Madison Holdings Group Li mite d 麥迪森控股集團有限公 司 MADISON Madison Holdings Group Limited Annual Report 2020/21 年 報 麥迪森控股集團有限公 司 （於開曼群島註冊成立的有限公司） 股份代號：���� ANNUAL REPORT 2020/21 年 報 2020/21 香港聯合交易所有限公司（「聯交所」） GEM的特色 GEM的定位，乃為中小型公司提供一個上市的市場，此等公司相比起其他在主板上市的公司帶有較高投資風險。 有意投資的人士應了解投資於該等公司的潛在風險，並應經過審慎周詳的考慮後方作出投資決定。 由於GEM上市公司普遍為中小型公司，在GEM買貴的證券可能會較於主板買才之證券承受較大的市場波動風險， 同時無法保證在GEM買賣的證券會有高流通量的市場。 香港交易及結算所有限公司及聯交所對本報告之內容概不負責，對其準確性或完整性亦不發表任何聲明，並明確 表示，概不對因本報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。 本報告的資料乃遵照聯交所的《GEM證券上市規則》（GEM上市規則 ...

[Financial Performance](index=6&type=section&id=Financial%20Performance) [Financial Summary](index=6&type=section&id=Financial%20Summary) For the nine months ended December 31, 2020, the Group's total revenue significantly decreased by 50.3% year-on-year, but loss attributable to owners of the Company narrowed considerably, with no dividends declared 2020 First Three Quarters Key Financial Indicators | Indicator | Nine Months Ended December 31, 2020 | Nine Months Ended December 31, 2019 | | :--- | :--- | :--- | | Revenue | Approx. HKD 81.6 million | Approx. HKD 164.1 million | | Loss Attributable to Owners of the Company | Approx. HKD 21.1 million | Approx. HKD 352.1 million | | Dividends | Nil | Nil | [Consolidated Income Statement Analysis](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) Despite a significant 50.3% revenue decline to HKD 81.592 million, the Group's total loss for the period narrowed substantially to HKD 21.06 million, primarily due to the absence of prior-year goodwill impairment Nine Months Ended December 31 Revenue Segment Comparison (HKD thousands) | Business Segment | 2020 | 2019 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Alcoholic Beverage Sales | 37,746 | 57,212 | -34.0% | | Financial Services | 0 | 7,238 | -100% | | Blockchain Services | 0 | 30,141 | -100% | | Loan Financing Services | 39,890 | 65,728 | -39.3% | | Auction (Discontinued) | 3,956 | 3,816 | +3.7% | | **Total** | **81,592** | **164,135** | **-50.3%** | - The significant narrowing of loss was primarily due to the absence of goodwill impairment loss in the current period, which amounted to **HKD 257 million** in the prior year[14](index=14&type=chunk) - Additionally, fair value changes of derivative financial instruments contributed a gain of **HKD 46.705 million**[14](index=14&type=chunk) Loss Per Share (HK cents) | Period | 2020 | 2019 | | :--- | :--- | :--- | | Nine Months Ended December 31 (Basic) | (0.18) | (6.31) | | Nine Months Ended December 31 (Diluted) | (0.18) | (6.32) | [Consolidated Statement of Changes in Equity](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of December 31, 2020, total equity attributable to owners increased slightly to HKD 196 million, driven by comprehensive income of HKD 9.076 million from overseas operations - As of December 31, 2020, total equity attributable to owners of the Company was approximately **HKD 196 million**[21](index=21&type=chunk) - For the nine months ended December 31, 2020, total comprehensive income for the period was approximately **HKD 9.076 million**, compared to a total comprehensive expense of **HKD 367 million** in the prior year[19](index=19&type=chunk)[21](index=21&type=chunk) [Notes to Financial Statements](index=10&type=section&id=Notes%20to%20Financial%20Statements) [General Information and Accounting Policies](index=10&type=section&id=2.%20Basis%20of%20Preparation%20and%20Accounting%20Policies) The Company, incorporated in the Cayman Islands and listed on GEM, prepares its financial statements under HKFRS, with consistent accounting policies, reviewed by the audit committee but unaudited - As of December 31, 2020, Mr. Ding Pengyun was the controlling shareholder of the Company, holding approximately **42.19%** of the issued share capital[24](index=24&type=chunk) - These financial statements have not been audited by the Company's auditor but have been reviewed by the Company's audit committee[27](index=27&type=chunk) [Revenue and Segment Information](index=12&type=section&id=3.%20Revenue%20and%20Segment%20Information) This section details the Group's revenue sources, recognition timing, business segment performance, and geographical contributions, highlighting the significant decline in total revenue due to zero contributions from financial and blockchain services [Revenue Composition](index=12&type=section&id=3.1%20Revenue%20Composition) Group revenue comprises contracts with customers and other sources, with alcoholic beverage sales and loan interest as primary continuing operations, while financial and blockchain service revenues ceased Nine Months Ended December 31 Revenue Sources (HKD thousands) | Revenue Source | 2020 | 2019 | | :--- | :--- | :--- | | **Revenue from contracts with customers** | | | | Alcoholic beverage sales | 37,746 | 57,212 | | Loan referral services | 5,645 | 5,992 | | **Other income sources** | | | | Loan interest income | 34,245 | 59,736 | | Blockchain services income | 0 | 30,141 | | Financial services interest income | 0 | 5,833 | [Segment Results](index=14&type=section&id=3.2%20Segment%20Results) All continuing segments recorded losses, but the Group's overall loss significantly narrowed due to a substantial reduction in the blockchain services segment's loss from HKD 315 million to HKD 4.1 million Nine Months Ended December 31 Segment (Loss)/Profit (HKD thousands) | Business Segment (Continuing Operations) | 2020 | 2019 | | :--- | :--- | :--- | | Alcoholic Beverage Sales | (5,894) | (8,549) | | Financial Services | (2,276) | (8,011) | | Blockchain Services | (4,096) | (314,654) | | Loan Financing Services | (1,341) | 28,192 | [Geographical Revenue](index=16&type=section&id=3.3%20Geographical%20Revenue) Hong Kong and Mainland China were the primary revenue contributors for continuing operations, while European blockchain business revenue ceased in the current period Nine Months Ended December 31 Revenue by Region (HKD thousands) | Region (Continuing Operations) | 2020 | 2019 | | :--- | :--- | :--- | | China | 30,074 | 41,353 | | Hong Kong | 47,562 | 88,825 | | Europe | 0 | 30,141 | [Key Profit and Loss Items](index=17&type=section&id=7.%20Loss%20for%20the%20Period) Key items affecting profit and loss include government subsidies as other income, finance costs from convertible bonds, increased impairment provisions for loans, and decreased staff costs - Finance costs were approximately **HKD 31.508 million**, primarily from interest expenses on convertible bonds, promissory notes, and other borrowings[45](index=45&type=chunk) - Net impairment recognized on loans and interest receivables for the period was approximately **HKD 22.576 million**, significantly higher than **HKD 4.369 million** in the prior year[51](index=51&type=chunk) - Total staff costs decreased from **HKD 55.738 million** in the prior year to **HKD 34.547 million**[51](index=51&type=chunk) [Share-based Payment Transactions](index=22&type=section&id=10.%20Share-based%20Payment%20Transactions) The Company's share option scheme, active until 2025, saw 273.7 million options cancelled or lapsed during the period, with 511.2 million options remaining unexercised and no new grants - As of December 31, 2020, **511,200,000** share options granted under the share option scheme remained unexercised, representing approximately **8.2%** of the total issued shares[62](index=62&type=chunk) - For the nine months ended December 31, 2020, **273,700,000** share options were cancelled or lapsed, with no new share options granted during the period[69](index=69&type=chunk) - During the period, the Group recognized share-based payment expenses of approximately **HKD 6.844 million** for share options granted[63](index=63&type=chunk) [Management Discussion and Analysis](index=27&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=27&type=section&id=Business%20Review) The Group reclassified its disposed wine auction business as discontinued operations, while continuing operations revenue declined 51.6% due to macroeconomic factors, trade tensions, COVID-19, and subsidiary disposals - The Group disposed of Madison Auction Limited, which engaged in wine auction business, on November 2, 2020, and its financial results were reclassified as discontinued operations[71](index=71&type=chunk) - Revenue from continuing operations decreased by **51.6%**, primarily due to economic slowdown in Mainland China and Hong Kong, US-China trade tensions, the COVID-19 pandemic, and the disposal of subsidiaries engaged in financial services and cryptocurrency mining businesses[72](index=72&type=chunk) [Financial Review](index=28&type=section&id=Financial%20Review) Total revenue decreased by 50.3% to HKD 81.6 million, but total loss significantly reduced to HKD 21.1 million, primarily due to the absence of substantial goodwill and plant impairment losses present in the prior year - Total revenue was approximately **HKD 81.6 million**, a year-on-year decrease of **50.3%**; gross profit was approximately **HKD 49.5 million**, a year-on-year decrease of **37.0%**[75](index=75&type=chunk) - Administrative and other operating expenses and depreciation charges significantly decreased by **61.7%** and **62.7%** respectively, due to the disposal of subsidiaries and cost control measures[78](index=78&type=chunk) - The loss significantly reduced by approximately **HKD 331 million**, mainly because there were no impairment losses on goodwill and plant and equipment in the current period, whereas these two impairments totaled approximately **HKD 279 million** in the prior year[78](index=78&type=chunk) [Capital Structure and Business Outlook](index=30&type=section&id=Capital%20Structure%20and%20Business%20Outlook) The Company completed a HKD 1 billion new share placement in December 2020 to supplement capital, and management anticipates continued economic challenges in 2021 while seeking new investment opportunities - The Company completed a placement on December 22, 2020, issuing **1,038,545,379** new shares at **HKD 0.055** per share[83](index=83&type=chunk) - Management anticipates challenging economic conditions in 2021 but will continue to identify other investment opportunities to sustain long-term growth[84](index=84&type=chunk) [Other Information](index=31&type=section&id=Other%20Information) [Directors' and Shareholders' Interests](index=31&type=section&id=Directors%27%20and%20Major%20Shareholders%27%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures) This section discloses directors' and major shareholders' interests in shares and options, with controlling shareholder Mr. Ding Pengyun holding approximately 42.19% of the Company's equity - Disclosed interests of directors including Guo Qun, Zhang Li, Ji Zuguang in shares and share options[87](index=87&type=chunk) - Controlling shareholder Mr. Ding Pengyun, through entities he controls such as Royal Spectrum, Devoss Global, and CVP, collectively holds approximately **42.19%** interest in the Company[93](index=93&type=chunk) [Share Option Scheme](index=35&type=section&id=Share%20Option%20Scheme) The 2015 share option scheme, valid until 2025, details changes in options granted to key stakeholders, including cancellations and unexercised quantities, with exercise prices ranging from HKD 0.207 to HKD 1.89 - The share option scheme is valid until **September 20, 2025**[102](index=102&type=chunk) - Detailed information on share options granted to Devoss Global, Montrachet, various directors, consultants, and employees, with exercise prices ranging from **HKD 0.207** to **HKD 1.89**[102](index=102&type=chunk)[104](index=104&type=chunk) [Corporate Governance](index=38&type=section&id=Corporate%20Governance%20Practices) The Company maintains high corporate governance standards, addressing a temporary deviation from the Chairman/CEO separation rule, and its audit committee has reviewed the unaudited financial report for compliance - From November 19, 2019, to July 31, 2020, Mr. Chan Ying Kit concurrently served as Chairman and Chief Executive Officer, deviating from Corporate Governance Code Provision A.2.1; the Company believes this promoted leadership consistency and balanced power[114](index=114&type=chunk) - The audit committee, comprising four members with Mr. Chu Kin Hong as Chairman (an independent non-executive director), has reviewed this financial report and deemed it to have made sufficient disclosures[117](index=117&type=chunk)

Financial Performance - For the six months ended September 30, 2020, the group recorded revenue of approximately HKD 50.8 million, a decrease of about 59.9% compared to HKD 126.8 million for the same period in 2019[8] - The group's attributable loss decreased to approximately HKD 100,000 for the six months ended September 30, 2020, compared to a loss of HKD 315.5 million for the same period in 2019[8] - Revenue from alcoholic beverage sales for the six months ended September 30, 2020, was HKD 23.8 million, down from HKD 40.4 million in the same period of 2019[10] - The group reported an operating loss of HKD 20.0 million for the six months ended September 30, 2020, compared to an operating loss of HKD 64.6 million for the same period in 2019[10] - The group’s pre-tax profit (loss) for the six months ended September 30, 2020, was HKD 40.6 million, compared to a loss of HKD 311.6 million for the same period in 2019[10] - The group’s net profit (loss) for the six months ended September 30, 2020, was HKD 32.5 million, compared to a loss of HKD 315.5 million for the same period in 2019[10] - The basic earnings per share for the six months ended September 30, 2020, was HKD 0.12, an improvement from a loss of HKD 5.72 in the same period of 2019[12] - Total comprehensive income for the three months ended September 30, 2020, was HKD 46,549,000, compared to a loss of HKD 301,410,000 in the same period of 2019[12] - The company reported a net profit of HKD 33,709,000 for the six months ended September 30, 2020, compared to a net loss of HKD 296,784,000 for the same period in 2019[60] Revenue Breakdown - Alcohol beverage sales revenue for the six months ended September 30, 2020, was HKD 23,816,000, down 41.1% from HKD 40,352,000 in the same period of 2019[35] - Loan referral service revenue for the six months ended September 30, 2020, was HKD 4,472,000, a decrease of 16.2% compared to HKD 5,340,000 for the same period in 2019[35] - Auction revenue for the six months ended September 30, 2020, was HKD 3,524,000, an increase of 35.6% from HKD 2,598,000 in the same period of 2019[35] - The loan financing business reported revenue of approximately HKD 23.5 million, down from HKD 48.9 million in the previous year[129] Costs and Expenses - The group’s total operating costs for the six months ended September 30, 2020, were HKD 50.8 million, a decrease from HKD 126.8 million in the same period of 2019[10] - Total employee costs for the six months ended September 30, 2020, were HKD 26,085,000, down from HKD 37,981,000 in 2019, reflecting a decrease of 31.2%[57] - Administrative and other operating expenses decreased by approximately 59.4% to about HKD 13.6 million, down from HKD 33.5 million in 2019[130] - Financing costs were approximately HKD 21.5 million, compared to HKD 28.7 million in the previous year[130] Assets and Liabilities - Non-current assets as of September 30, 2020, totaled HKD 229,183,000, a decrease from HKD 240,567,000 as of March 31, 2020[14] - Current assets decreased to HKD 466,326,000 as of September 30, 2020, from HKD 622,947,000 as of March 31, 2020[14] - Current liabilities increased to HKD 342,958,000 as of September 30, 2020, compared to HKD 538,197,000 as of March 31, 2020[16] - The total liabilities of the group as of September 30, 2020, were HKD 473,472,000, compared to HKD 665,599,000 as of March 31, 2020[47] - The total equity attributable to owners of the company was HKD 222,037,000 as of September 30, 2020, up from HKD 197,915,000 as of March 31, 2020[16] Cash Flow - The net cash generated from operating activities for the six months ended September 30, 2020, was HKD 118,397,000, an increase of 44.6% compared to HKD 81,866,000 for the same period in 2019[26] - The net cash used in financing activities for the six months ended September 30, 2020, was HKD (130,819,000), compared to HKD (99,361,000) for the same period in 2019[26] - The cash and cash equivalents decreased by HKD 9,081,000 for the six months ended September 30, 2020, compared to a decrease of HKD 5,468,000 in the same period of 2019[26] - The total cash and cash equivalents as of September 30, 2020, were HKD 39,986,000, down from HKD 46,046,000 as of September 30, 2019[26] Corporate Governance - The board confirmed that the information in the report is accurate and complete, with no misleading or fraudulent elements[2] - The company is committed to high standards of corporate governance to protect shareholder interests and enhance corporate value[178] - The audit committee has reviewed the unaudited consolidated results for the six months ending September 30, 2020, and found them to comply with applicable accounting standards and GEM listing rules[182] - The company has complied with the corporate governance code as per GEM listing rules for the six months ending September 30, 2020[181] Shareholder Information - The total issued and fully paid shares as of September 30, 2020, amounted to 5,192,726,898 shares[91] - Royal Spectrum holds 1,968,000,000 shares, representing approximately 37.90% of the company's issued shares[154] - Devoss Global Holdings Limited has a total equity of 1,974,000,000 shares, accounting for 38.01% of the issued shares[154] - CVP holds 504,872,727 shares, which is about 9.72% of the total issued shares[154] - 丁先生 controls 2,629,280,363 shares, representing 50.63% of the company's issued shares[156] Future Outlook - The group anticipates ongoing uncertainty due to the COVID-19 pandemic, which is expected to impact performance until 2021 when recovery signs are expected[146] - The group has not entered into any agreements for significant acquisitions or investments as of the report date[143]

Financial Performance - For the three months ended June 30, 2020, the group recorded revenue of approximately HKD 24,800,000, a decrease of about 65.6% compared to HKD 72,000,000 for the same period in 2019[8]. - The loss attributable to owners of the company for the three months ended June 30, 2020, was approximately HKD 27,400,000, compared to a loss of HKD 30,300,000 for the same period in 2019[8]. - The group reported a gross loss of HKD 34,560,000 before tax for the three months ended June 30, 2020, compared to a loss of HKD 32,937,000 for the same period in 2019[10]. - The total comprehensive loss for the period was HKD (31,500,000), compared to HKD (42,443,000) for the same period in 2019[13]. - The basic loss per share for the three months ended June 30, 2020, was HKD (0.53), compared to HKD (0.58) for the same period in 2019[12]. - The company reported a loss before tax of HKD 34,560,000, compared to a loss of HKD 32,937,000 in the same quarter of 2019[30]. - The loss for the period was approximately HKD 32.6 million, a reduction of about 5.2% from HKD 34.4 million in 2019, with attributable loss to owners of the company being approximately HKD 27.4 million[65]. Revenue Breakdown - The group’s revenue from alcoholic beverage sales was HKD 10,488,000 for the three months ended June 30, 2020, down from HKD 22,344,000 in the same period of 2019[10]. - Revenue from the alcohol beverage sales segment was HKD 10,488,000, down 53.1% from HKD 22,344,000 in the previous year[23]. - Loan referral service revenue decreased to HKD 1,702,000 from HKD 2,592,000, representing a decline of 34.4%[23]. - Auction revenue was HKD 1,430,000, down 41.6% from HKD 2,454,000 in the same quarter of 2019[23]. - Total contract revenue recognized at a point in time was HKD 13,620,000, a decrease of 51.0% from HKD 27,791,000 in the prior year[25]. - The financial services segment generated no revenue from securities and futures trading services, compared to HKD 401,000 in the same period last year[23]. - Interest income from real estate mortgage loans and other loans in the loan financing segment totaled HKD 8,698,000, down from HKD 11,399,000, a decline of 23.9%[23]. - Blockchain services revenue was not reported for the current period, compared to HKD 18,537,000 in the previous year[23]. - Loan financing services revenue was HKD 12,926,000, a decline of 50.7% from HKD 26,187,000 in the previous year[30]. Dividends and Shareholder Returns - The company did not recommend the payment of any dividends for the three months ended June 30, 2020, consistent with the previous year[8]. - The company did not declare any dividends for the period ended June 30, 2020[43]. Operational Costs and Expenses - The group incurred operational costs of HKD 8,753,000 for alcoholic beverages for the three months ended June 30, 2020, compared to HKD 18,711,000 in the same period of 2019[10]. - The total employee costs amounted to HKD 14,287,000, a decrease of 25.0% from HKD 19,067,000 in the same period last year[42]. - The company incurred financing costs of HKD 11,588,000, down 20.2% from HKD 14,534,000 in the same quarter of 2019[36]. - Administrative and other operating expenses decreased by approximately 67.8% to HKD 5.6 million, and depreciation expenses decreased by approximately 80.8% to HKD 3.4 million compared to the same period in 2019[65]. - The company reported a significant impairment loss of HKD 16,052,000 on receivables and interest, compared to HKD 4,693,000 in the previous year[42]. Corporate Governance and Compliance - The financial report was prepared in accordance with Hong Kong Financial Reporting Standards and reflects the company's ongoing commitment to transparency[20]. - The audit committee reviewed the unaudited consolidated results for the three months ended June 30, 2020, and found them to comply with applicable accounting standards and legal requirements[100]. - The company has established high standards of corporate governance to protect shareholder interests and enhance corporate value[97]. - The company has adopted a code of conduct for securities transactions by directors, confirming compliance with the standards set forth in the GEM Listing Rules[96]. - There were no directors or their associates holding any interests in businesses that directly or indirectly compete with the group as of June 30, 2020[93]. - The company has not deviated from the corporate governance code provisions, except for the roles of chairman and CEO being held by the same individual during a specified period[97]. - The company confirmed that no directors had any interests in competing businesses as of June 30, 2020[93]. Future Outlook and Strategy - The company is focused on improving its financial performance and exploring new strategies for market expansion and product development[8]. - The business outlook remains highly uncertain due to ongoing US-China trade tensions and the global impact of COVID-19, with the company focusing on existing operations and seeking suitable investment opportunities[69]. - The company will evaluate potential acquisitions for their intrinsic value to enhance shareholder value[69]. - The company continues to focus on expanding its alcohol beverage sales and financial services despite the significant revenue decline[18]. Share Options and Equity - As of June 30, 2020, the number of unexercised share options granted under the plan was 781,900,000 shares, representing about 15.1% of the total issued shares[53]. - The company approved a resolution on July 31, 2020, to redefine the plan's authorization limit, allowing a maximum of 519,272,689 shares to be issued upon exercise of options[53]. - The weighted average exercise price of options granted in 2020 ranged from HKD 0.207 to HKD 0.325, compared to HKD 1.89 in 2019[54]. - The company recognized share-based payment expenses of approximately HKD 4.41 million for the three months ended June 30, 2020, compared to HKD 294,000 in 2019[55]. - The expected volatility for the options granted in 2020 was between 59.126% and 59.774%, down from 75.216% in 2019[54]. - The company has a total of 160,000,000 stock options granted at an exercise price of HKD 0.80, which can be exercised from June 17, 2016, to December 16, 2025[88]. - The company has a total of 184,600,000 stock options granted at an exercise price of HKD 1.89, which can be exercised from January 1, 2019, to April 2, 2028[88]. - The company confirmed total expenses related to stock options granted amounted to approximately HKD 4,410,000 for the three months ended June 30, 2020, compared to HKD 294,000 for the same period in 2019[91].

Business Performance - Revenue for the fiscal year reached HKD 1.2 billion, representing a 15% increase compared to the previous year[23]. - The company reported a significant increase in user engagement, with a year-over-year growth of 25% in active users[23]. - The company has set a performance guidance of 10% revenue growth for the next fiscal year[23]. - The group recorded a loss of approximately HKD 318,300,000, which is a 24.2% reduction compared to the loss of HKD 419,700,000 in the prior year[45]. - The company's revenue decreased by approximately 35.1% to about HKD 201,500,000, down from HKD 310,400,000 in the previous year[42]. - The gross profit was approximately HKD 103,600,000, a decrease of about 41.0% from HKD 175,600,000 in the previous year, with a gross margin of approximately 51.4%[44]. - The financial services segment generated revenue of approximately HKD 10,500,000, down from HKD 21,700,000, representing a decline of about 51.5%[43]. - The loan financing business experienced a revenue decline of approximately 38.8% or HKD 54,800,000 to about HKD 86,600,000[77]. - The blockchain services segment reported revenue of approximately HKD 30,100,000, slightly up from HKD 29,400,000, indicating a growth of about 2.4%[43]. Strategic Initiatives - The company aims to diversify its business to create synergies, reduce cost structure impacts, and enhance long-term shareholder value[13]. - The company plans to expand its market presence in Southeast Asia, targeting a 30% increase in market share over the next two years[23]. - New product launches are expected to contribute an additional HKD 300 million in revenue, with a projected growth rate of 20% in the first year[23]. - A strategic acquisition is in progress, which is anticipated to add HKD 200 million in annual revenue once completed[23]. - The company is investing HKD 50 million in R&D for new technologies aimed at enhancing user experience and operational efficiency[23]. - The board believes the wine auction business can further solidify the group's position in the high-end wine market[87]. - The group aims to seek suitable investment opportunities to diversify its revenue sources and strengthen its business foundation[87]. Corporate Governance - The company is committed to improving its corporate governance and has established new committees to oversee compliance and risk management[23]. - The board of directors includes members with diverse backgrounds in finance, education, and technology, enhancing the company's strategic direction[23]. - The company has adopted a remuneration policy for directors that aligns with market practices and reflects performance and responsibilities[117]. - The company is committed to high standards of corporate governance, having adopted the principles and code provisions of the GEM listing rules[166]. - The board consists of nine members, including four executive directors and three independent non-executive directors, ensuring compliance with GEM listing rules[177]. - The company has established three board committees: Audit Committee, Remuneration Committee, and Nomination and Corporate Governance Committee to oversee various aspects of the business[191]. - The Audit Committee is tasked with reviewing the company's financial reporting system and risk management processes to identify and manage key risks affecting performance[193]. - The board's governance practices are designed to ensure transparency and accountability in decision-making processes[182]. Financial Position - As of March 31, 2020, the group's current assets net amounted to approximately HKD 84,800,000, an increase from HKD 76,400,000 in the previous year[47]. - The current ratio was approximately 1.2 times, compared to 1.1 times in the previous year, indicating improved liquidity[47]. - The debt-to-equity ratio increased to approximately 272.2% from 181.4% in the previous year, primarily due to a decrease in total equity[47]. - The group did not have any specific major investment or capital asset plans as of March 31, 2020[75]. - The company has maintained the required public float as per GEM listing rules as of the report date[160]. Employee and Management - The management team has extensive experience in business strategy and financial management, with over 20 years in the industry[23]. - The group employed 145 staff as of March 31, 2020, down from 218 in 2019[84]. - The company has no significant management or administrative contracts in place for the year[148]. - The attendance record for board meetings in 2019/2020 shows high engagement, with most directors attending all meetings[179]. Shareholder Information - No final dividend was recommended for the year ending March 31, 2020[97]. - The company will consider financial performance, earnings, and available reserves when proposing dividends, adhering to relevant laws and regulations[98]. - As of March 31, 2020, the total number of issued shares was 5,192,726,898[124]. - Royal Spectrum Holding Company Limited holds 1,968,000,000 shares, representing approximately 37.90% of the company's issued shares[127]. - The largest single customer accounted for 6.6% of total sales, an increase from 4.4% in 2019, while the top five customers represented 16.3% of total sales, slightly down from 16.7% in 2019[149].

[Corporate Information](index=4&type=section&id=Corporate%20Information) The company experienced significant personnel changes within its board and senior management during the reporting period - During the reporting period, significant personnel changes occurred within the company's board, committees, and senior management, including resignations and new appointments for roles such as Chairman, CEO, Executive Director, and Company Secretary[7](index=7&type=chunk)[8](index=8&type=chunk)[10](index=10&type=chunk) [Financial Highlights](index=6&type=section&id=Financial%20Highlights) Revenue decreased by **30.2%** to **HK$164.1 million**, leading to a **108.7%** expansion in loss attributable to owners, reaching **HK$327.5 million** Financial Highlights for the Nine Months Ended December 31, 2019 | Metric | Amount (HKD) | Year-on-Year Change | | :--- | :--- | :--- | | Revenue | Approx. 164,100,000 | -30.2% | | Loss Attributable to Owners of the Company | Approx. 327,500,000 | Loss expanded by 108.7% | | Dividends | Not distributed | No change | [Condensed Consolidated Financial Statements](index=7&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [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) The company reported **HK$164 million** in revenue, a **30.2%** decrease, with loss for the period expanding to **HK$352 million** and loss attributable to owners reaching **HK$327 million**, driven by significant impairment losses Key Items from the Statement of Profit or Loss for the Nine Months Ended December 31, 2019 | Item (HKD '000) | Nine Months 2019 | Nine Months 2018 (Restated) | | :--- | :--- | :--- | | **Revenue** | **164,135** | **235,085** | | Operating costs | (85,486) | (101,501) | | Impairment loss recognized on goodwill | (257,440) | (6,847) | | Impairment loss recognized on property, plant and equipment | (21,760) | – | | Gain on disposal of a subsidiary | 42,594 | – | | **Loss before tax** | **(351,763)** | **(137,448)** | | **Loss for the period** | **(352,118)** | **(150,773)** | | **Loss attributable to owners of the Company** | **(327,479)** | **(156,867)** | [Condensed Consolidated Statement of Changes in Equity](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) Equity attributable to owners of the company substantially decreased from **HK$167 million** due to significant losses, with non-controlling interests also declining [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [1. General Information](index=11&type=section&id=1.%20General%20Information) The company, a Cayman Islands-incorporated investment holding company listed on GEM, primarily operates in alcoholic beverage sales, financial services, blockchain, loan financing, and auctions - The Group primarily operates in five key business segments: alcoholic beverage sales, financial services, blockchain services, loan financing services, and alcoholic beverage auction services[30](index=30&type=chunk) [2. Basis of Preparation and Restatement](index=11&type=section&id=2.%20Basis%20of%20Preparation%20and%20Restatement) Financial statements are prepared under GEM Listing Rules, with comparative figures restated due to a business combination under common control - Due to a business combination under common control, financial statement data for prior periods have been restated to maintain comparability[32](index=32&type=chunk)[34](index=34&type=chunk) [4. Revenue and Segment Information](index=13&type=section&id=4.%20Revenue%20and%20Segment%20Information) Group revenue decreased **30.2%** due to declines in loan financing and alcoholic beverage sales, while blockchain services grew but incurred substantial losses, with Hong Kong and China as key declining regions Segment Revenue and (Loss) Profit for the Nine Months Ended December 31 | Segment (HKD '000) | 2019 Revenue | 2018 Revenue (Restated) | 2019 (Loss)/Profit | 2018 (Loss)/Profit (Restated) | | :--- | :--- | :--- | :--- | :--- | | Alcoholic beverage sales | 57,212 | 92,135 | (8,549) | 2,185 | | Financial services | 7,238 | 10,920 | (8,011) | (6,750) | | Blockchain services | 30,141 | 15,721 | (314,654) | (36,258) | | Loan financing services | 65,728 | 113,082 | 28,192 | 82,123 | | Auction | 3,816 | 3,227 | (2,919) | (319) | | **Total** | **164,135** | **235,085** | **(305,941)** | **40,981** | Revenue by Geographical Region for the Nine Months Ended December 31 | Region (HKD '000) | 2019 | 2018 (Restated) | | :--- | :--- | :--- | | Hong Kong | 92,641 | 168,024 | | China | 41,353 | 56,991 | | Europe | 30,141 | 10,070 | | **Total** | **164,135** | **235,085** | [8. Loss for the Period](index=18&type=section&id=8.%20Loss%20for%20the%20Period) Loss for the period was impacted by **HK$55.7 million** in staff costs and **HK$25.5 million** in depreciation, while equity-settled share-based payment expenses for consultants significantly decreased from **HK$50.2 million** to **HK$0.6 million** Major Expenses Included in Loss for the Period for the Nine Months Ended December 31 | Item (HKD '000) | 2019 | 2018 (Restated) | | :--- | :--- | :--- | | Total staff costs | 55,738 | 69,413 | | Depreciation of property, plant and equipment | 16,866 | 19,477 | | Depreciation of right-of-use assets | 8,672 | – | | Equity-settled share-based payment expenses – consultants | 627 | 50,192 | [10. Loss Per Share](index=19&type=section&id=10.%20Loss%20Per%20Share) Basic loss per share widened to **6.31 HK cents** from **3.75 HK cents**, primarily due to a substantial increase in loss attributable to owners Loss Per Share (HK Cents) | Item | Nine Months Ended December 31, 2019 | Nine Months Ended December 31, 2018 (Restated) | | :--- | :--- | :--- | | Basic | (6.31) | (3.75) | | Diluted | (6.32) | (3.80) | [11. Share-based Payment Transactions](index=20&type=section&id=11.%20Share-based%20Payment%20Transactions) The Group granted over **360 million** new share options, bringing total outstanding options to **796 million** shares (**15.3%** of issued shares), with related expenses significantly decreasing to **HK$2.48 million** - On August 16 and December 6, 2019, the company granted **11,500,000** and **355,400,000** share options, respectively[71](index=71&type=chunk) - For the nine months ended December 31, 2019, share-based payment expenses related to share options amounted to approximately **HK$2,483,000**, representing a significant year-on-year decrease[74](index=74&type=chunk) [12. Business Combination under Common Control and Restatement](index=24&type=section&id=12.%20Business%20Combination%20under%20Common%20Control%20and%20Restatement) The acquisition of Hackett Enterprises Limited on March 29, 2019, treated as a common control business combination, required restatement of 2018 comparative financial data to reflect its inclusion - On March 29, 2019, the company completed the acquisition of Hackett, which was classified as a business combination under common control, requiring restatement of comparative financial data[81](index=81&type=chunk) - Following restatement, revenue for the nine months ended 2018 was adjusted from **HK$122 million** to **HK$235 million**, and loss before tax was adjusted from **HK$207 million** to **HK$137 million**[91](index=91&type=chunk) [Management Discussion and Analysis](index=27&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=27&type=section&id=Business%20Review) Group revenue declined **30.2%** to **HK$164 million** due to downturns in loan financing and wine businesses, and European cryptocurrency mining operations ceased in January 2020 despite blockchain services growth Revenue Contribution by Business Segment for the Nine Months Ended December 31, 2019 | Business Segment | Revenue (HKD) | | :--- | :--- | | Wine business | Approx. 57,200,000 | | Wine auction business | Approx. 3,800,000 | | Financial services business | Approx. 7,200,000 | | Blockchain services business | Approx. 30,100,000 | | Loan financing business | Approx. 65,800,000 | - The Group ceased its cryptocurrency mining operations in Europe on January 22, 2020[94](index=94&type=chunk) [Financial Review](index=27&type=section&id=Financial%20Review) Financial performance deteriorated with revenue declining **30.2%** due to weak loan financing and alcoholic beverage sales, while **HK$279 million** in impairment losses on blockchain-related assets led to a **108.7%** increase in loss attributable to owners, partially offset by a **HK$42.6 million** gain from subsidiary disposal [Revenue](index=27&type=section&id=Revenue) Revenue decreased **30.2%** to **HK$164 million**, primarily due to reduced loan financing income from economic slowdowns and declining alcoholic beverage sales from competition and social events - The decrease in revenue was primarily attributable to (i) reduced income from loan financing business due to economic slowdown, and (ii) a decline in alcoholic beverage sales due to intense competition and social events in Hong Kong[95](index=95&type=chunk) [Impairment Loss](index=30&type=section&id=Impairment%20Loss) The Group recognized substantial impairment losses on cryptocurrency mining assets, including **HK$257 million** on Diginex goodwill and **HK$21.8 million** on related property and equipment, due to unmet business forecasts - Due to delays in the development of high-performance computing services, the Group recognized an impairment loss of approximately **HK$257,400,000** on goodwill arising from the acquisition of Diginex[107](index=107&type=chunk) - An impairment loss of approximately **HK$21,800,000** was recognized on property, plant and equipment of Diginex and Nordic[107](index=107&type=chunk) [Gain on Disposal of a Subsidiary](index=31&type=section&id=Gain%20on%20Disposal%20of%20a%20Subsidiary) The Group disposed of its **55%** equity in Novel Idea Holdings Limited for **HK$45 million**, recognizing a gain of approximately **HK$42.6 million** - The Group recorded a gain of approximately **HK$42,600,000** from the disposal of Novel Idea, a subsidiary engaged in cryptocurrency derivatives trading platforms[111](index=111&type=chunk) [Loss Attributable to Owners of the Company](index=32&type=section&id=Loss%20Attributable%20to%20Owners%20of%20the%20Company) Loss attributable to owners expanded **108.7%** from **HK$157 million** to **HK$328 million**, primarily due to substantial impairment losses on Diginex and Nordic assets, partially offset by the Novel Idea disposal gain - Loss attributable to owners increased by approximately **HK$171 million** to **HK$328 million**, primarily due to significant impairment losses in the blockchain business[115](index=115&type=chunk) [Significant Investments, Material Acquisitions and Disposals of Subsidiaries, and Future Plans for Material Investments and Capital Assets](index=32&type=section&id=Significant%20Investments%2C%20Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20and%20Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Assets) As of December 31, 2019, the Group held minor stakes in Tencent and AAC Technologies, disposed of money market funds, sold **55%** of Novel Idea, and increased its equity in BITOCEAN Co., Ltd. to **90.66%** Significant Financial Assets Held for Trading as of December 31, 2019 | Investment Target | Fair Value (HKD '000) | Percentage of Total Assets | | :--- | :--- | :--- | | Tencent Holdings Limited (700) | 376 | 0.03% | | AAC Technologies Holdings Inc. (2018) | 340 | 0.03% | - During the period, the Group disposed of its **55%** equity interest in Novel Idea and increased its equity interest in BITOCEAN Co., Ltd[125](index=125&type=chunk) [Outlook and Prospects](index=35&type=section&id=Outlook%20and%20Prospects) Management anticipates significant uncertainties from Hong Kong social events and the COVID-19 outbreak, with the company focusing on quality products and services while exploring new business directions - Management anticipates that ongoing social events in Hong Kong and the COVID-19 outbreak will bring business uncertainties[129](index=129&type=chunk) - The company's strategy involves consolidating its high-end fine wine business and seeking new business directions to mitigate negative impacts[129](index=129&type=chunk) [Other Information](index=36&type=section&id=Other%20Information) [Unauthorised Disposal](index=43&type=section&id=Unauthorised%20Disposal) The Group initiated legal proceedings in Shenzhen against Diginex's minority shareholders and Chinese management for unauthorized disposal of cryptocurrency mining equipment in China - The Group has filed a lawsuit concerning the unauthorized disposal of its cryptocurrency mining equipment in China, targeting Diginex's minority shareholders and management company[155](index=155&type=chunk) [Material Events after the Reporting Period](index=46&type=section&id=Material%20Events%20after%20the%20Reporting%20Period) Post-reporting period, the Group completed two significant divestitures: selling **49%** of Bartha International on January 17, 2020, and disposing of Madison Future Games (including Diginex and Nordic) on January 22, 2020, terminating European crypto mining operations - On January 17, 2020, the Group completed the disposal of its **49%** equity interest in Bartha International, after which Bartha and its subsidiaries are no longer consolidated into the Group's financial statements[169](index=169&type=chunk)[172](index=172&type=chunk) - On January 22, 2020, the Group disposed of Madison Future Games and its subsidiaries (including Diginex and Nordic) for a nominal consideration of **HK$1.00**, formally terminating its European cryptocurrency mining operations[173](index=173&type=chunk)

Financial Performance - For the six months ended September 30, 2019, the group recorded revenue of approximately HKD 126.8 million, a decrease of about 19.0% compared to HKD 156.6 million for the same period in 2018[16] - The loss attributable to owners of the company increased to approximately HKD 296.8 million for the six months ended September 30, 2019, compared to HKD 60.4 million for the same period in 2018[16] - The loss for the six months ended September 30, 2019, was HKD 315,498,000, compared to a loss of HKD 46,612,000 for the same period in 2018, representing a significant increase in losses[20] - Total comprehensive loss for the six months ended September 30, 2019, was HKD 337,004,000, compared to HKD 66,375,000 for the same period in 2018[23] - The company reported a basic loss per share of HKD 5.20 for the three months ended September 30, 2019, compared to HKD 1.00 for the same period in 2018[20] - The company reported a loss before tax of HKD 84,728,000, with a tax credit of HKD 231,000[44] - The net loss attributable to the company's owners was HKD 76,469,000, while non-controlling interests reported a loss of HKD 8,028,000[44] Revenue Breakdown - For the six months ended September 30, 2019, the company reported revenue from alcoholic beverage sales of HKD 68,095,000[42] - Alcoholic beverage sales for the three months ended September 30, 2019, were HKD 18,008,000, down 40.8% from HKD 30,478,000 in the same period of 2018[19] - Blockchain services revenue increased to HKD 11,598,000 for the three months ended September 30, 2019, compared to HKD 3,125,000 in the same period of 2018, marking a growth of 270.4%[19] - Blockchain services revenue significantly increased to HKD 30,135,000 for the six months ended September 30, 2019, compared to HKD 3,125,000 in the same period of 2018[97] - Loan referral service income for the six months ended September 30, 2019, was HKD 5,340,000, down 81% from HKD 27,837,000 in the same period of 2018[97] - The financial services segment generated HKD 71,000 in financial advisory service income for the three months ended September 30, 2019, compared to HKD 1,202,000 in the same period of 2018[97] Dividends and Shareholder Returns - The board of directors did not recommend the payment of an interim dividend for the six months ended September 30, 2019[16] - The company did not declare or propose any dividends for the six months ended September 30, 2019, consistent with the same period in 2018[126] Assets and Liabilities - Non-current assets decreased to HKD 379,320,000 as of September 30, 2019, from HKD 660,497,000 as of March 31, 2019[25] - The company's total equity as of September 30, 2019, was HKD 127,485 thousand, down from HKD 462,191 thousand as of March 31, 2019, reflecting a decrease of 72.5%[28] - The total assets less current liabilities decreased to HKD 432,156 thousand from HKD 736,895 thousand, indicating a decline of 41.3%[28] - The company's total liabilities as of September 30, 2019, were HKD 304,671 thousand, compared to HKD 274,704 thousand as of March 31, 2019, indicating an increase of 10.5%[28] - Total assets as of September 30, 2019, amounted to HKD 1,156,360 thousand, down from HKD 1,536,880 thousand as of March 31, 2019[108] Cash Flow and Financing - The net cash generated from operating activities for the six months ended September 30, 2019, was HKD 81,866 thousand, a significant improvement compared to a net cash outflow of HKD 170,394 thousand for the same period in 2018[36] - The financing activities resulted in a net cash outflow of HKD 99,361 thousand for the six months ended September 30, 2019, compared to a net cash inflow of HKD 281,356 thousand in the same period of 2018[36] - The company reported a significant increase in financing costs, which rose to HKD 28,695,000 for the six months ended September 30, 2019, compared to HKD 15,447,000 for the same period in 2018[19] - The company’s total borrowings increased to HKD 10,903,000 for the six months ended September 30, 2019, compared to HKD 5,291,000 in the same period of 2018, reflecting a significant rise of 106.5%[7] Accounting Policies and Standards - The company has adopted a new presentation method for its income statement, focusing on the nature of expenses rather than their function, to better reflect its performance in blockchain and loan financing sectors[66] - The adoption of Hong Kong Financial Reporting Standard 16 resulted in the recognition of right-of-use assets and lease liabilities amounting to approximately HKD 12,557,000 as of April 1, 2019[78] - The transition to HKFRS 16 did not have a significant impact on the financial performance and position of the company during the reporting period[71] Impairments and Losses - The company incurred a loss of HKD 21,760,000 related to impairment of property and equipment used in the blockchain services segment due to a decline in cryptocurrency market prices[130] - The goodwill impairment loss recognized for the acquisition of Diginex HPC was approximately HKD 257,440,000 due to underperformance in the cryptocurrency mining business[168] Loans and Receivables - The total loans receivable decreased to HKD 376,929,000 from HKD 458,140,000, reflecting a decline of 17.8%[157] - The provision for loan receivables increased to HKD 40,729,000 from HKD 33,076,000, indicating a rise of 23.1%[157] - The aging analysis of trade receivables showed that receivables over 365 days amounted to HKD 182,435,000, slightly down from HKD 186,595,000[159] Legal Matters - The company announced a lawsuit against Diginex Global and the management company for unauthorized sale of cryptocurrency mining equipment, which is not expected to have a significant adverse impact on the group's operations or financial condition[131]

Madison Holdings Group Limited MADISON Madison Holdings Group Limited 麥迪森控股集團有限公 司 Annual Report 2018/19 年報 麥迪森控股集團有限公司 （於開曼群島註冊成立的有限公司） 股份代號：8057 2018/19 Annual Report 2018/19 年 報 香港聯合交易所有限公司（「聯交所」）GEM之特色 GEM乃為帶有較其他在聯交所上市之公司有更高投資風險之中小型公司提供一個上市之市場。有 意投資之人士應了解投資於該等公司之潛在風險，並應經過審慎周詳之考慮後方作出投資決定。 由於在GEM上市之公司普遍為中小型公司，在GEM買賣之證券可能會較於主板買賣之證券承受較 大之市場波動風險，同時無法保證在GEM買賣之證券會有高流通量之市場。 香港交易及結算所有限公司及聯交所對本報告的內容概不負責，對其準確性或完整性亦不發表任何 聲明，並明確表示，概不對因本報告全部或任何部分內容而產生或因倚賴該等內容而引致的任何損 失承擔任何責任。 本報告乃遵照GEM證券上市規則（「GEM上市規則」）的規定而提供有關麥迪森控股集團有 ...

[Company Information](index=4&type=section&id=Company%20Information) This section provides essential details about Madison Holdings Group Limited, including its board, committees, and key corporate contacts [Company Basic Information](index=4&type=section&id=Company%20Basic%20Information) This section lists Madison Holdings Group Limited's board members, committee compositions, company secretary, compliance officer, authorized representatives, auditors, registered office, principal place of business in Hong Kong, principal bankers, Cayman Islands principal share registrar, Hong Kong share registrar, and stock code - The company's registered office is in the Cayman Islands, with its principal place of business in Hong Kong located at King's Road, North Point[16](index=16&type=chunk)[17](index=17&type=chunk) - The company's stock code is **08057**[23](index=23&type=chunk) [Directors and Committees](index=4&type=section&id=Directors%20and%20Committees) The company's Board of Directors comprises executive and independent non-executive directors, supported by Remuneration, Audit, and Nomination and Corporate Governance Committees to ensure robust corporate governance - Executive Directors include Mr. Ding Pengyun (Chairman), Mr. Zhu Qin (Vice Chairman), Mr. Zhang Zhiqiang (Chief Executive Officer, resigned), Mr. Zhou Bingrong (Chief Executive Officer, appointed), and Ms. Guo Qun[14](index=14&type=chunk) - Independent Non-executive Directors include Ms. Fan Wei, Mr. Chu Kin Hong, and Mr. Yip Cho Yin, JP[14](index=14&type=chunk) - The Audit Committee Chairman is Mr. Chu Kin Hong, the Remuneration Committee Chairman is Ms. Fan Wei, and the Nomination and Corporate Governance Committee Chairman is Mr. Ding Pengyun[14](index=14&type=chunk) [Financial Highlights](index=6&type=section&id=Financial%20Highlights) This section provides a concise overview of the Group's key financial performance indicators for the period [Overview of Financial Performance](index=6&type=section&id=Overview%20of%20Financial%20Performance) For the nine months ended December 31, 2018, the Group's revenue decreased by 12.9% to approximately HK$122 million, loss attributable to owners significantly increased to approximately HK$177.3 million, and no dividend was recommended Financial Summary for the Nine Months Ended December 31, 2018 | Metric | Nine Months Ended December 31, 2018 (HK$'000) | Nine Months Ended December 31, 2017 (Restated, HK$'000) | Change Rate | | :--- | :--- | :--- | :--- | | Revenue | 122,000 | 140,100 | -12.9% | | Loss attributable to owners of the Company | 177,300 | 144,000 | +23.1% | | Dividend | Not recommended | Nil | - | [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 presents the Group's financial performance, including revenue, expenses, and comprehensive income, for the reporting period [Analysis of Profit or Loss and Comprehensive Income](index=7&type=section&id=Analysis%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the nine months ended December 31, 2018, the Group reported revenue of HK$122 million, gross profit of HK$51.403 million, a loss for the period of HK$203.8 million, loss attributable to owners of HK$177.3 million, and basic and diluted loss per share of 4.24 HK cents Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (for the nine months ended December 31) | Metric | 2018 (HK$'000) | 2017 (Restated, HK$'000) | | :--- | :--- | :--- | | Revenue | 122,003 | 140,116 | | Cost of sales | (70,600) | (95,431) | | Gross profit | 51,403 | 44,685 | | Other income | 5,142 | 1,507 | | Selling and distribution expenses | (12,328) | (12,535) | | Net (loss) gain on trading | (34,206) | 2,184 | | Administrative and other operating expenses | (169,879) | (41,658) | | Share of results of associates | (72) | – | | Fair value change of derivative financial instruments | (1,119) | – | | Fair value change of cryptocurrencies | (6,413) | – | | Fair value change of exchangeable bonds | (11,727) | (151,064) | | Impairment loss on goodwill | (3,492) | – | | Deemed loss on disposal of an associate | (69) | – | | Finance costs | (21,230) | (6,009) | | Loss before tax | (203,990) | (162,890) | | Income tax credit | 231 | 335 | | Loss for the period | (203,759) | (162,555) | | Loss for the period attributable to owners of the Company | (177,281) | (144,049) | | Loss for the period attributable to non-controlling interests | (26,478) | (18,506) | | Loss per share (HK cents) Basic and diluted | (4.24) | (3.60) | [Condensed Consolidated Statement of Changes in Equity](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This section outlines the changes in the Group's equity components, including share capital, reserves, and non-controlling interests, for the reporting period [Analysis of Changes in Equity](index=9&type=section&id=Analysis%20of%20Changes%20in%20Equity) The condensed consolidated statement of changes in equity illustrates movements for the nine months ended December 31, 2018, encompassing opening balances, total comprehensive expenses for the period, share-based payment transactions, and other equity adjustments - The statement of changes in equity presents the opening and closing balances of share capital, reserves, and non-controlling interests, along with movements during the period due to losses, share-based payment expenses, and other factors[32](index=32&type=chunk) - The origins of other reserves, share capital reserves, and merger reserves are explained in the notes, involving reorganization, equity dilution, and business combinations under common control[35](index=35&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=11&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=11&type=section&id=1.%20General%20Information) The company, incorporated in the Cayman Islands and listed on GEM, operates as an investment holding company primarily engaged in alcoholic beverage sales, financial services, blockchain services, and cryptocurrency mining, with HKD as its functional currency - The company was incorporated in the Cayman Islands on April 15, 2015, and listed on GEM of the Stock Exchange on October 8, 2015[38](index=38&type=chunk) - Principal activities include alcoholic beverage sales, financial services, blockchain services, cryptocurrency mining, and alcoholic beverage auctions[38](index=38&type=chunk) - The Group adopted **HKD** as its presentation currency[38](index=38&type=chunk) [2. Basis of Preparation](index=11&type=section&id=2.%20Basis%20of%20Preparation) These condensed consolidated financial statements are prepared in accordance with GEM Listing Rules, adopting merger accounting for business combinations under common control, with restatement to reflect financial information from the date of first control - The financial statements are prepared in accordance with the applicable disclosure provisions of Chapter 18 of the GEM Listing Rules of the Stock Exchange[39](index=39&type=chunk) - The Group adopted merger accounting for business combinations under common control, restating the financial information of the combined entities retrospectively from the date of first control[41](index=41&type=chunk)[43](index=43&type=chunk) [3. Significant Accounting Policies](index=12&type=section&id=3.%20Significant%20Accounting%20Policies) These condensed consolidated financial statements are prepared on a historical cost basis, incorporating all new and revised Hong Kong Financial Reporting Standards effective on or after April 1, 2018, with no anticipated material impact on the Group's results or financial position - The financial statements are prepared on a historical cost basis, with accounting policies consistent with the interim condensed consolidated financial statements for the six months ended September 30, 2018[43](index=43&type=chunk)[44](index=44&type=chunk) - The Group has adopted all new and revised Hong Kong Financial Reporting Standards effective on or after April 1, 2018, with no material impact expected on its results or financial position[47](index=47&type=chunk) [4. Revenue and Segment Information](index=13&type=section&id=4.%20Revenue%20and%20Segment%20Information) The Group's revenue primarily stems from alcoholic beverage sales, auctions, financial services, and blockchain services, totaling HK$122 million for the nine months ended December 31, 2018, with Hong Kong being the largest contributor and increased revenue from Europe and China - The Group's revenue sources include alcoholic beverage sales, alcoholic beverage auctions, financial services, and blockchain services[50](index=50&type=chunk) Segment Revenue (for the nine months ended December 31) | Segment | 2018 (HK$'000) | 2017 (Restated, HK$'000) | | :--- | :--- | :--- | | Alcoholic beverage sales | 92,136 | 118,352 | | Alcoholic beverage auctions | 3,227 | – | | Financial services | 10,919 | 21,764 | | Blockchain services | 15,721 | – | | **Total Revenue** | **122,003** | **140,116** | Revenue by Geographical Area (for the nine months ended December 31) | Region | 2018 (HK$'000) | 2017 (Restated, HK$'000) | | :--- | :--- | :--- | | Hong Kong | 106,282 | 140,116 | | China | 5,651 | – | | Europe | 10,070 | – | | **Total Revenue** | **122,003** | **140,116** | [5. Other Income](index=15&type=section&id=5.%20Other%20Income) For the nine months ended December 31, 2018, the Group's other income significantly increased to HK$5.142 million, primarily driven by higher government grants and claims and compensation income Other Income (for the nine months ended December 31) | Item | 2018 (HK$'000) | 2017 (Restated, HK$'000) | | :--- | :--- | :--- | | Bank interest income | 172 | 98 | | Claims and compensation income | 2,373 | – | | Consignment income | 623 | 284 | | Promotion income | 655 | 98 | | Government grants | 1,088 | – | | Others | 231 | 987 | | **Total** | **5,142** | **1,507** | - Other income increased by approximately **240%** year-on-year, primarily due to significant increases in government grants and claims and compensation income[56](index=56&type=chunk) [6. Finance Costs](index=16&type=section&id=6.%20Finance%20Costs) For the nine months ended December 31, 2018, the Group's finance costs significantly increased to HK$21.23 million, mainly due to higher interest on exchangeable bonds and other borrowings Finance Costs (for the nine months ended December 31) | Item | 2018 (HK$'000) | 2017 (Restated, HK$'000) | | :--- | :--- | :--- | | Interest on exchangeable bonds | 10,077 | 5,589 | | Interest on other borrowings | 10,335 | – | | Interest on bills payable | 818 | 420 | | **Total** | **21,230** | **6,009** | - Finance costs increased by approximately **253.3%** year-on-year, primarily impacted by increased other borrowings[58](index=58&type=chunk) [7. Income Tax Credit](index=16&type=section&id=7.%20Income%20Tax%20Credit) For the nine months ended December 31, 2018, the Group's income tax credit decreased to HK$0.231 million, mainly due to increased loss before tax and a reduction in deferred tax assets Income Tax Credit (for the nine months ended December 31) | Item | 2018 (HK$'000) | 2017 (Restated, HK$'000) | | :--- | :--- | :--- | | Current tax: Hong Kong Profits Tax | – | 120 | | Deferred tax | (231) | (455) | | **Total** | **(231)** | **(335)** | - The decrease in income tax credit is primarily attributable to increased loss before tax and a reduction in deferred tax assets arising from temporary timing differences[104](index=104&type=chunk) [8. Loss for the Period](index=17&type=section&id=8.%20Loss%20for%20the%20Period) For the nine months ended December 31, 2018, the Group's loss for the period was HK$203.8 million, primarily influenced by staff costs, inventory costs, depreciation of plant and equipment, share-based payment expenses, and fair value changes of financial assets held for trading Loss for the Period Deducted (Credited) Items (for the nine months ended December 31) | Item | 2018 (HK$'000) | 2017 (Restated, HK$'000) | | :--- | :--- | :--- | | Staff costs (including directors' emoluments) | 30,833 | 21,946 | | Cost of inventories recognized as an expense | 70,600 | 95,284 | | Depreciation of plant and equipment | 17,691 | 3,894 | | Equity-settled share-based payment expenses | 70,473 | – | | Unrealized loss (gain) on fair value change of financial assets held for trading | 33,180 | (525) | | Net exchange (gain) loss | 552 | 255 | | Minimum lease payments under operating leases | 8,847 | 9,769 | [9. Dividends](index=17&type=section&id=9.%20Dividends) For the nine months ended December 31, 2018, the company neither paid, declared, nor proposed any dividends - The Directors do not recommend the payment of any dividend for the nine months ended December 31, 2018[64](index=64&type=chunk) [10. Loss Per Share](index=18&type=section&id=10.%20Loss%20Per%20Share) For the nine months ended December 31, 2018, the basic and diluted loss per share attributable to owners of the company was 4.24 HK cents, identical to basic loss per share, as the effect of share options and exchangeable bonds would reduce the loss per share Loss Per Share Calculation (for the nine months ended December 31) | Metric | 2018 (HK$'000) | 2017 (Restated, HK$'000) | | :--- | :--- | :--- | | Loss for the period attributable to owners of the Company | (177,281) | (144,049) | | Weighted average number of ordinary shares | 4,184,341,202 | 4,000,000,000 | | Loss per share (HK cents) Basic and diluted | (4.24) | (3.60) | - Diluted loss per share is the same as basic loss per share because the effect of unexercised share options and exchangeable bonds would result in a reduction in loss per share[66](index=66&type=chunk)[67](index=67&type=chunk) [11. Share-based Payment Transactions](index=19&type=section&id=11.%20Share-based%20Payment%20Transactions) The company operates a share option scheme to incentivize eligible individuals; as of December 31, 2018, outstanding share options covered 484.1 million shares, representing 11.30% of issued ordinary shares, with HK$70.473 million in share-based payment expenses recognized during the period - The company adopted a share option scheme on September 21, 2015, and granted multiple tranches of share options on April 3, December 13, and December 14, 2018[69](index=69&type=chunk)[70](index=70&type=chunk)[72](index=72&type=chunk) - As of December 31, 2018, outstanding share options involved **484.1 million shares**, representing **11.30%** of the issued ordinary shares[73](index=73&type=chunk) - For the nine months ended December 31, 2018, the Group recognized share-based payment expenses of approximately **HK$70.473 million** for the grant of share options[74](index=74&type=chunk)[159](index=159&type=chunk) [12. Business Combination under Common Control and Restatement](index=22&type=section&id=12.%20Business%20Combination%20under%20Common%20Control%20and%20Restatement) On May 31, 2018, Forefront Financial exercised its exchange right, converting exchangeable bonds into a 49% equity interest in Bartha International Limited, resulting in a business combination under common control, for which the Group adopted merger accounting and restated comparative figures - On May 31, 2018, Forefront Financial exercised its exchange right, converting approximately **HK$72.088 million** in exchangeable bonds into a **49%** equity interest in Bartha International Limited, constituting a business combination under common control[80](index=80&type=chunk) - The Group adopted merger accounting for this common control combination and restated comparative financial data for the three and nine months ended December 31, 2017[80](index=80&type=chunk)[81](index=81&type=chunk)[91](index=91&type=chunk) [Management Discussion and Analysis](index=24&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the Group's business operations, financial performance, significant investments, and future outlook [Business Review](index=24&type=section&id=Business%20Review) During the reporting period, the Group primarily engaged in retail and wholesale of wine products, alcoholic beverage auctions, financial services, blockchain services, and cryptocurrency mining, with total revenue of approximately HK$122 million for the nine months ended December 31, 2018, a 12.9% year-on-year decrease - The Group's businesses include wine business, alcoholic beverage auctions, financial services business, and blockchain services business[93](index=93&type=chunk) Revenue Contribution for the Nine Months Ended December 31, 2018 | Business | Revenue Contribution (HK$ million) | | :--- | :--- | | Alcoholic beverage sales | 92.1 | | Wine auctions | 3.2 | | Financial services | 10.9 | | Blockchain services | 15.7 | | **Total** | **122.0** | - Total revenue decreased by approximately **12.9%** year-on-year, primarily due to a decline in alcoholic beverage sales and reduced placement commission income from financial services business[93](index=93&type=chunk)[94](index=94&type=chunk) [Financial Review](index=24&type=section&id=Financial%20Review) This section details the financial performance for the nine months ended December 31, 2018, covering revenue decline, improved gross profit and margin, increased other income, reduced selling and distribution expenses, significant rise in administrative and other operating expenses, substantial increase in finance costs, recognition of goodwill impairment loss, and expanded loss attributable to owners [Revenue](index=24&type=section&id=Revenue) For the nine months ended December 31, 2018, the Group's revenue was approximately HK$122 million, a 12.9% year-on-year decrease, mainly impacted by declining alcoholic beverage sales and reduced placement commission income from financial services Revenue Change (for the nine months ended December 31) | Metric | 2018 (HK$ million) | 2017 (Restated, HK$ million) | Change Rate | | :--- | :--- | :--- | :--- | | Revenue | 122.0 | 140.1 | -12.9% | - The decrease in revenue was primarily attributable to intense industry competition leading to lower alcoholic beverage sales and reduced placement commission income from financial services business[94](index=94&type=chunk) [Gross Profit and Gross Profit Margin](index=25&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) For the nine months ended December 31, 2018, the Group's gross profit increased by 15.0% to approximately HK$51.4 million, with the gross profit margin improving from 31.9% to 42.1%, primarily due to contributions from financial services, blockchain services, and wine auction businesses, which incur no cost of sales Gross Profit and Gross Profit Margin Change (for the nine months ended December 31) | Metric | 2018 (HK$ million) | 2017 (Restated, HK$ million) | Change Rate | | :--- | :--- | :--- | :--- | | Gross profit | 51.4 | 44.7 | +15.0% | | Gross profit margin | 42.1% | 31.9% | +10.2 percentage points | - The improvement in gross profit margin was mainly due to contributions from financial services, blockchain services, and wine auction businesses, which do not incur cost of sales[97](index=97&type=chunk) [Other Income](index=25&type=section&id=Other%20Income) For the nine months ended December 31, 2018, the Group's other income significantly increased by 240.0% to approximately HK$5.1 million, primarily driven by higher government grants and claims and compensation income Other Income Change (for the nine months ended December 31) | Metric | 2018 (HK$ million) | 2017 (Restated, HK$ million) | Change Rate | | :--- | :--- | :--- | :--- | | Other income | 5.1 | 1.5 | +240.0% | - The increase in income was primarily attributable to higher government grants and claims and compensation income[98](index=98&type=chunk) [Selling and Distribution Expenses](index=25&type=section&id=Selling%20and%20Distribution%20Expenses) For the nine months ended December 31, 2018, the Group's selling and distribution expenses decreased by 1.6% to approximately HK$12.3 million, mainly due to lower rental expenses Selling and Distribution Expenses Change (for the nine months ended December 31) | Metric | 2018 (HK$ million) | 2017 (Restated, HK$ million) | Change Rate | | :--- | :--- | :--- | :--- | | Selling and distribution expenses | 12.3 | 12.5 | -1.6% | - The decrease in expenses was primarily due to lower rental expenses[99](index=99&type=chunk) [Administrative and Other Operating Expenses](index=25&type=section&id=Administrative%20and%20Other%20Operating%20Expenses) For the nine months ended December 31, 2018, the Group's administrative and other operating expenses significantly increased to approximately HK$169.9 million, primarily due to higher share-based payment expenses, new blockchain service operating expenses, staff costs, and professional fees Administrative and Other Operating Expenses Change (for the nine months ended December 31) | Metric | 2018 (HK$ million) | 2017 (Restated, HK$ million) | Change Rate | | :--- | :--- | :--- | :--- | | Administrative and other operating expenses | 169.9 | 41.7 | +307.4% | - The significant increase in expenses was primarily due to: (i) share-based payment expenses of approximately **HK$70.5 million**; (ii) increased operating expenses for new blockchain services, including depreciation, electricity, and consulting fees, of approximately **HK$38.2 million**; (iii) increased management and administrative staff costs of approximately **HK$8.9 million**; (iv) increased professional fees of approximately **HK$4 million**; and (v) increased other administrative expenses of approximately **HK$6.6 million**[100](index=100&type=chunk) [Finance Costs](index=26&type=section&id=Finance%20Costs) For the nine months ended December 31, 2018, the Group's finance costs significantly increased by 253.3% to approximately HK$21.2 million, primarily due to increased other borrowings Finance Costs Change (for the nine months ended December 31) | Metric | 2018 (HK$ million) | 2017 (Restated, HK$ million) | Change Rate | | :--- | :--- | :--- | :--- | | Finance costs | 21.2 | 6.0 | +253.3% | - The increase in finance costs was primarily due to increased effective interest expenses on exchangeable bonds and bills payable, as well as interest payable on other borrowings[102](index=102&type=chunk) [Impairment Loss on Goodwill](index=26&type=section&id=Impairment%20Loss%20on%20Goodwill) For the nine months ended December 31, 2018, the Group recognized an impairment loss on goodwill of approximately HK$3.5 million, primarily due to cryptocurrency price volatility Impairment Loss on Goodwill (for the nine months ended December 31) | Metric | 2018 (HK$ million) | | :--- | :--- | | Impairment loss on goodwill | 3.5 | - The impairment loss was primarily due to cryptocurrency price volatility, impacting the goodwill recognized upon the acquisition of HPC Nordic AB[103](index=103&type=chunk) [Income Tax Credit](index=26&type=section&id=Income%20Tax%20Credit) For the nine months ended December 31, 2018, the Group's income tax credit decreased to approximately HK$0.231 million, mainly due to increased loss before tax and a reduction in deferred tax assets Income Tax Credit Change (for the nine months ended December 31) | Metric | 2018 (HK$'000) | 2017 (Restated, HK$'000) | Change Rate | | :--- | :--- | :--- | :--- | | Income tax credit | 231 | 335 | -31.0% | - The decrease was due to increased loss before tax and a reduction in deferred tax assets arising from temporary timing differences[104](index=104&type=chunk) [Loss Attributable to Owners of the Company](index=26&type=section&id=Loss%20Attributable%20to%20Owners%20of%20the%20Company) For the nine months ended December 31, 2018, the loss attributable to owners of the company significantly increased to approximately HK$177.3 million, primarily due to higher share-based payment expenses and administrative expenses Loss Attributable to Owners of the Company Change (for the nine months ended December 31) | Metric | 2018 (HK$ million) | 2017 (Restated, HK$ million) | Change Rate | | :--- | :--- | :--- | :--- | | Loss attributable to owners of the Company | 177.3 | 144.0 | +23.1% | - The increase in loss was primarily due to higher share-based payment expenses and administrative expenses[105](index=105&type=chunk) [Dividends](index=26&type=section&id=Dividends) The Directors do not recommend the payment of any dividend for the nine months ended December 31, 2018 - No dividends were paid for the nine months ended December 31, 2018[106](index=106&type=chunk) [Significant Investments Held, Material Acquisitions and Disposals of Subsidiaries, and Future Plans for Material Investments and Capital Assets](index=27&type=section&id=Significant%20Investments%20Held%2C%20Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20and%20Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Assets) As of December 31, 2018, the Group held listed securities totaling approximately HK$27.9 million, including Tencent Holdings, AAC Technologies, Remixpoint, Inc., and TOMO Holdings Limited. During the period, several significant acquisitions were completed, including equity interests in Bartha International, Diginex High Performance Computing Limited, HPC Nordic, and BITOCEAN Co., Ltd., and the joint venture Madison Blockhouse Limited was established to expand blockchain and cryptocurrency businesses [Significant Investments](index=27&type=section&id=Significant%20Investments) As of December 31, 2018, the Group held listed securities totaling approximately HK$27.9 million, including Tencent Holdings, AAC Technologies, Remixpoint, Inc., and TOMO Holdings Limited. During the period, all holdings in China New City were disposed of at a loss, and the Group held exchangeable bonds issued by Bartha Holdings - As of December 31, 2018, the Group held listed securities including Tencent Holdings, AAC Technologies, Remixpoint, Inc. (REM), and TOMO Holdings Limited (TWD), totaling approximately **HK$27.9 million**[109](index=109&type=chunk) Significant Financial Assets Held for Trading (as of December 31, 2018) | Company Name | Fair Value (HK$'000) | Percentage of Total Group Assets | Gain/(Loss) on Disposal/Redemption (HK$'000) | | :--- | :--- | :--- | :--- | | China New City | – | Not applicable | (1,026) | | Tencent Holdings Limited | 314 | 0.03% | – | | AAC Technologies Holdings Inc. | 228 | 0.02% | – | | Remixpoint, Inc. (REM) | 22,834 | 1.95% | – | | TOMO Holdings Limited (TWD) | 4,533 | 0.39% | – | - The Group holds exchangeable bonds issued by Bartha Holdings Limited with a fair value of approximately **HK$63.3 million**, granting the right to exchange for a **51%** equity interest in Bartha International[117](index=117&type=chunk) [Transactions Completed During the Period](index=29&type=section&id=Transactions%20Completed%20During%20the%20Period) The Group completed several strategic acquisitions during the period, including 49% equity in Bartha International, 51% in Diginex High Performance Computing Limited, 100% in HPC Nordic, and established the joint venture Madison Blockhouse Limited. Additionally, REM shares were acquired, and agreements were signed for the acquisition of 77% equity in Hackett Enterprises Limited and 67.2% in BITOCEAN Co., Ltd - Acquisition of **49%** equity interest in Bartha International through the exercise of exchange rights on exchangeable bonds[118](index=118&type=chunk) - Acquisition of **51%** equity interest in Diginex High Performance Computing Limited for approximately **HK$426.1 million**[118](index=118&type=chunk) - Acquisition of **100%** equity interest in HPC Nordic for approximately **HK$13.7 million**[118](index=118&type=chunk) - Establishment of joint venture Madison Blockhouse Limited, with the company holding a **66.7%** interest and an initial capital injection of **US$2 million**[118](index=118&type=chunk) - Acquisition of **802,900 REM shares** for approximately **HK$56.56 million**[120](index=120&type=chunk) - Entered into an agreement to acquire a **77%** equity interest in Hackett Enterprises Limited (comprising **52%** from Forefront Financial Group and **25%** from SRA) for a total consideration of **HK$685.3 million**, aiming to provide loan financing and financial advisory services[120](index=120&type=chunk) - Entered into an agreement to acquire a **67.2%** equity interest in BITOCEAN Co., Ltd. for a total consideration of approximately **HK$115.85 million**, completed on January 11, 2019[124](index=124&type=chunk) [Outlook and Prospects](index=31&type=section&id=Outlook%20and%20Prospects) The Group plans to solidify its position in the high-end fine wine market through wine auction businesses and expand blockchain services and virtual currency trading platforms via recent cryptocurrency business acquisitions like Diginex and BITOCEAN. The Hackett acquisition will enhance cryptocurrency-related financing capabilities, with the overall strategy aiming to broaden revenue streams, improve operational mechanisms, and strengthen market presence - The Group has expanded its wine business through wine auction operations and plans to leverage online platforms to consolidate its position in the high-end fine wine market[125](index=125&type=chunk) - Through the Diginex acquisition, the Group has gained cryptocurrency mining experience, and through the BITOCEAN acquisition, it participates in Japanese virtual exchange services, with plans to expand BITOCEAN's business to online trading of various virtual currencies[125](index=125&type=chunk) - The Hackett acquisition will strengthen the Group's potential to develop cryptocurrency-related financing or leasing products and explore the development of cryptocurrency mining and financial services businesses[127](index=127&type=chunk) - The Board believes that through the completed acquisitions, the Group will expand its revenue streams, leverage the resources of various companies to apply blockchain technology in wine, financial services, and cryptocurrency businesses, enhance operational mechanisms, and strengthen its market position[127](index=127&type=chunk) [Other Information](index=33&type=section&id=Other%20Information) This section covers various corporate governance matters, including directors' and major shareholders' interests, share option schemes, use of proceeds, and compliance with codes [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares, and Debentures of the Company or Any Associated Corporation](index=33&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%2C%20and%20Debentures%20of%20the%20Company%20or%20Any%20Associated%20Corporation) As of December 31, 2018, Mr. Ding Pengyun held a total interest of approximately 2.629 billion shares in the company's shares and underlying shares, representing about 61.38% of the issued shares, with other directors holding minor share or share option interests Directors' and Chief Executive's Long Positions in Shares, Underlying Shares, and Debentures of the Company (as of December 31, 2018) | Director Name | Capacity/Nature of Interest | Number of Shares Held | Number of Convertible Shares | Total Interest | Approximate Percentage of Company's Issued Shares | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Ding Pengyun | Interest in controlled corporation | 2,486,916,727 | 142,363,636 | 2,629,280,363 | 61.38% | | Mr. Zhu Qin | Beneficial owner | – | 2,000,000 | 2,000,000 | 0.05% | | Ms. Guo Qun | Beneficial owner | – | 5,000,000 | 5,000,000 | 0.12% | | Ms. Fan Wei | Beneficial owner | – | 300,000 | 300,000 | 0.01% | | Mr. Chu Kin Hong | Beneficial owner | – | 300,000 | 300,000 | 0.01% | | Mr. Yip Cho Yin, JP | Beneficial owner | – | 300,000 | 300,000 | 0.01% | - Mr. Ding Pengyun's interests are primarily held through his wholly-owned Devoss Global Holdings Limited and Royal Spectrum Holding Company Limited, which he controls[131](index=131&type=chunk)[132](index=132&type=chunk) - Mr. Ding Pengyun is also deemed to have an interest in **136,363,636 convertible shares** held by Bartha Holdings[133](index=133&type=chunk) [Interests and Short Positions of Substantial Shareholders and Other Persons in the Shares and Underlying Shares of the Company](index=36&type=section&id=Interests%20and%20Short%20Positions%20of%20Substantial%20Shareholders%20and%20Other%20Persons%20in%20the%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) As of December 31, 2018, Royal Spectrum, Devoss Global, Forefront Financial Group, Ms. Luu Huyen Boi, SRA, SRA Holdings, Time Base Holdings Limited, and Ms. Lu Mengjia were substantial shareholders or held interests in the company's shares and underlying shares Interests and Short Positions of Substantial Shareholders and Other Persons in the Shares and Underlying Shares of the Company (as of December 31, 2018) | Name | Capacity/Nature of Interest | Number of Shares Held | Number of Convertible Shares | Total Interest | Approximate Percentage of Company's Issued Shares | | :--- | :--- | :--- | :--- | :--- | :--- | | Royal Spectrum | Beneficial owner | 1,968,000,000 | – | 1,968,000,000 | 45.95% | | Devoss Global | Interest in controlled corporation | 1,968,000,000 | 6,000,000 | 1,974,000,000 | 46.09% | | Forefront Financial Group | Beneficial owner | 504,872,727 | – | 504,872,727 | 11.79% | | Ms. Luu Huyen Boi | Spouse's interest | 2,486,916,727 | 142,363,636 | 2,629,280,363 | 61.38% | | SRA | Beneficial owner | 447,045,454 | – | 447,045,454 | 10.44% | | SRA Holdings | Interest in controlled corporation | 447,045,454 | – | 447,045,454 | 10.44% | | Time Base Holdings Limited | Beneficial owner | 177,299,440 | 40,000,000 | 217,299,440 | 5.07% | | Ms. Lu Mengjia | Interest in controlled corporation | 177,299,440 | 45,000,000 | 222,299,440 | 5.19% | - Ms. Luu Huyen Boi, as the spouse of Mr. Ding Pengyun, is deemed to have an interest in all shares and underlying shares in which Mr. Ding has an interest[144](index=144&type=chunk) - The interests of Forefront Financial Group and SRA relate to consideration shares for the Hackett acquisition, which was not completed as of the reporting date[143](index=143&type=chunk)[146](index=146&type=chunk) [Share Option Scheme](index=39&type=section&id=Share%20Option%20Scheme) The company operates a share option scheme to incentivize and retain talent; for the nine months ended December 31, 2018, the Group recognized total expenses of HK$70.473 million for share options, with multiple tranches granted during the period, involving adjustments to both the number of shares and exercise prices - The share option scheme was adopted on September 21, 2015, and its authorized limit was updated on August 17, 2018, aiming to provide incentives and attract talent[149](index=149&type=chunk) - Following the share split on November 8, 2016, the share option exercise price and number of shares were adjusted[149](index=149&type=chunk) - For the nine months ended December 31, 2018, the Group recognized total expenses of **HK$70.473 million** for share options[159](index=159&type=chunk) [Change in Use of Proceeds from Placing](index=43&type=section&id=Change%20in%20Use%20of%20Proceeds%20from%20Placing) The net proceeds from the placing, approximately HK$116.76 million, were originally intended for the BITPoint acquisition, but due to its termination, the funds were reallocated to acquire REM shares and for the BITOCEAN acquisition, and have now been fully utilized - The net proceeds from the placing, approximately **HK$116.76 million**, were originally designated for the BITPoint acquisition[162](index=162&type=chunk) - Due to the termination of the BITPoint acquisition, approximately **HK$56.56 million** of the proceeds were used for the acquisition of REM shares, and the remaining approximately **HK$60.2 million** for the BITOCEAN acquisition[162](index=162&type=chunk) - As of the date of this report, all proceeds from the placing have been fully utilized[162](index=162&type=chunk) [Achievement of Profit Estimate](index=43&type=section&id=Achievement%20of%20Profit%20Estimate) According to Bartha International's consolidated financial statements, its audited consolidated profit attributable to owners for the year ended March 31, 2018, was approximately HK$9.1 million, exceeding the previously disclosed profit estimate - Bartha International's audited consolidated profit attributable to owners for the year ended March 31, 2018, was approximately **HK$9.1 million**, exceeding the previously disclosed profit estimate[163](index=163&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=43&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) For the nine months ended December 31, 2018, neither the company nor any of its subsidiaries purchased, sold, or redeemed any shares - During the period, neither the company nor its subsidiaries engaged in any purchase, sale, or redemption of shares[164](index=164&type=chunk) [Directors' Interests in Competing Business](index=43&type=section&id=Directors%27%20Interests%20in%20Competing%20Business) As of December 31, 2018, Mr. Ding Pengyun held approximately a 9.57% interest in Sun Hung Kai & Co. Limited as a passive investor, which primarily engages in financial services and may compete with the Group's business; no other directors held interests in competing businesses - Mr. Ding Pengyun holds approximately a **9.57%** interest in Sun Hung Kai & Co. Limited, which primarily engages in financial services and may constitute a competing business with the Group[165](index=165&type=chunk) - Save for Mr. Ding, no other Directors or their associates held any interests in businesses that directly or indirectly compete with the Group's business[165](index=165&type=chunk) [Code of Conduct for Directors' Securities Transactions](index=44&type=section&id=Code%20of%20Conduct%20for%20Directors%27%20Securities%20Transactions) The company has adopted a stringent code of conduct for securities transactions and confirms that all directors complied with this code for the nine months ended December 31, 2018 - The company has adopted a code of conduct for securities transactions with terms no less exacting than those required by the GEM Listing Rules[167](index=167&type=chunk) - For the nine months ended December 31, 2018, all Directors complied with the code of conduct for securities transactions[167](index=167&type=chunk) [Corporate Governance Practices](index=44&type=section&id=Corporate%20Governance%20Practices) The company is committed to high standards of corporate governance, having adopted the Corporate Governance Code outlined in Appendix 15 of the GEM Listing Rules, and complied with its code provisions during the reporting period - The company has adopted the Corporate Governance Code and Corporate Governance Report as set out in Appendix 15 of the GEM Listing Rules[168](index=168&type=chunk) - From April 1, 2018, up to the date of this report, the company has complied with the code provisions of the Corporate Governance Code[168](index=168&type=chunk) [Audit Committee](index=44&type=section&id=Audit%20Committee) The Audit Committee, established on September 21, 2015, comprises three independent non-executive directors, responsible for reviewing financial systems, accounting policies, financial position, and reporting procedures, and liaising with external auditors. The committee has reviewed the unaudited consolidated results in this report and deemed them compliant with applicable standards - The Audit Committee was established on September 21, 2015, comprising three independent non-executive directors: Mr. Chu Kin Hong (Chairman), Ms. Fan Wei, and Mr. Yip Cho Yin, JP[169](index=169&type=chunk) - Its primary responsibilities include reviewing the Group's financial systems, accounting policies, financial position, and financial reporting procedures, as well as assessing internal controls and risk management[169](index=169&type=chunk) - The Audit Committee has reviewed the Group's unaudited consolidated results for the nine months ended December 31, 2018, and considers them to be in compliance with applicable accounting standards and disclosure requirements[171](index=171&type=chunk)