Financial Performance - The total revenue for the fiscal year ended December 31, 2021, was approximately HKD 235 million, a decrease of about 7.7% compared to HKD 255 million in the previous year[13]. - The company recorded a loss of approximately HKD 80.3 million for the fiscal year, an increase of 97.8% from a loss of HKD 40.6 million in the previous year[13]. - The increase in loss was primarily attributed to the cessation of government subsidies under the COVID-19 employment support scheme, a one-time loss from the sale of an associate company, and a decline in revenue and gross margin in the trading business in mainland China[13]. - Operating costs for the frozen warehouse and logistics business have significantly impacted the company's operating profit margin due to increased rental costs and additional expenses for health and safety measures[18]. - The company reported a basic and diluted loss per share of HK$ (27.7) for the year ended December 31, 2021, compared to HK$ (16.2) in 2020[40]. - The company's current ratio improved to 1.25 in 2021 from 0.83 in 2020, indicating better short-term financial health[40]. - The total liabilities to total assets ratio increased to 0.96 in 2021 from 0.80 in 2020, reflecting a higher level of debt[40]. - The company has a bank balance and cash of approximately HK$ 59.9 million as of December 31, 2021, down from HK$ 69.8 million in 2020[41]. - The company has extended the maturity of bonds totaling HK$ 90 million for two years, indicating ongoing financial restructuring efforts[42]. - The company’s retained earnings included paid-in surplus of HKD 84,239,000 and accumulated losses of HKD 528,250,000 as of December 31, 2021[76]. Business Operations and Strategy - The company faced challenges in the frozen warehouse and logistics business due to reduced demand from the food and beverage sector, impacted by strict government regulations on dining[9]. - The company diversified its customer base to attract new clients needing storage and logistics services during the crisis, including supermarkets and frozen food stores[8]. - The company optimized warehouse operations to improve efficiency and reduce losses, addressing rising operational costs due to enhanced food safety measures[9]. - The company plans to continue enhancing the operational efficiency of its frozen warehouse facilities and effectively manage costs to increase returns[10]. - The company has restructured its internal operations and adjusted its product mix to focus on high-margin retail products in mainland China[9]. - The company has expanded its temperature-controlled warehouse area in Kwai Shing Street to meet the growing demand for storage and logistics services during the pandemic, with operations starting in Q3 2021[16]. - The company signed a service agreement for an additional frozen warehouse facility in Tsing Yi in Q4 2021 to address increasing customer storage needs[16]. - The company has implemented strict cost control measures to maintain profitability in its food and beverage trading segment, terminating several low-margin wholesale channels[20]. - A new B2C business segment and a beverage product named "Attitude Planet" were launched in April 2021, targeting the younger generation through online and offline distribution channels[20]. - The company has introduced an online grocery shopping platform "Urban Mart" in Hong Kong, aimed at reaching retail customers with a variety of daily products[21]. - The company has ceased providing new financial resources to its non-core loan business, reallocating resources to more profitable segments[22]. - The company anticipates gradual recovery in its frozen warehouse and logistics business in Hong Kong and food and beverage distribution business in mainland China as the global economy improves[30]. - The company plans to continue diversifying its customer base by engaging more supermarkets and frozen food retailers to meet the strong demand for refrigerated facilities during the pandemic[31]. Risk Management and Governance - The company recognizes ongoing risks from the pandemic, geopolitical tensions, and changing monetary policies, which may affect demand for its products and services[29]. - The company has established a risk management policy to enhance its risk management capabilities[126]. - The board is responsible for maintaining an effective risk management and internal control system, which is reviewed semi-annually by the audit committee[186]. - The audit committee reviewed the risk management and internal control review report and the audited consolidated financial statements for the fiscal year ending December 31, 2021[176]. - The company has adopted a whistleblowing policy since March 28, 2012, to encourage employees to report any misconduct or potential violations, with no reports received during the review year[187]. - The company has implemented a series of internal control measures, including enhanced reporting channels for senior management, to improve risk management and internal control systems[187]. - The company has a comprehensive communication policy to ensure transparency and compliance with regulatory requirements, including adherence to guidelines issued by the Securities and Futures Commission[188]. Corporate Governance - The board of directors emphasizes the importance of corporate governance for the company's success and long-term shareholder benefits[126]. - The board consists of three committees: Audit Committee, Nomination Committee, and Remuneration Committee, which assist in monitoring senior management functions[127]. - The company has adopted the corporate governance code as per the Stock Exchange Listing Rules, ensuring compliance with all relevant provisions[126]. - The company has confirmed the independence of all current independent non-executive directors[105]. - The nomination committee, established in June 2005, includes three independent non-executive directors and is responsible for recommending all director appointments and reappointments[147]. - The company has not appointed a chairman as of December 31, 2021, which has resulted in non-compliance with corporate governance code A.2.7[143]. - The company’s board members have participated in continuous professional development through seminars and relevant reading materials[139]. - The remuneration committee provides recommendations on director remuneration based on the company's operating performance and market statistics[120]. - The audit committee was established on January 12, 2000, in accordance with guidelines from the Hong Kong Institute of Certified Public Accountants[171]. - The external auditor, Deloitte Touche Tohmatsu, was recommended for reappointment by the audit committee for the fiscal year ending December 31, 2021[176]. Shareholder Information - The company did not recommend any dividend for the year ending December 31, 2021, consistent with the previous year[74]. - The company’s dividend policy was adopted by the board and became effective on January 1, 2019[199]. - The dividend policy aims to balance shareholder interests and prudent capital management[199]. - Any proposed final dividend must be approved by shareholders at the annual general meeting and cannot exceed the amount recommended by the board[199]. - The board may also consider declaring special dividends outside of interim or final dividends[200]. - The company will periodically review and reassess the effectiveness of the dividend policy[200]. - Any amendments to the dividend policy must be considered and approved by the board[200].

Financial Performance - Total revenue for the six months ended June 30, 2021, was approximately HKD 105 million, a decrease of about 22% compared to HKD 135 million in the same period last year[5] - The group recorded a loss of approximately HKD 39 million for the period, compared to a loss of approximately HKD 26 million in the same period last year[5] - Total revenue for the six months ended June 30, 2021, was HKD 104,906,000, a decrease of 22.3% compared to HKD 135,075,000 for the same period in 2020[39] - The company reported a loss before tax of HKD 38,786,000, compared to a loss of HKD 26,430,000 for the same period in 2020, indicating a worsening financial position[39] - The company reported a net loss of HKD 38,990,000 for the six months ended June 30, 2021, compared to a loss of HKD 26,430,000 for the same period in 2020[48] - The basic and diluted loss per share for the period was HKD 1.34, compared to HKD 1.09 in the previous year, reflecting a 22.9% increase in loss per share[41] - The company recognized an impairment loss of HKD 7,500,000 related to a loan to an associate, which was not present in the previous year[39] - The company reported a segment loss of HKD 28,274,000 for the six months ended June 30, 2021, compared to a loss of HKD 16,018,000 in the same period of 2020[55] - The company reported a loss of HKD 38,990,000 for the six months ended June 30, 2021, compared to a loss of HKD 26,430,000 for the same period in 2020, representing a 47.5% increase in losses year-over-year[67] Revenue Breakdown - Revenue from frozen warehouse and related services was HKD 81,914,000, down from HKD 83,885,000, while food and beverage trading revenue dropped significantly to HKD 22,848,000 from HKD 51,000,000[39] - Revenue from cold storage and related services was HKD 81,914,000, down 2.3% from HKD 83,885,000 in the previous year[55] - Revenue from food and beverage trading dropped significantly to HKD 22,848,000, a decrease of 55.2% from HKD 51,000,000 in the prior year[54] Operational Developments - The group is converting two floors of its warehouse into a cold storage facility, expected to be operational in Q3 2021, to meet the growing demand for storage and logistics services[10] - A new B2C business segment was launched in April 2021, featuring a beverage product called "Attitude Planet," targeting the younger generation[13] - An online grocery shopping platform named "Urban Mart" was launched in Hong Kong, aimed at reaching retail customers with a variety of products[14] - The group has implemented strict cost control measures to maintain profitability in its food and beverage trading segment due to weak consumer demand during the pandemic[13] - The logistics business remains stable, supporting warehouse clients despite increased operational costs due to the pandemic[11] - The group is diversifying its customer base to attract clients with higher demand for storage and logistics services[10] - The group is focusing on e-commerce solutions to access a larger consumer base in mainland China and Hong Kong[20] Financial Position - As of June 30, 2021, the group's cash and bank balances were approximately HKD 45.1 million, down from HKD 69.8 million as of December 31, 2020[21] - The debt-to-equity ratio as of June 30, 2021, was approximately 110.7%, an increase from 68.4% as of December 31, 2020[21] - Total non-current assets decreased to HKD 266,119,000 from HKD 317,664,000, indicating a reduction of 16.2%[43] - Current assets also declined to HKD 122,238,000 from HKD 140,871,000, a decrease of 13.3%[43] - The company’s total liabilities increased to HKD 173,508,000 from HKD 169,651,000, showing a slight rise of 2.0%[45] - The company’s total equity attributable to owners decreased to HKD 49,683,000 as of June 30, 2021, from HKD 87,756,000 at the end of the previous period[46] - The company’s total assets decreased to HKD 388,357,000 as of June 30, 2021, from HKD 458,535,000 at the end of 2020, reflecting a decline of 15.3%[58] - Total liabilities also decreased to HKD 335,511,000 from HKD 367,620,000, a reduction of 8.7%[58] Cash Flow and Financing - Operating cash flow for the six months ended June 30, 2021, was HKD 16,674,000, an increase from HKD 15,247,000 in the previous year[47] - Total cash and cash equivalents at the end of the period were HKD 45,067,000, down from HKD 59,013,000 a year earlier[47] - The company incurred financing cash outflows of HKD 42,625,000, compared to HKD 71,844,000 in the previous year, indicating a reduction in financing costs[47] - The company has extended the maturity dates of two bonds totaling HKD 20,000,000 to November and December 2023, addressing liquidity risks[48] - The company’s management believes that it has sufficient working capital to meet cash flow requirements for the next twelve months[48] Risk Management and Governance - The board believes that the company has sufficient risk management and internal control procedures to meet its operational needs in the current environment[132] - The company has engaged an independent professional consultant to assess the adequacy and effectiveness of its risk management and internal control systems[131] - The risk management and internal control system evaluation plan focuses on reviewing operations in mainland China, compliance risk management, financial reporting, and follow-up on previous recommendations[131] - The board has not identified any issues that would indicate a breach in the risk management and internal control systems[132] - The company has maintained compliance with the corporate governance code, except for the absence of a chairman during the reporting period[127] Shareholder Information - The company has a total of 2,901,104,000 shares issued as of June 30, 2021[120] - The total equity held by directors Feng Baiji and He Hanzhong is 231,334,173 shares, representing 7.97% of the total issued shares[120] - The company granted a total of 116,044,160 stock options under the stock option plan, which is valid until June 1, 2025[115] - The exercise price for the stock options is HKD 0.039 per share, with a market price of HKD 0.039 at the time of grant[115] - Great Virtue Holding Limited holds 468,800,000 shares, accounting for 16.16% of the total issued shares[117] - Ever Achieve Enterprises Limited holds 202,323,133 shares, representing 6.97% of the total issued shares[117]

Financial Performance - The total revenue for the fiscal year ended December 31, 2020, was approximately HKD 255 million, down from approximately HKD 290 million in the previous year[9]. - The company recorded a loss of HKD 40.58 million for the fiscal year, a reduction of about 40% compared to a loss of HKD 67.14 million in the previous year[9][10]. - The improvement in performance was primarily attributed to the food and beverage trading segment and effective cost-saving measures implemented by the company[10]. - The group's revenue growth was partially offset by higher costs in frozen warehouse and logistics operations during the pandemic, including additional expenses for warehouse disinfection and staff temperature checks[13]. - The company reported a basic loss per share of HKD (1.62) for 2020, an improvement from HKD (2.76) in 2019[27]. - The net asset value per share attributable to the company's owners decreased to HKD 3.02 in 2020 from HKD 4.67 in 2019[27]. - The current ratio declined to 0.83 in 2020 from 1.19 in 2019, indicating a decrease in short-term liquidity[27]. - The debt-to-asset ratio remained stable at 0.80, while the asset-liability ratio improved to 68.4% in 2020 from 88.1% in 2019[27][28]. - Cash and bank balances decreased to approximately HKD 69.8 million in 2020 from HKD 118 million in 2019, primarily due to loan repayments[28]. - The company issued a total of HKD 100 million in bonds, consistent with the previous year, to support general working capital[28]. Business Strategy and Operations - The demand for the company's frozen warehouse and logistics services decreased due to strict pandemic measures affecting the food and beverage industry[6]. - The company diversified its customer base by attracting new clients, including supermarkets and frozen food stores, which required more frozen warehouse services during the crisis[6][12]. - The company plans to launch a business-to-consumer (B2C) retail network in Hong Kong to directly reach customers[7]. - The company aims to enhance operational efficiency in its frozen warehouse facilities and reduce costs to mitigate risks and increase returns[7]. - The company expanded its bonded warehouse business, which continued to achieve revenue growth throughout 2020[12]. - The company upgraded the shelving system in its Tsing Yi warehouse to optimize profit and ensure maximum operational efficiency[12]. - The food and beverage distribution business in mainland China turned profitable during the review period, attributed to internal restructuring and strategies to enhance revenue and profitability[16]. - The group plans to launch OEM new beverage products in mid-2021 and a B2C online grocery shopping platform in Hong Kong in early 2021[23]. - The group anticipates significant benefits from suppressed market demand in its frozen warehouse and logistics business in Hong Kong and food and beverage distribution in China due to expected economic recovery[20]. - The group is committed to diversifying its business portfolio to mitigate operational risks and ensure a balance between safety and profitability[17]. - The group will convert two additional floors of its warehouse on Kwai Hing Street into frozen storage by mid-2021, expecting revenue increases without significant additional costs[24]. - The logistics business remains stable in supporting warehouse clients despite challenges faced by certain customers due to reduced business volume[14]. - The group has ceased providing new financial resources to its loan services division, reallocating resources to more profitable segments[15]. - The group is enhancing the efficiency and storage capacity of its Tsing Yi warehouse and expanding its bonded warehouse capacity[24]. Corporate Governance - The company has maintained a high level of corporate governance practices[96]. - The financial statements for the year ended December 31, 2020, were audited by Deloitte Touche Tohmatsu[97]. - The board believes that corporate governance is crucial for the company's success and aims to maintain high standards of governance to benefit shareholders in the long term[102]. - The board has established a risk management policy to enhance the group's ability to prevent risks and ensure stable operations[102]. - The board consists of three committees: Audit Committee, Nomination Committee, and Remuneration Committee, which assist in monitoring senior management functions[103]. - The board includes two executive directors and five independent non-executive directors, ensuring a diverse governance structure[104]. - The board held a total of 17 meetings during the year, with all directors receiving at least 14 days' notice for regular meetings[108]. - Independent non-executive directors actively participate in board meetings and contribute to strategy and policy development[105]. - The company secretary is responsible for providing the board with updates on governance and regulatory matters[111]. - The board retains final decision-making authority on key matters, including long-term strategy and financial performance[106]. - The company has adopted the corporate governance code as per the listing rules, ensuring compliance with all relevant guidelines[102]. - The board will continue to monitor corporate governance practices to ensure prudent regulation of daily business activities[102]. Employee and Compensation - As of December 31, 2020, the total number of full-time employees in Hong Kong and mainland China was approximately 230 and 40, respectively, compared to 220 and 120 in 2019[39]. - Total employee compensation for the year ended December 31, 2020, was approximately HKD 78,483,000, an increase from HKD 75,112,000 in 2019, reflecting competitive salary levels[39]. - The company has maintained a competitive employee compensation policy, including discretionary bonuses and various benefits[39]. Environmental, Social, and Governance (ESG) - The company has a focus on environmental, social, and governance (ESG) policies, with detailed discussions included in the annual report[51]. - The company emphasizes the importance of ESG (Environmental, Social, and Governance) issues and has established a governance framework to oversee its sustainable development initiatives[177]. - The board is responsible for setting strategic directions and monitoring progress towards ESG-related goals to enhance the company's ESG performance[177]. - The company aims to reduce food waste by providing discounted storage for surplus food to local charities, integrating sustainability into its business model[175]. - The company has committed to improving its ESG performance and incorporating sustainability into its core strategies for future challenges[176]. - The company maintains the same ESG risk factors as the previous year, including health and safety risks associated with machinery and driving, which could impact operations and reputation[179]. - The aging workforce poses a risk to productivity and safety, prompting the company to implement a human resource management system and eliminate the mandatory retirement age of 60 to retain experienced employees[179]. - The company has identified 22 sustainability issues, with 11 prioritized as material issues based on stakeholder feedback from 152 valid survey responses[189]. - The company emphasizes compliance management and has not encountered any significant legal violations related to emissions, employment, health and safety, labor standards, product liability, or corruption during the reporting year[183]. - The company actively participates in community activities and engages with NGOs to understand community needs[187]. - The company has established policies and measures to ensure adherence to the highest ethical and responsibility standards in its operations[181]. - The company’s sustainability issues are ranked by significance, with anti-corruption and customer rights protection being the highest priorities[194]. - The company is committed to responsible and sustainable operations to earn the trust of all stakeholders, including customers[195]. - No legal cases related to corruption against the company or its employees during the reporting year[197]. - Three board members and 33 employees participated in anti-corruption training provided by the ICAC to enhance awareness of corruption issues in the warehousing and logistics industry[198]. - The company emphasizes long-term relationships with suppliers that share common ethical values and standards[200]. - Environmental and social factors are considered alongside technical and price competitiveness in the procurement process[200]. - The company has established standardized procurement management processes to evaluate and monitor supplier performance regularly[200]. - Poorly performing suppliers will be removed from the supplier list to ensure compliance with the company's standards[200]. - The company has implemented a reporting platform to ensure a fair and effective mechanism for reporting misconduct[198]. - Employees are encouraged to report any suspicious cash flows and potential conflicts of interest[198]. - The company has a commitment to maintaining integrity and promoting social fairness, prohibiting all forms of bribery and corruption[196]. - No incidents of corruption have been reported in the company's operations during the year[197].

[Company Information](index=3&type=section&id=Company%20Information) This chapter provides essential company information for Datong Group Limited (Stock Code: 00544), detailing its board, committees, secretary, offices, auditors, bankers, and share registrar - The company's Board of Directors comprises executive, non-executive, and independent non-executive directors, with established audit, nomination, and remuneration committees[3](index=3&type=chunk) - Company Secretary Mr. Cheung Hoi Kin was appointed on June 5, 2020, succeeding Mr. Choi Kai Sing who resigned on the same day[3](index=3&type=chunk) - The company's auditor is Deloitte Touche Tohmatsu, with principal bankers including Bank of China (Hong Kong), Bank of Communications, and HSBC[3](index=3&type=chunk) [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) This chapter details the Group's overall performance, operating segment review, future outlook, and comprehensive financial analysis for the six months ended June 30, 2020 [Overall Performance](index=4&type=section&id=Overall%20Performance) For H1 2020, the Group's total revenue decreased by **9.3%** to **HK$135 million**, with a loss of **HK$26.4 million**, despite steady core business growth from efficiency gains | Metric | H1 2020 (HK$ Thousand) | H1 2019 (HK$ Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 135,000 | 149,000 | -9.3% | | Loss for the Period | (26,400) | (25,600) | 3.1% (Loss Widened) | - The Group's overall and core businesses achieved **steady growth**, primarily due to improved operational efficiency across all business units and management's efforts to identify new clients and business opportunities to enhance profit margins[5](index=5&type=chunk) - Despite persistently **high operating costs**, particularly for summer warehouse refrigeration, the Group has implemented effective cost control mechanisms[5](index=5&type=chunk) [Operating Segment Review](index=4&type=section&id=Operating%20Segment%20Review) The Group's businesses include cold storage and related services in Hong Kong, food and beverage product trading in mainland China, loan services in Hong Kong, and investment holding [Cold Storage and Logistics](index=4&type=section&id=Cold%20Storage%20and%20Logistics) Cold storage remains the Group's core segment and primary revenue source, providing temperature-controlled warehousing and logistics services, with stable performance despite economic uncertainties and the pandemic - Cold storage business is the Group's **core segment** and primary revenue source, offering temperature-controlled warehousing, logistics, delivery, container handling, and packaging services[7](index=7&type=chunk) - Despite Hong Kong's economic uncertainty, social unrest, and the COVID-19 pandemic, the existing Kwai Hei Street warehouse facilities maintained **stable performance**, largely consistent with the prior year[7](index=7&type=chunk) - The Tsing Yi joint venture warehouse performed satisfactorily, while the Tsuen Wan bonded warehouse saw reduced profitability due to declining sales of tobacco and alcohol products and slower inventory turnover caused by the pandemic[9](index=9&type=chunk) [Loan Business](index=5&type=section&id=Loan%20Business) The Group's loan business, which provides credit support to cold storage and logistics clients, will no longer receive new capital investment, with resources redirected to more promising segments - The loan business provides credit support to cold storage and logistics clients[11](index=11&type=chunk) - This segment will **not receive new capital investment**, with resources reallocated to more promising segments like cold storage and logistics, and food and beverage product trading[11](index=11&type=chunk) [Food and Beverage Product Trading](index=5&type=section&id=Food%20and%20Beverage%20Product%20Trading) The Group's food and beverage product distribution business in mainland China performed better during the review period, driven by improved distribution network efficiency, diversified product portfolio, and recovering consumer demand - The food and beverage product distribution business in mainland China performed **better than last year**, primarily due to improved distribution network operational efficiency and a diversified product portfolio, including new Australian fresh dairy products and local brand fresh juices[12](index=12&type=chunk) - Despite initial business weakness caused by the COVID-19 pandemic, consumer demand has **rebounded since Q1 2020**[12](index=12&type=chunk) [Outlook](index=6&type=section&id=Outlook) The Group maintains a cautious outlook on the economy, focusing resources on resilient businesses like cold storage and food and beverage trading, while planning capacity expansion and network optimization [Macroeconomic Environment](index=6&type=section&id=Macroeconomic%20Environment) Hong Kong's economy experienced an **8.9% decline** in Q1 2020, the largest since 1974, due to protests, trade disputes, and the pandemic, leading to rising unemployment and plummeting retail sales - Hong Kong's economy declined by **8.9%** in Q1 2020 compared to the prior year, marking the largest drop since 1974[14](index=14&type=chunk) - Months of street protests, the US-China trade dispute, and the COVID-19 pandemic have pressured Hong Kong's economy, with unemployment rising to its highest level since September 2005 and retail sales plummeting by over one-third[14](index=14&type=chunk) - The forecast for overall real GDP growth in 2020 has been revised downwards from **-4% to -7%**, indicating a bleak macroeconomic outlook[14](index=14&type=chunk) [Cold Storage and Logistics (Outlook)](index=6&type=section&id=Cold%20Storage%20and%20Logistics%20(Outlook)) Despite the severe impact on Hong Kong's catering industry, the Group believes its cold storage and logistics business is more resilient, with plans for Tsing Yi warehouse expansion and Kwai Hei Street renovation - Hong Kong's catering industry saw a **31.2% drop in profits**, negatively impacting the warehouse sector by slowing the Group's inventory turnover and reducing H1 profitability[15](index=15&type=chunk) - The Kwai Hei Street warehouse is scheduled for major renovation, which may lead to **extended downtime** and fluctuations in overall revenue[17](index=17&type=chunk) - Construction to expand the storage area at the Tsing Yi cold storage facility is underway, which will **increase storage capacity** upon completion, reinforcing the Group's belief in the resilience of its cold storage and logistics business compared to other sectors[17](index=17&type=chunk) [Food and Beverage Product Trading (Outlook)](index=7&type=section&id=Food%20and%20Beverage%20Product%20Trading%20(Outlook)) The Group is committed to expanding its trading business through product diversification and network expansion in mainland China, while strategically optimizing its retail network and exploring e-commerce solutions - The Group is committed to developing its trading business through a **diversified food and beverage product portfolio** and expanding its distribution network across supermarkets and convenience stores in mainland China[18](index=18&type=chunk) - Recent initiatives include strategically evaluating the retail network to identify geographical areas for **revenue optimization** and expanding e-commerce solutions to reach a broader consumer base[18](index=18&type=chunk) - Facing intense price competition from retail chains in mainland China, the Group has taken actions to ensure the **profitability of its products** is maintained[18](index=18&type=chunk) [Financial Review](index=7&type=section&id=Financial%20Review) This section reviews the Group's financial position, including liquidity, financial resources, treasury policy, exchange rate risk, share capital structure, significant acquisitions/disposals, asset pledges, and contingent liabilities [Liquidity and Financial Resources](index=7&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2020, the Group's cash and bank balances decreased to **HK$59 million**, primarily due to bank loan repayments and net cash used in operations, leading to an increased gearing ratio | Metric | June 30, 2020 (HK$ Thousand) | December 31, 2019 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 59,000 | 118,000 | 50% Decrease | | Gearing Ratio | 114.0% | 88.1% | 25.9 percentage points Increase | | Bank Borrowings | 35,000 | 65,000 | 46.2% Decrease | | Total Bonds | 100,000 | 100,000 | No Change | - The decrease in cash and bank balances was primarily due to **repayment of bank loans**, placement of pledged bank deposits, and net cash used in operating activities[19](index=19&type=chunk) - The gearing ratio increased due to a **decrease in equity attributable to owners** of the Company[19](index=19&type=chunk) [Treasury Policy](index=8&type=section&id=Treasury%20Policy) The Group adopts a conservative treasury policy, strictly monitoring cash management, with most cash and bank balances denominated in Hong Kong Dollars - The Group adopts a **conservative treasury policy**, strictly monitoring its cash management[23](index=23&type=chunk) - The Group's cash and bank balances are primarily denominated in **Hong Kong Dollars**[23](index=23&type=chunk) [Exchange Rate Fluctuation Risk and Hedging](index=8&type=section&id=Exchange%20Rate%20Fluctuation%20Risk%20and%20Hedging) The Group's monetary assets and liabilities are primarily denominated in HKD, resulting in minimal exchange rate risk, which will be regularly reviewed if mainland China trading business increases - The Group's monetary assets and liabilities are primarily denominated in **Hong Kong Dollars**, and the Directors consider the exchange rate risk to be minimal[24](index=24&type=chunk) - The Group may be exposed to relatively higher exchange rate risk if more food and beverage trading business operates in mainland China, which the Directors will review regularly[24](index=24&type=chunk) - During the interim period, the Group did not undertake any **significant foreign exchange risk** nor use any financial instruments for hedging purposes[25](index=25&type=chunk) [Share Capital Structure](index=9&type=section&id=Share%20Capital%20Structure) As of June 30, 2020, the Company's total issued share capital was **HK$24.323 million**, comprising **2.4323 billion** ordinary shares of HK$0.01 each, remaining unchanged from December 31, 2019 | Metric | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total Issued Share Capital | HK$24,323,040 | HK$24,323,040 | | Number of Ordinary Shares | 2,432,304,000 shares | 2,432,304,000 shares | | Par Value Per Share | HK$0.01 | HK$0.01 | [Significant Acquisitions and Disposals of Subsidiaries, Associates, and Joint Ventures](index=9&type=section&id=Significant%20Acquisitions%20and%20Disposals%20of%20Subsidiaries,%20Associates,%20and%20Joint%20Ventures) During the interim period, the Group did not undertake any significant acquisitions or disposals of subsidiaries, associates, or joint ventures - During the interim period, the Group did not undertake any **significant acquisitions or disposals** of subsidiaries, associates, or joint ventures[28](index=28&type=chunk) [Pledge of Assets](index=9&type=section&id=Pledge%20of%20Assets) As of June 30, 2020, the Group had **HK$3.5 million** in bank facilities pledged by equivalent bank deposits, with approximately **HK$1.4 million** utilized, and **HK$64.3 million** in bank deposits pledged for lease agreement guarantees | Pledge Type | June 30, 2020 (HK$ Thousand) | December 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Bank Facilities Pledged by Bank Deposits | 3,500 | 3,500 | | Utilized Bank Facilities Amount | 1,400 | 3,500 | | Bank Guarantees for Lease Agreements Pledged by Bank Deposits | 64,300 | 62,100 | | Lease Liabilities Pledged by Right-of-Use Assets | 9 | 80 | [Future Plans for Material Investments or Capital Assets](index=9&type=section&id=Future%20Plans%20for%20Material%20Investments%20or%20Capital%20Assets) During the interim period, the Group had no specific future plans for material investments or capital assets, other than those related to joint ventures - During the interim period, the Group had no specific future plans for **material investments or capital assets**, other than those related to joint ventures[30](index=30&type=chunk) [Contingent Liabilities](index=9&type=section&id=Contingent%20Liabilities) As of June 30, 2020, the Group had no contingent liabilities - As of June 30, 2020, the Group had **no contingent liabilities**[31](index=31&type=chunk) [Employment and Remuneration Policies](index=10&type=section&id=Employment%20and%20Remuneration%20Policies) As of June 30, 2020, the Group employed approximately **240** full-time staff in Hong Kong and **90** in mainland China, offering competitive remuneration packages and benefits | Region | Number of Employees as of June 30, 2020 | Number of Employees as of December 31, 2019 | | :--- | :--- | :--- | | Hong Kong | Approx. 240 | Approx. 220 | | Mainland China | Approx. 90 | Approx. 120 | - The Group reviews remuneration annually and provides various benefits, including **discretionary bonuses**, Mandatory Provident Fund, lunch allowances, and professional guidance/training allowances[32](index=32&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=11&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2020, the Group's total revenue was **HK$135.075 million**, a **9.3%** decrease year-on-year, with loss for the period widening to **HK$26.43 million** and basic loss per share at **1.09 HK Cents** | Metric | H1 2020 (HK$ Thousand) | H1 2019 (HK$ Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 135,075 | 148,910 | -9.3% | | Revenue from Cold Storage and Related Services | 83,885 | 104,339 | -19.6% | | Revenue from Food and Beverage Trading | 51,000 | 42,238 | 20.7% | | Interest Income from Loan Services | 190 | 2,333 | -91.9% | | Gross Profit | 14,918 | 28,917 | -48.4% | | Loss Before Tax | (26,430) | (25,593) | 3.3% (Loss Widened) | | Loss for the Period | (26,430) | (25,593) | 3.3% (Loss Widened) | | Basic Loss Per Share | (1.09 HK Cents) | (1.05 HK Cents) | 3.8% (Loss Widened) | - This interim financial performance has been reviewed by the Company's Audit Committee but **not audited** by the Company's auditor[34](index=34&type=chunk) - Total comprehensive expense for the period was **HK$25.803 million**, a slight increase from **HK$25.476 million** in the prior year[36](index=36&type=chunk) [Condensed Consolidated Statement of Financial Position](index=13&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2020, the Group's total assets decreased to **HK$503 million**, with significant reductions in cash and bank balances, and equity attributable to owners of the Company falling to **HK$87.756 million** | Metric | June 30, 2020 (HK$ Thousand) | December 31, 2019 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current Assets | 363,346 | 399,253 | -9.0% | | Current Assets | 139,742 | 186,207 | -25.0% | | Bank Balances and Cash | 59,013 | 117,966 | -50.0% | | Current Liabilities | 133,458 | 156,578 | -14.7% | | Net Current Assets | 6,284 | 29,629 | -78.8% | | Equity Attributable to Owners of the Company | 87,756 | 113,559 | -22.7% | | Total Consolidated Assets | 503,088 | 585,460 | -14.0% | | Total Consolidated Liabilities | 412,169 | 468,738 | -12.1% | - Interests in an associate decreased from **HK$4.072 million** to zero, while loans to an associate increased from **HK$39.255 million** to **HK$40.621 million**[39](index=39&type=chunk) - Trade and other receivables, deposits, and prepayments increased from **HK$55.474 million** to **HK$64.979 million**[39](index=39&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=15&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2020, equity attributable to owners of the Company decreased from **HK$113.5 million** to **HK$87.76 million**, primarily due to the **HK$26.43 million** loss for the period | Metric | January 1, 2020 (HK$ Thousand) | June 30, 2020 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Equity Attributable to Owners of the Company | 113,559 | 87,756 | (25,803) | | Non-controlling Interests | 3,163 | 3,163 | 0 | | Total | 116,722 | 90,919 | (25,803) | | Loss for the Period | - | (26,430) | (26,430) | | Exchange Differences on Translation of Overseas Operations | - | 627 | 627 | - The decrease in equity attributable to owners of the Company was primarily due to the **loss for the period**[44](index=44&type=chunk) - Exchange reserve changed from **(HK$1.914 million)** at the beginning of the period to **(HK$1.287 million)** at the end, reflecting exchange gains from translating overseas operations[44](index=44&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=16&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2020, the Group's cash and cash equivalents saw a net decrease of **HK$59.58 million**, with the period-end balance at **HK$59.01 million**, driven by reduced operating cash flow and increased cash used in financing activities | Metric | H1 2020 (HK$ Thousand) | H1 2019 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | 15,247 | 82,454 | (67,207) | | Net Cash (Used in) from Investing Activities | (2,983) | 28,778 | (31,761) | | Net Cash Used in Financing Activities | (71,844) | (46,802) | (25,042) | | Net (Decrease) Increase in Cash and Cash Equivalents | (59,580) | 64,430 | (124,010) | | Cash and Cash Equivalents at End of Period | 59,013 | 120,445 | (61,432) | - Net cash from operating activities significantly decreased, primarily impacted by **lower revenue and reduced gross profit**[46](index=46&type=chunk) - Net cash used in financing activities increased, mainly due to **repayment of bank borrowings of HK$30 million** and repayment of lease liabilities of **HK$31.045 million**[46](index=46&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=17&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This chapter provides detailed notes to the condensed consolidated financial statements, covering basis of preparation, significant accounting policies, revenue and segment information, various income and expenses, asset and liability items, share capital, derivative financial instruments, pledge of assets, and related party transactions [1. Basis of Preparation](index=17&type=section&id=1.%20Basis%20of%20Preparation) The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and the applicable disclosure requirements of Appendix 16 to the Listing Rules of The Stock Exchange of Hong Kong Limited - The condensed consolidated financial statements are prepared in accordance with **HKAS 34 "Interim Financial Reporting"** and Appendix 16 of the Listing Rules[47](index=47&type=chunk) [2. Significant Accounting Policies](index=17&type=section&id=2.%20Significant%20Accounting%20Policies) The accounting policies and methods of computation used for the condensed consolidated financial statements for the six months ended June 30, 2020, are consistent with those followed in the preparation of the 2019 annual financial statements - The accounting policies and methods of computation used for this interim period are **consistent with the 2019 annual financial statements**[48](index=48&type=chunk) - New and revised Hong Kong Financial Reporting Standards (HKFRS) adopted on January 1, 2020, including amendments to HKFRS 3, HKFRS 9, HKAS 39, HKFRS 7, HKAS 1, and HKAS 8, had **no significant impact** on the results and financial position for the current and prior periods[49](index=49&type=chunk)[50](index=50&type=chunk) - The Group expects that newly issued and revised HKFRS that are not yet effective will **not have a significant impact** on the condensed consolidated financial statements[51](index=51&type=chunk) [3. Revenue and Segment Information](index=18&type=section&id=3.%20Revenue%20and%20Segment%20Information) The Group's revenue and results are segmented into cold storage and related services in Hong Kong, food and beverage trading in mainland China, and loan services in Hong Kong, showing varying performance across segments - The Group's operating segments include: **cold storage and related services** in Hong Kong, **food and beverage product trading** in mainland China, and **loan services** in Hong Kong[53](index=53&type=chunk)[54](index=54&type=chunk) | Segment | H1 2020 Revenue (HK$ Thousand) | H1 2019 Revenue (HK$ Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Cold Storage and Related Services | 83,885 | 104,339 | -19.6% | | Food and Beverage Trading | 51,000 | 42,238 | 20.7% | | Loan Services | 190 | 2,333 | -91.9% | | Total | 135,075 | 148,910 | -9.3% | | Segment | June 30, 2020 Assets (HK$ Thousand) | December 31, 2019 Assets (HK$ Thousand) | June 30, 2020 Liabilities (HK$ Thousand) | December 31, 2019 Liabilities (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Cold Storage and Related Services | 344,975 | 366,308 | 292,377 | 348,602 | | Food and Beverage Trading | 25,699 | 28,346 | 14,016 | 13,603 | | Loan Services | 2,097 | 2,056 | 5,230 | 3,138 | | Total Segment Assets | 372,771 | 396,710 | - | - | | Total Segment Liabilities | - | - | 311,623 | 365,343 | [4. Other Income](index=23&type=section&id=4.%20Other%20Income) For the six months ended June 30, 2020, the Group's total other income increased to **HK$4.386 million** from **HK$3.151 million** in the prior year, primarily driven by **HK$1.902 million** in government subsidies | Item | H1 2020 (HK$ Thousand) | H1 2019 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Government Subsidies | 1,902 | – | 1,902 | | Estimated Interest Income from Loan to an Associate | 1,366 | 1,877 | (511) | | Estimated Interest Income from Lease Deposits Paid | 367 | 398 | (31) | | Interest Income from Bank Deposits | 604 | 535 | 69 | | Miscellaneous Income | 147 | 341 | (194) | | Total | 4,386 | 3,151 | 1,235 | - **Government subsidies** were the primary driver of other income growth in this period[61](index=61&type=chunk) [5. Other Gains and Losses](index=23&type=section&id=5.%20Other%20Gains%20and%20Losses) For the six months ended June 30, 2020, the Group recorded total other losses of **HK$0.537 million**, a reduction from **HK$0.716 million** in the prior year, mainly from fair value changes in derivative financial instruments and financial assets at fair value through profit or loss | Item | H1 2020 (HK$ Thousand) | H1 2019 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Fair Value Change of Derivative Financial Instruments | (259) | (1,069) | 810 | | Fair Value Change of Financial Assets at Fair Value Through Profit or Loss | (278) | – | (278) | | Loss on Disposal of Property, Plant and Equipment | – | (177) | 177 | | Reversal of Impairment Loss on Loans Receivable | – | 502 | (502) | | Reversal of Impairment Loss on Trade Receivables | – | 28 | (28) | | Total | (537) | (716) | 179 | - The loss from fair value changes in derivative financial instruments decreased, but new losses arose from **financial assets at fair value through profit or loss**[62](index=62&type=chunk) [6. Finance Costs](index=24&type=section&id=6.%20Finance%20Costs) For the six months ended June 30, 2020, the Group's total finance costs decreased to **HK$10.199 million** from **HK$11.562 million** in the prior year, primarily due to a significant reduction in bank borrowing interest expenses | Item | H1 2020 (HK$ Thousand) | H1 2019 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Interest Expense on Bank Borrowings | 1,295 | 2,383 | (1,088) | | Interest Expense on Bonds | 3,000 | 3,000 | 0 | | Interest Expense on Lease Liabilities | 5,904 | 6,179 | (275) | | Total | 10,199 | 11,562 | (1,363) | - The reduction in **interest expense on bank borrowings** was the primary reason for the decrease in total finance costs[64](index=64&type=chunk) [7. Taxation](index=24&type=section&id=7.%20Taxation) For the six months ended June 30, 2020, the Group made no provision for Hong Kong Profits Tax or corporate income tax, as individual companies within the Group incurred losses or had tax losses to offset taxable profits - Hong Kong operates a **two-tiered profits tax rate system**, with the first HK$2 million of profits taxed at 8.25% and the remainder at 16.5%[65](index=65&type=chunk) - Mainland China subsidiaries were taxed at a rate of **25%** during both periods[65](index=65&type=chunk) - No provision for Hong Kong Profits Tax or corporate income tax was required for the period, as Group companies incurred losses or possessed tax losses[65](index=65&type=chunk) [8. Loss for the Period](index=25&type=section&id=8.%20Loss%20for%20the%20Period) For the six months ended June 30, 2020, the Group's loss for the period widened to **HK$26.43 million** from **HK$25.593 million** in the prior year, after deducting depreciation of property, plant and equipment and right-of-use assets | Item | H1 2020 (HK$ Thousand) | H1 2019 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Loss for the Period | (26,430) | (25,593) | (837) | | Depreciation of Property, Plant and Equipment | 1,717 | 1,581 | 136 | | Depreciation of Right-of-Use Assets | 34,470 | 37,943 | (3,473) | | Net Foreign Exchange Loss (Gain) | 36 | (30) | 66 | - Depreciation expense for **right-of-use assets decreased**, while depreciation for property, plant and equipment slightly increased[68](index=68&type=chunk) [9. Dividends](index=25&type=section&id=9.%20Dividends) During the interim period, the Group did not pay, declare, or propose any dividends, consistent with the prior year - No dividends were paid, declared, or proposed during the interim period[69](index=69&type=chunk) [10. Loss Per Share](index=25&type=section&id=10.%20Loss%20Per%20Share) For the six months ended June 30, 2020, basic loss per share attributable to owners of the Company widened to **1.09 HK Cents** from **1.05 HK Cents** in the prior year, with no diluted loss per share presented due to the absence of potential ordinary shares | Metric | H1 2020 | H1 2019 | | :--- | :--- | :--- | | Loss for Calculation of Basic Loss Per Share Attributable to Owners of the Company (HK$ Thousand) | (26,430) | (25,593) | | Weighted Average Number of Ordinary Shares for Basic Loss Per Share (Thousands) | 2,432,304 | 2,432,304 | | Basic Loss Per Share | (1.09 HK Cents) | (1.05 HK Cents) | - Diluted loss per share was not presented as there were **no potential ordinary shares** outstanding during either period[70](index=70&type=chunk) [11. Property, Plant and Equipment](index=26&type=section&id=11.%20Property,%20Plant%20and%20Equipment) During the interim period, the Group acquired property, plant and equipment totaling approximately **HK$0.909 million**, a significant decrease from **HK$6.26 million** in the prior year, with no disposals | Item | H1 2020 (HK$ Thousand) | H1 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Additions to Property, Plant and Equipment | 909 | 6,260 | | Disposals of Property, Plant and Equipment | – | 177 (Loss) | - Capital expenditure for additions to property, plant and equipment **decreased significantly** in this period[71](index=71&type=chunk) [12. Right-of-Use Assets](index=26&type=section&id=12.%20Right-of-Use%20Assets) As of June 30, 2020, the carrying amount of the Group's right-of-use assets was **HK$229.318 million**, a decrease from **HK$264.329 million** at the end of 2019, with depreciation expense of **HK$34.47 million** for the period | Item | June 30, 2020 (HK$ Thousand) | December 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Carrying Amount of Right-of-Use Assets | 229,318 | 264,329 | | Depreciation Expense (H1 2020) | 34,470 | 37,943 (H1 2019) | | Total Cash Outflow for Leases (H1 2020) | 36,949 | - | | Additions to Right-of-Use Assets (H1 2020) | 264 | - | - Right-of-use assets primarily include **cold storage facilities, offices, and motor vehicles**[72](index=72&type=chunk) - Lease contracts have fixed terms ranging from **24 months to 8 years**, with extension and/or termination options[73](index=73&type=chunk) [13. Interests in an Associate / Loans to an Associate / Amounts Due from an Associate](index=27&type=section&id=Interests%20in%20an%20Associate%20/%20Loans%20to%20an%20Associate%20/%20Amounts%20Due%20from%20an%20Associate) As of June 30, 2020, the Group's interest in associate Loving Peace International Limited was zero due to accumulated losses and impairment, while loans to and amounts due from the associate increased | Item | June 30, 2020 (HK$ Thousand) | December 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Interests in an Associate | – | 4,072 | | Loans to an Associate | 40,621 | 39,255 | | Amounts Due from an Associate | 12,316 | 8,077 | | Loving Peace Loss and Other Comprehensive Expense for the Period/Year | (26,858) | (73,180) | - The Group holds a **30% equity interest** and 20% voting rights in Loving Peace International Limited, exercising significant influence[75](index=75&type=chunk) - Loans to an associate are **unsecured, interest-free**, and considered part of the Group's net investment in the associate[77](index=77&type=chunk) [14. Trade and Other Receivables, Deposits and Prepayments](index=31&type=section&id=14.%20Trade%20and%20Other%20Receivables,%20Deposits%20and%20Prepayments) As of June 30, 2020, trade receivables (net of credit loss provision) increased to **HK$59.901 million** from **HK$50.337 million** at the end of 2019, with the Group typically granting 30 to 60 days credit | Ageing | June 30, 2020 (HK$ Thousand) | December 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | 0 to 30 days | 20,829 | 20,897 | | 31 to 60 days | 20,694 | 17,413 | | 61 to 90 days | 6,375 | 6,468 | | 91 to 120 days | 5,071 | 2,477 | | Over 120 days | 6,932 | 3,082 | | Total | 59,901 | 50,337 | - Total trade receivables increased, with a **significant rise in receivables over 120 days**[83](index=83&type=chunk) - The Group **does not charge interest** on any overdue trade receivables[82](index=82&type=chunk) [15. Loans Receivable](index=32&type=section&id=15.%20Loans%20Receivable) As of June 30, 2020, net loans receivable slightly increased to **HK$2.015 million** from **HK$1.975 million** at the end of 2019, with these loans being unsecured, interest-bearing, and maturing within 3 months to 1 year | Item | June 30, 2020 (HK$ Thousand) | December 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Loans Receivable | 2,880 | 2,840 | | Less: Provision for Credit Losses | (865) | (865) | | Net Amount | 2,015 | 1,975 | - Loans receivable bear fixed annual interest rates ranging from **12% to 24%** and have maturity dates between 3 months and 1 year[86](index=86&type=chunk) [16. Trade and Other Payables](index=32&type=section&id=16.%20Trade%20and%20Other%20Payables) As of June 30, 2020, trade payables increased to **HK$12.51 million** from **HK$10.911 million** at the end of 2019, with a notable increase in amounts due within 0 to 30 days | Ageing | June 30, 2020 (HK$ Thousand) | December 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | 0 to 30 days | 5,940 | 2,271 | | 31 to 60 days | 767 | 889 | | 61 to 90 days | 5,798 | 6,953 | | 91 to 120 days | 5 | 470 | | Over 120 days | – | 328 | | Total | 12,510 | 10,911 | - Total trade payables increased, with the most significant growth observed in amounts due within **0 to 30 days**[89](index=89&type=chunk) [17. Lease Liabilities](index=33&type=section&id=17.%20Lease%20Liabilities) As of June 30, 2020, the Group's total lease liabilities decreased to **HK$237.214 million** from **HK$268.91 million** at the end of 2019, with **HK$65.487 million** due within one year | Item | June 30, 2020 (HK$ Thousand) | December 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Total Lease Liabilities | 237,214 | 268,910 | | Due within One Year | 65,487 | 63,475 | | Due after One Year but Not More Than Two Years | 65,022 | 67,899 | | Due after Two Years but Not More Than Five Years | 106,705 | 137,536 | | Non-current Liabilities Due after 12 Months | 171,727 | 205,435 | - Total lease liabilities decreased, primarily reflected in the reduction of liabilities due **between two and five years**[91](index=91&type=chunk) [18. Share Capital](index=33&type=section&id=18.%20Share%20Capital) As of June 30, 2020, the Company's authorized share capital was **HK$600 million**, divided into **60 billion** ordinary shares of HK$0.01 each, with issued and fully paid share capital of **HK$24.323 million**, remaining unchanged from 2019 | Item | Number of Shares (Thousands) | Amount (HK$ Thousand) | | :--- | :--- | :--- | | Authorized Share Capital (Ordinary Shares of HK$0.01 each) | 60,000,000 | 600,000 | | Issued and Fully Paid Share Capital (Ordinary Shares of HK$0.01 each) | 2,432,304 | 24,323 | - The Company's authorized and issued share capital structure remained **stable** during the reporting period[92](index=92&type=chunk) [19. Derivative Financial Instruments](index=34&type=section&id=19.%20Derivative%20Financial%20Instruments) The Group entered into a joint venture agreement with two independent investors, granting two put options to one investor (Investor A) for the purchase of shares and shareholder loans in the associate Loving Peace - The Group granted **two put options** to Investor A, involving the purchase of its shares and shareholder loans in the associate Loving Peace[93](index=93&type=chunk) - The first put option is exercisable within **36 months** from the management services agreement date if specific key performance indicators are not met[93](index=93&type=chunk) - The second put option will be exercisable upon the expiration of **36 months** from the agreement date, irrespective of key performance indicator achievement[95](index=95&type=chunk) [20. Bonds](index=35&type=section&id=20.%20Bonds) Bonds issued by the Group bear an annual interest rate of **6%**, payable once a year, with maturity dates on the seventh anniversary of their respective issue dates (between November 2021 and May 2022) - Bonds bear an annual interest rate of **6%**, payable once a year[96](index=96&type=chunk) - Bond maturity dates are the **seventh anniversary** of their respective issue dates, falling between November 2021 and May 2022[96](index=96&type=chunk) [21. Pledge of Assets](index=35&type=section&id=21.%20Pledge%20of%20Assets) As of June 30, 2020, the Group had **HK$3.5 million** in bank facilities pledged by equivalent bank deposits, with approximately **HK$1.41 million** utilized, and **HK$64.285 million** in bank deposits pledged for lease agreement guarantees | Pledge Type | June 30, 2020 (HK$ Thousand) | December 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Bank Facilities Pledged by Bank Deposits | 3,500 | 3,500 | | Utilized Bank Facilities Amount | 1,410 | 3,480 | | Bank Guarantees for Lease Agreements Pledged by Bank Deposits | 64,285 | 62,068 | - The utilized bank facilities amount decreased from **HK$3.48 million** at the end of 2019 to **HK$1.41 million** in the current period[97](index=97&type=chunk) [22. Fair Value Measurement of Financial Instruments](index=36&type=section&id=22.%20Fair%20Value%20Measurement%20of%20Financial%20Instruments) The Group's financial assets and liabilities are measured at fair value, categorized into Level 1, 2, or 3, with listed equity securities in Level 1 and derivative financial liabilities in Level 3 | Item | Fair Value Level | June 30, 2020 (HK$ Thousand) | December 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Financial Assets at Fair Value Through Profit or Loss (Listed Equity Securities) | Level 1 | 408 | 686 | | Derivative Financial Liabilities | Level 3 | 6,984 | 6,725 | - The fair value of derivative financial instruments is calculated using a **binomial model**, with expected volatility as the key unobservable input (35.66% as of June 30, 2020)[104](index=104&type=chunk) - A slight decrease in expected volatility, holding other variables constant, would lead to a **decrease in the fair value measurement** of derivative instruments, and vice versa[104](index=104&type=chunk) [23. Related Party Transactions](index=38&type=section&id=23.%20Related%20Party%20Transactions) During the period, the Group engaged in significant related party transactions, including management service income of **HK$5.485 million** from an associate and total key management personnel remuneration of **HK$3.708 million** | Item | H1 2020 (HK$ Thousand) | H1 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Management Fee Income (from an Associate) | 5,485 | 2,254 | | Directors' Fees | 552 | 421 | | Other Emoluments (Salaries and Benefits) | 3,044 | 2,980 | | Other Emoluments (Performance Bonuses) | – | 410 | | Other Emoluments (Contributions to Retirement Benefit Schemes) | 112 | 156 | | Total Key Management Personnel Emoluments | 3,708 | 3,967 | - A subsidiary of the Company entered into a management services agreement with an associate to assist in its cold storage business operations and receive management fees[107](index=107&type=chunk) [Other Information](index=39&type=section&id=Other%20Information) This chapter discloses other important information, including directors' and major shareholders' interests, share option schemes, directors' interests in competing businesses, connected transactions, and corporate governance practices [Disclosure of Interests](index=39&type=section&id=Disclosure%20of%20Interests) This section discloses the interests of directors and major shareholders in the Company and its associated corporations as of June 30, 2020 [Directors' Interests](index=39&type=section&id=Directors'%20Interests) As of June 30, 2020, Executive Director Mr. Fung Pak Kei held a **10%** equity interest in associate Loving Peace International Limited through his controlled corporation GIK Business Consulting Limited - Executive Director Mr. Fung Pak Kei holds a **10% equity interest** in Loving Peace International Limited through his controlled corporation GIK Business Consulting Limited[109](index=109&type=chunk)[110](index=110&type=chunk) - Loving Peace International Limited is the **sole shareholder** of Glory Green Cold Storage Services Limited[111](index=111&type=chunk) - Save as disclosed above, no other directors or chief executives had any disclosable interests or short positions in the shares, underlying shares, and debentures of the Company or its associated corporations[108](index=108&type=chunk) [Major Shareholders' Interests](index=40&type=section&id=Major%20Shareholders'%20Interests) As of June 30, 2020, major shareholders included Ever Achieve Enterprises Limited (holding **8.32%**) and its ultimate beneficial owner Mr. Yuen Kin Wing, and Bingo Chance Limited (holding **5.76%**) and its ultimate beneficial owner Ms. Wulglar Wai Wan | Shareholder Name/Name | Capacity | Number of Shares Held | Approximate Percentage of Total Issued Share Capital | | :--- | :--- | :--- | :--- | | Ever Achieve Enterprises Limited | Beneficial Owner | 202,323,133 | 8.32% | | Yuen Kin Wing | Interest in Controlled Corporation | 202,323,133 | 8.32% | | Bingo Chance Limited | Beneficial Owner | 140,000,000 | 5.76% | | Elite Plan Investments Limited | Interest in Controlled Corporation | 140,000,000 | 5.76% | | Wulglar Wai Wan | Interest in Controlled Corporation | 140,000,000 | 5.76% | - Ms. Wulglar Wai Wan is the sister of Mr. Ho Hon Chung, an Executive Director of the Company, and the **sole ultimate beneficial owner** of Elite Plan Investments Limited and Bingo Chance Limited[115](index=115&type=chunk) [Share Option Scheme](index=41&type=section&id=Share%20Option%20Scheme) The Company adopted a new share option scheme ("2015 Scheme") on May 29, 2015, replacing the 2006 Scheme, effective from June 2, 2015, for a period of ten years - The Company approved the adoption of a **new share option scheme** on May 29, 2015, and terminated the 2006 scheme[116](index=116&type=chunk) - The 2015 Scheme became effective on **June 2, 2015**, and has a validity period of ten years[116](index=116&type=chunk) - As of June 30, 2020, there were **no outstanding share options**, and no share options had been granted since the adoption of the 2015 Scheme[116](index=116&type=chunk) [Directors' Interests in Competing Businesses](index=41&type=section&id=Directors'%20Interests%20in%20Competing%20Businesses) For the six months ended June 30, 2020, no directors, to the best of their knowledge, had any interests in businesses that directly or indirectly compete or are likely to compete with the Group's businesses - For the six months ended June 30, 2020, no directors, to the best of their knowledge, had any interests in businesses that directly or indirectly compete or are likely to compete with the Group's businesses[117](index=117&type=chunk) [Connected Transactions and Directors' Interests in Contracts](index=41&type=section&id=Connected%20Transactions%20and%20Directors'%20Interests%20in%20Contracts) Upon the appointment of Executive Director Mr. Fung Pak Kei, his wholly-owned GIK Business Consulting Limited became a connected person of the Company, rendering a prior joint venture agreement a connected transaction - Upon the appointment of Executive Director Mr. Fung Pak Kei, his wholly-owned GIK Business Consulting Limited became a **connected person** of the Company[118](index=118&type=chunk) - Tianqun Development Limited, an indirect wholly-owned subsidiary of the Company, entered into a joint venture agreement with Below Zero (Hong Kong) Limited, GIK, and Loving Peace International Limited to jointly operate and manage a joint venture company primarily engaged in the cold storage business[120](index=120&type=chunk) - The Board has reviewed and confirmed that the transaction was entered into in the ordinary and usual course of the Group's business, on normal commercial terms or better, and in the overall interests of the shareholders[120](index=120&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=42&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20Listed%20Securities) For the six months ended June 30, 2020, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the six months ended June 30, 2020, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[121](index=121&type=chunk) [Corporate Governance](index=43&type=section&id=Corporate%20Governance) This section outlines the Group's corporate governance practices, including compliance with the Corporate Governance Code, directors' securities dealing policy, Audit Committee responsibilities, and risk management and internal control systems [Corporate Governance Code](index=43&type=section&id=Corporate%20Governance%20Code) The Company complied with most provisions of the HKEX Corporate Governance Code in H1 2020, with a deviation regarding the vacant Chairman position, which the Board believes has no negative impact - The Company complied with the principles and code provisions of the HKEX Corporate Governance Code in H1 2020, **except for the vacant Chairman position**[123](index=123&type=chunk) - Code Provision A.2.1 stipulates that the roles of Chairman and Chief Executive should be separate and not performed by the same individual, but the Company did not appoint a Chairman during the period[123](index=123&type=chunk) - The Board believes that not filling the Chairman vacancy has **no negative impact** on the Company, as decisions are made collectively by the Board, and the need to appoint a suitable person to perform the Chairman's functions will be continuously reviewed[124](index=124&type=chunk) [Standard Code for Securities Transactions by Directors](index=43&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company has adopted a "Securities Dealing Policy" no less exacting than the Model Code set out in Appendix 10 of the Listing Rules, with all directors confirming compliance during the review period - The Company has adopted a written securities dealing policy whose terms are **no less exacting** than the required standards set out in the Model Code for Securities Transactions by Directors of Listed Issuers in Appendix 10 of the Listing Rules[125](index=125&type=chunk) - All Directors have confirmed their compliance with the required standards set out in the securities dealing policy during the review period[128](index=128&type=chunk) - The Company was **not aware of any non-compliance** during the review period[128](index=128&type=chunk) [Audit Committee](index=44&type=section&id=Audit%20Committee) The Audit Committee reviewed the Group's accounting principles, risk management, internal controls, and financial reporting matters, including the interim results, confirming compliance with applicable standards and regulations - The Audit Committee has reviewed the Group's adopted accounting principles and practices and discussed **risk management, internal controls, and financial reporting matters** with the Directors[129](index=129&type=chunk) - The Committee believes that the Group's unaudited condensed consolidated results for the six months ended June 30, 2020, comply with applicable accounting standards, Listing Rules, and legal requirements, and that **sufficient disclosures have been made**[129](index=129&type=chunk) - The Audit Committee comprises three independent non-executive directors: Mr. Leung Chi Hung (Chairman), Mr. Fung Siu Kit, and Mr. Tse Yuen Ming[129](index=129&type=chunk) [Risk Management and Internal Control](index=44&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board is responsible for maintaining appropriate and effective risk management and internal control systems, reviewed by the Audit Committee, and has found no deficiencies as of June 30, 2020 - The Board is responsible for maintaining appropriate and effective **risk management and internal control systems** for the Group and reviewing their effectiveness through the Audit Committee[130](index=130&type=chunk) - The Group has engaged an **independent professional consultant** to perform internal audit functions, conducting independent assessments of risk management and internal control systems for certain subsidiaries[132](index=132&type=chunk) - As of June 30, 2020, the Board is satisfied that the Group has **adequate risk management and internal control procedures** in place, and no issues were identified that would lead the Board to believe there were deficiencies in the Group's risk management and internal control systems[133](index=133&type=chunk)

Financial Performance - The total revenue for the fiscal year ended December 31, 2019, was approximately HKD 290 million, a decrease from HKD 309 million in the previous year[9]. - The company recorded a loss of approximately HKD 67 million, which is an increase of about 76% compared to a loss of HKD 38 million in 2018[9]. - The loss in the China trading business was HKD 11,796,000, representing a reduction of 9.6%[6]. - The company reported a basic loss per share of HKD (2.76) for 2019, compared to HKD (1.56) in 2018[25]. - The company's total liabilities to total assets ratio increased to 0.80 in 2019 from 0.53 in 2018, indicating a higher financial leverage[25]. - The asset-liability ratio stood at 88.1% as of December 31, 2019, up from 55.1% in 2018, reflecting a decline in equity attributable to the company's owners[26]. - The company’s cash and bank balances increased to approximately HKD 118 million in 2019 from HKD 55.9 million in 2018, primarily due to a decrease in receivables and cash generated from operating activities[26]. Business Strategy and Operations - The company has expanded its product portfolio to include more snacks and beverages from other countries and brands to maintain customer traffic[6]. - The new bonded warehouse in Kwai Chung, primarily for storing tobacco and alcohol products, initially incurred operating losses but is expected to improve in 2020[5]. - The company is focusing on its core business and reallocating resources to enhance its frozen warehouse and trading operations[6]. - The logistics department established to support the frozen warehouse division performed steadily, although it only provided limited services due to high operational costs[12]. - The company is gradually scaling back its lending services to concentrate more on expanding its frozen warehouse and trading businesses[14]. - The company is focusing on improving operational efficiency and reducing costs in its trade business to mitigate market risks[17]. - The company plans to expand its product supply and distribution network as part of its trade business transformation[20]. - The company aims to integrate its cold storage and food and beverage trade into a one-stop service platform to drive growth[23]. Economic Outlook - The company anticipates a GDP contraction of over 1% for Hong Kong in 2020, following a 1.2% decline in the previous year[19]. - The unemployment rate in Hong Kong has risen to 3.5%, the highest level since 2016, and is expected to worsen rapidly[19]. - The company remains cautiously optimistic about the long-term future, believing it will overcome the current economic crisis and achieve significant growth[7]. - The company remains cautiously optimistic about its long-term performance despite short-term macroeconomic challenges, focusing on core segments for rapid growth post-recovery[19]. Corporate Governance - The company maintains high standards of corporate governance practices[91]. - The board of directors emphasizes the importance of corporate governance for the company's success and long-term shareholder benefits[95]. - The board has established a risk management policy to enhance risk prevention capabilities and ensure stable operations[95]. - The board consists of three committees: Audit Committee, Nomination Committee, and Remuneration Committee, to assist in monitoring senior management functions[96]. - The company has adopted a director nomination policy effective from January 1, 2019, which is executed by the nomination committee[114]. - The nomination committee consists of three independent non-executive directors, ensuring compliance with corporate governance standards[114]. - The company has not filled the chairman position, believing that collective decision-making by the board will not negatively impact operations[112]. - The company has arranged appropriate insurance to protect directors against potential liabilities arising from company affairs, in compliance with corporate governance codes[107]. Risk Management - The company has implemented a robust risk assessment and control mechanism to navigate the challenging macroeconomic environment[6]. - The board has established a risk management and internal control system to ensure operational effectiveness and compliance, with regular reviews conducted by the audit committee[145]. - The company has adopted a whistleblowing policy since March 28, 2012, to encourage reporting of misconduct, with no reports received during the year under review[146]. - The board believes that the current risk management and internal control systems are adequate and effective, with no significant issues identified that would indicate weaknesses[149]. Employee and Stakeholder Engagement - The group had approximately 220 full-time employees in Hong Kong and 120 in China, compared to 230 and 80 respectively in 2018[38]. - The group emphasizes the importance of employee development and training, regularly assessing training needs[182]. - The group has a zero-tolerance policy for workplace harassment and provides a clear employee handbook outlining rights and responsibilities[176]. - The company has established a reporting platform for employees to confidentially report any suspected violations[189]. - The company emphasizes open communication with shareholders and investors, encouraging inquiries and suggestions through various channels[151]. Environmental, Social, and Governance (ESG) Initiatives - The company reported a focus on sustainable development and risk management in response to economic and political uncertainties[166]. - The company plans to replace refrigerants with more environmentally friendly alternatives and is preparing to expand disclosure on climate change[166]. - The board is responsible for evaluating ESG risks and ensuring effective ESG risk management and internal control systems are in place[168]. - The group identified 11 material ESG issues, with new topics including product responsibility and supply chain management, and added emission management as a new environmental issue[172]. - The company has committed to reducing its environmental impact across its supply chain, focusing on emissions and resource consumption management[199]. Financial Management - The group adopted a conservative treasury policy, strictly monitoring cash management, with cash and bank balances primarily denominated in HKD[29]. - The group reported that the top five customers accounted for approximately 49.8% of total revenue, with the largest customer contributing about 14.8%[52]. - The top five suppliers represented around 51.3% of total procurement, with the largest supplier accounting for approximately 25.8%[52]. - The group’s lease liabilities amounted to HKD 268,900,000, with approximately HKD 80,000 pledged against lease assets[35]. - The company has established strict internal procedures to prevent insider trading and conflicts of interest, adhering to relevant guidelines issued by regulatory bodies[147].

Financial Performance - Total revenue for the six months ended June 30, 2019, was approximately HKD 149 million, an increase of about 3.47% compared to HKD 144 million in the same period last year[5]. - The group recorded a loss of approximately HKD 25.6 million during this period, compared to a loss of HKD 17.1 million in 2018, primarily due to losses from an associate company and operational losses from a new warehouse not being fully operational[5]. - The total revenue for the six months ended June 30, 2019, was HKD 148.91 million, compared to HKD 143.80 million for the same period in 2018, representing a growth of 3.5%[33]. - The gross profit for the six months ended June 30, 2019, was HKD 28.92 million, compared to HKD 15.69 million in the same period last year, indicating a significant improvement in profitability[33]. - The group reported a loss before tax of HKD 25.59 million for the six months ended June 30, 2019, compared to a loss of HKD 17.07 million in the same period of 2018[34]. - The company reported a loss of HKD 25,593 thousand for the six months ended June 30, 2019, compared to a loss of HKD 17,074 thousand in the same period of 2018[38]. - The basic loss per share attributable to the owners of the company was HKD (25,593,000), compared to HKD (17,074,000) in the prior year, reflecting a worsening financial performance[78]. Revenue Segments - The food and beverage trading division saw continuous revenue growth in the first half of 2019, with increased profit margins, despite rising operational costs leading to performance below expectations[11]. - The revenue from food and beverage trading increased to HKD 42.24 million, up from HKD 33.93 million in the previous year, marking a growth of 24.5%[33]. - The segment loss for the cold storage and related services was HKD 11,622,000, compared to a loss of HKD 5,266,000 in the prior year, indicating a deterioration in performance[65]. Operational Developments - The group is expanding warehouse capacity as a key measure to promote recovery in its operations, with expectations of improved profit margins once the new warehouse is fully operational[5]. - A joint venture has been established to oversee operations and management of the new warehouse facilities in Tsing Yi, aimed at enhancing efficiency and profitability[14]. - The group has initiated operations of a 50,000 square feet bonded warehouse in Tsuen Wan, seeking to develop its core business segment and create new revenue sources[14]. Economic Outlook and Strategy - The group has adopted a cautious approach to operations in light of the deteriorating economic outlook in Hong Kong, focusing resources on the most promising business segments[13]. - The cold storage business is expected to be less affected by economic downturns, as it primarily stores essential goods, ensuring stable demand regardless of local economic conditions[14]. Financial Position - As of June 30, 2019, the group's cash and bank balances amounted to approximately HKD 120.4 million, a significant increase from HKD 55.9 million as of December 31, 2018[19]. - The group's debt-to-equity ratio increased to 64.2% as of June 30, 2019, up from 55.1% as of December 31, 2018, due to a decrease in equity attributable to owners[19]. - Non-current assets increased significantly to HKD 444,278 thousand in June 2019 from HKD 223,039 thousand in December 2018, representing a growth of 99.4%[36]. - Current liabilities rose to HKD 165,385 thousand in June 2019, up from HKD 102,098 thousand in December 2018, an increase of 62.0%[37]. - Total assets less current liabilities increased to HKD 500,857 thousand in June 2019 from HKD 293,383 thousand in December 2018, a rise of 70.7%[37]. - The company’s equity attributable to owners decreased to HKD 155,670 thousand in June 2019 from HKD 181,654 thousand in December 2018, a decline of 14.3%[38]. Cash Flow and Investments - The net cash generated from operating activities was HKD 82,454 thousand for the six months ended June 30, 2019, compared to a cash outflow of HKD 44,471 thousand in the same period of 2018[39]. - The company’s cash flow from investing activities showed a net inflow of HKD 28,778 thousand for the six months ended June 30, 2019, compared to a net outflow of HKD 770 thousand in the same period of 2018[39]. - The net cash from investing activities was HKD 28,778,000, indicating ongoing investment in growth opportunities[60]. Accounting Standards and Changes - The company adopted the Hong Kong Financial Reporting Standard No. 16 (HKFRS 16) effective from January 1, 2019, which requires most leases to be recognized on the balance sheet[45]. - The adoption of HKFRS 16 resulted in a reclassification of lease liabilities, with total lease liabilities recognized as HKD 60,339,000 as of June 30, 2019[59]. - The company's total lease liabilities increased by HKD 65,959,000 due to the adoption of HKFRS 16, reflecting the present value of future lease payments[48]. - The adoption of HKFRS 16 did not have a significant impact on the financial performance and position of the group for the current and prior periods[44]. Shareholder and Governance Information - Major shareholders include Ever Achieve Enterprises Limited with 202,323,133 shares, representing 8.32% of the issued share capital[119]. - The company did not declare any interim dividends during the period, maintaining a conservative cash position[77]. - The company has not appointed a chairman, with decisions made collectively by the board, which believes this does not negatively impact operations[125]. - All directors confirmed compliance with the securities trading policy during the review period, with no known non-compliance incidents[128]. Risk Management and Internal Controls - The board is responsible for maintaining an effective risk management and internal control system, with regular meetings to review financial and operational performance[130]. - The company has engaged an independent professional consultant to enhance its risk management and internal control systems, focusing on independent assessments of several subsidiaries' systems[132]. - The board believes that the company has adequate risk management and internal control procedures to meet current operational needs, with no identified issues suggesting vulnerabilities in the systems[132].

Financial Performance - The total revenue for the fiscal year ended December 31, 2018, was approximately HKD 309 million, an increase from HKD 275 million in the previous year[7]. - The company recorded a loss of approximately HKD 38 million, representing an increase of about 8.57% compared to a loss of HKD 35 million in the previous year[7]. - The basic loss per share was HKD (1.56), compared to HKD (1.45) in the previous year[8]. - As of December 31, 2018, the group's cash and bank balances were approximately HKD 55.9 million, a decrease from HKD 94.8 million in 2017, primarily due to increased receivables and cash used in operating activities[34]. - The debt-to-equity ratio as of December 31, 2018, was approximately 55.1%, up from 45.7% in 2017, attributed to a decline in equity attributable to owners[34]. - The group had bank loans amounting to HKD 65 million as of December 31, 2018, with an annual interest rate of 7%, maturing in April 2020[35]. - The company reported a total reserve of HKD 84,239,000 as of December 31, 2018, unchanged from the previous year, with accumulated losses amounting to HKD 422,767,000[60]. Operational Changes - The company entered into a joint venture agreement in September 2018 to develop new cold storage business, aiming to enhance its core operations[4]. - The company terminated its underperforming industrial ice business to reallocate resources towards its core cold storage operations[4]. - The company plans to extend the lease of its existing cold storage facility in Kwai Chung for an additional eight years, effective from February 15, 2019[11]. - The company aims to improve its product variety and trading flexibility in the mainland China market to achieve higher profit margins[4]. - The company plans to concentrate resources on new frozen warehouse projects through joint ventures, with a significant investment in a 320,000 square foot facility in Tsing Yi starting operations in March 2019[25]. - The industrial ice division contributes only 1% to 2% of total revenue, leading to its discontinuation in 2018 to focus on more profitable frozen warehouse operations[15]. Risk Management and Compliance - The company is implementing a risk management plan to address macroeconomic and competitive risks in the fluctuating business environment of 2019[5]. - The company has made significant policy decisions to mitigate major risks, including eliminating leasing uncertainties for core warehouse operations[23]. - The company has engaged an independent professional consultant to evaluate the adequacy and effectiveness of its risk management and internal control systems[136]. - The board is responsible for maintaining an effective risk management and internal control system, with the audit committee reviewing its effectiveness every six months[135]. - The company has established a risk management framework to adapt to emerging risks and ensure operational resilience, focusing on environmental and social performance[159]. Governance and Board Structure - The board of directors includes a mix of executive and independent non-executive members, ensuring diverse governance and oversight[61]. - The board held a total of 16 meetings during the year, with an attendance rate of 100% for executive directors[95]. - The board retains ultimate decision-making authority while delegating daily operations to executive directors and senior management[93]. - The nomination committee consists of three independent non-executive directors, ensuring compliance with corporate governance codes[105]. - The board has achieved measurable diversity goals under the board diversity policy, including at least three independent non-executive directors, constituting one-third of the board[119]. Employee and Workplace Policies - The company emphasizes employee well-being by encouraging work-life balance and providing various paid leave options and benefits such as medical insurance and tuition reimbursement[177]. - The company has implemented a performance evaluation system to assess employee performance and determine salary increases and promotions based on evaluation results[173]. - The total number of employees is 217, with a new hire percentage of 6.5% and a turnover rate of 13.4%, which increased by 1.3%[176]. - The company is focused on improving energy efficiency in its cold storage facilities and refrigerant selection to mitigate environmental risks[159]. Environmental and Social Responsibility - The company emphasizes the integration of sustainable development into its business practices to create greater value for stakeholders and society[156]. - The total greenhouse gas emissions for the reporting year amounted to 9,370.65 tons of CO2 equivalent, with the main sources being electricity consumption from warehouses and offices, accounting for 64% of total emissions[192]. - The company has adopted a green procurement policy, prioritizing environmentally friendly and energy-efficient products[200]. - The company is committed to providing a safe and healthy work environment, adhering to occupational health and safety laws and regulations[170]. - The company conducted a stakeholder communication survey, receiving 130 valid responses from 313 questionnaires sent out, identifying 11 material environmental, social, and governance issues[164].