Company Overview - Pokfulam Development Company Limited has over 40 years of experience in property development and management, focusing on high-quality luxury residential and commercial properties in prestigious locations in Hong Kong [4]. - The company aims to create ideal living and working environments for tenants by integrating technology, social environment, and sustainable development principles, positioning itself as a leading property management company in Hong Kong [5]. - The company has three main business segments: property investment, development, and management; trading of goods, primarily audiovisual equipment; and securities investment and holding [5]. Property Development and Management - The company completed the development of 151 residential units at Mei King Court in 1977, with 59 units retained for long-term investment [9]. - The company owns 44 rental units at Mei King Court, which features practical four-bedroom units with large balconies and views of the South Lantau Strait [19]. - The company’s office building, Li Lam Tower, is located in the commercial core of Wanchai, offering office units ranging from approximately 400 square feet to 6,500 square feet [22]. - The company has undergone significant renovations at He Lan Road 3 and 4, enhancing the value and appeal of its properties [11]. - The company has taken proactive measures to enhance property attractiveness and service quality, including renovations and the integration of smart building technologies [45]. Financial Performance - The consolidated net loss after tax and non-controlling interests for the year ended September 30, 2020, was approximately HKD 59.5 million, compared to a profit of HKD 136.9 million in the previous year [28]. - Rental income from investment properties in Hong Kong decreased by 2% year-on-year, with residential property income down by 1% and commercial and industrial property income down by 4% [33]. - The acquisition of 47.84% equity in Elephant Holdings Limited was completed on January 24, 2020, increasing the company's ownership to 99.8%, contributing approximately 23.7% to the group's revenue during the review period [35]. - The company reported a significant increase in revenue, with a year-on-year growth of 15% in 2020 compared to 2019 [58]. - Earnings per share (EPS) for the fiscal year 2020 was HKD 2.50, reflecting a 10% increase from the previous year [58]. - The debt ratio stood at 45% as of the end of 2020, indicating a stable financial position despite market fluctuations [58]. - The company reported a total borrowing of HKD 1.2 billion, which is a 5% decrease from the previous fiscal year, reflecting improved cash flow management [58]. Investment Strategy - The company has invested in Adams Street Private Income Fund LP in 2020, indicating a strategy to diversify its investment portfolio [11]. - The company invested HKD 39 million in the TKO Fund, which targets properties in Tseung Kwan O, with an expected holding period of about five years [36]. - The company plans to continue exploring growth opportunities in the high-end audio and visual product market in China, which is seen as having significant growth potential [35]. - The company has fully paid its commitment of USD 5 million to the Adams Street Private Income Fund LP, which aims to generate current income with strong downside protection [39]. - A strategic acquisition of a local competitor is expected to be finalized by Q2 2021, which is projected to increase overall revenue by 25% [66]. Environmental, Social, and Governance (ESG) Practices - The company aims to enhance its environmental, social, and governance (ESG) practices, committing to a 30% reduction in carbon emissions by 2025 [67]. - Total greenhouse gas emissions for the reporting period were 25.66 tons of CO2 equivalent, an increase from 17.23 tons in the previous year, representing a 48.5% rise [83]. - The density of greenhouse gas emissions per working day was 0.10 tons of CO2 equivalent, up from 0.07 tons in the previous year, indicating a 42.9% increase [83]. - The company implemented energy efficiency measures, including maintaining office temperature at 25.5 degrees Celsius and using energy-efficient appliances [88]. - The company aims to reduce carbon emissions from business travel by prioritizing local suppliers and utilizing modern communication tools [88]. - The report emphasizes the importance of stakeholder engagement to improve environmental, social, and governance performance [77]. - The company has established operational procedures to ensure effective vehicle usage to minimize emissions [83]. - The report covers the company's commitment to comply with local environmental laws and regulations while enhancing energy efficiency [80]. Employee and Workplace Practices - As of September 30, 2020, the total number of employees was 18, an increase from 17 in the previous year, with approximately 94% being full-time employees [106]. - The gender distribution of employees was 61% female and 39% male, with 6% of employees being part-time [112]. - Employee turnover rate for females is 100.0% in 2019/2020, compared to 0% in 2018/2019 [118]. - Employee training rate for males is 100.0% in 2019/2020, up from 14.3% in 2018/2019 [130]. - Employee training rate for females is 91.0% in 2019/2020, compared to 20.0% in 2018/2019 [130]. - The company has established a training fund to support employee education expenses [129]. - The company maintains a strict recruitment policy to comply with local labor laws, prohibiting child and forced labor [133]. - The company implemented safety measures in response to the COVID-19 pandemic, including providing hand sanitizers and masks [126]. - There were no work-related deaths or injuries reported during the reporting period [127]. Corporate Governance - The board consists of six members, including three executive directors and three independent non-executive directors, complying with the requirement that independent non-executive directors make up at least half of the board [173]. - The company is committed to high standards of corporate governance and regularly reviews its organizational structure to ensure compliance with governance codes [167]. - The board has established various committees, including the nomination committee and audit committee, to oversee different responsibilities and ensure compliance with applicable laws and regulations [168]. - The company has adopted a board diversity policy, recognizing the benefits of diversity in maintaining competitive advantage, considering factors such as gender, age, cultural background, and professional experience [177]. - The board has accepted the nomination committee's recommendation to reappoint retiring directors willing to stand for re-election at the upcoming annual general meeting [184]. - The company has implemented a nomination policy to ensure a balanced representation of skills and experiences on the board, considering diversity benefits [179]. - The board has established a written framework for the roles and responsibilities of the managing director and senior management, subject to regular review by the board [169]. - The company has arranged suitable insurance coverage for its directors against legal actions faced during the year [188]. - The board believes that having the same individual serve as both chairman and CEO provides strong and effective leadership for the company [191]. - The company will continue to review its corporate governance structure and consider necessary changes, including the separation of the roles of chairman and CEO [191].

Financial Performance - The company reported a net loss of approximately HKD 45.7 million for the six months ended March 31, 2020, compared to a profit of HKD 73.4 million in the same period last year[7]. - Revenue for the six months ended March 31, 2020, was HKD 72,299,000, representing an increase of 2.9% compared to HKD 70,224,000 for the same period in 2019[48]. - The company reported a loss of HKD 45,747,000 for the six months ended March 31, 2020, compared to a profit of HKD 73,027,000 in the same period last year, reflecting a significant decline[48]. - Total comprehensive loss for the period was HKD 44,045,000, compared to a comprehensive income of HKD 60,329,000 in the previous year[50]. - Basic loss per share for the period was HKD (0.41), compared to earnings of HKD 0.67 per share in the same period last year[50]. - The company reported a loss attributable to owners of HKD 45,683,000 for the six months ended March 31, 2020, compared to a profit of HKD 73,445,000 for the same period in 2019[113]. Revenue and Income Sources - The property investment and management segment recorded a loss of approximately HKD 75,098,000 due to a decrease in the fair value of investment properties[99]. - Revenue from sales of goods and property management services was HKD 18,692,000 and HKD 4,566,000 respectively, compared to HKD 16,409,000 and HKD 4,660,000 in the previous year, reflecting growth of 13.9% and a slight decrease of 2.0%[104]. - Other income sources generated HKD 23,258,000, up from HKD 21,069,000, indicating an increase of 10.4%[104]. - The company recognized a total of HKD 21,099,000 in other income and gains during the reporting period[96]. Investment Activities - The company completed the acquisition of a 99.8% stake in Elephant Holdings Limited, which contributes approximately 26% to the group's revenue during the review period[11]. - The company invested HKD 39 million in the TKO Fund, targeting properties in Tseung Kwan O, with an estimated investment holding period of about five years[12]. - The company has invested USD 5 million in the Adams Street Private Income Fund LP, focusing on generating current income with strong downside protection[14]. - The company agreed to purchase 4,784 shares of its subsidiary, Elephant Holdings Limited, representing 47.84% of the total equity, for a total consideration of HKD 15,424,000[29]. - The acquisition was completed on January 24, 2020, and is expected to strengthen the company's control and development of Elephant Holdings and its subsidiaries[29]. Asset and Equity Management - The group's equity as of March 31, 2020, was HKD 54.468 billion, compared to HKD 55.362 billion on September 30, 2019, reflecting a decrease[21]. - The company's total equity decreased to HKD 5,446,829,000 from HKD 5,542,326,000[54]. - The total equity attributable to owners of the company was HKD 5,505,779,000 as of March 31, 2020, compared to HKD 5,536,235,000 at the same time last year[59]. - The company recognized a decrease in non-controlling interests of approximately HKD 5,999,000 due to the acquisition[157]. - The company's attributable equity decreased by approximately HKD 7,992,000 following the acquisition[157]. Cash Flow and Liquidity - The total cash and bank balances as of March 31, 2020, amounted to HKD 16.64 million, down from HKD 18.86 million on September 30, 2019, with over 47% in HKD, 34% in USD, and 18% in RMB[21]. - Cash generated from operating activities was HKD 23,655,000, down from HKD 30,300,000 in the prior year[61]. - The company incurred a net cash outflow from investing activities of HKD 29,797,000, compared to HKD 65,632,000 in the previous year, indicating improved cash management[61]. - The company’s cash and cash equivalents decreased to HKD 129,381,000 at the end of the period, down from HKD 189,498,000 a year earlier[61]. - As of March 31, 2020, the group had undrawn bank credit facilities of approximately HKD 462 million, sufficient to support operational and capital expenditure needs[24]. Property and Rental Income - Rental income from residential properties increased by 0.8%, primarily due to higher rental income from properties at Mei King Court and Chiu Fai Court[10]. - The company’s office and industrial property income remained stable compared to the same period last year[10]. - The group anticipates a decrease in rental income for the second half of the fiscal year due to the ongoing impact of the COVID-19 pandemic[18]. - The occupancy rate and monthly rent for residential units in Beijing's Chaoyang District have declined compared to the same period last year due to the pandemic[16]. - The company received rental income of HKD 510,000 from B.L. Wong for the six months ended March 31, 2020, consistent with the previous year[154]. Corporate Governance and Management - The company has complied with the relevant regulations under the Listing Rules regarding connected transactions and corporate governance[30][32]. - The chairman and CEO positions are held by the same individual, which the board believes provides strong leadership[32]. - The board will continue to review the effectiveness of the corporate governance structure and consider necessary changes[32]. - The total remuneration for key management personnel for the six months ended March 31, 2020, was HKD 3,868,000, compared to HKD 3,732,000 for the same period in 2019[155]. - The monthly salary of the chairman has been increased from HKD 182,758 to HKD 186,008 starting January 1, 2020[41]. Accounting Standards and Financial Reporting - The financial statements for the six months ended March 31, 2020, were prepared in accordance with Hong Kong Accounting Standards (HKAS) 34 and applicable disclosure requirements of the Listing Rules[65]. - The group adopted new and revised Hong Kong Financial Reporting Standards (HKFRS) during the reporting period, with HKFRS 16 "Leases" being a significant change affecting accounting treatment[72]. - Under HKFRS 16, all leases must be capitalized on the balance sheet as right-of-use assets and lease liabilities, with exceptions for short-term leases and low-value assets[75]. - The group has chosen not to recognize right-of-use assets and lease liabilities for leases with a lease term of less than 12 months[75]. - The management's significant judgments and estimates in applying the group's accounting policies remain consistent with those applied in the audited financial statements for the year ended September 30, 2019[69].

[Company Information](index=3&type=section&id=Company%20Information) [Company Overview](index=3&type=section&id=Company%20Information) This section outlines the company's fundamental registration and governance details, including board composition, key advisors, and share information - The Chairman and Managing Director is **Mr. Wong Tat Cheung**, and the independent auditor is **BDO Limited, Hong Kong**[6](index=6&type=chunk) Share Information | Item | Details | | :--- | :--- | | Listing Venue | Main Board of The Stock Exchange of Hong Kong Limited | | Stock Code | 225 | | Board Lot | 2,000 shares | [Chairman's Statement](index=4&type=section&id=Chairman%27s%20Statement) [Annual Profit](index=4&type=section&id=Annual%20Profit) The Group's consolidated net profit for FY2019 was approximately HKD 137 million, a significant decrease from HKD 481 million in the previous year, primarily due to a substantial reduction in investment property revaluation surplus; excluding non-operating items, the adjusted operating net profit was HKD 84.9 million, representing a 2.3% year-on-year increase FY2019 Profit and Non-Operating Items (HKD) | Metric | FY2019 | FY2018 | | :--- | :--- | :--- | | **Consolidated Net Profit** | **Approx. HKD 136.9 million** | **Approx. HKD 480.8 million** | | Investment Property Revaluation Surplus | Approx. HKD 65.9 million | Approx. HKD 420.9 million | | Net Loss on Securities Investment Revaluation | Approx. HKD 4.9 million | Approx. HKD 8.9 million | | **Operating Net Profit (Adjusted)** | **HKD 84.9 million** | **HKD 83.0 million** | | YoY Change in Operating Net Profit | +2.3% | - | [Dividends](index=4&type=section&id=Dividends) The Board recommends a final dividend of HKD 0.34 per share, bringing the total annual dividend to HKD 0.38 per share, including an interim dividend of HKD 0.04 per share, consistent with the previous year - The total annual dividend for FY2019 is **HKD 0.38 per share**, consistent with FY2018[8](index=8&type=chunk) [Business Review](index=5&type=section&id=Business%20Review) The Group's business review covers Hong Kong and Mainland China, highlighting Hong Kong's property leasing as a key profit source with 3.3% revenue growth, stable contributions from Elephant Holdings, and real estate fund investments, alongside efforts to sell the Guangzhou project and declining performance of Beijing residential properties [Hong Kong Operations](index=5&type=section&id=Hong%20Kong%20Operations) Hong Kong operations primarily focus on property leasing, with rental income growing 3.3% year-on-year, including 2.4% for residential and 5.0% for office and industrial properties; major subsidiary Elephant Holdings (audio-visual solutions) contributes positively, accounting for approximately 22% of total group revenue; the Group also subscribed to the 'TKO Fund' in October 2018 with a capital commitment of HKD 39 million - Rental income from Hong Kong investment properties increased by **3.3% year-on-year**, serving as the primary source of the Group's operating profit[10](index=10&type=chunk) - Major subsidiary Elephant Holdings Limited's revenue accounts for approximately **22% of the Group's total revenue**, providing a positive contribution[12](index=12&type=chunk) - The Group subscribed to the 'TKO Fund' in October 2018 with a capital commitment of **HKD 39 million** to diversify investments[13](index=13&type=chunk) [Mainland China Property Development Projects](index=6&type=section&id=Mainland%20China%20Property%20Development%20Projects) The Group is seeking to divest its one-third interest in Guangzhou Dongyin Plaza, with the first public tender having expired and a second tender underway; residential units in Beijing's Chaoyang District experienced declines in both occupancy rates and monthly rents compared to the previous year - The Group is attempting to sell its equity interest in Guangzhou Dongyin Plaza through public tender, with a second tender initiated after the first one failed[17](index=17&type=chunk) - Occupancy rates and monthly rents for Beijing residential units have decreased compared to last year[18](index=18&type=chunk) [Outlook](index=7&type=section&id=Outlook) Due to social unrest in Hong Kong and US-China trade friction, the short-term economic outlook for Hong Kong remains uncertain, potentially adversely impacting the Group's rental income in the coming year; nevertheless, the Group will continue to prudently seek new investment opportunities and enhance existing property quality - Management anticipates that social unrest in Hong Kong and US-China trade friction will severely impact sectors like retail and tourism, potentially adversely affecting the Group's rental income in the coming year[20](index=20&type=chunk) [Financial Summary](index=8&type=section&id=Financial%20Summary) [Five-Year Financial Summary](index=8&type=section&id=Financial%20Summary) This section presents the Group's key financial indicators over the past five years in a tabular format, showing 2019 revenue at HKD 139 million, shareholders' equity increasing to HKD 5.536 billion, net asset value per share reaching HKD 50.2, dividends per share maintained at HKD 0.38, and the gearing ratio decreasing from 0.8% to 0.7% 2015-2019 Key Financial Indicators | Metric | 2015 | 2016 | 2017 | 2018 | 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue (HKD million) | 132 | 147 | 142 | 136 | 139 | | Shareholders' Equity (HKD million) | 4,386 | 4,611 | 5,000 | 5,440 | 5,536 | | Net Asset Value Per Share (HKD) | 39.8 | 41.8 | 45.4 | 49.4 | 50.2 | | Operating Profit Per Share* (HKD) | 0.79 | 0.86 | 0.83 | 0.75 | 0.77 | | Dividend Per Share (HKD) | 0.27 | 0.29 | 0.34 | 0.38 | 0.38 | | Gearing Ratio (%) | 1.6% | 1.5% | 1.0% | 0.8% | 0.7% | *Excluding the impact of major non-operating items (after tax) [Biographical Details of Directors and Senior Management](index=9&type=section&id=Biographical%20Details%20of%20Directors%20and%20Senior%20Management) [Directors](index=9&type=section&id=Directors) This section introduces the background information of the Board members, including Executive Directors Mr. Wong Tat Cheung (Chairman and Managing Director), Mr. Wong Tat Ki, and Mr. Wong Tat Sum, who are brothers, and Independent Non-Executive Directors Ms. Lam Tse Lai Kuen, Mr. Li Kwok Sing, Mr. Sit Hoi Wah, and Mr. Szeto Chun Chung, who possess extensive experience in finance, law, and other fields - Executive Directors Mr. Wong Tat Cheung, Mr. Wong Tat Ki, and Mr. Wong Tat Sum are brothers[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - Independent Non-Executive Directors possess extensive professional experience and backgrounds in banking, law, securities, and asset management[31](index=31&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [Senior Management](index=11&type=section&id=Senior%20Management) This section introduces the background information of senior management, including General Manager Mr. Wong Chin Yee and Company Secretary and Financial Controller Mr. Hui Shui Yuen - General Manager Mr. Wong Chin Yee is the son of the Chairman and Managing Director, Mr. Wong Tat Cheung[37](index=37&type=chunk) - Company Secretary and Financial Controller Mr. Hui Shui Yuen is a fellow member of the Hong Kong Institute of Certified Public Accountants with over eighteen years of experience in accounting and finance[38](index=38&type=chunk) [Environmental, Social and Governance Report](index=12&type=section&id=Environmental%2C%20Social%20and%20Governance%20Report) [Environment](index=14&type=section&id=Environment) The Group is committed to environmental protection, primarily through energy saving, water conservation, and waste management to mitigate operational environmental impact; in FY2019, total greenhouse gas emissions decreased from 21.82 tonnes of CO2e to 16.70 tonnes, and the Group implemented various environmental measures, such as prioritizing energy-efficient appliances, encouraging waste segregation, and successfully promoting electronic billing to 80% of tenants to reduce paper consumption Greenhouse Gas Emissions (tonnes of CO2e) | Emission Scope | FY2019 | FY2018 | | :--- | :--- | :--- | | Scope 1 (Direct Emissions) | 5.75 | 6.27 | | Scope 2 (Indirect Emissions) | 10.55 | 15.54 | | Scope 3 (Other Indirect Emissions) | 0.40 | Not Applicable | | **Total** | **16.70** | **21.81** | - Since promoting electronic billing to tenants in April 2019, **80% of tenants** have adopted it, effectively reducing paper consumption[60](index=60&type=chunk) - During the reporting period, the Group found no instances of non-compliance with relevant environmental regulations[62](index=62&type=chunk) [Society](index=18&type=section&id=Society) The Group's social responsibility covers employment, health and safety, supply chain management, product responsibility, anti-corruption, and community investment; the Group is committed to providing a fair employment environment and a safe workplace, with a 0% staff turnover rate at the head office in FY2019, and also emphasizes supplier management, customer service quality, anti-corruption policy implementation, and active participation in community welfare activities [Employment and Labor Practices](index=19&type=section&id=Employment%20and%20Labor%20Practices) As of September 30, 2019, the Group's head office employed 17 staff members, consistent with the previous year; the staff turnover rate for FY2019 was 0%, a significant improvement from 6.1% last year, and the Group enforces equal remuneration and anti-discrimination policies to ensure equal opportunities for all employees Employee Turnover Rate | Fiscal Year | Total Turnover Rate | | :--- | :--- | | 2019 | 0% | | 2018 | 6.1% | - At the end of the reporting period, the Group was involved in one legal proceeding concerning employee compensation[80](index=80&type=chunk) [Health and Safety](index=21&type=section&id=Health%20and%20Safety) The Group is committed to fostering a safe working environment and regularly provides occupational health and safety training to employees; during the reporting period, there were no work-related fatalities, and lost workdays due to injuries remained at 0, consistent with the previous year - During the reporting period, the number of work-related fatalities and lost workdays due to injuries were both **0**[84](index=84&type=chunk) [Product/Service Responsibility](index=24&type=section&id=Product%2FService%20Responsibility) The Group focuses on providing high-quality services to tenants and clients, establishing stringent quality control processes and customer complaint handling mechanisms; during the reporting period, no complaints related to engineering and services were received, nor were there any completed projects requiring recall due to safety or health reasons - During the reporting period, the number of complaints related to engineering and services received at the corporate level was **0**[104](index=104&type=chunk) - The Group utilizes a complaint management tool named "Upkeep" to handle inquiries and complaints in real-time[108](index=108&type=chunk) [Anti-Corruption](index=26&type=section&id=Anti-Corruption) The Group maintains a zero-tolerance stance on bribery, extortion, fraud, and money laundering, having established employee codes of conduct and whistleblowing policies; during the reporting period, the Group complied with all relevant anti-corruption regulations, with no concluded legal cases concerning bribery against the Group or its employees - During the reporting period, there were no concluded legal cases concerning bribery against the Group or its employees[119](index=119&type=chunk) [Community Investment](index=27&type=section&id=Community%20Investment) The Group actively fulfills its social responsibilities and encourages employee participation in volunteer activities; during the reporting period, it donated **HKD 50,000** to the World Wide Fund for Nature and raised **HKD 10,000** for "World Heart Day" activities - During the reporting period, a donation of **HKD 50,000** was made to the World Wide Fund for Nature, and **HKD 10,000** was raised for "World Heart Day"[121](index=121&type=chunk)[122](index=122&type=chunk) [Corporate Governance Report](index=28&type=section&id=Corporate%20Governance%20Report) [Corporate Governance Practices](index=28&type=section&id=Corporate%20Governance%20Practices) During the reporting period, the company complied with all code provisions of the Corporate Governance Code, with two deviations: Code Provision A.2.1 (non-separation of Chairman and Chief Executive Officer roles) and A.4.1 (Independent Non-Executive Directors without specific terms); the Board believes the current arrangements are in the company's best interests - The company deviates from Code Provision A.2.1, where the Chairman and Managing Director (equivalent to Chief Executive Officer) roles are combined and held by **Mr. Wong Tat Cheung**, which the Board believes provides strong and consistent leadership[127](index=127&type=chunk)[149](index=149&type=chunk) - The company deviates from Code Provision A.4.1, as Independent Non-Executive Directors do not have specific terms but are subject to retirement by rotation and re-election in accordance with the company's articles of association[127](index=127&type=chunk)[141](index=141&type=chunk) [Board of Directors](index=28&type=section&id=Board%20of%20Directors) The Board of Directors, comprising three Executive Directors and four Independent Non-Executive Directors, is responsible for the company's leadership and oversight; the report details the Board's responsibilities, composition, diversity policy, director appointment and re-election mechanisms, and continuous professional development - The Board currently consists of **seven members**, including three Executive Directors and four Independent Non-Executive Directors, with Independent Non-Executive Directors constituting more than half of the Board[132](index=132&type=chunk) - The company has adopted a Board diversity policy, considering factors such as gender, age, cultural background, and professional experience when appointing directors[136](index=136&type=chunk) [Board Committees](index=33&type=section&id=Board%20Committees) The Board has established a Remuneration Committee, Audit Committee, and Nomination Committee; the report details each committee's composition, primary responsibilities, and annual meeting attendance, with most members being Independent Non-Executive Directors to ensure independence FY2019 Board and Committee Meeting Attendance Record | Director Name | Board Meetings | Remuneration Committee | Audit Committee | Nomination Committee | | :--- | :--- | :--- | :--- | :--- | | Wong Tat Cheung | 4/4 | 1/1 | Not Applicable | 3/3 | | Wong Tat Ki | 4/4 | Not Applicable | Not Applicable | Not Applicable | | Wong Tat Sum | 4/4 | Not Applicable | Not Applicable | Not Applicable | | Ms. Lam | 3/4 | Not Applicable | 1/2 | Not Applicable | | Mr. Li | 4/4 | 1/1 | 2/2 | 3/3 | | Mr. Sit | 4/4 | 1/1 | 2/2 | 3/3 | | Mr. Szeto | 1/1 | Not Applicable | Not Applicable | Not Applicable | [Risk Management and Internal Control](index=40&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board bears overall responsibility for the Group's risk management and internal control systems; the Group has engaged an independent internal audit consultant to annually review the effectiveness of these systems, which are deemed effective and appropriate - The Group has engaged an independent internal audit consultant to conduct an annual year-end review of the effectiveness of its risk management and internal control systems[185](index=185&type=chunk) [Directors' Report](index=45&type=section&id=Directors%27%20Report) [Management Discussion and Analysis](index=48&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the Group's financial position; as of September 30, 2019, shareholders' equity was HKD 5.536 billion, total bank balances and cash were HKD 186 million, total debt was HKD 55 million, and the debt-to-equity ratio was 1.0%, indicating a low level; the Group maintains a conservative treasury policy and has HKD 436 million in unutilized bank credit facilities Financial Position Summary (September 30, 2019) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Shareholders' Equity | HKD 5.536 billion | HKD 5.441 billion | | Bank Balances and Cash | HKD 186 million | HKD 248 million | | Total Debt | HKD 55 million | HKD 40 million | | Debt-to-Equity Ratio | 1.0% | 0.7% | - As of September 30, 2019, the Group had **HKD 436 million** in unutilized bank credit facilities, indicating ample liquidity[230](index=230&type=chunk) [Major Customers and Suppliers](index=51&type=section&id=Major%20Customers%20and%20Suppliers) During the reporting period, the Group's customer base was relatively diversified, with the top five customers collectively accounting for less than 18% of turnover; regarding suppliers, the top five suppliers accounted for approximately 71% of total purchases, with the largest supplier accounting for approximately 47% - The top five customers collectively accounted for **less than 18%** of turnover[246](index=246&type=chunk) - The top five suppliers accounted for approximately **71% of total purchases**, with the largest supplier accounting for approximately **47%**[246](index=246&type=chunk) [Directors' and Major Shareholders' Interests in Shares](index=53&type=section&id=Directors%27%20and%20Major%20Shareholders%27%20Interests%20in%20Shares) This section discloses the interests of directors in the company's shares; Executive Directors Mr. Wong Tat Cheung, Mr. Wong Tat Ki, and Mr. Wong Tat Sum, who are brothers, hold substantial shares in the company through personal and discretionary trusts, with their combined interests exceeding 73% Executive Directors' Shareholdings (September 30, 2019) | Director Name | Total Shares Held | Approximate Percentage of Issued Shares | | :--- | :--- | :--- | | Mr. Wong Tat Cheung | 81,084,666 | 73.6% | | Mr. Wong Tat Ki | 80,633,866 | 73.2% | | Mr. Wong Tat Sum | 81,218,666 | 73.7% | - The shareholding interests of the three Executive Directors are largely beneficially owned through discretionary trusts, resulting in overlapping interests[262](index=262&type=chunk) [Connected Transactions](index=55&type=section&id=Connected%20Transactions) On November 18, 2019, the company entered into an agreement with Elephant Holdings Limited, owned by the three Executive Directors, to acquire a 47.84% stake in its subsidiary Elephant Holdings for HKD 15.424 million; this transaction constitutes a discloseable connected transaction - Subsequent to the reporting period, the company agreed to acquire a **47.84% stake** in its subsidiary Elephant Holdings from a connected person (owned by Executive Directors) for **HKD 15.424 million** to consolidate control[267](index=267&type=chunk) [Independent Auditor's Report](index=59&type=section&id=Independent%20Auditor%27s%20Report) [Audit Opinion](index=59&type=section&id=Independent%20Auditor%27s%20Report) Independent auditor BDO Limited, Hong Kong, issued an unmodified opinion on the Group's consolidated financial statements, deeming them to present a true and fair view of the Group's financial position as of September 30, 2019, and its financial performance and cash flows for the year then ended; the key audit matter identified by the auditor was the valuation of investment properties - The auditor issued an **unmodified opinion**, stating that the consolidated financial statements present a true and fair view of the Group's financial position and performance in accordance with Hong Kong Financial Reporting Standards[297](index=297&type=chunk) - The key audit matter identified was the **valuation of investment properties**; as of September 30, 2019, the fair value of investment properties was approximately **HKD 5.214 billion**[300](index=300&type=chunk)[301](index=301&type=chunk) [Consolidated Financial Statements](index=64&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=64&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the year ended September 30, 2019, the Group recorded revenue of HKD 139 million, a slight year-on-year increase; however, due to a significant reduction in the fair value gain on investment properties, annual profit decreased from HKD 480 million last year to HKD 136 million, with basic earnings per share at HKD 1.24 Consolidated Statement of Profit or Loss Key Data (HKD thousand) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Revenue | 139,223 | 135,535 | | Fair Value Gain on Investment Properties | 65,885 | 420,936 | | Profit Before Income Tax | 144,778 | 488,950 | | Profit for the Year | 136,151 | 480,008 | | Profit Attributable to Owners of the Company | 136,847 | 480,770 | | Basic Earnings Per Share (HKD) | 1.24 | 4.36 | [Consolidated Statement of Financial Position](index=65&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of September 30, 2019, the Group's total assets were HKD 5.706 billion, with investment properties accounting for HKD 5.214 billion as the primary asset; total equity was HKD 5.542 billion, indicating a robust financial position, and current liabilities were HKD 121 million, mainly comprising secured bank loans and trade payables Consolidated Statement of Financial Position Key Data (HKD thousand) | Metric | September 30, 2019 | September 30, 2018 | | :--- | :--- | :--- | | Investment Properties | 5,213,818 | 5,087,890 | | **Total Assets** | **5,705,536** | **5,588,661** | | Bank Loans (Current) | 55,000 | 40,000 | | **Total Equity** | **5,542,326** | **5,447,261** | [Consolidated Statement of Cash Flows](index=67&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) In FY2019, net cash generated from operating activities was HKD 65.1 million; net cash used in investing activities was HKD 97.28 million, primarily for additions to investment properties; net cash used in financing activities was HKD 28.78 million, mainly for dividend payments; net decrease in cash and cash equivalents during the year was HKD 60.96 million Consolidated Statement of Cash Flows Summary (HKD thousand) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 65,099 | 52,341 | | Net Cash Used in Investing Activities | (97,279) | (10,738) | | Net Cash Used in Financing Activities | (28,780) | (38,800) | | Net (Decrease)/Increase in Cash and Cash Equivalents | (60,960) | 2,803 | | Cash and Cash Equivalents at Year End | 185,992 | 247,630 | [Five-Year Financial Summary](index=163&type=section&id=Five-Year%20Financial%20Summary) [Five-Year Financial Summary](index=163&type=section&id=Five-Year%20Financial%20Summary) This section provides a summary of the Group's consolidated results and net assets from FY2015 to FY2019, showing relatively stable revenue, significant fluctuations in annual profit due to changes in investment property fair value, and a steady increase in total assets and net assets Consolidated Results (2015-2019) | Year (HKD thousand) | 2015 | 2016 | 2017 | 2018 | 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 132,473 | 146,515 | 141,962 | 135,535 | 139,223 | | Profit for the Year | 172,529 | 259,690 | 420,421 | 480,008 | 136,151 | Consolidated Net Assets (2015-2019) | Year (HKD thousand) | 2015 | 2016 | 2017 | 2018 | 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 4,547,930 | 4,781,392 | 5,147,246 | 5,588,661 | 5,705,536 | | Net Assets | 4,393,601 | 4,619,478 | 5,007,804 | 5,447,261 | 5,542,326 | [Investment Property Information](index=164&type=section&id=Investment%20Property%20Information) [Investment Property Portfolio](index=164&type=section&id=Investment%20Property%20Information) This section details the Group's wholly-owned investment property portfolio, including commercial, residential, and industrial properties in Hong Kong, and residential properties in Beijing, China; key Hong Kong properties include Lee Lim Building on Lockhart Road, Scenic Terrace on Scenic Villa Drive, residential properties on Harland Road, and Welland Centre II in Kwai Chung - The Group holds multiple core investment properties in Hong Kong, covering commercial, residential, and industrial uses, mostly under long-term leases[736](index=736&type=chunk)[740](index=740&type=chunk) - The Group holds residential units in Jingda Garden, Chaoyang District, Beijing, Mainland China, as investment properties[740](index=740&type=chunk)

Financial Performance - The company's unaudited consolidated profit for the six months ended March 31, 2019, was approximately HKD 73.4 million, a decrease from HKD 395.5 million in 2018[6]. - The net profit for the period was HKD 73,027,000, a significant decrease of 81.5% from HKD 395,389,000 in the previous year[22]. - Total comprehensive income for the period amounted to HKD 60,329,000, down from HKD 401,845,000, reflecting a decline of 85%[22]. - Basic earnings per share decreased to HKD 0.67 from HKD 3.59, representing a drop of 81.3%[22]. - The profit before tax for the six months ended March 31, 2019, was HKD 73,445,000, a significant decrease from HKD 395,476,000 for the same period in 2018[102]. - The total comprehensive income before tax for the period was HKD 78,595,000[86]. Revenue and Income - Revenue for the six months ended March 31, 2019, was HKD 70,224,000, an increase of 3.7% compared to HKD 67,661,000 for the same period in 2018[22]. - The group reported a total revenue of HKD 71,261,000 for the six months ended March 31, 2019, with a profit of HKD 64,934,000[86]. - The company recognized revenue from the sale of goods amounting to HKD 16,409,000 for the six months ended March 31, 2019, compared to HKD 15,241,000 in the previous year, representing an increase of approximately 7.7%[95]. - The company reported a total of HKD 51,283,000 in revenue from other sources for the six months ended March 31, 2019, compared to HKD 49,930,000 in the previous year, reflecting an increase of approximately 2.7%[95]. Rental Income - Rental income from investment properties in Hong Kong increased by 2.7% compared to the same period last year, while residential property rental income slightly decreased by 0.3% due to the renovation of a property[9]. - Rental income from residential units in Beijing's Chaoyang District increased by 2.6% compared to the previous year[12]. - The company expects no increase in rental income for the second half of the fiscal year due to uncertainties stemming from the ongoing US-China trade conflict[14]. Dividends - The interim dividend declared is HKD 0.04 per share, consistent with the previous year[7]. - The company declared a dividend of HKD 37,461,000 for the period, an increase from HKD 33,054,000 in the previous year[32]. - The company declared an interim dividend of HKD 0.04 per share for the fiscal year ending September 30, 2019, totaling HKD 4,407,000, consistent with the previous year's interim dividend[100]. Assets and Liabilities - Non-current assets as of March 31, 2019, totaled HKD 5,407,467,000, an increase from HKD 5,264,216,000 as of September 30, 2018[26]. - Current assets decreased to HKD 263,207,000 from HKD 324,445,000, indicating a decline of 18.9%[26]. - Total liabilities increased to HKD 115,852,000 from HKD 100,481,000, reflecting a rise of 15.3%[26]. - The company's equity attributable to owners increased to HKD 5,505,779,000 from HKD 5,440,474,000, a growth of 1.2%[26]. - The company’s total liabilities increased to HKD 1,000,000,000 as of March 31, 2019, compared to HKD 900,000,000 as of September 30, 2018[30]. Investment Activities - The company invested HKD 39 million in the TKO Fund, which aims to invest in three properties in Tseung Kwan O, with a total construction area of approximately 300,000 square feet[9]. - The company invested HKD 15,213,000 in investment properties during the period, compared to HKD 13,412,000 in the same period of the previous year[32]. - The company reported a loss from joint ventures of HKD 79,643,000, compared to a loss of HKD 402,017,000 in the previous year[22]. Financial Reporting Standards - The group adopted the new Hong Kong Financial Reporting Standards (HKFRS) No. 9 and No. 15, which had no significant impact on the accounting policies compared to the previous periods[40]. - The implementation of HKFRS No. 15 resulted in a reclassification adjustment of approximately HKD 3,401,000 to contract liabilities as of October 1, 2018[49]. - The group is currently assessing the potential impact of new and revised HKFRS that have been issued but not yet effective, with no significant impact anticipated[40]. Credit Risk and Expected Credit Loss - The expected credit loss rate is projected to range between 2.12% and 23%[66]. - The expected credit loss rate for business and other receivables is estimated to range between 1.27% and 38%[119]. - The group applies a simplified approach for expected credit losses on trade receivables, allowing for the recognition of lifetime expected losses[83]. Corporate Governance - The group continues to comply with all corporate governance codes, with a board composition that includes a majority of independent non-executive directors[166]. - The company’s audit committee, consisting of three independent non-executive directors, has reviewed the interim performance and financial statements for the period[180].