Employee Share Incentive Plans - The company has adopted an employee share incentive plan with a budget of up to HKD 60,000,000 for purchasing shares from the market[1] - As of December 31, 2023, there has been no change in the number of shares awarded under the incentive plan, with a total expense of zero for the year[3][5] - The company has a total of 206,160,593 shares available for grant under the share incentive plan, representing approximately 1.56% of the issued share capital[46] - The company adopted a stock option plan on June 20, 2023, allowing for the issuance of up to 1,322,130,217 shares, representing approximately 10% of the total issued shares as of that date[77] - The maximum number of shares that can be issued to any participant under the stock option plan is limited to 1% of the total issued shares at any time within a 12-month period[77] - No stock options were granted, canceled, unexercised, exercised, or expired during the year under the 2023 stock option plan[78] - The company has adopted a share option scheme to encourage and reward eligible participants contributing to the group's success[100] - No share options were granted, exercised, cancelled, or lapsed under the 2012 share option scheme during the year[100] - The total number of share options outstanding as of January 1, 2023, was 13,000,000, with 2,000,000 options exercised during the year[101] Financial Performance - The company reported total revenue of HKD 2,887,000,000 for the year, a decrease of approximately 24% compared to HKD 3,814,000,000 in 2022[113] - The company recorded a post-tax loss of HKD 42,000,000 for the year, compared to a profit of HKD 66,000,000 in 2022[113] - The decline in revenue was primarily due to a decrease in toy product procurement orders from major customers, increased financial costs due to rising Hong Kong Interbank Offered Rate, and reduced income from the sale of berth bonds[113] - Despite the loss, the overall financial, business, and trading conditions of the company remain stable[113] - The company reported a basic loss per share of HKD 0.2 for the year, compared to a basic earnings per share of HKD 0.6 in 2022[120] - The trading and manufacturing segment's revenue decreased by approximately 25% to HKD 2,644,000,000, down from HKD 3,540,000,000 in 2022[122] - The OEM toy business generated revenue of HKD 2,450,000,000, a reduction of about 25% from HKD 3,246,000,000 in 2022[125] - The operating profit for the trading and manufacturing segment decreased by approximately 21% to HKD 185,400,000, down from HKD 236,000,000 in 2022[122] - The property investment and development segment's revenue decreased by about 12% to HKD 241,000,000, compared to HKD 273,000,000 in 2022[150] - Rental income from the property investment segment was HKD 173,000,000, an 8% decrease from HKD 187,200,000 in 2022[150] - The operating profit for the agriculture and forestry business was HKD 52,100,000, down from HKD 102,600,000 in 2022, representing a decrease of approximately 49%[130] - The company did not declare or distribute any dividends for the year, consistent with 2022[121] Governance and Risk Management - The company held four board meetings, three audit committee meetings, one remuneration and nomination committee meeting, one annual general meeting, and two special general meetings during the year[59] - The board consists of 11 members, including three executive directors, four non-executive directors, and four independent non-executive directors as of December 31, 2023[56] - The company has implemented a diversity policy for its board, considering factors such as gender, age, cultural and educational background, race, professional experience, skills, knowledge, and length of service[55] - The audit committee met with senior management and external auditors twice during the year to review accounting principles and practices, and discuss audit, internal control, and financial reporting matters[73] - The board has established an audit committee with specific written terms of reference outlining its powers and responsibilities[90] - The audit committee currently consists of five members, including four independent non-executive directors and one non-executive director[91] - The company has established a risk register to manage key risks, documenting estimated risks, current mitigation measures, and further management actions to control risks effectively[65] - The internal audit department regularly prepares audit plans and reports to the audit committee, ensuring effective risk management and internal control systems[83] - The company maintains a commitment to transparency and governance through its established audit committee and adherence to regulatory requirements[90] Strategic Outlook and Market Conditions - The company maintains a cautiously optimistic outlook for the market recovery and future business prospects, closely monitoring political and economic changes[161] - The company plans to control production costs through restructuring actions and expanding production bases in lower-cost countries[162] - The company aims to enhance customer loyalty and diversify its customer base, while exploring competitive pricing from different material suppliers[163] - The company anticipates a cautious optimism regarding the sales of residential units in Central Plaza, located in a prime area of Shenyang[165] - The group continues to focus on cost reduction by relocating production to lower-cost regions and outsourcing non-core components[126] - The group aims to enhance its competitive advantage in the OEM toy production business by streamlining operations, adopting automation, and providing unique integrated solutions[184] - The group plans to expand its customer base in the footwear trade, particularly in the US and Italy, to secure more orders while controlling production costs by diversifying production bases outside of China[185] - The group will continue to adopt a diversified tenant leasing strategy in response to the competitive and challenging real estate market in mainland China, where consumer confidence is crucial for recovery[186] - The group is exploring the feasibility of converting land reserves in Nanjing and Tianjin from industrial to commercial use to enhance land value and development returns[188] - The group currently leases over 290,000 acres (approximately 193 million square meters) of land in mainland China for agricultural purposes, focusing on high-profit crops and improving operational performance[188] - The group faces risks related to the economic downturn, credit crises, and other adverse economic conditions that could negatively impact consumer spending and client orders[190] - The overall condition of the Hong Kong economy and real estate market, along with government policies, may affect the group's income from its property portfolio[193] - The group is considering legal actions against 南京擎天科技有限公司 for the infringement of software copyrights, seeking compensation of RMB 210.4 million[197] - The group is committed to promoting sustainability through the use of recycled water and solar energy in its mainland China factories[184] Employee and Cost Management - The total number of employees as of December 31, 2023, was approximately 9,714, down from 10,006 in 2022, with employee costs around HKD 810,000,000 compared to HKD 1,183,000,000 in 2022[180] - The annual inflation rate in the US is around 3%, with expectations for the Federal Reserve to start cutting interest rates around mid-2024, which may boost economic growth and consumer spending[183]

Property Development and Sales - The group's flagship property project "Central Plaza" has approximately 65% of its residential and serviced apartment sales area sold as of this year[1]. - The group provided guarantees totaling approximately RMB 183,200,000 (about HKD 201,000,000) for independent buyers of the Central Plaza property as of December 31, 2023[9]. - The group is optimistic about the sales of residential units in Zhonghuan Plaza, located in a prime area of Shenyang, despite challenges posed by pandemic control measures[20]. - The group is exploring the feasibility of converting land reserves in Nanjing and Tianjin from industrial to commercial use to enhance land value and development returns[21]. - The total building area of the company's property investment portfolio in mainland China and Hong Kong is approximately 614,000 square meters and 26,000 square meters, respectively[38]. - The group's revenue from property investment and development decreased by approximately 12% to HKD 241 million in 2023, down from HKD 274 million in 2022[167]. - The operating profit for the property investment and development segment, including fair value changes, was HKD 52.1 million in 2023, compared to HKD 102.6 million in 2022[167]. - Rental income from the group's properties in Hong Kong decreased by about 8% to HKD 173 million in 2023, down from HKD 187.2 million in 2022[168]. Financial Performance - The company reported a basic loss per share of HKD 0.2 for the year 2023, compared to a basic earnings per share of HKD 0.6 in 2022, indicating a significant decline in profitability[33]. - Total revenue for the year ended December 31, 2023, was HKD 2,887,385, a decrease from HKD 3,813,722 in 2022, representing a decline of approximately 24.3%[110]. - Gross profit for the year was HKD 479,357, down from HKD 571,265 in the previous year, indicating a decrease of about 16.1%[110]. - The group reported a loss before tax of HKD (35,189) for the year, compared to a profit of HKD 86,936 in 2022, marking a significant turnaround[111]. - The company reported a loss of HKD 31,846,000 for the year ending December 31, 2023, compared to a profit of HKD 74,734,000 in 2022[137]. - The group reported a post-tax loss of HKD 42,000,000 for the year, compared to a post-tax profit of HKD 66,000,000 in 2022[176]. Segment Performance - Revenue from the trading and manufacturing segment decreased by approximately 36% to HKD 176 million in 2023, down from HKD 274 million in 2022, while operating profit increased by 15% to HKD 7.6 million[36]. - The trading and manufacturing segment recorded a revenue decrease of approximately 25% to HKD 2,644,000,000, down from HKD 3,540,000,000 in 2022[177]. - The OEM toy business generated revenue of HKD 2,450,000,000, a decrease of approximately 25% from HKD 3,246,000,000 in 2022[178]. - The group's segment profit for 2023 was HKD 231,813,000, up from HKD 292,347,000 in 2022, reflecting a decline of 20.7%[132]. Economic Outlook and Market Conditions - The International Monetary Fund forecasts a slight decrease in global economic growth rate from 3% in 2023 to 2.9% in 2024, which may provide more opportunities for the group, especially in its OEM toy manufacturing business[11]. - The group maintains a cautiously optimistic outlook for market recovery and future business prospects, anticipating a gradual rebound in consumer confidence in the second half of 2024[12]. - The group faces risks related to macroeconomic conditions, which could impact consumer spending and order volumes[24]. - The company anticipates continued uncertainty in the global economy for 2024, influenced by tensions between the US and mainland China, as well as geopolitical conflicts[41]. Cost Management and Operational Strategies - The group plans to control production costs through restructuring actions, including expanding production scale in Guangxi Province and automating processes[14]. - The group will continue to explore opportunities for further dispersing production bases in low-cost countries to enhance cost efficiency[15]. - The group continues to monitor raw material supply closely and is shifting production capacity from higher-cost areas in Guangdong Province to lower-cost areas in Guangxi Province to reduce costs[179]. - The group is adopting a diversified tenant mix leasing strategy to adapt to changing environments and consumer patterns[19]. Legal and Compliance Matters - The company believes that Nanjing Qingtian has severely violated integrity and is essentially a shell company with no personnel, premises, or funds[49]. - The company intends to pursue legal action to claim ownership of 31 software copyrights developed using resources from Nanhua Qingtian[49]. - The Jiangsu High Court ruled that individuals involved must pay a total of RMB 4,392,329.95 to Nanhua Qingtian, with a total of approximately RMB 28,000,000 frozen in Nanjing Qingtian's bank accounts[51]. - The company is currently awaiting a court hearing regarding a claim for damages of approximately RMB 366 million related to a land development agreement in Tianjin[54]. - Nanjing Qingtian and its executives are liable to pay a total of RMB 22,533,377.09 to Nanhua Qingtian, with joint liability for additional amounts from other executives[71]. Governance and Management - The company has established an audit committee consisting of four independent non-executive directors and one non-executive director to enhance governance[85]. - The company aims to improve its operational strategies and explore market expansion opportunities in the upcoming fiscal year[93]. - The group has adopted new accounting policies as per the Hong Kong Financial Reporting Standards, which did not have a significant impact on the financial statements[124].

Financial Performance - Revenue for the six months ended June 30, 2023, was HKD 1,137,892, a decrease of 48.2% compared to HKD 2,199,680 for the same period in 2022[3] - Gross profit for the period was HKD 124,861, down 59.0% from HKD 303,644 in the previous year[3] - Operating profit decreased to HKD 54,717, a decline of 56.4% from HKD 125,596 in 2022[3] - The company reported a loss before tax of HKD 83,702 compared to a profit of HKD 36,749 in the same period last year[3] - The total comprehensive loss for the period was HKD 306,328, compared to a total comprehensive income of HKD 268,597 in the previous year[34] - The company reported a basic loss per share of HKD 0.6 cents for the period[15] - The company reported a loss of approximately HKD 84,300,000 after tax for the current period, compared to a profit of approximately HKD 37,700,000 in the same period of 2022[89] - The company reported a loss attributable to shareholders of HKD 79,281,000 for the six months ended June 30, 2023, compared to a profit of HKD 46,693,000 in the same period last year[106] Assets and Liabilities - Total non-current assets amounted to HKD 10,067,354, down from HKD 10,343,535 as of December 31, 2022[43] - Current assets increased to HKD 3,407,541 from HKD 3,193,691 in the previous period[43] - As of June 30, 2023, total current liabilities increased to HKD 3,349,512 thousand from HKD 2,771,488 thousand as of December 31, 2022, representing a growth of approximately 20.8%[44] - Total assets minus current liabilities decreased to HKD 10,125,383 thousand as of June 30, 2023, from HKD 10,765,738 thousand as of December 31, 2022, indicating a decline of about 5.9%[44] - Non-current liabilities decreased to HKD 3,970,375 thousand as of June 30, 2023, from HKD 4,276,533 thousand as of December 31, 2022, reflecting a reduction of approximately 7.1%[44] - The total equity attributable to shareholders decreased to HKD 5,853,563 thousand as of June 30, 2023, from HKD 6,163,389 thousand as of December 31, 2022, a decline of about 5%[46] Cash Flow - The net cash flow from operating activities for the six months ended June 30, 2023, was a cash outflow of HKD 250,779 thousand, compared to an inflow of HKD 41,651 thousand for the same period in 2022[49] - The company reported a net cash increase of HKD 2,332 thousand for the six months ended June 30, 2023, compared to an increase of HKD 40,713 thousand for the same period in 2022[49] - Cash and bank balances were HKD 434,682, slightly down from HKD 438,262 in the previous year[43] - Cash and cash equivalents at the end of June 30, 2023, were HKD 402,629 thousand, down from HKD 621,926 thousand at the end of June 30, 2022[49] Revenue Breakdown - The group's revenue from the trading and manufacturing sector was HKD 131,160,000 for the six months ended June 30, 2023, compared to HKD 230,897,000 in 2022, reflecting a decrease of approximately 43.2%[59] - The investment and development sector reported revenue of HKD 594,463,000 for the six months ended June 30, 2023, down from HKD 1,353,565,000 in the previous year, a decline of about 56.1%[59] - Footwear trading revenue decreased by 29% to approximately HKD 108 million, compared to HKD 152.7 million in 2022, while operating profit remained stable at approximately HKD 5.6 million[62] - Brand sports product sales revenue decreased by 12% to approximately HKD 6.4 million, down from HKD 7.3 million in 2022, primarily due to the depreciation of the Renminbi[63] - Property investment and development revenue significantly decreased by 48% to approximately HKD 96.4 million, compared to HKD 184.7 million in 2022, with operating profit around HKD 32.5 million[64] - Rental income from the property investment portfolio in China and Hong Kong decreased by approximately 13% to HKD 86.5 million during the period[65] Operational Changes and Strategies - The group continues to diversify its production capacity and has shifted supply chains from Guangdong Province to Guangxi Province to control costs amid decreased demand for toy products[61] - The company plans to expand production capacity in Guangxi Province while reducing production in higher-cost areas such as Shenzhen and Dongguan to control manufacturing costs[119] - The company expects a recovery in order trends for its toy business in the second half of 2023, anticipating more orders than in the first half due to traditional seasonal demand[121] - The company is focusing on improving the rental rate of Central Plaza and leveraging the reopening of the night market to attract more potential tenants[123] Risks and Challenges - The group faced foreign exchange risks primarily related to the Renminbi and US Dollar, managing these risks through monitoring and forward contracts[70] - The company has identified key risks and uncertainties that may impact its operations, although not exhaustive, these risks are significant[127] - The group's financial performance is heavily dependent on the discretionary spending levels of consumers in the final sales markets for its products, which include toys, shoes, and leather goods[128] - Rising costs due to raw materials, transportation, and compliance with minimum wage legislation in mainland China may impact the profit margins of the group's products[129] - The majority of the group's property portfolio is located in mainland China, exposing it to risks associated with the real estate market, including policy changes and economic conditions[130] - The agricultural business is vulnerable to natural disasters and adverse weather conditions, which can lead to reduced yields or production delays[133] Shareholder Information - As of June 30, 2023, the total number of ordinary shares issued was 13,221,302,172, with significant holdings by key executives[150] - Mr. Wu holds a substantial personal interest of 1,312,816,324 shares, representing 66.22% of the total issued ordinary shares[136] - The company’s equity structure and shareholding percentages reflect significant ownership concentration among key stakeholders, indicating a strong alignment of interests[160] - The company’s board decided not to declare an interim dividend for the six months ended June 30, 2023, compared to no dividend declared in the same period last year[108] Corporate Governance and Compliance - The company has complied with the corporate governance code, except for certain absences of directors during meetings[195] - There were no purchases, sales, or redemptions of the company's listed securities during the six months ending June 30, 2023[194] - The company has not reported any significant changes during the six months ending June 30, 2023, compared to the previous year's annual report[198] Legal Matters - The company is currently involved in ongoing litigation regarding copyright infringement and land disputes[193] - The company has decided to withdraw a lawsuit after considering various factors and is exploring new legal avenues to protect its interests[199]

[Unaudited Interim Results Announcement](index=1&type=section&id=Unaudited%20Interim%20Results%20Announcement) This section presents the Group's unaudited interim financial results, including the income statement, comprehensive income, and financial position [Consolidated Income Statement](index=1&type=section&id=Consolidated%20Income%20Statement) The Group's revenue decreased by 48% to HKD 1,138 million, resulting in a loss of HKD 84.315 million, driven by reduced sales, higher finance costs, and lower disposal gains Consolidated Income Statement | Indicator | 2023 (thousand HKD) | 2022 (thousand HKD) | | :--- | :--- | :--- | | Revenue | 1,137,892 | 2,199,680 | | Gross Profit | 124,861 | 303,644 | | Other Income and Gains, Net | 102,975 | 54,364 | | Operating Profit | 54,717 | 125,596 | | Finance Costs | (138,269) | (88,644) | | (Loss)/Profit Before Tax | (83,702) | 36,749 | | (Loss)/Profit for the Period | (84,315) | 37,731 | | (Loss)/Profit Attributable to Owners of the Company | (79,281) | 46,693 | | Non-controlling Interests | (5,034) | (8,962) | | Basic (Loss)/Earnings Per Share | (0.6) HK cents | 0.4 HK cents | - Current period revenue decreased by **48%** compared to the prior period, primarily due to reduced toy product sales orders, increased finance costs, and lower gains from disposal of vessel space bonds[52](index=52&type=chunk) [Consolidated Statement of Comprehensive Income](index=3&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) Total comprehensive income for the period was a loss of HKD 334.197 million, widening from the prior year, primarily due to period loss and foreign exchange differences Consolidated Statement of Comprehensive Income | Indicator | 2023 (thousand HKD) | 2022 (thousand HKD) | | :--- | :--- | :--- | | (Loss)/Profit for the Period | (84,315) | 37,731 | | Exchange Differences on Translating Financial Statements of Overseas Operations | (249,923) | (306,328) | | Exchange Reserve Reclassified to Profit or Loss upon Disposal of a Subsidiary | 41 | – | | Total Comprehensive Income for the Period | (334,197) | (268,597) | | Attributable to Owners of the Company | (309,826) | (237,648) | | Non-controlling Interests | (24,371) | (30,949) | [Consolidated Statement of Financial Position](index=4&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) Total non-current assets were HKD 10,067 million, with net current assets at HKD 58 million, a decrease driven by reduced investment properties and higher borrowings Consolidated Statement of Financial Position | Indicator | June 30, 2023 (thousand HKD) | December 31, 2022 (thousand HKD) | | :--- | :--- | :--- | | Total Non-current Assets | 10,067,354 | 10,343,535 | | Total Current Assets | 3,407,541 | 3,193,691 | | Total Current Liabilities | 3,349,512 | 2,771,488 | | Net Current Assets | 58,029 | 422,203 | | Total Assets Less Current Liabilities | 10,125,383 | 10,765,738 | | Total Non-current Liabilities | 3,970,375 | 4,276,533 | | Net Assets | 6,155,008 | 6,489,205 | | Total Equity Attributable to Owners of the Company | 5,853,563 | 6,163,389 | | Total Equity | 6,155,008 | 6,489,205 | [Notes to the Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes to the consolidated financial statements, covering accounting policies, segment information, and key financial items [Basis of Preparation](index=6&type=section&id=Basis%20of%20Preparation) Interim financial statements are prepared under HKAS 34, adopting new HKFRSs with no significant impact on the Group's financial position or performance - The interim financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and were authorized for issue on August 22, 2023[11](index=11&type=chunk) - The Group has adopted amendments to HKAS 1, HKAS 8, and HKAS 12, but these amendments have had no significant impact on the Group's results and financial position for the current or prior periods[13](index=13&type=chunk)[14](index=14&type=chunk)[17](index=17&type=chunk) [Revenue and Segment Information](index=7&type=section&id=Revenue%20and%20Segment%20Information) Total revenue decreased significantly to HKD 1,137.892 million, with the US region experiencing the largest decline and a shift to operating loss Revenue and Segment Information | Region | 2023 Revenue (thousand HKD) | 2022 Revenue (thousand HKD) | 2023 Operating Profit Contribution (thousand HKD) | 2022 Operating Profit Contribution (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | People's Republic of China (including Hong Kong and Macau) | 131,160 | 230,897 | 65,145 | 23,310 | | United States of America | 594,463 | 1,353,565 | (3,918) | 69,681 | | Europe | 286,021 | 411,963 | (4,642) | 21,890 | | Japan | 7,332 | 8,916 | (128) | 476 | | Others | 118,916 | 194,339 | (1,740) | 10,239 | | **Total** | **1,137,892** | **2,199,680** | **54,717** | **125,596** | - In the first half of 2023, the Group's total revenue decreased by **48%** year-on-year, with revenue from the US region falling from **HKD 1,353,565 thousand** to **HKD 594,463 thousand**, and its operating profit contribution shifting from **HKD 69,681 thousand** to a loss of **HKD 3,918 thousand**[20](index=20&type=chunk) [Other Income and Gains, Net](index=8&type=section&id=Other%20Income%20and%20Gains,%20Net) The Group recognized a **HKD 78,197,000 gain** from subsidiary disposal, while other non-current asset disposal gains decreased significantly - In the first half of 2023, the gain on disposal of a subsidiary was **HKD 78,197,000** (2022: nil)[21](index=21&type=chunk) - The gain on disposal of other non-current assets was **HKD 980,000** (2022: **HKD 32,678,000**)[21](index=21&type=chunk) [Operating Profit](index=8&type=section&id=Operating%20Profit) Operating profit for H1 2023 significantly decreased to **HKD 54,717 thousand** from HKD 125,596 thousand, mainly due to reduced revenue Operating Profit | Indicator | 2023 (thousand HKD) | 2022 (thousand HKD) | | :--- | :--- | :--- | | Operating Profit | 54,717 | 125,596 | | Cost of Sales | 911,102 | 1,725,076 | | Provision for Inventories | 7,970 | 65,996 | | Depreciation of Property, Plant and Equipment | 18,924 | 25,245 | | Depreciation of Right-of-use Assets | 39,363 | 42,993 | [Finance Costs](index=9&type=section&id=Finance%20Costs) Finance costs surged by **56% to HKD 138.269 million** in H1 2023, mainly driven by increased interest on bank loans and other borrowings Finance Costs | Indicator | 2023 (thousand HKD) | 2022 (thousand HKD) | | :--- | :--- | :--- | | Interest on Bank Loans, Overdrafts and Other Borrowings | 126,617 | 74,935 | | Interest on Lease Liabilities | 11,652 | 14,986 | | Less: Amount Capitalized | – | (1,277) | | **Total Finance Costs** | **138,269** | **88,644** | - The increase in finance costs was primarily due to the rise in HIBOR during the period[52](index=52&type=chunk) [Income Tax](index=9&type=section&id=Income%20Tax) Income tax includes current and deferred tax, with Hong Kong profits tax at **16.5%** and China corporate income tax at **25%** - Hong Kong profits tax rate is **16.5%**, and China corporate income tax rate is **25%**[61](index=61&type=chunk) - Deferred tax is provided for temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements[40](index=40&type=chunk) [Interim Dividend](index=9&type=section&id=Interim%20Dividend) The Board resolved not to declare an interim dividend for the six months ended June 30, 2023, consistent with the prior period - The Board resolved not to declare an interim dividend for the six months ended June 30, 2023 (2022: nil)[41](index=41&type=chunk)[62](index=62&type=chunk) [Loss/Earnings Per Share](index=10&type=section&id=Loss%2FEarnings%20Per%20Share) Basic and diluted loss per share was **HKD 0.6 cents**, a shift from **HKD 0.4 cents earnings** in the prior period, due to the period's loss Loss/Earnings Per Share | Indicator | 2023 (thousand HKD) | 2022 (thousand HKD) | | :--- | :--- | :--- | | (Loss)/Profit Attributable to Owners of the Company | (79,281) | 46,693 | | Weighted Average Number of Ordinary Shares for Basic (Loss)/Earnings Per Share Calculation | 12,982,892 thousand shares | 12,982,892 thousand shares | | Weighted Average Number of Ordinary Shares for Diluted (Loss)/Earnings Per Share Calculation | 12,982,892 thousand shares | 13,409,004 thousand shares | | Basic (Loss)/Earnings Per Share | (0.6) HK cents | 0.4 HK cents | | Diluted (Loss)/Earnings Per Share | (0.6) HK cents | 0.4 HK cents | - The diluted loss per share for the first half of 2023 is the same as the basic loss per share because the outstanding potential ordinary shares had an anti-dilutive effect[66](index=66&type=chunk)[97](index=97&type=chunk) [Investment Properties and Non-current Assets Held for Sale](index=11&type=section&id=Investment%20Properties%20and%20Non-current%20Assets%20Held%20for%20Sale) Properties valued at approximately **HKD 46,242,000** were reclassified from investment properties to non-current assets held for sale - As of June 30, 2023, properties amounting to approximately **HKD 46,242,000** were reclassified from investment properties to non-current assets held for sale[67](index=67&type=chunk) [Trade Receivables](index=11&type=section&id=Trade%20Receivables) Trade receivables increased to approximately **HKD 545,466,000**, net of loss allowance, with strict control maintained over outstanding amounts Trade Receivables | Indicator | June 30, 2023 (thousand HKD) | December 31, 2022 (thousand HKD) | | :--- | :--- | :--- | | Trade Receivables | 545,466 | 343,591 | - The Group's trade terms with customers are primarily on credit, with credit periods generally ranging from one to three months, and a credit control department monitors credit risk[49](index=49&type=chunk) [Trade Payables](index=11&type=section&id=Trade%20Payables) Trade payables slightly decreased to approximately **HKD 553,968,000**, with most accounts aged within six months Trade Payables | Indicator | June 30, 2023 (thousand HKD) | December 31, 2022 (thousand HKD) | | :--- | :--- | :--- | | Trade Payables | 553,968 | 576,316 | - The majority of trade payables are aged within six months[69](index=69&type=chunk) [Share Capital](index=12&type=section&id=Share%20Capital) Total authorized share capital was **HKD 260,000 thousand**, with issued and fully paid capital at **HKD 134,413 thousand**, unchanged from prior period Share Capital | Indicator | June 30, 2023 (thousand HKD) | December 31, 2022 (thousand HKD) | | :--- | :--- | :--- | | Total Authorized Share Capital | 260,000 | 260,000 | | Total Issued and Fully Paid Share Capital | 134,413 | 134,413 | - The number of ordinary shares and redeemable convertible preference shares issued by the Company remained unchanged for the six months ended June 30, 2023 and 2022[72](index=72&type=chunk) - Redeemable convertible preference shares are redeemable by the Company at any time, entitle holders to dividends or distributions at the discretion of the Board on a pro-rata basis, and have priority over ordinary shares in liquidation[25](index=25&type=chunk) [Management Discussion and Analysis](index=13&type=section&id=Management%20Discussion%20and%20Analysis) This section offers management's review of the Group's financial performance, business segments, liquidity, capital structure, and future outlook [Financial Review and Key Performance Indicators](index=13&type=section&id=Financial%20Review%20and%20Key%20Performance%20Indicators) H1 2023 revenue decreased by **48% to HKD 1,138 million**, resulting in a **HKD 84.3 million post-tax loss** and **HKD 0.6 cents loss per share** - The Group's revenue for the first half of 2023 was approximately **HKD 1,138 million**, a **48%** decrease compared to the same period in 2022[52](index=52&type=chunk) - The post-tax loss for the current period was approximately **HKD 84.3 million**, compared to a post-tax profit of approximately **HKD 37.7 million** in the same period of 2022[52](index=52&type=chunk) - Loss per share attributable to owners of the Company was **HKD 0.6 cents** (2022: earnings per share of **HKD 0.4 cents**)[74](index=74&type=chunk) [Business Review](index=13&type=section&id=Business%20Review) The Group's core businesses are trading, property, and agriculture; H1 2023 saw declines in trading and property revenue, but growth in agriculture - The Group's principal businesses are trading and manufacturing, property investment and development, and agriculture and forestry businesses[75](index=75&type=chunk) [Trading and Manufacturing](index=13&type=section&id=Trading%20and%20Manufacturing) Trading and Manufacturing revenue decreased by **48% to HKD 1,041 million**, resulting in an operating loss, primarily due to reduced OEM toy orders - The Trading and Manufacturing segment's revenue decreased by **48%** to approximately **HKD 1,041 million**, recording an operating loss of approximately **HKD 9.4 million** (2022: operating profit of approximately **HKD 107.7 million**)[30](index=30&type=chunk) [OEM Toy Manufacturing](index=13&type=section&id=OEM%20Toy%20Manufacturing) OEM toy revenue decreased by **50% to HKD 924 million** due to global economic factors and cautious client ordering, with cost control efforts underway - OEM toy business revenue was approximately **HKD 924 million**, a **50%** decrease compared to the same period in 2022[106](index=106&type=chunk) - The decline in revenue was mainly due to major customers actively pushing shipment plans in the first half of 2022 to avoid logistics bottlenecks, followed by cautious ordering strategies, leading to fewer orders in the current period[52](index=52&type=chunk)[77](index=77&type=chunk)[107](index=107&type=chunk) - The Group is committed to controlling costs through capacity diversification and relocating its supply chain from Guangdong Province to Guangxi Province in mainland China[78](index=78&type=chunk) [Footwear Trading](index=14&type=section&id=Footwear%20Trading) Footwear trading revenue decreased by **29% to HKD 108 million**, but operating profit remained stable at **HKD 5.6 million** through production diversification - Footwear trading business revenue decreased by **29%** to approximately **HKD 108 million** (2022: approximately **HKD 152.7 million**)[53](index=53&type=chunk) - The overall operating profit for this segment remained stable at approximately **HKD 5.6 million** (2022: approximately **HKD 5.5 million**), offsetting the impact of reduced demand through production diversification in low-cost countries[53](index=53&type=chunk) [Branded Ball Products Sales](index=14&type=section&id=Branded%20Ball%20Products%20Sales) Branded ball product sales revenue decreased by **12% to HKD 6.4 million** due to RMB depreciation, but overall segment performance remained stable - Branded ball products sales revenue decreased by **12%** to approximately **HKD 6.4 million** (2022: approximately **HKD 7.3 million**), primarily due to the depreciation of RMB[109](index=109&type=chunk) - The overall performance of this segment remained stable[109](index=109&type=chunk) [Property Investment and Development](index=15&type=section&id=Property%20Investment%20and%20Development) Property investment revenue decreased by **48% to HKD 96.4 million**, with operating profit at **HKD 32.5 million**, impacted by lower rents and RMB depreciation - Property Investment and Development segment revenue significantly decreased by **48%** to approximately **HKD 96.4 million** (2022: approximately **HKD 184.7 million**)[31](index=31&type=chunk) - The operating profit for this segment (including fair value changes of investment properties) was approximately **HKD 32.5 million** (2022: approximately **HKD 33.5 million**)[31](index=31&type=chunk) - Rental income was **HKD 86.5 million**, a decrease of approximately **13%** compared to the same period in 2022, mainly affected by lower rents in previous years before the pandemic and RMB depreciation[111](index=111&type=chunk) - Approximately **60%** of the total saleable area of the residential towers and serviced apartments of the Group's flagship property project "Central Plaza" has been sold, and management is cautiously optimistic about its sales and rental contributions[112](index=112&type=chunk) [Agriculture and Forestry Business](index=16&type=section&id=Agriculture%20and%20Forestry%20Business) Agriculture and Forestry revenue grew to **HKD 698,000**, with operating profit of **HKD 67.7 million**, including a **HKD 78.2 million** disposal gain - Agriculture and Forestry business revenue increased to approximately **HKD 698,000** (2022: approximately **HKD 77,000**)[113](index=113&type=chunk) - The operating profit for the current period was **HKD 67.7 million**, which includes a gain of **HKD 78.2 million** from the disposal of a subsidiary[113](index=113&type=chunk) - Excluding the disposal gain, the operating loss for the current period decreased by approximately **24%** to approximately **HKD 10.5 million** (2022: approximately **HKD 13.8 million**)[113](index=113&type=chunk) [Liquidity and Financial Resources](index=16&type=section&id=Liquidity%20and%20Financial%20Resources) Current ratio was **1.0** and gearing ratio **33%**, both decreased from prior period, with operations funded by internal resources and bank borrowings Liquidity and Financial Resources | Indicator | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Current Ratio | 1.0 | 1.2 | | Gearing Ratio | 33% | 35% | - The gearing ratio is calculated based on the Group's long-term bank borrowings of **HKD 2,006 million** against the Group's equity of **HKD 6,155 million**[84](index=84&type=chunk) [Capital Structure](index=16&type=section&id=Capital%20Structure) The Group's capital structure remains largely unchanged compared to the most recently published annual report - The Group's capital structure has not undergone significant changes compared to the most recently published annual report[115](index=115&type=chunk) [Exchange Rate Fluctuation Risk and Related Hedging](index=16&type=section&id=Exchange%20Rate%20Fluctuation%20Risk%20and%20Related%20Hedging) The Group manages foreign currency exchange rate risks, including RMB and USD, through close monitoring and timely forward contracts - The Group faces foreign currency exchange rate risks, including RMB and USD, arising from future commercial transactions, recognized assets, liabilities, and net investments in mainland China operations[165](index=165&type=chunk) - The Group manages foreign currency exchange rate risks by closely monitoring exchange rate movements and entering into forward contracts when appropriate[165](index=165&type=chunk) [Significant Acquisitions and Disposals of Subsidiaries and Associates](index=17&type=section&id=Significant%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%20and%20Associates) The Group completed the disposal of Genius Year Limited for a **HKD 78,197,000 gain** and has an pending agreement to dispose of Kunshan Huiqiang Footwear Co., Ltd - Thousand China Investments Limited, an indirect wholly-owned subsidiary of the Company, completed the disposal of **100%** equity interest in Genius Year Limited on January 13, 2023, for a total consideration of **HKD 89,840,000**, recognizing a gain on disposal of approximately **HKD 78,197,000**[116](index=116&type=chunk) - Huiqiang Footwear Co., Ltd., an indirect wholly-owned subsidiary of the Company, has entered into an agreement to dispose of **100%** equity interest in Kunshan Huiqiang Footwear Co., Ltd. for a consideration of **RMB 61,500,000** (approximately **HKD 68,333,000**), which has not yet been completed as of the announcement date[87](index=87&type=chunk) [Contingent Liabilities](index=18&type=section&id=Contingent%20Liabilities) A PRC subsidiary provided guarantees of approximately **RMB 171 million (HKD 185 million)** for Central Plaza property buyers, to be released upon property certificate issuance - A PRC subsidiary of the Company provided guarantees totaling approximately **RMB 171,000,000** (approximately **HKD 185,000,000**) to financial institutions for independent buyers of Central Plaza properties[118](index=118&type=chunk) - The aforementioned guarantees will be released upon the issuance of property ownership certificates to these buyers[118](index=118&type=chunk) - Save for the above, there were no other significant changes in the Group's pledged assets and contingent liabilities[89](index=89&type=chunk) [Outlook](index=18&type=section&id=Outlook) H2 2023 presents challenges and opportunities; the Group will control costs, expand customer base, and explore property and agriculture business opportunities - In the second half of 2023, Sino-US relations and the Russia-Ukraine war will continue to pose uncertainties to the business environment, and major central banks' tightening monetary policies will have adverse spillover effects on the global economy, requiring time for recovery[119](index=119&type=chunk) - China's relaxed COVID-19 measures and the reopening of the Hong Kong-mainland border, along with the central government's policies to achieve economic growth targets, will have a direct and favorable impact on the performance of the Group's various business segments[119](index=119&type=chunk) - The Group will control manufacturing costs and expenses through restructuring actions, including expanding production scale in Guangxi Province and reducing production scale in high-cost areas of Guangdong Province, and identifying key customer needs to provide one-stop solutions[120](index=120&type=chunk) - The Group will continue to explore converting some land reserve assets in Nanjing and Tianjin from industrial to commercial use and remains cautiously optimistic about the sales of residential units at Shenyang Central Plaza[94](index=94&type=chunk)[56](index=56&type=chunk) - The agriculture and forestry business will continue to explore opportunities to cultivate high-margin varieties and focus on improving harvests, sales distribution channels, and implementing cost controls[124](index=124&type=chunk) [Key Risks and Uncertainties](index=21&type=section&id=Key%20Risks%20and%20Uncertainties) The Group faces diverse risks including economic recession, cost increases, property market volatility, policy changes, and natural disasters, which are regularly reviewed and mitigated - The Group's financial results depend on the level of discretionary consumer spending in the end markets for its products; economic recession, credit crises, and other economic downturns can lead to reduced disposable income for consumers, thereby affecting customer orders[167](index=167&type=chunk) - Increased costs may affect product profit margins, including increases in raw materials, transportation, minimum wage legislation, or compliance with regulatory requirements[147](index=147&type=chunk) - The majority of the Group's property portfolio is located in mainland China, facing risks related to the mainland China real estate market, including policy changes, RMB exchange rate fluctuations, interest rate changes, supply-demand imbalances, and overall economic conditions[57](index=57&type=chunk)[148](index=148&type=chunk) - The agriculture and forestry business is susceptible to natural disasters and adverse weather conditions such as droughts, floods, earthquakes, and environmental disasters, which may lead to reduced yields or production delays[35](index=35&type=chunk)[150](index=150&type=chunk) [Corporate Governance and Other Information](index=22&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section details the Company's corporate governance practices, director information updates, and significant litigation progress [Corporate Governance Code](index=22&type=section&id=Corporate%20Governance%20Code) The Company generally complied with the Corporate Governance Code, with minor deviations regarding director attendance at EGM and AGM due to other engagements - The Company complied with the Corporate Governance Code in Appendix 14 of the Listing Rules during the first half of 2023[130](index=130&type=chunk) - Messrs. Ng Hung Sang, Ng Yuk Yeung, Ng Yuk Fung, and Kam Yiu Sing were unable to attend the extraordinary general meeting and annual general meeting due to other important engagements, constituting a deviation from Code Provisions F.2.2 and C.1.6 of the Corporate Governance Code[130](index=130&type=chunk)[155](index=155&type=chunk) [Interim Dividend](index=22&type=section&id=Interim%20Dividend_CG) The Board resolved not to declare an interim dividend for the six months ended June 30, 2023, consistent with the prior period - The Board resolved not to declare an interim dividend for the six months ended June 30, 2023 (2022: nil)[152](index=152&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=22&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) Neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities during the six months ended June 30, 2023 - During the six months ended June 30, 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed shares[153](index=153&type=chunk) [Litigation Progress](index=23&type=section&id=Litigation%20Progress) The Group is involved in several lawsuits, including an appealed copyright case and a withdrawn Tianjin land case, with no other significant changes in litigation progress - In the copyright infringement case, the Jiangsu Provincial Higher People's Court ruled that two computer software copyrights belong to Nanjing Nanhua Qingtian Information Technology Co., Ltd., and Nanhua Qingtian has filed an appeal[156](index=156&type=chunk) - The Tianjin Binhai land infringement case has been withdrawn, and the legal team is exploring initiating a new case from a perspective more favorable to protecting the interests of Huanwei and Tianjin Nanhua Real Estate Development Co., Ltd[133](index=133&type=chunk) - There were no significant changes in the corporate interest liability dispute case and the Nansha land arbitration case during the six months ended June 30, 2023[134](index=134&type=chunk)[157](index=157&type=chunk) [Update on Directors' Information](index=23&type=section&id=Update%20on%20Directors'%20Information) Mr. Ng Yuk Yeung was appointed INED and committee member of China Rongzhong Financial, and Ms. Li Yuen Yu joined the Company's Audit Committee - Mr. Ng Yuk Yeung was appointed as an independent non-executive director and a member of the audit committee, nomination committee, and remuneration committee of China Rongzhong Financial Holdings Co., Ltd. (stock code: 03963), effective April 28, 2023[37](index=37&type=chunk) - Ms. Li Yuen Yu was appointed as a member of the Company's Audit Committee on July 7, 2023[159](index=159&type=chunk) Directors | Position | Name | | :--- | :--- | | Executive Directors | Mr. Ng Hung Sang, Ms. Cheung Sai Oi, Mr. Ng Yuk Yeung | | Non-executive Directors | Ms. Ng Yuk Mo, Mr. Ng Yuk Fung, Ms. Li Yuen Yu, Mr. Yu Pui Hang | | Independent Non-executive Directors | Mr. Kam Yiu Sing, Ms. Tse Wong Siu Yin, Ms. Pong Oi Lan, BBS, JP, Mr. Wong Chun Tat, JP | [Audit Committee](index=24&type=section&id=Audit%20Committee) The Audit Committee, comprising INEDs and a NED, reviewed and confirmed the Group's unaudited interim results comply with accounting standards - The Audit Committee comprises Mr. Kam Yiu Sing (Chairman), Ms. Tse Wong Siu Yin, Ms. Pong Oi Lan, BBS, JP, and Mr. Wong Chun Tat, JP (all independent non-executive directors), and Ms. Li Yuen Yu (non-executive director)[162](index=162&type=chunk) - The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2023, and is of the opinion that their preparation complies with applicable accounting standards and requirements, and that adequate disclosures have been made[161](index=161&type=chunk) [Publication of Interim Results and Interim Report](index=24&type=section&id=Publication%20of%20Interim%20Results%20and%20Interim%20Report) This announcement is published on HKEX and Company websites; the interim report for H1 2023 will be published and dispatched to shareholders - This announcement is published on the website of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk) and the Company's website (www.scholding.com)[163](index=163&type=chunk) - The Company's interim report for the six months ended June 30, 2023, will be published on the aforementioned websites and dispatched to the Company's shareholders in due course[163](index=163&type=chunk)

Announcement Overview This section provides an overview of the announcement, including company information and the context of the supplementary disclosure [Company Information](index=1&type=section&id=Company%20Information) This announcement is issued by South China Holdings Company Limited, a company incorporated in the Cayman Islands with stock code 00413 - Company Name: **South China Holdings Company Limited**[1](index=1&type=chunk) - Place of Incorporation: **Cayman Islands**[1](index=1&type=chunk) - Stock Code: **00413**[1](index=1&type=chunk) [Announcement Context](index=1&type=section&id=Announcement%20Context) This announcement supplements the annual report of South China Holdings Company Limited for the year ended December 31, 2022, published on April 24, 2023, providing additional information on the employee share award scheme in accordance with the Listing Rules - This announcement serves as a supplement to the annual report for the year ended **December 31, 2022**[7](index=7&type=chunk)[13](index=13&type=chunk) - It aims to provide additional information regarding the share award scheme in accordance with **Listing Rules 17.09 and 17.12(2)**[7](index=7&type=chunk) Details of Employee Share Award Scheme This section outlines the specifics of the employee share award scheme, covering its purpose, participant eligibility, share quantities, and key terms [Purpose of the Scheme](index=1&type=section&id=Purpose%20of%20the%20Scheme) The share award scheme aims to recognize employee contributions, encourage retention to support the Group's operations and sustainable development, and attract suitable talent for future growth - Objectives include: (i) recognizing contributions of selected employees to the Group; (ii) encouraging selected employees to remain with the Group to support its operations and sustainable development; and (iii) attracting suitable talent for the Group's future development[4](index=4&type=chunk)[7](index=7&type=chunk) [Participant Eligibility](index=1&type=section&id=Participant%20Eligibility) The Board of Directors may from time to time select any employee of the Group to participate in the share award scheme - Participants are any employees of the Group as selected by the Board of Directors from time to time[15](index=15&type=chunk) [Share Quantity and Entitlement](index=1&type=section&id=Share%20Quantity%20and%20Entitlement) As of the annual report date, the total number of shares available for grant under the scheme is 206,160,593, representing approximately 1.56% of the issued share capital, with no maximum entitlement set per selected participant Total Shares Available for Grant Under Share Award Scheme | Metric | Value | | :--- | :--- | | Number of shares available for grant (as of annual report date) | 206,160,593 shares | | Percentage of issued share capital (approx.) | 1.56% | - No maximum entitlement is set for each selected participant under the share award scheme[2](index=2&type=chunk)[17](index=17&type=chunk) [Scheme Terms](index=2&type=section&id=Scheme%20Terms) The vesting period for share awards is determined by the Board, with no exercise period set; no payment is required to accept awards, and the purchase price is Board-determined; the scheme is effective for 15 years from March 18, 2011, with approximately 2.5 years remaining, and the trustee cannot exercise voting rights over shares held in trust - The vesting period for share awards will be determined by the Board at the time of grant; in case of a participant's death or retirement, all awarded shares and income are deemed vested immediately prior to the date of death or retirement[5](index=5&type=chunk)[14](index=14&type=chunk) - No exercise period is set for the awarded shares[9](index=9&type=chunk) - No payment is required upon acceptance of a share award, and the purchase price for each awarded share will be determined by the Board at the time of grant[14](index=14&type=chunk) - The share award scheme is valid and effective for **15 years** from **March 18, 2011** (adoption date), with an approximate remaining term of **2.5 years**[14](index=14&type=chunk)[18](index=18&type=chunk) - The trustee may not exercise voting rights over any shares held in trust[10](index=10&type=chunk) Board of Directors This section details the composition of the company's Board of Directors as of the announcement date [Current Board Composition](index=3&type=section&id=Current%20Board%20Composition) As of the announcement date, the Board of Directors of South China Holdings Company Limited comprises executive directors, non-executive directors, and independent non-executive directors Board of Directors Member List | Executive Directors | Non-Executive Directors | Independent Non-Executive Directors | | :------------------ | :---------------------- | :---------------------------------- | | Mr. Ng Hung Sang | Ms. Ng Yuk Mui, Jessica | Ms. Tse Wong Siu Yin, Shirley | | Ms. Cheung Sai Oi | Mr. Ng Yuk Fung | Mr. Kam Yiu Sing | | Mr. Ng Yuk Yeung | Ms. Li Yuen Yu | Ms. Pong Oi Lan, BBS, JP | | | Mr. Yu Pui Hang | Mr. Wong Chun Tat, JP |

Financial Performance - The company reported its financial performance and position for the year ended December 31, 2022, in the annual report, with detailed financial statements provided on pages 81 to 199[82]. - The company's distributable reserves as of December 31, 2022, amounted to HKD 993,100,000, a decrease from HKD 1,064,817,000 in 2021[96]. - The board may recommend the payment of interim, final, or special dividends based on the group's actual and expected financial performance, business performance, and other relevant factors[88]. - The board considers various factors, including financial and economic conditions, when determining dividend amounts[88]. - The company has adopted a dividend policy allowing for the declaration and distribution of dividends to shareholders, enabling them to share in the company's profits while retaining appropriate reserves for future development[83]. Real Estate and Property Development - The total leasable area of residential buildings and serviced apartments is approximately 60% sold[2]. - The group is cautiously optimistic about the sales of residential units in Central Plaza, located in a prime residential area of Shenyang, benefiting from direct subway access and proximity to restaurants and retail stores[20]. - The group plans to explore the feasibility of converting some land reserves in Nanjing and Tianjin from industrial to commercial use to enhance land value and development returns[20]. - The group is facing risks related to the real estate market in mainland China, including policy changes, currency fluctuations, interest rate changes, and overall economic conditions[31]. - The group is also exposed to risks associated with the Hong Kong real estate market, including government policies and competition affecting rental levels[32]. - The company expects the Chinese economy to rebound, benefiting the retail business core sources of its leasing division[19]. - The company will hold night market events from March to October 2023 to enhance the commercial atmosphere and attract potential tenants[19]. Corporate Governance and Compliance - The board is responsible for the group's environmental, social, and governance (ESG) strategy and reporting, ensuring compliance with ESG risk management and internal control systems[80]. - The company emphasizes the importance of corporate governance and compliance with regulatory requirements in its operations[80]. - The company has a comprehensive ESG policy and performance discussion included in the annual report, specifically on pages 54 to 74[81]. - The board includes independent non-executive directors who contribute to the governance and oversight of the company's operations[69][76]. - The company has set up compliance procedures to ensure adherence to applicable laws, rules, and regulations[59]. Operational Strategy and Market Expansion - The company plans to expand its customer base and establish production bases in countries with lower production costs[16]. - The company aims to maintain long-term relationships with loyal customers while expanding its customer base through referrals[18]. - The company has a focus on expanding its market presence through strategic investments and partnerships in various sectors[79]. - The group aims to improve operational performance in its agricultural sector by enhancing yields, sales distribution channels, and implementing cost control measures[28]. Legal Matters - The group is currently involved in a copyright infringement lawsuit against Nanjing Qingtian Technology Co., Ltd., seeking compensation of RMB 210.4 million for damages[41]. - The group is awaiting a judgment on the copyright infringement case, which has seen multiple hearings and appeals in the Jiangsu High Court[39]. - 南京擎天需向南华擎天支付人民币22,533,377.09元，辛颖梅女士需支付人民币4,392,329.95元，汪晓刚先生、张虹先生和南京擎天对该款项承担连带清偿责任[46]. - 江蘇省中級人民法院于2017年2月裁定南京擎天持有的银行账户内总额约人民币28,000,000元[47]. Shareholder Information - The company has a total of 13,221,302,172 ordinary shares issued as of December 31, 2022[125]. - The beneficial ownership includes 1,075,765,537 shares and 1,273,122,098 shares held by related parties, representing 66.22% of the total[156]. - The company has no provisions for preemptive rights regarding the issuance of new shares to existing shareholders[99]. - The company has a focus on medium to large property investment and development projects, while its subsidiary seeks to expand into financial services[170]. - The company maintains sufficient public float as per listing rules, ensuring compliance with regulatory requirements[174]. Related Party Transactions - The company reported a significant related party transaction involving a management service agreement for a residential development project covering approximately 58,000 square meters, with a total cost of RMB 30,000,000 (approximately HKD 34,100,000)[184]. - The company's independent non-executive directors confirmed that the transactions were part of the group's ordinary business and were conducted on fair and reasonable terms[191]. Employee Development and Corporate Culture - 公司高度重视员工个人发展，并已采用股权计划及股份奖励计划以表彰员工贡献[60]. - 公司致力于提供卓越的客户服务，并已建立多种方式加强与客户的沟通[61].

[Group Performance](index=1&type=section&id=Group%20Performance) [Consolidated Financial Statements](index=1&type=section&id=Consolidated%20Financial%20Statements) The Group's 2022 total revenue decreased by 19% to **HKD 3.814 billion**, while annual profit nearly doubled to **HKD 65.64 million** due to cost control, with net assets slightly declining to **HKD 6.489 billion** Consolidated Income Statement Summary | Item | 2022 (HKD Thousands) | 2021 (HKD Thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 3,813,722 | 4,724,909 | -19.3% | | Gross Profit | 571,265 | 535,415 | +6.7% | | Operating Profit | 292,347 | 256,239 | +14.1% | | Profit Before Tax | 86,936 | 86,293 | +0.1% | | Profit for the Year | 65,644 | 33,076 | +98.5% | | Profit Attributable to Owners of the Company | 74,734 | 30,852 | +142.2% | Consolidated Statement of Financial Position Summary | Item | As at December 31, 2022 (HKD Thousands) | As at December 31, 2021 (HKD Thousands) | Change | | :--- | :--- | :--- | :--- | | Total Non-Current Assets | 10,343,535 | 11,055,086 | -6.4% | | Total Current Assets | 3,193,691 | 4,559,904 | -30.0% | | Total Current Liabilities | 2,771,488 | 3,957,875 | -29.9% | | Total Non-Current Liabilities | 4,276,533 | 4,759,520 | -10.1% | | Net Assets | 6,489,205 | 6,897,595 | -5.9% | | Total Equity Attributable to Owners | 6,489,205 | 6,897,595 | -5.9% | Earnings Per Share | Item | 2022 (HK Cents) | 2021 (HK Cents) | | :--- | :--- | :--- | | Basic Earnings Per Share | 0.6 | 0.2 | | Diluted Earnings Per Share | 0.6 | 0.2 | [Management Discussion and Analysis](index=13&type=section&id=Management%20Discussion%20and%20Analysis) [Financial Summary](index=13&type=section&id=Financial%20Summary) For 2022, the Group's total revenue decreased by 19% to **HKD 3.814 billion**, while annual profit nearly doubled to **HKD 66 million** due to cost control, resulting in basic earnings per share of **0.6 HK Cents** 2022 Financial Performance Summary | Indicator | 2022 (HKD) | 2021 (HKD) | | :--- | :--- | :--- | | Total Revenue | 3,814,000,000 | 4,725,000,000 | | Annual Profit | 66,000,000 | 33,000,000 | | Basic Earnings Per Share | 0.6 HK Cents | 0.2 HK Cents | [Business Review](index=13&type=section&id=Business%20Review) The Group's core businesses include trading and manufacturing, property investment and development, and forestry, with trading and manufacturing profit significantly increasing this year while property and forestry segments faced challenges - The Group's primary business segments include trading and manufacturing, property investment and development, and forestry operations[2](index=2&type=chunk) [Trading & Manufacturing](index=13&type=section&id=Trading%20%26%20Manufacturing) Despite an 18% revenue decrease to **HKD 3.54 billion**, this segment's operating profit surged by 171% to **HKD 236 million**, driven by cost control in OEM toys and strong footwear trade, while branded ball product sales declined Trading and Manufacturing Segment Performance | Business | Revenue (HKD) | Operating Profit (HKD) | | :--- | :--- | :--- | | **Total** | **3,540,000,000 (-18%)** | **236,000,000 (+171%)** | | OEM Toy Production | 3,246,000,000 (-21%) | Not Applicable | | Footwear Product Trading | 274,000,000 (+76%) | 6,600,000 (+154%) | | Branded Ball Product Sales | 15,500,000 (-33%) | Not Applicable | - The decline in OEM toy business revenue was primarily due to reduced customer spending and cautious ordering strategies caused by the pandemic, geopolitical factors, and high interest rates[4](index=4&type=chunk) - To address challenges, management implemented measures such as relocating production facilities to lower-cost regions like Guangxi and Vietnam and sourcing new suppliers, effectively controlling production costs and enhancing operating profit[5](index=5&type=chunk) [Property Investment & Development](index=14&type=section&id=Property%20Investment%20%26%20Development) This segment's revenue decreased by 33% to **HKD 274 million**, though operating profit (excluding fair value changes) grew 48% to **HKD 157 million**, as rental income declined 20% due to pandemic restrictions in China and Hong Kong Property Investment and Development Segment Performance | Indicator | 2022 (HKD) | 2021 (HKD) | Change | | :--- | :--- | :--- | :--- | | Revenue | 274,000,000 | 408,000,000 | -33% | | Operating Profit (incl. fair value changes) | 102,600,000 | 234,000,000 | -56% | | Operating Profit (excl. fair value changes) | 156,800,000 | 105,700,000 | +48% | | Rental Income | 187,200,000 | Not Applicable | -20% (vs. prior year) | - The Group's property investment portfolio in China and Hong Kong has a total gross floor area of approximately **630,000 square meters** and **26,000 square meters**, respectively[9](index=9&type=chunk) - China's 'dynamic zero-COVID' policy and Hong Kong's travel restrictions adversely impacted rental income in Nanjing, Shenyang, Tianjin, and Hong Kong[10](index=10&type=chunk)[45](index=45&type=chunk) [Forestry Business](index=15&type=section&id=Forestry%20Business) The forestry business segment's revenue sharply declined by 74% to **HKD 0.7 million**, with operating loss widening 46% to **HKD 17.2 million**, and productive plant value decreasing 17% due to RMB depreciation and asset write-offs Forestry Business Segment Performance | Indicator | 2022 (HKD) | Change | | :--- | :--- | :--- | | Revenue | 700,000 | -74% | | Operating Loss | 17,200,000 | +46% | | Balance Value of Productive Plants | 21,400,000 | -17% | [Liquidity and Financial Resources](index=15&type=section&id=Liquidity%20and%20Financial%20Resources) At year-end 2022, the Group maintained stable financial health with a current ratio of **1.2** and a gearing ratio of **35%**, funding operations via internal resources and bank loans while monitoring RMB and USD exchange risks Financial Ratios | Indicator | December 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Current Ratio | 1.2 | 1.2 | | Gearing Ratio | 35% | 36% | - The Group faces significant foreign currency exchange risks primarily related to RMB and USD, which are managed through close monitoring of exchange rate trends and entering into forward contracts[28](index=28&type=chunk) - There were no significant changes in the Group's capital structure during the year[60](index=60&type=chunk) [Notes to the Announcement](index=6&type=section&id=Notes%20to%20the%20Announcement) [Basis of Preparation and Accounting Policies](index=6&type=section&id=Basis%20of%20Preparation%20and%20Accounting%20Policies) The accounting policies and basis of preparation for this year's financial statements are consistent with the prior year, with the adoption of newly revised Hong Kong Financial Reporting Standards having no material impact on the consolidated financial statements - The Group applied amendments to Hong Kong Accounting Standard 37 (Revised) and Hong Kong Accounting Standard 16 (Revised), among others, issued by the Hong Kong Institute of Certified Public Accountants during this accounting period[43](index=43&type=chunk)[49](index=49&type=chunk) - The adoption of these revised standards had no material impact on the Group's consolidated financial statements[49](index=49&type=chunk)[43](index=43&type=chunk) [Revenue and Segment Information](index=7&type=section&id=Revenue%20and%20Segment%20Information) The Group is organized into four reportable segments: trading and manufacturing, property investment and development, forestry business, and others, with this report providing detailed revenue and performance information for each business and geographical segment Revenue and Results by Business Segment (HKD Thousands) | Segment | 2022 Revenue | 2021 Revenue | 2022 Results | 2021 Results | | :--- | :--- | :--- | :--- | :--- | | Trading & Manufacturing | 3,539,515 | 4,314,040 | 236,041 | 87,059 | | Property Investment & Development | 273,504 | 408,213 | 102,600 | 233,980 | | Forestry Business | 703 | 2,656 | (17,201) | (11,777) | | Others | – | – | (29,093) | (53,023) | | **Total** | **3,813,722** | **4,724,909** | **292,347** | **256,239** | External Revenue by Geographical Segment (HKD Thousands) | Region | 2022 | 2021 | | :--- | :--- | :--- | | China (incl. Hong Kong & Macau) | 368,203 | 605,451 | | United States | 2,327,367 | 2,620,073 | | Europe | 749,690 | 1,105,047 | | Japan | 21,048 | 12,070 | | Others | 347,414 | 382,268 | | **Total** | **3,813,722** | **4,724,909** | [Earnings Per Share](index=9&type=section&id=Earnings%20Per%20Share) For 2022, profit attributable to owners was **HKD 74.734 million**, yielding basic earnings per share based on **12.983 billion** weighted average ordinary shares, with diluted EPS reflecting potential dilutive shares Basic and Diluted Earnings Per Share Calculation | Item | 2022 | 2021 | | :--- | :--- | :--- | | **Profit (HKD Thousands)** | | | | Profit Attributable to Owners of the Company | 74,734 | 30,852 | | **Number of Shares (Thousands)** | | | | Weighted Average Number of Ordinary Shares (Basic) | 12,982,892 | 12,982,892 | | Weighted Average Number of Ordinary Shares (Diluted) | 13,409,004 | 13,418,999 | - The Company's share options had an anti-dilutive effect as their exercise price was higher than the average market price during the year, thus they were not included in the diluted earnings per share calculation[14](index=14&type=chunk) [Dividends](index=10&type=section&id=Dividends) The Company neither declared nor paid any dividends for the year ended December 31, 2022, and the Board does not recommend a final dividend for the period - The Company neither declared nor paid any dividends for the year 2022, nor did it recommend a final dividend (2021: nil)[1](index=1&type=chunk) [Trade Receivables and Payables](index=10&type=section&id=Trade%20Receivables%20and%20Payables) At year-end 2022, total trade receivables significantly decreased to **HKD 344 million**, and total trade payables also notably declined to **HKD 576 million**, with aging analyses provided for both Aging Analysis of Trade Receivables (HKD Thousands) | Aging | 2022 | 2021 | | :--- | :--- | :--- | | Within 90 days | 283,186 | 766,076 | | 91 to 180 days | 36,381 | 67,173 | | 181 to 365 days | 11,880 | 5,560 | | Over 365 days | 12,144 | 2,960 | | **Total** | **343,591** | **841,769** | Aging Analysis of Trade Payables (HKD Thousands) | Aging | 2022 | 2021 | | :--- | :--- | :--- | | Within 90 days | 197,153 | 439,149 | | 91 to 180 days | 175,383 | 422,708 | | 181 to 365 days | 76,541 | 23,329 | | Over 365 days | 127,239 | 146,245 | | **Total** | **576,316** | **1,031,431** | [Share Capital](index=11&type=section&id=Share%20Capital) This section details the Company's authorized and issued share capital, including ordinary and redeemable convertible preference shares, with **13.221 billion** ordinary shares issued and total issued share capital unchanged at year-end 2022 Issued and Fully Paid Share Capital (HKD Thousands) | Item | 2022 | 2021 | | :--- | :--- | :--- | | 13,221,302,172 Ordinary Shares | 132,213 | 132,213 | | 109,975,631 Redeemable Convertible Preference Shares | 2,200 | 2,200 | | **Total Issued and Fully Paid Share Capital** | **134,413** | **134,413** | - There was no change in the number of issued ordinary shares and redeemable convertible preference shares during 2022[23](index=23&type=chunk) [Significant Corporate Activities](index=16&type=section&id=Significant%20Corporate%20Activities) [Significant Acquisitions and Disposals](index=16&type=section&id=Significant%20Acquisitions%20and%20Disposals) During the year, the Group completed the sale of Dongguan Naili Enterprise Management Co., Ltd. for **RMB 225 million**, recognizing a **HKD 56.986 million** gain, and agreed to sell Genius Year Limited for **HKD 89.84 million**, completed in early 2023 - The Group completed the disposal of 100% equity in Dongguan Naili Enterprise Management Co., Ltd. for a total consideration of **RMB 225 million**, recognizing a gain on disposal of approximately **HKD 56.986 million**[62](index=62&type=chunk) - The Group agreed to sell 100% equity in Genius Year Limited to a subsidiary of South China Financial Holdings for a total consideration of **HKD 89.84 million**, with an expected gain of approximately **HKD 78.24 million**, and this transaction was completed on January 13, 2023[63](index=63&type=chunk) [Pledge of Assets and Contingent Liabilities](index=17&type=section&id=Pledge%20of%20Assets%20and%20Contingent%20Liabilities) During the year, the Group released pledges on certain investment properties and assets held for sale, while a Chinese subsidiary provided guarantees of approximately **RMB 195 million** for property buyers, to be released upon property certificate issuance - During the year, pledges on certain of the Group's investment properties and assets held for sale were released and discharged[66](index=66&type=chunk) - The Group has a contingent liability in the form of guarantees totaling approximately **RMB 195 million** (approximately **HKD 219 million**) provided to independent buyers of Central Plaza properties[66](index=66&type=chunk) [Prospects and Risks](index=17&type=section&id=Prospects%20and%20Risks) [Prospects](index=17&type=section&id=Prospects) For 2023, the Group foresees challenges from global interest rate hikes and geopolitical tensions, balanced by opportunities from China's relaxed pandemic measures, adopting cautious strategies across segments including cost control, customer expansion, and leveraging China's property market recovery - The trading and manufacturing segment will continue to control costs through production relocation, process streamlining, and increased automation, while planning to expand its customer base and strengthen green manufacturing R&D[69](index=69&type=chunk) - In property investment, the lifting of China's pandemic measures is expected to benefit retail business, with the Group focusing on increasing occupancy rates at Shenyang Xinghui Plaza and Central Plaza shopping malls, and planning to reintroduce night market events to enhance commercial vibrancy[77](index=77&type=chunk) - In property development, the Group maintains cautious optimism regarding sales of Shenyang Central Plaza residential units and will continue to explore the feasibility of converting other land reserves from industrial to commercial use[78](index=78&type=chunk) - The forestry business will continue to explore opportunities for planting high-margin varieties and improve harvesting, sales channels, and cost control[79](index=79&type=chunk) [Principal Risks and Uncertainties](index=19&type=section&id=Principal%20Risks%20and%20Uncertainties) The Group's principal risks stem from its core business areas: trading and manufacturing is affected by macroeconomic conditions and rising costs; property investment and development faces policy and market volatility risks in mainland China and Hong Kong real estate markets; and forestry business is susceptible to natural disasters and adverse weather - Trading and Manufacturing Risks: - Macroeconomic downturns leading to reduced consumer disposable income and impacting customer orders[81](index=81&type=chunk) - Increased costs for raw materials, transportation, and labor potentially affecting product profit margins[83](index=83&type=chunk) - Property Investment and Development Risks: - Mainland China's real estate market is influenced by policy changes, exchange rates, interest rates, and supply-demand imbalances[84](index=84&type=chunk) - Hong Kong's real estate market is affected by economic conditions, government policies, and the political environment[85](index=85&type=chunk) - Forestry Business Risks: Operations are susceptible to natural disasters like droughts and floods, and adverse weather, which may lead to reduced output or production delays[86](index=86&type=chunk) [Litigation Progress](index=21&type=section&id=Litigation%20Progress) [Litigation Progress](index=21&type=section&id=Litigation%20Progress) This section updates the Group's significant litigation, including copyright infringement and corporate interest disputes with Nanjing Qingtian Technology, both awaiting judgment, and land-related cases in Tianjin and Guangzhou Nansha, also under trial or awaiting decisions - Copyright Infringement Case: South China Qingtian sued Nanjing Qingtian and others for infringing **31** computer software copyrights; after being remanded for retrial by the Supreme People's Court, the case is now awaiting judgment from the Jiangsu Provincial High People's Court[91](index=91&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - Dispute over Damages for Company Interests: Involves Nanjing Qingtian and its executives violating non-compete obligations; after the Supreme People's Court ordered a retrial, the case is currently awaiting judgment from the Jiangsu Provincial High People's Court[100](index=100&type=chunk)[97](index=97&type=chunk) - Tianjin Land Infringement Case: Huanwei, an indirect wholly-owned subsidiary of the Group, filed a lawsuit concerning development rights for a piece of land in Tianjin Binhai New Area; the case has been heard and is now awaiting judgment[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) - Nansha Land Arbitration Case: Huihan, an indirect wholly-owned subsidiary of the Group, initiated arbitration regarding breach of land transfer agreements; the case was heard in February 2023[106](index=106&type=chunk)[108](index=108&type=chunk) [Corporate Governance and Other Information](index=25&type=section&id=Corporate%20Governance%20and%20Other%20Information) [Corporate Governance and Other Information](index=25&type=section&id=Corporate%20Governance%20and%20Other%20Information) The Company largely complied with the Corporate Governance Code, with some directors missing the AGM due to other commitments; the Audit Committee reviewed annual results, and no listed securities were purchased, sold, or redeemed by the Company or its subsidiaries during the year, with the AGM set for June 20, 2023 - The Company complied with applicable code provisions of the Corporate Governance Code in effect during the year, except for certain directors' inability to attend the 2022 Annual General Meeting due to other important commitments, deviating from code provisions F.2.2 and C.1.6[110](index=110&type=chunk) - The Audit Committee, comprising four independent non-executive directors, reviewed the Group's annual results and deemed them prepared in compliance with applicable accounting standards and adequately disclosed[112](index=112&type=chunk) - For the year ended December 31, 2022, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[111](index=111&type=chunk) - The Board does not recommend the payment of a final dividend for the year ended December 31, 2022[109](index=109&type=chunk)

Financial Performance - Revenue for the six months ended June 30, 2022, was HKD 2,199,680, an increase of 15.5% from HKD 1,896,036 in the same period of 2021[3] - Gross profit for the same period was HKD 303,644, compared to HKD 189,475 in 2021, reflecting a significant increase of 60.1%[3] - Operating profit for the six months was HKD 125,596, a turnaround from an operating loss of HKD 23,784 in the previous year[3] - Net profit for the period was HKD 37,731, compared to a net loss of HKD 109,216 in the same period of 2021[5] - Basic earnings per share for the period was HKD 0.4, recovering from a loss of HKD 0.8 per share in the previous year[5] - The company reported a total comprehensive income of HKD 37,731 for the period, compared to a loss of HKD 109,216 in the previous year[8] - Cash generated from operating activities was HKD 50,306,000, a significant improvement from a cash outflow of HKD 232,632,000 in the previous year[18] - The company reported a pre-tax profit of HKD 36,749 for the six months ended June 30, 2022[26] - The company reported a loss attributable to shareholders of approximately HKD 46,693,000 for the six months ended June 30, 2022, compared to a loss of HKD 108,279,000 for the same period in 2021[44] Assets and Liabilities - Total assets as of June 30, 2022, were HKD 15,746,216, a decrease from HKD 16,457,626 as of December 31, 2021[14] - Current liabilities totaled HKD 4,163,650, an increase from HKD 3,957,875 at the end of 2021[14] - Non-current liabilities decreased to HKD 4,558,085 from HKD 4,759,520 at the end of the previous year[14] - The company reported a total equity of HKD 6,628,998,000 as of June 30, 2022, compared to HKD 6,683,500,000 as of June 30, 2021[16] - The company’s total liabilities decreased to HKD 1,711,355,000 from HKD 1,684,274,000 year-over-year[18] - The total assets as of June 30, 2022, were HKD 15,350,733, compared to HKD 12,220,811 as of December 31, 2021, indicating a growth of approximately 25.5%[27] - The total liabilities as of June 30, 2022, were HKD 8,721,735, compared to HKD 7,469,191 as of December 31, 2021, reflecting an increase of about 16.8%[27] Cash Flow - Net cash generated from investing activities was HKD 42,888,000, compared to a cash outflow of HKD 17,002,000 in the prior year[18] - Cash and cash equivalents at the end of the period increased to HKD 621,926,000 from HKD 557,592,000 in the previous year[18] - The company recorded a cash flow increase of HKD 40,713,000 for the period, contrasting with a decrease of HKD 18,252,000 in the previous year[18] - New bank loans amounted to HKD 1,711,355,000, while repayments of bank loans were HKD 1,542,931,000, resulting in a net cash outflow from financing activities of HKD 43,826,000[18] Revenue Segments - The trading and manufacturing segment generated revenue of approximately HKD 2,015,000,000, a 30% increase from HKD 1,552,000,000 in 2021, with an operating profit of approximately HKD 107,700,000[94] - OEM toy production revenue increased by 26% to approximately HKD 1,852,000,000, up from HKD 1,470,000,000 in 2021[95] - The footwear trading business saw a substantial revenue increase of 124% to approximately HKD 152,700,000, compared to HKD 68,200,000 in 2021[97] - The property investment and development segment's revenue slightly decreased by 1% to approximately HKD 184,700,000, down from HKD 186,100,000 in 2021[99] - Rental income from properties in Hong Kong, Nanjing, Shenyang, and Tianjin reached HKD 99,900,000, a decrease of approximately 15% compared to the same period in 2021[100] - Revenue from the United States and Europe for the six months ended June 30, 2022, was HKD 1,353,565, an increase from HKD 966,913 in the same period in 2021, reflecting a growth of approximately 39.9%[27] Market and Operational Strategy - The company plans to continue expanding its market presence and investing in new product development to drive future growth[27] - The group plans to implement prudent cost control and resource deployment strategies to maintain competitiveness and sustainability in a challenging environment[112] - The group aims to expand production in Guangxi while reducing operations in higher-cost areas like Shenzhen and Dongguan to control manufacturing costs[114] - The company continues to implement commercialization and transformation in various properties in mainland China, including the transformation of the Sunlight Plaza to attract a diverse range of tenants and consumers[116] - The company is exploring opportunities to convert land reserves in Nanjing and Tianjin from industrial to commercial use to enhance land value and development returns[118] Risks and Challenges - The management anticipates challenges and uncertainties in the second half of 2022 due to ongoing pandemic effects and geopolitical tensions, impacting consumer confidence and order volumes[111] - The company faces risks related to the real estate market in mainland China, including policy changes and economic conditions that may adversely affect its business and financial situation[124] - The company is subject to risks from natural disasters and adverse weather conditions that could impact agricultural yields and operational performance[126] Shareholding Structure - The company holds a significant shareholding structure, with the largest shareholder owning approximately 61.22% of the total issued ordinary shares[130] - Major shareholders include Ying Li with 1,075,765,537 shares (17.77%) and Bannock with 1,273,122,098 shares (9.63%)[151][152] - The total number of issued ordinary shares as of June 30, 2022, is 13,221,302,172[144][152] - The company holds 30% of ordinary shares, totaling 6,828,729,326 shares through controlled entities[142][147] Employee and Operational Metrics - The total number of employees as of June 30, 2022, was approximately 21,578, down from 25,451 a year earlier, with employee costs for the six months amounting to approximately HKD 682,900,000[110] - The company has adopted new accounting standards effective from January 1, 2022, which are expected to have no significant impact on the financial statements[21]

Financial Performance - For the year ended December 31, 2021, the company reported revenue of HKD 4,725,000,000, an increase of 16% compared to HKD 4,086,000,000 in 2020[23] - The company's profit for the year was HKD 33,000,000, down from HKD 65,000,000 in 2020[23] - Basic earnings per share attributable to owners of the company were HKD 0.02, compared to HKD 0.05 in 2020[24] - The trading and manufacturing segment recorded revenue of HKD 4,314,000,000, a 34% increase from HKD 3,224,000,000 in 2020, while operating profit decreased by 1% to HKD 87,100,000[27] - The OEM toy business generated revenue of HKD 4,129,000,000, a 33% increase compared to the previous year[34] - The property investment and development segment saw a significant revenue decrease of 52% to HKD 408,000,000 due to prior year sales of pre-sold properties[39] - Rental income from the company's properties in Hong Kong and mainland China reached HKD 233,600,000, an increase of approximately 8% from the previous year[39] - The revenue from the agriculture segment decreased by 80% to HKD 2,700,000, while operating losses reduced by 57% to HKD 11,800,000[41] Dividends and Reserves - The company did not declare or distribute any dividends during the year, consistent with the previous year[25] - As of December 31, 2021, the company's distributable reserves amounted to HKD 1,064,817,000, down from HKD 1,125,932,000 in 2020[150] - The company did not declare an interim dividend for the year, consistent with the previous year[133] - The board does not recommend the distribution of a final dividend for the year, similar to the previous year[133] - The company has adopted a dividend policy aimed at sharing profits with shareholders while retaining sufficient reserves for future development[134] Business Operations and Strategy - The company continues to focus on developing its flagship property project in Shenyang, which has a total construction area of over 500,000 square meters[39] - The total saleable area of residential buildings and serviced apartments in Central Plaza Phase 1 is approximately 170,000 square meters, with about 55% sold to date[40] - The group plans to continue relocating production from Shenzhen and Dongguan to Guangxi and Vietnam to reduce production costs and enhance competitiveness[60] - The group is transforming the Xinghui Plaza from a fur-themed shopping mall to a multi-retail space to increase rental income and attract diverse customer demographics[63] - The group has implemented temporary rent reductions for several tenants in Hong Kong and mainland China, which will not have a significant financial impact[64] - The management remains cautiously optimistic about sales and rental contributions in 2022 and beyond, despite challenges from the pandemic and geopolitical tensions[53] - The company maintains a cautiously optimistic outlook for the sales of residential units at Central Plaza, attributed to its prime location and accessibility via the subway[65] Employee and Governance - The total number of employees as of December 31, 2021, was approximately 16,111, with employee costs amounting to HKD 1,459,000,000[52] - The company emphasizes the importance of employee development and has implemented stock option and incentive plans to reward contributions to growth[104] - The executive team includes experienced members with backgrounds in finance, law, and management, enhancing the company's governance[120][121] - The board of directors includes independent members with extensive experience in media and finance, ensuring diverse perspectives[124][125] - The board is responsible for the group’s ESG strategy and reporting, ensuring compliance with ESG risk management[131] Risks and Challenges - The company faces risks related to the macroeconomic environment, including potential declines in consumer discretionary income due to economic downturns, which could adversely affect customer orders[68] - Rising costs due to raw materials, transportation, and compliance with minimum wage legislation in mainland China may impact the profit margins of the company's products[69] - The company is exposed to risks associated with the real estate market in mainland China, including policy changes, currency fluctuations, and overall economic conditions[74] - The company is also affected by the overall economic and real estate market conditions in Hong Kong, which may influence rental income from its properties[75] - The agriculture segment is vulnerable to natural disasters and adverse weather conditions, which could lead to reduced yields or production delays[76] Legal Matters - The company is involved in ongoing litigation regarding copyright infringement, seeking compensation of RMB 210.4 million for damages related to software rights[85] - The company is pursuing legal action to claim ownership of 31 software copyrights, asserting that the software developed by Nanjing Qingtian is based on its own resources and personnel[88] - A court ruling requires Nanjing Qingtian and its associated individuals to pay a total of RMB 22,533,377.09 to the company, with additional amounts owed by individual defendants[89] - The Jiangsu High Court has identified approximately RMB 28,000,000 in Nanjing Qingtian's bank accounts, pending further legal proceedings[90] - The company has filed a lawsuit against Binhai Group for breach of contract, seeking RMB 166 million in damages, which is currently under review[98] Corporate Social Responsibility - The group reported charitable donations of HKD 3,382,000 for the year, an increase from HKD 2,450,000 in the previous year[149] - The company is committed to environmental protection and compliance with environmental regulations in its operations[102] Shareholder Information - The largest customer accounted for 42.6% of total sales, while the top five customers collectively represented 73.6% of total sales[159] - The largest supplier contributed 8.0% to total procurement, with the top five suppliers accounting for 20.4%[159] - As of December 31, 2021, the total issued ordinary shares amounted to 13,221,302,172[178] - The executive director Wu Hongsheng holds approximately 61.22% of the total issued ordinary shares[174] - The company has no provisions for preemptive rights in its articles of association[153] - All independent non-executive directors confirmed their independence as per the listing rules[163] - The board of directors includes a mix of executive and non-executive members, with specific roles outlined[160] Financial Instruments and Options - The company issued 109,975,631 redeemable convertible preferred shares, which could convert into 219,951,262 ordinary shares, generating proceeds of HKD 87,980,000[152] - The company has no outstanding stock options or agreements at year-end[152] - The company adopted the share option plan in June 2012 to encourage and reward eligible participants for their contributions to the group's success[186] - No share options were granted under the 2012 share option plan during the year, and 1,500,000 options lapsed due to employee resignations[186] - As of December 31, 2021, the total number of share options outstanding was 13,000,000, down from 14,500,000 at the beginning of the year[187] - The exercise price for the share options is set at HKD 0.51 per share[187] - The employee share award plan was adopted in March 2011, allowing the company to purchase up to HKD 60,000,000 worth of its own shares for the plan[197] - The company has implemented a defined contribution retirement benefit plan and a mandatory provident fund plan for its employees[199] - There were no arrangements during the year that allowed directors to benefit from purchasing shares or bonds of the company or any other entity[198] - The company has not granted any rights to directors or key executives to subscribe for shares or debt securities during the year[198] - The share options are subject to a vesting period, with varying percentages exercisable based on the time elapsed since the grant date[188] - The company has engaged in transactions with related parties as defined by the listing rules, detailed in the annual report[200]

Financial Performance - Revenue for the six months ended June 30, 2021, was HKD 1,738,006, an increase of 11.7% compared to HKD 1,556,119 for the same period in 2020[3] - Gross profit for the period was HKD 189,475, representing a gross margin of approximately 10.9%, up from HKD 162,214 in 2020[3] - Operating loss decreased to HKD 23,784 from HKD 39,153 year-over-year, indicating improved operational efficiency[3] - Net loss for the period was HKD 109,216, compared to a net loss of HKD 146,549 in the previous year, reflecting a 25.5% reduction in losses[3] - The group reported a pre-tax loss of HKD (106,465,000) for the period, an improvement from HKD (141,659,000) in the previous year, showing a reduction in losses[63] - The group reported a post-tax loss of approximately HKD 109,200,000, an improvement from a loss of HKD 146,500,000 in the same period of 2020[112] Assets and Liabilities - Total assets as of June 30, 2021, amounted to HKD 15,435,358, an increase from HKD 15,097,785 at the end of 2020[51] - Current assets increased to HKD 4,235,560 from HKD 3,897,564, showing a growth of 8.7%[51] - Non-current assets totaled HKD 11,057,910, up from HKD 10,963,689, indicating a 0.9% increase[49] - Total liabilities increased to HKD 8,662,132 from HKD 8,177,753, reflecting a rise of 5.9%[51] - The company’s total liabilities decreased from HKD 6,393,021 thousand as of January 1, 2021, to HKD 6,631,338 thousand as of June 30, 2021, indicating a reduction of approximately 4.1%[53] - Total liabilities reached HKD 8,662,132, compared to HKD 8,177,753 in the prior year, indicating a year-over-year increase of approximately 5.9%[66] Cash Flow and Investments - The net cash outflow from operating activities for the six months ended June 30, 2021, was HKD 238,194 thousand, compared to HKD 156,890 thousand for the same period in 2020, indicating an increase of 51.6%[55] - Cash and cash equivalents at the end of the period were HKD 557,592 thousand, down from HKD 672,392 thousand at the end of June 30, 2020, reflecting a decrease of 17.0%[55] - The company incurred a net cash outflow from investing activities of HKD 17,002 thousand for the six months ended June 30, 2021, compared to HKD 14,481 thousand in the same period of 2020, representing an increase of 17.6%[55] - New bank loans added during the period amounted to HKD 1,684,274 thousand, while repayments of bank loans were HKD 1,358,783 thousand, resulting in a net cash inflow from financing activities of HKD 236,944 thousand[55] Shareholder Information - The company reported a basic loss per share of HKD 0.8, an improvement from HKD 1.1 in the previous year[16] - The loss per share attributable to equity holders was HKD 0.8 cents, improved from HKD 1.1 cents in 2020[113] - The company did not declare an interim dividend for the six months ended June 30, 2021, consistent with the previous year[72] - The company holds 61.22% of its ordinary shares, with significant holdings by major shareholders including 1,075,765,537 shares held by Ying Li[172] Revenue Breakdown - Revenue from the United States reached HKD 966,913,000, significantly up from HKD 498,414,000 in the previous year, marking an increase of approximately 93.8%[64] - Revenue from Europe was HKD 341,589,000, up from HKD 237,800,000, reflecting a growth of approximately 43.7% year-over-year[64] - The group's revenue from China, including Hong Kong and Macau, was HKD 291,842,000, down from HKD 691,368,000, indicating a decline of approximately 57.8%[64] - The trading and manufacturing segment generated revenue of approximately HKD 1,552,000,000, a 67% increase from HKD 931,000,000 in 2020, with an operating loss of approximately HKD 34,400,000[115] - OEM toy manufacturing revenue reached approximately HKD 1,470,000,000, a 68% increase compared to HKD 874,000,000 in 2020[116] - Footwear trading business revenue increased by 39% to approximately HKD 68,200,000, up from HKD 48,900,000 in 2020[119] Operational Challenges - The group faced significant challenges in cost control due to rising production and logistics costs, including labor and material costs[116] - The management anticipates challenges and uncertainties in the second half of 2021 due to the Delta variant, US-China trade tensions, and RMB appreciation[134] - The company is exposed to risks from natural disasters affecting its agricultural operations, which could lead to reduced yields or production delays[148] - The company is subject to increased costs due to raw materials, transportation, and compliance with minimum wage legislation in mainland China[145] Corporate Governance - The company has established an Audit Committee consisting of five members, including four independent non-executive directors and one non-executive director[194] - The company has adopted a standard code of conduct for directors regarding securities trading[192] - The Audit Committee reviewed the unaudited interim financial statements for the six months ended June 30, 2021, and deemed them to be prepared in accordance with applicable accounting standards[194] - The company complied with the corporate governance code, except for certain deviations related to the absence of directors at the annual general meeting[183]