Company Information and Announcements [Disclaimer](index=1&type=section&id=Disclaimer) The Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited are not responsible for the content of this announcement, make no statement as to its accuracy or completeness, and expressly disclaim any liability for any loss arising from or in reliance upon the whole or any part of the contents of this announcement - The Hong Kong Stock Exchange assumes no responsibility for the content of this announcement, nor does it guarantee its accuracy or completeness[1](index=1&type=chunk) [Company Overview and Performance Announcement](index=1&type=section&id=Company%20Overview%20and%20Performance%20Announcement) Synertone Communication Group Limited (Stock Code: 1613) announced its consolidated results for the year ended March 31, 2024, with comparative data for the same period in 2023 - Synertone Communication Group Limited (Stock Code: 1613) released its annual results announcement for the year ended March 31, 2024[2](index=2&type=chunk) Consolidated Financial Statements [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the year ended March 31, 2024, the Group's revenue slightly increased, but it still recorded a loss, which significantly narrowed compared to the previous year, with gross profit notably improving despite fluctuations in other income and net other gains Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2024 (HK$ thousand) | 2023 (HK$ thousand) | Change (HK$ thousand) | Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 62,581 | 60,538 | 2,043 | 3.38 | | Cost of Sales | (37,824) | (51,590) | 13,766 | -26.68 | | Gross Profit | 24,757 | 8,948 | 15,809 | 176.69 | | Other Income | 2,238 | 3,572 | (1,334) | -37.35 | | Net Other Gains | 4,806 | 1,800 | 3,006 | 167.00 | | Operating Loss | (11,883) | (37,036) | 25,153 | -67.91 | | Loss Before Tax | (17,752) | (43,675) | 25,923 | -59.36 | | Loss for the Year | (17,768) | (43,679) | 25,911 | -59.32 | | Loss Attributable to Owners of the Company | (17,840) | (40,971) | 23,131 | -56.46 | | Basic and Diluted Loss Per Share (HK cents) | (6.0) | (16.05) | 10.05 | -62.62 | [Consolidated Statement of Financial Position](index=4&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of March 31, 2024, the Group's non-current assets and current liabilities decreased, while current assets and total equity increased, resulting in a positive net current assets position and an overall improved financial condition Key Data from Consolidated Statement of Financial Position | Indicator | 2024 (HK$ thousand) | 2023 (HK$ thousand) | Change (HK$ thousand) | Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | | Non-current Assets | 85,555 | 120,455 | (34,900) | -28.97 | | Current Assets | 137,540 | 105,568 | 31,972 | 30.28 | | Current Liabilities | 106,884 | 156,013 | (49,129) | -31.49 | | Net Current Assets | 30,656 | (50,445) | 81,101 | -160.77 | | Total Assets Less Current Liabilities | 116,211 | 70,010 | 46,201 | 65.99 | | Net Assets | 116,211 | 68,369 | 47,842 | 69.98 | | Total Equity | 116,211 | 68,369 | 47,842 | 69.98 | | Cash and Cash Equivalents | 33,373 | 2,345 | 31,028 | 1323.92 | | Trade and Other Receivables | 40,850 | 39,475 | 1,375 | 3.48 | | Trade and Other Payables | 45,646 | 57,212 | (11,566) | -20.22 | Notes to the Financial Statements [General Information](index=6&type=section&id=General%20Information) Synertone Communication Group Limited, incorporated in the Cayman Islands and listed on the Main Board of the Hong Kong Stock Exchange in 2012, primarily operates in China, focusing on the design, development, and sale of automatic control systems and smart systems, as well as leasing and hosting services for computer equipment, IT infrastructure, and robots, with financial statements presented in HKD - The company was incorporated in the Cayman Islands in 2006 and listed on the Hong Kong Stock Exchange in 2012[9](index=9&type=chunk)[10](index=10&type=chunk) - Principal businesses include the design, development, and sale of automatic control systems and smart systems (visual intercom and surveillance), as well as leasing and hosting services for computer equipment, IT infrastructure, and robots[10](index=10&type=chunk) - The Group's main operations are conducted in China, and the consolidated financial statements are presented in Hong Kong dollars[11](index=11&type=chunk) [Application of New and Revised Hong Kong Financial Reporting Standards](index=7&type=section&id=Application%20of%20New%20and%20Revised%20Hong%20Kong%20Financial%20Reporting%20Standards) This year marks the first application of several new and revised Hong Kong Financial Reporting Standards, including HKFRS 17 (Insurance Contracts) and amendments to HKAS 1, 8, and 12, which management assessed to have no material impact on the financial position or performance for the current and prior years - This year marks the first application of HKFRS 17 and amendments to HKAS 1, 8, and 12[14](index=14&type=chunk) - The implementation of new standards has no material impact on the Group's financial position and performance[14](index=14&type=chunk) [Segment Reporting](index=8&type=section&id=Segment%20Reporting) The Group manages and reports its operations across three business segments: building intelligence, control systems, and data centers; for FY2024, both control systems and building intelligence segments achieved profitability, while the data center segment's loss expanded, with revenue primarily from the Chinese market and changes in customer concentration - The Group's principal business segments include building intelligence, control systems, and data centers[16](index=16&type=chunk) [Segment Results, Assets and Liabilities](index=8&type=section&id=Segment%20Results%2C%20Assets%20and%20Liabilities) In FY2024, both the control systems and building intelligence segments turned from loss to profit, while the data center segment's loss widened, with external revenue for control systems growing, building intelligence remaining stable, and data centers significantly decreasing FY2024 Segment Performance Overview (Adjusted EBIT) | Segment | 2024 External Revenue (HK$ thousand) | 2023 External Revenue (HK$ thousand) | 2024 Segment Profit/(Loss) (HK$ thousand) | 2023 Segment Loss (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Building Intelligence | 24,305 | 25,766 | 3,616 | (13,734) | | Control Systems | 38,030 | 33,977 | 467 | (2,384) | | Data Center | 246 | 795 | (11,711) | (3,516) | - The increase in data center segment loss is primarily due to an impairment of property, plant and equipment of **HK$4.7 million** recorded in FY2024[53](index=53&type=chunk) [Reconciliation of Reportable Segment Revenue, Profit or Loss, Assets and Liabilities](index=11&type=section&id=Reconciliation%20of%20Reportable%20Segment%20Revenue%2C%20Profit%20or%20Loss%2C%20Assets%20and%20Liabilities) This section provides a reconciliation of revenue, loss, assets, and liabilities for each reportable segment to the corresponding totals in the consolidated financial statements, illustrating the effects of inter-segment eliminations and unallocated corporate items FY2024 Consolidated Revenue and Loss Reconciliation | Indicator | 2024 (HK$ thousand) | 2023 (HK$ thousand) | | :--- | :--- | :--- | | Reportable Segment Revenue | 66,140 | 63,583 | | Elimination of Inter-segment Revenue | (3,559) | (3,045) | | Consolidated Revenue | 62,581 | 60,538 | | Reportable Segment Loss | (7,628) | (19,634) | | Consolidated Loss Before Tax | (17,752) | (43,675) | [Geographical Information](index=12&type=section&id=Geographical%20Information) The Group's revenue primarily originates from China, with external customer revenue in the Chinese market increasing in FY2024, while revenue from Hong Kong and overseas markets decreased or was zero, and non-current assets are also mainly concentrated in China FY2024 Geographical Revenue and Non-current Assets | Region | 2024 Revenue from External Customers (HK$ thousand) | 2023 Revenue from External Customers (HK$ thousand) | 2024 Non-current Assets (HK$ thousand) | 2023 Non-current Assets (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Hong Kong | 246 | 795 | – | 11,172 | | China | 62,335 | 59,557 | 51,690 | 109,283 | | Overseas | – | 186 | – | – | | **Total** | **62,581** | **60,538** | **51,690** | **120,455** | [Information about Major Customers](index=12&type=section&id=Information%20about%20Major%20Customers) In FY2024, the Group had two major customers (Customer A and Customer B) in the building intelligence business that contributed over 10% of total sales, whereas in FY2023, no single customer contributed over 10% FY2024 Major Customer Revenue Contribution | Customer | 2024 Revenue (HK$ thousand) | 2023 Revenue (HK$ thousand) | | :--- | :--- | :--- | | Customer A (Building Intelligence) | 16,972 | Not applicable* | | Customer B (Building Intelligence) | 6,612 | Not applicable* | * Revenue from customers in 2023 was less than 10% of the Group's total revenue - In FY2024, no single customer contributed **10% or more** of the Group's revenue[30](index=30&type=chunk) [Revenue](index=13&type=section&id=Revenue%20(Notes)) The Group's total revenue for FY2024 was HK$62.581 million, representing a 3.38% increase from FY2023, driven by significant growth in the control systems business, a slight decrease in building intelligence, and a substantial reduction in data center business revenue Revenue by Major Products and Services | Business Segment | 2024 (HK$ thousand) | 2023 (HK$ thousand) | Change (HK$ thousand) | Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | | Building Intelligence | 24,305 | 25,766 | (1,461) | -5.67 | | Control Systems | 38,030 | 33,977 | 4,053 | 11.93 | | Data Center | – | 371 | (371) | -100.00 | | **Total Revenue from Contracts with Customers** | **62,335** | **60,114** | **2,221** | **3.70** | | Rental income under HKFRS 16 | 246 | 424 | (178) | -42.00 | | **Total Revenue** | **62,581** | **60,538** | **2,043** | **3.38** | - Revenue from building intelligence and control systems businesses is recognized when customers obtain control of the goods, while data center business revenue is recognized over time[32](index=32&type=chunk)[33](index=33&type=chunk) [Other Income and Net Other Gains](index=14&type=section&id=Other%20Income%20and%20Net%20Other%20Gains%20(Notes)) In FY2024, other income decreased due to reduced government subsidies, while net other gains significantly increased primarily from gains on disposal of subsidiaries and an associate Other Income and Net Other Gains | Item | 2024 (HK$ thousand) | 2023 (HK$ thousand) | Change (HK$ thousand) | Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | | **Other Income** | | | | | | Interest income from bank deposits | 50 | 13 | 37 | 284.62 | | VAT refunds | 546 | 350 | 196 | 56.00 | | Government subsidies | – | 1,302 | (1,302) | -100.00 | | Miscellaneous income | 1,642 | 1,730 | (88) | -5.09 | | **Subtotal** | **2,238** | **3,572** | **(1,334)** | **-37.35** | | **Net Other Gains** | | | | | | Net exchange gains | 292 | 49 | 243 | 495.92 | | Gain on disposal of a subsidiary | 3,044 | – | 3,044 | N/A | | Gain on disposal of an associate | 1,459 | – | 1,459 | N/A | | **Subtotal** | **4,806** | **1,800** | **3,006** | **167.00** | | **Total** | **7,044** | **5,372** | **1,672** | **31.12** | - A reduction in government subsidies of approximately **HK$1.3 million** was the primary reason for the decrease in other income[38](index=38&type=chunk) - Gains from the disposal of a subsidiary and an associate, approximately **HK$3.0 million** and **HK$1.5 million** respectively, drove the significant increase in net other gains[36](index=36&type=chunk)[85](index=85&type=chunk) [Loss Before Tax](index=15&type=section&id=Loss%20Before%20Tax) The loss before tax for FY2024 was calculated considering finance costs, staff costs, and other operating items, with both finance costs and staff costs decreasing, while net provision for expected credit losses slightly increased Components of Loss Before Tax | Item | 2024 (HK$ thousand) | 2023 (HK$ thousand) | Change (HK$ thousand) | Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | | **Finance Costs** | | | | | | Interest expense on bank borrowings | 3,200 | 3,467 | (267) | -7.70 | | Finance charges on lease liabilities | 110 | 317 | (207) | -65.30 | | **Subtotal** | **3,310** | **3,784** | **(474)** | **-12.53** | | **Staff Costs** | | | | | | Salaries, wages and other benefits | 16,282 | 17,303 | (1,021) | -5.90 | | Contributions to defined contribution retirement plans | 2,159 | 2,325 | (166) | -7.14 | | **Subtotal** | **18,441** | **19,628** | **(1,187)** | **-6.05** | | **Other Items** | | | | | | Cost of inventories recognized as expense | 37,824 | 50,893 | (13,069) | -25.68 | | Depreciation of property, plant and equipment | 4,481 | 4,672 | (191) | -4.09 | | Depreciation of right-of-use assets | 2,859 | 6,168 | (3,309) | -53.65 | | Net provision for expected credit losses | 7,476 | 7,261 | 215 | 2.96 | | Research and development expenses | 2,588 | 4,221 | (1,633) | -38.69 | | Impairment of non-financial assets | 4,721 | 821 | 3,900 | 475.03 | [Income Tax](index=16&type=section&id=Income%20Tax) Income tax expense for FY2024 primarily consisted of China corporate income tax, which slightly increased compared to the previous year Income Tax Expense | Item | 2024 (HK$ thousand) | 2023 (HK$ thousand) | | :--- | :--- | :--- | | Current tax - China corporate income tax | 16 | – | | Underprovision in prior years - China corporate income tax | – | 4 | | **Income Tax Expense** | **16** | **4** | [Dividends](index=16&type=section&id=Dividends%20(Notes)) No dividends were paid or proposed for the year ended March 31, 2024 - No dividends were paid or proposed for both FY2024 and FY2023[41](index=41&type=chunk) [Loss Per Share](index=16&type=section&id=Loss%20Per%20Share) Basic loss per share for FY2024 significantly narrowed to 6.0 HK cents from 16.05 HK cents in FY2023, with no diluted loss per share presented due to the absence of potential dilutive ordinary shares Loss Per Share Data | Indicator | 2024 | 2023 | | :--- | :--- | :--- | | Loss Attributable to Owners of the Company (HK$ thousand) | (17,840) | (40,971) | | Weighted Average Number of Ordinary Shares (thousand shares) | 295,722 | 255,325 | | Basic and Diluted Loss Per Share (HK cents) | (6.0) | (16.05) | - Diluted loss per share is not presented as there were no potential dilutive ordinary shares in either year[43](index=43&type=chunk) [Trade and Other Receivables](index=17&type=section&id=Trade%20and%20Other%20Receivables) As of March 31, 2024, total trade and other receivables amounted to HK$40.850 million, a slight increase from the previous year, with an increase in loss allowance for trade receivables but a significant decrease for loan receivables and other receivables Overview of Trade and Other Receivables | Item | 2024 (HK$ thousand) | 2023 (HK$ thousand) | | :--- | :--- | :--- | | Trade receivables | 48,546 | 47,407 | | Less: Loss allowance | (26,194) | (23,605) | | **Net Trade Receivables** | **22,352** | **23,802** | | Loan receivables | – | 21,318 | | Other receivables | 24,529 | 23,596 | | Prepaid VAT and other taxes | 67 | 118 | | Deposits and prepayments | 13,818 | 12,119 | | Less: Loss allowance | (19,916) | (41,255) | | **Net Deposits and Prepayments** | **18,498** | **16,050** | | **Total Trade and Other Receivables** | **40,850** | **39,852** | Ageing Analysis of Trade Receivables (by due date) | Ageing | 2024 (HK$ thousand) | 2023 (HK$ thousand) | | :--- | :--- | :--- | | Not yet due | 28,707 | 20,694 | | 1 to 60 days | 2,258 | 2,729 | | 61 to 90 days | 1,874 | 1,962 | | 91 to 180 days | 340 | 340 | | 181 to 365 days | 6,511 | 1,811 | | Over 365 days | 8,856 | 19,871 | | **Total** | **48,546** | **47,407** | | Less: Loss allowance | (26,194) | (23,605) | | **Net** | **22,352** | **23,802** | - Customer credit terms range from **30 to 180 days**, extendable to **181 to 365 days** for reputable customers[45](index=45&type=chunk) [Trade and Other Payables](index=18&type=section&id=Trade%20and%20Other%20Payables) As of March 31, 2024, total trade and other payables amounted to HK$45.646 million, a decrease from the previous year, primarily due to a reduction in trade payables and deposits received Overview of Trade and Other Payables | Item | 2024 (HK$ thousand) | 2023 (HK$ thousand) | | :--- | :--- | :--- | | Trade payables | 13,814 | 18,186 | | Accrued salaries | 3,492 | 3,213 | | Accrued expenses | 3,347 | 3,723 | | Other payables | 24,454 | 26,923 | | Deposits received | 3 | 4,416 | | Other taxes payable | 536 | 751 | | **Total** | **45,646** | **57,212** | Ageing Analysis of Trade Payables (by invoice date) | Ageing | 2024 (HK$ thousand) | 2023 (HK$ thousand) | | :--- | :--- | :--- | | 0 to 60 days | 4,424 | 2,208 | | 61 to 90 days | 197 | 8,692 | | 91 to 180 days | 254 | 2,474 | | 181 to 365 days | 449 | 1,244 | | Over 365 days | 8,490 | 3,568 | | **Total** | **13,814** | **18,186** | Management Discussion and Analysis [Business Review](index=19&type=section&id=Business%20Review) The Group is a leading provider of smart building and home products and integrated automatic control system solutions, with applications across various industries; in FY2024, the control systems business saw revenue growth and profitability, building intelligence maintained stable revenue and turned profitable, while the data center business experienced revenue decline and expanded losses - The Group is a leading provider of smart building and home products and integrated automatic control system solutions, with products widely used in high-rise buildings, high-end villas, and smart communities[48](index=48&type=chunk) - Principal businesses include the design, development, and sale of automatic control systems and solutions; the design, R&D, production, and sale of smart systems; and leasing, hosting, and other related services for advanced technologies such as computer equipment, IT infrastructure, and robots[49](index=49&type=chunk) [Control Systems Business](index=19&type=section&id=Control%20Systems%20Business) The control systems business provides automatic control systems and solutions widely used in power, petrochemical, and utility industries; in FY2024, external revenue grew to HK$38.0 million, and the segment recorded a profit of HK$0.5 million, reversing last year's loss - External revenue for the control systems business increased to **HK$38.0 million** in FY2024 (2023: HK$34.0 million)[50](index=50&type=chunk) - The control systems segment recorded a segment profit of **HK$0.5 million** in FY2024, compared to a loss of **HK$2.4 million** in FY2023[50](index=50&type=chunk) [Building Intelligence Business](index=19&type=section&id=Building%20Intelligence%20Business) The building intelligence business primarily supplies visual intercom systems, security alarm solutions, and smart home devices to large real estate developers; in FY2024, external revenue remained stable at HK$24.3 million, and the segment recorded a profit of HK$3.6 million, mainly due to sales of high-margin products - External revenue for the building intelligence business was **HK$24.3 million** in FY2024 (2023: HK$25.8 million), remaining stable[52](index=52&type=chunk) - The building intelligence segment recorded a segment profit of **HK$3.6 million** for the year, compared to a segment loss of **HK$13.7 million** in the prior year, primarily due to the sale of more high-margin products[52](index=52&type=chunk) [Data Center Business](index=20&type=section&id=Data%20Center%20Business) The data center business offers leasing and maintenance services for computer equipment, IT infrastructure, and robots; in FY2024, total revenue decreased to HK$0.2 million, and the segment loss expanded to HK$11.7 million, mainly due to impairment of property, plant and equipment - Total revenue for the data center business was **HK$0.2 million** in FY2024 (2023: HK$0.8 million)[53](index=53&type=chunk) - The data center segment recorded a segment loss of **HK$11.7 million** in FY2024 (2023: loss of HK$3.5 million), primarily due to an impairment of property, plant and equipment of **HK$4.7 million**[53](index=53&type=chunk) [Investment in an Associate Engaged in Charging Station Leasing Business](index=20&type=section&id=Investment%20in%20an%20Associate%20Engaged%20in%20Charging%20Station%20Leasing%20Business) The Group invested in Iogo Workshop Investment Limited in 2020, holding a 20% equity stake; in FY2024, 5% of the equity was sold for a gain of HK$1.5 million, with the remaining 15% classified as financial assets at fair value through profit or loss, and the Group recognized a share of loss from the associate of HK$2.6 million for the year - The Group acquired a **20% equity stake** in associate Iogo Workshop Investment Limited for **HK$56 million** in 2020[54](index=54&type=chunk) - In FY2024, **5% of Iogo Workshop Investment Limited's equity** was sold for a gain of **HK$1.5 million**, with the remaining **15% stake** classified as financial assets at fair value through profit or loss[54](index=54&type=chunk) - A share of loss from the associate of **HK$2.6 million** was recognized for the year (2023: HK$2.9 million)[55](index=55&type=chunk) [Business Outlook for the Group's Principal Businesses](index=21&type=section&id=Business%20Outlook%20for%20the%20Group%27s%20Principal%20Businesses) Facing challenges in the Chinese market and US-China tensions, the Group achieved profitability in its building intelligence and control systems segments through cost-saving measures, and will continue to focus on 5G technology, IoT, and smart home markets while seeking new business opportunities to diversify revenue streams - The Chinese market is affected by inflation, high interest rates, and US-China tensions, leading to a weak economic recovery[56](index=56&type=chunk) - The Board believes that the growth of **5G technology**, IoT, and smart home markets will ensure demand for building intelligence products[56](index=56&type=chunk) - Effective cost-saving measures implemented during the year resulted in segment profits for both the building intelligence and control systems segments[56](index=56&type=chunk) - The Group will continue to prudently control costs, identify potential business opportunities to diversify revenue sources, and leverage business opportunities arising from **5G technology** and related products[57](index=57&type=chunk) [Future Fundraising and Investment Opportunities](index=21&type=section&id=Future%20Fundraising%20and%20Investment%20Opportunities) The Company will continuously explore new investment or M&A opportunities to expand or diversify its businesses and evaluate potential fundraising options, including issuing new shares or convertible securities, to support existing operations and future development - The company will explore new business, investment, or M&A opportunities to expand or diversify its businesses[58](index=58&type=chunk) - The company will identify and evaluate potential fundraising opportunities, possibly including the issuance of new shares or convertible securities[58](index=58&type=chunk) [The Group's Loan Transactions](index=22&type=section&id=The%20Group%27s%20Loan%20Transactions) As of March 31, 2024, the Group had two outstanding loan receivables with zero net book value, Debtor 1 and Debtor 2, both fully provided for due to long-term overdue status and doubtful recoverability; the Group maintains internal control policies and credit assessment procedures before granting loans and continues to pursue recovery actions Overview of Outstanding Loan Receivables (as of March 31, 2024) | Borrower | Principal Amount (HK$ thousand) | Interest Rate | Term | Collateral | Outstanding Amount (HK$ thousand) | Loss Allowance (HK$ thousand) | Carrying Amount (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Debtor 1 | 13,000 | 8% per annum | One month | Mineral inventory assets and personal guarantee | 10,087 | (10,087) | – | | Debtor 2 | 13,000 (maximum revolving facility) | Interest-free | Repayable on demand | Factory production equipment and machinery | 11,134 | (11,134) | – | | **Total** | | | | | **21,221** | **(21,221)** | **–** | - All loan transactions are not part of the Group's ordinary course of business, and all applicable size test percentage ratios under the Listing Rules are below **5%**[61](index=61&type=chunk) [Regarding Debtor 1](index=23&type=section&id=Regarding%20Debtor%201) Debtor 1, a trading and investment company, received a HK$13 million short-term bridging loan from the Group in 2020 at an 8% annual interest rate; due to long-term repayment delays and doubtful recoverability, the Group has fully provided for the outstanding HK$10.1 million - A **HK$13 million** short-term bridging loan was granted to Debtor 1 on April 29, 2020, at an **8% annual interest rate**, initially unsecured, later secured by mineral inventory assets as additional collateral[63](index=63&type=chunk) - As of March 31, 2024, the outstanding amount is approximately **HK$10.1 million**, fully provided for due to doubtful recoverability[63](index=63&type=chunk)[64](index=64&type=chunk) [Regarding Debtor 2](index=24&type=section&id=Regarding%20Debtor%202) Debtor 2, a mask manufacturing company, was granted a revolving facility of up to HK$13 million by the Group in 2020 for potential investment collaboration; due to repayment delays and doubtful recoverability, the Group has fully provided for the outstanding HK$11.1 million - A revolving facility of up to **HK$13 million** was granted to Debtor 2 on May 22, 2020, interest-free, for potential investment in a mask factory[66](index=66&type=chunk)[67](index=67&type=chunk) - As of March 31, 2024, the outstanding amount is approximately **HK$11.1 million**, fully provided for due to doubtful recoverability[67](index=67&type=chunk)[68](index=68&type=chunk) [Internal Control System and Credit Assessment Before Granting Loans](index=25&type=section&id=Internal%20Control%20System%20and%20Credit%20Assessment%20Before%20Granting%20Loans) While not a registered money lender, the Company maintains an internal control system and conducts credit assessments, including borrower identification, financial review, and bankruptcy/liquidation searches; loan approvals are determined on a case-by-case basis, considering credit risk, market interest rates, and potential business relationships, with size and connected transaction tests performed to ensure Listing Rules compliance - The company maintains an internal control system and conducts credit assessments, including identity verification, financial statement review, and searches[70](index=70&type=chunk)[71](index=71&type=chunk) - Loan terms consider borrower credit risk, recoverability, market interest rates, and potential business relationships[74](index=74&type=chunk) - The Group conducts size tests and connected transaction tests to comply with the Listing Rules[74](index=74&type=chunk) [Actions Taken to Recover Outstanding Loan Receivables](index=27&type=section&id=Actions%20Taken%20to%20Recover%20Outstanding%20Loan%20Receivables) The Company continuously issues demand letters and reminders to debtors, seeks legal advice, requests collateral such as personal guarantees and asset pledges, and negotiates repayment schedules to achieve legally binding debt settlement arrangements, with ongoing monitoring of repayment status and legal action as necessary - The company continuously issues demand letters and reminders to debtors, and seeks legal advice[77](index=77&type=chunk) - Collateral such as personal guarantees and asset pledges has been requested from borrowers, and repayment schedules are being negotiated[77](index=77&type=chunk) - Repayment status will be continuously monitored, and legal action will be taken if necessary[78](index=78&type=chunk) [Financial Review](index=27&type=section&id=Financial%20Review) In FY2024, the Group's revenue slightly increased, sales costs significantly decreased, and gross profit and gross margin substantially improved; other income declined due to reduced government subsidies, but net other gains surged from the disposal of subsidiaries and an associate, while administrative expenses and finance costs both decreased, leading to a significant narrowing of the loss for the year [Revenue](index=27&type=section&id=Revenue%20(Financial%20Review)) The Group's revenue for FY2024 was approximately HK$62.6 million, a 3.5% year-on-year increase, primarily driven by increased market demand in the control systems segment - FY2024 revenue was approximately **HK$62.6 million**, a **3.5% increase** year-on-year[79](index=79&type=chunk)[81](index=81&type=chunk) - Revenue growth was primarily due to increased market demand in the control systems segment[81](index=81&type=chunk) [Cost of Sales](index=28&type=section&id=Cost%20of%20Sales) Cost of sales for FY2024 was approximately HK$37.8 million, a 26.7% year-on-year decrease, mainly because some R&D costs for new products were recognized as R&D expenses in the previous year - FY2024 cost of sales was approximately **HK$37.8 million**, a **26.7% decrease** year-on-year[82](index=82&type=chunk) - The decrease in cost of sales was primarily due to some R&D costs for new products being recorded under R&D expenses in the prior year[82](index=82&type=chunk) [Gross Profit and Gross Margin](index=28&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit for FY2024 was approximately HK$24.8 million, a 178.7% year-on-year increase, with the gross margin rising to 39.6%, primarily attributable to the sale of high-margin new products - FY2024 gross profit was approximately **HK$24.8 million**, a **178.7% increase** year-on-year[83](index=83&type=chunk) - Gross margin increased to **39.6%** (FY2023: 14.8%), primarily due to the launch of high-margin new products[83](index=83&type=chunk) [Other Income](index=28&type=section&id=Other%20Income%20(Financial%20Review)) Other income for FY2024 decreased to approximately HK$2.2 million, mainly due to a reduction in government subsidies of approximately HK$1.3 million - FY2024 other income decreased to approximately **HK$2.2 million** (2023: HK$3.6 million)[84](index=84&type=chunk) - Primarily due to a reduction in government subsidies of approximately **HK$1.3 million**[84](index=84&type=chunk) [Net Other Gains](index=28&type=section&id=Net%20Other%20Gains%20(Financial%20Review)) Net other gains for FY2024 increased to approximately HK$4.8 million, primarily benefiting from gains of approximately HK$3.0 million and HK$1.5 million from the disposal of a subsidiary and an associate, respectively - FY2024 net other gains increased to approximately **HK$4.8 million** (2023: HK$1.8 million)[85](index=85&type=chunk) - Primarily due to a gain on disposal of a subsidiary of approximately **HK$3.0 million** and a gain on disposal of an associate of approximately **HK$1.5 million**[85](index=85&type=chunk) [Selling and Distribution Expenses](index=28&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses for FY2024 decreased to approximately HK$1.4 million, a 36.4% year-on-year decline, consistent with reduced sales in the building intelligence segment - FY2024 selling and distribution expenses decreased to approximately **HK$1.4 million** (2023: HK$2.2 million), a **36.4% decrease** year-on-year[86](index=86&type=chunk) - The decrease is consistent with reduced sales in the building intelligence segment[86](index=86&type=chunk) [Administrative and Other Operating Expenses](index=29&type=section&id=Administrative%20and%20Other%20Operating%20Expenses) Administrative and other operating expenses for FY2024 decreased to approximately HK$27.5 million, primarily due to lower staff costs - FY2024 administrative and other operating expenses decreased to approximately **HK$27.5 million** (2023: HK$36.8 million)[88](index=88&type=chunk) - Primarily due to lower staff costs[88](index=88&type=chunk) [Net Provision for Expected Credit Losses](index=29&type=section&id=Net%20Provision%20for%20Expected%20Credit%20Losses) Net provision for expected credit losses for FY2024 was HK$7.5 million, slightly higher than the previous year, with provisions mainly targeting trade receivables, loan receivables, and other receivables - FY2024 net provision for expected credit losses was **HK$7.5 million** (2023: HK$7.3 million)[89](index=89&type=chunk) - Provisions primarily target trade receivables (**HK$26.2 million**) and loan and other receivables (**HK$19.9 million**)[89](index=89&type=chunk) [Finance Costs](index=29&type=section&id=Finance%20Costs) Finance costs for FY2024 were approximately HK$3.3 million, a 13.2% year-on-year decrease, mainly due to a reduction in the effective interest rate on bank borrowings - FY2024 finance costs were approximately **HK$3.3 million**, a **13.2% decrease** year-on-year[90](index=90&type=chunk) - Primarily due to a reduction in the effective interest rate on bank borrowings[90](index=90&type=chunk) [Loss for the Year](index=30&type=section&id=Loss%20for%20the%20Year) Loss attributable to owners of the Company for FY2024 significantly decreased by 56.6% to approximately HK$17.8 million, primarily due to increased gross profit and net other gains - FY2024 loss attributable to owners of the Company was approximately **HK$17.8 million**, a significant **56.6% decrease** year-on-year[92](index=92&type=chunk) - Primarily due to an increase in gross profit of approximately **HK$15.9 million** and an increase in net other gains of approximately **HK$3.0 million**[92](index=92&type=chunk) [Capital Structure, Liquidity and Financial Resources](index=30&type=section&id=Capital%20Structure%2C%20Liquidity%20and%20Financial%20Resources) The Group primarily meets its working capital needs through operating cash, bank borrowings, and shareholder contributions; in FY2024, the Company successfully raised funds through three placing exercises, significantly improving its current ratio and gearing ratio, thereby enhancing financial flexibility - The Group's working capital is primarily sourced from operating cash, bank borrowings, and shareholder contributions[93](index=93&type=chunk) - As of March 31, 2024, issued share capital was approximately **HK$36.0 million** (2023: HK$26.0 million)[93](index=93&type=chunk) - Net proceeds of approximately **HK$12.1 million** from the 2022 placing were fully utilized for general working capital and investment opportunities[96](index=96&type=chunk)[97](index=97&type=chunk) - Net proceeds of approximately **HK$14.7 million** from the 2023 placing were fully utilized for general working capital and investment opportunities[99](index=99&type=chunk)[101](index=101&type=chunk) - Net proceeds of approximately **HK$23.8 million** from the 2024 placing remained unutilized during the year, intended for general working capital and investment opportunities[103](index=103&type=chunk) Liquidity and Solvency Ratios | Indicator | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Current Ratio | Approx. 1.3 | Approx. 0.7 | | Gearing Ratio | 15% | 96% | [Bank Borrowings](index=33&type=section&id=Bank%20Borrowings) As of March 31, 2024, the Group's outstanding bank borrowings amounted to approximately HK$50.7 million, a decrease from the previous year - As of March 31, 2024, outstanding bank borrowings were approximately **HK$50.7 million** (2023: HK$62.8 million)[105](index=105&type=chunk) [Pledged Assets](index=33&type=section&id=Pledged%20Assets) As of March 31, 2024, the Group's land use rights, property, plant and equipment with a total carrying amount of approximately HK$28.2 million were pledged for bank borrowings - As of March 31, 2024, land use rights, property, plant and equipment with a total carrying amount of approximately **HK$28.2 million** were pledged to secure bank borrowings[106](index=106&type=chunk) [Contingent Liabilities](index=33&type=section&id=Contingent%20Liabilities) As of March 31, 2024, the Group had no significant contingent liabilities - As of March 31, 2024, the Group had no significant contingent liabilities[107](index=107&type=chunk) [Significant Acquisitions and Disposals](index=33&type=section&id=Significant%20Acquisitions%20and%20Disposals) During the year, the Group completed several significant transactions, including the disposal of a portion of MOX Group Limited's equity, the full disposal of interests in Global Clean Energy Investment Limited, and the disposal of all equity and shareholder loans in Hong Kong Blockchain Development Marketing Limited and Hong Kong Blockchain Development Company Limited - On July 24, 2023, MOX Group Limited completed a placing, reducing the Group's shareholding from **100% to 66.67%**[108](index=108&type=chunk) - On September 11, 2023, all interests in Global Clean Energy Investment Limited and its subsidiaries were disposed of for **HK$1**[109](index=109&type=chunk) - On October 31, 2023, all equity and shareholder loans in Hong Kong Blockchain Development Marketing Limited and Hong Kong Blockchain Development Company Limited were disposed of[109](index=109&type=chunk) [Significant Capital Expenditure for the Year](index=34&type=section&id=Significant%20Capital%20Expenditure%20for%20the%20Year) Except as otherwise disclosed in this announcement, the Group had no significant capital expenditure commitments as of March 31, 2024 - As of March 31, 2024, the Group had no significant capital expenditure commitments[111](index=111&type=chunk) [Exchange Rate Fluctuation Risk](index=34&type=section&id=Exchange%20Rate%20Fluctuation%20Risk) The Group's transactions and bank deposits are primarily denominated in RMB and HKD, effectively mitigating foreign currency exchange risk; despite RMB exchange rate fluctuations against HKD, the Directors do not anticipate a material adverse impact on operations and thus have not implemented a formal hedging policy - The Group's transactions and bank deposits are primarily denominated in RMB and HKD, reducing foreign currency exchange risk[112](index=112&type=chunk) - The Directors do not expect RMB exchange rate fluctuations to have a material adverse impact on operations and have not implemented a formal hedging policy[112](index=112&type=chunk) [Employees and Remuneration Policy](index=34&type=section&id=Employees%20and%20Remuneration%20Policy) As of March 31, 2024, the Group had 85 employees, with staff costs decreasing by 6.1% year-on-year; remuneration policy is based on individual performance, experience, and industry practice, reviewed annually, and the Company adopted a new share option scheme in 2022, granting 25,043,200 share options in April 2024 to incentivize employees - As of March 31, 2024, the Group had **85 employees** (2023: 115 employees)[113](index=113&type=chunk) - FY2024 staff costs were approximately **HK$18.4 million**, a **6.1% decrease** year-on-year, primarily due to a reduction in employee numbers[113](index=113&type=chunk) - Remuneration policy is determined based on individual performance, experience, and industry practice, and is reviewed annually[115](index=115&type=chunk) - A new share option scheme was adopted in 2022, and **25,043,200 share options** were granted on April 27, 2024, to incentivize employees[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) Events After the Reporting Period [Grant of Share Options](index=35&type=section&id=Grant%20of%20Share%20Options) On April 27, 2024, the Company granted a total of 25,043,200 share options to executive directors and certain employees under the share option scheme, with an exercise price of HK$0.49 and a five-year validity period - On April 27, 2024, a total of **25,043,200 share options** were granted with an exercise price of **HK$0.49**[117](index=117&type=chunk) - The share options have a validity and vesting period of **five years**, from April 26, 2024, to April 25, 2029[117](index=117&type=chunk) - Of these, **3,596,800 options** were granted to Mr. You Yiyang, an executive director, with the remainder granted to six employees[118](index=118&type=chunk) [Appointment of Non-Executive Director](index=36&type=section&id=Appointment%20of%20Non-Executive%20Director) On May 29, 2024, Ms. Mo Yina was appointed as a non-executive director of the Company and will retire and be eligible for re-election at the next annual general meeting - On May 29, 2024, Ms. Mo Yina was appointed as a non-executive director of the Company[120](index=120&type=chunk) Other Information [Dividends](index=36&type=section&id=Dividends%20(Other%20Information)) The Board does not recommend the declaration of any dividend for the year ended March 31, 2024 - The Board does not recommend the declaration of any dividend for FY2024[122](index=122&type=chunk) [Closure of Register of Members](index=36&type=section&id=Closure%20of%20Register%20of%20Members) To determine eligibility to attend and vote at the 2024 Annual General Meeting, the Company will suspend its share transfer registration from August 26 to August 29, 2024, with all share transfer documents required to be lodged by 4:30 p.m. on August 23, 2024 - Share transfer registration will be suspended from **August 26 to August 29, 2024**[123](index=123&type=chunk) - All share transfer documents must be lodged by **4:30 p.m. on August 23, 2024**[123](index=123&type=chunk) [Purchase, Redemption or Sale of the Company's Listed Securities](index=36&type=section&id=Purchase%2C%20Redemption%20or%20Sale%20of%20the%20Company%27s%20Listed%20Securities) For the year ended March 31, 2024, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - In FY2024, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[124](index=124&type=chunk) [Corporate Governance Practices](index=36&type=section&id=Corporate%20Governance%20Practices) The Company has adopted the Corporate Governance Code set out in Appendix 14 of the Listing Rules and complied with all applicable code provisions in FY2024, except for Code Provision C.2 (Chairman vacancy) and F.2.2 (Chairman attendance at AGM) - The company has adopted the Corporate Governance Code set out in Appendix 14 of the Listing Rules[125](index=125&type=chunk) - All applicable code provisions were complied with in FY2024, except for Code Provisions C.2 and F.2.2[125](index=125&type=chunk) [Code Provision C.2 of the Corporate Governance Code](index=37&type=section&id=Code%20Provision%20C.2%20of%20the%20Corporate%20Governance%20Code) The Company has not complied with Code Provision C.2 as the Chairman position has been vacant since January 3, 2020; currently, the Chairman's role is jointly performed by Board members, and the Company is seeking a suitable candidate to fill the vacancy - The position of Chairman of the Board has been vacant since **January 3, 2020**, failing to comply with Code Provision C.2[127](index=127&type=chunk) - The Chairman's role is jointly performed by Board members, and the company is seeking a suitable candidate[127](index=127&type=chunk) [Code Provision F.2.2 of the Corporate Governance Code](index=37&type=section&id=Code%20Provision%20F.2.2%20of%20the%20Corporate%20Governance%20Code) As the Chairman position was vacant on the day of the 2023 Annual General Meeting, Mr. Han Weining (Executive Director and CEO) was appointed as Chairman to address shareholder questions, aligning with the spirit of the Code - On the day of the 2023 Annual General Meeting, with the Chairman position vacant, Mr. Han Weining (Executive Director and Chief Executive Officer) was appointed as Chairman[128](index=128&type=chunk) - The Directors believe Mr. Han Weining has sufficient understanding of the Group's business to serve as Chairman of the meeting[128](index=128&type=chunk) [Compliance with the Model Code for Securities Transactions by Directors](index=37&type=section&id=Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors) Following specific inquiries, all Directors confirmed compliance with the Model Code set out in Appendix 10 of the Listing Rules for the year ended March 31, 2024 - All Directors confirmed compliance with the Model Code in FY2024[129](index=129&type=chunk) [Audit Committee](index=38&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors, has reviewed the Company's consolidated financial statements for FY2024 and concluded that all applicable accounting standards and requirements have been complied with, and adequate disclosures have been made - The Audit Committee comprises three independent non-executive directors, with Mr. Lam Ying Hung as Chairman[130](index=130&type=chunk) - The Audit Committee has reviewed the FY2024 consolidated financial statements and believes that accounting standards have been complied with and adequate disclosures made[130](index=130&type=chunk) [Publication of Annual Results Announcement and Annual Report](index=38&type=section&id=Publication%20of%20Annual%20Results%20Announcement%20and%20Annual%20Report) This annual results announcement has been published on the HKEX website and the Company's website; the FY2024 annual report will be dispatched to shareholders and published on the aforementioned websites in due course - The annual results announcement has been published on the HKEX website (www.hkexnews.hk) and the Company's website (www.synertone.net)[131](index=131&type=chunk) - The FY2024 annual report will be dispatched to shareholders and published on the aforementioned websites in due course[131](index=131&type=chunk)

Financial Performance - Revenue for the six months ended September 30, 2023, was HKD 17,126,000, a decrease of 11.3% from HKD 19,312,000 in the same period of 2022[5] - Gross profit increased to HKD 6,443,000, up 104.3% from HKD 3,147,000 year-on-year[5] - Operating loss for the period was HKD 8,018,000, compared to a loss of HKD 6,598,000 in the previous year, reflecting a deterioration of 21.5%[5] - Net loss attributable to owners of the company was HKD 8,801,000, compared to HKD 8,076,000 in the same period last year, indicating a 9.0% increase in losses[6] - The company reported a basic and diluted loss per share of HKD 3.04, slightly improved from HKD 3.22 in the previous year[6] - The company reported a net loss of approximately 9,815 thousand HKD for the six months ended September 30, 2023[20] - For the six months ended September 30, 2023, the total revenue from external customers was HKD 17,126,000, a decrease from HKD 19,312,000 for the same period in 2022, representing a decline of approximately 11.3%[33] - The company reported a pre-tax loss of HKD 1,722,000 for the six months ended September 30, 2023, compared to HKD 1,981,000 in the same period of 2022[45] - The company reported a net exchange gain of HKD 29,000 for the period, down from HKD 72,000 in the previous year[41] - The total comprehensive loss for the six months ended September 30, 2023, was HKD 1,313,000, a significant reduction from HKD 4,077,000 in the prior year, reflecting an improvement of approximately 67.7%[61] Assets and Liabilities - Total assets less current liabilities increased to HKD 101,061,000 from HKD 70,010,000, representing a growth of 44.4%[9] - Cash and cash equivalents rose significantly to HKD 12,821,000 from HKD 2,345,000, marking a substantial increase of 447.5%[8] - Non-current liabilities decreased to HKD 215,000 from HKD 1,641,000, showing a reduction of 87.9%[9] - The company’s equity attributable to owners increased to HKD 98,878,000 from HKD 69,126,000, reflecting a growth of 42.9%[9] - The total assets of the company stood at 843,126 thousand HKD, indicating a stable financial position[10] - Total liabilities as of September 30, 2023, were HKD 120,645,000, down from HKD 157,654,000 as of March 31, 2023[37] - The company reduced its bank borrowings to approximately HKD 56.5 million as of September 30, 2023, compared to HKD 62.8 million on March 31, 2023[133] Cash Flow and Financing - For the six months ended September 30, 2023, the net cash used in operating activities was approximately (22,833) thousand HKD, compared to (6,148) thousand HKD for the same period in 2022[12] - The net cash generated from financing activities was 35,402 thousand HKD, a significant increase from (8,655) thousand HKD in the previous year[12] - The net increase in cash and cash equivalents for the six months ended September 30, 2023, was 11,069 thousand HKD, compared to 2,289 thousand HKD in 2022[13] - The company plans to implement cost control measures and expedite the collection of receivables to achieve positive cash flow from operations[21] - The board has considered various financing options, including shareholder loans and bank borrowings, to improve liquidity[21] - The company has taken steps to negotiate debt compromise plans with creditors to alleviate liquidity issues[21] - The company is exploring potential mergers and acquisitions to enhance its product offerings and market share, with a budget of 100,846 thousand HKD allocated for this purpose[10] Business Strategy and Market Expansion - The company plans to focus on expanding its market presence and enhancing its product offerings in the upcoming quarters[5] - The company plans to expand its market presence by entering two new regions by the end of 2024, targeting a revenue increase of 20% from these markets[10] - The company is actively seeking business and investment opportunities to enhance long-term growth potential[21] - The company is exploring new business and investment opportunities to expand or diversify its operations for long-term benefits[109] Segment Performance - Revenue from the "Building Intelligence" segment was HKD 6,057,000, while the "Control Systems" segment generated HKD 13,560,000, and the "Data Center" segment contributed HKD 123,000[33] - Revenue from the Building Intelligence segment was HKD 4,347,000, up 9.3% from HKD 3,975,000 year-on-year[38] - Revenue from the Control Systems segment was HKD 12,656,000, down 13.7% from HKD 14,666,000 in the previous year[38] - The control systems segment recorded an increase in operating profit to HKD 2.9 million, compared to HKD 1.3 million in the same period last year[96] - The "MOX" brand's revenue increased to HKD 4.3 million during the period, up from HKD 4.0 million in the previous period, resulting in a reduction of segment loss from HKD 3.4 million to HKD 1.9 million[99] Employee and Management - Employee costs increased to HKD 10,595,000 from HKD 9,484,000 year-on-year, reflecting a rise in salaries and benefits[45] - The total remuneration for directors and key management personnel for the six months ended September 30, 2023, was HKD 2,419,000, an increase from HKD 1,690,000 in the previous year[88] - The company conducts annual reviews of employee compensation policies, including performance-linked bonuses[144] - The company invests in continuous education and training programs for employees to enhance their skills and knowledge[145] Corporate Governance - The company has adopted the Corporate Governance Code and believes it has complied with all applicable provisions, except for specific clauses due to the chairman position being vacant since January 3, 2020[159][160] - The company is actively seeking a suitable candidate to fill the vacant chairman position[160] - The audit committee reviewed the unaudited consolidated financial statements for the six months ended September 30, 2023, and confirmed compliance with applicable accounting standards[165] - There were changes in the board of directors, with two directors not re-elected and one resigning to focus on personal business[157][158] Share Capital and Securities - The company has a total issued share capital of 300,313,000 shares as of September 30, 2023, with a par value of HKD 0.1 per share[82] - The company issued 40,000,000 new shares at a subscription price of HKD 0.375 per share, raising a net amount of HKD 14.7 million for general working capital and further investments[16] - The company completed a placement of 40,000,000 shares at a price of HKD 0.375 per share, representing a discount of approximately 14.77% from the market price of HKD 0.44 on the agreement date[128] - The stock ownership of Excel Time, a company controlled by the co-CEO, amounts to 54,227,451 shares, representing 18.06% of the total issued shares[149]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不負 責,對 其 準 確 性 或 完 整 性 亦 不 發 表 任 何 聲 明,並 明 確 表 示 概 不 就 因 本 公 告 全 部 或任何部分內容而產生或因倚賴該等內容而引致之任何損失承擔任何責任。 協同通信集團有限公司 Synertone Communication Corporation (於開曼群島註冊成立之有限公司) (股份代號:1613) 截至二零二三年九月三十日止六個月 中期業績公告 協 同 通 信 集 團 有 限 公 司(「本公司」,連 同 其 附 屬 公 司,統 稱「本集團」)董 事(「董 事」) 會(「董事會」)公 佈 本 集 團 截 至 二 零 二 三 年 九 月 三 十 日 止 六 個 月 的 未 經 審 核 簡 明 綜 合 中 期 業 績,連 同 二 零 二 二 年 同 期 的 未 經 審 核 比 較 數 字。此 等 中 期 財 務 業 績 未經審核,但已由本公司審核委員會審閱。 簡明綜合損益及其他全面收益表 截至二零二三年九月三十日止六個月 | | | 截至九月三十日止 | | |------------------- ...

Financial Performance - The company's revenue decreased from approximately HKD 114.2 million in the fiscal year ending March 31, 2022, to approximately HKD 60.5 million in the fiscal year ending March 31, 2023, representing a decline of 47.0%[7] - Gross profit fell from approximately HKD 22.9 million in the fiscal year ending March 31, 2022, to approximately HKD 8.9 million in the fiscal year ending March 31, 2023, with a gross margin decrease from 20.1% to 14.8%[7] - The net loss attributable to shareholders decreased from approximately HKD 109.7 million in the fiscal year ending March 31, 2022, to approximately HKD 41.0 million in the fiscal year ending March 31, 2023, a reduction of 62.6%[7] - The company recorded revenue of approximately HKD 60.5 million for the year, a decrease of about HKD 53.7 million or 47.0% compared to the previous year's revenue of approximately HKD 114.2 million[50] - The decrease in revenue was primarily due to the lockdowns in China during the fiscal year 2023, which halted production activities in the Control Systems and Building Intelligence businesses, particularly in the East China region[50] - The company's cost of sales decreased to approximately HKD 51.6 million, a reduction of about HKD 39.6 million or 43.4% from approximately HKD 91.2 million in the previous fiscal year[52] - Gross profit for the fiscal year 2023 was approximately HKD 8.9 million, down about HKD 14.0 million or 61.1% from approximately HKD 22.9 million in the previous fiscal year, with a gross margin of 14.8% compared to 20.1% in fiscal year 2022[53] Cash Flow and Financial Position - Operating cash flow for the fiscal year ending March 31, 2023, was a net cash outflow of HKD 2.716 million, an improvement compared to HKD 7.702 million in the previous year[6] - The company's current ratio decreased to 0.7 in the fiscal year ending March 31, 2023, down from 0.8 in the previous year[6] - Capital expenditures for the fiscal year ending March 31, 2023, were HKD 223 thousand, a significant decrease from HKD 10.702 million in the previous year[6] - The debt-to-equity ratio as of March 31, 2023, was 96%, significantly up from 70% in 2022[75] - The company had outstanding bank borrowings of approximately HKD 62.8 million as of March 31, 2023, down from HKD 72.3 million in 2022[76] Business Segments and Operations - The company's control systems and building intelligence business recorded revenues of HKD 34.0 million and HKD 25.8 million, respectively, for the fiscal year ending March 31, 2023[10] - The control systems division reported external revenue of HKD 34.0 million for the fiscal year 2023, down from HKD 47.3 million in the previous year, reflecting a significant impact from COVID-19 lockdowns[17] - The building intelligence division experienced a decline in external revenue from HKD 60.4 million to HKD 25.8 million due to production halts and rising component costs, resulting in an operating loss of HKD 13.7 million[20] - The data center business incurred a total revenue of HKD 0.8 million in fiscal year 2023, a decrease from HKD 6.5 million in the previous year, leading to a division loss of HKD 3.5 million[22] - Revenue breakdown by business segment for the year includes: Building Intelligence at HKD 25.8 million (42.6%), Control Systems at HKD 34.0 million (56.1%), and Data Centers at HKD 0.8 million (1.3%) [50] Future Outlook and Strategic Initiatives - The company expects performance to improve in the next fiscal year due to the easing of COVID-19 restrictions in China[10] - The company is actively seeking new investment opportunities in the virtual asset trading platform sector to capitalize on emerging market trends[11] - The company aims to improve its financial performance and operational efficiency through the development of new technologies and services in the data center sector[21] - The company is considering restructuring plans for its building intelligence business to improve returns, including asset sales and business reorganization[27] - The company is expanding into virtual asset-related activities through a joint venture, Jade Power, which will operate VATP in Hong Kong[172] Share Capital and Fundraising - The company completed the first placement on January 25, 2022, issuing 58,000,000 shares at a price of HKD 0.25 per share, representing approximately 4.63% of the enlarged issued share capital post-placement[71] - The net proceeds from the first placement amounted to approximately HKD 14.2 million, with a net price per share of about HKD 0.245, intended for general working capital and future investments[71] - The company completed the second placement on October 3, 2022, issuing 49,200,000 shares at a price of HKD 0.25 per share, representing approximately 3.78% of the enlarged issued share capital post-placement[74] - The net proceeds from the second placement were approximately HKD 12.1 million, with a net price per share of about HKD 0.246, also intended for general working capital and future investments[74] - The company completed a new share placement on May 19, 2023, issuing 40,000,000 shares at a price of HKD 0.375 per share, which represents approximately 13.32% of the enlarged issued share capital[171] Governance and Management - The company appointed a new executive director and co-CEO, as well as an independent non-executive director, on May 19, 2023[89] - The company has established an audit committee consisting of three independent non-executive directors to review financial statements[178] - The board consists of two executive directors and three independent non-executive directors as of March 31, 2023, with changes noted by the report date[187] - The company has adopted a board diversity policy, currently comprising eight directors, including two females, with no numerical targets set for gender diversity[188] - The company has established mechanisms to ensure independent viewpoints are obtained and reviewed annually[197] Employee and Operational Management - The group has established stable relationships with major suppliers, ensuring that only materials passing quality tests are procured[123] - The company has implemented a new share option plan to incentivize employees, with no unexercised options remaining as of March 31, 2023[84] - Continuous training programs are provided to enhance the skills and knowledge of employees[148] - The employee compensation policy is reviewed annually, considering individual performance, experience, and industry standards[148] Risk Management - The company faces various risks that could significantly impact its business, financial condition, and growth prospects, including market risks related to China[115] - Financial risks include exposure to exchange rates, interest rates, and liquidity[119] - The company has implemented internal control procedures to ensure compliance with local regulations and listing rules[120] - The company has established preventive and emergency measures to mitigate potential operational losses[118] Legal and Compliance - As of March 31, 2023, the company reported no significant legal violations affecting its business operations[128] - The company has complied with all relevant laws and regulations related to health, safety, and environmental standards[126] - The company has not entered into any non-exempt connected transactions or continuing connected transactions under the Listing Rules as of March 31, 2023[165] Dividend Policy - No dividends were recommended for the year ended March 31, 2023[97] - The company is committed to a sustainable dividend policy that balances shareholder expectations with prudent capital management[200] - Dividend declarations will consider multiple factors including overall operational performance, financial condition, and future expansion plans[200]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不負 責,對 其 準 確 性 或 完 整 性 亦 不 發 表 任 何 聲 明,並 明 確 表 示 概 不 就 因 本 公 告 全 部 或任何部分內容而產生或因倚賴該等內容而引致之任何損失承擔任何責任。 協同通信集團有限公司 Synertone Communication Corporation (於開曼群島註冊成立之有限公司) (股份代號:1613) 截至二零二三年三月三十一日止年度全年業績公告 協 同 通 信 集 團 有 限 公 司(「本公司」,連 同 其 附 屬 公 司 統 稱「本集團」)董 事(「董 事」) 會(「董事會」)公 佈 本 集 團 截 至 二 零 二 三 年 三 月 三 十 一 日 止 年 度 的 綜 合 業 績,連 同截至二零二二年同期的比較數字如下: – 1 – 綜合損益及其他全面收益表 截至二零二三年三月三十一日止年度 | | | 二零二三年 | 二零二二年 | |-----------------------------------------------|---------|----------------|----- ...

Financial Performance - Revenue for the six months ended September 30, 2022, was HKD 19,312,000, a decrease of 51.6% compared to HKD 39,950,000 in the same period of 2021[5] - Gross profit for the same period was HKD 3,147,000, down 72.7% from HKD 11,547,000 year-on-year[5] - The company reported a loss of HKD 8,855,000 for the six months, compared to a loss of HKD 9,964,000 in the previous year, indicating a 11.1% improvement[5] - Basic and diluted loss per share was HKD 0.64, compared to HKD 0.75 in the prior year[9] - The total comprehensive loss before tax for the period was HKD 8,851,000[44] - The company incurred a pre-tax loss of HKD 9,955 thousand for the six months ended September 30, 2022[46] - The company reported a net loss of approximately HKD 8,855,000 for the six months ended September 30, 2022[32] - The company's loss attributable to owners decreased by approximately HKD 0.8 million or 9.0% to about HKD 8.1 million, primarily due to reduced overall expenses under stricter cost control[190] Assets and Liabilities - Non-current assets decreased from HKD 142,525,000 as of March 31, 2022, to HKD 128,876,000 as of September 30, 2022, a decline of 9.6%[13] - Current assets also decreased from HKD 128,927,000 to HKD 104,766,000, representing a 18.7% decline[13] - Total liabilities decreased from HKD 163,048,000 to HKD 135,859,000, a reduction of 16.7%[13] - Total assets amounted to HKD 233,642 thousand, down from HKD 271,452 thousand as of March 31, 2022[49] - Total liabilities increased to HKD 136,841 thousand from HKD 166,017 thousand as of March 31, 2022[51] - As of September 30, 2022, total assets minus current liabilities amounted to HKD 97,783,000, down from HKD 108,404,000 in the previous period[17] - The company’s accumulated losses reached HKD 934,669,000, reflecting a decrease of 8,867,000 during the reporting period[19] Cash Flow - The net cash generated from operating activities for the six months ended September 30, 2022, was a loss of HKD 6,148,000, compared to a gain of HKD 3,324,000 in the previous year[23] - The net cash generated from investing activities was HKD 17,092,000, a significant improvement from a cash outflow of HKD 29,594,000 in the prior year[25] - The company reported a net increase in cash and cash equivalents of HKD 2,289,000 for the six months ended September 30, 2022, compared to an increase of HKD 9,739,000 in the previous year[25] - The company had a cash balance of HKD 9,738,000 at the end of the reporting period, down from HKD 13,924,000 a year earlier[25] Segment Performance - Revenue from external customers for the building intelligence segment was HKD 3,975,000, while the control systems segment generated HKD 14,666,000, and the data center segment contributed HKD 671,000, totaling HKD 19,312,000[44] - The adjusted EBIT for the building intelligence segment was a loss of HKD 3,393,000, while the control systems segment achieved a profit of HKD 1,339,000, and the data center segment reported a loss of HKD 1,695,000, resulting in a total adjusted EBIT loss of HKD 3,749,000[44] - The control systems segment's revenue decreased to HKD 14.7 million from HKD 26.4 million compared to the previous period, representing a decline of approximately 44.5%[135] - The building intelligence segment recorded an operating loss of HKD 3.4 million compared to a loss of HKD 5.5 million in the previous period, showing an improvement in loss margin[138] - The data center business generated revenue of HKD 0.7 million but incurred a loss of HKD 1.7 million during the period[141] Cost Management - Research and development expenses for the period were HKD 1,504,000, down 23.9% from HKD 1,975,000 in the previous year[5] - The company has implemented cost control measures and accelerated the collection of receivables to improve cash flow and financial condition[34] - Administrative and other operating expenses decreased by approximately HKD 3.0 million or 16.9% to about HKD 14.8 million due to reduced expenses during the lockdown period in China and stricter cost control measures implemented by the company[185] - Sales and distribution expenses decreased by approximately HKD 1.9 million or 65.5% to about HKD 1.0 million, consistent with the decrease in sales during the period[184] Credit and Receivables - The company recognized a reversal of expected credit loss of HKD 3,058,000, compared to a provision of HKD 1,429,000 in the previous year[5] - The expected credit loss provisions for trade receivables were HKD (748), compared to HKD 864 in the previous year, indicating an improvement[71] - The company maintains internal control policies and conducts credit assessments before granting loans to minimize credit and default risks[167] - The company has a significant overdue receivable balance of HKD 16,881,000 related to the sale of protective masks, which has been fully provided for[107] Future Outlook - The company expects a negative impact on the financial performance of the control systems and building intelligence segments due to ongoing lockdowns, particularly until March 31, 2023[146] - The company believes that if the COVID-19 situation improves, the rental and advertising business of Iogo Workshop will recover and financial performance will gradually improve[145] - The company anticipates stable organic growth in the medium term once the pandemic situation stabilizes and lockdowns are lifted[146] - The company plans to explore new business and investment opportunities, including potential mergers and acquisitions, to diversify and expand its operations for long-term benefits[152]

Financial Performance - The group's revenue increased by approximately HKD 23.9 million or 26.5% to approximately HKD 114.2 million for the fiscal year ending March 31, 2022, compared to HKD 90.3 million for the previous year[6]. - Gross profit decreased slightly by HKD 0.1 million to approximately HKD 22.9 million, with a gross margin decline from 25.5% to 20.1%[7]. - The loss attributable to owners of the company increased by approximately HKD 94.6 million or 6.3 times to HKD 109.7 million for the fiscal year ending March 31, 2022, compared to HKD 15.1 million for the previous year[7]. - The company reported a basic loss per share of HKD 0.09 for the fiscal year ending March 31, 2022, compared to HKD 0.01 in the previous year[8]. - The group recorded revenue of approximately HKD 114.2 million for the year, an increase of about HKD 23.9 million or 26.5% compared to the previous year's revenue of HKD 90.3 million[37]. Liquidity and Financial Ratios - The current ratio decreased from 1.0 in 2021 to 0.8 in 2022, indicating a decline in short-term liquidity[6]. - The debt-to-equity ratio increased significantly to 69.7% in 2022 from 43.8% in 2021, reflecting higher leverage[6]. - As of March 31, 2022, the company's current ratio was approximately 0.8, down from 1.0 in 2021, indicating a decline in short-term financial health[83]. - The debt-to-equity ratio as of March 31, 2022, was 70%, significantly higher than 44% in 2021, reflecting increased leverage[83]. Cash Flow and Expenditures - Operating cash flow for the year was negative at HKD 8.039 million, compared to negative HKD 7.726 million in the previous year[6]. - Capital expenditures increased to HKD 10.702 million in 2022 from HKD 2.251 million in 2021, indicating a focus on investment[6]. - The group invested approximately HKD 9.8 million in the initial capital expenditure for the data center business, which included the purchase of high-end computer equipment and leasing renovations[27]. Revenue Segmentation - The group's control systems business recorded external revenue of HKD 47.3 million in FY2022, up from HKD 39.5 million in FY2021[22]. - The building intelligence segment's external revenue increased to HKD 60.4 million in FY2022, compared to HKD 50.8 million in FY2021[26]. - The control systems business generated revenue of HKD 47.3 million, accounting for 41.5% of total revenue, while the building intelligence business contributed HKD 60.4 million, or 52.9%[38]. Credit Loss Provisions - The group recognized an expected credit loss provision of HKD 62.9 million in FY2022, a significant increase from HKD 4.6 million in FY2021[5]. - Expected credit loss provisions for trade receivables and loans amounted to HKD 62.9 million in FY2022, compared to a reversal of HKD 4.6 million in FY2021[49]. - The company has made specific provisions for expected credit losses of HKD 10.1 million for Debtor 1 and HKD 12.6 million for Debtor 2 due to uncertainties in recovering these amounts[60]. Employee Costs and Compensation - Employee costs for the year amounted to approximately HKD 22.5 million, an increase of about HKD 8.8 million or 64.2% compared to approximately HKD 13.7 million in the previous year[90]. - The group reviews its employee compensation policy annually, considering factors such as individual performance and industry standards[92]. - Continuous training programs are conducted for employees to enhance their skills and knowledge, including both internal and external courses[93]. Business Strategy and Future Outlook - The group anticipates a decline in revenue for the next fiscal year due to lockdown measures in China, but remains optimistic about the future of its control systems and building intelligence businesses[5]. - The group aims to identify new investment or acquisition opportunities to expand or diversify its business for long-term benefits[17]. - The group plans to propose a new share option scheme to incentivize employees, executives, or senior staff[92]. Governance and Compliance - The company has complied with all relevant laws and regulations, with no significant violations reported as of March 31, 2022[121]. - The company has adopted the Corporate Governance Code and believes it has complied with all applicable provisions for the year ended March 31, 2022, except for specific clauses[174]. - The board consists of two executive directors and three independent non-executive directors as of March 31, 2022[179]. Risk Management - The group faces various risks, including market risks related to its customer base in China, which may impact financial performance[111]. - The group has established preventive and emergency measures to mitigate operational risks and ensure effective control procedures[113]. - Financial risks related to exchange rates, interest rates, and liquidity are acknowledged and discussed in the financial statements[114].

[Company Information](index=3&type=section&id=Company%20Information) The company's board comprises executive and independent non-executive directors, supported by audit, nomination, and remuneration committees to enhance governance [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) The company's board consists of two executive directors, including the CEO, and three independent non-executive directors, with established committees for robust governance - The Board of Directors includes **2 executive directors** (including the CEO) and **3 independent non-executive directors**[3](index=3&type=chunk) - An Audit Committee, Nomination Committee, and Remuneration Committee are established to enhance corporate governance standards[3](index=3&type=chunk) [Registration and Operational Information](index=3&type=section&id=Registration%20and%20Operational%20Information) The company is registered in the Cayman Islands, headquartered in Hong Kong, with its shares listed on the HKEX under stock code 1613 - The company is incorporated in the Cayman Islands and listed on the Main Board of the Hong Kong Stock Exchange, stock code **1613**[3](index=3&type=chunk) - Principal bankers include HSBC, Bank of China (Hong Kong), and China Construction Bank[4](index=4&type=chunk) [Condensed Consolidated Statement of Profit or Loss](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) This section presents the group's financial performance, highlighting revenue growth, cost of sales, and the resulting loss for the period [Condensed Consolidated Statement of Profit or Loss for the Six Months Ended September 30, 2021](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20for%20the%20Six%20Months%20Ended%20September%2030%2C%202021) For the six months ended September 30, 2021, the Group's revenue significantly increased by 51.5% to HKD 39,950 thousand, but the loss for the period expanded to HKD 9,964 thousand due to increased costs and expenses Condensed Consolidated Statement of Profit or Loss Key Data | Indicator | 2021 (thousand HKD) | 2020 (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 39,950 | 26,367 | +51.5% | | Cost of sales | (28,403) | (17,741) | +60.1% | | Gross profit | 11,547 | 8,626 | +33.9% | | Other income | 5,152 | 2,656 | +93.9% | | Operating loss | (7,403) | (7,495) | -1.2% | | Loss before tax | (9,955) | (9,478) | +5.0% | | Loss for the period | (9,964) | (8,512) | +17.1% | | Basic loss per share (HK cents) | (0.75) | (0.79) | -5.1% | | Diluted loss per share (HK cents) | (0.75) | (0.79) | -5.1% | - The loss for the period was primarily attributable to an increase in the net provision for expected credit losses, rather than a significant deterioration in operating loss[7](index=7&type=chunk)[8](index=8&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This section details the total comprehensive expense for the period, including the loss for the period and other comprehensive income items [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income for the Six Months Ended September 30, 2021](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income%20for%20the%20Six%20Months%20Ended%20September%2030%2C%202021) For the six months ended September 30, 2021, the Group recorded a total comprehensive expense of HKD 9,957 thousand, an increase from HKD 8,451 thousand in the prior year, mainly due to an expanded loss for the period Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2021 (thousand HKD) | 2020 (thousand HKD) | | :--- | :--- | :--- | | Loss for the period | (9,964) | (8,512) | | Exchange differences on translation of financial statements of overseas operations | 7 | 61 | | Other comprehensive income for the period, net of tax | 7 | 61 | | Total comprehensive expense for the period | (9,957) | (8,451) | - Total comprehensive expense attributable to owners of the Company was **HKD 8,860 thousand**, with **HKD 1,097 thousand** attributable to non-controlling interests[13](index=13&type=chunk) [Condensed Consolidated Statement of Financial Position](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This section provides a snapshot of the Group's assets, liabilities, and equity at the end of the reporting period [Condensed Consolidated Statement of Financial Position as at September 30, 2021](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position%20as%20at%20September%2030%2C%202021) As at September 30, 2021, the Group's total assets less current liabilities increased to HKD 194,672 thousand, and net assets rose to HKD 192,573 thousand, driven by improved net current assets Condensed Consolidated Statement of Financial Position Key Data | Indicator | September 30, 2021 (thousand HKD) | March 31, 2021 (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current assets | 165,675 | 159,596 | +3.8% | | Current assets | 180,646 | 150,118 | +20.3% | | Current liabilities | 151,649 | 144,098 | +5.2% | | Net current assets | 28,997 | 6,020 | +381.7% | | Total assets less current liabilities | 194,672 | 165,616 | +17.5% | | Non-current liabilities | 2,099 | 2,974 | -29.4% | | Net assets | 192,573 | 162,642 | +18.4% | | Equity attributable to owners of the Company | 187,246 | 156,218 | +19.9% | | Total equity | 192,573 | 162,642 | +18.4% | - Cash and cash equivalents significantly increased from **HKD 4,185 thousand** to **HKD 13,924 thousand**, with trade and other receivables also showing a notable increase[16](index=16&type=chunk) - Share capital increased by **HKD 40,500 thousand** due to the issuance of new shares, reflecting enhanced capital strength through equity financing[18](index=18&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This section outlines the changes in the Group's equity over the reporting period, including profit or loss, other comprehensive income, and transactions with owners [Condensed Consolidated Statement of Changes in Equity for the Six Months Ended September 30, 2021](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity%20for%20the%20Six%20Months%20Ended%20September%2030%2C%202021) For the six months ended September 30, 2021, equity attributable to owners of the Company increased from HKD 156,218 thousand to HKD 187,246 thousand, primarily due to a HKD 40,500 thousand capital injection from new share issuance Condensed Consolidated Statement of Changes in Equity Key Data | Indicator | April 1, 2021 (thousand HKD) | Loss for the period (thousand HKD) | Total comprehensive expense for the period (thousand HKD) | Issue of shares (thousand HKD) | Share issue costs (thousand HKD) | September 30, 2021 (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Equity attributable to owners of the Company | 156,218 | (8,867) | (8,860) | 40,500 | (612) | 187,246 | | Non-controlling interests | 6,424 | (1,097) | (1,097) | – | – | 5,327 | | Total equity | 162,642 | (9,964) | (9,957) | 40,500 | (612) | 192,573 | - The issuance of new shares generated **HKD 40,500 thousand** in funds for the Group, with a net amount of approximately **HKD 39,888 thousand** effectively supplementing working capital[19](index=19&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This section presents the Group's cash flows from operating, investing, and financing activities for the reporting period [Condensed Consolidated Statement of Cash Flows for the Six Months Ended September 30, 2021](index=11&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20September%2030%2C%202021) For the six months ended September 30, 2021, net cash from operating activities turned into an inflow of HKD 3,324 thousand, and net cash from financing activities significantly increased to HKD 36,009 thousand, primarily due to new share issuance Condensed Consolidated Statement of Cash Flows Key Data | Indicator | 2021 (thousand HKD) | 2020 (thousand HKD) | Change | | :--- | :--- | :--- | :--- | | Net cash generated from/(used in) operating activities | 3,324 | (5,848) | Turned into inflow | | Net cash used in investing activities | (29,594) | (18,939) | Increased outflow | | Net cash generated from/(used in) financing activities | 36,009 | (7,579) | Turned into inflow | | Net increase/(decrease) in cash and cash equivalents | 9,739 | (32,366) | Turned into increase | | Cash and cash equivalents at end of period | 13,924 | 14,005 | Slight decrease | - Cash inflow from financing activities primarily resulted from proceeds of **HKD 40,500 thousand** from the issuance of new shares, effectively offsetting cash outflow from investing activities[22](index=22&type=chunk) - Increased cash outflow from investing activities was mainly due to the purchase of property, plant and equipment and advances to an associate[22](index=22&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. General Information](index=13&type=section&id=1.%20General%20Information) The company is incorporated in the Cayman Islands and listed in Hong Kong, primarily engaged in designing, developing, and selling automatic control and smart building systems in China, with financial statements presented in HKD - The Group is primarily engaged in the design, development, production, and sale of **automatic control systems** and **smart building systems**[27](index=27&type=chunk) - The Group's principal operations are in China, and the condensed consolidated financial statements are presented in **HKD**[28](index=28&type=chunk) [2. Basis of Preparation and Principal Accounting Policies](index=14&type=section&id=2.%20Basis%20of%20Preparation%20and%20Principal%20Accounting%20Policies) The condensed consolidated financial statements are prepared in accordance with HKAS 34 and the Listing Rules, with new HKFRS standards having no material impact on financial performance or position - Financial statements adhere to the disclosure requirements of **HKAS 34** and the **Listing Rules**[30](index=30&type=chunk) - Newly applied accounting standards and amendments have **no material impact** on the financial performance and position for the current interim period and prior periods[31](index=31&type=chunk) [3. Segment Reporting](index=15&type=section&id=3.%20Segment%20Reporting) The Group is segmented into building intelligence and control systems, with control systems showing significant revenue and profit growth, while building intelligence revenue grew but loss expanded Segment Revenue and Results (Adjusted EBIT) | Segment | 2021 Revenue (thousand HKD) | 2020 Revenue (thousand HKD) | 2021 Profit/(Loss) (thousand HKD) | 2020 Profit/(Loss) (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Building Intelligence | 13,565 | 11,384 | (5,450) | (2,459) | | Control Systems | 26,385 | 14,983 | 3,145 | (1,829) | | Total | 39,950 | 26,367 | (2,305) | (4,288) | Segment Assets and Liabilities | Segment | September 30, 2021 Assets (thousand HKD) | March 31, 2021 Assets (thousand HKD) | September 30, 2021 Liabilities (thousand HKD) | March 31, 2021 Liabilities (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Building Intelligence | 117,908 | 118,414 | 120,646 | 113,440 | | Control Systems | 93,641 | 87,943 | 20,261 | 18,103 | | Total reported segments | 211,549 | 206,357 | 140,907 | 131,543 | | Consolidated total | 346,321 | 309,714 | 153,748 | 147,072 | - The **Control Systems** business achieved a turnaround in the first half of 2021, with segment profit reaching **HKD 3,145 thousand**, compared to a loss of **HKD 1,829 thousand** in the prior year[38](index=38&type=chunk)[43](index=43&type=chunk) [4. Revenue](index=19&type=section&id=4.%20Revenue) For the six months ended September 30, 2021, the Group's revenue was HKD 39,950 thousand, a 51.5% year-on-year increase, with control systems contributing 66.0% and building intelligence 34.0%, predominantly from the China market Revenue by Major Product | Product | 2021 (thousand HKD) | 2020 (thousand HKD) | | :--- | :--- | :--- | | Building Intelligence | 13,565 | 11,384 | | Control Systems | 26,385 | 14,983 | | Total | 39,950 | 26,367 | Revenue by Geographical Market | Region | 2021 (thousand HKD) | 2020 (thousand HKD) | | :--- | :--- | :--- | | China | 39,895 | 25,789 | | Overseas | 55 | 578 | | Total | 39,950 | 26,367 | - **Control Systems** revenue increased by **76.1%** year-on-year, while **Building Intelligence** revenue increased by **19.2%**[51](index=51&type=chunk) [5. Other Income and Other Losses](index=20&type=section&id=5.%20Other%20Income%20and%20Other%20Losses) Other income significantly increased to HKD 5,152 thousand, a 93.9% year-on-year rise, primarily driven by VAT refunds and net income from equipment leasing and machine services, with exchange losses remaining low Other Income and Other Losses Details | Item | 2021 (thousand HKD) | 2020 (thousand HKD) | | :--- | :--- | :--- | | Interest income from bank deposits | 12 | 38 | | Interest income from loans receivable | 352 | 330 | | Net income from equipment leasing and machine services | 921 | – | | Government grants | 547 | 568 | | VAT refunds | 1,476 | 312 | | Miscellaneous income | 1,844 | 1,408 | | Total other income | 5,152 | 2,656 | | Net exchange losses | (14) | (24) | | Net other income and losses | 5,138 | 2,632 | - **VAT refunds** increased from **HKD 312 thousand** to **HKD 1,476 thousand**, and net income from equipment leasing and machine services was a new revenue source for the period[55](index=55&type=chunk) [6. Loss Before Tax](index=21&type=section&id=6.%20Loss%20Before%20Tax) The Group's loss before tax was HKD 9,955 thousand, an increase from the prior year, with slight rises in finance costs and employee costs due to increased retirement scheme contributions, alongside other expense variations Finance Costs Details | Item | 2021 (thousand HKD) | 2020 (thousand HKD) | | :--- | :--- | :--- | | Interest expense on bank and other borrowings | 1,861 | 1,748 | | Finance charges on lease liabilities | 153 | 163 | | Total | 2,014 | 1,911 | Employee Costs Details | Item | 2021 (thousand HKD) | 2020 (thousand HKD) | | :--- | :--- | :--- | | Salaries, wages and other benefits | 8,001 | 7,522 | | Defined contribution retirement scheme contributions | 750 | 169 | | Total | 8,751 | 7,691 | Other Items of Expense Details | Item | 2021 (thousand HKD) | 2020 (thousand HKD) | | :--- | :--- | :--- | | Cost of inventories recognised as expense | 27,720 | 17,152 | | Amortisation of intangible assets | – | 3,446 | | Depreciation of property, plant and equipment | 2,338 | 1,723 | | Depreciation of right-of-use assets | 1,853 | 1,517 | - Employee costs increased by **14.3%**, primarily due to a significant increase in defined contribution retirement scheme contributions[60](index=60&type=chunk) [7. Income Tax (Expense) / Credit](index=23&type=section&id=7.%20Income%20Tax%20(Expense)%20%2F%20Credit) Income tax expense for the period was HKD 9 thousand, compared to a credit of HKD 966 thousand in the prior year, mainly due to current tax expense from China enterprise income tax and no taxable profits from Hong Kong operations Income Tax (Expense) / Credit Details | Item | 2021 (thousand HKD) | 2020 (thousand HKD) | | :--- | :--- | :--- | | Current tax - China enterprise income tax | (9) | – | | Deferred tax - Reversal of temporary differences | – | 966 | | Total income tax (expense) / credit | (9) | 966 | - The Company's subsidiaries registered in the **Cayman Islands** and the **British Virgin Islands** are exempt from income tax[67](index=67&type=chunk)[68](index=68&type=chunk) - The Group's China subsidiaries are subject to enterprise income tax at a rate of **25%**, while no tax provision was made for Hong Kong operations due to absence of profits[68](index=68&type=chunk)[70](index=70&type=chunk) [8. Dividends](index=24&type=section&id=8.%20Dividends) For the six months ended September 30, 2021, the company neither paid nor proposed any dividends, consistent with the prior year - The Company neither paid nor proposed any dividends during or after the reporting period[72](index=72&type=chunk) [9. Loss Per Share](index=25&type=section&id=9.%20Loss%20Per%20Share) For the six months ended September 30, 2021, the company's basic and diluted loss per share were both HKD 0.75 cents, an improvement from HKD 0.79 cents in the prior year, despite an increase in loss attributable to owners Loss Per Share Calculation | Indicator | 2021 (thousand HKD/thousand shares/HK cents) | 2020 (thousand HKD/thousand shares/HK cents) | | :--- | :--- | :--- | | Loss attributable to owners of the Company | (8,867) | (8,110) | | Weighted average number of ordinary shares in issue | 1,182,855 | 1,032,363 | | Basic loss per share (HK cents) | (0.75) | (0.79) | | Diluted loss per share (HK cents) | (0.75) | (0.79) | - The improvement in loss per share was primarily due to an increase in the **weighted average number of ordinary shares in issue** during the period[74](index=74&type=chunk) [10. Property, Plant and Equipment](index=26&type=section&id=10.%20Property%2C%20Plant%20and%20Equipment) For the six months ended September 30, 2021, the Group's additions to property, plant and equipment amounted to HKD 10,687 thousand, a significant increase from the prior year Additions to Property, Plant and Equipment | Item | 2021 (thousand HKD) | 2020 (thousand HKD) | | :--- | :--- | :--- | | Additions to property, plant and equipment | 10,687 | 2,223 | - Additions to property, plant and equipment for the period increased by **380.7%** year-on-year, indicating increased investment in fixed assets[76](index=76&type=chunk) [11. Goodwill](index=26&type=section&id=11.%20Goodwill) As at September 30, 2021, the Group's goodwill carrying amount was HKD 51,301 thousand, unchanged from March 31, 2021, with no impairment losses recognized, and all goodwill allocated to the control systems cash-generating unit Goodwill Carrying Amount | Indicator | September 30, 2021 (thousand HKD) | March 31, 2021 (thousand HKD) | | :--- | :--- | :--- | | Cost | 239,613 | 239,613 | | Less: Accumulated impairment losses | (188,312) | (188,312) | | Carrying amount | 51,301 | 51,301 | - No impairment losses on goodwill were recognized for the period, as management believes the carrying amount of related assets does not exceed their recoverable amount[77](index=77&type=chunk) - All goodwill is allocated to the **Control Systems** cash-generating unit[77](index=77&type=chunk) [12. Interests in Associates and Amounts Due From/To an Associate](index=27&type=section&id=12.%20Interests%20in%20Associates%20and%20Amounts%20Due%20From%2FTo%20an%20Associate) The Group's interest in associate Iogo Workshop, engaged in mobile device charging station leasing, was HKD 54,962 thousand; Iogo Workshop Group's revenue significantly declined, and losses expanded, increasing the Group's share of associate losses Interests in Associates | Item | September 30, 2021 (thousand HKD) | March 31, 2021 (thousand HKD) | | :--- | :--- | :--- | | Investment cost in associates | 56,000 | 56,000 | | Share of post-acquisition losses, net of dividends received | (1,449) | (876) | | Exchange adjustments | 411 | 376 | | Total interests | 54,962 | 55,500 | Summary of Iogo Workshop Group Financial Information | Indicator | 2021 (thousand HKD) | 2020 (thousand HKD) | | :--- | :--- | :--- | | Revenue | 549 | 3,790 | | Loss for the period | (2,691) | (235) | | Total comprehensive expense for the period | (2,691) | (216) | - Iogo Workshop Group's revenue decreased by **85.5%** year-on-year, and loss for the period expanded by **1045.1%**, primarily due to reduced advertising revenue impacted by the pandemic[87](index=87&type=chunk)[128](index=128&type=chunk) - The Group's share of associate losses increased from **HKD 72 thousand** to **HKD 538 thousand**[128](index=128&type=chunk) [13. Trade and Other Receivables, Deposits and Prepayments](index=31&type=section&id=13.%20Trade%20and%20Other%20Receivables%2C%20Deposits%20and%20Prepayments) As at September 30, 2021, total trade and other receivables, deposits, and prepayments increased to HKD 117,636 thousand, with a significant portion of trade receivables over 365 days old and an increase in expected credit loss provisions Trade and Other Receivables, Deposits and Prepayments Details | Item | September 30, 2021 (thousand HKD) | March 31, 2021 (thousand HKD) | | :--- | :--- | :--- | | Trade receivables (net of provision) | 40,910 | 38,803 | | Bills receivable | 1,512 | 1,941 | | Loans receivable | 21,944 | 21,040 | | Other receivables | 43,772 | 25,997 | | Prepaid VAT and other taxes | 24 | 28 | | Deposits and prepayments (net of provision) | 9,474 | 8,994 | | Total | 117,636 | 96,803 | Ageing Analysis of Trade Receivables | Ageing | September 30, 2021 (thousand HKD) | March 31, 2021 (thousand HKD) | | :--- | :--- | :--- | | 0 to 60 days | 5,541 | 2,030 | | 61 to 90 days | 874 | 2,220 | | 91 to 180 days | 6,685 | 7,586 | | 181 to 365 days | 4,882 | 2,322 | | Over 365 days | 38,194 | 38,869 | | Total | 56,176 | 53,027 | | Less: Loss allowance | (15,266) | (14,224) | | Net amount | 40,910 | 38,803 | - Net provision for expected credit losses was **HKD 1,429 thousand**, compared to a net reversal of **HKD 3,061 thousand** in the prior year, negatively impacting the current period's loss[8](index=8&type=chunk)[144](index=144&type=chunk) [14. Trade and Other Payables](index=35&type=section&id=14.%20Trade%20and%20Other%20Payables) As at September 30, 2021, total trade and other payables increased to HKD 47,169 thousand, primarily driven by an increase in accrued expenses and other payables, with a significant portion of trade payables still over 365 days old Trade and Other Payables Details | Item | September 30, 2021 (thousand HKD) | March 31, 2021 (thousand HKD) | | :--- | :--- | :--- | | Trade payables | 10,595 | 8,176 | | Accrued salaries | 1,209 | 1,087 | | Accrued expenses and other payables | 34,896 | 32,116 | | Other taxes payable | 469 | 350 | | Total | 47,169 | 41,729 | Ageing Analysis of Trade Payables | Ageing | September 30, 2021 (thousand HKD) | March 31, 2021 (thousand HKD) | | :--- | :--- | :--- | | 0 to 60 days | 5,553 | 2,434 | | 61 to 90 days | – | 142 | | 91 to 180 days | – | 604 | | 181 to 365 days | – | 540 | | Over 365 days | 4,240 | 4,456 | | Total | 10,595 | 8,176 | - Accrued expenses and other payables increased by **HKD 2,780 thousand**, being the primary reason for the growth in trade and other payables[103](index=103&type=chunk) [15. Bank Borrowings](index=36&type=section&id=15.%20Bank%20Borrowings) As at September 30, 2021, the Group's total bank borrowings were HKD 69,001 thousand, consistent with March 31, 2021, mostly secured, with fixed interest rates between 4.35% and 6.50%, and no covenant breaches Bank Borrowings Details | Type | September 30, 2021 (thousand HKD) | March 31, 2021 (thousand HKD) | | :--- | :--- | :--- | | Secured | 58,474 | 58,474 | | Unsecured | 10,527 | 10,527 | | Total | 69,001 | 69,001 | - All bank borrowings are measured at amortised cost and bear fixed annual interest rates ranging from **4.35% to 6.50%**[110](index=110&type=chunk) - The Group did not breach any bank borrowing covenants at the end of the reporting period[109](index=109&type=chunk) [16. Share Capital](index=38&type=section&id=16.%20Share%20Capital) As at September 30, 2021, the company's issued share capital increased to HKD 298,591 thousand, primarily due to the issuance of 162,000,000 new shares to independent third parties, with net proceeds used for general working capital and investments Share Capital Movement | Item | September 30, 2021 Number of shares (thousand shares) | September 30, 2021 Amount (thousand HKD) | March 31, 2021 Number of shares (thousand shares) | March 31, 2021 Amount (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Issued and fully paid ordinary shares at beginning/end of period | 1,032,363 | 258,091 | 1,032,363 | 258,091 | | Issue of new shares | 162,000 | 40,500 | – | – | | Issued and fully paid ordinary shares at end of period | 1,194,363 | 298,591 | 1,032,363 | 258,091 | - The issuance of new shares resulted in a **HKD 40,500 thousand** increase in share capital, with net proceeds of approximately **HKD 39.9 million** used for the Group's general working capital and further investments[112](index=112&type=chunk) [17. Commitments](index=38&type=section&id=17.%20Commitments) As at September 30, 2021 and March 31, 2021, the Group had no significant outstanding commitments - The Group had **no significant capital expenditure commitments** or other material commitments at the end of the reporting period[113](index=113&type=chunk) [18. Significant Related Party Transactions](index=39&type=section&id=18.%20Significant%20Related%20Party%20Transactions) During the period, the Group's sales to associate Iogo Workshop Group amounted to HKD 1,616 thousand, with total remuneration for directors and key management personnel at HKD 1,679 thousand, and the CEO providing personal guarantees for some bank borrowings Transactions with Related Parties | Transacting Party | 2021 Sales (thousand HKD) | 2020 Sales (thousand HKD) | | :--- | :--- | :--- | | Iogo Workshop Group | 1,616 | 47 | Transactions with Key Management Personnel | Item | 2021 (thousand HKD) | 2020 (thousand HKD) | | :--- | :--- | :--- | | Short-term employee benefits | 1,658 | 1,564 | | Post-employment benefits | 21 | 21 | | Total | 1,679 | 1,585 | - Mr. Han Weining, CEO and Executive Director, provided personal guarantees for bank borrowings totaling **HKD 15,305 thousand**[117](index=117&type=chunk) [19. Events After the Reporting Period](index=40&type=section&id=19.%20Events%20After%20the%20Reporting%20Period) No significant events occurred after the reporting period - No significant events occurred after the reporting period[118](index=118&type=chunk) [Management Discussion and Analysis](index=41&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the Group's business performance, financial condition, and future outlook [Business Review](index=41&type=section&id=Business%20Review) The Group, a provider of smart home, smart community, and automatic control systems, saw both control systems and building intelligence businesses recover from the pandemic, with significant external revenue growth, while a new equipment leasing business contributed stable income - The Group is a supplier of **smart home, smart community solutions**, and **automatic control systems**, with products widely used in high-rise buildings, villas, and various industries[120](index=120&type=chunk) - Both the **Control Systems** and **Building Intelligence** businesses have fully recovered from the adverse effects of the pandemic during the period[120](index=120&type=chunk)[122](index=122&type=chunk)[125](index=125&type=chunk) [Control Systems Business](index=41&type=section&id=Control%20Systems%20Business) The control systems business fully recovered from the pandemic in China, with production and customer orders resuming, leading to significantly increased external revenue of HKD 26.4 million and a segment profit of HKD 3.1 million from new large software projects - External revenue from the Control Systems business significantly increased to **HKD 26.4 million** (2020: HKD 15.0 million), a **76%** year-on-year increase[122](index=122&type=chunk) - Newly signed large control system software projects contributed higher profit margins, enabling the segment to achieve a profit of **HKD 3.1 million**, reversing the loss from the prior year[122](index=122&type=chunk) [Building Intelligence Business](index=42&type=section&id=Building%20Intelligence%20Business) The building intelligence business experienced market demand recovery and improved MOX brand product sales, with external revenue increasing to HKD 13.6 million, but segment loss expanded to HKD 5.5 million due to global chip price increases - External revenue for the Building Intelligence segment increased to **HKD 13.6 million** (2020: HKD 11.4 million), a **19.3%** year-on-year increase[125](index=125&type=chunk) - Segment loss expanded from **HKD 2.5 million** to **HKD 5.5 million**, primarily due to increased costs from global chip price hikes[125](index=125&type=chunk) - The Group has made progress in domestic and international smart home markets, with its product series holding a leading position[125](index=125&type=chunk) [Investment in an Associate Engaged in Charging Station Leasing Business](index=42&type=section&id=Investment%20in%20an%20Associate%20Engaged%20in%20Charging%20Station%20Leasing%20Business) The Group acquired a 20% equity interest in Iogo Workshop, a mobile device charging station leasing company, in June 2020; during the period, Iogo Workshop Group's revenue significantly declined, and operating losses expanded, increasing the Group's share of associate losses - Iogo Workshop Group's revenue for the period was **HKD 549 thousand** (2020: HKD 3.8 million), with an operating loss of **HKD 2.7 million** (2020: HKD 235 thousand)[128](index=128&type=chunk) - The operating loss was mainly due to reduced advertising revenue impacted by the pandemic, and the Group's share of associate losses increased to **HKD 538 thousand**[128](index=128&type=chunk) [Other Business Activities](index=43&type=section&id=Other%20Business%20Activities) A new computer equipment and machine leasing and hosting services business was launched with initial capital expenditure of approximately HKD 9.8 million, contributing approximately HKD 3.1 million in revenue and HKD 0.9 million in profit, expected to provide stable future income and profitability - The new business incurred initial capital expenditure of approximately **HKD 9.8 million**, contributing approximately **HKD 3.1 million** in revenue and **HKD 0.9 million** in profit for the period[129](index=129&type=chunk) - The Board expects the equipment leasing and hosting services business to contribute **stable income and profitability** to the Group in the future[129](index=129&type=chunk) [Business Outlook](index=43&type=section&id=Business%20Outlook) With the stabilization of the pandemic in China, the Group's core businesses have returned to normal, and the Board is optimistic about the future performance of control systems and building intelligence, particularly the sustained demand for smart building products driven by 5G, IoT, and connected home markets - The Group's core businesses have recovered and fully returned to normal levels, and the Board is **optimistic** about their future performance[130](index=130&type=chunk) - The rapid growth of **China's 5G technology, IoT, and connected home smart markets** will ensure sustained and stable demand for building intelligence products[130](index=130&type=chunk) [Future Fundraising and Investment Opportunities](index=44&type=section&id=Future%20Fundraising%20and%20Investment%20Opportunities) The company will continue to explore new investment or M&A opportunities to expand or diversify its business and seek potential fundraising opportunities, such as issuing new shares or convertible securities, to support existing and future investments - The Company will continue to explore new investment or M&A opportunities to **expand or diversify its business** and generate long-term benefits[133](index=133&type=chunk) - The Company continuously seeks and evaluates potential fundraising opportunities, which may include the **issuance of new shares or convertible securities**[133](index=133&type=chunk) [Financial Review](index=44&type=section&id=Financial%20Review) Revenue increased by 51.5% to HKD 40.0 million, driven by market recovery and control system software projects; gross margin slightly decreased to 28.9% due to chip price increases; other income significantly grew, selling and distribution expenses increased, R&D expenses slightly decreased; loss for the period expanded mainly due to increased expected credit loss provisions - Revenue for the period was approximately **HKD 40.0 million**, an increase of **51.5%** from the prior year, primarily driven by the Control Systems business[134](index=134&type=chunk)[136](index=136&type=chunk) - Gross margin slightly declined to **28.9%** (2020: 32.7%), mainly due to increased costs from global chip price increases[138](index=138&type=chunk) - Loss attributable to owners of the Company increased by **9.9%** to **HKD 8.9 million**, primarily due to a net provision for expected credit losses of **HKD 1.4 million** for the period, compared to a net reversal of **HKD 3.1 million** in the prior year[147](index=147&type=chunk) [Revenue](index=44&type=section&id=Revenue) Revenue for the period was approximately HKD 40.0 million, a 51.5% year-on-year increase, primarily due to market demand recovery and the signing of large software projects in the control systems business Revenue by Business Segment | Segment | 2021 (thousand HKD) | Share (%) | 2020 (thousand HKD) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Building Intelligence | 13,565 | 34.0 | 11,384 | 43.2 | | Control Systems | 26,385 | 66.0 | 14,983 | 56.8 | | Total | 39,950 | 100.0 | 26,367 | 100.0 | - Significant revenue growth in the **Control Systems** business was the primary driver of overall revenue increase for the period[136](index=136&type=chunk) [Cost of Sales](index=45&type=section&id=Cost%20of%20Sales) Cost of sales increased to HKD 28.4 million, a 60.5% year-on-year increase, consistent with the period's sales growth - Cost of sales increased from **HKD 17.7 million** to **HKD 28.4 million**, a **60.5%** year-on-year increase[137](index=137&type=chunk) [Gross Profit and Gross Margin](index=45&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit increased to HKD 11.5 million, a 33.7% year-on-year rise, but gross margin slightly declined to 28.9%, mainly due to global chip price increases - Gross profit increased from **HKD 8.6 million** to **HKD 11.5 million**, a **33.7%** year-on-year increase[138](index=138&type=chunk) - Gross margin decreased from **32.7%** to **28.9%**, primarily due to increased costs from global chip price increases[138](index=138&type=chunk) [Other Income](index=45&type=section&id=Other%20Income) Other income significantly increased to HKD 5.2 million, primarily including net income from equipment leasing and hosting services and a notable increase in VAT refunds - Total other income significantly increased to **HKD 5.2 million** (2020: HKD 2.7 million)[138](index=138&type=chunk) - New net income from equipment leasing and hosting services was approximately **HKD 0.9 million**, and VAT refunds increased to **HKD 1.5 million**[138](index=138&type=chunk) [Selling and Distribution Expenses](index=45&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses increased to HKD 2.9 million, an 81.3% year-on-year rise, mainly due to increased sales and marketing activities during the period - Selling and distribution expenses increased from **HKD 1.6 million** to **HKD 2.9 million**, an **81.3%** year-on-year increase[139](index=139&type=chunk) [Administrative and Other Operating Expenses](index=46&type=section&id=Administrative%20and%20Other%20Operating%20Expenses) Administrative and other operating expenses were approximately HKD 17.8 million, comparable to approximately HKD 18.0 million in the prior year - Administrative and other operating expenses remained stable, primarily comprising employee costs, depreciation and amortisation, and legal and professional fees[142](index=142&type=chunk) [Research and Development Expenses](index=46&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses slightly decreased to HKD 2.0 million, a 9.1% year-on-year decline, mainly due to stricter cost control and reduced R&D activities by the Group - Research and development expenses decreased from **HKD 2.2 million** to **HKD 2.0 million**, a **9.1%** year-on-year decrease[143](index=143&type=chunk) [Net Expected Credit Loss (Provision) / Reversal](index=46&type=section&id=Net%20Expected%20Credit%20Loss%20(Provision)%20%2F%20Reversal) A net provision for expected credit losses of HKD 1.4 million was recorded for the period, compared to a net reversal of HKD 3.1 million in the prior year, negatively impacting the current period's loss - A net provision for expected credit losses of **HKD 1.4 million** was recorded for the period, compared to a net reversal of **HKD 3.1 million** in the prior year[144](index=144&type=chunk) - Impairment provisions for trade receivables and loans and other receivables were **HKD 15.3 million** and **HKD 1.6 million**, respectively[144](index=144&type=chunk) [Finance Costs](index=46&type=section&id=Finance%20Costs) Finance costs were approximately HKD 2.0 million, comparable to approximately HKD 1.9 million in the prior year - Finance costs, primarily interest expense on bank borrowings, remained stable[145](index=145&type=chunk) [Loss for the Period](index=47&type=section&id=Loss%20for%20the%20Period) Loss attributable to owners of the Company increased to HKD 8.9 million, primarily due to the increase in net expected credit loss provisions - Loss attributable to owners of the Company increased from **HKD 8.1 million** to **HKD 8.9 million**, a **9.9%** year-on-year increase[147](index=147&type=chunk) - The increased loss was primarily attributable to a net provision for expected credit losses of **HKD 1.4 million** for the period, compared to a net reversal of **HKD 3.1 million** in the prior year[147](index=147&type=chunk) [Capital Structure, Liquidity and Financial Resources](index=47&type=section&id=Capital%20Structure%2C%20Liquidity%20and%20Financial%20Resources) The Group's funding needs are met through operating cash, bank borrowings, and shareholder contributions; a placement of 162 million new shares raised HKD 39.9 million net proceeds for working capital and future investments, improving both current and debt-to-asset ratios - The Company's issued share capital increased to **HKD 298.6 million**, comprising **1,194,363,200 shares**[148](index=148&type=chunk) - A placement of **162,000,000 placement shares** was completed, raising net proceeds of approximately **HKD 39.9 million**, fully utilized for general working capital and investment opportunities[151](index=151&type=chunk) Financial Ratios | Indicator | September 30, 2021 | March 31, 2021 | | :--- | :--- | :--- | | Current ratio | 1.2 | 1.0 | | Debt-to-asset ratio | 32% | 44% | [Bank Borrowings](index=49&type=section&id=Bank%20Borrowings) As at September 30, 2021, the Group's total outstanding bank borrowings remained at HKD 69.0 million, consistent with March 31, 2021 - Total outstanding bank borrowings remained at **HKD 69.0 million**[153](index=153&type=chunk) [Pledge of Assets](index=49&type=section&id=Pledge%20of%20Assets) As at September 30, 2021, the Group's land use rights and property, plant and equipment with a total carrying amount of approximately HKD 40.2 million were pledged for bank borrowings - Total carrying amount of pledged assets was approximately **HKD 40.2 million**, including land use rights and property, plant and equipment[154](index=154&type=chunk) [Contingent Liabilities](index=49&type=section&id=Contingent%20Liabilities) As at September 30, 2021, the Group had no significant contingent liabilities - The Group had **no significant contingent liabilities** at the end of the reporting period[155](index=155&type=chunk) [Significant Acquisitions and Disposals](index=49&type=section&id=Significant%20Acquisitions%20and%20Disposals) The company entered into a share subscription agreement to acquire a 3.33% equity interest in Yao Ling Limited for HKD 10,000,000, which was not completed as of the reporting date; no other significant acquisition or disposal transactions occurred during the period - The Company intends to subscribe for a **3.33% equity interest** in Yao Ling Limited, involving blockchain and distributed cloud computing systems, for a total consideration of **HKD 10,000,000**[156](index=156&type=chunk) - This share subscription transaction was **not completed** as of the reporting date[156](index=156&type=chunk) [Significant Capital Expenditure During the Period](index=49&type=section&id=Significant%20Capital%20Expenditure%20During%20the%20Period) Other than disclosed matters, the Group had no significant capital expenditure commitments as at September 30, 2021 - The Group had **no significant capital expenditure commitments** at the end of the reporting period[157](index=157&type=chunk) [Exchange Rate Fluctuation Risk](index=49&type=section&id=Exchange%20Rate%20Fluctuation%20Risk) The Group's transactions are primarily denominated in RMB, USD, and HKD, with bank deposits held in RMB and HKD, resulting in low foreign currency exchange risk; directors do not anticipate significant adverse impacts from RMB exchange rate fluctuations and have not implemented a formal hedging policy - The Group's transactions and bank deposits are primarily denominated in **RMB, USD, and HKD**, resulting in **low foreign currency exchange risk**[158](index=158&type=chunk) - Directors do not anticipate that RMB exchange rate fluctuations will have a **material adverse impact** on operations and have not implemented a formal hedging policy[158](index=158&type=chunk) [Employees and Remuneration Policy](index=50&type=section&id=Employees%20and%20Remuneration%20Policy) As at September 30, 2021, the Group had 123 employees, with employee costs of approximately HKD 8.8 million, a 14.3% year-on-year increase, mainly due to increased retirement contributions for China employees; the company reviews its remuneration policy annually and provides continuous learning and training programs Employees and Remuneration | Indicator | September 30, 2021 | March 31, 2021 | | :--- | :--- | :--- | | Number of employees | 123 | 133 | | Employee costs (thousand HKD) | 8,800 | 7,700 | | Employee costs year-on-year growth | +14.3% | – | - The increase in employee costs was primarily due to increased **retirement contributions** for China employees during the period[159](index=159&type=chunk) - The Group provides **continuous learning and training programs** to enhance employee skills and knowledge[160](index=160&type=chunk) [Other Information](index=51&type=section&id=Other%20Information) This section covers additional disclosures including interim dividends, directors' and major shareholders' interests, share option schemes, and corporate governance practices [Interim Dividend](index=51&type=section&id=Interim%20Dividend) The Board resolved not to declare an interim dividend for the six months ended September 30, 2021, consistent with the prior year - The Company did not declare an interim dividend during the reporting period[162](index=162&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or its Associated Corporations](index=51&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20or%20its%20Associated%20Corporations) As at September 30, 2021, Executive Director and CEO Mr. Han Weining held long positions in the company's shares, including a 20.01% equity interest through his controlled corporation Excel Time and a 0.68% beneficial interest personally Directors' Long Positions in Shares | Director Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Han Weining | Interest in controlled corporation | 238,942,059 | 20.01% | | Mr. Han Weining | Beneficial owner | 8,160,000 | 0.68% | - Mr. Han Weining wholly and beneficially owns **20.01%** of the equity interest through Excel Time Investments Limited[165](index=165&type=chunk) [Directors' Rights to Acquire Securities](index=52&type=section&id=Directors'%20Rights%20to%20Acquire%20Securities) During the review period, no rights to acquire shares or debentures of the company or other body corporate were granted to or exercised by any director, their spouse, or minor children - No rights to acquire company securities were granted to or exercised by directors or their associates during the reporting period[168](index=168&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares / Other Persons as Recorded in the Register Kept Under Section 336 of the Securities and Futures Ordinance](index=52&type=section&id=Substantial%20Shareholders'%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares%20%2F%20Other%20Persons%20as%20Recorded%20in%20the%20Register%20Kept%20Under%20Section%20336%20of%20the%20Securities%20and%20Futures%20Ordinance) As at September 30, 2021, substantial shareholder Excel Time held a 20.01% long position in the company's shares, and Mr. Lam Siu Sun held a 14.95% long position Substantial Shareholders' Long Positions in Shares | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Issued Shares | | :--- | :--- | :--- | :--- | | Excel Time | Beneficial owner | 238,942,059 | 20.01% | | Lam Siu Sun | Beneficial owner | 178,582,400 | 14.95% | - Excel Time is wholly owned by Mr. Han Weining, the CEO and Executive Director[170](index=170&type=chunk) [Share Option Scheme](index=53&type=section&id=Share%20Option%20Scheme) The company adopted a share option scheme on March 22, 2012, to recognize and incentivize contributions from eligible participants; as at September 30, 2021, no share options remained outstanding under the scheme - The Share Option Scheme aims to recognize and incentivize contributions from eligible participants to the Group[171](index=171&type=chunk) - As at the end of the reporting period, there were **no outstanding share options** under the Share Option Scheme[171](index=171&type=chunk) - The total number of shares available for issue is **86,036,320 shares**, representing approximately **7.20%** of the total issued shares[171](index=171&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=53&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) For the six months ended September 30, 2021, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - The Company and its subsidiaries did not engage in any purchase, sale, or redemption activities of listed securities during the reporting period[172](index=172&type=chunk) [Disclosure Pursuant to Rule 13.51B(1) of the Listing Rules](index=53&type=section&id=Disclosure%20Pursuant%20to%20Rule%2013.51B(1)%20of%20the%20Listing%20Rules) The directorship of Mr. Wang Chen, an independent non-executive director, was automatically renewed for three years on June 25, 2021, until June 24, 2024 - The directorship of Mr. Wang Chen, an independent non-executive director, has been **automatically renewed for three years**[173](index=173&type=chunk) [Corporate Governance Practices](index=54&type=section&id=Corporate%20Governance%20Practices) The company adopted the Corporate Governance Code but did not comply with Code Provision A.2 (Chairman vacancy) and E.1.2 (Chairman attendance at AGM) during the period, with the Board actively seeking a suitable candidate for the Chairman position - The Company did not comply with Code Provision **A.2** of the Corporate Governance Code, as the position of Chairman of the Board has been vacant since January 3, 2020[175](index=175&type=chunk) - The Company did not comply with Code Provision **E.1.2** of the Corporate Governance Code, as the Chairman position was vacant, and CEO Mr. Han Weining chaired the 2021 Annual General Meeting[176](index=176&type=chunk) - The Board is actively seeking a suitable candidate to fill the vacancy of the **Chairman of the Board**[175](index=175&type=chunk) [Standard Code for Securities Transactions by Directors](index=55&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The company adopted the Standard Code as the code of conduct for directors' securities transactions, and all directors confirmed compliance with its trading standards during the reporting period - All directors confirmed compliance with the trading standards set out in the Standard Code for securities transactions during the reporting period[178](index=178&type=chunk) [Audit Committee](index=55&type=section&id=Audit%20Committee) The Audit Committee, composed of three independent non-executive directors, is responsible for reviewing and monitoring the Group's financial reporting, risk management, and internal control systems, and has reviewed the unaudited condensed consolidated financial statements for the period - The Audit Committee comprises **three independent non-executive directors**, with Mr. Lam Ying Hung as Chairman[179](index=179&type=chunk) - The Committee has reviewed the financial statements for the period and believes the company has complied with all applicable accounting standards and requirements[179](index=179&type=chunk) [Sufficiency of Public Float](index=55&type=section&id=Sufficiency%20of%20Public%20Float) As at September 30, 2021, and up to the date of this report, the company has maintained a sufficient public float as required by the Listing Rules - The Company maintained a **sufficient public float** as required by the Listing Rules during the reporting period and up to the date of this report[180](index=180&type=chunk)

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |----------------------------------------------------------|-------|-------|-------|-------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | SYNERTONE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 協同通信集團有限公司 Synertone Communication Corporation | | | | | | | | | | | (於開曼群島註冊成立的有限公司) 股份代號:1613 | | | | | | | | | | | 年 報 | | | | | | | | | | | 2019 | | | | | | | | | | | | | | | | | | | | | | | ...

SYNERTONE 協同通信集團有限公司 Synertone Communication Corporation (於開量的熟証冊成立的有限公司) 88 to tem =1613 中期報告 0203 目 錄 | --- | --- | |------------------------------|-------| | | 頁 次 | | 公司資料 | 2 | | 簡明綜合損益表 | 4 | | 簡明綜合損益及其他全面收益表 | 6 | | 簡明綜合財務狀況表 | 7 | | 簡明綜合權益變動表 | 9 | | 簡明綜合現金流量表 | 10 | | 簡明綜合財務報表附註 | 12 | | 管理層討論及分析 | 42 | | 其他資料 | 52 | 公司資料 董事會 執行董事 韓衛寧*先 生（行政總裁） 獨立非執行董事 林英鴻先生 王忱先生 李明綺女士 委員會 審核委員會 林英鴻先生（主席） 王忱先生 李明綺女士 提名委員會 王忱先生（主席） 林英鴻先生 李明綺女士 薪酬委員會 李明綺女士（主席） 林英鴻先生 王忱先生 公司秘書 丁鍵煒先生 授權代表 韓衛寧*先 生 林英鴻先生 （韓衛寧*先生之替任代表） 丁鍵 ...