[Financial Summary](index=3&type=section&id=Financial%20Summary) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended September 30, 2019, revenue from continuing operations decreased by 7.5% to **HKD 239.8 million**, gross profit fell 49% to **HKD 56.5 million**, and loss for the period expanded to **HKD 79.05 million** due to investment losses | Metric (Continuing Operations) | H1 2019 (HKD thousands) | H1 2018 (HKD thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 239,836 | 259,211 | -7.5% | | Gross Profit | 56,497 | 110,990 | -49.1% | | Loss Before Income Tax | (75,499) | (19,524) | +286.7% | | Loss for the Period | (79,048) | (19,524) | +304.9% | | Loss Attributable to Owners of the Company | (76,977) | (18,712) | +311.4% | | Basic Loss Per Share (HK cents) | (0.93) | (0.22) | +322.7% | - The company had discontinued operations in the prior period, resulting in a loss of **HKD 20.39 million**, with no such operations in the current period[7](index=7&type=chunk)[8](index=8&type=chunk) [Condensed Consolidated Statement of Financial Position](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of September 30, 2019, total assets increased slightly to **HKD 714.7 million**, but total liabilities rose to **HKD 414.1 million**, reducing net assets to **HKD 300.6 million** while maintaining a healthy current ratio of 2.1x | Metric | Sep 30, 2019 (HKD thousands) | Mar 31, 2019 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Non-current Assets | 103,214 | 109,426 | -5.7% | | Current Assets | 611,497 | 588,366 | +3.9% | | **Total Assets** | **714,711** | **697,792** | **+2.4%** | | Current Liabilities | 288,835 | 198,854 | +45.2% | | Non-current Liabilities | 125,279 | 105,498 | +18.8% | | **Total Liabilities** | **414,114** | **304,352** | **+36.1%** | | **Net Assets** | **300,597** | **393,440** | **-23.6%** | - The balance sheet first recognized **right-of-use assets** (**HKD 21.07 million**) and **lease liabilities** (**HKD 21.36 million**) due to the adoption of Hong Kong Financial Reporting Standard 16 (HKFRS 16)[10](index=10&type=chunk)[11](index=11&type=chunk)[28](index=28&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Operating cash flow significantly improved from a net outflow of **HKD 140.9 million** to a net inflow of **HKD 94.6 million**, with cash and cash equivalents increasing to **HKD 123.1 million** at period-end | Metric | H1 2019 (HKD thousands) | H1 2018 (HKD thousands) | | :--- | :--- | :--- | | Net Cash Inflow/(Outflow) from Operating Activities | 94,602 | (140,891) | | Net Cash Outflow from Investing Activities | (2,820) | (2,391) | | Net Cash (Outflow)/Inflow from Financing Activities | (21,753) | 123,707 | | **Net Increase/(Decrease) in Cash and Cash Equivalents** | **70,029** | **(19,575)** | | Cash and Cash Equivalents at End of Period | 123,081 | 31,978 | [Management Discussion and Analysis](index=33&type=section&id=Management%20Discussion%20and%20Analysis) [Results, Business Review and Prospects](index=33&type=section&id=Results%2C%20Business%20Review%20and%20Prospects) During the period, revenue from continuing operations declined 7% to **HKD 240 million**, gross margin fell from 43% to 24%, and loss attributable to owners expanded to **HKD 77 million**, primarily due to a significant increase in losses from financial instrument investments - Revenue decline was mainly due to zero revenue from consumer electronics and a drop in Chinese health products due to a weak Hong Kong retail market[154](index=154&type=chunk)[159](index=159&type=chunk) - Gross margin decline was primarily due to a **HKD 2 million loss** on financial instrument sales in the current period, compared to a **HKD 44 million realized gain** in the prior period[155](index=155&type=chunk)[159](index=159&type=chunk) - The core driver of the expanded overall loss was a sharp increase in losses from the **investment in financial instruments segment** from approximately **HKD 6 million** in the prior period to **HKD 54 million** in the current period[156](index=156&type=chunk)[159](index=159&type=chunk) [Segment Business Review and Prospects](index=34&type=section&id=Segment%20Business%20Review%20and%20Prospects) Segment performance varied, with OBM toys seeing strong growth, Chinese health products declining due to local unrest, consumer electronics divested, money lending stable, and financial instrument investments incurring significant losses [Own Brand Manufacturing (OBM) Toys](index=35&type=section&id=OBM%20Toys) This segment's revenue increased by 66% to **HKD 179 million**, driven by strong North American market recovery and increased deliveries to key retail channels, though future sales may decline due to tariff uncertainties - OBM toy business revenue increased by approximately **66%** from **HKD 108 million** in the prior period to **HKD 179 million**[168](index=168&type=chunk)[172](index=172&type=chunk) - The North American market was the primary growth driver, with shipments to the region reaching **HKD 173 million**, accounting for **72%** of the Group's total revenue[170](index=170&type=chunk) - The company expects a slight decline in 2020 sales, with profit margins potentially impacted by tariff threats[187](index=187&type=chunk) [Chinese Health Products](index=34&type=section&id=Chinese%20Health%20Products) Revenue for this segment decreased from **HKD 58 million** to **HKD 49 million**, resulting in a loss of **HKD 6 million**, primarily due to reduced tourist numbers and a weak retail market in Hong Kong caused by social unrest | Metric | H1 2019 | H1 2018 | | :--- | :--- | :--- | | Revenue | Approx. HKD 49 million | Approx. HKD 58 million | | Segment (Loss)/Profit | Approx. (HKD 6) million | Approx. (HKD 1) million | - Performance decline was mainly due to local social unrest since June 2019 impacting Hong Kong's retail market and tourist numbers[192](index=192&type=chunk)[196](index=196&type=chunk) [Consumer Electronic Products](index=34&type=section&id=Consumer%20Electronic%20Products) This segment generated no revenue and incurred a **HKD 3 million** loss due to the expiration of a supply contract, leading to its divestment after the reporting period to improve the Group's financial position - No revenue contribution in the current period (compared to **HKD 37 million** in the prior period), with a segment loss of **HKD 3 million**[161](index=161&type=chunk)[165](index=165&type=chunk) - Due to continuous losses, the company sold this business segment on October 27, 2019, to improve the Group's financial position[162](index=162&type=chunk)[165](index=165&type=chunk) [Money Lending Business](index=36&type=section&id=Money%20Lending) The money lending business remained stable, generating approximately **HKD 14 million** in interest income and **HKD 8 million** in segment profit, with the Group planning to continue prudent development and strengthen risk control | Metric | H1 2019 | H1 2018 | | :--- | :--- | :--- | | Interest Income | Approx. HKD 14 million | Approx. HKD 11 million | | Segment Profit (Pre-tax) | Approx. HKD 8 million | Approx. HKD 7 million | - During the period, the Group granted new loans totaling **HKD 199 million**, with customers repaying **HKD 115 million**, and outstanding loan balances at period-end were **HKD 196 million**[175](index=175&type=chunk)[198](index=198&type=chunk) [Investment in Financial Instruments](index=36&type=section&id=Investment%20in%20Financial%20Instruments) This segment recorded a significant loss of **HKD 54 million**, primarily due to unfavorable stock market conditions, including **HKD 52 million** in fair value changes and **HKD 2 million** in realized sales losses, causing the market value of listed equities to drop to **HKD 145 million** - Segment loss of approximately **HKD 54 million**, a significant increase from **HKD 6 million** in the prior period[176](index=176&type=chunk)[178](index=178&type=chunk) | Major Holdings (as of Sep 30, 2019) | Fair Value (HKD thousands) | % of Total Assets | Fair Value (Loss)/Gain for the Period (HKD thousands) | | :--- | :--- | :--- | :--- | | IDG Energy Investment Limited (650) | 46,000 | 6.4% | 400 | | Yunfeng Financial Group Limited (376) | 26,040 | 3.6% | (9,709) | | Global Mastermind Capital Holdings Limited (905) | 19,745 | 2.8% | (19,159) | [Group Resources and Liquidity](index=40&type=section&id=Group%20Resources%20and%20Liquidity) As of September 30, 2019, the Group's financial position remained stable with cash increasing to **HKD 123 million** and a current ratio of 212%, though the debt-to-equity ratio rose to 44% due to share repurchases and operating losses | Metric | Sep 30, 2019 | Mar 31, 2019 | | :--- | :--- | :--- | | Cash and Bank Balances | Approx. HKD 123 million | Approx. HKD 55 million | | Debt-to-Equity Ratio | Approx. 44% | Approx. 29% | | Current Ratio | Approx. 212% | Approx. 296% | - Trade receivables significantly increased by **315%** to **HKD 129 million**, primarily due to increased OBM toy orders from US customers seeking to mitigate tariff uncertainties[206](index=206&type=chunk)[211](index=211&type=chunk) - Shareholders' equity decreased from **HKD 393 million** to **HKD 301 million**, mainly due to share repurchases and operating losses during the period[200](index=200&type=chunk)[203](index=203&type=chunk) [Notes to the Unaudited Condensed Consolidated Interim Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Interim%20Financial%20Statements) [Changes in HKFRSs](index=10&type=section&id=2.%20Changes%20in%20HKFRSs) The Group adopted HKFRS 16 'Leases' for the first time, significantly impacting the financial statements by recognizing new right-of-use assets and lease liabilities, with a cumulative effect transition approach - The adoption of **HKFRS 16** is the most significant accounting policy change this period, replacing the previous **HKAS 17** Leases standard[28](index=28&type=chunk)[31](index=31&type=chunk) | Impact on Statement of Financial Position as of April 1, 2019 | Amount (HKD thousands) | | :--- | :--- | | **Increase:** Right-of-use assets | 15,290 | | **Increase:** Lease liabilities (current) | 6,108 | | **Increase:** Lease liabilities (non-current) | 9,182 | [Revenue, other revenue, gains and losses, net and segmental information](index=15&type=section&id=4.%20Revenue%2C%20other%20revenue%2C%20gains%20and%20losses%2C%20net%20and%20segmental%20information) Total revenue from continuing operations was **HKD 240 million**, with OBM toys as the largest contributor at **HKD 179 million**, and the US and Canada being the largest market, accounting for over 72% of revenue | Continuing Operations Segment | Revenue (HKD thousands) | (Loss)/Profit Before Income Tax (HKD thousands) | | :--- | :--- | :--- | | Own Brand Manufacturing Toys | 179,172 | (7,883) | | Chinese Health Products | 48,801 | (5,515) | | Money Lending Business | 14,263 | 8,177 | | Investment in Financial Instruments | (2,400) | (53,995) | | Consumer Electronic Products | – | (3,300) | | Revenue from Continuing Operations by Geographical Region | H1 2019 (HKD thousands) | H1 2018 (HKD thousands) | | :--- | :--- | :--- | | United States and Canada | 173,035 | 103,889 | | Mainland China and Hong Kong | 63,252 | 149,599 | | Europe | 2,859 | 3,025 | [Business Divestitures and Disposals](index=21&type=section&id=6.%20Loss%20before%20income%20tax) The Group completed the disposal of its OEM Toys business in January 2019 and sold Notton Limited in September 2019, recognizing a gain of **HKD 4.05 million**, with Keytime Global Limited also divested post-period - The **Original Equipment Manufacturing (OEM) Toys** business was disposed of on January 30, 2019, with its H1 2018 performance (revenue of **HKD 46.42 million**, loss of **HKD 20.39 million**) classified as discontinued operations[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) - On September 26, 2019, the Group sold its entire equity interest in subsidiary **Notton Limited** for a total consideration of **HKD 1**, recognizing a disposal gain of approximately **HKD 4.05 million**[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - Post-reporting period, the Group sold **Keytime Global Limited**, a subsidiary engaged in consumer electronic product sales, on October 27, 2019[148](index=148&type=chunk)[149](index=149&type=chunk) [Share Capital and Share Repurchases](index=29&type=section&id=17.%20Share%20capital) During the six months ended September 30, 2019, the company repurchased **655.85 million** ordinary shares for **HKD 28.92 million**, all of which were cancelled, aiming to enhance net asset value per share | Month of Repurchase | Number of Ordinary Shares (thousands) | Price Per Share (HKD) | Total Consideration (HKD thousands) | | :--- | :--- | :--- | :--- | | June 2019 | 77,750 | 0.038 - 0.039 | 3,030 | | July 2019 | 578,100 | 0.039 - 0.050 | 25,889 | | **Total** | **655,850** | | **28,919** | - After the repurchases, the total number of issued ordinary shares decreased from **8,521,308 thousand** to **7,865,458 thousand**[133](index=133&type=chunk) [Corporate Governance and Other Information](index=43&type=section&id=Corporate%20Governance%20and%20Other%20Information) [Substantial Shareholders](index=43&type=section&id=Substantial%20Shareholders) As of September 30, 2019, Eternity Finance Group Limited was the largest shareholder with **18.86%** of issued ordinary shares, while Heng Tai Finance Limited held convertible bonds convertible into **1.2 billion** shares | Shareholder Name | Capacity | Number of Ordinary Shares Held | % of Issued Share Capital | | :--- | :--- | :--- | :--- | | Eternity Finance Group Limited | Beneficial Owner | 1,483,728,240 | 18.86% | - **Heng Tai Finance Limited** holds convertible bonds corresponding to **1,200,000,000** relevant shares[227](index=227&type=chunk) [Share Option Scheme](index=44&type=section&id=Share%20Option%20Scheme) At the beginning of the period, **340 million** unexercised share options granted to directors existed, all of which lapsed during the period, resulting in no outstanding options at period-end - As of April 1, 2019, there were **340,000,000** unexercised share options, all held by the company's directors[235](index=235&type=chunk) - During the six months ended September 30, 2019, all **340,000,000** share options lapsed[144](index=144&type=chunk)[235](index=235&type=chunk) [Corporate Governance](index=46&type=section&id=Corporate%20Governance) The company largely complied with the Corporate Governance Code, with one non-executive director's absence from the AGM noted, and board composition changes occurring post-reporting period, including a new Vice Chairman appointment - The company complied with most provisions of the Corporate Governance Code, except for one non-executive director's absence from the Annual General Meeting[251](index=251&type=chunk)[253](index=253&type=chunk) - Board member changes: Mr. Zhang Guowei was appointed Vice Chairman and Executive Director on October 28, 2019; Mr. Diao Yunfeng resigned as Non-executive Director on the same day[245](index=245&type=chunk)[247](index=247&type=chunk)

Financial Performance - China Healthwise Holdings Limited reported a consolidated revenue of HKD 150 million for the fiscal year 2018/19, representing a 10% increase compared to the previous year[12]. - The company achieved a net profit of HKD 30 million, which is a 15% increase year-on-year, indicating improved operational efficiency[12]. - For the year ended 31 March 2019, the Group's turnover from continuing operations decreased by approximately 19% to approximately HK$452 million, compared to approximately HK$561 million for the year ended 31 March 2018[17]. - The Group recorded a revenue decrease of approximately 19%, from approximately HK$561 million for the year ended March 31, 2018, to approximately HK$452 million for the year ended March 31, 2019[99]. - Revenue from the consumer electronic products segment significantly decreased from approximately HK$292 million in FY17/18 to approximately HK$42 million in FY18/19 due to the expiry of the contract with Haier[19]. - The OBM toys segment recorded a sales increase of approximately 47%, rising from approximately HK$125 million in FY17/18 to approximately HK$184 million in FY18/19[29]. - The Chinese health products segment generated approximately HK$155 million in revenue, an increase from HK$134 million in the previous period[81]. - The investment in financial instruments segment reported revenue of approximately HK$43 million, with a segment loss of approximately HK$2 million, compared to a loss of HK$67 million in FY17/18[88]. Market Expansion and Strategy - User data showed a growth in customer base by 20%, reaching a total of 500,000 active users by the end of the fiscal year[12]. - The company plans to expand its market presence in Southeast Asia, targeting a 25% increase in market share over the next two years[12]. - Future guidance indicates a projected revenue growth of 15% for the next fiscal year, driven by new product introductions and market expansion strategies[12]. - A new marketing strategy focusing on digital channels is expected to increase brand awareness and customer engagement by 40%[12]. - The Group will maintain a multi-brand and multi-product strategy while strictly controlling costs to address challenges in the childcare products market[62]. Financial Position and Assets - The Group's total current assets rose to approximately HK$588 million as of 31 March 2019, compared to HK$358 million as of 31 March 2018[68]. - The current ratio improved to approximately 295% as of 31 March 2019, up from 110% as of 31 March 2018[68]. - Shareholders' fund increased from approximately HK$274 million as of 31 March 2018 to approximately HK$393 million as of 31 March 2019, primarily due to shares placing during the year[68]. - The Group's total assets amounted to HK$698 million as of 31 March 2019, financed by shareholders' funds, payables, and borrowings[136][137]. - The Group's loans receivables increased sharply to HK$261 million as of 31 March 2019, up from HK$35 million as of 31 March 2018[66]. Cost Management and Efficiency - Research and development expenses increased by 30%, reflecting the company's commitment to innovation and new technology[12]. - The management streamlined distribution networks to reduce costs and focus on large distributors with extensive networks[28]. - Selling and distribution expenses decreased to approximately HK$87 million, representing a decrease of approximately 23% from approximately HK$113 million in the previous year[103]. - General and Administrative (G&A) expenses amounted to approximately HK$82 million, a decrease of approximately 5% compared to HK$86 million in FY17/18[110]. - Cost of goods sold (COGS) decreased by approximately 28% to approximately HK$287 million in FY18/19 from approximately HK$400 million in FY17/18[100]. Risk Management - The management has identified principal risks including strategic, economic, credit, and market risks, with mitigating actions in place to address these challenges[155][160]. - The company has implemented measures to mitigate liquidity risk by regularly monitoring financial position and maintaining appropriate liquidity[163]. - Price risk is managed by diversifying equity investments and regularly monitoring the equity portfolio[163]. - Exchange risk is addressed through the use of financial instruments such as forward exchange contracts to hedge against foreign exchange rate fluctuations[163]. - Legal and regulatory risks are managed by monitoring changes in the regulatory environment and ensuring sufficient resources are available for compliance[165]. Corporate Governance - The Company has adopted the Corporate Governance Code as a guideline for its governance policies[182]. - The Board comprises five Executive Directors, one Non-executive Director, and three Independent Non-executive Directors, with no relationships among them[183]. - The Board held a total of twenty-five meetings during the year ended March 31, 2019[186]. - The Company emphasizes high standards of corporate governance to manage business risks and protect stakeholders' interests[172]. - Independent Non-executive Directors are appointed for a specific term of three years and are subject to retirement by rotation every three years[187]. Shareholder Activities - A total of 1,420,000,000 new shares were issued at a placing price of HK$0.11 per share, raising approximately HK$150 million for business operations[171]. - Approximately HK$120 million of the proceeds from the share placement was allocated for money lending business, while HK$30 million was designated for general working capital and future investment opportunities[171]. - The company entered into a subscription agreement for a bond issuance of HK$120 million, with net proceeds of approximately HK$119.5 million intended for money lending and working capital[171]. - As of March 31, 2019, all net proceeds from both the share placement and bond issuance were utilized as intended[171].