Financial Performance - The group's revenue for the year ended December 31, 2021, was approximately RMB 1,010.5 million, a decrease of about 14.0% compared to RMB 1,175.0 million for the year ended December 31, 2020[6]. - The loss attributable to equity holders for the year was approximately RMB 90.6 million, compared to a loss of RMB 33.9 million in the previous year[6]. - The basic loss per share was RMB 4.4 cents, compared to RMB 1.9 cents in the previous year[6]. - The group's total revenue for the reporting period was approximately RMB 1,010.5 million, a decrease of about 14.0% compared to RMB 1,175.0 million for the year ended December 31, 2020[41]. - The gross profit for the group was approximately RMB 206.3 million, down about 19.1% from RMB 255.0 million for the year ended December 31, 2020[42]. - The gross profit margin decreased by approximately 1.3% to about 20.4%, compared to 21.7% for the year ended December 31, 2020[42]. - The group recorded a net loss attributable to equity holders of approximately RMB 90.6 million, compared to a net loss of RMB 33.9 million for the year ended December 31, 2020, resulting in a net loss margin of about 9.0%[53]. Segment Performance - The personal care products segment generated total revenue of approximately RMB 499.3 million, a decline of about 32.2% from RMB 736.9 million in the previous year[12]. - The gross profit for the personal care products segment was approximately RMB 94.1 million, down about 41.6% from RMB 161.1 million in the previous year[12]. - The gross profit margin for the personal care products segment decreased by approximately 3.1% to about 18.8% due to increased manufacturing costs[12]. - The personal care products segment recorded a loss of approximately RMB 54.8 million, compared to a loss of RMB 17.6 million in the previous year[12]. - The catering services segment contributed approximately RMB 412.9 million in total revenue, an increase of about 17.2% compared to RMB 352.4 million for the year ended December 31, 2020[13]. - The total gross profit for the catering services was approximately RMB 42.5 million, a decrease of about RMB 5.7 million from RMB 48.2 million for the year ended December 31, 2020, resulting in a gross margin of approximately 10.3%, down about 3.4% year-on-year[13]. - The financial services segment generated total revenue of approximately RMB 88.9 million, a significant increase of about 56.0% from RMB 57.0 million for the year ended December 31, 2020[15]. - The securities investment business recorded a loss of approximately RMB 3.1 million, compared to a profit of approximately RMB 10.7 million for the year ended December 31, 2020, due to global market volatility[19]. - The securities brokerage, asset management, and professional services business achieved revenue of approximately RMB 76.1 million, up from RMB 31.2 million for the year ended December 31, 2020, driven by increased demand for fund establishment and management services[20]. - The lending, leasing, and factoring business recorded revenue of approximately RMB 12.5 million, a slight decrease from RMB 13.8 million for the year ended December 31, 2020, as resources were reallocated to securities brokerage and asset management[24]. - The lending segment reported a loss of approximately RMB 18.2 million, compared to a profit of approximately RMB 0.6 million for the year ended December 31, 2020[28]. - The property holding segment recorded a loss of approximately RMB 10.7 million, an improvement from a loss of approximately RMB 16.5 million for the year ended December 31, 2020[31]. - The trade and temperature-controlled warehousing segment contributed total revenue of approximately RMB 9.4 million, down from RMB 28.7 million for the year ended December 31, 2020[35]. - The trade business did not contribute any revenue during the reporting period, compared to RMB 10.7 million for the year ended December 31, 2020, due to a strategic focus on developing other more promising business segments[37]. Business Strategy and Development - The company plans to continue strengthening and developing its diversified business portfolio in a sustainable manner in 2022[6]. - The company will review the performance of its existing businesses and adopt a prudent approach to business development[6]. - The group plans to cautiously develop its restaurant services business due to high procurement costs and operational difficulties caused by COVID-19 restrictions[77]. - The group aims to expand into the financial services sector, leveraging Hong Kong's unique advantages as an offshore RMB business hub[79]. - The board intends to strengthen the capital base of its wholly-owned subsidiary, Aggregated Financial Services, to enhance the group's financial services business[80]. - The group will continue to review the performance of its existing businesses and consider expanding into potential segments to enhance profitability and shareholder value[81]. - The group is open to considering other investment opportunities as appropriate, in line with the listing rules[81]. - The group is committed to enhancing its operational efficiency and exploring new business avenues for future growth[81]. Governance and Compliance - The company has adopted the corporate governance code principles as outlined in the listing rules, ensuring compliance with governance standards[104]. - The board of directors consists of three independent non-executive directors, meeting the requirement of at least one-third representation[108]. - The company emphasizes the importance of good corporate governance practices for maintaining investor confidence and sustainable development[103]. - The board is responsible for overseeing the company's business, strategic decisions, and performance to enhance shareholder value[105]. - The company has experienced a leadership transition, with the former chairman resigning on June 30, 2021, and the board is in the process of identifying a suitable replacement[114]. - The company’s executive directors are responsible for different business functions, leveraging their expertise to drive the group's objectives[109]. - The company has ensured that all independent non-executive directors are independent according to the listing rules[110]. - The company’s management team has extensive experience in their respective fields, contributing to effective operational management[101]. - The company is committed to transparency and accountability in its operations, as reflected in its governance practices[103]. - The company’s governance practices are regularly reviewed to ensure alignment with operational growth and business needs[105]. - The board held a total of 9 meetings, with attendance rates for individual directors ranging from 9/9 to 10/10 for board meetings[120]. - The company has adopted a standard code for securities trading, confirming that all directors complied with it during the fiscal year ending December 31, 2021[125]. - The board has established five committees to oversee specific aspects of the company, including an executive committee and an audit committee[129]. - The company provided regular updates and training to directors on business operations and corporate governance matters[118]. - The investment and credit committee held 12 meetings during the fiscal year, indicating active oversight in this area[121]. - The company has a written guideline for employees regarding securities trading, which is not less stringent than the standard code[126]. - The board is responsible for reviewing and monitoring compliance with legal and regulatory requirements[127]. - The company ensures that all directors are aware of their responsibilities and obligations under the listing rules and relevant regulations[118]. Employee and Social Responsibility - The group employed 1,039 employees as of December 31, 2021, compared to 1,013 employees as of December 31, 2020, indicating a growth of approximately 2.6% in workforce[83]. - The group emphasizes employee development and provides opportunities for skill enhancement[184]. - The group has established a mandatory provident fund plan, contributing 5% of each employee's relevant income, with a monthly contribution cap of HKD 30,000[83]. - The group made donations totaling approximately RMB 2.4 million during the year ending December 31, 2021[188]. - The group has established long-term relationships with multiple suppliers, ensuring compliance with product quality and ethical commitments[187]. Financial Position and Capital Management - The group’s cash and bank balances as of December 31, 2021, were approximately RMB 364.2 million, compared to RMB 359.2 million as of December 31, 2020[55]. - The group’s significant capital expenditures for the reporting period were approximately RMB 25.2 million, down from RMB 45.9 million for the year ended December 31, 2020[54]. - The group’s total liabilities to total assets ratio was approximately 48.6% as of December 31, 2021, slightly down from 49.4% as of December 31, 2020[69]. - The group’s bank borrowings amounted to approximately RMB 72.6 million as of December 31, 2021, an increase from RMB 50.0 million as of December 31, 2020[70]. - The company will consider the group's financial condition, cash needs, and market conditions when deciding on dividend payments[182]. - The board decided not to declare any final dividend for the year ended December 31, 2021, consistent with the previous year[85]. - As of December 31, 2021, the distributable reserves of the company were approximately RMB 259,029,000[179]. Risk Management and Environmental Compliance - The company is committed to monitoring risks related to economic conditions, foreign exchange policies, and raw material prices[176]. - The company has established an environmental safety department to oversee compliance with environmental laws and regulations[177]. - The company has a dedicated plan to address environmental emergencies and ensure compliance with applicable environmental standards[177]. - The risk management and internal control systems were deemed effective and sufficient after a review by the Board[155]. Miscellaneous - The group has no significant management or administrative contracts in place for the year[196]. - The group has no directors with interests in any competing businesses during the year[198]. - The group recorded sales to its top five customers amounting to 49% of total sales for the year, with the largest customer accounting for 16% of total sales[183]. - The new stock option plan adopted on June 25, 2021, is valid for 10 years, with no options granted yet under this plan[200]. - The group has a nationwide marketing team capable of closely collaborating with international clients[185].

Revenue Performance - The personal care products segment generated total revenue of approximately RMB 186.5 million, a decrease of about 23.0% compared to RMB 242.4 million in the same period last year[25]. - The catering services segment contributed total revenue of approximately RMB 161.9 million, a decrease of about 5.3% from RMB 171.0 million in the previous year[26]. - The financial services segment reported total revenue of approximately RMB 44.5 million, an increase approximately 176.3% from RMB 16.1 million in the same period last year[28]. - The securities brokerage, asset management, and professional services business generated revenue of approximately RMB 33.6 million, an increase from RMB 7.6 million in the same period last year[32]. - The trade business contributed total revenue of approximately RMB 10.1 million, an increase of about 54.2% compared to RMB 6.5 million for the same period last year[40]. - The group's revenue for the period was approximately RMB 403.0 million, a decrease of about 7.6% compared to RMB 436.0 million for the same period last year[43]. - Total revenue for the six months ended June 30, 2021, was RMB 402,954 thousand, a decrease of 7.6% from RMB 436,015 thousand in the same period of 2020[128]. Profit and Loss - The group recorded a net loss attributable to equity holders of approximately RMB 31.4 million, compared to a net loss of RMB 0.6 million for the same period last year, resulting in a net loss margin of approximately 7.8%[54]. - Gross profit for the period was approximately RMB 104.9 million, down about 5.6% from RMB 111.1 million for the same period last year, with a gross margin increase of 0.5% to approximately 26.0%[44]. - The group incurred a loss before tax of RMB 23,232,000, compared to a loss of RMB 611,000 in the previous year, indicating a significant decline in performance[87]. - The net loss for the period was RMB 28,861,000, compared to a loss of RMB 2,697,000 in the prior year, reflecting a substantial increase in losses[87]. - The adjusted segment loss for the financial services division was RMB 12,329,000, while the overall adjusted loss for the group was RMB 13,430,000[121]. - The company reported a pre-tax loss of RMB 31,364 thousand for the six months ended June 30, 2021, compared to a loss of RMB 645 thousand in the same period of 2020[144]. Expenses and Liabilities - Administrative expenses increased by approximately 40.4% to RMB 69.3 million, primarily due to increased wages and professional fees from the financial business[50]. - The group had outstanding unsecured loans of approximately RMB 17.6 million with an average effective annual interest rate of 29.8%[35]. - The group recorded impairment losses on receivables of approximately RMB 0.6 million, a significant decrease from RMB 6.5 million for the same period last year[36]. - The group’s financing costs increased to RMB 2,133,000 from RMB 1,827,000 in the previous year, indicating rising financial expenses[87]. - The total liabilities decreased to RMB 620,028 thousand as of June 30, 2021, down from RMB 677,458 thousand as of December 31, 2020, a reduction of 8.5%[95]. Assets and Cash Flow - Cash and bank balances as of June 30, 2021, were approximately RMB 339.0 million, compared to RMB 359.2 million as of December 31, 2020[57]. - The company’s total assets decreased to RMB 1,319,569 thousand from RMB 1,395,718 thousand, a decline of 5.5%[95]. - The company reported a net asset value of RMB 699,541 thousand as of June 30, 2021, down from RMB 723,260 thousand, a decrease of 3.3%[95]. - The company’s cash flow from operating activities showed a significant decline, indicating potential challenges in operational efficiency[105]. - The total cash and cash equivalents at the end of the period decreased to RMB 339,014 thousand from RMB 477,074 thousand in the prior year[105]. Business Strategy and Future Plans - The company plans to continue providing specialized financial solutions and professional services related to financial products and fund management in the future[33]. - The group plans to diversify its business portfolio and is exploring investment opportunities in the food service sector to enhance its financial performance[76]. - The group aims to expand into the financial services sector, leveraging Hong Kong's unique advantages as an offshore RMB business hub[78]. - The group plans to continue its lending business and focus on developing its financial services and potential acquisitions[38]. - The company aims to enhance its ability to recruit and retain talented employees through the new share option plan[170]. Share Options and Equity - The total number of issued and fully paid ordinary shares was 1,912,123 thousand shares, representing an increase from 1,810,123 thousand shares at the end of 2020, which is a growth of approximately 5.7%[167]. - The total proceeds from exercising all unexercised stock options would amount to approximately HKD 110,506,000[186]. - The company granted 159,000 options during the reporting period under the 2011 Share Option Scheme, with an average exercise price of HKD 0.084[182]. - The company has not issued any options under the 2021 Share Option Scheme since its adoption[171]. - The company’s share options do not confer any rights to dividends or voting at shareholder meetings[181].

(於開曼群島註冊成立之有限公司) 股份代號: 1259 2020 年度報告 目錄 版本。 | --- | --- | --- | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|-------| | | | | | 公司資料 | 2 | | | 主席報告 | 3 | | | 管理層討論及分析 | 4 | | | 董事、公司秘書及高級管理層簡介 | 18 | | | 企業管治報告 | 21 | | | 董事會報告 | 36 | | | 獨立核數師報告 | 48 | | | 綜合損益及其他全面收益表 | 57 | | | 綜合財務狀況表 | 60 | | | | | | | 綜合權益變動表 | 62 | | | 綜合現金流量表 | 64 | | | 財務報表附註 ...

Revenue Performance - The personal care products segment generated total revenue of approximately RMB 242.4 million for the six months ended June 30, 2020, an increase of about 47.2% compared to RMB 164.6 million for the same period last year[7]. - The catering services segment contributed approximately RMB 171.0 million in total revenue, a significant increase from RMB 25.0 million as of June 30, 2019[18]. - The group's total revenue from continuing operations was approximately RMB 436.0 million, representing a year-on-year increase of approximately 56.2% from RMB 279.2 million[28]. - The group reported total segment revenue of RMB 436,015 thousand for the six months ended June 30, 2020[111]. Profit and Loss - The lending business contributed total revenue of approximately RMB 7.1 million, a decrease of about 60.3% from RMB 18.0 million in the same period last year, while segment profit increased by approximately 425.2% to RMB 7.7 million[8]. - The property holding segment recorded a loss of approximately RMB 10.1 million, compared to a loss of RMB 0.3 million in the same period last year[17]. - The group reported a loss from continuing operations of RMB 2,697 thousand for the six months ended June 30, 2020, compared to a loss of RMB 74,789 thousand for the same period in 2019[78]. - The company reported a net loss attributable to equity holders of approximately RMB 0.6 million, compared to a net loss of RMB 75.3 million for the period ended June 30, 2019, resulting in a net loss margin of about 0.1% versus 26.5% previously[52]. Expenses - Selling and distribution expenses were approximately RMB 60.6 million, an increase of approximately 140.2% from RMB 25.2 million[38]. - Administrative expenses decreased to approximately RMB 49.4 million, down approximately 13.4% from RMB 57.0 million[39]. - The total financing costs for continuing operations decreased to RMB 1,827 thousand from RMB 3,131 thousand in the previous year, representing a reduction of 41.7%[133]. Assets and Liabilities - As of June 30, 2020, total assets amounted to RMB 876,262 thousand, an increase from RMB 756,851 thousand as of December 31, 2019, representing a growth of approximately 15.8%[83]. - Current liabilities increased to RMB 416,077 thousand from RMB 274,786 thousand, which is an increase of approximately 51.2%[84]. - The group had bank borrowings of approximately RMB 50.0 million as of June 30, 2020, compared to none on December 31, 2019[62]. Cash Flow - As of June 30, 2020, the company's cash and cash equivalents were approximately RMB 477.1 million, an increase from RMB 414.1 million as of December 31, 2019, indicating healthy liquidity[54]. - The net cash generated from operating activities was RMB 6,056 thousand, a significant improvement compared to a net cash used of RMB 127,715 thousand in the same period of 2019[94]. - The company reported a net cash outflow from investing activities of RMB 16,929 thousand for the six months ended June 30, 2020, compared to a net cash inflow of RMB 81,513 thousand in the same period of 2019[94]. Investments and Acquisitions - The company is in the process of acquiring 90% of the issued shares of Goldway Investment Hong Kong Limited and Goldway Asset Management Limited, with a total consideration of approximately HKD 27.968 million[42]. - The company completed the acquisition of all issued shares of Greater China Cold Chain Logistics Limited for a total consideration of HKD 800,000, paid in cash[46]. - The group has completed the acquisition of 60% of Ayasa Globo BVI, which holds all issued shares of Ayasa Globo Financial Services Limited, enhancing its presence in the financial services sector[73]. Employee and Compensation - The group employed 896 employees as of June 30, 2020, an increase from 861 employees on December 31, 2019[74]. - The group has established a competitive compensation package for employees, including a year-end bonus for outstanding performance[75]. - The group is committed to complying with social insurance contribution plans in China, which include pension, medical, and unemployment insurance[75]. Market Outlook - The group anticipates a challenging business environment for its trading operations due to economic uncertainties stemming from the COVID-19 pandemic[70]. - The group is optimistic about the property market in Hong Kong and is actively seeking potential investment and development opportunities[70]. - The group aims to maintain and enhance the value of its investment portfolio amid the current economic environment and international trade tensions[15].

未來發展控股有限公司 Prosperous Future Holdings Limited (於開曼群島註冊成立之有限公司) 股份代號: 1259 2019 年 度 報 告 目錄 公司資料 2 3 主席報告 管理層討論及分析 4 董事、公司秘書及高級管理層簡介 16 19 企業管治報告 董事會報告 34 獨立核數師報告 55 綜合損益及其他全面收益表 64 綜合財務狀況表 66 綜合權益變動表 68 綜合現金流量表 70 財務報表附註 72 財務資料概要 196 主要物業詳情 197 本年報之中英文版本均已上載到本公司網頁www.fd-holdings.com。 股東可於任何時間更改本公司之公司通訊（「公司通訊」）的語言版本選擇（中文、英文、或中文及英文）。 股東可將更改公司通訊語言版本選擇的書面通知提交到本公司之股份登記及過戶分處（即聯合證券登記有限公司，地址為香港北角英皇道338號華 懋交易廣場2期33樓3301-04室）。由於本年報之中文及英文版本被訂裝成單一冊子，已選擇只收取公司通訊的中文或英文版本的股東將收取本年 報之中文及英文版本。 2019年年度報告 02 公司資料 | --- | --- | ...

[Company Information](index=3&type=section&id=Company%20Information) This section provides an overview of the company's fundamental details, including its board, committees, registration, auditors, and primary business activities [Company Basic Information](index=3&type=section&id=Company%20Basic%20Information) This chapter outlines Future Development Holdings Limited's board members, committee structure, registration details, auditors, principal bankers, contact information, and its primary business as an investment holding company - Executive Directors include Mr. Choi Wah Lun (Chairman), Mr. Zhou Ling (Chief Executive Officer), and Mr. Lau Ka Ho (Chief Financial Officer, appointed on May 24, 2019)[5](index=5&type=chunk) - Mr. Lau Ka Ho was appointed Company Secretary on May 24, 2019, following the resignation of Mr. Leung Ho Ming[7](index=7&type=chunk) - The Group's principal business is investment holding, with subsidiaries engaged in manufacturing and selling personal care products, money lending, operating online platforms, trading commodities, securities investment, property holding and investment, and providing catering services[10](index=10&type=chunk)[83](index=83&type=chunk) [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a comprehensive review of the Group's business and financial performance, future outlook, and key corporate updates [Business Review](index=4&type=section&id=Business%20Review) The Group's business segments showed mixed performance, with personal care products, online platform operations, and commodity trading experiencing revenue declines or expanded losses, while money lending saw revenue growth but reduced profit; securities investment recorded unrealized and realized losses, catering services achieved stable growth post-acquisition, and property holding experienced decreases in both revenue and profit - Personal care products business revenue was approximately **RMB 164.6 million**, an increase of approximately **7.0%** year-on-year, but recorded a loss of approximately **RMB 38.7 million**, with losses expanding primarily due to China's economic slowdown and consumer shift to e-commerce[11](index=11&type=chunk) - Money lending business revenue was approximately **RMB 18.0 million**, an increase of approximately **8.2%** year-on-year, but segment profit was approximately **RMB 1.5 million**, a decrease of approximately **66.6%** year-on-year[12](index=12&type=chunk) - Online platform operations revenue was approximately **RMB 5.2 million**, a decrease of approximately **40.9%** year-on-year, and recorded a profit of approximately **RMB 2.2 million**, a decrease of approximately **65.4%** year-on-year[13](index=13&type=chunk) - Commodity trading business revenue was approximately **RMB 71.3 million**, a decrease of approximately **16.0%** year-on-year, and recorded a loss of approximately **RMB 24.6 million** (June 30, 2018: loss of approximately RMB 0.3 million)[14](index=14&type=chunk)[16](index=16&type=chunk) - Securities investment business recorded a net unrealized loss of approximately **RMB 38.9 million** and a net realized loss of approximately **RMB 4.4 million**[17](index=17&type=chunk) - Catering services business recorded total revenue of approximately **RMB 25.0 million** (June 30, 2018: nil) after the acquisitions of Lucky International Group Limited and Greater China Cold Chain Logistics Limited, but recorded a segment loss of approximately **RMB 0.5 million**[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) [Financial Review](index=6&type=section&id=Financial%20Review) The Group's turnover increased by 6.9% year-on-year, but gross profit and gross profit margin significantly decreased, leading to an expanded loss attributable to equity holders; two subsidiary acquisitions were completed to expand catering services, and funds were raised through share placements, maintaining healthy financial resources and liquidity despite increased impairment provisions for loans and trade receivables Turnover and Gross Profit Changes | Metric | 2019 (Unaudited) (RMB million) | 2018 (Unaudited) (RMB million) | Y-o-Y Change (%) | | :------------------ | :----------------------------- | :----------------------------- | :--------------- | | Turnover | 284.4 | 266.1 | 6.9% | | Gross Profit | 23.9 | 60.4 | (60.4%) | | Gross Profit Margin | 8.4% | 22.7% | (14.3%) | - Loss attributable to equity holders of the Company was approximately **RMB 75.3 million**, an increase of **47.7%** from RMB 51.0 million in the prior period; basic loss per share was approximately **RMB 5.3 cents** (June 30, 2018: RMB 4.4 cents)[41](index=41&type=chunk) - During the reporting period, the Group acquired **80% equity interest** in Lucky International Group Limited (consideration of **HKD 42 million**, partly paid by issuing shares) and **100% equity interest** in Greater China Cold Chain Logistics Limited (consideration of **HKD 800,000 cash**) to expand its catering services business[36](index=36&type=chunk)[37](index=37&type=chunk)[39](index=39&type=chunk) - On June 30, 2018, **80% equity interest** in Fujian Aijieli Daily Chemical Co., Ltd. was disposed of for a consideration of **RMB 12.0 million**, recognizing a disposal loss of **RMB 9.0 million**[40](index=40&type=chunk) - The Group's cash and cash equivalents were approximately **RMB 194.3 million** (December 31, 2018: RMB 218.9 million), with a current ratio of **1.4**, maintaining healthy liquidity[43](index=43&type=chunk) - The Group raised approximately **HKD 29.6 million** and **HKD 29.3 million** in 2018 and 2019 respectively through share placements, primarily for money lending business and inventory procurement for catering services[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - Impairment loss provision for loans and interest receivable was approximately **RMB 5.0 million** (June 30, 2018: RMB 0.5 million), and for trade receivables and bills receivable was approximately **RMB 4.5 million** (June 30, 2018: nil)[48](index=48&type=chunk)[49](index=49&type=chunk) [Future Outlook](index=12&type=section&id=Future%20Outlook) The Group plans to strengthen and diversify its business portfolio, cautiously developing each segment amidst China's economic slowdown, trade frictions, and stock market volatility; personal care will focus on supply chain and product development, money lending will explore finance lease opportunities, property holding remains optimistic about the Hong Kong market, and catering services are expected to continue growing - The Group will continue to strengthen, develop, and expand its diversified business portfolio, further building a sustainable investment portfolio, adopting a prudent approach to business development in the current economic environment[59](index=59&type=chunk) - The personal care business faces challenging prospects, and the Group will strive to improve supply chain responsiveness and enhance product development capabilities[59](index=59&type=chunk) - The money lending business will explore expansion through participation in China's finance lease business to manage risks[59](index=59&type=chunk) - The Group remains optimistic about the development of Hong Kong's property market and intends to demolish and redevelop a plot of land in Yuen Long, Hong Kong[60](index=60&type=chunk) - Catering services business recorded stable growth after acquisitions, and the Directors believe that the outlook for Hong Kong's catering services industry remains positive with lower reliance on the PRC market[62](index=62&type=chunk) [Change of Company Name](index=13&type=section&id=Change%20of%20Company%20Name) Effective May 2, 2019, the Company changed its English name from 'China Child Care Corporation Limited' to 'Future Development Holdings Limited' and adopted the Chinese name '未來發展控股有限公司' - The Company's English name changed from 'China Child Care Corporation Limited' to 'Future Development Holdings Limited'[63](index=63&type=chunk) - The Chinese name '未來發展控股有限公司' was adopted as the Company's dual foreign name, replacing its former Chinese name '中國兒童護理有限公司'[63](index=63&type=chunk) - The aforementioned changes became effective from May 2, 2019[63](index=63&type=chunk) [Employees and Remuneration](index=13&type=section&id=Employees%20and%20Remuneration) As of June 30, 2019, the Group's employee count increased to 982; the company offers competitive remuneration packages, including basic salaries, year-end bonuses, and social insurance, and has a share option scheme to reward employee contributions - As of June 30, 2019, the Group employed **982 employees** (December 31, 2018: 921 employees)[64](index=64&type=chunk) - Remuneration packages include basic salaries, year-end bonuses, and participation in social insurance contribution schemes as required by the PRC government[64](index=64&type=chunk) - The Company adopted a share option scheme in June 2011 and updated its limits in June 2019 to reward employees who have contributed to the Group's success[64](index=64&type=chunk) [Dividends](index=13&type=section&id=Dividends) The Board resolved not to declare any interim dividend for the six months ended June 30, 2019 - The Board resolved not to declare any interim dividend for the six months ended June 30, 2019 (six months ended June 30, 2018: nil)[65](index=65&type=chunk) [Unaudited Condensed Consolidated Interim Financial Statements](index=14&type=section&id=Unaudited%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section presents the Group's unaudited condensed consolidated interim financial statements, including the statement of profit or loss, financial position, changes in equity, and cash flows [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=14&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2019, the Group's revenue increased by 6.9% year-on-year, but a significant rise in cost of sales led to a 60.4% decrease in gross profit; loss for the period expanded, with loss attributable to equity holders of the Company increasing to RMB 75.3 million and basic loss per share at RMB 5.3 cents Key Data from Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | 2019 (Unaudited) (RMB thousand) | 2018 (Unaudited) (RMB thousand) | Y-o-Y Change (%) | | :------------------------------------- | :------------------------------ | :------------------------------ | :--------------- | | Revenue | 284,416 | 266,055 | 6.9% | | Cost of sales | (260,481) | (205,623) | 26.7% | | Gross profit | 23,935 | 60,432 | (60.4%) | | Loss before tax | (72,578) | (46,161) | 57.2% | | Loss for the period | (73,440) | (47,911) | 53.3% | | Loss for the period attributable to equity holders of the Company | (75,337) | (50,998) | 47.7% | | Basic loss per share (RMB cents) | (5.3) | (4.4) | 20.5% | [Condensed Consolidated Statement of Financial Position](index=16&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2019, the Group's total assets and total liabilities both decreased, with non-current assets and current assets declining by 12.2% and 10.4% respectively; equity attributable to equity holders of the Company decreased by 12.3%, and total equity decreased by 11.0% Key Data from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2019 (Unaudited) (RMB thousand) | December 31, 2018 (Audited) (RMB thousand) | Change (%) | | :------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------- | | Non-current assets | 614,245 | 698,990 | (12.2%) | | Current assets | 516,474 | 576,306 | (10.4%) | | **Total Assets** | **1,130,719** | **1,275,296** | **(11.4%)** | | Current liabilities | 361,420 | 412,652 | (12.4%) | | Non-current liabilities | (15,222) | (15,418) | (1.3%) | | **Total Liabilities** | **376,642** | **428,070** | **(12.0%)** | | Equity attributable to equity holders of the Company | 678,779 | 773,974 | (12.3%) | | Non-controlling interests | 75,298 | 73,252 | 2.8% | | **Total Equity** | **754,077** | **847,226** | **(11.0%)** | [Condensed Consolidated Statement of Changes in Equity](index=18&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2019, the Group's total equity was RMB 754,077 thousand, a decrease from the beginning of the period; total comprehensive expense attributable to equity holders of the Company was RMB 125,861 thousand, while share capital increased through the issuance of new shares - As of June 30, 2019, equity attributable to equity holders of the Company was **RMB 678,779 thousand**, a decrease from RMB 773,574 thousand as of December 31, 2018[77](index=77&type=chunk) - Total comprehensive expense attributable to equity holders of the Company for the period was **RMB 125,861 thousand**[77](index=77&type=chunk) - Issuance of new shares during the period resulted in an increase in share capital of **RMB 1,762 thousand**[77](index=77&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=20&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2019, the Group's net cash used in operating activities was RMB 127,715 thousand, net cash from investing activities was RMB 81,513 thousand, and net cash from financing activities was RMB 20,748 thousand, resulting in a net decrease in cash and cash equivalents of RMB 25,454 thousand Key Data from Condensed Consolidated Statement of Cash Flows | Metric | 2019 (Unaudited) (RMB thousand) | 2018 (Unaudited) (RMB thousand) | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net cash used in operating activities | (127,715) | (76,918) | | Net cash from/(used in) investing activities | 81,513 | (6,009) | | Net cash from financing activities | 20,748 | 12,494 | | Net decrease in cash and cash equivalents | (25,454) | (70,433) | | Cash and cash equivalents at end of period | 194,264 | 153,034 | [Notes to the Condensed Consolidated Interim Financial Statements](index=21&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) These notes detail the basis of preparation, accounting policies (including the impact of initial adoption of IFRS 16 Leases), operating segment information, analysis of revenue and various expenses, as well as important financial information such as share capital, share option schemes, subsidiary acquisitions and disposals, related party transactions, and post-reporting period events [1. Company Information](index=21&type=section&id=1.%20Company%20Information) This section provides fundamental details about Future Development Holdings Limited, including its incorporation, listing, and diversified business activities through its subsidiaries - Future Development Holdings Limited (formerly 'China Child Care Corporation Limited') was incorporated in the Cayman Islands, with its shares listed on the Main Board of The Stock Exchange of Hong Kong Limited[83](index=83&type=chunk) - The Company's principal activity is investment holding, with diversified subsidiary businesses including manufacturing and selling personal care products, money lending, operating online platforms, trading commodities, securities investment, property holding, investment holding, and providing catering services[83](index=83&type=chunk) [2. Basis of Preparation and Accounting Policies](index=21&type=section&id=2.%20Basis%20of%20Preparation%20and%20Accounting%20Policies) This section outlines the basis for preparing the interim financial statements, including compliance with IAS 34 and the initial adoption of IFRS 16 Leases - The unaudited condensed consolidated interim financial statements are prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' and the applicable disclosure requirements of Appendix 16 to the Listing Rules of the Stock Exchange[84](index=84&type=chunk) - IFRS 16 Leases was adopted for the first time in the current period, applied using the full retrospective method, with the date of initial application being January 1, 2019[84](index=84&type=chunk)[87](index=87&type=chunk) Impact of IFRS 16 Adoption on Statement of Financial Position | Metric | Increase/(Decrease) (Unaudited) (RMB thousand) | | :--------------------------------- | :--------------------------------------------- | | Increase in right-of-use assets | 19,962 | | Decrease in prepaid land lease payments | (10,511) | | Increase in total assets | 9,183 | | Increase in lease liabilities (non-current) | 8,146 | | Increase in lease liabilities (current) | 1,037 | | Increase in total liabilities | 9,183 | [3. Operating Segment Information](index=26&type=section&id=3.%20Operating%20Segment%20Information) This section provides a breakdown of the Group's performance across its diverse operating segments, including revenue and profit/loss contributions - The Group's operating segments include personal care products, money lending, operating online platforms, trading commodities, securities investment, property holding, and providing catering services[98](index=98&type=chunk) Segment Revenue for the Six Months Ended June 30, 2019 | Segment | Revenue (RMB thousand) | | :----------------------- | :--------------------- | | Personal care products | 164,640 | | Money lending | 17,965 | | Operating online platforms | 5,219 | | Trading commodities | 71,324 | | Securities investment | – | | Property holding | 248 | | Catering services | 25,020 | | **Total** | **284,416** | Segment (Loss)/Profit for the Six Months Ended June 30, 2019 | Segment | (Loss)/Profit (RMB thousand) | | :----------------------- | :--------------------------- | | Personal care products | (38,734) | | Money lending | 1,470 | | Operating online platforms | 2,205 | | Trading commodities | (24,577) | | Securities investment | (59) | | Property holding | (284) | | Catering services | (517) | | **Total** | **(60,496)** | [4. Revenue](index=29&type=section&id=4.%20Revenue) This section provides a detailed breakdown of the Group's revenue by source for the reporting period Analysis of Revenue Sources | Revenue Source (RMB thousand) | 2019 (Unaudited) | 2018 (Unaudited) | | :---------------------------- | :--------------- | :--------------- | | Revenue from sales of goods | 235,964 | 238,769 | | Interest income from money lending business | 17,965 | 16,609 | | Income from operating online platforms | 5,219 | 8,838 | | Rental income from investment properties | 248 | 1,839 | | Income from catering services | 25,020 | – | | **Total** | **284,416** | **266,055** | [5. Other Income and Gains](index=29&type=section&id=5.%20Other%20Income%20and%20Gains) This section details the various other income and gains recognized by the Group during the reporting period Analysis of Other Income and Gains | Other Income and Gains (RMB thousand) | 2019 (Unaudited) | 2018 (Unaudited) | | :---------------------------------- | :--------------- | :--------------- | | Interest income | 419 | 1,905 | | Gains from financial assets at fair value through profit or loss | 342 | 399 | | Reversal of impairment loss on trade receivables | 1,911 | – | | Government grants | 2,186 | 619 | | Rental income | 278 | 285 | | Others | 760 | 832 | | **Total** | **5,987** | **4,040** | [6. Other Expenses](index=30&type=section&id=6.%20Other%20Expenses) This section provides an analysis of the Group's other expenses, including losses from asset disposals and impairment charges Analysis of Other Expenses | Other Expenses (RMB thousand) | 2019 (Unaudited) | 2018 (Unaudited) | | :---------------------------- | :--------------- | :--------------- | | Loss on disposal of property, plant and equipment | 437 | 2,580 | | Impairment loss on loans and interest receivable | 4,988 | 488 | | Impairment on trade receivables | 4,462 | – | | Impairment loss on goodwill | 2,523 | – | | Loss on disposal of a subsidiary | – | 9,004 | | Loss on fair value change of investment properties | 1,710 | 406 | | **Total** | **14,232** | **12,973** | [7. Finance Costs](index=30&type=section&id=7.%20Finance%20Costs) This section details the Group's finance costs, including interest expenses from bank and other borrowings, and lease liabilities Analysis of Finance Costs | Finance Costs (RMB thousand) | 2019 (Unaudited) | 2018 (Unaudited) | | :--------------------------- | :--------------- | :--------------- | | Interest on bank borrowings | 1,354 | 2,586 | | Interest on other borrowings | 1,460 | 2,174 | | Finance charges on lease liabilities | 317 | – | | **Total** | **3,131** | **4,896** | [8. Loss Before Tax](index=31&type=section&id=8.%20Loss%20Before%20Tax) This section itemizes the key expenses deducted in calculating the Group's loss before tax Items Deducted in Loss Before Tax | Item (RMB thousand) | 2019 (Unaudited) | 2018 (Unaudited) | | :------------------ | :--------------- | :--------------- | | Cost of inventories sold | 260,481 | 205,623 | | Depreciation of property, plant and equipment | 14,222 | 18,066 | | Depreciation of right-of-use assets | 2,343 | – | | Total staff costs | 35,015 | 31,073 | | Research and development costs | 9,905 | 5,586 | | Net exchange losses | 3,101 | 5,290 | [9. Income Tax Expense](index=32&type=section&id=9.%20Income%20Tax%20Expense) This section provides an analysis of the Group's income tax expense, including Hong Kong profits tax, PRC corporate income tax, and deferred tax Analysis of Income Tax Expense | Income Tax Expense (RMB thousand) | 2019 (Unaudited) | 2018 (Unaudited) | | :-------------------------------- | :--------------- | :--------------- | | Hong Kong profits tax | 1,998 | 1,951 | | PRC corporate income tax | 2 | 11 | | Deferred tax | (1,138) | (212) | | **Total** | **862** | **1,750** | - A subsidiary, Frog Prince (China) Daily Chemical Co., Ltd., enjoys a **preferential tax rate of 15%**[112](index=112&type=chunk) [10. Dividends](index=32&type=section&id=10.%20Dividends) This section confirms the Board's decision regarding interim dividend declaration for the reporting period - The Directors of the Company do not recommend the payment of any interim dividend for the six months ended June 30, 2019 (six months ended June 30, 2018: nil)[113](index=113&type=chunk) [11. Loss Per Share Attributable to Equity Holders of the Company](index=32&type=section&id=11.%20Loss%20Per%20Share%20Attributable%20to%20Equity%20Holders%20of%20the%20Company) This section presents the basic and diluted loss per share attributable to the Company's equity holders for the reporting period Loss Per Share | Metric (RMB cents) | 2019 (Unaudited) | 2018 (Unaudited) | | :----------------- | :--------------- | :--------------- | | Basic loss per share | (5.3) | (4.4) | | Diluted loss per share | Not applicable | Not applicable | - The basic loss per share amount is calculated based on the loss for the period attributable to equity holders of the Company of approximately **RMB 75,337 thousand** and the weighted average number of ordinary shares in issue of **1,425,482 thousand shares** for the six months ended June 30, 2019[114](index=114&type=chunk) [12. Property, Plant and Equipment](index=33&type=section&id=12.%20Property,%20Plant%20and%20Equipment) This section outlines the changes in the Group's property, plant, and equipment, including additions and depreciation Changes in Property, Plant and Equipment | Metric (RMB thousand) | June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | | :------------------------------------------------ | :-------------------------- | :-------------------------- | | At beginning of period/year, net of accumulated depreciation and impairment | 171,823 | 402,050 | | Additions, at cost | 7,878 | 10,950 | | Depreciation provided during the period/year | (14,222) | (28,293) | | **At end of period/year, net of accumulated depreciation and impairment** | **164,986** | **171,823** | [13. Goodwill](index=33&type=section&id=13.%20Goodwill) This section reports the carrying value of the Group's goodwill - As of June 30, 2019, the net carrying value of goodwill was **RMB 22,800 thousand**, consistent with December 31, 2018[118](index=118&type=chunk) [14. Financial Assets at Fair Value Through Other Comprehensive Income](index=34&type=section&id=14.%20Financial%20Assets%20at%20Fair%20Value%20Through%20Other%20Comprehensive%20Income) This section provides a breakdown of the Group's financial assets measured at fair value through other comprehensive income Financial Assets at Fair Value Through Other Comprehensive Income | Financial Asset Category (RMB thousand) | June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | | :------------------------------------ | :------------------------ | :------------------------ | | - Equity securities listed in Hong Kong | 12,087 | 50,925 | | - Unlisted investment funds | 23,488 | 62,442 | | - Unlisted equity investments | 3,981 | 14,994 | | **Total** | **39,556** | **128,361** | [15. Loans and Interest Receivable](index=34&type=section&id=15.%20Loans%20and%20Interest%20Receivable) This section provides an overview of the Group's loans and interest receivable, including impairment provisions and average interest rates Overview of Loans and Interest Receivable | Metric (RMB thousand) | June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | | :-------------------- | :------------------------ | :------------------------ | | Gross loans and interest receivable | 186,710 | 180,951 | | Less: Impairment losses recognized | (9,930) | (4,860) | | **Net carrying amount** | **176,780** | **176,091** | - During the period, the Group provided loans of approximately **RMB 19.5 million** (year ended December 31, 2018: RMB 95.6 million), with an average annual interest rate of approximately **41.6%**[47](index=47&type=chunk)[122](index=122&type=chunk) - During the reporting period, an impairment loss provision of approximately **RMB 5.0 million** (June 30, 2018: RMB 0.5 million) was made for loans and interest receivable[48](index=48&type=chunk)[122](index=122&type=chunk) [16. Trade and Bills Receivables](index=35&type=section&id=16.%20Trade%20and%20Bills%20Receivables) This section provides an overview and aging analysis of the Group's trade and bills receivables, including credit terms and impairment provisions Overview of Trade and Bills Receivables | Metric (RMB thousand) | June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | | :-------------------- | :------------------------ | :------------------------ | | Trade and bills receivables | 100,995 | 84,075 | | Less: Provision for doubtful debts | (4,462) | (1,911) | | **Net carrying amount** | **96,533** | **82,164** | - The Group generally grants credit terms of **30 to 180 days** to its customers[123](index=123&type=chunk) - During the reporting period, an impairment loss provision of approximately **RMB 4.5 million** (June 30, 2018: nil) was made for trade and bills receivables[49](index=49&type=chunk)[123](index=123&type=chunk) Aging Analysis of Trade and Bills Receivables | Aging (RMB thousand) | June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | | :----------------- | :------------------------ | :------------------------ | | Within 30 days | 53,264 | 25,859 | | 31 to 60 days | 27,126 | 23,502 | | 61 to 90 days | 9,458 | 4,025 | | Over 90 days | 6,685 | 28,778 | | **Total** | **96,533** | **82,164** | [17. Trade and Bills Payables](index=36&type=section&id=17.%20Trade%20and%20Bills%20Payables) This section provides an aging analysis of the Group's trade and bills payables, including typical settlement terms Aging Analysis of Trade and Bills Payables | Aging (RMB thousand) | June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | | :----------------- | :------------------------ | :------------------------ | | Within 30 days | 23,019 | 34,644 | | 31 to 90 days | 23,419 | 18,466 | | Over 90 days | 19,951 | 17,660 | | **Total** | **66,389** | **70,770** | - Trade payables are non-interest bearing and are normally settled within **30 to 180 days**[126](index=126&type=chunk) [18. Share Capital](index=37&type=section&id=18.%20Share%20Capital) This section details the Group's issued and fully paid share capital, including changes due to new share issuances Issued and Fully Paid Share Capital | Metric (RMB thousand) | June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | | :-------------------- | :------------------------ | :------------------------ | | Issued and fully paid share capital | 13,411 | 11,649 | - On March 1, 2019, the Company issued **200,000,000 new shares** as partial consideration for the acquisition of an **80% equity interest** in Lucky International Group Limited[128](index=128&type=chunk) [19. Share Option Scheme](index=37&type=section&id=19.%20Share%20Option%20Scheme) This section describes the Company's share option scheme, its purpose, and the movements of outstanding share options - The Company established a share option scheme to provide incentives and rewards to eligible participants who contribute to the successful operations of the Group[130](index=130&type=chunk) - The maximum number of outstanding share options currently permitted to be granted under the scheme is **10%** of the Company's issued shares at any time upon exercise[130](index=130&type=chunk) Movements in Share Options | Metric (thousand units) | June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | | :---------------------- | :------------------------ | :------------------------ | | At January 1 | 93,655 | 94,827 | | Forfeited/lapsed during the period/year | (15,908) | (1,172) | | **At June 30/December 31** | **77,747** | **93,655** | - For the six months ended June 30, 2019, the Group recognized share option expenses totaling **RMB nil** (2018: RMB 601 thousand)[137](index=137&type=chunk) [20. Acquisition of Subsidiaries](index=39&type=section&id=20.%20Acquisition%20of%20Subsidiaries) This section details the Group's acquisitions of subsidiaries, including Lucky International Group Limited and Greater China Cold Chain Logistics Limited, and their strategic rationale [(a) Acquisition of Lucky International Group Limited](index=39&type=section&id=(a)%20Acquisition%20of%20Lucky%20International%20Group%20Limited) This subsection details the acquisition of Lucky International Group Limited, its consideration, and the resulting goodwill - The acquisition of **80% equity interest** in Lucky International Group Limited was completed on May 29, 2019, for a total consideration of **RMB 50,051 thousand** (of which **RMB 19,385 thousand** was paid in cash and **RMB 30,666 thousand** by issuing shares)[139](index=139&type=chunk)[140](index=140&type=chunk) - The acquisition of Lucky International Group Limited enables the Group to engage in catering services in Hong Kong, particularly in the trading of frozen agricultural products[139](index=139&type=chunk) - The acquisition generated goodwill of **RMB 2,523 thousand**, which has been reflected as an impairment loss in the profit or loss for the current period[140](index=140&type=chunk) [(b) Acquisition of Greater China Cold Chain Logistics Limited](index=41&type=section&id=(b)%20Acquisition%20of%20Greater%20China%20Cold%20Chain%20Logistics%20Limited) This subsection details the acquisition of Greater China Cold Chain Logistics Limited and its contribution to the Group's catering services - The acquisition of **100% of the issued share capital** of Greater China Cold Chain Logistics Limited was completed on June 4, 2019, for a total cash consideration of **RMB 705 thousand**[147](index=147&type=chunk)[145](index=145&type=chunk) - The acquisition of Greater China Cold Chain Logistics Limited achieved synergy within the Company's catering services business, primarily engaged in providing frozen warehousing services[147](index=147&type=chunk) [21. Disposal of a Subsidiary](index=42&type=section&id=21.%20Disposal%20of%20a%20Subsidiary) This section details the disposal of Fujian Aijieli Daily Chemical Co., Ltd. and the resulting loss - On June 30, 2018, the Group disposed of **80% equity interest** in Fujian Aijieli Daily Chemical Co., Ltd. for a total cash consideration of **RMB 12,000 thousand**[152](index=152&type=chunk) - Immediately following the completion of the disposal, Fujian Aijieli ceased to be a subsidiary of the Company, and a disposal loss of **RMB 9,004 thousand** was recognized[152](index=152&type=chunk)[153](index=153&type=chunk) [22. Operating Lease Arrangements](index=43&type=section&id=22.%20Operating%20Lease%20Arrangements) This section outlines the Group's operating lease arrangements, both as a lessor for investment properties and as a lessee for office and warehouse premises - As a lessor, the Group leases investment properties under operating lease arrangements for terms ranging from **one to twenty years**, with total future minimum lease payments receivable of **RMB 7,212 thousand** as of June 30, 2019[155](index=155&type=chunk)[156](index=156&type=chunk) - As a lessee, the Group is a lessee for several leased properties used as offices and warehouses, having adopted IFRS 16 for the first time using the modified retrospective approach[157](index=157&type=chunk) [23. Commitments](index=44&type=section&id=23.%20Commitments) This section reports the Group's contractual commitments for property, plant, and equipment - As of June 30, 2019, the Group had **nil** contracted but unprovided commitments for the purchase of property, plant and equipment (December 31, 2018: RMB 288 thousand)[158](index=158&type=chunk) [24. Contingent Liabilities](index=44&type=section&id=24.%20Contingent%20Liabilities) This section confirms the absence of any significant contingent liabilities for the Group - As of June 30, 2019 and December 31, 2018, the Group had **no significant contingent liabilities**[159](index=159&type=chunk) [25. Related Party Transactions](index=44&type=section&id=25.%20Related%20Party%20Transactions) This section details the Group's transactions with related parties and remuneration for key management personnel Related Party Transactions (Six Months Ended June 30, 2019) | Transaction Type | Related Party | Amount (RMB thousand) | | :--------------- | :------------ | :-------------------- | | Sales of products | Associates | 73,515 | | Purchases of products | Associates | 5,296 | | Miscellaneous income | Associates | 475 | Key Management Personnel Remuneration (Six Months Ended June 30, 2019) | Remuneration Category | Amount (RMB thousand) | | :-------------------- | :-------------------- | | Short-term employee benefits | 280 | | Post-employment benefits | 13 | | **Total** | **293** | [26. Events After the Reporting Period](index=45&type=section&id=26.%20Events%20After%20the%20Reporting%20Period) This section outlines significant events that occurred after the reporting period, including proposed disposals, name changes, and new lease agreements - On July 10, 2019, the Company entered into an agreement to dispose of the entire issued share capital of Long Sheng Xing Investment Holdings Limited for a total consideration of **HKD 125 million**, which is yet to be finalized[164](index=164&type=chunk) - On July 16, 2019, the Company announced a proposed change of its English name to 'Prosperous Future Holdings Limited', which is not yet effective[165](index=165&type=chunk) - On July 19, 2019, subsidiary Greater China Cold Chain Logistics Limited entered into a **five-year lease agreement** for a property at Kwai Chung Container Terminal, Hong Kong, to develop its frozen warehouse services business[166](index=166&type=chunk) - On August 23, 2019, the Company entered into an agreement to dispose of **51% of the issued shares** of Marvel Paramount Holdings Limited for a total consideration of **HKD 40 million**, which is yet to be completed[167](index=167&type=chunk) [27. Approval of Condensed Consolidated Interim Financial Statements](index=46&type=section&id=27.%20Approval%20of%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section states the date on which the condensed consolidated interim financial statements were approved for issuance by the Board - The condensed consolidated interim financial statements were approved and authorized for issue by the Board of Directors on August 30, 2019[168](index=168&type=chunk) [Supplementary Information to Interim Report](index=47&type=section&id=Supplementary%20Information%20to%20Interim%20Report) This section provides additional details on the Company's share option scheme, directors' and major shareholders' interests, and corporate governance practices [Share Option Scheme](index=47&type=section&id=Share%20Option%20Scheme) This section details the movements of share options under the Company's share option scheme for the six months ended June 30, 2019, including the number of options held by non-executive directors, executive directors, former directors, Group employees, and distributors, along with their exercise prices and periods - As of June 30, 2019, the total number of outstanding share options under the share option scheme was **77,746,500 units** (January 1, 2019: 93,654,500 units)[204](index=204&type=chunk) - The number of share options forfeited/lapsed during the period was **15,908,000 units**[204](index=204&type=chunk) - Share option exercise prices ranged from **HKD 0.38 to HKD 2.94**, with exercise periods covering **2012 to 2027**[205](index=205&type=chunk)[206](index=206&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares and Underlying Shares](index=58&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) This section discloses the interests of directors and the chief executive in the Company's shares and underlying shares as of June 30, 2019, with Mr. Li Zhouxin holding share options Directors' Long Positions in Underlying Shares (Share Options) | Name of Director | Nature of Interest | Number of Underlying Shares Interested | Percentage of the Company's Issued Share Capital + | | :--------------- | :----------------- | :----------------------------------- | :----------------------------------------- | | Mr. Li Zhouxin | Beneficial owner | 1,480,000 | 0.09% | - Save as disclosed above, as at June 30, 2019, none of the Directors or chief executive of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations that were required to be recorded[209](index=209&type=chunk) [Major Shareholders' Interests in Shares and Underlying Shares](index=59&type=section&id=Major%20Shareholders'%20Interests%20in%20Shares%20and%20Underlying%20Shares) This section lists major shareholders holding 5% or more of the Company's issued share capital as of June 30, 2019, including their long positions in ordinary shares and underlying shares (share options) Major Shareholders' Long Positions in the Company's Ordinary Shares | Name of Major Shareholder | Nature of Interest | Number of Ordinary Shares | Percentage of the Company's Issued Share Capital + | | :------------------------------------ | :------------------------- | :------------------------ | :----------------------------------------- | | Golden Sparkle Limited | Beneficial owner | 263,308,500 | 16.56% | | Mr. Lai Wai Lam | Interest in controlled corporation | 263,308,500 | 16.56% | | Pai Sheng Trading Limited | Beneficial owner | 200,000,000 | 12.58% | | Good Honour Investment Holdings Limited | Interest in controlled corporation | 200,000,000 | 12.58% | | Diamond Ace Holdings Limited | Interest in controlled corporation | 200,000,000 | 12.58% | | Emperor Supreme Limited | Interest in controlled corporation | 200,000,000 | 12.58% | | Ms. Cheng Wan Chi | Interest in controlled corporation | 200,000,000 | 12.58% | | Mr. Tai Chi Piu | Beneficial owner | 140,382,500 | 8.83% | | Yili Luo International Trading (Hong Kong) Limited | Beneficial owner | 80,000,000 | 5.03% | | Mr. Li Liang | Interest in controlled corporation | 80,000,000 | 5.03% | Major Shareholders' Long Positions in the Company's Underlying Shares (Share Options) | Name of Major Shareholder | Nature of Interest | Number of Underlying Shares Interested | Percentage of the Company's Issued Share Capital + | | :------------------------ | :----------------- | :----------------------------------- | :----------------------------------------- | | Mr. Li Liang | Beneficial owner | 30,000 | 0.002% | [Compliance with the Model Code for Securities Transactions by Directors](index=60&type=section&id=Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules, and all Directors confirmed full compliance during the reporting period - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules as its code of conduct for Directors' securities transactions[218](index=218&type=chunk) - Following specific enquiry by the Company, all Directors have confirmed their full compliance with the required standards set out in the Model Code during the reporting period[218](index=218&type=chunk) [Compliance with the Company's Written Guidelines on Securities Transactions by Employees](index=60&type=section&id=Compliance%20with%20the%20Company's%20Written%20Guidelines%20on%20Securities%20Transactions%20by%20Employees) The Company has established written guidelines for employees who may possess inside information, which are no less exacting than the Model Code, and no breaches were identified - The Company has adopted written guidelines for employees who may possess inside information of the Company and/or its securities for securities transactions, on terms no less exacting than the Model Code[219](index=219&type=chunk) - The Company has not noted any non-compliance with the employee written guidelines by relevant employees[219](index=219&type=chunk) [Corporate Governance](index=61&type=section&id=Corporate%20Governance) The Board believes the Company has complied with the code provisions of the Corporate Governance Code in Appendix 14 of the Listing Rules for the period ended June 30, 2019 - The Board is of the view that the Company has complied with the code provisions set out in the Corporate Governance Code in Appendix 14 to the Listing Rules for the period ended June 30, 2019[222](index=222&type=chunk) [Update on Directors' Information](index=61&type=section&id=Update%20on%20Directors'%20Information) Pursuant to Rule 13.51B(1) of the Listing Rules, changes in the Company's Directors' information are listed as follows: Mr. Lau Ka Ho was appointed as an Executive Director of the Company on May 24, 2019 - Mr. Lau Ka Ho was appointed as an Executive Director of the Company on May 24, 2019[223](index=223&type=chunk) [Purchase, Redemption or Sale of the Company's Listed Securities](index=61&type=section&id=Purchase,%20Redemption%20or%20Sale%20of%20the%20Company's%20Listed%20Securities) Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the review period - Neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company's listed securities during the review period[224](index=224&type=chunk) [Audit Committee](index=61&type=section&id=Audit%20Committee) The Company's Audit Committee has reviewed the unaudited condensed consolidated results for the six months ended June 30, 2019, and discussed financial reporting matters - The Company's Audit Committee, comprising three independent non-executive Directors, has reviewed the unaudited condensed consolidated results for the six months ended June 30, 2019, including the accounting principles and practices adopted by the Group, and discussed financial reporting matters[225](index=225&type=chunk)

[Company Information](index=2&type=section&id=Company%20Information) [Company Information Overview](index=2&type=section&id=Company%20Information%20Overview) Provides basic information on China Child Care Corporation Limited, noting multiple board member changes during the period - The Board of Directors underwent several changes during the reporting period, including the resignation of Mr Wong Sun Man and Mr Ma Chi Ming as executive directors, and the appointment of Mr Zhou Ling as an executive director and the Chief Executive Officer[5](index=5&type=chunk) - The company's website is www.princefrog.com.cn, with its registered office in the Cayman Islands and principal places of business in Fujian, China, and Hong Kong[5](index=5&type=chunk) [Chairman's Statement](index=4&type=section&id=Chairman's%20Statement) [2018 Performance Review and Outlook](index=4&type=section&id=2018%20Performance%20Review%20and%20Outlook) The Chairman's statement attributes the decline in personal care product revenue to economic slowdown and business changes, resulting in a wider loss Key Financial Data Comparison for FY2018 | Indicator | 2018 (RMB million) | 2017 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Turnover | 631.2 | 795.6 | -20.7% | | Loss attributable to equity holders of the Company | 431.4 | 170.7 | 152.7% (Loss widened) | | Basic loss per share (RMB cents) | 33.8 | 15.5 | 118.1% (Loss widened) | - The decline in revenue was mainly due to the slowdown in economic growth in the PRC, the cessation of consolidation of Fujian Herun Supply Chain Management Co, Ltd, and a complex and unpredictable international situation[6](index=6&type=chunk) - Looking ahead to 2019, the Group will leverage its resources to continue developing diversified businesses to improve profitability and shareholder interests[7](index=7&type=chunk) [Management Discussion and Analysis](index=5&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=5&type=section&id=Business%20Review) Details the performance of various business segments, highlighting a significant decline in personal care products and mixed results in other areas Revenue and Profit/Loss by Business Segment (2018 vs 2017) | Business Segment | 2018 Revenue (RMB million) | 2017 Revenue (RMB million) | Revenue Change | 2018 Profit/Loss (RMB million) | 2017 Profit/Loss (RMB million) | Profit/Loss Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Personal care products | 396.1 | 570.8 | -30.6% | (338.1) (Loss) | (227.7) (Loss) | 48.4% (Loss widened) | | Money lending business | 35.9 | 31.8 | +12.9% | 4.7 (Profit) | 3.1 (Profit) | +50.6% | | Operation of online platform | 11.5 | 21.1 | -45.3% | 8.1 (Profit) | 16.5 (Profit) | -50.7% | | Trading of goods | 182.9 | 171.4 | +6.7% | (16.6) (Loss) | 4.9 (Profit) | From profit to loss | | Property holding | 4.8 | 0.304 | +1472.7% | (34.3) (Loss) | 13.0 (Profit) | From profit to loss | - The decrease in revenue from personal care products was mainly due to the cessation of consolidation of Fujian Herun Supply Chain Management Co, Ltd, and a decrease in gross profit from the economic slowdown in China, coupled with an impairment provision of **RMB170.7 million** for property, plant and equipment and **RMB60.6 million** in product label recall expenses[8](index=8&type=chunk) - Outstanding loans in the money lending business included unsecured loans of approximately **RMB62.5 million** (average effective annual interest rate of approximately 35.5%) and mortgage loans of approximately **RMB108.4 million** (average effective annual interest rate of approximately 17.5%)[10](index=10&type=chunk) - As of December 31, 2018, the securities investment business held approximately **RMB50.9 million** in Hong Kong-listed equity securities and approximately **RMB62.4 million** in unlisted investment funds, recording an unrealized loss of approximately **RMB74.9 million** and a net realized loss of approximately **RMB3.5 million** during the period[21](index=21&type=chunk)[22](index=22&type=chunk) - Revenue from the property holding business grew significantly, but the segment recorded a loss due to an impairment provision of approximately **RMB20.2 million** for properties under development and a loss on fair value changes of investment properties of approximately **RMB16.4 million**[27](index=27&type=chunk)[28](index=28&type=chunk) [Financial Review](index=9&type=section&id=Financial%20Review) Summarizes the Group's overall financial performance, noting decreased revenue and gross margin alongside a significant reduction in selling expenses Key Financial Indicators Comparison for FY2018 | Indicator | 2018 (RMB million) | 2017 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Turnover | 631.2 | 795.6 | -20.7% | | Gross Profit | 95.1 | 181.8 | -47.7% | | Gross Profit Margin | 15.1% | 22.8% | -7.7 p.p. | | Selling and distribution expenses | 66.7 | 227.1 | -70.6% | | Administrative expenses | 134.6 | 148.5 | -9.4% | | Finance costs | 11.2 | 3.2 | +250% | - The overall gross profit margin decreased mainly due to the lower gross profit margins of the personal care products and trading of goods businesses, with the personal care products' gross margin decreasing by approximately **7.9 percentage points to 14.1%** due to a shift from manufacturing to an OEM model[31](index=31&type=chunk) - The significant decrease in selling and distribution expenses was primarily due to the shift to an OEM model for the personal care business, leading to lower advertising, marketing, promotion, and freight costs[35](index=35&type=chunk) - The decrease in administrative expenses was mainly attributable to exchange differences arising from the depreciation of the Renminbi during the reporting period[36](index=36&type=chunk) [Acquisitions and Disposals of Subsidiaries](index=11&type=section&id=Acquisitions%20and%20Disposals%20of%20Subsidiaries) Outlines the Group's subsidiary acquisition and disposal activities during the reporting period, including key transactions in the property holding business - In the second quarter of 2017, the Group acquired the entire share capital of Apex Magic International Limited for a consideration of **RMB71,192,000**, with its principal assets being land and properties in Yuen Long, Hong Kong[38](index=38&type=chunk) - In the fourth quarter of 2017, the Group acquired the entire share capital of Tak Fat Property Company Limited for a consideration of **RMB83,599,000**, with its principal asset being a property in the Hong Kong Industrial Centre, Kowloon[38](index=38&type=chunk)[39](index=39&type=chunk) - On November 2, 2018, the Group disposed of the entire equity interest in Amazing Gear Limited for a total cash consideration of **HK$9,000,000**, with no gain or loss recognized[40](index=40&type=chunk) - On June 30, 2018, the Group disposed of an 80% equity interest in Fujian Aijieli Daily Chemical Co, Ltd for a consideration of **RMB12.0 million**, recognizing a loss on disposal of **RMB9.0 million**[40](index=40&type=chunk) - In the first half of 2017, the Group disposed of a 45% equity interest in Fujian Herun Supply Chain Management Co, Ltd for a consideration of **RMB100.0 million**, recognizing a gain on disposal of **RMB95.9 million**, reducing the Group's interest from 75% to 30%, thereby becoming an associate[42](index=42&type=chunk) [Net Loss and Net Loss Ratio](index=12&type=section&id=Net%20Loss%20and%20Net%20Loss%20Ratio) The loss attributable to equity holders widened significantly to RMB431.4 million in 2018, with the net loss ratio increasing to 68.3% Net Loss and Net Loss Ratio Comparison for FY2018 | Indicator | 2018 (RMB million) | 2017 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Loss attributable to equity holders of the Company | 431.4 | 170.7 | 152.7% (Loss widened) | | Net loss ratio | 68.3% | 21.5% | +46.8 p.p. | | Basic loss per share (RMB cents) | 33.8 | 15.5 | 118.1% (Loss widened) | - The widened loss was mainly due to decreased revenue, recall expenses related to personal care product labeling issues, and impairment provisions of **RMB170.7 million**, **RMB31.2 million**, and **RMB20.2 million** for property, plant and equipment, goodwill, and properties under development, respectively[43](index=43&type=chunk) - The fair value change of investment properties shifted from a gain of **RMB13.2 million** in 2017 to a loss of **RMB16.4 million** in 2018[43](index=43&type=chunk) [Capital Expenditure](index=12&type=section&id=Capital%20Expenditure) The Group's significant capital expenditure decreased substantially to RMB11.0 million in FY2018, mainly for property and office renovations Capital Expenditure Comparison for FY2018 | Indicator | 2018 (RMB million) | 2017 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Significant capital expenditure | 11.0 | 257.3 | -95.7% | - Capital expenditure was mainly used for the renovation of plants and offices, plant reinforcement works, and the acquisition of production machinery[44](index=44&type=chunk) [Financial Resources and Liquidity](index=12&type=section&id=Financial%20Resources%20and%20Liquidity) As of December 31, 2018, the Group maintained a healthy liquidity position with a current ratio of 1.4 and cash equivalents of RMB218.9 million Financial Resources and Liquidity Indicators Comparison for FY2018 | Indicator | 2018 (RMB million) | 2017 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 218.9 | 222.7 | -1.7% | | Current ratio | 1.4 | 1.8 | -0.4 | | Trade and bills receivables | 82.2 | 113.2 | -27.4% | | Loans and interest receivables | 176.1 | 205.4 | -14.2% | | Inventories | 102.2 | 32.0 | +219.8% | | Gearing ratio | 33.6% | 24.0% | +9.6 p.p. | | Bank borrowings | 55.0 | 115.0 | -52.2% | | Other secured borrowings | 98.8 | None | New | | Other unsecured borrowings | 20.0 | 50.0 | -60.0% | - On June 12, 2018, the Group raised **HK$29.6 million** through a placing of new shares to develop its money lending business[47](index=47&type=chunk) - The significant increase in inventories was mainly due to the Group's sales business of electronic products and other electronic components[52](index=52&type=chunk) - In 2018, bank borrowings were guaranteed by a PRC supplier, whereas in 2017 they were secured by bank deposits; new other secured borrowings of **RMB98.8 million** were secured by investment properties and shares of a subsidiary[54](index=54&type=chunk)[55](index=55&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk) [Capital Structure and Risk Management](index=14&type=section&id=Capital%20Structure%20and%20Risk%20Management) The Group is committed to maintaining a healthy capital ratio and an efficient capital structure, with no significant foreign currency risk - The Group's primary capital management objective is to ensure its ability to continue as a going concern and maintain a healthy capital ratio to support its business and maximize shareholder value[60](index=60&type=chunk) - As most of the Group's transactions are denominated in Renminbi, the Group does not face significant foreign currency risk[62](index=62&type=chunk) - As of December 31, 2018, the Group had no significant contingent liabilities[63](index=63&type=chunk) [Future Prospects](index=15&type=section&id=Future%20Prospects) The Group will continue to strengthen and develop its diversified business portfolio while prudently managing its personal care business amid China's economic slowdown - The Group will continue to strengthen, develop, and expand its diversified business portfolio, including manufacturing and selling personal care products, money lending, operating an online platform, trading goods, securities investment, property holding, and investment holding[64](index=64&type=chunk) - Facing the slowdown in China's economic growth, the Group will enhance its supply chain responsiveness and product development capabilities to prevent further decline in sales revenue[64](index=64&type=chunk) - The Group will continue to expand its money lending business and extend its mortgage business to corporate clients, operating and expanding its business in a prudent and risk-balanced manner[64](index=64&type=chunk) [Employees and Remuneration](index=16&type=section&id=Employees%20and%20Remuneration) As of December 31, 2018, the Group employed 921 employees and offered competitive remuneration packages, including a share option scheme Employee Headcount Comparison | Indicator | 2018 | 2017 | | :--- | :--- | :--- | | Number of employees | 921 | 999 | - The Group offers year-end bonuses to outstanding employees and participates in social insurance contribution schemes as required by the PRC government[65](index=65&type=chunk) - The Company adopted a share option scheme in June 2011 and refreshed its limit in June 2017 to reward employees for their contributions to the Group's success[65](index=65&type=chunk) [Final Dividend](index=16&type=section&id=Final%20Dividend) The Board does not recommend the payment of any dividend for the year ended December 31, 2018 - The Directors do not recommend the payment of any dividend to shareholders for the year ended December 31, 2018[66](index=66&type=chunk) [Biographical Details of Directors, Company Secretary and Senior Management](index=17&type=section&id=Biographical%20Details%20of%20Directors,%20Company%20Secretary%20and%20Senior%20Management) [Biographical Details of the Board of Directors](index=17&type=section&id=Biographical%20Details%20of%20the%20Board%20of%20Directors) Introduces the backgrounds of the Group's executive, non-executive, and independent non-executive directors, noting key leadership changes - Mr Choi Wa Lun resigned as Chief Executive Officer on December 12, 2018, but remains as Chairman, with over 30 years of experience in real estate, investment, and forestry[67](index=67&type=chunk) - Mr Zhou Ling was appointed as an executive Director, Chief Executive Officer, and a member of the Remuneration Committee on December 12, 2018, bringing extensive experience in investment products and finance[67](index=67&type=chunk) - Mr Li Zhouxin was re-designated as a non-executive Director on June 30, 2017, having previously served as Chief Financial Officer, and holds a bachelor's degree in finance and multiple professional accounting qualifications[68](index=68&type=chunk) - Independent non-executive Directors Ms Chan Sze Man, Mr Ma Kwun Yung, and Ms Bu Yanan have professional backgrounds in accounting, energy management, and law, respectively, and serve on various Board committees[70](index=70&type=chunk)[71](index=71&type=chunk) [Biographical Details of Company Secretary and Senior Management](index=19&type=section&id=Biographical%20Details%20of%20Company%20Secretary%20and%20Senior%20Management) Introduces the backgrounds of the Company Secretary and two senior management members with extensive experience in the child daily chemical industry - Mr Leung Ho Ming was appointed as the Company Secretary on January 31, 2018, and has over 10 years of experience in accounting and auditing[73](index=73&type=chunk) - Ms Han Xinbin serves as the Production Director of Prince Frog (Fujian) Baby & Child Care Products Co, Ltd, with over 16 years of experience in production and supply chain management in China's child daily chemical industry[74](index=74&type=chunk) - Mr Wen Wenzhong serves as the R&D and Quality Assurance Center Director of Prince Frog (Fujian) Baby & Child Care Products Co, Ltd, with over 27 years of experience in R&D of children's personal care products[74](index=74&type=chunk) [Corporate Governance Report](index=20&type=section&id=Corporate%20Governance%20Report) [Corporate Governance Practices](index=20&type=section&id=Corporate%20Governance%20Practices) The Company is committed to maintaining good corporate governance practices to enhance investor confidence and sustainable development - The Company is committed to strengthening its corporate governance practices to ensure business transparency and accountability and has adopted the Corporate Governance Code contained in Appendix 14 of the Listing Rules[77](index=77&type=chunk)[78](index=78&typechunk) - During the reporting period, the Company deviated from code provision A.2.1 (separation of Chairman and CEO roles), but has been in strict compliance since December 12, 2018, following the appointment of Mr Zhou Ling as CEO and the resignation of Mr Choi Wa Lun from that role[78](index=78&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) [The Board of Directors](index=20&type=section&id=The%20Board%20of%20Directors) The Board is responsible for leading and managing the company, overseeing business strategies, and ensuring compliance and effective governance - The Board is responsible for leading, monitoring, and managing the Company, overseeing its business, strategic decisions, and performance to ensure effective operation and growth, and to enhance investor value[79](index=79&type=chunk) - As of December 31, 2018, the Board consisted of three executive Directors, one non-executive Director, and three independent non-executive Directors, in compliance with Rules 3.10 and 3.10A of the Listing Rules[80](index=80&type=chunk)[81](index=81&type=chunk) - All Directors have complied with code provision A.6.5 of the Corporate Governance Code regarding participation in continuous professional development, including regular briefings, seminars, and reading relevant materials[87](index=87&type=chunk)[88](index=88&type=chunk) Board and Committee Meeting Attendance Record for FY2018 | Director's Name | Board of Directors | Audit Committee | Remuneration Committee | Nomination Committee | Annual General Meeting | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr Choi Wa Lun | 17/17 | N/A | N/A | N/A | 1/1 | | Ms Chan Sze Man | 17/17 | 3/3 | 3/3 | 3/3 | 1/1 | | Mr Ma Kwun Yung | 17/17 | 3/3 | 3/3 | 3/3 | 1/1 | | Ms Bu Yanan | 15/17 | 3/3 | N/A | 2/3 | 1/1 | - The Company has adopted the Model Code for Securities Transactions as set out in Appendix 10 of the Listing Rules and, upon specific enquiry, all Directors confirmed their compliance with the code during the reporting period[96](index=96&type=chunk) [Board Committees](index=26&type=section&id=Board%20Committees) The Board has established Remuneration, Nomination, and Audit Committees to oversee specific matters, each with defined terms of reference - The Board has established a Remuneration Committee, a Nomination Committee, and an Audit Committee, all of which have written terms of reference and are provided with sufficient resources to perform their duties[99](index=99&type=chunk) - The primary duties of the Remuneration Committee include advising the Board on remuneration policies and structures, ensuring no director or their associate is involved in deciding their own remuneration[102](index=102&type=chunk) - The primary duties of the Nomination Committee include reviewing the Board's composition, developing procedures for nominating and appointing directors, and assessing the independence of independent non-executive directors[104](index=104&type=chunk) - The primary duties of the Audit Committee are to review the Group's financial information and reports, review the relationship with the external auditor, and review the company's financial reporting system, internal control system, and risk management system[114](index=114&type=chunk) [Directors' Responsibility for Financial Reporting in respect of the Financial Statements](index=32&type=section&id=Directors'%20Responsibility%20for%20Financial%20Reporting%20in%20respect%20of%20the%20Financial%20Statements) The Board acknowledges its responsibility to prepare true and fair financial statements and ensure all disclosures are balanced and understandable - The Directors acknowledge their responsibility for preparing the Company's financial statements for the year ended December 31, 2018[119](index=119&type=chunk) - The Board is responsible for presenting a balanced, clear, and understandable assessment in its annual and interim reports, price-sensitive announcements, and other disclosures required by the Listing Rules and other regulatory requirements[119](index=119&type=chunk) [Risk Management and Internal Control](index=32&type=section&id=Risk%20Management%20and%20Internal%20Control) The Group's risk management and internal control systems are designed to safeguard assets and manage operational risks, with their effectiveness continuously reviewed by the Board - The Group's risk management and internal control systems are designed to protect assets from misuse and unauthorized transactions, as well as to manage operational risks[121](index=121&type=chunk) - The Board has overall responsibility for the risk management and internal control systems on an ongoing basis and conducts an annual review, considering them effective and adequate[121](index=121&type=chunk)[124](index=124&type=chunk) - The Group has adopted a functional, bottom-up, and comprehensive risk management process, including risk identification, assessment, valuation, and treatment, with its effectiveness reviewed by the internal audit function[123](index=123&type=chunk)[124](index=124&type=chunk) [Company Secretary](index=33&type=section&id=Company%20Secretary) Mr Leung Ho Ming was appointed as the Company Secretary on January 31, 2018, and undertook relevant professional training during the period - Mr Leung Ho Ming was appointed as the Company Secretary on January 31, 2018, and undertook no less than 15 hours of relevant professional training for the year ended December 31, 2018[126](index=126&type=chunk)[127](index=127&type=chunk) [External Auditor and Auditor's Remuneration](index=33&type=section&id=External%20Auditor%20and%20Auditor's%20Remuneration) ZHONGZHENG TIANHENG Certified Public Accountants LLP served as the external auditor, with total remuneration of RMB2,093,000 for FY2018 Auditor's Remuneration for FY2018 | Service Type | Fee (RMB) | | :--- | :--- | | Audit services | 1,751,000 | | Non-audit services | 342,000 | | **Total** | **2,093,000** | - ZHONGZHENG TIANHENG Certified Public Accountants LLP will retire at the 2019 Annual General Meeting and, being eligible, offers itself for re-appointment[238](index=238&type=chunk) [Communication with Shareholders and Investors](index=34&type=section&id=Communication%20with%20Shareholders%20and%20Investors) The Company values effective communication with shareholders, providing updated business and financial information through its corporate website - The Company has established a website, www.princefrog.com.cn, as a communication platform with shareholders and investors, providing information on business development, operations, finances, and other matters[130](index=130&type=chunk) - General meetings provide an opportunity for communication between the Board and shareholders, where Board members and senior officers answer questions from shareholders[131](index=131&type=chunk) [Shareholders' Rights](index=35&type=section&id=Shareholders'%20Rights) To protect shareholder interests, all resolutions at general meetings are voted on by poll, and procedures are in place for convening special meetings - Shareholders may request the Board to convene a special general meeting through a written request from holders of not less than one-tenth of the paid-up capital, in accordance with Article 58 of the Company's Articles of Association[133](index=133&type=chunk) - Shareholders wishing to nominate a non-retiring director for election must send a written notice of their intention and the nominee's consent to be elected[133](index=133&type=chunk) - In accordance with the Listing Rules, all resolutions proposed at general meetings must be voted on by way of a poll, with the results published on the websites of the Stock Exchange and the Company[134](index=134&type=chunk) [Report of the Directors](index=36&type=section&id=Report%20of%20the%20Directors) [Principal Activities and Financial Summary](index=36&type=section&id=Principal%20Activities%20and%20Financial%20Summary) The Company's principal activity is investment holding, with its subsidiaries engaged in diversified businesses; the Group recorded a loss for the period - The Company's principal activity is investment holding, and its subsidiaries are mainly engaged in the manufacturing and sale of personal care products, money lending, operation of an online platform, trading of goods, securities investment, property holding, and investment holding[136](index=136&type=chunk) - The Group recorded a loss for the year ended December 31, 2018, and the Directors do not recommend the payment of any final dividend to shareholders[138](index=138&type=chunk)[140](index=140&type=chunk) [Shareholder Registration and Compliance](index=37&type=section&id=Shareholder%20Registration%20and%20Compliance) The register of members will be closed from June 25 to June 28, 2019, to determine eligibility for the Annual General Meeting - The Company's register of members will be closed from June 25, 2019, to June 28, 2019, to determine the entitlement to attend and vote at the 2019 Annual General Meeting[143](index=143&type=chunk) - To the best of the Board's knowledge, the Group had no material breach of or non-compliance with applicable laws and regulations that have a significant impact on the Group's business and operations during the year ended December 31, 2018[144](index=144&type=chunk) [Risks, Environmental Matters and Dividend Policy](index=37&type=section&id=Risks,%20Environmental%20Matters%20and%20Dividend%20Policy) The Group faces economic and regulatory risks, manages environmental compliance, and has a dividend policy considering its financial condition and capital needs - The Group's operations face major risks and uncertainties including domestic and international economic conditions, PRC foreign exchange policies, changes in laws and regulations, and raw material prices and supply[145](index=145&type=chunk) - The Group has a dedicated Environmental Safety Department responsible for overseeing comprehensive environmental protection to ensure compliance with applicable environmental laws, regulations, and standards[146](index=146&type=chunk) - As of December 31, 2018, the Company's distributable reserves amounted to approximately **RMB287,870,000**, and the share premium account of **RMB519,572,000** was also available for distribution[151](index=151&type=chunk) - The dividend policy states that if the Group records a profit and it does not affect normal operations, the Company may consider declaring and paying dividends, taking into account various factors including financial condition, capital and debt levels, future cash needs, and market conditions[152](index=152&type=chunk)[153](index=153&type=chunk) [Major Stakeholder Relationships](index=38&type=section&id=Major%20Stakeholder%20Relationships) The Group maintains long-term relationships with key customers and suppliers and emphasizes employee development, with significant customer concentration noted Major Customer and Supplier Concentration for FY2018 | Indicator | Percentage | | :--- | :--- | | Sales to top five customers as a percentage of total sales | 63.3% | | Sales to the largest customer as a percentage of total sales | 26.2% | | Purchases from top five suppliers as a percentage of total purchases | 33.3% | | Purchases from the largest supplier as a percentage of total purchases | 11.9% | - The Group places great importance on the personal development of its employees and is committed to providing clear career development paths and skill enhancement opportunities[157](index=157&type=chunk) - The Group has established long-term cooperative relationships with numerous customers and suppliers and has strict evaluation standards for its suppliers[158](index=158&type=chunk)[159](index=159&type=chunk) - The Group made charitable donations amounting to approximately **RMB632,000** during the year ended December 31, 2018[160](index=160&type=chunk) [Board and Management](index=39&type=section&id=Board%20and%20Management) This section details Board member changes, service contract terms, and the status of the share option scheme during the reporting period - During the reporting period, Mr Wong Sun Man and Mr Ma Chi Ming resigned as executive Directors, and Mr Zhou Ling was appointed as an executive Director[161](index=161&type=chunk) - The service contracts for executive and non-executive Directors are for a term of three years, and the service contracts for independent non-executive Directors are also for a term of three years[165](index=165&type=chunk)[166](index=166&type=chunk) - No contracts concerning the management and administration of the whole or any substantial part of the Group's business were entered into or existed during the year[169](index=169&type=chunk) - As of the year ended December 31, 2018, there were **93,654,500** outstanding share options under the share option scheme, which, if fully exercised, would raise approximately **HK$117,844,000** for the Company[173](index=173&type=chunk)[174](index=174&type=chunk)[211](index=211&type=chunk) [Directors' and Chief Executive's Interests](index=53&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests) Discloses the interests of directors and substantial shareholders in the Company's shares and underlying shares Directors' Long Positions in Shares and Underlying Shares (Share Options) | Director's Name | Nature of Interest | Number of Underlying Shares | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr Li Zhouxin | Beneficial owner | 1,480,000 | 0.11% | Substantial Shareholders' Long Positions in Ordinary Shares | Substantial Shareholder's Name | Nature of Interest | Number of Ordinary Shares Held | Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Golden Sparkle Limited | Beneficial owner | 263,308,500 | 18.94% | | Mr Lai Wai Lam | Interest in a controlled corporation | 263,308,500 | 18.94% | | Mr Dai Zhi Biao | Beneficial owner | 140,382,500 | 10.10% | | Yililuo International Trading (Hong Kong) Co, Limited | Beneficial owner | 80,000,000 | 5.75% | | Mr Li Liang | Interest in a controlled corporation | 80,000,000 | 5.75% | [Continuing Connected Transactions and Connected Transactions](index=55&type=section&id=Continuing%20Connected%20Transactions%20and%20Connected%20Transactions) Independent non-executive directors have reviewed and confirmed that continuing connected transactions were conducted on normal commercial terms - The independent non-executive Directors have confirmed that the continuing connected transactions were entered into in the ordinary and usual course of business of the Group, on normal commercial terms, and are in the overall interests of the Company's shareholders[223](index=223&type=chunk) - The main non-exempt continuing connected transaction was the sale of goods to Shuangfei Daily Chemical (USA) Co, Ltd under a renewed product sales agreement, with a total amount of approximately **RMB4,877,000** in 2018, against an annual cap of **RMB7,000,000**[224](index=224&type=chunk)[225](index=225&type=chunk) - The remaining related party transactions for the year ended December 31, 2018, as set out in Note 52 to the financial statements, also constitute connected transactions of the Group but are exempt from reporting, announcement, annual review, and independent shareholders' approval requirements under Chapter 14A of the Listing Rules as the relevant applicable percentage ratios are below 0.1%[227](index=227&type=chunk) [Other Disclosures](index=56&type=section&id=Other%20Disclosures) Covers director remuneration, public float, audit committee work, and significant post-reporting period events, including a proposed acquisition and name change - The Remuneration Committee considers and recommends to the Board the remuneration and other benefits payable to the Directors and reviews the remuneration of all Directors periodically[228](index=228&type=chunk) - For the year ended December 31, 2018, neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities[233](index=233&type=chunk) - As at the date of this annual report, at least 25% of the total number of issued shares of the Company was held by the public[234](index=234&type=chunk) - The Audit Committee has reviewed the Group's consolidated financial statements for the year ended December 31, 2018, and discussed accounting principles and practices, financial reporting matters, and internal controls with management and the auditor, with no disagreements[237](index=237&type=chunk) - After the reporting period, the Company proposed to acquire an 80% equity interest in Li Yu International Group Limited for a consideration of **HK$42,000,000** (subject to adjustment) and proposed to change the Company's English name to "Future Development Holdings Limited" and its Chinese name to "未來發展控股有限公司"[239](index=239&type=chunk)[713](index=713&type=chunk)[714](index=714&type=chunk) [Independent Auditor's Report](index=59&type=section&id=Independent%20Auditor's%20Report) [Opinion and Basis for Opinion](index=59&type=section&id=Opinion%20and%20Basis%20for%20Opinion) The independent auditor issued an unqualified opinion, stating the consolidated financial statements give a true and fair view in accordance with IFRSs - The auditor is of the opinion that the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2018, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance[242](index=242&type=chunk) - The audit was conducted in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants and complied with the Code of Ethics for Professional Accountants, ensuring independence[243](index=243&type=chunk) [Key Audit Matters](index=59&type=section&id=Key%20Audit%20Matters) The auditor identified key audit matters including impairment assessments of various assets, valuation of investment properties, and revenue recognition - Impairment assessment of property, plant and equipment and prepaid land lease payments was a key audit matter due to the judgment and assumptions involved in estimating fair value less costs of disposal[245](index=245&type=chunk)[246](index=246&type=chunk) - Valuation of investment properties was a key audit matter due to their material carrying amount and the significant judgment involved in determining fair value, for which the valuer used the income capitalization approach[247](index=247&type=chunk)[248](index=248&type=chunk) - Impairment assessment of goodwill was a key audit matter due to its significant amount and the management judgment and estimates involved in assessing the value in use of cash-generating units[252](index=252&type=chunk)[253](index=253&type=chunk) - Recoverability of loans and interest receivables and trade and bills receivables was a key audit matter due to their significant amounts and the estimation and judgment involved in determining their recoverable amounts[254](index=254&type=chunk)[255](index=255&type=chunk) - Revenue recognition was a key audit matter because sales revenue is significant and a key performance indicator for the Group; the auditor assessed the internal controls and standards for revenue recognition[256](index=256&type=chunk)[257](index=257&type=chunk) [Information Other than the Consolidated Financial Statements and Auditor's Report Thereon](index=66&type=section&id=Information%20Other%20than%20the%20Consolidated%20Financial%20Statements%20and%20Auditor's%20Report%20Thereon) The directors are responsible for the other information in the annual report, while the auditor does not express an assurance conclusion on it - The directors are responsible for all information contained in the annual report, other than the consolidated financial statements and the auditor's report thereon[258](index=258&type=chunk) - The auditor does not express any form of assurance conclusion on the other information but will review it for material inconsistencies with the consolidated financial statements or information obtained during the audit[259](index=259&type=chunk) [Responsibilities of Directors and Those Charged with Governance for the Consolidated Financial Statements](index=66&type=section&id=Responsibilities%20of%20Directors%20and%20Those%20Charged%20with%20Governance%20for%20the%20Consolidated%20Financial%20Statements) The directors are responsible for preparing true and fair consolidated financial statements and ensuring effective internal controls - The directors are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with IFRSs and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as they determine is necessary to enable the preparation of statements that are free from material misstatement, whether due to fraud or error[260](index=260&type=chunk) - The directors are responsible for assessing the Group's ability to continue as a going concern and disclosing matters related to it[260](index=260&type=chunk) - Those charged with governance are responsible for overseeing the Group's financial reporting process[261](index=261&type=chunk) [Auditor's Responsibilities for the Audit of the Consolidated Financial Statements](index=67&type=section&id=Auditor's%20Responsibilities%20for%20the%20Audit%20of%20the%20Consolidated%20Financial%20Statements) The auditor's objective is to obtain reasonable assurance that the consolidated financial statements are free from material misstatement - The auditor's objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error[263](index=263&type=chunk) - The auditor exercises professional judgment and maintains professional skepticism throughout the audit, identifying and assessing risks of material misstatement and designing and performing audit procedures accordingly[264](index=264&type=chunk) - The auditor communicates with those charged with governance regarding the planned scope and timing of the audit, significant audit findings (including any significant deficiencies in internal control), and other matters, and confirms compliance with ethical requirements for independence[267](index=267&type=chunk) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=69&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) [Consolidated Profit or Loss and Other Comprehensive Income for 2018](index=69&type=section&id=Consolidated%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income%20for%202018) For the year ended December 31, 2018, the Group's revenue decreased by 20.7% to RMB631,215 thousand, resulting in a widened loss Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income for FY2018 | Indicator | 2018 (RMB'000) | 2017 (RMB'000) | Change | | :--- | :--- | :--- | :--- | | Revenue | 631,215 | 795,580 | -20.7% | | Cost of sales | (536,157) | (613,829) | -12.7% | | Gross profit | 95,058 | 181,751 | -47.7% | | Other income and gains | 6,830 | 130,423 | -94.8% | | (Loss)/gain on fair value changes of investment properties | (16,386) | 13,222 | From gain to loss | | Selling and distribution expenses | (66,718) | (227,146) | -70.6% | | Administrative expenses | (134,594) | (148,506) | -9.4% | | Impairment loss on goodwill | (31,157) | (36,300) | -14.1% | | Other expenses | (274,426) | (65,840) | +316.8% | | Finance costs | (11,248) | (3,215) | +250% | | Loss before tax | (437,407) | (156,538) | +179.4% | | Loss for the year | (438,960) | (163,283) | +168.8% | | Loss attributable to equity holders of the Company | (431,435) | (170,744) | +152.7% | | Basic loss per share (RMB cents) | (33.8) | (15.5) | +118.1% | - In other comprehensive income, the exchange difference on translation of operations outside Mainland China shifted from a loss of **RMB28,311 thousand** in 2017 to a gain of **RMB30,881 thousand** in 2018, while a fair value loss of **RMB82,360 thousand** was recorded for financial assets at fair value through other comprehensive income[271](index=271&type=chunk) [Consolidated Statement of Financial Position](index=71&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) [Consolidated Financial Position for 2018](index=71&type=section&id=Consolidated%20Financial%20Position%20for%202018) As of December 31, 2018, the Group's total assets decreased by 26.3% to RMB1,275,296 thousand, with a significant increase in inventories Key Data from Consolidated Statement of Financial Position for FY2018 | Indicator | 2018 (RMB'000) | 2017 (RMB'000) | Change | | :--- | :--- | :--- | :--- | | **Non-current assets** | | | | | Property, plant and equipment | 171,823 | 402,050 | -57.3% | | Investment properties | 115,768 | 95,272 | +21.5% | | Properties under development | 123,854 | 137,297 | -9.8% | | Goodwill | 22,800 | 63,314 | -64.0% | | Financial assets at fair value through other comprehensive income | 128,361 | – | New | | Available-for-sale investments | – | 202,119 | Discontinued | | **Current assets** | | | | | Inventories | 102,239 | 31,967 | +219.8% | | Loans and interest receivables | 68,338 | 105,887 | -35.5% | | Trade and bills receivables | 82,164 | 113,164 | -27.4% | | **Current liabilities** | | | | | Bank and other borrowings | 173,768 | 164,966 | +5.3% | | Amounts due to associates | 92,065 | 79,982 | +15.1% | | **Total assets** | 1,275,296 | 1,731,628 | -26.3% | | **Total liabilities** | 428,070 | 416,047 | +2.9% | | **Net assets** | 847,226 | 1,315,581 | -35.7% | | **Equity attributable to equity holders of the Company** | 773,974 | 1,229,870 | -37.0% | - Available-for-sale investments under non-current assets have been reclassified as financial assets at fair value through other comprehensive income[273](index=273&type=chunk) - Net current assets decreased from **RMB305,689 thousand** in 2017 to **RMB163,654 thousand** in 2018[273](index=273&type=chunk) [Consolidated Statement of Changes in Equity](index=73&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) [Consolidated Changes in Equity for 2018](index=73&type=section&id=Consolidated%20Changes%20in%20Equity%20for%202018) Total equity attributable to the Company's equity holders decreased from RMB1,229,870 thousand to RMB773,974 thousand, mainly due to the loss for the year Key Data from Consolidated Statement of Changes in Equity for FY2018 | Indicator | 2018 (RMB'000) | 2017 (RMB'000) | | :--- | :--- | :--- | | Equity attributable to equity holders of the Company at beginning of year | 1,229,870 | 1,324,988 | | Loss for the year | (431,435) | (170,744) | | Other comprehensive (expense)/income for the year | (51,479) | 19,753 | | Total comprehensive expense for the year | (490,439) | (143,530) | | Equity attributable to equity holders of the Company at end of year | 773,974 | 1,229,870 | | Non-controlling interests at end of year | 73,252 | 85,711 | | Total equity at end of year | 847,226 | 1,315,581 | - Changes in equity were primarily driven by the loss for the year, fair value changes of financial assets at FVTOCI, and the exchange fluctuation reserve[271](index=271&type=chunk)[279](index=279&type=chunk) - In 2018, non-controlling interests decreased due to the loss and total comprehensive expense for the year[271](index=271&type=chunk) [Consolidated Statement of Cash Flows](index=75&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) [Consolidated Cash Flows for 2018](index=75&type=section&id=Consolidated%20Cash%20Flows%20for%202018) Net cash used in operating activities improved significantly, while net cash from investing activities turned positive due to a decrease in pledged bank deposits Key Data from Consolidated Statement of Cash Flows for FY2018 | Indicator | 2018 (RMB'000) | 2017 (RMB'000) | Change | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | (123,978) | (331,593) | Improved | | Net cash from/(used in) investing activities | 95,703 | (118,262) | From outflow to inflow | | Net cash from financing activities | 20,972 | 59,348 | -64.7% | | Net decrease in cash and cash equivalents | (7,303) | (390,507) | Improved | | Cash and cash equivalents at end of year | 218,888 | 222,691 | -1.7% | - The decrease in cash used in operating activities was mainly due to decreases in loans and interest receivables and trade and bills receivables, as well as an increase in trade and bills payables[281](index=281&type=chunk) - The net cash inflow from investing activities was primarily due to a significant decrease of **RMB113,028 thousand** in pledged bank deposits, which offset the outflow for the purchase of financial assets at FVTOCI[282](index=282&type=chunk) - The decrease in net cash from financing activities was mainly due to increased repayments of bank and other loans, despite proceeds from the issue of shares[282](index=282&type=chunk) [Notes to the Financial Statements](index=77&type=section&id=Notes%20to%20the%20Financial%20Statements) [1. General Information](index=77&type=section&id=1.%20General%20Information) Provides the Company's registration, listing, and principal business activities, stating that the financial statements are presented in RMB - The Company is incorporated in the Cayman Islands, and its shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited[285](index=285&type=chunk) - The Company's principal activity is investment holding, and its subsidiaries are mainly engaged in manufacturing and selling personal care products, money lending, operating an online platform, trading goods, securities investment, property holding, and investment holding[285](index=285&type=chunk) - The Group's consolidated financial statements are presented in Renminbi (RMB), which is also the functional currency of the Company[286](index=286&type=chunk) [2. Application of International Financial Reporting Standards ('IFRSs')](index=77&type=section&id=2.%20Application%20of%20International%20Financial%20Reporting%20Standards%20('IFRSs')) Details the impact of first-time application of IFRS 15 and IFRS 9, including adjustments to financial asset classification and revenue recognition - In the current year, the Group has applied IFRS 15 "Revenue from Contracts with Customers" for the first time, which supersedes IAS 18 "Revenue", with retrospective application but without restating comparative information[287](index=287&type=chunk)[288](index=288&type=chunk) - The first-time application of IFRS 9 "Financial Instruments" introduced new requirements for the classification and measurement of financial assets and liabilities and the expected credit loss model, leading to the reclassification of available-for-sale investments[287](index=287&type=chunk)[293](index=293&type=chunk)[298](index=298&type=chunk) Impact of Initial Application of IFRS 9 on Financial Asset Classification (1 January 2018) | Indicator | Available-for-sale investments (RMB'000) | Financial assets at FVTOCI (RMB'000) | Investment revaluation reserve (RMB'000) | FVTOCI revaluation reserve (RMB'000) | | :--- | :--- | :--- | :--- | :--- | | Balance at 31 December 2017 (IAS 39) | 202,119 | – | 45,678 | – | | Impact of IFRS 9 application | (202,119) | 202,119 | (45,678) | 45,678 | | Balance at 1 January 2018 (IFRS 9) | – | 202,119 | – | 45,678 | - IFRS 16 "Leases" will become effective on January 1, 2019, and is expected to result in lessees recognizing right-of-use assets and corresponding liabilities, potentially affecting cash flow classification[303](index=303&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk) [3. Significant Accounting Policies](index=84&type=section&id=3.%20Significant%20Accounting%20Policies) Outlines the significant accounting policies adopted in preparing the consolidated financial statements, covering basis of preparation, consolidation, and asset valuation - The consolidated financial statements have been prepared in accordance with IFRSs, the disclosure requirements of the Hong Kong Companies Ordinance, and the Listing Rules, and are prepared on the historical cost basis, except for certain investment properties and financial instruments measured at fair value[311](index=311&type=chunk)[312](index=312&type=chunk) - The Group accounts for business combinations using the acquisition method, with goodwill stated at cost less accumulated impairment losses and tested for impairment annually[323](index=323&type=chunk)[324](index=324&type=chunk)[328](index=328&type=chunk) - Investments in associates and joint ventures are accounted for using the equity method and are tested for impairment when necessary[331](index=331&type=chunk)[334](index=334&type=chunk) - Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses; investment properties are measured at fair value; and properties under development are stated at cost less impairment losses[337](index=337&type=chunk)[338](index=338&type=chunk)[339](index=339&type=chunk) - Financial assets are classified under IFRS 9 as at amortised cost, at fair value through other comprehensive income (FVTOCI), or at fair value through profit or loss (FVTPL), with provisions for expected credit losses recognized[352](index=352&type=chunk)[353](index=353&type=chunk)[356](index=356&type=chunk) - Under IFRS 15, revenue is recognized when a performance obligation is satisfied, which is when control of the goods or services is transferred to the customer[400](index=400&type=chunk) [4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty](index=115&type=section&id=4.%20Critical%20Accounting%20Judgements%20and%20Key%20Sources%20of%20Estimation%20Uncertainty) Details the critical accounting judgements and key sources of estimation uncertainty made in preparing the financial statements - Critical accounting judgements include withholding tax on dividend distributions, deferred tax on investment properties, and control over Jumbo Excel Investment Corporation[436](index=436&type=chunk)[437](index=437&type=chunk)[438](index=438&type=chunk)[439](index=439&type=chunk) - Key sources of estimation uncertainty include impairment of property, plant and equipment and prepaid land lease payments (impairment of **RMB170,747 thousand** recognized in 2018), fair value estimation of investment properties, impairment of properties under development (impairment of **RMB20,154 thousand** recognized in 2018), and impairment of goodwill (impairment of **RMB31,157 thousand** recognized in 2018)[441](index=441&type=chunk)[444](index=444&type=chunk)[445](index=445&type=chunk)[453](index=453&type=chunk) - The impairment assessment of receivables uses a simplified approach to provide for lifetime expected credit losses for trade receivables and assesses expected credit losses for other receivables[447](index=447&type=chunk)[452](index=452&type=chunk)[664](index=664&type=chunk) - The fair value measurement of financial instruments relies on observable market data; if unavailable, it refers to valuations from valuers or fund managers, involving key inputs such as long-term growth, profit margins, discount rates, and market liquidity[454](index=454&type=chunk)[677](index=677&type=chunk) [5. Revenue](index=120&type=section&id=5.%20Revenue) Analyzes the Group's revenue sources, which primarily include sales of goods, interest income from money lending, and rental income Revenue Source Analysis for FY2018 | Revenue Source | 2018 (RMB'000) | 2017 (RMB'000) | | :--- | :--- | :--- | | Revenue from sales of goods | 578,983 | 742,178 | | Interest income from money lending business | 35,936 | 31,820 | | Revenue from operation of online platform | 11,515 | 21,070 | | Rental income from leasing of investment properties | 4,781 | 304 | | Consultancy income | – | 208 | | **Total** | **631,215** | **795,580** | - Revenue from the personal care products business and trading of goods is recognized at a point in time when the Group satisfies a performance obligation by transferring promised goods and services to a customer[456](index=456&type=chunk) [6. Operating Segment Information](index=121&type=section&id=6.%20Operating%20Segment%20Information) Provides a breakdown of operating results, assets, and liabilities by business segment, along with geographical revenue information Revenue and Profit/Loss by Operating Segment for FY2018 | Business Segment | Revenue (RMB'000) | Segment (Loss)/Profit (RMB'000) | | :--- | :--- | :--- | | Personal care products | 396,093 | (338,070) | | Money lending | 35,936 | 4,736 | | Operation of online platform | 11,515 | 8,116 | | Trading of goods | 182,890 | (16,642) | | Securities investment | – | (96) | | Property holding | 4,781 | (34,312) | | **Total** | **631,215** | **(376,268)** | Revenue by Geographical Location for FY2018 | Region | Revenue (RMB'000) | | :--- | :--- | | The PRC (excluding Hong Kong) | 361,112 | | Hong Kong | 65,675 | | The USA | 159,998 | | Overseas (excluding the USA and Indonesia) | 44,430 | | **Total** | **631,215** | Revenue Contribution from Major Customers for FY2018 | Customer | Revenue Source | Revenue (RMB'000) | | :--- | :--- | :--- | | Customer A | Personal care products | 165,184 | | Customer B | Personal care products | 135,960 | [7. Other Income and Gains](index=125&type=section&id=7.%20Other%20Income%20and%20Gains) Details other income and gains, which decreased significantly to RMB6,830 thousand from RMB130,423 thousand in the prior year Other Income and Gains for FY2018 | Income and Gain Item | 2018 (RMB'000) | 2017 (RMB'000) | | :--- | :--- | :--- | | Interest income | 3,234 | 9,527 | | Income generated from other financial assets | 504 | – | | Income generated from available-for-sale investments | – | 1,053 | | Government grants | 1,399 | 2,340 | | Gain on disposal of available-for-sale investments | – | 11,477 | | Gain on disposal of subsidiaries | – | 95,885 | | Gain on disposal of intangible assets | – | 4,505 | | Gain on disposal of property, plant and equipment | 31 | – | | Reversal of impairment loss on trade receivables | – | 4,525 | | Sundry income | 1,662 | 1,111 | | **Total** | **6,830** | **130,423** | [8. Other Expenses](index=126&type=section&id=8.%20Other%20Expenses) Details other expenses, which increased significantly to RMB274,426 thousand, primarily due to asset impairments and product recall costs Other Expenses for FY2018 | Expense Item | 2018 (RMB'000) | 2017 (RMB'000) | | :--- | :--- | :--- | | Loss on disposal of a subsidiary | 9,004 | – | | Loss on early redemption of promissory notes | 104 | – | | Impairment loss on property, plant and equipment | 170,747 | 38,533 | | Impairment loss on properties under development | 20,154 | – | | Impairment loss on interests in associates | 3,217 | 8,372 | | Impairment loss on loans and interest receivables | 4,673 | – | | Impairment loss on trade receivables | 1,660 | – | | Write-off of trade receivables | 4,060 | 8,278 | | Recall expenses on labelling issue | 60,614 | – | | **Total** | **274,426** | **65,840** | - The recall expenses on the labelling issue, totaling **RMB60,614 thousand**, were due to a mandatory recall by local authorities of certain products sold with improper labels, including recall prices, selling expenses, and compensation to an associate[468](index=468&type=chunk)[469](index=469&type=chunk) [9. Finance Costs](index=126&type=section&id=9.%20Finance%20Costs) Details finance costs, which increased significantly to RMB11,248 thousand, mainly from interest on bank and other borrowings Finance Costs for FY2018 | Finance Cost Item | 2018 (RMB'000) | 2017 (RMB'000) | | :--- | :--- | :--- | | Interest on bank borrowings | 5,589 | 2,368 | | Interest on bank overdrafts | – | 2 | | Interest on bills payable | 1,950 | – | | Interest on other borrowings | 3,573 | 389 | | Imputed interest on promissory notes payable | 136 | 456 | | **Total** | **11,248** | **3,215** | [10. Loss Before Tax](index=127&type=section&id=10.%20Loss%20Before%20Tax) Details the components of the loss before tax, which widened to RMB437,407 thousand in 2018 Components of Loss Before Tax for FY2018 | Item | 2018 (RMB'000) | 2017 (RMB'000) | | :--- | :--- | :--- | | Cost of inventories sold | 536,157 | 613,829 | | Depreciation of property, plant and equipment | 28,293 | 32,584 | | Amortisation of prepaid land lease payments | 270 | 339 | | Amortisation of intangible assets | 36 | 63 | | Minimum lease payments under operating leases in respect of land and buildings | 4,590 | 3,454 | | Total employee benefit expenses | 98,885 | 117,457 | | Auditor's remuneration (Total) | 2,093 | 2,392 | | Research and development costs included in administrative expenses | 20,621 | 8,721 | | Net exchange loss | 6,746 | 13,077 | - Total employee benefit expenses include wages and salaries, equity-settled share-based payments, and contributions to retirement benefit schemes[471](index=471&type=chunk) - Research and development costs for the year included an amount of **RMB4,564 thousand** related to staff costs for R&D activities[472](index=472&type=chunk) [11. Income Tax Expense](index=128&type=section&id=11.%20Income%20Tax%20Expense) Details the income tax expense, which decreased to RMB1,553 thousand, with a PRC subsidiary benefiting from a preferential tax rate Income Tax Expense for FY2018 | Tax Item | 2018 (RMB'000) | 2017 (RMB'000) | | :--- | :--- | :--- | | Hong Kong Profits Tax | 2,389 | 5,470 | | PRC Enterprise Income Tax | 206 | 1,654 | | Current tax expense | 2,595 | 7,124 | | Deferred tax credit | (1,042) | (379) | | **Income tax expense recognised in profit or loss** | **1,553** | **6,745** | - Prince Frog (China) Daily Chemical Co, Ltd is entitled to a preferential enterprise income tax rate of 15%[474](index=474&type=chunk) Reconciliation of Income Tax Expense to Loss Before Tax for FY2018 | Item | 2018 (RMB'000) | 2017 (RMB'000) | | :--- | :--- | :--- | | Loss before tax | (437,407) | (156,538) | | Tax at the applicable tax rate | (100,117) | (35,397) | | Effect of tax concession for a PRC subsidiary of the Group | 35,555 | 12,470 | | Income not subject to tax | (303) | (5,081) | | Non-deductible expenses | 7,443 | 20,888 | | Unrecognised tax losses | 59,197 | 13,865 | | **Income tax expense** | **1,553** | **6,745** | [12. Directors', Chief Executive's and Employees' Emoluments](index=129&type=section&id=12.%20Directors',%20Chief%20Executive's%20and%20Employees'%20Emoluments) Discloses the remuneration of directors, the chief executive, and the five highest-paid employees, with total director remuneration decreasing in 2018 Directors' and Chief Executive's Emoluments for FY2018 | Emolument Category | 2018 (RMB'000) | 2017 (RMB'000) | | :--- | :--- | :--- | | Fees | 2,307 | 3,042 | | Salaries and discretionary bonuses | 240 | 452 | | Equity-settled share-based payments | 84 | 525 | | Contributions to retirement benefit schemes | 38 | 52 | | **Total** | **2,669** | **4,071** | Emoluments by Individual Director for FY2018 | Director's Name | Fees (RMB'000) | Salaries and discretionary bonuses (RMB'000) | Equity-settled share-based payments (RMB'000) | Contributions to retirement benefit schemes (RMB'000) | Total (RMB'000) | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr Wong Sun Man | 150 | 240 | 24 | 8 | 422 | | Mr Choi Wa Lun | 356 | – | – | 15 | 371 | | Mr Ma Chi Ming | 276 | – | – | 14 | 290 | | Mr Zhou Ling | 105 | – | – | 1 | 106 | | Mr Li Zhouxin | 682 | – | 29 | – | 711 | | Mr Ren Yunan | 153 | – | 31 | – | 184 | | Ms Chan Sze Man | 195 | – | – | – | 195 | | Mr Ma Kwun Yung | 195 | – | – | – | 195 | | Ms Bu Yanan | 195 | – | – | – | 195 | | **Total** | **2,307** | **240** | **84** | **38** | **2,669** | - For the years ended December 31, 2018 and 2017, no director waived or agreed to waive any emoluments, and no emoluments were paid to directors as an inducement to join or as compensation for loss of office[482](index=482&type=chunk) [13. Dividend](index=133&type=section&id=13.%20Dividend) The directors of the Company do not recommend the payment of any dividend for the year ended December 31, 2018 - The directors of the Company do not recommend the payment of a dividend for the year ended 31 December 2018 (2017: Nil)[496](index=496&type=chunk) [14. Loss Per Share Attributable to Equity Holders of the Company](index=133&type=section&id=14.%20Loss%20Per%20Share%20Attributable%20to%20Equity%20Holders%20of%20the%20Company) Calculates the basic loss per share, which widened to RMB33.8 cents in 2018, with no diluted loss per share presented Loss Per Share Calculation Data for FY2018 | Indicator | 2018 (RMB'000/cents) | 2017 (RMB'000/cents) | | :--- | :--- | :--- | | Loss for the purpose of basic loss per share (RMB'000) | (431,435) | (170,744) | | Weighted average number of ordinary shares for the purpose of basic loss per share ('000 shares) | 1,277,771 | 1,100,474 | | Basic loss per share (RMB cents) | (33.8) | (15.5) | - No exercise of the Company's granted share options was assumed in the calculation of diluted loss per share as the exercise prices of these options were higher than the average market price of the Company's shares for both years ended 31 December 2018 and 2017[497](index=497&type=chunk) [15. Property, Plant and Equipment](index=134&type=section&id=15.%20Property,%20Plant%20and%20Equipment) Details the changes in property, plant and equipment, with the net book value decreasing significantly due to a major impairment loss Net Book Value of Property, Plant and Equipment for FY2018 | Indicator | 2018 (RMB'000) | 2017 (RMB'000) | | :--- | :--- | :--- | | Net book value | 171,823 | 402,050 | - An impairment loss on property, plant and equipment of **RMB170,747 thousand** (2017: RMB38,533 thousand) was recognised during the year, mainly due to significant operating losses in the personal care products segment[500](index=500&type=chunk)[501](index=501&type=chunk) - Following the disposal of a subsidiary (Fujian Aijieli) during the year, certain land and buildings with a carrying amount of **RMB29,400 thousand** were reclassified to investment properties[502](index=502&type=chunk) [16. Prepaid Land Lease Payments](index=136&type=section&id=16.%20Prepaid%20Land%20Lease%20Payments) Details the changes in prepaid land lease payments, which decreased due to amortisation and reclassification to investment properties Changes in Prepaid Land Lease Payments for FY2018 | Indicator | 2018 (RMB'000) | 2017 (RMB'000) | | :--- | :--- | :--- | | Balance at beginning of year | 13,969 | 14,308 | | Amortisation during the year | (270) | (339) | | Reclassified to investment properties | (2,920) | – | | Balance at end of year | 10,779 | 13,969 | - Prepaid land lease payments represent medium-term land use rights in the PRC, which are amortised over 50 years[503](index=503&type=chunk) [17. Investment Properties](index=136&type=section&id=17.%20Investment%20Properties) Details the fair value changes of investment properties, which increased in value despite a fair value loss recorded during the year Fair Value Changes of Investment Properties for FY2018 | Indicator | 2018 (RMB'000) | 2017 (RMB'000) | | :--- | :--- | :--- | | Fair value at beginning of year | 95,272 | 23,000 | | Reclassified from prepaid land lease payments | 2,920 | – | | Reclassified from property, plant and equipment | 29,400 | – | | (Loss)/gain on fair value changes recognised in profit or loss | (16,386) | 13,222 | | Exchange realignment | 4,562 | (720) | | Fair value at end of year | 115,768 | 95,272 | - The investment properties were stated at fair value as at 31 December 2018 and 2017, based on valuations performed by an independent qualified professional valuer not connected with the Group[506](index=506&type=chunk) Valuation Techniques and Key Inputs for Investment Properties (31 December 2018) | Property Type | Valuation Technique | Significant Unobservable Inputs | Estimated Unobservable Inputs | | :--- | :