Economic Performance - In 2021, Hong Kong's economy expanded by 6.4% year-on-year, supported by a stable pandemic situation starting in May[7]. - China's GDP growth reached 8.1% in 2021, exceeding market expectations despite challenges from the Omicron variant and a distressed real estate sector[8]. - Hong Kong's real GDP expanded by 6.4% in 2021, reversing declines from the previous two years[19]. - The global economy faces uncertainties from COVID-19 variants and geopolitical risks, which may impact growth in 2022[9]. - The global economy is projected to grow by 4.1% in 2022, with China targeting a 5.5% economic growth rate for the same year[46]. - Hong Kong's economy is expected to grow by 2.0% to 3.5% in real terms for the year, supported by fiscal measures from the government[47]. Market Performance - The Hang Seng Index fell by 14% over the year, making Hong Kong one of the worst-performing equity markets among major markets[7]. - The Hang Seng Index fell by 14.1% in 2021, with the Hang Seng Technology Index dropping by 34.8% due to regulatory crackdowns[20]. - The total funds raised in Hong Kong's securities market reached HK$770.7 billion in 2021, representing a year-on-year increase of 3.0%[20]. - The average daily turnover in Hong Kong's securities market was HK$166.7 billion in 2021, reflecting a year-on-year increase of 29.0%[20]. Business Strategy and Development - The Group plans to adopt a dual-track business strategy to enhance financial operations in Hong Kong and expand digital assets and internet gaming in China[11]. - The Group aims to improve service quality and provide stable financial services to customers to strengthen its market position[11]. - The Group aims to strengthen its financial services in Hong Kong while expanding into the digital assets and internet gaming sectors to enhance business flexibility and diversify revenue sources[13]. - The Group has launched a digital assets sales and marketing business to target the internet generation Z market, aiming to diversify its business and expand income[23]. - The Group plans to allocate more resources to develop the digital assets market through marketing cooperation and IP collaboration, expecting new business to start contributing to revenue in the current financial year[51]. - The Group aims to enhance its presence in the digital assets industry to capture potential growth and drive synergies between its internet business and other segments[53]. - The Group will continue to explore business opportunities in the PRC market and seek investment opportunities in key sectors with positive growth potential[52]. Financial Performance - For the year ended December 31, 2021, the Group's consolidated revenue from continuing operations was approximately HK$90.6 million, an increase of about 32% compared to approximately HK$68.4 million in 2020[58]. - The Group recorded a consolidated profit attributable to shareholders of approximately HK$15.2 million for the year ended December 31, 2021, compared to a loss of approximately HK$31.7 million for the same period in 2020[58]. - The improvement in the Group's consolidated results was mainly due to an increase in revenue of approximately HK$22.2 million and a reduction of impairment loss on accounts receivable of approximately HK$23.7 million[59]. - Total revenue for the year ended December 31, 2021, was approximately HK$90.6 million, a 32.4% increase from HK$68.4 million in 2020[67]. - Brokerage and financing segment revenue increased by about 40% to approximately HK$82.8 million, accounting for 92% of the Group's total revenue[69]. - The Group recorded a profit before taxation of HK$39.6 million, compared to a loss of HK$34.1 million in the previous year[68]. - The Group's total segment profit was HK$77.5 million, significantly up from HK$25.9 million in 2020[68]. - The Group's profit for the year from continuing operations was HK$28.8 million, a turnaround from a loss of HK$35.8 million in 2020[68]. Investments and Acquisitions - The company is focusing on diversifying its revenue base through digital asset-related business development[25]. - The company has made significant investments in joint ventures and acquisitions to expand its market presence and asset portfolio[26][28][35]. - The company plans to establish a joint venture securities company in Guangxi, China, with an investment of RMB 445 million (approximately HK$ 545 million), representing 44.5% equity interest[26]. - The company entered into a series of memoranda of understanding to acquire a total of 32% equity interest in China Bloom International Limited for a total cash consideration of HK$ 19.6 million, but the acquisition will not proceed[32][33]. - The company acquired 5,158,000 shares of HG Semiconductor Limited for approximately HK$ 38.3 million, representing about 0.94% of the total shares issued as of October 7, 2021[35]. - The Group made a net purchase in securities investment of approximately HK$186.3 million in 2021, significantly higher than HK$66.4 million in 2020[94]. Risk Management and Governance - The Group has established various policies to manage and monitor risks related to the environment, employment, and community[193]. - The Group's management of significant issues affecting operations includes environmental, social, and governance matters[185]. - The Group prioritizes stakeholders based on its strategic plan and business initiatives to develop mutually beneficial relationships[198]. - The Group's commitment to responsible operations is reflected in its adherence to applicable legal requirements and sustainability principles[193]. Management and Team - The company has a diverse board with expertise in finance, corporate strategy, and industry operations[169]. - The management team includes members with advanced degrees in business administration and risk management[164][166]. - The company is focused on leveraging its management's extensive industry connections for growth[165]. - The board includes independent directors with significant experience in various sectors, enhancing governance[169][173]. Sustainability Initiatives - The reporting period for the sustainability initiatives was from January 1, 2021, to December 31, 2021[190]. - The Group has implemented measures to optimize and improve disclosure requirements in the Environmental, Social and Governance Report[187]. - The Environmental, Social and Governance Report is available in both Chinese and English on the Stock Exchange's website[188]. - The sustainability strategy incorporates environmental, social, and governance considerations to enhance long-term competitiveness[193].

Economic Performance - In 2021, Hong Kong's economy expanded by 6.4% year-on-year, supported by a stable pandemic situation starting in May[7]. - China's GDP growth reached 8.1% in 2021, exceeding market expectations despite challenges from the Omicron variant and a distressed real estate sector[8]. - The Hang Seng Index fell by 14% over the year, making Hong Kong one of the worst-performing equity markets among major markets[7]. - Concerns over the resurgence of COVID-19 are expected to dampen economic growth momentum in Hong Kong in early 2022[9]. - A series of relief measures, including a new consumption voucher scheme, may support post-pandemic recovery in Hong Kong[9]. - The global economy faces uncertainties from COVID-19 variants and geopolitical risks, which may impact growth in 2022[9]. - The global economy is projected to grow by 4.1% in 2022, while China has set a 5.5% economic growth target for the same year[46]. - Hong Kong's economy is expected to achieve a real growth of 2.0% to 3.5% for the entire year, supported by fiscal measures from the government[47]. Business Strategy and Development - The Group plans to adopt a dual-track business strategy to enhance financial operations in Hong Kong and expand digital assets and internet gaming in China[11]. - The Group aims to improve service quality and provide stable financial services to customers to adapt to a competitive market[11]. - The Group aims to strengthen its financial services in Hong Kong while expanding into the digital assets and internet gaming sectors to enhance business flexibility and diversify revenue sources[13]. - The Group plans to allocate more resources to develop the digital assets market through marketing cooperation and IP collaboration, expecting new business to start contributing to revenue in the current financial year[51]. - The Group aims to enhance its presence in the digital assets industry to capture potential growth and drive synergies between digital assets and other business segments[53]. - The Group will continue to explore business opportunities in the PRC market and seek investment opportunities in key sectors with positive growth and returns[52]. - The Group's long-term strategy includes business diversification and acquisition to strengthen its position in Hong Kong and beyond[55]. Financial Performance - For the year ended December 31, 2021, the Group's consolidated revenue from continuing operations was approximately HK$90.6 million, an increase of about 32% compared to approximately HK$68.4 million in 2020[58]. - The Group recorded a consolidated profit attributable to shareholders of approximately HK$15.2 million for the year ended December 31, 2021, compared to a loss of approximately HK$31.7 million for the same period in 2020[58]. - The improvement in the Group's consolidated results was mainly due to an increase in revenue of approximately HK$22.2 million and a reduction of impairment loss on accounts receivable of approximately HK$23.7 million[59]. - Total revenue for the year ended December 31, 2021, was approximately HK$90.6 million, a 32.4% increase from HK$68.4 million in 2020[67]. - Brokerage and financing segment revenue increased by about 40% to approximately HK$82.8 million, accounting for 92% of the Group's total revenue[69]. - The Group recorded a profit before taxation of HK$39.6 million, compared to a loss of HK$34.1 million in the previous year[68]. - The Group's total segment profit was HK$77.5 million, significantly up from HK$25.9 million in 2020[68]. - Profit for the year from continuing operations was HK$28.8 million, a turnaround from a loss of HK$35.8 million in the previous year[68]. Investments and Acquisitions - VC Brokerage will contribute RMB445 million (approximately HK$545 million) for a 44.5% shareholding in a joint venture securities company in Guangxi, PRC[24]. - The company plans to establish a joint venture securities company in Guangxi, China, with an investment of RMB 445 million (approximately HK$ 545 million), representing 44.5% equity interest[26]. - The company has not yet obtained approval from the CSRC for the establishment of the PRC joint venture company[27]. - The company disposed of its entire 30% equity interest in Telebox Technology Holdings Limited for a cash consideration of HK$ 5 million, completed on December 17, 2021[35]. - The company entered into a memorandum of understanding to acquire a 32% equity interest in China Bloom International Limited for a total cash consideration of HK$ 19.6 million, but the acquisition will not proceed[32][33]. - The company acquired 5,158,000 shares of HG Semiconductor Limited for approximately HK$ 38.3 million, representing about 0.94% of the total shares issued as of October 7, 2021[35]. - The Group made a net purchase in securities investment of approximately HK$186.3 million in 2021, significantly higher than HK$66.4 million in 2020[94]. - The Group held an investment in IBO Technology, comprising 50,398,000 shares (approximately 9.15%) with a fair value of approximately HK$125.5 million, representing about 13% of total assets, and recorded an unrealized gain of approximately HK$42.5 million during the year[149]. - The Group also invested in HG Semiconductor, holding 8,565,000 shares (approximately 1.52%) with a fair value of approximately HK$62.4 million, accounting for about 7% of total assets, and recorded an unrealized gain of approximately HK$226,000[150]. Sustainability and Governance - The Group has implemented measures to optimize and improve disclosure requirements in its Environmental, Social, and Governance Report[187]. - The Group aims to manage significant environmental, social, and governance issues affecting its operations[187]. - The Group has taken initiatives to formulate policies and monitor measures related to sustainability[187]. - The Environmental, Social, and Governance Report will be published in both Chinese and English on the Stock Exchange's website[187]. - The Group is committed to responsible operations that optimize value for stakeholders and the community[193]. - Stakeholder engagement is crucial for understanding risks and opportunities, with a focus on maintaining effective communication[197]. - The Group prioritizes stakeholders based on its strategic plan and business initiatives to promote mutually beneficial relationships[198]. - The Group has implemented various channels for communication with stakeholders to gather feedback and promote sustainability[200]. Management and Team - Mr. Fu has nearly 40 years of experience in financial management and securities business[163]. - Mr. Lin has over 20 years of experience in corporate development and business strategy[164]. - Ms. Li has extensive experience in business operations and industry resources in communications and internet technology[165]. - Mr. Zhang has over 10 years of experience in sales management for electronic consumer products and internet-related products[168]. - Mr. Wong has over 15 years of experience in audit and accounting from a sizeable international firm[172]. - The company has appointed new executive directors to enhance its management team[165][168]. - The board includes independent non-executive directors with diverse backgrounds in finance and management[169][173]. - The management team is well-versed in risk management and corporate governance practices[164][172].

Economic Growth - In the first half of 2021, the G20 area GDP growth rebounded to 3.4%, an increase of 0.8% compared to the previous quarter[7]. - Hong Kong's real GDP increased by 7.9% year-on-year in the first half of 2021, ending six consecutive quarters of contraction[8]. - The global economy is projected to grow by 6% in 2021 and 4.9% in 2022, driven by a rebound in private consumption and investments[55]. - China's domestic economic growth is expected to reach 8.5% in 2021, supported by the recovery of its manufacturing industry[55]. - The Hong Kong economy is on a recovery path, with improved external conditions anticipated to support exports and boost consumer sentiment[55]. IPO Market and Securities - The Hong Kong IPO market welcomed 46 IPOs, raising a record high of US$26 billion during the first six months of 2021[13]. - The number of securities firms that ceased operations in Hong Kong significantly dropped compared to the previous year, indicating an improved market environment[14]. - The Group continues to seek business opportunities in the local IPO market by providing placing and underwriting services[20]. - The Group aims to capture opportunities in local initial public offerings and other fundraising activities, having recorded approximately HK$0.3 million in placing and underwriting commissions for the six months ended June 30, 2021[85]. Financial Performance - For the six months ended June 30, 2021, the Group's consolidated revenue was approximately HK$37.8 million, an increase of about 36% compared to HK$27.9 million in the same period of 2020[62]. - The Group recorded a consolidated profit attributable to owners of the Company of approximately HK$101.1 million, reversing a loss of approximately HK$54.8 million for the same period in 2020[62]. - Revenue from brokerage and financing businesses increased by about 46% to approximately HK$33.3 million, accounting for about 88% of the Group's total revenue[75]. - The Group recorded a net realized and unrealized gain in financial assets at fair value through profit or loss of approximately HK$79.4 million, compared to a loss of approximately HK$22.2 million for the same period last year[63]. - The Group's total income from other sources, including interest income from authorized institutions and convertible bonds, amounted to HK$526,000, compared to HK$5,879,000 in the previous year[171]. Business Segments - The Group operates six distinct business segments, up from five in 2020, including brokerage and financing, corporate finance, asset management, insurance brokerage, proprietary trading, and healthcare product distribution[173]. - The brokerage and financing segment includes services such as securities, futures, and options brokering, margin financing, and money lending[174]. - The corporate finance segment's revenue increased compared to the previous period, reflecting growth in advisory services[185]. - The asset management segment reported a profit of HK$77,826,000, while the insurance brokerage segment incurred a loss of HK$752,000[192]. Investments and Acquisitions - The Group plans to invest RMB445 million (approximately HK$543 million) in a joint venture securities company in Guangxi, representing a 44.5% shareholding[26]. - The investment in the PRC joint venture is intended to be financed through the placement of convertible bonds amounting to up to HK$850 million, with net proceeds expected to be approximately HK$829 million[27]. - The company entered into a memorandum of understanding to acquire a 16% equity interest in China Bloom International Limited for HK$9,800,000, with a principal asset valued at approximately HK$68,000,000[38]. - The company completed a placing of up to 341,150,000 shares at a price of HK$0.205 per share, representing approximately 20% of the total issued shares as of the agreement date[140]. Financial Position and Ratios - As of June 30, 2021, the Group held equity securities listed in Hong Kong valued at approximately HK$358.4 million, reflecting a 45% increase in market value compared to December 31, 2020[25]. - The Group's bank balances and cash amounted to approximately HK$79.9 million, representing an increase of about 24.5% compared to HK$64.2 million as of December 31, 2020[118]. - Current assets were approximately HK$891.0 million, reflecting a 13.0% increase from HK$788.6 million as of December 31, 2020[118]. - The Group's gearing ratio was approximately 0.01 times, a decrease from 0.03 times as of December 31, 2020[129]. - The Group's financial position remained solid, with no charged assets reported as of June 30, 2021[124][125]. Operational Efficiency and Future Outlook - The Group aims to improve operational efficiency to enhance profitability in the upcoming periods[193]. - The company continues to explore market expansion opportunities in various segments, particularly in asset management and insurance brokerage[192]. - Future outlook includes potential new product offerings and enhancements in service delivery across all segments[192]. - The Group plans to explore opportunities for business diversification and acquisitions to strengthen its comprehensive business development in Hong Kong and other regions[60]. Employee and Administrative Costs - The Group employed a total of 64 employees as of June 30, 2021, with salaries and staff benefit costs amounting to approximately HK$19.4 million, an increase from HK$17.4 million in the same period last year[110]. - Unallocated administrative costs decreased to approximately HK$6.9 million for the six months ended June 30, 2021, down from approximately HK$12.9 million in the same period last year[105]. - Employee selection and compensation are based on performance and qualifications, with additional benefits including medical insurance and training programs[113]. Compliance and Reporting - The interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34, indicating compliance with local financial reporting standards[165]. - The company’s auditor provided an unqualified report on the financial statements for the year ended December 31, 2020, with no matters of emphasis noted[165]. - The Group's accounting policies remain consistent with those used in the preparation of the audited annual consolidated financial statements for the year ended December 31, 2020[168].

Economic Impact of COVID-19 - In 2020, Hong Kong's GDP contracted by 6.1% year-on-year due to the COVID-19 pandemic and other external factors[10] - The unemployment rate in Hong Kong reached a 16-year high of 6.6% in Q4 2020[10] - The unemployment rate in Hong Kong slightly increased to 7.2% during the three months to February 2021[15] - The global fiscal response to the pandemic amounted to about 12% of global GDP[8] - The economic outlook remains gloomy, with significant downward pressure expected to continue impacting the economy[114] - Fiscal measures are being implemented in various countries to mitigate social and economic impacts due to market instability[114] Stock Market Performance - The Hang Seng Index fell from a high of 29,174 in January 2020 to a low of 21,139 in March 2020, before recovering to around 26,800 by the end of 2020[8] - The Hang Seng Index decreased from 28,189 on December 31, 2019, to 27,147 on December 31, 2020, reflecting a bearish market sentiment[26] - The average daily turnover value of Stock Connect Northbound and Southbound reached record levels in 2020, indicating increased market activity[26] - The enhancements to the Hang Seng Index (HSI) include increasing the number of constituents to 100 and adopting a weighting cap of 8% on all HSI constituents[115] - The optimization of the Hang Seng Index, including increasing the number of constituent stocks to 100, is expected to enhance market representation and stability in Hong Kong[118] Company Financial Performance - The Group's consolidated revenue for the year ended December 31, 2020, was approximately HK$77.9 million, representing an increase of about 58% compared to HK$49.2 million in 2019[126] - The consolidated loss attributable to owners of the Company decreased to approximately HK$31.7 million in 2020, a reduction of about 66% from a loss of approximately HK$93.4 million in 2019[126] - Revenue from brokerage and financing accounted for 76% of total revenue, amounting to HK$37.8 million, while interest income from money lending clients surged by 194% to HK$10.5 million[131] - The Group plans to expand its revenue base by tapping into new emerging markets and increasing resources for business diversification and acquisitions[121] - The healthcare market segment, particularly the newly launched AVL-19, is expected to contribute positively to the Group's performance as diversified sales channels are established globally[120] Business Strategy and Development - The Group's proactive operating model includes both offensive and defensive strategies to navigate market conditions[28] - The Group aims for long-term balanced growth by focusing on core financial services, including securities brokering, corporate finance, and asset management[31] - The Group continues to seek new business opportunities and resources to enhance its asset management services despite challenges in the local capital market[151] - The Group plans to invest resources to capture opportunities in initial public offerings and other fundraising activities in Hong Kong[142] - The Group will continue to explore business opportunities in the PRC market while also focusing on local financial market opportunities with comparatively positive growth[121] Healthcare Market Initiatives - The Group entered the healthcare market through a joint venture and license agreement with Vast Sea Biotechnology, Inc., focusing on the dietary supplement AVL-19 designed to combat COVID-19[32] - AVL-19 is based on naturally occurring nucleotides and polypeptides, differentiating it from synthetic drugs[33] - Certain quantities of AVL-19 were successfully sold in the United States and Hong Kong, aligning with the Group's strategy to expand its revenue base[36] - The healthcare products segment, through Success Health Global Limited, generated revenue of approximately HK$9.5 million from the sale and distribution of the healthcare product AVL-19, designed to combat COVID-19[173] Financial Management and Investments - The Group financed its operations and investments through internal resources, cash revenue from operating activities, and proceeds from the issuance of new shares and convertible bonds[185] - The Group's prudent treasury policy resulted in almost all bank balances and cash being denominated in Hong Kong dollars as of December 31, 2020[186] - The Group did not maintain any banking facilities as of December 31, 2020[189] - The Group intends to maintain minimum exposure to foreign exchange risks[186] Employee and Operational Costs - Salaries and staff benefits costs totaled approximately HK$43.7 million for the year ended December 31, 2020, an increase of approximately HK$6.1 million from the previous year[181] - The Group employed a total of 64 employees as of December 31, 2020, compared to 63 employees in the previous year[181] - Unallocated administrative costs decreased to approximately HK$34.0 million in 2020 from approximately HK$51.2 million in the previous year, primarily due to reduced intra-group loan expenses[176]

Market Performance - The Hang Seng Index fell from an intraday high of 29,174 on January 20, 2020, to an intraday low of 21,139 on March 19, 2020, reflecting a significant decline back to 2016 levels [14]. - Average daily transaction volume on the Hong Kong Stock Exchange for the year was approximately HK$92.24 billion, representing a decrease of approximately 4.1% from HK$96.23 billion for the corresponding period of last year [14]. - The Hong Kong Stock Exchange welcomed 64 new stocks and 59 IPOs in the first half of 2020, which represented around a 20% decrease compared to the same period in 2019 [15]. - Total capital raised in the first half of 2020 increased by 22% year-on-year to USD11.3 billion, driven by secondary listings of internet giants JD.com and NetEase [15]. - The rapid spread of COVID-19 has led to unprecedented impacts on the global economy, with significant volatility in worldwide stock markets [11]. Economic Impact - China's GDP contracted by 6.8% in the first quarter of 2020 due to the impact of COVID-19 [10]. - The company anticipates that weak economic data will negatively affect capital market sentiment due to the combined effects of the US-China trade war and COVID-19 [11]. - The outlook for the second half of the year indicates that the epidemic will continue to impact the global economy, with potential IPOs and secondary listings in Hong Kong expected to accelerate [67]. - The Group anticipates that once the epidemic is under control, Hong Kong's market will rebound faster than neighboring countries, benefiting from high public awareness and efficient medical responses [68]. Financial Performance - The Group's consolidated revenue for the six months ended June 30, 2020, was approximately HK$27.9 million, representing an increase of about 29.8% compared to approximately HK$21.5 million during the same period in 2019 [72]. - The consolidated loss attributable to shareholders for the same period was approximately HK$54.8 million, a decrease of about 19.8% from a loss of approximately HK$68.3 million in 2019 [72]. - Revenue from brokerage and financing businesses increased by approximately 41% to HK$22.8 million, accounting for about 82% of the Group's total revenue [84]. - Interest income from money lending services rose significantly by about 218% to approximately HK$10.5 million, compared to HK$3.3 million in the same period last year [90]. - The Group recorded a credit impairment loss of approximately HK$12.1 million for receivables from brokerage and financing clients, compared to a loss of HK$7.0 million as of December 31, 2019, reflecting a more cautious approach in financing services due to economic volatility [93]. Business Strategy - The Group's business strategies include expanding revenue through core businesses and exploring new markets, with a focus on business diversification and acquisitions when opportunities arise [71]. - The Group will continue to explore business opportunities in the PRC market while focusing on local financial market opportunities with positive growth potential [71]. - The Group intends to use net proceeds of approximately HK$67.4 million from the placing of shares for developing the e-Commerce business, subject to the formal agreement materializing [60]. Investment Activities - The Group completed the acquisition of a 20% equity interest in Speedy Billion Holdings Limited for a cash consideration of HK$360,000 on February 28, 2020 [48]. - The Group acquired a 16% equity interest in China Bloom International Limited for HK$9.8 million, with the principal asset being a residential property in Hong Kong valued at approximately HK$68 million [66]. - The Group recognized a net loss of approximately HK$22.2 million on trading investments for the six months ended June 30, 2020, compared to a net loss of approximately HK$29.5 million for the same period in 2019 [109]. Corporate Developments - The Company plans to finance the investment in the PRC JV Company through the placement of convertible bonds totaling up to HK$ 850 million, with net proceeds expected to be approximately HK$ 829 million [24][27]. - The Company entered into a joint venture agreement to establish Success Health, focusing on the commercial application of a dietary supplement formula (AVL-19) containing novel compounds and vitamins [155]. - On July 30, 2020, the company planned to grant options to issue 108,000,000 new shares at a subscription price of HK$0.26 per share [161]. Financial Position - As of June 30, 2020, the Group's bank balances and cash amounted to approximately HK$50.1 million, a decrease of about 29% compared to HK$70.8 million as of December 31, 2019 [135]. - The Group's net current assets were approximately HK$677.9 million, representing a decrease of about 7% from HK$729.7 million as of December 31, 2019 [135]. - The current ratio was maintained at approximately 34 times as of June 30, 2020, compared to 26 times as of December 31, 2019, indicating a solid financial position [135]. Regulatory and Compliance - The Company reported unaudited condensed consolidated financial statements for the six months ended 30 June 2020 [188]. - The auditor's report on the financial statements was unqualified and did not contain any emphasis of matter [190]. - The Group has applied new amendments to HKFRSs, including those related to COVID-19 rent concessions, which did not have a significant impact on the financial position and performance of the Group [194].

GROUP Value Convergence Holdings Limited 酒 盈 控 股 有 限 公 司 A Hong Kong Iisted company with stock code: 821 香港上市公司股票代號：821 www.vcgroup.com.hk Annual Report 2019 年報 Delivering Value Through Excellence 載週緊財富 ΩΣ:This Annual Report is printed on environmentally friendly paper. 👍本午報採用環保紙印製 - | --- | --- | --- | --- | --- | |-------|-------|-------|-------|--------------------------------------------------------------------------------------------------| | | | | | | | | | | | Corporate Information CONTENTS 目錄 | | | ...

Financial Performance - For the six months ended June 30, 2019, the Group's consolidated revenue was approximately HK$21.5 million, a decrease of about 20% compared to HK$26.7 million for the same period in 2018[74]. - The consolidated loss attributable to shareholders for the six months ended June 30, 2019, was approximately HK$68.3 million, representing a substantial drop of about 79% from a loss of approximately HK$320.3 million in the same period of 2018[74]. - Revenue for the six months ended June 30, 2019, was HK$21,485,000, a decrease of 19.3% compared to HK$26,709,000 for the same period in 2018[197]. - The company reported a loss before tax of HK$67,693,000, compared to a loss of HK$321,436,000 in the previous year[197]. - The total comprehensive expense for the period was HK$68,329,000, significantly lower than HK$320,285,000 in the same period last year[197]. Market Conditions - The escalation of the US-China trade dispute led to a decline in market sentiment, with the Hang Seng Index dropping from around 30,000 to approximately 27,000 in May 2019[33]. - The global economic recovery saw a slowdown due to factors such as the US-China trade war and political uncertainties[27]. - The macroeconomic environment is expected to remain challenging in the second half of 2019, with trade talks between China and the US being a major uncertainty[67]. - The Chinese government is likely to introduce policy easing measures to support stable economic growth, including the use of local government project-specific bonds for infrastructure financing[67]. - Hong Kong is anticipated to maintain its status as one of the largest IPO markets in 2019, with ongoing listing reforms expected to attract more international and mainland Chinese investors[68]. IPO and Fundraising - Total IPO fundraising in Hong Kong reached HK$69.5 billion, ranking first in Asia, with 76 new listed companies, of which 70 were on the main board[34]. - The total fundraising amount for Hong Kong's initial public offerings reached HK$69.5 billion, the highest in Asia[36]. - The number of new listings was 76, with 70 on the main board, while the number of GEM IPOs dropped from 50 in 2018 to only 6[36]. Business Strategy and Investments - The Group is committed to delivering premier financial services and products to meet various investment and wealth management needs in the Greater China region[26]. - The Group plans to increase resources for business diversification and acquisitions when opportunities arise, aiming to strengthen its business position in Hong Kong and beyond[73]. - The Group will continue to explore business opportunities in the PRC market while focusing on local financial market opportunities with positive growth and returns[73]. - The company plans to finance the investment in the PRC joint venture through the placement of convertible bonds totaling up to HK$850 million, with net proceeds expected to be approximately HK$829 million[44]. - The investment in the PRC joint venture is aimed at strengthening the company's financial position and providing a pathway to enter the PRC market[44]. Operational Performance - The brokerage and financing businesses recorded total revenue of approximately HK$16.1 million, a decrease of about 22% from approximately HK$20.7 million for the same period last year, accounting for about 75% of the Group's total revenue[87]. - The Group's strategy includes expanding its revenue base through core businesses and tapping into new emerging markets[73]. - The Group's proprietary trading business recorded an operating loss of approximately HK$31.7 million for the six months ended 30 June 2019, an improvement from a loss of approximately HK$66.8 million for the same period last year[146]. - The asset management business recorded an operating loss after tax of approximately HK$0.8 million, consistent with the loss from the same period last year[108]. - The insurance brokerage business recorded an operating loss after tax of approximately HK$0.1 million since the acquisition date, primarily due to general operating expenses such as staff costs[116]. Financial Position - As of June 30, 2019, the Group's bank balances and cash amounted to approximately HK$113.3 million, representing a decrease of about 18% compared to HK$138.0 million as of December 31, 2018[168]. - The Group's current assets and shareholders' equity (excluding clients' segregated accounts) were HK$767.1 million, an increase of about 43% from HK$536.9 million as of December 31, 2018[168]. - The Group's total borrowings, including bank borrowings and the liability portion of convertible bonds, resulted in a gearing ratio of approximately 0.03 times as of June 30, 2019, down from 0.06 times as of December 31, 2018[181]. - The current ratio was maintained at a satisfactory level of about 16.9 times as of June 30, 2019, compared to 8.5 times as of December 31, 2018[168]. - The Group's policy is to minimize foreign exchange risks by conducting most of its principal businesses in Hong Kong dollars, resulting in minimal impact from foreign exchange exposure[173]. Employee and Cost Management - The Group employed a total of 66 employees as of June 30, 2019, down from 81 employees as of December 31, 2018[161]. - Salaries and staff benefit costs for the six months ended June 30, 2019, were approximately HK$20.5 million, a decrease of about HK$33.2 million compared to approximately HK$53.7 million in the same period last year[161]. - Staff costs decreased by approximately HK$37.0 million, and finance costs decreased by approximately HK$11.7 million during the reporting period[75]. - The significant decrease in finance costs was attributed to the gradual conversion of convertible bonds by bondholders, leading to a reduction in related imputed interests[158]. - The absence of equity-settled share option expense of approximately HK$19.8 million contributed to the decrease in salaries and staff benefits costs[161].

Market Performance - The Hong Kong stock market experienced significant turbulence in 2018 due to the trade conflict between China and the United States and rising U.S. benchmark interest rates, leading to a noticeable shrinkage in average daily turnover[10]. - Yearly equity turnover reached an all-time high in 2018, indicating increased market activity facilitated by the Stock Connects program[13]. - The ongoing development of the Hong Kong stock market infrastructure has significantly boosted market activity, despite external economic uncertainties[11]. - The expansion of quota for Mainland-HK Stock Connects has enhanced fund flows between mainland and international investors throughout 2018[13]. - The Hang Seng Index (HSI) lost 13.6% to close at 25,845 at the end of 2018 due to dampened investment sentiment from escalating trade tensions and higher interest costs[34]. IPO and Fundraising - The amount of IPO funds raised in 2018 was the highest since 2010, with Hong Kong returning to the top of the global IPO fundraising table[11]. - Newly listed companies in 2018 rose 25% to 218 compared to 174 in the same period last year, while total funds raised through IPOs surged 123% to nearly HK$287 billion from HK$129 billion in 2017[33]. Financial Position and Strategy - The Group successfully raised net cash proceeds of approximately HK$72.6 million through a top-up placing of existing shares and issuing new shares to independent parties, enhancing its financial resources for business expansion[15]. - The Group's financial position has strengthened, providing flexibility for future business developments when opportunities arise[15]. - The Group aims for long-term and balanced growth by capitalizing on growth opportunities and enhancing shareholder value through a pragmatic operating strategy[14]. - The Group aims to strengthen its core businesses and explore new emerging markets while increasing resources for business diversification and acquisitions[23]. - The Group's strategies remain unchanged despite macroeconomic uncertainties, focusing on expanding the revenue base and exploring business opportunities in the PRC[25]. Revenue and Losses - The Group's consolidated revenue for the year ended December 31, 2018, was approximately HK$50.5 million, a decrease of about 6% compared to the same period in 2017[95]. - The consolidated loss attributable to shareholders for 2018 amounted to approximately HK$486.3 million, representing an increase of about 6 times from a loss of approximately HK$67.5 million in 2017[95]. - The increase in consolidated loss was primarily due to a net realized and unrealized loss on financial assets held for trading of approximately HK$137.1 million, compared to a net loss of approximately HK$10.8 million in the previous year[96]. - Revenue from brokerage and financing businesses decreased by about 21% to approximately HK$36.7 million, accounting for about 73% of the Group's total revenue[108]. Investment and Acquisitions - VC Brokerage will contribute RMB445 million (approximately HK$503 million), representing a 44.5% shareholding in the joint venture securities company in Guangxi, PRC[40]. - The Company plans to finance the investment in the PRC JV Company by placing convertible bonds with an aggregate principal amount of up to HK$850 million, with net proceeds intended for capital contribution and business expansion[43]. - The acquisition of 18% of Hackett Enterprises Limited was completed for a consideration of HK$160,000,000, settled by issuing 3-year 2% unsecured convertible bonds[63]. - A proposed acquisition of 49% of BTCC Pool Limited was valued at HK$147,000,000 but will not proceed due to the expiration of the memorandum of understanding[67]. Operational Performance - The Group's average daily turnover for 2018 was HK$107.4 billion, an increase of 22% compared to HK$88.2 billion in the same period last year[32]. - The Group's operational capabilities will be leveraged to foster core businesses and pursue business diversification and acquisitions when opportunities arise[90]. - The Group continues to seek new business opportunities to enhance its asset management services, despite challenges in the local capital market[131]. Financial Management - The Group's unallocated administrative costs increased to approximately HK$115.3 million from HK$61.7 million in 2017[106]. - The Group's interest income from money lending services was approximately HK$8.0 million for the year ended 31 December 2018, representing a 5% increase from approximately HK$7.6 million in the previous year[114]. - The Group's credit control policies are focused on minimizing credit risk exposure, with a significant increase in provisions for doubtful debts due to economic conditions[118]. Future Outlook - The management anticipates a potential turnaround in the investment portfolio performance in 2019 due to the easing of global economic uncertainties[161][162]. - The Group is optimistic about the prospects of the financial services industry in Hong Kong and China, planning to hold convertible bonds for trading purposes to gain capital gains[61].