) The Group's business is divided into six segments: proprietary investments, property investment, brokerage and lending, corporate finance and capital markets, asset management, and others; the proprietary investments segment showed significant performance improvement, while brokerage and lending, and corporate finance and capital markets segments recorded losses Segment Results (2020) | Segment | Segment Revenue (HKD '000) | Segment Results (HKD '000) | | :--- | :--- | :--- | | Proprietary investments | 1,768 | 18,476 | | Property investment | 1,812 | 341 | | Brokerage and lending | 27,547 | (6,637) | | Corporate finance and capital markets | 10,812 | (6,101) | | Asset management | 455 | (1,309) | | Others | 11,842 | (45) | - Net gains from financial assets and liabilities at fair value through profit or loss for the proprietary investments segment amounted to **HKD 27,138 thousand**, which was the main contributor to its performance[42](index=42&type=chunk) - The brokerage and lending segment's commission and fee income was **HKD 16,632 thousand**, and interest income from financial assets at amortized cost was **HKD 10,080 thousand**[42](index=42&type=chunk) Total Assets by Segment (December 31, 2020) | Segment | Total Assets (HKD '000) | | :--- | :--- | | Brokerage and lending | 1,082,670 | | Proprietary investments | 332,273 | | Others | 319,354 | [Profit / (Loss) Before Tax](index=16&type=section&id=6%20Profit%20%2F%20%28Loss%29%20Before%20Tax) During the reporting period, the company's profit before tax was HKD 3,545 thousand, a significant improvement from a loss of HKD 12,278 thousand in the prior year, mainly due to exchange gains and reduced staff costs and depreciation Profit / (Loss) Before Tax | Indicator | 2020 (HKD '000) | 2019 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Profit / (Loss) before tax | 3,545 | (12,278) | Turned loss to profit | Major Cost and Income Items | Item | 2020 (HKD '000) | 2019 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Staff costs | (28,262) | (37,038) | Decreased 23.7% | | Depreciation | (6,419) | (6,897) | Decreased 6.9% | | Exchange gains / (losses) (net) | 3,325 | (679) | Turned loss to gain | [Income Tax in Condensed Consolidated Statement of Profit or Loss](index=16&type=section&id=7%20Income%20Tax%20in%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) During the reporting period, income tax expense increased, mainly due to higher current period tax, but some Hong Kong subsidiaries were exempt from profits tax due to offsetting prior year tax losses Income Tax Expense | Indicator | 2020 (HKD '000) | 2019 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Income tax expense | 1,948 | 974 | Increased 100.0% | - Hong Kong profits tax rate is **16.5%**, and China corporate income tax rate is **25%**[48](index=48&type=chunk) - Some Hong Kong subsidiaries were not subject to Hong Kong profits tax on an estimated assessable profit of **HKD 13.8 million** due to offsetting prior year tax losses[48](index=48&type=chunk) [Dividends](index=17&type=section&id=8%20Dividends) The Board declared an interim dividend of 1.5 HK cents per share, lower than 2 HK cents per share in the prior year Dividends Declared and Paid | Indicator | 2020 (HKD '000) | 2019 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Final dividend for prior year of 1 HK cent per share (after share consolidation) declared and payable during the period | 7,128 | 17,536 | Decreased 59.3% | - After the interim reporting date, the directors declared an interim dividend of **1.5 HK cents per share** (2019: 2 HK cents), totaling **HKD 10,792 thousand** (2019: HKD 14,255 thousand)[50](index=50&type=chunk) [Earnings / (Loss) Per Share](index=17&type=section&id=9%20Earnings%20%2F%20%28Loss%29%20Per%20Share) Basic and diluted earnings per share attributable to owners of the Company turned from a loss of 1.9 HK cents in the prior year to a profit of 0.3 HK cents, mainly due to the period's profit turning positive Basic and Diluted Earnings / (Loss) Per Share | Indicator | 2020 (HK cents) | 2019 (HK cents) | Change | | :--- | :--- | :--- | :--- | | Basic and diluted earnings / (loss) per share | 0.3 | (1.9) | Turned loss to profit | - Profit / (loss) for the period attributable to owners of the Company used for calculation was **HKD 1,959 thousand** (2019: (HKD 13,253) thousand)[51](index=51&type=chunk) - The weighted average number of ordinary shares outstanding used for calculating basic and diluted loss per share has been retrospectively adjusted after the share consolidation[51](index=51&type=chunk) [Property and Equipment](index=18&type=section&id=10%20Property%20and%20Equipment) During the reporting period, the net revaluation deficit on property and equipment was HKD 20,390 thousand, which has been deducted from the property revaluation reserve; property and equipment increased by HKD 131 thousand at period-end - Net revaluation deficit: **HKD 20,390 thousand** (2019: HKD 19,657 thousand), deducted from property revaluation reserve[53](index=53&type=chunk) - Fair value of land and buildings was determined by an independent qualified chartered surveyor, **Winnie Lee & Partners Valuation Advisory Limited**[53](index=53&type=chunk) - Property and equipment increased by **HKD 131 thousand** at period-end (2019: HKD 315 thousand)[54](index=54&type=chunk) [Financial Assets at Fair Value Through Profit or Loss](index=18&type=section&id=11%20Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) As of December 31, 2020, total financial assets at fair value through profit or loss increased to HKD 288,632 thousand, primarily comprising listed equity securities and unlisted investment funds Financial Assets Composition | Category | December 31, 2020 (HKD '000) | June 30, 2020 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Listed equity securities | 145,882 | 128,175 | Increased 13.8% | | Listed debt securities | 35,006 | 48,371 | Decreased 27.6% | | Unlisted investment funds | 74,432 | 65,068 | Increased 14.4% | | Total | 288,632 | 268,826 | Increased 7.4% | - Listed debt securities are scheduled to mature sequentially from **2021 to 2027**[57](index=57&type=chunk) - Fair values of unlisted equity securities and unlisted investment loans are determined by independent valuers or fund managers based on net asset value statements[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk) [Trade and Other Receivables, Loans and Other Receivables](index=20&type=section&id=12%20Trade%20and%20Other%20Receivables%2C%20Loans%20and%20Other%20Receivables) As of December 31, 2020, total trade and other receivables, loans and other receivables amounted to HKD 397,949 thousand, a decrease from mid-year; impairment provisions significantly increased, mainly due to higher expected credit loss provisions for margin clients and loans receivable Total Trade and Other Receivables and Loans | Indicator | December 31, 2020 (HKD '000) | June 30, 2020 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Trade and other receivables, loans and other receivables (net of impairment provision) | 397,949 | 411,692 | Decreased 3.3% | | Total impairment provision | 35,254 | 24,267 | Increased 45.3% | - Impairment losses of **HKD 5,280 thousand** were recognized for margin clients' receivables, and **HKD 4,420 thousand** for loans receivable[67](index=67&type=chunk) - Margin clients' receivables are secured by approximately **HKD 47 million** in securities collateral[62](index=62&type=chunk) - Loans receivable are primarily secured by personal/corporate guarantees and trade receivables, with contracts maturing within one year[65](index=65&type=chunk) [Bank Balances and Cash - Trust Accounts](index=22&type=section&id=13%20Bank%20Balances%20and%20Cash%20-%20Trust%20Accounts) The Group maintains segregated client trust accounts with licensed banks for client funds arising from brokerage activities, which are restricted and regulated by the Securities and Futures (Client Money) Rules - Client funds are deposited in **segregated client accounts** with licensed banks[69](index=69&type=chunk) - Subject to restrictions and regulations under the **Securities and Futures (Client Money) Rules (Cap. 571I of the Laws of Hong Kong)**[69](index=69&type=chunk) [Financial Liabilities at Fair Value Through Profit or Loss](index=22&type=section&id=14%20Financial%20Liabilities%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) As of December 31, 2020, financial liabilities at fair value through profit or loss amounted to HKD 9,355 thousand, primarily from the fair value of listed equity securities from short selling activities Financial Liabilities | Indicator | December 31, 2020 (HKD '000) | June 30, 2020 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Financial liabilities at fair value through profit or loss arising from short selling activities | 9,355 | 8,267 | Increased 13.2% | - Liabilities represent the fair value of **listed equity securities from short selling activities**[70](index=70&type=chunk) [Net Assets Attributable to Non-Controlling Interests Holders of Consolidated Investment Funds](index=22&type=section&id=15%20Net%20Assets%20Attributable%20to%20Non-Controlling%20Interests%20Holders%20of%20Consolidated%20Investment%20Funds) Net assets attributable to non-controlling interests holders of consolidated investment funds (MEC Asian Fund) are classified as liabilities because they are redeemable for cash and returnable at net asset value Net Assets Attributable to Non-Controlling Interests Holders | Indicator | December 31, 2020 (HKD '000) | June 30, 2020 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Net assets attributable to non-controlling interests holders of consolidated investment funds | 10,200 | 9,164 | Increased 11.3% | - These net assets are presented as liabilities because non-controlling interests holders can **redeem for cash and return net assets**[71](index=71&type=chunk) [Accruals, Trade and Other Payables](index=22&type=section&id=16%20Accruals%2C%20Trade%20and%20Other%20Payables) As of December 31, 2020, total accruals, trade and other payables amounted to HKD 741,831 thousand, a decrease from mid-year, primarily due to a reduction in amounts due to clients Trade and Other Payables | Indicator | December 31, 2020 (HKD '000) | June 30, 2020 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Amounts due to clients | 703,516 | 837,413 | Decreased 16.0% | | Total | 741,831 | 883,615 | Decreased 16.0% | - Settlement dates for amounts due to brokers, clearing houses, and clients are **one to two business days after the trade date**[72](index=72&type=chunk) [Bank Loans](index=23&type=section&id=17%20Bank%20Loans) As of December 31, 2020, secured bank loans increased to HKD 110,000 thousand, used to finance investment portfolios and new share subscriptions for brokerage clients Secured Bank Loans | Indicator | December 31, 2020 (HKD '000) | June 30, 2020 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Secured bank loans | 110,000 | 60,000 | Increased 83.3% | - Loans are secured by **land and buildings held for own use with a fair value of approximately HKD 320 million**[74](index=74&type=chunk) - Interest is calculated at **HIBOR plus 1.4%**[74](index=74&type=chunk) - The Group regularly monitors and complies with covenant terms such as **loan-to-value ratios**[75](index=75&type=chunk) [Share Capital](index=23&type=section&id=18%20Share%20Capital) As of December 31, 2020, the amount of issued and fully paid share capital remained unchanged, but the number of shares decreased due to a share consolidation Share Capital Information | Indicator | December 31, 2020 (Number of Shares) | June 30, 2020 (Number of Shares) | Change | | :--- | :--- | :--- | :--- | | Issued and fully paid share capital (end of period) | 712,761,496 | 7,127,614,962 | Decreased 90% | | Amount (HKD '000) | 71,276 | 71,276 | No change | - A share consolidation was completed on **November 26, 2020**, where every 10 existing shares were consolidated into 1 consolidated share[76](index=76&type=chunk) - The authorized share capital amount remained unchanged at **HKD 1,000,000,000**, but the par value per share changed from HKD 0.01 to HKD 0.10[76](index=76&type=chunk) [Commitments](index=24&type=section&id=19%20Commitments) The Group has operating lease commitments as a lessor with minimum lease receivables of HKD 2,826 thousand within one year; additionally, capital commitments for unlisted equity securities amount to HKD 17,891 thousand, most of which were paid in January 2021 Operating Lease Commitments (as Lessor) | Term | December 31, 2020 (HKD '000) | June 30, 2020 (HKD '000) | | :--- | :--- | :--- | | Within one year | 2,826 | 1,903 | | One to two years | 800 | 450 | | Total | 3,626 | 2,353 | - Capital commitments for unlisted equity securities amounted to **HKD 17,891 thousand** (June 30, 2020: HKD 12,161 thousand)[79](index=79&type=chunk) - Of this, **HKD 13,730 thousand** was paid in January 2021[79](index=79&type=chunk) [Contingent Liabilities](index=24&type=section&id=20.%20Contingent%20Liabilities) The Group faces potential legal proceedings and regulatory reviews in its ordinary course of business, which management regularly assesses and provisions for, with no significant adverse impact expected this period; the Group previously signed guarantees for clients' short selling stock deposits - Faces potential **legal proceedings, regulatory reviews, and enforcement actions**[80](index=80&type=chunk) - Management regularly assesses and makes provisions, currently expecting **no significant adverse impact**[80](index=80&type=chunk) - Previously signed guarantees for clients' short selling stock deposits held in HKSCC accounts, agreeing to bear potential claims[80](index=80&type=chunk) [Joint Venture Agreement](index=25&type=section&id=21%20Joint%20Venture%20Agreement) The Group has entered into an agreement with a joint venture partner to establish a full-license securities company in Chongqing, China, with the Group contributing RMB 330 million for a 22% equity stake; additional information is currently being provided to the China Securities Regulatory Commission for approval - Plans to establish a **full-license securities company in Chongqing, China**[83](index=83&type=chunk) - The Group will contribute **RMB 330 million** for a **22% equity stake** in the joint venture company[83](index=83&type=chunk) - Shareholder approval has been obtained, and a confirmation receipt from the CSRC has been received; additional information is currently being provided for approval[83](index=83&type=chunk) [Significant Related Party and Connected Transactions](index=25&type=section&id=22%20Significant%20Related%20Party%20and%20Connected%20Transactions) During the reporting period, the Group engaged in several transactions with related parties, including key management personnel compensation, brokerage commissions, advisory and management fees, and amounts due to clients Key Management Personnel Compensation | Indicator | 2020 (HKD '000) | 2019 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Directors' fees | 1,100 | 1,200 | Decreased 8.3% | | Salaries, commissions and other allowances | 2,922 | 3,252 | Decreased 10.2% | | Total | 4,109 | 4,539 | Decreased 9.5% | Other Related Party Transactions | Transaction Type | 2020 (HKD '000) | 2019 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Brokerage commissions earned from trading of securities, options, futures and commodity futures (directors and their family members/companies) | 113 | 55 | Increased 105.5% | | Advisory and management fees received (companies controlled by directors) | 620 | 620 | No change | | Amounts due to clients (directors and their family members/companies) | 31,663 | 37,939 | Decreased 16.5% | - Provided shareholder loans to an associate for the purchase of investment properties in Japan, one of which is **unsecured, bears 5% annual interest, and matures in January 2023**[86](index=86&type=chunk) [Financial Instruments](index=26&type=section&id=23%20Financial%20Instruments) The Group's operations are exposed to credit risk, liquidity risk, equity price risk, foreign currency risk, and interest rate risk; risk management policies remained unchanged during this six-month period - Financial risks faced: **credit risk, liquidity risk, equity price risk, foreign currency risk, and interest rate risk**[87](index=87&type=chunk) - Risk management policies **remained unchanged** during this six-month period[88](index=88&type=chunk) [Fair Value Measurement of Financial Instruments](index=26&type=section&id=24%20Fair%20Value%20Measurement%20of%20Financial%20Instruments) The fair value of the Group's financial assets and liabilities is measured on a recurring basis and categorized into Level 1, Level 2, and Level 3; fair value measurement of unlisted investment loans and overseas unlisted equity securities involves unobservable input data - Fair value measurements are categorized into three levels: **Level 1 (unadjusted quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)**[90](index=90&type=chunk) Fair Value Measurement (December 31, 2020) | Category | Fair Value (HKD '000) | Fair Value Level | Valuation Method and Key Inputs | | :--- | :--- | :--- | :--- | | Listed equity securities | 145,882 | Level 1 | Active market quotes | | Listed debt securities | 35,006 | Level 2 | Market quotes | | Exchange traded funds | 9,983 | Level 1 | Active market quotes | | Unlisted investment funds | 74,432 | Level 2 | Net asset value of investments | | Unlisted investment loans | 14,439 | Level 3 | Adjusted net asset value, credit risk adjustment 3.61% | | Overseas unlisted equity securities | 8,890 | Level 3 | Market approach (enterprise value to EBITDA multiple 6.6x, discount for lack of marketability 22%) or income approach (cost of capital 24%, discount for lack of control 9.8%, discount for lack of marketability 20.6%) | - Unrealized gains / (losses) for Level 3 fair value measurements amounted to **HKD 5,565 thousand**[97](index=97&type=chunk) - Management reviews valuations semi-annually and engages valuers to establish valuation methodologies[99](index=99&type=chunk) [Key Sources of Estimation Uncertainty](index=29&type=section&id=25%20Key%20Sources%20of%20Estimation%20Uncertainty) Management is required to make significant judgments, estimates, and assumptions in preparing financial reports, which are based on past experience and relevant factors, and actual results may differ - Management is required to make **significant judgments, estimates, and assumptions** in preparing financial reports[101](index=101&type=chunk) - Estimates and assumptions are based on past experience and relevant factors, and **actual results may differ** from estimated amounts[101](index=101&type=chunk) - Revisions to accounting estimates are recognized in the period of revision or future periods[101](index=101&type=chunk) Management Discussion and Analysis [Market](index=30&type=section&id=Market) In the first half of 2020, the Hong Kong stock market sharply declined due to the pandemic, but rebounded in the second half, stimulated by global easing policies and the return of Chinese concept stocks to list in Hong Kong, with significantly increased trading volume - The Hang Seng Index fell to a three-year low of **21,139 points in March 2020**, closing at **27,231 points at year-end**[103](index=103&type=chunk) - Average monthly trading volume on the Main Board and GEM increased by **82% year-on-year to HKD 2,962 billion**[103](index=103&type=chunk) - Funds raised from Main Board IPOs reached **HKD 306 billion**, an increase of **26%**[103](index=103&type=chunk) [Financial Summary](index=30&type=section&id=Financial%20Summary) The Group achieved a profit after tax of HKD 2 million in the first half of fiscal year 2021, reversing a loss of HKD 13 million in the prior year, mainly due to financial investment gains from ample capital market liquidity and reduced administrative expenses Financial Performance Overview | Indicator | H1 FY2021 (HKD '000) | H1 FY2020 (HKD '000) | Change | | :--- | :--- | :--- | :--- | | Profit / (Loss) after tax | 2,000 | (13,000) | Turned loss to profit | | Total comprehensive expense | (15,000) | (34,000) | Decreased 55.9% | - Net gains from financial assets and liabilities at fair value through profit or loss were **HKD 27 million**, compared to HKD 8 million in the prior period[105](index=105&type=chunk) - General and administrative expenses decreased by **HKD 7 million to HKD 51 million**, mainly due to reduced staff bonus provisions and government pandemic subsidies[105](index=105&type=chunk) - The fair value of the Lippo Centre office decreased by **14% to HKD 320 million**, recognizing a revaluation deficit of **HKD 20 million**[104](index=104&type=chunk) [Business Development](index=31&type=section&id=Business%20Development) The Group is actively advancing its joint venture project to establish a full-license securities company in Chongqing, China, having received shareholder approval and a confirmation receipt from the China Securities Regulatory Commission, and is currently providing additional information for approval - Signed an agreement with a joint venture partner to establish a **full-license securities company in Chongqing, China**[107](index=107&type=chunk) - The Group will contribute **RMB 330 million** for a **22% equity stake** in the joint venture company[107](index=107&type=chunk) - Shareholder approval has been obtained, and a confirmation receipt from the CSRC has been received; additional information is currently being provided for approval[107](index=107&type=chunk) - Expects to sell some listed equity and debt securities and recover some loans receivable to fund the joint venture investment cost[107](index=107&type=chunk) [Brokerage and Lending](index=31&type=section&id=Brokerage%20and%20Lending) The brokerage and lending segment's total revenue increased, mainly due to higher brokerage commission income from increased market turnover; however, interest income from loan financing clients decreased, and expected credit loss provisions significantly increased - Total revenue was **HKD 28 million**, compared to HKD 25 million in the prior period[108](index=108&type=chunk) - Brokerage commission income increased by **HKD 6 million to HKD 15 million**, mainly due to an 82% increase in average daily market turnover[108](index=108&type=chunk) - Interest income from loan financing clients decreased by **HKD 4 million to HKD 6 million**[108](index=108&type=chunk) - Total expected credit loss provisions were **HKD 10 million**, an increase of HKD 6 million from HKD 4 million in the prior period, reflecting a prudent risk strategy[108](index=108&type=chunk) - Fixed-rate loans and factoring receivables decreased to **HKD 153 million**[108](index=108&type=chunk) [Corporate Finance and Capital Markets](index=31&type=section&id=Corporate%20Finance%20and%20Capital%20Markets) The corporate finance and capital markets segment's total revenue decreased, mainly due to the impact of the pandemic on due diligence progress, with the segment focusing on advisory services for listed companies; underwriting and placing income also decreased - Total revenue was **HKD 11 million**, compared to HKD 18 million in the prior period[109](index=109&type=chunk) - The pandemic affected the progress of due diligence for IPO projects, with the department focusing on **advisory services for listed companies**[109](index=109&type=chunk) - Underwriting and placing income was **HKD 1 million**, compared to HKD 2 million in the prior period[109](index=109&type=chunk) [Asset Management](index=32&type=section&id=Asset%20Management) The asset management segment's total revenue was insignificant, and it is actively engaging with private equity funds and high-net-worth clients to expand its business - Total revenue was **insignificant**[111](index=111&type=chunk) - Actively engaging with **private equity funds and high-net-worth clients** to generate more revenue[111](index=111&type=chunk) [Proprietary Investments](index=32&type=section&id=Proprietary%20Investments) The proprietary investments segment's total income significantly increased, mainly due to net gains from listed equity securities driven by the rise in the Hang Seng Index; the segment reduced its investment proportion in listed debt securities and exchange-traded funds - Total income was **HKD 29 million**, compared to HKD 11 million in the prior period[112](index=112&type=chunk) - Net gains from listed equity securities were **HKD 20 million**, compared to HKD 6 million in the prior period, benefiting from an **11% rise in the Hang Seng Index**[112](index=112&type=chunk) - Bond interest and dividend income was **HKD 2 million**, compared to HKD 3 million in the prior period[112](index=112&type=chunk) - Reduced investment proportion in listed debt securities and exchange-traded funds to address **low yield and high default risk environments**[112](index=112&type=chunk) - Carrying values of unlisted investments, listed securities, and listed debt securities were **HKD 98 million, HKD 146 million, and HKD 45 million**, respectively[113](index=113&type=chunk) [Property Investment](index=32&type=section&id=Property%20Investment) The property investment segment's total revenue remained stable; Hong Kong shops recognized a revaluation deficit, but this was offset by a revaluation surplus from investment properties in China, resulting in a combined revaluation surplus of HKD 0.2 million - Total revenue was **HKD 2 million**, consistent with the prior period[114](index=114&type=chunk) - Hong Kong shops recognized a revaluation deficit of **HKD 2 million**[114](index=114&type=chunk) - Investment properties in China recorded a revaluation surplus of **HKD 2.2 million** due to the strong rebound of the RMB[114](index=114&type=chunk) - Combined, the segment recognized a revaluation surplus of **HKD 0.2 million**[114](index=114&type=chunk) - Owns Hong Kong shops, car parks, and China office properties, and invests in an associate holding properties in Japan[114](index=114&type=chunk) [Outlook](index=32&type=section&id=Outlook) Looking ahead, market uncertainties persist, including post-vaccination stability, social media-driven market volatility, and the ongoing impact of the Hong Kong pandemic; China's strong economic performance and the listing of large Chinese enterprises in Hong Kong will support capital market development - Market stability has not recovered after **vaccinations and the US presidential inauguration**, with social media attacks on short sellers causing volatility[115](index=115&type=chunk) - Hong Kong remains in its **fourth wave of the pandemic**, with the retail peak season affected by quarantine measures[115](index=115&type=chunk) - China's economy performed best, and the listing of large Chinese enterprises in Hong Kong will support capital market development[115](index=115&type=chunk) - Expects a gradual recovery of global business flows[115](index=115&type=chunk) [Liquidity and Financial Resources](index=33&type=section&id=Liquidity%20and%20Financial%20Resources) As of the end of December 2020, the Group's total assets were HKD 1.882 billion, with 72% being current assets; net current assets were HKD 462 million, accounting for approximately 48% of net assets; total secured borrowings were HKD 110 million, with a gearing ratio of approximately 11% - Total assets of **HKD 1.882 billion**, with approximately **72% being current assets**[117](index=117&type=chunk) - Net current assets of **HKD 462 million**, accounting for approximately **48% of net assets**[117](index=117&type=chunk) - Cash and cash equivalents of **HKD 119 million**, primarily denominated in HKD[117](index=117&type=chunk) - Total secured borrowings of **HKD 110 million**, used to finance investment portfolios and new share subscriptions for brokerage clients[117](index=117&type=chunk) - Gearing ratio of approximately **11%**[117](index=117&type=chunk) - Office properties with a fair value of **HKD 320 million** are pledged to banks as loan collateral[117](index=117&type=chunk) - No other significant contingent liabilities except for the indemnity signed with Hong Kong Securities Clearing Company Limited[117](index=117&type=chunk) - The company provided corporate guarantees of **HKD 210 million** for bank facilities granted to its subsidiaries[117](index=117&type=chunk) [Foreign Exchange Risk](index=33&type=section&id=Foreign%20Exchange%20Risk) The Group's assets are primarily located in Hong Kong and China, with most monetary assets and liabilities denominated in HKD; the Group monitors foreign currency financial asset movements daily and currently deems hedging RMB-denominated assets unnecessary, but will closely monitor and implement hedging measures - Assets are primarily located in **Hong Kong and China**, with most monetary assets and liabilities denominated in HKD[118](index=118&type=chunk) - Foreign currency financial asset movements are **monitored daily**[118](index=118&type=chunk) - Currently deems **hedging RMB-denominated assets unnecessary**, but will closely monitor and implement hedging measures[118](index=118&type=chunk) - Not exposed to other significant exchange rate fluctuation risks and has not adopted any hedging instruments[118](index=118&type=chunk) [Risk Management](index=33&type=section&id=Risk%20Management) The Group has established risk management policies and procedures, regularly reviewed by management, to ensure all major risks are appropriately monitored; the business faces risks such as industry trends, market competition, securities price volatility, and the introduction of new regulations - Risk management policies and procedures have been established and are **regularly reviewed by management**[121](index=121&type=chunk) - The Legal and Compliance Department, together with the Finance Department and other monitoring committees, regularly reviews and assists management in adopting internal control measures[121](index=121&type=chunk) - Faces risks such as **industry trends (investment, brokerage, corporate finance and capital markets), market competition, securities price declines, and the introduction of new regulations**[119](index=119&type=chunk) [Employees](index=34&type=section&id=Employees) As of December 31, 2020, the Group had 95 full-time employees; remuneration and bonuses are determined based on performance; the Group provides comprehensive induction and internal training, and has implemented various measures to protect employees and clients from the pandemic - **95 full-time employees** (June 30, 2020: 103 employees)[122](index=122&type=chunk) - Remuneration and bonuses are determined based on performance and **reviewed annually**[122](index=122&type=chunk) - Provides comprehensive **induction programs and internal training courses**[122](index=122&type=chunk) - Implemented various pandemic protection measures, including providing anti-epidemic supplies, flexible work arrangements, office restrictions, video conferencing, cancellation of business trips, and paid self-isolation[122](index=122&type=chunk) [Interim Dividend](index=34&type=section&id=Interim%20Dividend) The Board declared an interim dividend of 1.5 HK cents per ordinary share for the six months ended December 31, 2020, to be paid on March 24, 2021 - Declared an interim dividend of **1.5 HK cents per ordinary share** (2019: 2 HK cents)[123](index=123&type=chunk) - Dividends will be paid on **March 24, 2021**, to shareholders whose names appear on the register of members on March 5, 2021[123](index=123&type=chunk) [Closure of Register of Members](index=34&type=section&id=Closure%20of%20Register%20of%20Members) To determine eligibility for the interim dividend, the company will suspend share registration from March 3 to March 5, 2021, and all transfer procedures must be completed by 4:30 p.m. on March 2, 2021 - Share registration suspension dates: **March 3 to March 5, 2021**[124](index=124&type=chunk) - Deadline for transfer procedures: **4:30 p.m. on March 2, 2021**[124](index=124&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or any Associated Corporation](index=35&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20or%20any%20Associated%20Corporation) As of December 31, 2020, Dr. Jonathan Choi Koon Shum and Mr. Choi Koon Ming held long positions in the Company's ordinary shares, with Dr. Jonathan Choi Koon Shum deemed to own 30.20% of the Company's shares Directors' Long Positions | Director Name | Type of Interest | Number of Ordinary Shares | Percentage of Total Issued Shares | | :--- | :--- | :--- | :--- | | Dr. Jonathan Choi Koon Shum | Corporate | 215,254,511 | 30.20% | | Dr. Jonathan Choi Koon Shum | Personal | 180,501,212 | 25.32% | | Mr. Choi Koon Ming | Personal | 29,494,804 | 4.14% | | Mr. Choi Koon Ming | Corporate | 9,850,916 | 1.38% | - Dr. Jonathan Choi Koon Shum is deemed to own **215,254,511 ordinary shares**[126](index=126&type=chunk) - No other directors or chief executive, their spouses, or children held interests or short positions in the Company's or associated corporations' shares, underlying shares, or debentures[127](index=127&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares of the Company](index=36&type=section&id=Substantial%20Shareholders%27%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) As of December 31, 2020, Dr. Jonathan Choi Koon Shum and his associated companies (World Developments Limited, Innovation Assets Limited, SIL, Sun Wah Capital Limited) and Guangzhou Huiyin Development Investment Partnership were substantial shareholders, holding 5% or more interests in the Company Substantial Shareholders' Long Positions | Shareholder Name | Number of Ordinary Shares (Direct Interest) | Deemed Interest | Percentage of Total Issued Shares | | :--- | :--- | :--- | :--- | | Dr. Jonathan Choi Koon Shum | 180,501,212 | 215,254,511 | 55.52% | | World Developments Limited | 185,701,741 | – | 26.05% | | Innovation Assets Limited | – | 185,701,741 | 26.05% | | Sunwah International Limited | – | 185,701,741 | 26.05% | | Sun Wah Capital Limited | 29,552,749 | 185,701,741 | 30.20% | | Mr. Choi Koon Ming | 29,494,804 | 9,850,916 | 5.52% | | Guangzhou Huiyin Development Investment Partnership | 35,640,000 | – | 5.00% | - The interests of World Developments Limited, Innovation Assets Limited, SIL, Sun Wah Capital Limited, and Dr. Jonathan Choi Koon Shum **overlap with each other**[131](index=131&type=chunk) [Corporate Governance Code](index=36&type=section&id=Corporate%20Governance%20Code) The company has applied and complied with the principles and code provisions of the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 to the Hong Kong Listing Rules during the reporting period - Applied and complied with the principles and code provisions of the **Corporate Governance Code and Corporate Governance Report** as set out in Appendix 14 to the Listing Rules[133](index=133&type=chunk) [Share Option Scheme](index=37&type=section&id=Share%20Option%20Scheme) The company adopted a share option scheme on November 24, 2020, to reward and attract outstanding employees; no share options were granted, exercised, cancelled, or lapsed during the reporting period - Adopted a share option scheme on **November 24, 2020**[135](index=135&type=chunk) - Aims to **reward or acknowledge employees' contributions** and assist in recruiting and retaining talent[135](index=135&type=chunk) - No share options were granted, exercised, cancelled, or lapsed during the reporting period[136](index=136&type=chunk) [Repurchase, Sale or Redemption of Shares](index=37&type=section&id=Repurchase%2C%20Sale%20or%20Redemption%20of%20Shares) During the reporting period, neither the company nor any of its subsidiaries repurchased, sold, or redeemed any of the company's shares - No shares were repurchased, sold, or redeemed during the reporting period[137](index=137&type=chunk) [Directors' Securities Transactions](index=37&type=section&id=Directors%27%20Securities%20Transactions) The company has adopted the Model Code as set out in Appendix 10 to the Listing Rules, and all directors have confirmed compliance with the code during the reporting period - Adopted the **Model Code** as set out in Appendix 10 to the Listing Rules[138](index=138&type=chunk) - All directors have confirmed **compliance with the Model Code**[138](index=138&type=chunk) [Changes in Directors' Information](index=37&type=section&id=Changes%20in%20Directors%27%20Information) Dr. Guan Huanfei resigned as an independent non-executive director of Shougang Fushan Resources Group Limited and was appointed as an independent non-executive director of Shanghai Zendai Property Limited - Dr. Guan Huanfei resigned as an independent non-executive director of **Shougang Fushan Resources Group Limited**[139](index=139&type=chunk) - Dr. Guan Huanfei was appointed as an independent non-executive director of **Shanghai Zendai Property Limited**, effective January 11, 2021[140](index=140&type=chunk) [Audit Committee](index=37&type=section&id=Audit%20Committee) The Audit Committee has reviewed accounting principles and practices with management, discussed financial reporting matters, and reviewed the interim report and financial statements; the committee is also responsible for reviewing the Group's financial controls, risk management, and internal control systems - Reviewed **accounting principles, practices, and financial reporting matters**[141](index=141&type=chunk) - Reviewed the **interim report and unaudited condensed consolidated financial statements**[141](index=141&type=chunk) - Responsible for reviewing the Group's **financial controls, risk management, and internal control systems**[141](index=141&type=chunk) - Has commenced its responsibility to review the company's **strategic, operational, and financial risks**[141](index=141&type=chunk) Independent Review Report [Review Conclusion](index=38&type=section&id=Review%20Conclusion) Ernst & Young has reviewed Sunwah Kingsway Financial Holdings Limited's interim financial information in accordance with Hong Kong Standard on Review Engagements 2410 and found no material matters indicating non-preparation in accordance with Hong Kong Accounting Standard 34 - Reviewing firm: **Ernst & Young**[143](index=143&type=chunk) - Scope of review: Interim financial information, including the condensed consolidated statement of financial position, statement of profit or loss, statement of comprehensive income, statement of changes in equity, and statement of cash flows[143](index=143&type=chunk) - Review standard: **Hong Kong Standard on Review Engagements 2410**[144](index=144&type=chunk) - Conclusion: No material matters were found indicating that the interim financial information was not prepared in all material respects in accordance with **Hong Kong Accounting Standard 34**[145](index=145&type=chunk) - No audit opinion was expressed, as the scope of review is less than that of an audit[144](index=144&type=chunk) List of Licensed Subsidiaries and Affiliates [Subsidiaries and Affiliates](index=39&type=section&id=Subsidiaries%20and%20Affiliates) This section lists Sunwah Kingsway Financial Holdings Limited's licensed subsidiaries and its affiliates and overseas offices in Hong Kong and China, covering businesses such as securities and futures brokerage, corporate finance, asset management, and money lending - Hong Kong licensed subsidiaries include **Sunwah Kingsway Financial Services Limited** (securities and futures brokerage), **Sunwah Kingsway Capital Limited** (corporate finance and sponsor), **Sunwah Kingsway Asset Management Limited** (asset management), and **Sunwah Kingsway Finance Limited** (licensed money lender)[148](index=148&type=chunk) - China affiliates and overseas offices include **Beijing Sunwah Kingsway Investment Advisory Co., Ltd.** and **Shenzhen Sunwah Kingsway Investment Consulting Co., Ltd.**[148](index=148&type=chunk)

SUNWAH KINGSWAY 新華滙富 Sunwah Kingsway Capital Holdings Limited 新 華 滙 富 金 融 控 股 有 限 公 司 於 百 慕 遮 註冊 成 立 之 有 限 公 司 股份代號：00188 years 商界展開懷 caringcompany Avarded by The Kong Council of Social Service 香港社會服務聯會頒發 準備就緒 迎接轉機 MOBIL 年度報告 穩固的業務平台 新華滙富一向專注所長，力臻至善。新華滙富矢志成為香港最佳的 本地金融服務供應商，以熱誠及誠信為本地及國際客戶創建價值。 | --- | --- | --- | --- | --- | --- | --- | --- | |---------------------|------------|-----------------------------|---------------------|-------|-------------------|----------|-----------------| | 企業融資及資本市場 | | 客戶服務 \ ...

[Company Information](index=3&type=section&id=Company%20Information) This chapter outlines the basic information of Sunwah Kingsway Capital Holdings Limited, including board members, legal advisors, principal bankers, auditors, registered office, head office and principal place of business, and members of various board committees - The company's core beliefs are integrity, teamwork, respect, responsibility, perseverance, and striving for excellence[4](index=4&type=chunk) - The Chairman of the Board is **Dr. Jonathan Choi**, and the Chief Executive Officer is **Mr. Michael Choi**[7](index=7&type=chunk) - Principal bankers include Standard Chartered Bank (Hong Kong), Bank of China (Hong Kong), The Hongkong and Shanghai Banking Corporation, and Industrial and Commercial Bank of China (Asia)[7](index=7&type=chunk) [Condensed Consolidated Income Statement](index=4&type=section&id=Condensed%20Consolidated%20Income%20Statement) The company turned from profit to loss during the reporting period, mainly due to changes in fair value of financial assets and liabilities, with a significant decrease in commission and fee income but an increase in interest income, leading to a substantial narrowing of the loss for the period - Loss for the period: **HKD 13,252 thousand** for the six months ended December 31, 2019, a significant narrowing from **HKD 41,749 thousand** in the same period of 2018[9](index=9&type=chunk) Condensed Consolidated Income Statement Key Data Comparison | Indicator | Six Months Ended December 31, 2019 (HKD thousands) | Six Months Ended December 31, 2018 (HKD thousands) | Change (HKD thousands) | | :--- | :--- | :--- | :--- | | Commission and fee income | 29,315 | 51,897 | (22,582) | | Interest income from financial assets at amortized cost | 14,817 | 13,628 | 1,189 | | Net gain/(loss) from financial assets and liabilities at fair value through profit or loss | 8,201 | (37,971) | 46,172 | | General and administrative expenses | (58,346) | (64,266) | 5,920 | | Loss before tax | (12,278) | (39,925) | 27,647 | | Loss for the period | (13,252) | (41,749) | 28,497 | | Basic loss per share | (0.19) HK cents | (0.61) HK cents | 0.42 HK cents | [Condensed Consolidated Statement of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) Total comprehensive expense for the period increased, primarily due to revaluation loss on land and buildings held for own use, offsetting the positive impact of a narrower loss for the period - Total comprehensive expense for the period: **HKD 33,747 thousand** for the six months ended December 31, 2019, an increase from **HKD 30,759 thousand** in the same period of 2018[12](index=12&type=chunk) Condensed Consolidated Statement of Comprehensive Income Key Data Comparison | Indicator | Six Months Ended December 31, 2019 (HKD thousands) | Six Months Ended December 31, 2018 (HKD thousands) | | :--- | :--- | :--- | | Loss for the period | (13,252) | (41,749) | | Revaluation (loss)/surplus on land and buildings held for own use (net of tax) | (19,657) | 10,796 | | Exchange differences arising from translation of financial statements of overseas subsidiaries | (838) | (440) | | Total comprehensive expense for the period | (33,747) | (30,759) | [Condensed Consolidated Statement of Financial Position](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of December 31, 2019, the company's total assets and net current assets both decreased, mainly due to a significant reduction in bank balances and cash in trust accounts, though trade receivables increased - Total assets: Decreased from **HKD 1,988,465 thousand** as of June 30, 2019, to **HKD 1,678,036 thousand** as of December 31, 2019[50](index=50&type=chunk) - Net current assets: Decreased from **HKD 484,912 thousand** as of June 30, 2019, to **HKD 471,559 thousand** as of December 31, 2019[14](index=14&type=chunk) Condensed Consolidated Statement of Financial Position Key Data Comparison | Indicator | December 31, 2019 (HKD thousands) | June 30, 2019 (HKD thousands) | Change (HKD thousands) | | :--- | :--- | :--- | :--- | | Non-current assets | 595,961 | 637,084 | (41,123) | | Current assets | 1,082,075 | 1,351,381 | (269,306) | | Current liabilities | 610,516 | 866,469 | (255,953) | | Net assets | 1,031,558 | 1,082,841 | (51,283) | | Bank balances and cash - trust accounts | 351,561 | 667,609 | (316,048) | | Trade receivables, loans and other receivables | 320,324 | 287,979 | 32,345 | | Accounts payable to customers | 415,972 | 712,589 | (296,617) | [Condensed Consolidated Statement of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) During the reporting period, the company's total equity and equity attributable to owners of the Company both decreased, primarily due to the loss for the period and property revaluation loss - Total equity: Decreased from **HKD 1,082,841 thousand** as of July 1, 2019, to **HKD 1,031,558 thousand** as of December 31, 2019[16](index=16&type=chunk) - Equity attributable to owners of the Company: Decreased from **HKD 1,082,776 thousand** as of July 1, 2019, to **HKD 1,031,492 thousand** as of December 31, 2019[16](index=16&type=chunk) Condensed Consolidated Statement of Changes in Equity Major Changes | Indicator | July 1, 2019 (HKD thousands) | December 31, 2019 (HKD thousands) | Change (HKD thousands) | | :--- | :--- | :--- | :--- | | Retained profits/(accumulated losses) | 319,381 | 288,592 | (30,789) | | Property revaluation reserve | 232,684 | 213,027 | (19,657) | | Exchange reserve | (1,701) | (2,539) | (838) | [Condensed Consolidated Statement of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) During the reporting period, the company experienced a net decrease in cash and cash equivalents, with increased cash outflows from operating and investing activities, but a significant increase in cash inflows from financing activities, mainly due to bank loan drawdowns - Net decrease in cash and cash equivalents: **HKD 40,294 thousand** for the six months ended December 31, 2019, an increase from **HKD 36,585 thousand** in the same period of 2018[18](index=18&type=chunk) - Net cash used in operating activities: **HKD 54,227 thousand** for the six months ended December 31, 2019, an increase from **HKD 44,832 thousand** in the same period of 2018[18](index=18&type=chunk) Condensed Consolidated Statement of Cash Flows Key Data Comparison | Indicator | Six Months Ended December 31, 2019 (HKD thousands) | Six Months Ended December 31, 2018 (HKD thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (54,227) | (44,832) | | Net cash (used in)/generated from investing activities | (315) | 6,089 | | Net cash generated from financing activities | 14,248 | 2,158 | | Net decrease in cash and cash equivalents | (40,294) | (36,585) | | Cash and cash equivalents at end of period | 169,485 | 194,078 | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This chapter details the basis of preparation, significant accounting policies, segment information, specific components and changes in financial accounts, financial risk management, and valuation methods, providing crucial supplementary information for understanding the financial statements - Accounting policies: Prepared under the historical cost convention, except for investment properties, land and buildings held for own use, and financial assets/liabilities at fair value through profit or loss, which are measured at revalued amounts or fair value[22](index=22&type=chunk) - New standards adoption: The company first adopted **HKFRS 16 "Leases"** and other new and revised standards during this interim period[23](index=23&type=chunk)[24](index=24&type=chunk) [1 Basis of Preparation](index=9&type=section&id=1%20Basis%20of%20Preparation) This interim condensed consolidated financial information is prepared in accordance with the disclosure requirements of Appendix 16 to the Listing Rules of the Stock Exchange of Hong Kong and Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA - Basis of preparation: Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[21](index=21&type=chunk) [2 Significant Accounting Policies](index=9&type=section&id=2%20Significant%20Accounting%20Policies) This section outlines the significant accounting policies adopted in preparing the interim financial statements, including historical cost convention, revaluation or fair value measurement, and the adoption and impact of new and revised HKFRSs, particularly HKFRS 16 "Leases" which significantly impacted the statement of financial position [Adoption of New and Revised Hong Kong Financial Reporting Standards](index=9&type=section&id=Adoption%20of%20New%20and%20Revised%20Hong%20Kong%20Financial%20Reporting%20Standards) This section details the adoption of new and revised Hong Kong Financial Reporting Standards, including HKFRS 16 "Leases," and assesses their impact on the financial statements - Standards adopted: Including **HKFRS 16 "Leases"**, **HK(IFRIC)-Int 23 "Uncertainty over Income Tax Treatments"**, etc[24](index=24&type=chunk) - Impact: Except for **HKFRS 16**, other new and revised standards had no significant impact on financial performance and position[25](index=25&type=chunk) [HKFRS 16 "Leases"](index=10&type=section&id=HKFRS%2016%20%22Leases%22) This section details the adoption of HKFRS 16 "Leases" using a modified retrospective approach, outlining its impact on the financial statements and the new accounting policies for right-of-use assets and lease liabilities - Adoption method: Modified retrospective approach, with the cumulative effect recognized as an adjustment to the opening balance of retained profits on **July 1, 2019**[28](index=28&type=chunk) Impact of Adopting HKFRS 16 | Indicator | Increase (HKD thousands) | | :--- | :--- | | Right-of-use assets | 4,258 | | Lease liabilities | 4,370 | | Corresponding decrease in accruals, trade payables and other payables | (112) | - New accounting policies: Right-of-use assets are measured at cost less accumulated depreciation and impairment losses; lease liabilities are recognized at the present value of lease payments to be made over the lease term[37](index=37&type=chunk)[38](index=38&type=chunk) Changes in Right-of-Use Assets and Lease Liabilities During the Period | Indicator | Right-of-use assets (HKD thousands) | Lease liabilities (HKD thousands) | | :--- | :--- | :--- | | July 1, 2019 | 4,258 | 4,370 | | Depreciation expense | (766) | – | | Interest expense | – | 78 | | Payments | – | (830) | | December 31, 2019 | 3,492 | 3,618 | [Amendments to HKAS 28 Long-term Interests in Associates and Joint Ventures](index=14&type=section&id=Amendments%20to%20HKAS%2028%20Long-term%20Interests%20in%20Associates%20and%20Joint%20Ventures) This section explains the amendments to HKAS 28 regarding long-term interests in associates and joint ventures, requiring the application of HKFRS 9, and confirms no significant impact on the Group's financial statements - Amendment content: Long-term interests (not applying the equity method) should be accounted for under **HKFRS 9**, including impairment provisions[41](index=41&type=chunk) - Impact: The amendment had no significant impact on the Group's interim condensed consolidated financial statements[41](index=41&type=chunk) [HK(IFRIC)-Int 23 Uncertainty over Income Tax Treatments](index=14&type=section&id=HK(IFRIC)-Int%2023%20Uncertainty%20over%20Income%20Tax%20Treatments) This section addresses the interpretation of uncertain tax treatments, including whether to consider uncertain tax treatments separately and assumptions about tax authority examinations, confirming no significant impact on the Group's financial statements - Matters addressed: Involves whether an entity considers uncertain tax treatments separately, assumptions about tax authority examinations, and how to determine taxable profit, etc[42](index=42&type=chunk) - Impact: The interpretation had no significant impact on the Group's interim condensed consolidated financial statements[42](index=42&type=chunk) [3 Segment Information](index=15&type=section&id=3%20Segment%20Information) This section presents the Group's revenue, results, and asset analysis by operating segment (proprietary investments, property investments, brokerage and lending, corporate finance and capital markets, asset management, and others), showing the contribution and scale of each business segment Segment Revenue for the Six Months Ended December 31, 2019 | Segment | Segment Revenue (HKD thousands) | | :--- | :--- | | Proprietary investments | 3,199 | | Property investments | 1,514 | | Brokerage and lending | 24,889 | | Corporate finance and capital markets | 18,199 | | Asset management | 846 | | Others | 14,963 | | **Consolidated** | **63,610** | Segment Assets as of December 31, 2019 | Segment | Total Assets (HKD thousands) | | :--- | :--- | | Proprietary investments | 327,325 | | Property investments | 111,677 | | Brokerage and lending | 803,097 | | Corporate finance and capital markets | 53,747 | | Asset management | 5,241 | | Others | 376,949 | | **Total Assets** | **1,678,036** | - Commission and fee income recognition timing: For the six months ended December 31, 2019, revenue from services transferred at a point in time was **HKD 21,828 thousand**, and revenue from services transferred over time was **HKD 7,487 thousand**[50](index=50&type=chunk) [4 Loss Before Tax](index=18&type=section&id=4%20Loss%20Before%20Tax) This section details the income and expenses included in the loss before tax, showing that the net gain from financial assets and liabilities at fair value through profit or loss significantly contributed to the narrowing of the loss, while staff costs and depreciation were major expenses - Loss before tax: **HKD (12,278) thousand** for the six months ended December 31, 2019, a significant narrowing from **HKD (39,925) thousand** in the same period of 2018[52](index=52&type=chunk) Major Items Affecting Loss Before Tax | Item | Six Months Ended December 31, 2019 (HKD thousands) | Six Months Ended December 31, 2018 (HKD thousands) | | :--- | :--- | :--- | | Net gain/(loss) from financial assets and liabilities at fair value through profit or loss | 8,201 | (37,971) | | Staff costs | (37,038) | (43,352) | | Depreciation | (6,131) | (5,747) | | Amortisation of right-of-use assets | (766) | – | | Total interest income | 14,817 | 13,628 | [5 Income Tax in the Condensed Consolidated Income Statement](index=19&type=section&id=5%20Income%20Tax%20in%20the%20Condensed%20Consolidated%20Income%20Statement) This section discloses the income tax expense for the period, primarily comprising Hong Kong profits tax and China corporate income tax, explaining the tax rates and deductions, and showing a decrease in total income tax expense - Income tax expense: **HKD 974 thousand** for the six months ended December 31, 2019, a decrease from **HKD 1,824 thousand** in the same period of 2018[54](index=54&type=chunk) Income Tax Components | Item | Six Months Ended December 31, 2019 (HKD thousands) | Six Months Ended December 31, 2018 (HKD thousands) | | :--- | :--- | :--- | | Current tax – Hong Kong | 844 | 1,120 | | Current tax – China | 383 | 228 | | Deferred tax | (253) | 476 | | **Total income tax expense** | **974** | **1,824** | - Hong Kong profits tax rate is **16.5%**, and China corporate income tax rate is **25%**[54](index=54&type=chunk) [6 Dividends](index=19&type=section&id=6%20Dividends) The Board declared an interim dividend and confirmed the payment of final dividends for prior years, demonstrating the company's consistent dividend distribution to shareholders - Dividends declared and payable: **HKD 17,536 thousand** for the final dividend of **0.25 HK cents** per share for the prior year (2018: **HKD 20,705 thousand** paid for **0.3 HK cents** per share)[55](index=55&type=chunk) - Interim dividend: The Board declared an interim dividend of **0.2 HK cents** per share (2018: **0.2 HK cents** per share), totaling **HKD 14,255 thousand**[55](index=55&type=chunk) [7 Loss Per Share](index=20&type=section&id=7%20Loss%20Per%20Share) This section presents the calculation and results of the company's basic and diluted loss per share, reflecting the narrowing of the company's loss - Basic and diluted loss per share: **(0.19) HK cents** for the six months ended December 31, 2019, a significant narrowing from **(0.61) HK cents** in the same period of 2018[57](index=57&type=chunk) - Number of shares used for calculation: **7,014,469,674 shares** as of December 31, 2019, and **6,901,631,102 shares** as of December 31, 2018[57](index=57&type=chunk) [8 Property and Equipment](index=20&type=section&id=8%20Property%20and%20Equipment) This section discloses the revaluation loss and additions to the company's property and equipment for the period, along with the valuation basis, reflecting changes in property values - Revaluation loss: Net revaluation loss of **HKD 19,657 thousand** (2018: surplus of **HKD 10,796 thousand**) as of December 31, 2019, net of related deferred tax, has been debited to the property revaluation reserve[58](index=58&type=chunk) - Valuation basis: Fair value of land and buildings was assessed by an independent qualified chartered surveyor, Norton Appraisals Limited[58](index=58&type=chunk) - Additions for the period: Property and equipment increased by **HKD 315 thousand** as of December 31, 2019 (2018: **HKD 112 thousand**)[59](index=59&type=chunk) [9 Financial Assets at Fair Value Through Profit or Loss](index=21&type=section&id=9%20Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) This section details the composition of the company's financial assets at fair value through profit or loss, including listed and unlisted securities, investment loans, and investment funds, showing an increase in their total amount - Total amount: **HKD 280,289 thousand** as of December 31, 2019, an increase from **HKD 233,023 thousand** as of June 30, 2019[62](index=62&type=chunk) Major Components of Financial Assets at Fair Value Through Profit or Loss | Item | December 31, 2019 (HKD thousands) | June 30, 2019 (HKD thousands) | | :--- | :--- | :--- | | Listed equity securities | 127,088 | 77,680 | | Listed debt securities | 63,404 | 69,006 | | Unlisted investment funds | 68,522 | 66,334 | | Unlisted investment loans | 9,690 | 8,452 | - Fair value of unlisted investment loans is determined by reference to loan statements provided by borrowers and net asset value statements provided by relevant investment funds, adjusted for discounts to reflect borrowers' credit risk[63](index=63&type=chunk) [10 Trade Receivables, Loans and Other Receivables](index=22&type=section&id=10%20Trade%20Receivables,%20Loans%20and%20Other%20Receivables) This section provides a detailed disclosure of the composition, impairment losses, and aging analysis of the company's trade receivables, loans, and other receivables, showing an increase in the total amount and sufficient collateral for margin client loans - Total amount: **HKD 320,324 thousand** as of December 31, 2019, an increase from **HKD 287,979 thousand** as of June 30, 2019[66](index=66&type=chunk) Major Components of Trade Receivables, Loans and Other Receivables | Item | December 31, 2019 (HKD thousands) | June 30, 2019 (HKD thousands) | | :--- | :--- | :--- | | Amounts due from brokers and clearing houses | 104,347 | 93,169 | | Amounts due from margin clients | 33,541 | 44,003 | | Loans receivable | 191,268 | 141,775 | | Less: Impairment losses | (13,056) | (9,715) | - Trade receivables from margin clients are secured by securities with a total market value of approximately **HKD 218 million** (June 30, 2019: **HKD 174 million**), with the market value of securities pledged by most margin clients exceeding their outstanding loan balances[68](index=68&type=chunk) - Impairment provision changes: Impairment losses of **HKD 6,314 thousand** were recognized, and **HKD 2,973 thousand** of irrecoverable amounts were written off as of December 31, 2019[73](index=73&type=chunk) [11 Bank Balances and Cash - Trust Accounts](index=24&type=section&id=11%20Bank%20Balances%20and%20Cash%20-%20Trust%20Accounts) This section explains that client monies deposited in the company's trust accounts are regulated by the Securities and Futures Ordinance, and corresponding accounts payable to clients have been recognized - Client monies: Deposited in segregated client accounts with licensed banks, regulated by the Securities and Futures (Client Money) Rules under the Securities and Futures Ordinance[75](index=75&type=chunk) - Related liabilities: The Group has recognized accounts payable to clients for the related client monies[75](index=75&type=chunk) [12 Financial Liabilities at Fair Value Through Profit or Loss](index=24&type=section&id=12%20Financial%20Liabilities%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) This section discloses the company's financial liabilities at fair value through profit or loss, primarily arising from short-selling activities, with a significant increase in the amount - Total amount: **HKD 24,486 thousand** as of December 31, 2019, a significant increase from **HKD 6,358 thousand** as of June 30, 2019[76](index=76&type=chunk) - Source: The balance represents the fair value of listed equity securities arising from short-selling activities[76](index=76&type=chunk) [13 Net Assets Attributable to Non-Controlling Interests of Consolidated Investment Funds](index=24&type=section&id=13%20Net%20Assets%20Attributable%20to%20Non-Controlling%20Interests%20of%20Consolidated%20Investment%20Funds) This section explains why net assets attributable to non-controlling interests of consolidated investment funds are classified as liabilities and highlights the uncertainty in their realization - Nature: Refers to the non-controlling interests' right to receive cash and return the net assets to the Group, thus classified as a liability[77](index=77&type=chunk) - Uncertainty in prediction: Its realization cannot be accurately predicted as it is influenced by the actions of non-controlling investors[77](index=77&type=chunk) [14 Accruals, Trade Payables and Other Payables](index=24&type=section&id=14%20Accruals,%20Trade%20Payables%20and%20Other%20Payables) This section lists the components of the company's accruals, trade payables, and other payables, with accounts payable to clients forming a significant portion, and shows a decrease in the total amount - Total amount: **HKD 501,640 thousand** as of December 31, 2019, a decrease from **HKD 795,640 thousand** as of June 30, 2019[78](index=78&type=chunk) Major Components of Accruals, Trade Payables and Other Payables | Item | December 31, 2019 (HKD thousands) | June 30, 2019 (HKD thousands) | | :--- | :--- | :--- | | Accounts payable to customers | 415,972 | 712,589 | | Other trade payables | 51,189 | 42,607 | | Other payables, accruals and other provisions | 34,474 | 40,233 | - Settlement date for accounts payable to clients is one to three days after the transaction date[79](index=79&type=chunk) [15 Bank Loans](index=25&type=section&id=15%20Bank%20Loans) This section discloses the company's bank loan situation, including the amount of secured bank loans, collateral, and interest rates, confirming compliance with loan covenant terms - Secured bank loans: **HKD 35,000 thousand** as of December 31, 2019, an increase from **HKD 20,000 thousand** as of June 30, 2019[81](index=81&type=chunk) - Collateral: Land and buildings held for own use with a carrying amount of approximately **HKD 371 million** are pledged to banks as security[81](index=81&type=chunk) - Interest rate: Interest is calculated at HIBOR plus **1.3%**[81](index=81&type=chunk) - Compliance: The Group did not breach any covenant terms related to utilized loan facilities at the end of the reporting period[82](index=82&type=chunk) [16 Commitments](index=25&type=section&id=16%20Commitments) This section lists the company's operating lease commitments as a lessor and other investment commitments, reflecting future financial obligations - Operating lease commitments as a lessor: Total future minimum lease receivables were **HKD 4,151 thousand** as of December 31, 2019[83](index=83&type=chunk) - Other commitments: Including a commitment to invest in unlisted equity securities of **HKD 8,000 thousand**[84](index=84&type=chunk) [17 Contingent Liabilities](index=26&type=section&id=17%20Contingent%20Liabilities) This section describes potential legal proceedings and regulatory reviews the company may face in its ordinary course of business, and discloses an indemnity related to short-selling stock deposits, which is not expected to have a material adverse effect on the financial position - Legal risks: May face legal proceedings and regulatory reviews in the ordinary course of business, with management regularly assessing and making provisions[86](index=86&type=chunk) - Indemnity: The Group has signed an indemnity with Hong Kong Securities Clearing Company Limited on behalf of clients, assuming all potential claims related to shortfalls in delisted shares[86](index=86&type=chunk) [18 Joint Venture Agreement](index=26&type=section&id=18%20Joint%20Venture%20Agreement) This section discloses the company's plan to establish a joint venture in Chongqing, China, with a partner, aiming to become a full-license securities firm, currently awaiting final approval from Chinese authorities - Joint venture plan: To establish a joint venture in Chongqing, China, with a partner, aiming to become a full-license securities firm[87](index=87&type=chunk) - Capital contribution: The Group will contribute **RMB 330 million**, representing a **22%** equity interest in the joint venture[87](index=87&type=chunk) - Progress: Acknowledgment receipt from the China Securities Regulatory Commission has been received, awaiting final approval[87](index=87&type=chunk) [19 Significant Related Party and Connected Transactions](index=26&type=section&id=19%20Significant%20Related%20Party%20and%20Connected%20Transactions) This section discloses significant related party transactions between the company and key management personnel and companies controlled by directors, including remuneration, brokerage commissions, advisory and management fees, and loans to associates - Key management personnel remuneration: **HKD 4,539 thousand** for the six months ended December 31, 2019 (2018: **HKD 4,379 thousand**)[89](index=89&type=chunk) - Transactions with directors and family members: Earned brokerage commissions of **HKD 55 thousand** (2018: **HKD 64 thousand**)[92](index=92&type=chunk) - Companies controlled by directors: Received advisory and management fees of **HKD 620 thousand** (2018: **HKD 620 thousand**)[92](index=92&type=chunk) - Loans to associates: Provided two unsecured loans, one at an annual interest rate of **5%** due in 2023, and another interest-free loan due in 2024[93](index=93&type=chunk) [20 Financial Instruments](index=27&type=section&id=20%20Financial%20Instruments) This section outlines the various financial risks faced by the company's operating activities, noting no changes in risk management policies during the period, and emphasizing the importance of risk monitoring - Financial risks: Credit risk, liquidity risk, equity price risk, foreign currency risk, and interest rate risk[94](index=94&type=chunk) - Risk management policies: No changes during this six-month period[95](index=95&type=chunk) [21 Fair Value Measurement of Financial Instruments](index=27&type=section&id=21%20Fair%20Value%20Measurement%20of%20Financial%20Instruments) This section provides detailed information on the fair value measurement of the company's financial assets and liabilities, including fair value hierarchy, valuation methods, and key input data, with specific explanations for the valuation of unlisted investments - Fair value hierarchy: Divided into Level 1 (unadjusted quoted prices in active markets), Level 2 (observable input data), and Level 3 (unobservable input data)[97](index=97&type=chunk) Financial Instruments with Major Fair Value Measurements | Item | December 31, 2019 Fair Value (HKD thousands) | Fair Value Hierarchy | Valuation Method and Key Inputs | | :--- | :--- | :--- | :--- | | Listed equity securities | 127,088 | Level 1 | Quoted prices in active markets | | Listed debt securities | 63,404 | Level 1 | Quoted prices in active markets | | Unlisted investment funds | 68,522 | Level 2 | Fund transaction prices, net asset value calculated with reference to observable quoted prices of relevant investment portfolios in active markets | | Unlisted investment loans | 9,690 | Level 3 | Adjusted net asset value, credit risk adjustment of 1.48% | | Overseas unlisted equity securities | 11,398 | Level 3 | Market approach/income approach, enterprise value to EBITDA multiple of 7.18x, cost of capital 18%, no marketability discount 22% | - Reconciliation of Level 3 fair value measurements: Unrealized profit of **HKD 1,272 thousand** on financial assets at fair value through profit or loss was recognized during the period[102](index=102&type=chunk) [22 Key Sources of Estimation Uncertainty](index=29&type=section&id=22%20Key%20Sources%20of%20Estimation%20Uncertainty) This section highlights that significant judgments, estimates, and assumptions are involved in applying accounting principles and making estimations when preparing interim financial reports, and actual results may differ from these estimates - Sources of uncertainty: Selection and application of accounting principles, estimations, and assumptions[105](index=105&type=chunk) - Management judgment: Based on past experience and relevant factors, actual results may differ from estimated amounts[105](index=105&type=chunk) [Management Discussion and Analysis](index=30&type=section&id=Management%20Discussion%20and%20Analysis) This chapter discusses the market environment, the company's financial performance, operational status of each business segment, future outlook, liquidity, financial resources, risk management, employee situation, and dividend policy during the reporting period, providing a comprehensive insight into the company's operations and future strategies [Market](index=30&type=section&id=Market) During the reporting period, global markets were affected by US-China trade talks, Brexit, and social unrest in Hong Kong, leading to Hang Seng Index volatility and subdued market activity, though Alibaba's secondary listing stimulated the IPO market - Market sentiment: Adversely affected by US-China trade negotiations, Brexit uncertainties, and social unrest in Hong Kong[107](index=107&type=chunk) - Hang Seng Index: Closed at **28,190 points** at the end of December 2019, a slight decrease from **28,543 points** at the end of June 2019, but higher than **25,846 points** at the end of December 2018[108](index=108&type=chunk) - Market turnover: Average monthly turnover for the Main Board and GEM fell to **HKD 1,631 billion** in the first half of FY2020, a **12%** decrease from the first half of FY2019[108](index=108&type=chunk) - IPO market: Alibaba Group Holding Limited's secondary listing raised **HKD 101 billion**, stimulating the IPO market[108](index=108&type=chunk) [Financial Summary](index=30&type=section&id=Financial%20Summary) The company's loss significantly narrowed in the first half of FY2020, primarily due to improved net gain from financial assets and liabilities at fair value through profit or loss, and a reduction in general and administrative expenses, though revaluation loss negatively impacted total comprehensive expense - Loss after tax: Recorded **HKD 13 million** in the first half of FY2020, a significant narrowing from **HKD 42 million** in the first half of FY2019[109](index=109&type=chunk) - Total comprehensive expense: **HKD 34 million** in the first half of FY2020, an increase from **HKD 31 million** in the first half of FY2019, mainly due to revaluation loss[109](index=109&type=chunk) Financial Summary Key Revenue Changes | Indicator | First Half of FY2020 (HKD thousands) | First Half of FY2019 (HKD thousands) | | :--- | :--- | :--- | | Commission and fee income from financial intermediary business | 29,000 | 52,000 | | Interest income | 17,000 | 16,000 | | Dividend and rental income | 2,000 | 3,000 | | Net gain from financial assets and liabilities at fair value through profit or loss | 8,000 | (38,000) | - General and administrative expenses: Decreased from **HKD 64 million** in the first half of FY2019 to **HKD 58 million** in the first half of FY2020, primarily due to reduced variable remuneration[110](index=110&type=chunk) [Brokerage and Lending](index=31&type=section&id=Brokerage%20and%20Lending) The brokerage and lending segment maintained stable total revenue, with increased loan financing and interest income, but faced higher impairment losses due to unfavorable economic conditions, leading management to focus on factoring business and prudent risk management - Total revenue: Remained stable at **HKD 25 million** for both the first half of FY2020 and FY2019[114](index=114&type=chunk) - Loan financing: Fixed-rate loans and factoring receivables amounted to **HKD 183 million** as of December 31, 2019, an increase from **HKD 116 million** as of December 31, 2018[114](index=114&type=chunk) - Interest income: Interest income from loan financing clients increased by **HKD 2 million** to **HKD 10 million** in the first half of FY2020[114](index=114&type=chunk) - Impairment loss: Net impairment loss of **HKD 4 million** was recognized in the first half of FY2020, an increase from **HKD 1 million** in the first half of FY2019[114](index=114&type=chunk) - Strategy: Management will focus more on developing factoring business and maintain a prudent risk management strategy[114](index=114&type=chunk) [Corporate Finance and Capital Markets](index=31&type=section&id=Corporate%20Finance%20and%20Capital%20Markets) The corporate finance and capital markets segment experienced a decline in total revenue and reduced underwriting and placement fees, reflecting a lack of momentum in capital markets, despite completing one IPO project and providing corporate finance advisory services during the period - Total revenue: **HKD 18 million** in the first half of FY2020, a significant decrease from **HKD 38 million** in the first half of FY2019[115](index=115&type=chunk) - Business activities: Completed one initial public offering project and provided corporate finance advisory services to several listed companies during the period[115](index=115&type=chunk) - Underwriting and placement fees: Decreased from **HKD 3 million** in the first half of FY2019 to **HKD 2 million** in the first half of FY2020[115](index=115&type=chunk) [Asset Management](index=31&type=section&id=Asset%20Management) The asset management segment's total revenue was insignificant, but the company is actively pursuing private equity funds and high-net-worth clients, and plans to acquire a Chinese asset management company to expand its business, aiming for future revenue growth - Total revenue: Insignificant for both the first half of FY2020 and FY2019[116](index=116&type=chunk) - Business expansion: Actively engaging with private equity funds and high-net-worth clients to provide asset management services[116](index=116&type=chunk) - Acquisition plan: Signed an agreement to acquire a **65%** equity interest in a Chinese asset management company for **RMB 5 million**, pending approval from Chinese authorities[116](index=116&type=chunk) [Proprietary Investments](index=32&type=section&id=Proprietary%20Investments) The proprietary investments segment saw a decrease in total revenue, but a significant improvement in net gain from financial assets and liabilities at fair value through profit or loss, with adjustments to the investment portfolio and one investment manager adopting a long-short strategy to mitigate market risk - Total revenue: **HKD 3 million** in the first half of FY2020, a decrease from **HKD 6 million** in the first half of FY2019[118](index=118&type=chunk) - Trading gain: Recognized **HKD 8 million** in trading gain from listed and unlisted investments in the first half of FY2020, compared to a loss of **HKD 38 million** in the first half of FY2019[118](index=118&type=chunk) - Interest and dividend income: **HKD 3 million** in the first half of FY2020, a decrease from **HKD 6 million** in the first half of FY2019[118](index=118&type=chunk) - Investment portfolio: As of December 31, 2019, the carrying amounts of unlisted investments, listed securities, and listed debt securities were **HKD 90 million**, **HKD 127 million**, and **HKD 63 million**, respectively[119](index=119&type=chunk) - Strategy: One investment manager adopted a long-short strategy to mitigate market risk, leading to an **HKD 18 million** increase in short positions in listed securities[118](index=118&type=chunk) [Property Investments](index=32&type=section&id=Property%20Investments) The property investments segment maintained stable total revenue, with rental income providing a steady cash flow, but social unrest in Hong Kong led to vacancies in some properties, affecting rental income, and the company holds property investments in Hong Kong, China, and Japan - Total revenue: Remained stable at **HKD 2 million** for both the first half of FY2020 and FY2019[120](index=120&type=chunk) - Rental income: Social unrest in Hong Kong led to several months of vacancy for a shop in Kwun Tong, resulting in reduced rental income[120](index=120&type=chunk) - Investment portfolio: Owns a shop and a car park in Hong Kong, an office property in China, and investments in two associates holding properties in Japan[120](index=120&type=chunk) [Outlook](index=32&type=section&id=Outlook) The company's outlook is affected by the COVID-19 outbreak, anticipating economic disruption, but management is confident in the Group's development after the crisis, leveraging past experience in financial crises and emphasizing prudent management policies - Major challenge: The outbreak of the **COVID-19** in China and its global spread, causing severe losses to the retail and hospitality sectors and disrupting economic activities[121](index=121&type=chunk) - Management confidence: With experience in handling financial crises over the past two decades, management is confident in the Group's ability to thrive again after the crisis[121](index=121&type=chunk) - Management policy: The Group has consistently adopted prudent management policies and maintained a very low capital gearing ratio[121](index=121&type=chunk) [Liquidity and Financial Resources](index=33&type=section&id=Liquidity%20and%20Financial%20Resources) The company possesses ample liquidity and a low capital gearing ratio, primarily relying on internal resources for working capital, supplemented by some secured bank borrowings, indicating a robust financial position - Total assets and liquidity: Total assets of **HKD 1.678 billion** at the end of December 2019, with approximately **64%** being current assets[123](index=123&type=chunk) - Net current assets: **HKD 472 million**, accounting for approximately **46%** of net assets[123](index=123&type=chunk) - Cash and cash equivalents: **HKD 169 million**, primarily denominated in HKD[123](index=123&type=chunk) - Capital gearing ratio: Approximately **3%**[123](index=123&type=chunk) - Contingent liabilities: No other significant contingent liabilities apart from the indemnity signed with Hong Kong Securities Clearing Company Limited[123](index=123&type=chunk) [Foreign Exchange Risk](index=33&type=section&id=Foreign%20Exchange%20Risk) The company's major assets and liabilities are denominated in HKD, and RMB assets are not currently hedged, but management will closely monitor the situation and take hedging measures as appropriate to address potential exchange rate fluctuation risks - Asset currency: Primarily located in Hong Kong and China, with most monetary assets and liabilities denominated in HKD[124](index=124&type=chunk) - RMB assets: Operates factoring business and purchases properties in China, currently deems it unnecessary to hedge RMB-denominated assets[124](index=124&type=chunk) - Risk monitoring: Management will closely monitor the situation and take appropriate hedging measures if significant adverse changes occur[124](index=124&type=chunk) [Risk Management](index=33&type=section&id=Risk%20Management) The company has established risk management policies and procedures, regularly reviews and implements internal control measures to effectively address all major risks arising from industry trends, market competition, securities price fluctuations, and regulatory changes - Risk management policies: Policies and procedures have been established and are regularly reviewed by management to ensure all major risks are properly monitored[127](index=127&type=chunk) - Major risks: Industry trends (investments, brokerage, corporate finance and capital markets), market competition, decline in securities prices, and introduction of new laws and rules[125](index=125&type=chunk) - Internal controls: Legal and compliance department, finance department, and other control committees conduct regular reviews to assist management and departments in complying with policies and procedures[127](index=127&type=chunk) [Employees](index=34&type=section&id=Employees) The company's employee count decreased, with remuneration and bonuses determined by performance, and comprehensive onboarding and internal training are provided to support employee development and compliance requirements - Employee count: **97 full-time employees** as of December 31, 2019 (June 30, 2019: **108 employees**)[128](index=128&type=chunk) - Remuneration policy: Remuneration and bonuses are determined by performance and reviewed annually based on employee's full-year performance assessment and reference to departmental and Group-wide results[128](index=128&type=chunk) - Training: Provides comprehensive induction programs and internal training courses to assist professional staff in meeting continuous professional training requirements[128](index=128&type=chunk) [Interim Dividend](index=34&type=section&id=Interim%20Dividend) The Board declared an interim dividend of **0.2 HK cents** per ordinary share, to be distributed on a specified date, as a return to shareholders - Interim dividend: **0.2 HK cents** per ordinary share (2018: **0.2 HK cents** per share)[129](index=129&type=chunk) - Payment date: Tuesday, March 24, 2020[129](index=129&type=chunk) - Record date: Close of business on Friday, March 6, 2020[129](index=129&type=chunk) [Closure of Register of Members](index=34&type=section&id=Closure%20of%20Register%20of%20Members) The company will temporarily close its share register to determine eligibility for the interim dividend, with a clear deadline for share transfers - Closure dates: From Wednesday, March 4, 2020, to Friday, March 6, 2020 (both days inclusive)[130](index=130&type=chunk) - Transfer deadline: All completed transfer forms, together with the relevant share certificates, must be lodged with the share registrar by **4:30 p.m.** on Tuesday, March 3, 2020[130](index=130&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or Any Associated Corporation](index=35&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares,%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20or%20Any%20Associated%20Corporation) This section discloses the long positions of directors and the chief executive in the company's ordinary shares, highlighting Dr. Jonathan Choi and his associates as significant shareholders, and confirms no other undisclosed interests - Dr. Jonathan Choi: Directly and deemed to own a total of **51.18%** of the total issued shares[132](index=132&type=chunk) - Mr. Michael Choi: Directly and corporately owns a total of **5.34%** of the total issued shares[132](index=132&type=chunk) - No other interests: Except as disclosed, no other interests or short positions in shares, underlying shares, or debentures were held by directors, the chief executive, or their spouses or minor children[133](index=133&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares of the Company](index=36&type=section&id=Substantial%20Shareholders'%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) This section lists the substantial shareholders holding **5%** or more of the company's issued share capital and their shareholdings, indicating Dr. Jonathan Choi and his associated parties as the primary controlling shareholders Substantial Shareholders' Shareholding | Shareholder Name | Number of Ordinary Shares of the Company (Deemed Interest) | Percentage of Total Issued Shares | | :--- | :--- | :--- | | Dr. Jonathan Choi | 2,138,735,220 | 51.18% | | World Developments Limited | 1,857,017,425 | 26.47% | | Innovation Assets Limited | 1,857,017,425 | 26.47% | | Sunwah International Limited | 1,857,017,425 | 26.47% | | Sun Wah Capital Limited | 1,857,017,425 | 30.49% | | Mr. Michael Choi | 93,905,931 | 5.34% | | Guangzhou Huiyin Development Investment Partnership (Limited Partnership) | 356,400,000 | 5.08% | - Overlapping interests: Interests of World Developments Limited, Innovation Assets Limited, SIL, Sun Wah Capital Limited, and Dr. Jonathan Choi overlap[137](index=137&type=chunk) [Corporate Governance Code](index=36&type=section&id=Corporate%20Governance%20Code) The company applied and complied with the principles and code provisions of the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 to the Listing Rules of the Stock Exchange of Hong Kong during the reporting period, demonstrating good corporate governance practices - Compliance: The company has applied and complied with the principles and code provisions of the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 to the Listing Rules[139](index=139&type=chunk) [Share Option Scheme](index=37&type=section&id=Share%20Option%20Scheme) The company adopted a share option scheme on November 10, 2010, to reward and attract talent, but no share options were granted, exercised, cancelled, or lapsed during this period - Adoption date: **November 10, 2010**[141](index=141&type=chunk) - Purpose: To reward or acknowledge participants' contributions to the Group, assist in recruiting and retaining excellent employees, and attract valuable talent[141](index=141&type=chunk) - Current period situation: No share options were granted, exercised, cancelled, or lapsed under the share option scheme during this period[142](index=142&type=chunk) [Purchase, Sale or Redemption of Shares](index=37&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20Shares) During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any shares, indicating no capital structure adjustments through share buybacks or issuances in this period - Current period situation: Neither the company nor any of its subsidiaries purchased, sold, or redeemed any shares of the company during the six months ended December 31, 2019[143](index=143&type=chunk) [Directors' Securities Transactions](index=37&type=section&id=Directors'%20Securities%20Transactions) The company has adopted the Model Code as set out in Appendix 10 to the Listing Rules, and all directors confirmed compliance with the code during the review period, ensuring the legality of directors' securities transactions - Compliance with code: The company has adopted the Model Code as set out in Appendix 10 to the Listing Rules, and all directors confirmed compliance with the code during the review period[144](index=144&type=chunk) [Changes in Directors' Information](index=37&type=section&id=Changes%20in%20Directors'%20Information) This section discloses changes in directors' information, specifically Dr. Lam Ka-lai's resignation as an independent non-executive director from two companies, reflecting adjustments to the board composition - Dr. Lam Ka-lai: Resigned as an independent non-executive director of Hsin Chong Group Holdings Limited and Glorious Sun Enterprises Limited[145](index=145&type=chunk) [Audit Committee](index=37&type=section&id=Audit%20Committee) The Audit Committee has reviewed accounting principles and financial reporting matters with management and is responsible for reviewing financial controls, risk management, and internal control systems to enhance the Group's risk response capabilities - Responsibilities: Reviewing the accounting principles and practices adopted by the Group, discussing financial reporting matters, and reviewing the interim report and unaudited condensed consolidated financial statements[146](index=146&type=chunk) - Additional responsibilities: Responsible for reviewing the Group's financial controls, risk management, and internal control systems, and has commenced performing these duties[146](index=146&type=chunk) [Independent Review Report](index=38&type=section&id=Independent%20Review%20Report) Independent auditor Ernst & Young reviewed the interim financial information and concluded that it was prepared in all material respects in accordance with HKAS 34, providing independent assurance on the reliability of the financial reporting - Scope of review: Conducted in accordance with Hong Kong Standard on Review Engagements 2410 issued by the Hong Kong Institute of Certified Public Accountants[149](index=149&type=chunk) - Conclusion: Nothing has come to our attention that causes us to believe that the interim financial information is not prepared, in all material respects, in accordance with **HKAS 34**[150](index=150&type=chunk) - Auditor: **Ernst & Young**[151](index=151&type=chunk) [List of Licensed Subsidiaries and Affiliates](index=39&type=section&id=List%20of%20Licensed%20Subsidiaries%20and%20Affiliates) This section lists Sunwah Kingsway Capital Holdings Limited's licensed subsidiaries, associates, and overseas offices, showcasing its extensive licensing and business presence in financial services, including securities, financing, asset management, and lending in Hong Kong, and investment advisory offices in China - Licensed subsidiaries: Including Sunwah Kingsway Financial Services Limited (holding multiple SFC licenses in Hong Kong and China B-share lead underwriter/broker licenses), Sunwah Kingsway Finance Limited, Sunwah Kingsway Asset Management Limited, and Sunwah Kingsway Credit Limited[153](index=153&type=chunk) - Associates and overseas offices: Investment advisory companies in Beijing, Shanghai, and Shenzhen, China[153](index=153&type=chunk)

SUNWAH KINGSWAY Sunwah Kingsway Capital Holdings Limited 新 華 滙 富 金 融 控 股 有 限 公 司 於 百 慕 建 註 冊 成 立 之 有 限 公 司 股份代號：00188 years 商界展關懷 @ caringcompany Awarded by The long Kong Council of Social Service 優質服務 極致追求 | --- | --- | --- | --- | |---------------------------------|-------|----------|-------| | | | | | | itatistic Graph Statistic Graph | | 年度報告 | | | | | | | statist 穩固的業務平台 新華滙富一向專注所長，力臻至善。新華滙富矢志成為香港最佳的 本地金融服務供應商，以熱誠及誠信為本地及國際客戶創建價值。 | --- | --- | --- | --- | --- | --- | --- | |---------------------|------ ...

Financial Performance - Total revenue for the six months ended December 31, 2018, was HKD 70,862,000, a decrease of 6.6% compared to HKD 75,860,000 in the same period of 2017[10] - Commission and fee income decreased to HKD 51,897,000, down 15.5% from HKD 61,483,000 year-over-year[10] - Interest income increased to HKD 16,051,000, representing a 47.5% increase from HKD 10,886,000 in the previous year[10] - The company reported a net loss of HKD 41,749,000 for the period, compared to a profit of HKD 12,808,000 in the same period last year[10] - Basic and diluted loss per share was HKD 0.61, compared to earnings of HKD 0.23 per share in the prior year[10] - The overall comprehensive loss for the period was HKD 30,759,000, compared to a comprehensive income of HKD 44,496,000 in the same period last year[13] Assets and Liabilities - Non-current assets decreased from HKD 612,269,000 to HKD 607,094,000, a decline of approximately 0.3%[15] - Current assets decreased significantly from HKD 1,838,618,000 to HKD 1,275,917,000, representing a decrease of about 30.7%[15] - Total liabilities decreased from HKD 1,250,339,000 to HKD 777,573,000, a reduction of approximately 37.8%[15] - The company's net asset value decreased from HKD 1,164,308,000 to HKD 1,068,172,000, a decline of about 8.2%[15] - Cash and cash equivalents decreased from HKD 230,663,000 to HKD 194,078,000, a decrease of approximately 15.8%[15] Cash Flow - Operating cash flow before changes in working capital was (48,916) thousand HKD, a significant decrease compared to 4,120 thousand HKD in the previous year[20] - Cash generated from operating activities was (44,832) thousand HKD, down from 4,547 thousand HKD year-on-year[20] - The company reported a decrease in accounts receivable, loans, and other receivables by 344,767 thousand HKD, compared to an increase of (30,884) thousand HKD in the previous year[20] - The company did not pay dividends to shareholders during this period, compared to 13,803 thousand HKD paid in the previous year[20] Accounting Standards and Impairment - The company adopted new accounting standards, including HKFRS 9 and HKFRS 15, which may impact the classification and measurement of financial assets and liabilities[29] - The company established an expected credit loss model for impairment, adjusting the expected credit loss amount based on the latest conditions at each reporting date[35] - The expected credit loss is calculated based on the probability of default, loss given default, and exposure at default, using historical data and forward-looking information[45] - The company will recognize significant increases in credit risk if contractual payments are overdue by more than 30 days, and will consider assets overdue by more than 90 days as defaulted[42] Shareholder Information - The company declared a final dividend of HKD 20,705 million for the period, an increase from HKD 13,803 million in the previous year[77] - The board declared an interim dividend of HKD 0.2 per ordinary share for the six months ended December 31, 2018, consistent with the previous year[158] - Major shareholders include Dr. Cai Guanshen with a total interest of 52.26% and World Developments Limited with 28.36%[165] Corporate Governance - All directors confirmed compliance with the standard code of conduct during the review period of six months[172] - The audit committee reviewed the accounting principles and practices adopted by the group, including the interim report for the six months ended December 31, 2018[175] - The independent review report concluded that there were no matters that would lead to a belief that the financial statements were not prepared in accordance with the relevant accounting standards[179] Market Conditions - The average monthly trading volume on the main board and GEM decreased by 11% to approximately HKD 185 billion in the first half of the 2019 fiscal year, down from HKD 208.5 billion in the same period of the previous year[136] - The average daily market turnover fell to HKD 89 billion in the first half of the 2019 fiscal year, compared to HKD 100 billion in the same period of the previous year[141] Future Plans - The group plans to invest RMB 330 million in a joint venture in Chongqing, China, which will hold 22% equity in the venture, pending approval from the China Securities Regulatory Commission[115] - The company plans to invest approximately HKD 8 million in properties located in Osaka, Japan, following an investment in Tokyo[147]