Financial Performance - Revenue for the nine months ended 31 March 2021 was HK$198,159,000, a decrease of 46.2% compared to HK$368,376,000 for the same period in 2020[9] - Gross profit increased to HK$27,926,000, representing a gross margin of 14.1%, compared to HK$11,409,000 in the previous year[9] - Profit for the period was HK$18,994,000, down 12.8% from HK$21,569,000 in the same period last year[10] - Total comprehensive income for the period was HK$29,240,000, compared to HK$14,847,000 for the same period in 2020[10] - Basic and diluted earnings per share attributable to owners of the Company were HK$4.52 cents, down from HK$5.14 cents in the previous year[10] - The Group's sales decreased by approximately 46.2% for the nine months ended 31 March 2021 compared to the same period last year[60] - The Group achieved operating income of approximately HK$198.2 million during the period[65] - The Group recorded a revenue of approximately HK$198.2 million for the nine months ended March 31, 2021, representing a decrease of about 46.2% compared to HK$368.4 million for the same period in 2020[71] - The cost of sales amounted to approximately HK$170.2 million for the nine months ended March 31, 2021, a decrease of about 52.3% compared to the previous year[72] - The gross profit margin increased to about 14.1% for the nine months ended March 31, 2021, up from 3.1% for the same period in 2020[73] - The Group's profit for the period was approximately HK$19.0 million for the nine months ended March 31, 2021, compared to HK$21.6 million for the same period in 2020[89] - Other income, gains, and losses, net, amounted to net gains of approximately HK$0.7 million for the nine months ended March 31, 2021, down from HK$1.3 million for the same period in 2020[78] Expenses and Cost Management - Administrative expenses decreased to HK$14,832,000 from HK$25,074,000, reflecting a reduction of 40.8%[9] - Selling and distribution expenses were reduced to HK$1,147,000 from HK$3,448,000, a decrease of 66.7%[9] - The Group's financial costs for the nine months ended March 31, 2021 totaled HK$728,000, a significant decrease from HK$3,805,000 in the same period of 2020[34] - Interest on bank borrowings decreased to HK$191,000 in 2021 from HK$698,000 in 2020, while interest on other borrowings dropped significantly from HK$2,335,000 to HK$321,000[34] - The depreciation of right-of-use assets was HK$2,152,000 for the nine months ended March 31, 2021, compared to HK$6,043,000 in the previous year[37] Equity and Share Capital - The total equity attributable to owners of the Company as of 31 March 2021 was HK$194,074,000, an increase from HK$164,834,000 at the beginning of the period[12] - The basic earnings per share attributable to owners of the Company were calculated based on 420,000,000 shares in issue during the periods[52] - The Company had 420,000,000 shares in issue as of March 31, 2021[121] - 7Road Holdings Limited holds 54,000,000 shares, representing approximately 12.86% of the company's issued share capital[126] - Shanghai Angell Asset Management Company Limited has a controlled interest of 72,497,169 shares, accounting for 17.26% of the issued share capital[129] - BOC-HFT-BOC-Overseas No.1 QDII Segregated Account holds 50,000,000 shares, which is 11.9% of the company's issued share capital[129] - Jiang Peijie and Wang Fei are beneficial owners with 29,150,000 shares (6.94%) and 40,000,000 shares (9.52%) respectively[129] Taxation and Compliance - The Group did not incur any income tax expense for the period ended March 31, 2021, as there were no assessable profits generated[40] - The PRC Enterprise Income Tax has been provided at a rate of 25% for both 2021 and 2020[43] - No income tax expense was recorded for Hong Kong profits tax for the periods ended 31 March 2021 and 2020[50] - The statutory reserve must be maintained at a minimum of 25% of capital after usage, as per the regulations in the People's Republic of China[17] - The Group's financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and comply with GEM Listing Rules[20] Strategic Focus and Future Plans - The Group will increase investments in the internet advertising market to seek new customers and revenue streams[66] - The Group is focused on optimizing customer selection to prioritize quality customers amid reduced advertising budgets due to the COVID-19 pandemic[60] - The Group will closely monitor the development of the Epidemic and assess its impact on operations[67] - The Group plans to increase investment in the internet advertising market to expand new customer bases and revenue sources despite challenges posed by the pandemic[69] Corporate Governance and Audit - The Audit Committee reviewed the unaudited consolidated results for the nine months ended March 31, 2021, prior to recommending them to the Board for approval[143] - There were no competing business interests reported by the Directors or controlling shareholders during the nine months ended March 31, 2021[136] - The company’s financial results for the nine months ended March 31, 2021, have not been audited by the Company's auditor[145] - The company is led by Chairman and CEO Zhu Yongjun, along with executive and independent non-executive Directors[146] Borrowings and Financial Position - As of March 31, 2021, the Group's outstanding borrowings amounted to HK$7.5 million, down from HK$30.8 million as of June 30, 2020[92] - The total debt to equity ratio was approximately 3.9% as of March 31, 2021, compared to 18.7% as of June 30, 2020[93] - As of March 31, 2021, the Group had no significant capital commitments or contingent liabilities, consistent with the previous year[107][111] - The Group did not engage in any material acquisitions or disposals during the nine months ended March 31, 2021[108][112] - The Group entered into a subscription agreement to issue 84,000,000 ordinary shares at a subscription price of HK$0.25 per share, totaling HK$21,000,000[109][113] - As of March 31, 2021, the Group had no pledged bank deposits to support its banking facilities, compared to HK$5.9 million as of June 30, 2020[102][106] Foreign Exchange and Interest Rate Exposure - The Group's foreign exchange exposure was minimal, with no significant adverse effects from currency fluctuations during the reporting periods[100][104] - The Group has not entered into any interest rate hedging contracts due to relatively low current interest rates, but continues to monitor interest rate exposure closely[101][105] - As of March 31, 2021, the Group had cash deposits primarily in US dollars, Hong Kong dollars, and Renminbi[99][104] - The Group's trading transactions in Mainland China are mainly denominated in Renminbi, while those in Hong Kong and overseas are primarily in Hong Kong dollars and US dollars[100][104]

2020-21 Interim Report 中期報告 MILLION STARS HOLDINGS LIMITED 萬星控股有限公司 Stock Code 股份代號：8093 (Incorporated in the Cayman Islands with limited liability ) （於開曼群島註冊成立之有限公司） For the six months period ended 31 December, 2020 截至2020年12月31日止6個月 MILLION STARS HOLDINGS LIMITED 萬星控股有限公司 CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than oth ...

CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. Given that the companies listed on GEM are generally small ...

[GEM Characteristics of HKEX](index=2&type=section&id=GEM%20Characteristics) This section outlines the GEM market's role as a listing platform for small and medium-sized companies, emphasizing the associated higher investment risks and potential market volatility [GEM Market Positioning and Risk Disclosure](index=2&type=section&id=GEM%20Market%20Positioning%20and%20Risks) The HKEX GEM market aims to accommodate small and medium-sized companies, but investing in such companies carries higher risks, potential market volatility, and no guarantee of high market liquidity - The GEM market is positioned as a listing platform for small and medium-sized companies with **higher investment risks**[1](index=1&type=chunk)[4](index=4&type=chunk) - Investors should understand the potential risks and make investment decisions only after careful and thorough consideration[1](index=1&type=chunk)[4](index=4&type=chunk) - Securities traded on GEM may be subject to greater market volatility risks than Main Board securities, with no guarantee of high liquidity[2](index=2&type=chunk)[5](index=5&type=chunk) [Corporate Information](index=4&type=section&id=Corporate%20Information) This section provides key corporate details including the board composition, contact information, and professional advisors [Board of Directors and Committee Composition](index=4&type=section&id=Board%20of%20Directors%20and%20Committees) Million Stars Holdings Limited's Board of Directors comprises executive and independent non-executive directors, supported by audit, remuneration, nomination, and corporate governance committees - Executive Directors include Mr. Zhu Yongjun (Chairman) and Ms. Tian Yuan[7](index=7&type=chunk)[8](index=8&type=chunk) - Independent Non-Executive Directors include Mr. Chan Chak, Ms. Ji Fang, and Mr. Gao Shuo[7](index=7&type=chunk)[8](index=8&type=chunk) - The company has an Audit Committee (Chairman: Mr. Chan Chak), Remuneration Committee (Chairman: Ms. Ji Fang), Nomination Committee (Chairman: Mr. Gao Shuo), and Corporate Governance Committee (Chairman: Mr. Chan Chak)[7](index=7&type=chunk)[8](index=8&type=chunk) [Company Details and Contact Information](index=4&type=section&id=Company%20Details%20and%20Contacts) This section lists the company's authorized representatives, company secretary, compliance officer, registered office, principal place of business, share registrar, principal bankers, auditor, legal advisor, and stock code - The Company Secretary is Ms. Fu Manyi, and the Compliance Officer is Ms. Tian Yuan[8](index=8&type=chunk) - The company website is www.millionstars.hk, and the stock code is **8093**[12](index=12&type=chunk) - The auditor is Grant Thornton Hong Kong Limited[11](index=11&type=chunk)[12](index=12&type=chunk) [Chairman's Statement](index=6&type=section&id=Chairman's%20Statement) The Chairman's statement provides an overview of the company's performance and strategic outlook, highlighting key achievements and future plans [FY2020 Performance Overview](index=6&type=section&id=FY2020%20Performance%20Overview) Despite intense competition and strict regulations due to the COVID-19 pandemic and slower game license approvals, the Group achieved a 60.4% year-on-year revenue growth in FY2020 through promotional strategies, yet recorded a loss after tax FY2020 Key Financial Data | Metric | FY2020 (HK$ thousand) | FY2019 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 434,314 | 270,729 | | Loss after tax | 44,039 | - | - The Group's sales volume increased by **60.4%** compared to the same period last year[14](index=14&type=chunk)[16](index=16&type=chunk) - The internet advertising industry faces fierce competition, with **information flow advertising** emerging as a new growth point[14](index=14&type=chunk)[16](index=16&type=chunk) - National regulations on internet advertising media and operators are becoming stricter, leading to increased operating costs[15](index=15&type=chunk)[17](index=17&type=chunk) [Future Outlook](index=9&type=section&id=Future%20Outlook) The Group plans to capitalize on internet advertising opportunities, increase investment, and expand client base and revenue streams while closely monitoring the pandemic's impact - The Group will increase investment in internet advertising to expand new clients, businesses, and revenue sources[34](index=34&type=chunk)[40](index=40&type=chunk) - The Group will closely monitor the development of the **COVID-19 pandemic** and its impact on business[35](index=35&type=chunk)[40](index=40&type=chunk) [Management Discussion and Analysis](index=8&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the Group's business and financial performance, liquidity, and future outlook, including key operational and financial metrics [Business Review](index=8&type=section&id=Business%20Review) The Group primarily provides internet advertising agency services, achieving a 60.4% sales growth despite macroeconomic and game license slowdowns, with domestic and overseas operations managed by subsidiaries - The Group primarily provides **internet advertising agency services**[25](index=25&type=chunk)[29](index=29&type=chunk) - Sales volume increased by approximately **60.4%** year-on-year[26](index=26&type=chunk)[30](index=30&type=chunk) - Dongrun Network is the exclusive advertising agent for Dongqiudi games and a core agent for Cheetah Mobile, Yidian Zixun, WiFi Master Key, and Toutiao, with operating revenue of approximately **HK$329.8 million** during the year[27](index=27&type=chunk)[30](index=30&type=chunk) - Million Stars Internet Media Limited (MSIM) expanded into overseas internet advertising markets via Facebook, with operating revenue of approximately **HK$103.1 million** during the year[28](index=28&type=chunk)[31](index=31&type=chunk) [Financial Review](index=9&type=section&id=Financial%20Review) The Group's FY2020 revenue grew by 60.4% to HK$434.3 million, but loss after tax widened to HK$44 million due to lower gross profit margin, impairment losses on intangible assets and associate interests, and increased finance costs FY2020 Key Financial Indicators | Metric | FY2020 (HK$ thousand) | FY2019 (HK$ thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Revenue | 434,300 | 270,700 | +60.4% | | Loss after tax | 44,000 | 36,600 | +20.2% | | Gross profit margin | 2.0% | 15.0% | -13.0% | | Selling and distribution expenses | 2,200 | 3,300 | -33.3% | | Administrative expenses | 36,600 | 40,000 | -8.4% | | Finance costs | 4,400 | 600 | +633.3% | - The increase in loss after tax was primarily attributable to a net reversal of impairment loss on trade and other receivables of approximately **HK$27.9 million**, and impairment losses recognized on intangible assets and interests in an associate of approximately **HK$16.1 million** and **HK$23.9 million**, respectively[37](index=37&type=chunk)[41](index=41&type=chunk) - The increase in finance costs was mainly due to interest expenses arising from interest-bearing bank borrowings and third-party loans[46](index=46&type=chunk)[51](index=51&type=chunk) [Financial Position, Liquidity and Financial Resources](index=10&type=section&id=Financial%20Position,%20Liquidity%20and%20Financial%20Resources) The Group maintains prudent cash and financial management, with increased bank and cash balances, a higher debt-to-equity ratio, and sufficient internal resources for future development, while disclosing asset pledges and risk management policies FY2020 Liquidity and Debt Indicators | Metric | June 30, 2020 (HK$ thousand) | June 30, 2019 (HK$ thousand) | | :--- | :--- | :--- | | Bank and cash balances (including pledged bank deposits) | 55,800 | 23,500 | | Total debt to equity ratio | 18.7% | 6.25% | | Bank borrowings | 28,300 | 8,100 | | Third-party interest-bearing loans | 2,500 | 5,000 | - The increase in bank and cash balances was mainly due to the **recovery of receivables** from debtors[56](index=56&type=chunk)[63](index=63&type=chunk) - Bank borrowing interest rates ranged from **2.8% to 4.8%** (2019: 5.6% to 11.3%)[57](index=57&type=chunk)[63](index=63&type=chunk) - The Group's bank facilities are secured by pledged bank deposits of approximately **HK$5.9 million** (2019: HK$3.9 million)[60](index=60&type=chunk)[65](index=65&type=chunk) - The Group is exposed to foreign currency risk (primarily RMB) and interest rate risk, but the foreign exchange impact is minimal, and no interest rate hedging contracts have been entered into[61](index=61&type=chunk)[66](index=66&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) [Material Acquisitions and Disposals](index=12&type=section&id=Material%20Acquisitions%20and%20Disposals) On August 30, 2019, the Group's wholly-owned subsidiary, Beijing Dongrun, subscribed for a 35% equity interest in Shenzhen Yidao Network Co., Ltd. for RMB50 million (approximately HK$55.72 million), completed on October 28, 2019 - On August 30, 2019, Beijing Dongrun subscribed for a **35% equity interest** in Shenzhen Yidao Network Co., Ltd. for **RMB50 million** (approximately **HK$55.72 million**)[72](index=72&type=chunk)[78](index=78&type=chunk) - The subscription was completed on **October 28, 2019**[72](index=72&type=chunk)[78](index=78&type=chunk) - Apart from the above, the Group had no other material acquisitions or disposals in FY2020[73](index=73&type=chunk)[79](index=79&type=chunk) [Employees and Remuneration Policy](index=13&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2020, the Group's employee count decreased to 60, with a significant reduction in total staff costs, and remuneration policies are set by the Remuneration Committee based on duties, experience, and capabilities Employee and Staff Cost Changes | Metric | June 30, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Number of employees | 60 | 109 | | Total staff costs (HK$ thousand) | 13,600 | 33,900 | - Employee remuneration policy is determined by the Remuneration Committee with reference to employees' responsibilities, duties, experience, and capabilities[83](index=83&type=chunk)[89](index=89&type=chunk) - The Group provides training to employees on technical skills, quality control, and work safety standards[85](index=85&type=chunk)[89](index=89&type=chunk) [Biographical Details of Directors](index=14&type=section&id=Biographical%20Details%20of%20Directors) This section provides detailed biographies of the executive and independent non-executive directors, highlighting their professional backgrounds and expertise [Executive Directors](index=14&type=section&id=Executive%20Directors) This section presents the detailed biographies of Executive Directors Mr. Zhu Yongjun and Ms. Tian Yuan, including their age, appointment dates, educational backgrounds, and extensive experience in investment management and financial enterprises - Mr. Zhu Yongjun (40 years old) was appointed as an Executive Director on **February 24, 2017**, and as Chairman of the Board on **March 17, 2017**[91](index=91&type=chunk)[94](index=94&type=chunk) - Mr. Zhu Yongjun has extensive experience in investment management, having founded Shanghai Xuntou Financial Information Service Co., Ltd. and Taizhou Sifang Network Co., Ltd[92](index=92&type=chunk)[94](index=94&type=chunk) - Ms. Tian Yuan (46 years old) was appointed as an Executive Director on **July 28, 2017**, holding a Bachelor's degree in Economics from UCLA and a Master of Science degree in Financial Engineering from the University of Michigan, Ann Arbor[98](index=98&type=chunk)[102](index=102&type=chunk) - Ms. Tian Yuan has extensive experience in financial product investment, establishment and operation of investment funds, private equity, capital market investment, and financing[99](index=99&type=chunk)[102](index=102&type=chunk) [Independent Non-Executive Directors](index=16&type=section&id=Independent%20Non-Executive%20Directors) This section introduces the biographies of Independent Non-Executive Directors Mr. Chan Chak, Ms. Ji Fang, and Mr. Gao Shuo, who possess extensive professional knowledge and experience in investment management, accounting, corporate management, and capital operations - Mr. Chan Chak (35 years old) was appointed as an Independent Non-Executive Director on **January 1, 2018**, currently serving as Chairman of the Audit Committee and Corporate Governance Committee, and is a **Certified Public Accountant** and **Chartered Financial Analyst**[105](index=105&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) - Ms. Ji Fang (46 years old) was appointed as an Independent Non-Executive Director on **January 1, 2019**, possessing over **twenty years of experience** in senior corporate management, industrial investment, and capital operations[111](index=111&type=chunk)[112](index=112&type=chunk)[114](index=114&type=chunk) - Mr. Gao Shuo (37 years old) was appointed as an Independent Non-Executive Director on **November 6, 2017**, with **12 years of experience** in investment management, currently serving as a partner at Hanfu (Beijing) Capital Management Co., Ltd[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) [Report of the Directors](index=19&type=section&id=Report%20of%20the%20Directors) The Directors' Report presents the Group's audited consolidated financial statements for FY2020, outlining business activities, financial performance, and corporate governance matters [Business and Financial Performance](index=19&type=section&id=Business%20and%20Financial%20Performance) The Directors present the Group's audited consolidated financial statements for FY2020, with the company primarily engaged in investment holding, and no dividends are recommended for the year - The Company's principal business is **investment holding**[121](index=121&type=chunk)[128](index=128&type=chunk) - The Board does not recommend the payment of any dividend for FY2020 (2019: nil)[122](index=122&type=chunk)[130](index=130&type=chunk) - The Group's environmental policies, relationships with key stakeholders, and compliance with laws and regulations will be disclosed in the Environmental, Social and Governance Report[125](index=125&type=chunk)[131](index=131&type=chunk) [Key Operational and Financial Details](index=20&type=section&id=Key%20Operational%20and%20Financial%20Details) This section discloses the Group's distributable reserves, changes in property, plant and equipment, and concentration of major customers and suppliers, confirming no significant interests of directors or major shareholders in the top five clients and suppliers - According to the Companies Law of the Cayman Islands, contributed surplus and share premium account may be distributed to shareholders, provided the company can pay its debts as they fall due in the ordinary course of business[134](index=134&type=chunk)[140](index=140&type=chunk) FY2020 Major Customer and Supplier Concentration | Category | % of Total Sales/Purchases | Max Customer/Supplier % | | :--- | :--- | :--- | | Top five customers | 64.0% | 26.8% | | Top five suppliers | 84.3% | 47.4% | - Save as disclosed, none of the Directors or their close associates or any shareholder (holding more than 5% of the issued share capital) had any interest in the Group's five largest customers and suppliers[138](index=138&type=chunk)[143](index=143&type=chunk) [Directors and Corporate Governance](index=21&type=section&id=Directors%20and%20Corporate%20Governance) This section lists current directors and changes, confirms compliance of service contracts, notes no significant director interests in major transactions, and states no share repurchases during FY2020 - Ms. Wang Fei resigned as Executive Director, Chief Executive Officer, and Chairman and member of the Corporate Governance Committee on **September 5, 2020**[151](index=151&type=chunk) - Mr. Chan Chak has been appointed as Chairman of the Company's Corporate Governance Committee, effective **September 5, 2020**[151](index=151&type=chunk) - None of the Directors proposed for re-election at the forthcoming annual general meeting has entered into a service contract with the Company which is not determinable by the Company within one year without payment of compensation (other than statutory compensation)[152](index=152&type=chunk)[157](index=157&type=chunk) - The Company and any of its subsidiaries did not purchase, sell, or redeem any of the Company's listed securities during FY2020[154](index=154&type=chunk)[159](index=159&type=chunk) [Share Issuance and Use of Proceeds](index=23&type=section&id=Share%20Issuance%20and%20Use%20of%20Proceeds) On December 9, 2019, the company issued 20,000,000 ordinary shares to Ms. Zhong Baomei for HK$0.25 per share, raising HK$5 million, with net proceeds allocated to general working capital and future business development - The issuance of **20,000,000 ordinary shares** to Ms. Zhong Baomei was completed on **December 9, 2019**[164](index=164&type=chunk)[168](index=168&type=chunk) - The subscription price was **HK$0.25 per share**, representing a discount of approximately **18.03%** to the closing price on the date of the subscription agreement[164](index=164&type=chunk)[169](index=169&type=chunk)[171](index=171&type=chunk) - The gross and net proceeds were approximately **HK$5 million** and **HK$4.99 million**, respectively[172](index=172&type=chunk)[173](index=173&type=chunk) - The net proceeds are intended to be used as general working capital for the Group and for future business development, as well as to strengthen the capital base and broaden the shareholder base[166](index=166&type=chunk)[170](index=170&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) [Share Option Scheme and Emolument Policy](index=25&type=section&id=Share%20Option%20Scheme%20and%20Emolument%20Policy) The company adopted a share option scheme on January 28, 2015, to incentivize contributors, with a total of 40,000,000 shares available for grant, representing approximately 9.52% of issued shares, and no options were granted as of the reporting date - The share option scheme was adopted on **January 28, 2015**, with a validity period of **10 years**[182](index=182&type=chunk)[185](index=185&type=chunk)[199](index=199&type=chunk)[206](index=206&type=chunk) - The total number of shares that may be granted under the scheme is **40,000,000 shares**, representing approximately **9.52%** of the total issued shares as of the date of this annual report[187](index=187&type=chunk)[190](index=190&type=chunk) - As of the reporting date, no share options were granted, expired, lapsed, exercised, or cancelled[200](index=200&type=chunk)[207](index=207&type=chunk) - Directors' emoluments are recommended and approved by the Remuneration Committee with reference to the company's operating performance, individual performance, and comparable market data[202](index=202&type=chunk)[208](index=208&type=chunk) [Shareholders' Interests and Public Float](index=29&type=section&id=Shareholders'%20Interests%20and%20Public%20Float) This section discloses the interests and short positions of directors, chief executives, and substantial shareholders in the company's shares, confirming compliance with GEM Listing Rules for public float and no competing interests from directors or controlling shareholders Directors' Interests in Company Shares (as of June 30, 2020) | Director Name | Capacity | Interest in Shares | Approximate % of Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zhu Yongjun | Beneficial owner | 38,398,786 (L) | 9.14% | | Ms. Wang Fei (resigned on September 5, 2020) | Beneficial owner | 40,000,000 (L) | 9.52% | Major Shareholders' Interests in Company Shares (as of June 30, 2020) | Shareholder Name | Capacity | Interest in Shares | Approximate % of Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Jiang Peijie | Beneficial owner | 29,150,000 (L) | 6.94% | | Seventh Avenue Holdings Limited | Beneficial owner | 54,000,000 (L) | 12.86% | | United Conquer Limited | Interest in controlled corporation | 69,597,169 (L) | 16.57% | | Shanghai Hutong Investment Center (Limited Partnership) | Beneficial owner/Interest in controlled corporation | 50,000,000 (L) / 69,597,169 (L) | 11.91% / 16.57% | | Shanghai Angju Asset Management Co., Ltd. | Interest in controlled corporation | 119,597,169 (L) | 28.48% | | Jilin Province Investment Group | Interest in controlled corporation | 119,597,169 (L) | 28.48% | | Yao Ligang | Interest in controlled corporation | 119,597,169 (L) | 28.48% | - As of the date of this annual report, the company's public float is sufficient, no less than the **25%** required by the GEM Listing Rules[214](index=214&type=chunk)[217](index=217&type=chunk) - In FY2020, none of the Directors, controlling shareholders, or their respective associates had any business or interest that competed or might compete with the Group's business[226](index=226&type=chunk)[228](index=228&type=chunk) [Auditors](index=32&type=section&id=Auditors) This section details the change in the company's auditors, with RSM Hong Kong resigning on July 6, 2020, and Grant Thornton Hong Kong Limited appointed as the new auditor on July 7, 2020, for re-appointment at the upcoming AGM - RSM Hong Kong resigned as the Company's auditor on **July 6, 2020**[231](index=231&type=chunk)[233](index=233&type=chunk) - Grant Thornton Hong Kong Limited was appointed as the new auditor by the Directors on **July 7, 2020**[231](index=231&type=chunk)[233](index=233&type=chunk) - The Board confirms that there were no disagreements with the former auditors, BDO and RSM[233](index=233&type=chunk)[234](index=234&type=chunk)[235](index=235&type=chunk) [Corporate Governance Report](index=33&type=section&id=Corporate%20Governance%20Report) This report outlines the Group's commitment to high corporate governance standards, adherence to the GEM Listing Rules, and addresses deviations with explanations and improvement measures [Corporate Governance Practices](index=33&type=section&id=Corporate%20Governance%20Practices) The Group is committed to high corporate governance standards, adopting the GEM Listing Rules' Corporate Governance Code, and has disclosed deviations regarding the Chairman's temporary dual role, untimely board meeting documents, and monthly financial updates, along with corrective actions - The Group has adopted the Corporate Governance Code set out in Appendix 15 of the GEM Listing Rules[241](index=241&type=chunk)[242](index=242&type=chunk) - There is a deviation where the Chairman temporarily also serves as the Chief Executive Officer, and the Board will endeavor to identify a suitable candidate[243](index=243&type=chunk) - Some Board meeting documents were not dispatched at least three days before the meeting, but Board members still had sufficient information to discuss matters[243](index=243&type=chunk) - Management failed to provide updated financial information to the Board monthly but will inform them of the latest information from time to time[244](index=244&type=chunk) - The Board has identified deficiencies in the internal control system regarding compliance matters and will engage external consultants to review and improve them[244](index=244&type=chunk) [Board of Directors](index=35&type=section&id=Board%20of%20Directors) The Board emphasizes independence, objectivity, and accountability, comprising two executive and three independent non-executive directors, with regular meetings, high attendance, and a diversity policy in place - The Board comprises two Executive Directors and three Independent Non-Executive Directors, emphasizing independence and objectivity[248](index=248&type=chunk)[249](index=249&type=chunk)[261](index=261&type=chunk)[265](index=265&type=chunk) - Board meetings have high attendance, and Directors actively participate[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk) - A Board Diversity Policy has been implemented, achieving measurable objectives of at least one-third independent non-executive directors, at least one female director, and at least one director with accounting or other professional qualifications[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk) - The roles of Chairman and Chief Executive Officer are separated, but the CEO position is vacant after Ms. Wang Fei's resignation, and the Board is seeking a suitable candidate[279](index=279&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk) - Each newly appointed Director will receive comprehensive, formal, and tailored induction training, along with market information and updates on regulatory requirements[305](index=305&type=chunk)[308](index=308&type=chunk) [Board Committees](index=44&type=section&id=Board%20Committees) The Board has established Audit, Remuneration, Nomination, and Corporate Governance Committees, each with clear written terms of reference and a majority or all independent non-executive directors, fulfilling their responsibilities through regular meetings - The Board has an Audit Committee, Remuneration Committee, Nomination Committee, and Corporate Governance Committee, all with written terms of reference[310](index=310&type=chunk)[315](index=315&type=chunk) - All members of the Audit Committee, Remuneration Committee, and Nomination Committee are Independent Non-Executive Directors[311](index=311&type=chunk)[316](index=316&type=chunk) - The Audit Committee is responsible for overseeing the financial reporting system, risk management, and internal control procedures, and reviewing financial information[313](index=313&type=chunk)[317](index=317&type=chunk) - The Nomination Committee has adopted a Board Diversity Policy and Nomination Policy, and provides recommendations on director nominations, rotation, and re-election[324](index=324&type=chunk)[325](index=325&type=chunk)[328](index=328&type=chunk) - The Corporate Governance Committee is responsible for formulating and reviewing corporate governance policies and management, and monitoring the training of Directors and senior management[340](index=340&type=chunk)[345](index=345&type=chunk) [Directors' and Auditors' Responsibilities and Remuneration](index=48&type=section&id=Directors'%20and%20Auditors'%20Responsibilities%20and%20Remuneration) Directors affirm their responsibility for preparing consolidated financial statements in compliance with statutory and accounting standards, while auditor remuneration is primarily for audit services, and the company had no senior management during the year - Directors confirm their responsibility for preparing consolidated financial statements and ensuring compliance with statutory requirements and applicable accounting standards[343](index=343&type=chunk)[349](index=349&type=chunk) Auditor Remuneration (HK$ thousand) | Service Type | FY2020 | FY2019 | | :--- | :--- | :--- | | Audit services | 850 | 1,250 | | Non-audit services (tax services) | – | – | - During the year, the Company did not have any senior management[356](index=356&type=chunk)[359](index=359&type=chunk) [Dividend Policy](index=49&type=section&id=Dividend%20Policy) The company established a dividend policy on February 13, 2019, to allow shareholders to share in profits while retaining sufficient reserves for future development, with the Board considering various factors for dividend recommendations - The company formulated a dividend policy on **February 13, 2019**, aiming to allow shareholders to share in profits while retaining sufficient reserves[357](index=357&type=chunk)[360](index=360&type=chunk) - Factors considered for dividend distribution include the Group's profits, economic and financial conditions, changes in capital structure, acquisitions and disposals, credit arrangements, cash flow, and past dividend trends[358](index=358&type=chunk)[360](index=360&type=chunk) [Risk Management and Internal Control](index=50&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board is responsible for assessing and determining the nature and extent of risks the Group is willing to undertake, and establishing and maintaining effective risk management and internal control systems. The Group has formulated various risk management procedures and guidelines, and engaged external consultants for internal control review. The Board annually assesses the system's effectiveness and confirms compliance with relevant code provisions - The Board assumes overall responsibility for assessing and determining the nature and extent of risks the Company is willing to undertake in achieving its strategic objectives[362](index=362&type=chunk)[365](index=365&type=chunk) - The Group has formulated various risk management procedures and guidelines, covering project management, financial reporting, human resources, etc[363](index=363&type=chunk)[365](index=365&type=chunk) - The Group engaged Shinewing Risk Management Limited to conduct an internal control review of its principal businesses and will take measures to improve identified deficiencies[380](index=380&type=chunk)[384](index=384&type=chunk) - The Board annually assesses the effectiveness of the risk management and internal control systems and confirms that the Group has complied with the relevant provisions of the Corporate Governance Code[383](index=383&type=chunk)[386](index=386&type=chunk) [Shareholders' Rights and Communication](index=53&type=section&id=Shareholders'%20Rights%20and%20Communication) Shareholders can requisition extraordinary general meetings and submit inquiries to the Board or company secretary, with the company committed to high transparency through regular reports and various communication channels - Shareholders holding not less than one-tenth of the paid-up capital have the right to request the Directors to convene an extraordinary general meeting[389](index=389&type=chunk)[393](index=393&type=chunk) - Shareholders may submit written inquiries and suggestions to the Board or the Company Secretary[391](index=391&type=chunk)[393](index=393&type=chunk) - The company provides shareholders with updated business developments and financial performance information through annual, interim, and quarterly reports, and provides contact information on its website[396](index=396&type=chunk)[399](index=399&type=chunk) - The Annual General Meeting serves as a platform for shareholders to exchange views with the Board, and all Directors and external auditors endeavor to attend[397](index=397&type=chunk)[399](index=399&type=chunk) [Independent Auditor's Report](index=55&type=section&id=Independent%20Auditor's%20Report) This section presents the independent auditor's report, including a disclaimer of opinion due to significant limitations in audit scope regarding intangible assets and associate investments [Disclaimer of Opinion](index=55&type=section&id=Disclaimer%20of%20Opinion) The independent auditor disclaims an opinion on Million Stars Holdings Limited's consolidated financial statements due to the significance of matters described in the "Basis for Disclaimer of Opinion" section, preventing the formation of an audit opinion - The auditor disclaims an opinion on the Group's consolidated financial statements[404](index=404&type=chunk)[406](index=406&type=chunk) - The inability to form an audit opinion is due to the significance of the matters described in the "Basis for Disclaimer of Opinion" section[404](index=404&type=chunk)[406](index=406&type=chunk) [Basis for Disclaimer of Opinion](index=55&type=section&id=Basis%20for%20Disclaimer%20of%20Opinion) The auditor's disclaimer is primarily due to insufficient audit evidence for the acquisition and impairment assessment of intangible assets and the purchase price allocation, share of results, net assets, and impairment assessment of the associate, Yidao Network - Acquisition and impairment assessment of intangible assets: Limited supporting documentation and evidence, making it impossible to determine the reasonableness of management's assumptions and the feasibility of business plans[405](index=405&type=chunk)[407](index=407&type=chunk)[410](index=410&type=chunk)[412](index=412&type=chunk) - Interests in associate Yidao Network: Insufficient supporting documentation and evidence for purchase price allocation, share of results, share of net assets, and impairment assessment, making it impossible to ascertain if all assets and liabilities were identified and the reasonableness of management's assumptions[415](index=415&type=chunk)[418](index=418&type=chunk)[420](index=420&type=chunk)[422](index=422&type=chunk)[425](index=425&type=chunk) - The aforementioned scope limitations prevent determining whether adjustments to the relevant amounts are necessary, which would have a significant impact on the Group's financial position and performance[423](index=423&type=chunk)[425](index=425&type=chunk)[428](index=428&type=chunk)[433](index=433&type=chunk) [Other Matter](index=59&type=section&id=Other%20Matter) The Group's consolidated financial statements for the year ended June 30, 2019, were audited by another auditor who issued an unmodified opinion - The Group's FY2019 consolidated financial statements were audited by another auditor who issued an unmodified opinion[429](index=429&type=chunk)[434](index=434&type=chunk) [Responsibilities of Directors and Auditor](index=59&type=section&id=Responsibilities%20of%20Directors%20and%20Auditor) Directors are responsible for preparing true and fair consolidated financial statements and maintaining effective internal controls, while the auditor's responsibility is to conduct an audit in accordance with Hong Kong Standards on Auditing and report to shareholders - Directors are responsible for preparing true and fair consolidated financial statements and for internal controls[430](index=430&type=chunk)[435](index=435&type=chunk) - The auditor's responsibility is to conduct an audit in accordance with Hong Kong Standards on Auditing and to report to shareholders[438](index=438&type=chunk)[440](index=440&type=chunk) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=61&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the year ended June 30, 2020, the Group's revenue from continuing operations significantly increased to HK$434,314 thousand, but a loss of HK$44,039 thousand and total comprehensive expense of HK$50,031 thousand were recorded due to higher service costs and impairment losses [Financial Performance Summary](index=61&type=section&id=Financial%20Performance%20Summary) For the year ended June 30, 2020, the Group's revenue from continuing operations was HK$434,314 thousand, a significant increase from the prior year, but a loss of HK$44,039 thousand and total comprehensive expense of HK$50,031 thousand were recorded due to increased service costs and various impairment losses Consolidated Statement of Profit or Loss and Other Comprehensive Income (Summary) | Metric | FY2020 (HK$ thousand) | FY2019 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 434,314 | 270,729 | | Cost of services | (425,780) | (230,119) | | Gross profit | 8,534 | 40,610 | | Other income, gains and losses, net | 3,254 | 3,092 | | Selling and distribution expenses | (2,150) | (3,266) | | Administrative expenses | (36,558) | (39,887) | | Net reversal of impairment loss on trade and other receivables | 27,947 | (34,934) | | Impairment loss on intangible assets | (16,129) | – | | Impairment loss on interests in an associate | (23,856) | – | | Finance costs | (4,449) | (626) | | Loss before tax | (44,039) | (35,011) | | Loss for the year | (44,039) | (36,606) | | Total comprehensive expense for the year | (50,031) | (45,672) | | Loss per share (basic and diluted) | (10.71) HK cents | (9.15) HK cents | - Revenue increased by **60.4%** year-on-year, but gross profit significantly decreased[444](index=444&type=chunk) - Loss for the year was primarily affected by impairment losses on **intangible assets** and **interests in an associate**[444](index=444&type=chunk) [Consolidated Statement of Financial Position](index=63&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2020, the Group's total assets were HK$268,442 thousand, total liabilities HK$103,608 thousand, and total equity HK$164,834 thousand. Non-current assets saw new right-of-use assets and intangible assets, trade and other receivables significantly decreased, while bank and cash balances increased [Assets, Liabilities and Equity Overview](index=63&type=section&id=Assets,%20Liabilities%20and%20Equity%20Overview) As of June 30, 2020, the Group's total assets were HK$268,442 thousand, total liabilities HK$103,608 thousand, and total equity HK$164,834 thousand, with new right-of-use assets and intangible assets, a significant decrease in trade and other receivables, and an increase in bank and cash balances Consolidated Statement of Financial Position (Summary) | Metric | June 30, 2020 (HK$ thousand) | June 30, 2019 (HK$ thousand) | | :--- | :--- | :--- | | Non-current assets | 85,311 | 6,209 | | Current assets | 183,131 | 282,442 | | Current liabilities | 100,076 | 78,616 | | Non-current liabilities | 3,532 | 170 | | Net assets | 164,834 | 209,865 | | Total equity | 164,834 | 209,865 | - Non-current assets significantly increased, mainly due to new **right-of-use assets of HK$8,147 thousand** and **intangible assets of HK$32,993 thousand**[449](index=449&type=chunk) - Trade receivables decreased from **HK$113,508 thousand** in FY2019 to **HK$38,069 thousand** in FY2020[449](index=449&type=chunk) - Bank and cash balances increased from **HK$19,564 thousand** in FY2019 to **HK$49,895 thousand** in FY2020[449](index=449&type=chunk) [Consolidated Statement of Changes in Equity](index=65&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) For the year ended June 30, 2020, the Group's total equity decreased from HK$209,865 thousand to HK$164,834 thousand, primarily due to a total comprehensive expense of HK$50,031 thousand, partially offset by a HK$5,000 thousand increase from ordinary share issuance [Equity Movement Analysis](index=65&type=section&id=Equity%20Movement%20Analysis) For the year ended June 30, 2020, the Group's total equity decreased from HK$209,865 thousand on July 1, 2019, to HK$164,834 thousand, primarily due to a total comprehensive expense of HK$50,031 thousand, partially offset by a HK$5,000 thousand increase from ordinary share issuance Consolidated Statement of Changes in Equity (Summary) | Item | June 30, 2020 (HK$ thousand) | June 30, 2019 (HK$ thousand) | | :--- | :--- | :--- | | Share capital | 4,200 | 4,000 | | Share premium | 44,582 | 39,782 | | Statutory reserve | 1,806 | 1,806 | | Exchange reserve | (17,297) | (11,305) | | Retained profits | 131,543 | 175,582 | | Total equity | 164,834 | 209,865 | - Total comprehensive expense for the year was **HK$50,031 thousand**, leading to a decrease in equity[453](index=453&type=chunk) - Issuance of ordinary shares resulted in an equity increase of **HK$5,000 thousand**, comprising **HK$200 thousand** in share capital and **HK$4,800 thousand** in share premium[453](index=453&type=chunk) [Consolidated Statement of Cash Flows](index=67&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) For the year ended June 30, 2020, the Group generated HK$144,408 thousand net cash from operating activities, used HK$119,323 thousand in investing activities, and generated HK$10,730 thousand from financing activities, resulting in a net increase of HK$35,815 thousand in cash and cash equivalents [Cash Flow Activities Summary](index=67&type=section&id=Cash%20Flow%20Activities%20Summary) For the year ended June 30, 2020, the Group generated HK$144,408 thousand net cash from operating activities, used HK$119,323 thousand in investing activities, and generated HK$10,730 thousand from financing activities, resulting in a net increase of HK$35,815 thousand in cash and cash equivalents Consolidated Statement of Cash Flows (Summary) | Activity Type | FY2020 (HK$ thousand) | FY2019 (HK$ thousand) | | :--- | :--- | :--- | | Net cash generated from (used in) operating activities | 144,408 | (31,072) | | Net cash used in investing activities | (119,323) | (10,094) | | Net cash generated from (used in) financing activities | 10,730 | (44,592) | | Net increase (decrease) in cash and cash equivalents | 35,815 | (85,758) | - In investing activities, expenditure for acquisition of an associate was **HK$63,324 thousand**, and for purchase of intangible assets was **HK$46,091 thousand**[463](index=463&type=chunk) - In financing activities, proceeds from issuance of ordinary shares were **HK$5,000 thousand**, borrowings raised were **HK$381,620 thousand**, and borrowings repaid were **HK$365,503 thousand**[463](index=463&type=chunk) [Notes to the Consolidated Financial Statements](index=69&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed notes to the consolidated financial statements, explaining the Group's accounting policies, significant judgments, and disclosures for various financial statement line items [General Information](index=69&type=section&id=General%20Information) This section outlines Million Stars Holdings Limited's registration, principal place of business, listing venue, primary business (investment holding), and its subsidiaries' main activities, with financial statements presented in Hong Kong Dollars - The Company is incorporated in the Cayman Islands, and its shares are listed on GEM of The Stock Exchange of Hong Kong[464](index=464&type=chunk) - The Company is an investment holding company, and the consolidated financial statements are presented in **Hong Kong Dollars**[465](index=465&type=chunk)[468](index=468&type=chunk)[469](index=469&type=chunk) [Application of New and Amendments to HKFRSs](index=69&type=section&id=Application%20of%20New%20and%20Amendments%20to%20HKFRSs) The Group first applied several new and amended HKFRSs in the current fiscal year, notably HKFRS 16 Leases, which was applied retrospectively, leading to the recognition of additional lease liabilities and right-of-use assets, with other standards yet to be effective - The Group first applied **HKFRS 16 Leases** in the current year, with retrospective application[471](index=471&type=chunk)[475](index=475&type=chunk) - As of **July 1, 2019**, the Group recognized additional lease liabilities and right-of-use assets of **HK$20,080 thousand** each[474](index=474&type=chunk)[477](index=477&type=chunk)[483](index=483&type=chunk)[488](index=488&type=chunk) - Standards issued but not yet effective include HKFRS 17 Insurance Contracts, amendments to HKFRS 3 Definition of a Business, etc[74](index=74&type=chunk)[495](index=495&type=chunk) [Significant Accounting Policies](index=75&type=section&id=Significant%20Accounting%20Policies) This section details the Group's significant accounting policies for preparing consolidated financial statements, covering consolidation, goodwill, associate investments, revenue recognition, contract liabilities, leases, foreign currency translation, borrowings, employee benefits, share-based payments, taxation, property, plant and equipment, intangible assets, impairment, provisions, and financial instruments - Revenue is recognized when performance obligations are satisfied, with internet advertising agency service revenue recognized over time, and performance-based advertising recognized by clicks or impressions[543](index=543&type=chunk)[550](index=550&type=chunk)[551](index=551&type=chunk)[554](index=554&type=chunk) - Financial asset impairment is assessed using the Expected Credit Loss (ECL) model, with trade receivables always recognizing lifetime ECL[662](index=662&type=chunk)[666](index=666&type=chunk)[669](index=669&type=chunk) - Goodwill is stated at acquisition cost less accumulated impairment losses and is tested for impairment annually[518](index=518&type=chunk)[522](index=522&type=chunk) - Investments in associates are accounted for using the equity method, with the excess of investment cost over the fair value of identifiable assets and liabilities recognized as goodwill[533](index=533&type=chunk)[536](index=536&type=chunk) [Critical Accounting Judgements and Key Sources of Estimation Uncertainty](index=109&type=section&id=Critical%20Accounting%20Judgements%20and%20Key%20Sources%20of%20Estimation%20Uncertainty) This section explains the Group's critical judgments and estimation uncertainties in applying accounting policies, primarily concerning the assessment of significant credit risk increases, useful lives and impairment of property, plant and equipment and intangible assets, goodwill impairment, associate impairment, trade receivables' expected credit loss provisions, and income and deferred taxes - The assessment of a significant increase in credit risk considers quantitative and qualitative information, including deterioration in external or internal credit ratings, changes in economic conditions, etc[726](index=726&type=chunk)[730](index=730&type=chunk)[674](index=674&type=chunk)[675](index=675&type=chunk) - The estimation of asset impairment (including property, plant and equipment, right-of-use assets, and intangible assets) relies on judgments of recoverable amounts (fair value less costs of disposal or value in use), involving estimates of future cash flows and discount rates[738](index=738&type=chunk)[740](index=740&type=chunk) - Goodwill and associate impairment assessments require estimating future cash flows of cash-generating units and appropriate discount rates[745](index=745&type=chunk)[746](index=746&type=chunk)[748](index=748&type=chunk) - Provisions for expected credit losses on trade receivables are estimated based on historical default rates combined with forward-looking information[755](index=755&type=chunk) [Revenue](index=114&type=section&id=Revenue) This section discloses the Group's revenue breakdown from customer contracts, primarily from internet advertising agency services, categorized by geographical region and revenue recognition timing Revenue by Major Product or Service | Service Category | FY2020 (HK$ thousand) | FY2019 (HK$ thousand) | | :--- | :--- | :--- | | Internet advertising agency services | 434,314 | 270,629 | | Mobile payment technical support services | – | 100 | Revenue by Geographical Market | Geographical Market | FY2020 (HK$ thousand) | FY2019 (HK$ thousand) | | :--- | :--- | :--- | | China | 331,222 | 218,810 | | Hong Kong | 103,092 | 51,919 | - All revenue represents services transferred over time[767](index=767&type=chunk) [Other Income, Gains and Losses, Net](index=115&type=section&id=Other%20Income,%20Gains%20and%20Losses,%20Net) This section presents the Group's net other income, gains, and losses for FY2020 and FY2019, primarily comprising interest income, exchange differences, additional input VAT granted, and miscellaneous income Other Income, Gains and Losses, Net (HK$ thousand) | Item | FY2020 | FY2019 | | :--- | :--- | :--- | | Interest income from bank deposits | 54 | 141 | | Interest income from loans receivable | 435 | 1,673 | | Net exchange (loss) gain | (83) | 581 | | Additional input VAT granted | 1,702 | – | | Miscellaneous income | 1,146 | 175 | | **Total** | **3,254** | **3,092** | - Net other income, gains, and losses for FY2020 was **HK$3,254 thousand**, a slight increase from FY2019[769](index=769&type=chunk) [Operating Segments](index=116&type=section&id=Operating%20Segments) In accordance with HKFRS 8, this section discloses the Group's operating segment information, primarily internet advertising agency services and mobile payment technical support services, providing analysis of revenue, results, assets, liabilities, and geographical information for each segment - The Group's reportable segments are **internet advertising agency services** and **mobile payment technical support services**[772](index=772&type=chunk)[773](index=773&type=chunk) Segment Results (HK$ thousand) | Segment | FY2020 Results | FY2019 Results | | :--- | :--- | :--- | | Internet advertising agency services | (57,146) | (2,131) | | Mobile payment technical support services | 25,313 | (25,474) | - In FY2020, revenue from external customers: Customer B contributed **HK$116,567 thousand**, Customer C **HK$68,316 thousand**, and Customer D **HK$44,195 thousand**[801](index=801&type=chunk) Non-current Assets by Location (HK$ thousand) | Region | FY2020 | FY2019 | | :--- | :--- | :--- | | China | 83,728 | 5,937 | | Hong Kong | 1,573 | 239 | | United States | 10 | 33 | [Finance Costs](index=122&type=section&id=Finance%20Costs) This section discloses the Group's finance costs for FY2020 and FY2019, primarily comprising interest on lease liabilities and bank and other borrowings, which significantly increased Finance Costs (HK$ thousand) | Item | FY2020 | FY2019 | | :--- | :--- | :--- | | Finance lease expenses | – | 33 | | Interest on lease liabilities | 1,136 | – | | Interest on bank and other borrowings | 3,313 | 593 | | **Total** | **4,449** | **626** | - FY2020 finance costs significantly increased, mainly due to higher interest on **lease liabilities** and **bank and other borrowings**[805](index=805&type=chunk) [Income Tax Expenses](index=122&type=section&id=Income%20Tax%20Expenses) This section discloses the Group's income tax expenses for FY2020 and FY2019, explaining applicable tax rates for Hong Kong profits tax and PRC corporate income tax, as well as tax incentives, with no income tax expense in FY2020 Income Tax Expenses (HK$ thousand) | Item | FY2020 | FY2019 | | :--- | :--- | :--- | | Current income tax | – | 1,879 | | Over-provision in prior years | – | (89) | | **Income tax expenses** | **–** | **1,790** | - Hong Kong profits tax rate is **16.5%**, with the first **HK$2 million** of assessable profits taxed at **8.25%**[811](index=811&type=chunk)[812](index=812&type=chunk) - The PRC corporate income tax rate is **25%**[814](index=814&type=chunk)[816](index=816&type=chunk) - Subsidiaries in Horgos Economic Development Zone enjoy a **5-year corporate income tax exemption** until the end of 2020[818](index=818&type=chunk)[820](index=820&type=chunk) [Loss for the Year from Continuing Operations](index=126&type=section&id=Loss%20for%20the%20Year%20from%20Continuing%20Operations) This section lists the Group's loss for the year from continuing operations, detailing the various expenses and impairment losses contributing to the loss, including auditor's remuneration, intangible asset amortization, depreciation, exchange losses, lease termination losses, and the recognition and reversal of various impairment losses Components of Loss for the Year from Continuing Operations (HK$ thousand) | Item | FY2020 | FY2019 | | :--- | :--- | :--- | | Auditor's remuneration | 850 | 1,250 | | Amortisation of intangible assets | 3,028 | – | | Depreciation of right-of-use assets | 6,433 | – | | Loss on termination of lease contracts | 1,967 | – | | Reversal of impairment loss on trade receivables | (27,200) | (1,847) | | Impairment loss recognised on intangible assets | 16,129 | – | | Impairment loss recognised on interests in an associate | 23,856 | – | - The loss for the year from continuing operations in FY2020 was **HK$44,039 thousand**[827](index=827&type=chunk) [Employee Benefits Expenses](index=126&type=section&id=Employee%20Benefits%20Expenses) This section discloses the Group's employee benefits expenses for FY2020 and FY2019, including salaries, bonuses, allowances, and retirement benefit scheme contributions, and details the remuneration breakdown for the five highest-paid individuals Employee Benefits Expenses (HK$ thousand) | Item | FY2020 | FY2019 | | :--- | :--- | :--- | | Salaries, bonuses and allowances | 11,718 | 29,099 | | Retirement benefit scheme contributions | 1,868 | 4,811 | | **Total staff costs** | **13,586** | **33,910** | Remuneration of Five Highest Paid Individuals (HK$ thousand) | Item | FY2020 | FY2019 | | :--- | :--- | :--- | | Salaries, allowances and benefits in kind | 3,133 | 925 | | Discretionary bonuses | – | 7,616 | | Retirement benefit scheme contributions | 96 | 28 | | **Total** | **3,229** | **8,569** | - In FY2020, none of the five highest-paid employees were directors, with 4 individuals earning between zero and **HK$1 million**, and 1 individual earning between **HK$1 million** and **HK$1.5 million**[833](index=833&type=chunk) [Benefits and Interests of Directors](index=128&type=section&id=Benefits%20and%20Interests%20of%20Directors) This section discloses the remuneration breakdown for the Group's directors (executive and independent non-executive) for FY2020 and FY2019, confirming no additional compensation for joining or leaving, nor any director waiving remuneration during the year Directors' Remuneration (HK$ thousand) | Director Name | Directors' Fees | Salaries and Allowances | Employer's Retirement Benefit Scheme Contributions | Discretionary Bonuses and Performance-Related Incentive Payments | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | **FY2020** | | | | | | | Mr. Zhu Yongjun | – | 50 | – | – | 50 | | Ms. Wang Fei (CEO) | – | 100 | 2 | – | 102 | | Ms. Tian Yuan | – | – | – | – | – | | Ms. Ji Fang | 180 | – | – | – | 180 | | Mr. Gao Shuo | 180 | – | – | – | 180 | | Mr. Chan Chak | 180 | – | – | – | 180 | | **Total** | **540** | **150** | **2** | **–** | **692** | - Total directors' remuneration in FY2020 was **HK$692 thousand**, a significant decrease from **HK$4,983 thousand** in FY2019[838](index=838&type=chunk)[841](index=841&type=chunk) - During the year, no directors or chief executive were paid remuneration as an inducement to join or upon joining or as compensation for loss of office, nor did any directors waive remuneration[846](index=846&type=chunk)[849](index=849&type=chunk) [Discontinued Operation](index=131&type=section&id=Discontinued%20Operation) This section explains that the Group disposed of its leather business, Odella International Limited and its subsidiaries, on February 18, 2019, and presents the financial information for the discontinued operation for FY2019 - The Group disposed of its leather business, Odella International Limited and its subsidiaries, on **February 18, 2019**, for a consideration of **HK$10,000 thousand**[852](index=852&type=chunk)[853](index=853&type=chunk) FY2019 Profit from Discontinued Operation (HK$ thousand) | Item | FY2019 | | :--- | :--- | | Revenue | 37,219 | | Loss before tax | (2,119) | | Gain on disposal of subsidiaries | 2,324 | | **Profit for the year attributable to owners of the Company** | **195** | - The disposal resulted in a net cash outflow of **HK$6,274 thousand**[854](index=854&type=chunk) [Dividends](index=132&type=section&id=Dividends) This section states that the Group neither paid nor proposed any dividends to ordinary shareholders during FY2020 and FY2019 - No dividends were paid or proposed to the Company's ordinary shareholders during the year or since the end of the reporting period[856](index=856&type=chunk)[857](index=857&type=chunk) [Loss Per Share](index=132&type=section&id=Loss%20Per%20Share) This section discloses the Group's basic and diluted loss per share from continuing and discontinued operations, as well as from continuing operations, for FY2020 and FY2019 Loss Per Share (HK cents) | Item | FY2020 | FY2019 | | :--- | :--- | :--- | | From continuing and discontinued operations | (10.71) | (9.15) | | From continuing operations | (10.71) | (9.20) | - The weighted average number of ordinary shares used to calculate basic and diluted loss per share was **411,202 thousand** in FY2020 and **400,000 thousand** in FY2019[859](index=859&type=chunk) [Property, Plant and Equipment](index=134&type=section&id=Property,%20Plant%20and%20Equipment) This section provides details on the changes in cost, accumulated depreciation, and impairment losses for the Group's property, plant and equipment, including depreciation rates and impairment assessment results. HK$5 thousand impairment loss was recognized in FY2020 Carrying Amount of Property, Plant and Equipment (HK$ thousand) | Item | June 30, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Motor vehicles | 706 | 2,639 | | Furniture, fixtures and office equipment | 471 | 643 | | Leasehold improvements | 1,108 | 349 | | **Total** | **2,285** | **3,631** | - Depreciation expense for FY2020 was **HK$1,484 thousand**[868](index=868&type=chunk) - An impairment loss of **HK$5 thousand** was recognized in FY2020, allocated to property, plant and equipment of the Aiwan Yue cash-generating unit[868](index=868&type=chunk)[872](index=872&type=chunk) [Leases](index=136&type=section&id=Leases) This section discloses detailed information on the Group's right-of-use assets and lease liabilities, including adjustments after HKFRS 16 application, asset additions, depreciation, lease terminations, and maturity analysis and currency denomination of lease liabilities Carrying Amount of Right-of-Use Assets (HK$ thousand) | Item | June 30, 2020 | July 1, 2019 | | :--- | :--- | :--- | | Leased properties | 8,108 | 20,022 | | Office equipment | 39 | 58 | | **Total** | **8,147** | **20,080** | Lease Liabilities (HK$ thousand) | Item | June 30, 2020 | July 1, 2019 | | :--- | :--- | :--- | | Non-current | 3,532 | 5,692 | | Current | 5,128 | 14,388 | | **Total** | **8,660** | **20,080** | - The termination of lease contracts for China offices and staff dormitories in FY2020 resulted in a loss of **HK$1,967 thousand**[880](index=880&type=chunk)[881](index=881&type=chunk) - Total cash outflow for leases in FY2020 was **HK$7,179 thousand**[892](index=892&type=chunk) [Intangible Assets](index=140&type=section&id=Intangible%20Assets) This section provides details on the changes in cost, accumulated amortization, and impairment losses for the Group's intangible assets, including mobile applications, licensed mobile game application concessions, and software. In FY2020, the Group acquired significant intangible assets and recognized substantial impairment losses Carrying Amount of Intangible Assets (HK$ thousand) | Item | June 30, 2020 | | :--- | :--- | | Mobile applications | 11,847 | | Licensed mobile game applications | 7,814 | | Software | 13,332 | | **Total** | **32,993** | - The total consideration for intangible assets acquired in FY2020 was approximately **HK$52,668 thousand**, of which **HK$8,862 thousand** was from Yidao Network[896](index=896&type=chunk)[898](index=898&type=chunk) - An impairment loss of **HK$16,129 thousand** on intangible assets was recognized in FY2020[896](index=896&type=chunk)[907](index=907&type=chunk)[908](index=908&type=chunk) - The economic useful lives of intangible assets are: mobile applications **8 years**, licensed mobile game application concessions **8 to 10 years**, and software **5 to 10 years**[900](index=900&type=chunk) [Interests in Associates](index=142&type=section&id=Interests%20in%20Associates) This section details the Group's interests in Yidao Network and Baitui Network, including investment costs, share of results, impairment losses, and exchange differences. The report explains the background, purchase price allocation, and impairment assessment results for both acquisitions Carrying Amount of Interests in Associates (HK$ thousand) | Item | June 30, 2020 | | :--- | :--- | | Investment cost in associates | 63,324 | | Share of post-acquisition results and other comprehensive income, net | 937 | | Impairment loss recognized during the year | (23,856) | | Exchange differences | (855) | | **Total** | **39,550** | - Yidao Network: Acquired a **35% equity interest** on **October 28, 2019**, for a cash consideration of **HK$55,720 thousand**, with an impairment loss of **HK$23,856 thousand** recognized in FY2020[919](index=919&type=chunk)[925](index=925&type=chunk)[942](index=942&type=chunk)[945](index=945&type=chunk) - Baitui Network: Acquired a **25.54% equity interest** on **May 21, 2020**, for a cash consideration of **HK$7,604 thousand**, with no impairment loss recognized in FY2020[948](index=948&type=chunk)[951](index=951&type=chunk)[969](index=969&type=chunk) - Amount due from Baitui Network was **HK$4,939 thousand**, with an impairment loss of **HK$1,415 thousand** recognized[911](index=911&type=chunk) [Goodwill](index=156&type=section&id=Goodwill) This section discloses the carrying amount and impairment assessment results of the Group's goodwill, primarily arising from the acquisitions of Aiwan Yue and Dongrun Interactive. In FY2020, an impairment loss was recognized for Aiwan Yue's goodwill, while Dongrun Interactive's goodwill was not impaired Carrying Amount of Goodwill (HK$ thousand) | Item | June 30, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Aiwan Yue | – | 154 | | Dongrun Interactive | 2,336 | 2,424 | | **Total** | **2,336** | **2,578** | - An impairment loss of **HK$149 thousand** was recognized in FY2020, allocated to the goodwill of the Aiwan Yue cash-generating unit[995](index=995&type=chunk)[1008](index=1008&type=chunk)[1011](index=1011&type=chunk) - The recoverable amount of the Dongrun Interactive cash-generating unit exceeded its carrying amount, thus no impairment loss was recognized in FY2020[1009](index=1009&type=chunk)[1011](index=1011&type=chunk) [Investments in Subsidiaries](index=160&type=section&id=Investments%20in%20Subsidiaries) This section lists detailed information for the company's principal subsidiaries, including their place of incorporation, business structure, issued share capital, ownership interest, and principal activities. All major subsidiaries are directly or indirectly wholly-owned by the company - Principal subsidiaries include United Mutual Holdings Limited (investment holding), Million Stars Internet Media Limited (internet advertising agency services), Dongrun Interactive (investment holding), etc[1019](index=1019&type=chunk)[1021](index=1021&type=chunk)[1022](index=1022&type=chunk) - All principal subsidiaries are directly or indirectly **wholly-owned (100%)** by the Company[1019](index=1019&type=chunk)[1021](index=1021&type=chunk)[1022](index=1022&type=chunk) [Trade Receivables](index=163&type=section&id=Trade%20Receivables) This section discloses the Group's trade receivables' carrying amount, provisions, aging analysis, and currency denomination, along with client credit terms and concentration of credit risk Net Carrying Amount of Trade Receivables (HK$ thousand) | Item | June 30, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Trade receivables | 48,577 | 141,481 | | Less: Provision | (10,508) | (27,973) | | **Net amount** | **38,069** | **113,508** | Aging Analysis of Trade Receivables (HK$ thousand) | Aging | June 30, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Within 30 days | 17,197 | 14,131 | | 31 to 60 days | 691 | 7,974 | | 61 to 90 days | 4,979 | 5,166 | | 91 to 180 days | 15,004 | 12,831 | | 181 to 365 days | 198 | 14,648 | | Over 365 days | – | 58,758 | - The Group has concentrated credit risk, with the largest customer accounting for **36.8%** of total trade receivables, and the top five customers accounting for **87.1%**[1128](index=1128&type=chunk) [Deposits, Prepayments and Other Receivables](index=164&type=section&id=Deposits,%20Prepayments%20and%20Other%20Receivables) This section discloses the Group's deposits, prepayments, and other receivables' carrying amount, provisions, and composition, including prepaid service costs, loans receivable, and consideration receivable Deposits, Prepayments and Other Receivables (HK$ thousand) | Item | June 30, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Deposits | 1,966 | 4,605 | | Prepayments | 78,833 | 96,354 | | Loans receivable | 6,004 | 49,684 | | Consideration receivable | – | 5,000 | | Others | 2,776 | 6,328 | | Less: Provision | (5,208) | (16,506) | | **Net amount** | **84,371** | **145,465** | - Approximately **HK$78,249 thousand** (2019: HK$91,271 thousand) of prepayments were for service costs related to internet adve

[Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) [Performance Summary](index=4&type=section&id=Performance%20Summary) Profit from continuing operations surged to HKD 21.57 million, primarily due to 62.0% revenue growth and a HKD 41.29 million impairment reversal, despite a gross profit decline Condensed Consolidated Statement of Profit or Loss Summary (For the nine months ended March 31) | Metric | 2020 (HKD thousands) | 2019 (HKD thousands) | YoY Change | | :--- | :--- | :--- | :--- | | **Revenue** | **368,376** | **227,362** | **+62.0%** | | Cost of sales | (356,967) | (190,006) | +87.9% | | **Gross profit** | **11,409** | **37,356** | **-69.5%** | | Reversal of impairment loss on trade receivables | 41,287 | – | Not applicable | | **Profit from operations** | **25,466** | **5,159** | **+393.6%** | | **Profit for the period** | **21,569** | **3,215** | **+570.9%** | | **Total comprehensive income** | **14,847** | **(431)** | **Switched to profit** | | **Basic earnings per share (from continuing operations)** | **5.14 HK cents** | **0.82 HK cents** | **+526.8%** | - Despite significant revenue growth, gross margin was significantly pressured due to a faster increase in cost of sales (**+87.9%**), leading to a **69.5% year-on-year decline in gross profit**[11](index=11&type=chunk) - The significant increase in operating profit and net profit was primarily attributable to a **HKD 41.29 million net reversal of impairment loss on trade and other receivables**, which was a non-recurring gain[11](index=11&type=chunk) [Unaudited Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) [Equity Changes Summary](index=6&type=section&id=Equity%20Changes%20Summary) Total equity attributable to owners increased to **HKD 230 million** from **HKD 210 million** at the beginning of the period, driven by **HKD 21.57 million** in profit and **HKD 5 million** from new share subscriptions, partially offset by **HKD 6.72 million** in foreign exchange differences Equity Changes Summary (For the nine months ended March 31, 2020) | Item | Amount (HKD thousands) | | :--- | :--- | | **As at July 1, 2019 (Beginning of period)** | **209,865** | | Subscription of new shares | 5,000 | | Profit for the period | 21,569 | | Exchange differences on translation of foreign operations | (6,722) | | **Total comprehensive income for the period** | **14,847** | | **As at March 31, 2020 (End of period)** | **229,712** | [Notes to The Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=8&type=section&id=Notes%20to%20The%20Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) [Basis of Preparation and Changes in Accounting Policies](index=8&type=section&id=1.%20BASIS%20OF%20PREPARATION%20AND%202.%20CHANGES%20IN%20ACCOUNTING%20POLICIES) Financial information is prepared under HKFRS, with HKFRS 16 'Leases' adopted for the first time using a simplified transition approach, leading to the recognition of **HKD 22.73 million** in right-of-use assets and lease liabilities, and related depreciation and finance costs - The Group first applied **HKFRS 16 'Leases'** during this interim period, replacing the previous **HKAS 17**[27](index=27&type=chunk)[29](index=29&type=chunk) - Upon adoption of the new leasing standard, the Group recognized **HKD 22,725 thousand** in right-of-use assets and **HKD 22,725 thousand** in lease liabilities as of July 1, 2019[55](index=55&type=chunk)[57](index=57&type=chunk) - For the nine months ended March 31, 2020, the Group recognized **HKD 6,043 thousand** in depreciation expense and **HKD 772 thousand** in finance costs due to the new standard, replacing previous operating lease expenses[63](index=63&type=chunk)[64](index=64&type=chunk) [Revenue, Costs, and Tax Analysis](index=16&type=section&id=3.%20REVENUE,%204.%20FINANCE%20COSTS,%206.%20INCOME%20TAX%20EXPENSE) All group revenue is from internet advertising agency services, while finance costs surged **743%** due to increased other borrowings and lease liabilities interest, resulting in minimal income tax expense due to a five-year corporate income tax exemption for certain Horgos subsidiaries - The Group's revenue is solely derived from providing internet advertising agency services[66](index=66&type=chunk)[67](index=67&type=chunk) Finance Costs Breakdown (For the nine months ended March 31) | Item | 2020 (HKD thousands) | 2019 (HKD thousands) | | :--- | :--- | :--- | | Interest on bank borrowings | 698 | 328 | | Interest on other borrowings | 2,335 | 135 | | Interest on lease liabilities | 772 | – | | **Total** | **3,805** | **463** | - Three of the Group's subsidiaries in Horgos, Xinjiang (Horgos Sifan, Horgos Banana Superman, Horgos Dongrun) benefit from a corporate income tax exemption from 2017 to 2020, resulting in an income tax expense of only **HKD 96 thousand** for the period[78](index=78&type=chunk)[80](index=80&type=chunk)[82](index=82&type=chunk) [Earnings Per Share and Dividends](index=19&type=section&id=7.%20EARNING%20PER%20SHARE%20and%208.%20DIVIDENDS) Basic earnings per share attributable to owners significantly increased to **5.14 HK cents** for the nine months ended March 31, 2020, from **0.82 HK cents** in the prior period, with no dividends declared or paid - Basic and diluted earnings per share from continuing operations were **5.14 HK cents**, compared to **0.82 HK cents** in the prior period[12](index=12&type=chunk)[83](index=83&type=chunk) - No dividends were declared or paid by the company during the reporting period[85](index=85&type=chunk)[87](index=87&type=chunk) [Management Discussion and Analysis](index=20&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review and Outlook](index=20&type=section&id=BUSINESS%20REVIEW%20and%20OUTLOOK) The Group focuses on internet advertising agency services in mainland China and overseas, achieving approximately **62.0%** year-on-year sales growth through promotional measures despite a challenging macroeconomic environment and intensified competition, with plans to further invest in market expansion - The core business is internet advertising agency services, with primary clients located in mainland China[90](index=90&type=chunk)[91](index=91&type=chunk)[93](index=93&type=chunk) - Facing macroeconomic challenges and industry competition, the Group implemented promotional measures like increased rebates, achieving approximately **62.0%** year-on-year sales growth[91](index=91&type=chunk)[94](index=94&type=chunk) Revenue by Business Segment (For the nine months ended March 31, 2020) | Business Segment | Operating Entity | Revenue (HKD millions approx.) | | :--- | :--- | :--- | | Domestic Internet Advertising | Dongrun Network | 317.7 | | Overseas Internet Advertising | Wanxing Network (MSIM) | 49.0 | - Looking ahead, the Group plans to seize industry development opportunities, increase investment, and expand new clients, businesses, and revenue streams[98](index=98&type=chunk)[100](index=100&type=chunk) [Financial Review](index=22&type=section&id=FINANCIAL%20REVIEW) Revenue grew **62.0%** to **HKD 368 million**, but gross margin sharply declined from **16.4%** to **3.1%** due to increased costs from promotions, while administrative expenses decreased **11.9%**; profit for the period surged to **HKD 21.6 million**, mainly from a net reversal of impairment loss on receivables - Revenue increased **62.0%** year-on-year to approximately **HKD 368.4 million**, primarily due to increased internet advertising agency service revenue[102](index=102&type=chunk)[105](index=105&type=chunk) - Gross margin significantly decreased from **16.4%** in the prior period to **3.1%**, mainly due to the narrowing gross margin of internet advertising agency services in mainland China[104](index=104&type=chunk)[106](index=106&type=chunk) - Administrative expenses decreased **11.9%** year-on-year to **HKD 25.1 million**, primarily due to a **HKD 2.3 million** reduction in directors' salaries[110](index=110&type=chunk)[111](index=111&type=chunk)[114](index=114&type=chunk) - Profit for the period increased from **HKD 3.2 million** to **HKD 21.6 million**, primarily due to the net reversal of impairment loss on trade and other receivables[117](index=117&type=chunk)[122](index=122&type=chunk) [Financial Position, Liquidity and Financial Resources](index=24&type=section&id=Financial%20Position,%20Liquidity%20and%20Financial%20Resources) The Group maintains prudent financial management, with **HKD 35.6 million** in cash and bank balances and **HKD 18.5 million** in bank borrowings as of March 31, 2020, resulting in a healthy **9.1%** debt-to-equity ratio, while currency risks from USD, HKD, and RMB are deemed minimal Key Financial Position Indicators | Metric | March 31, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Cash and bank balances (HKD millions) | 35.6 | 23.5 | | Total bank borrowings (HKD millions) | 18.5 | 8.1 | | Total debt to equity ratio | 9.1% | 7.0% | - The Group's treasury activities are centrally managed, with cash primarily held in banks in Hong Kong and mainland China[118](index=118&type=chunk)[123](index=123&type=chunk) - The Group's bank financing is secured by pledged bank deposits of approximately **HKD 5.9 million**[133](index=133&type=chunk)[137](index=137&type=chunk) [Events After the Reporting Period](index=26&type=section&id=EVENTS%20AFTER%20THE%20REPORTING%20PERIOD) Following the reporting period, the COVID-19 pandemic spread globally, prompting the Group to implement control measures like extended holidays and safe resumption of work, while continuously monitoring the situation and assessing its potential impact on financial position and operating results - The Group is actively responding to the impact of the **COVID-19** pandemic, implementing control measures including extended holidays and safe resumption of work[136](index=136&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) - The company will continue to assess the pandemic's impact on its financial position and operating performance, maintaining vigilance in risk management[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) [Other Information](index=28&type=section&id=Other%20Information) [Directors' and Chief Executive's Interests and Substantial Shareholders](index=28&type=section&id=DIRECTORS'%20AND%20CHIEF%20EXECUTIVE'S%20INTERESTS%20AND%20SUBSTANTIAL%20SHAREHOLDERS) As of March 31, 2020, Executive Directors Mr. Zhu Yongjun and Ms. Wang Fei held **9.14%** and **9.52%** of the company's shares respectively, with entities related to Zhongtian Financial Group collectively holding **33.24%** equity Directors' Interests in the Company's Shares | Director Name | Capacity | Number of Shares Interested (Long Position) | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zhu Yongjun | Beneficial Owner | 38,398,786 | 9.14% | | Ms. Wang Fei | Beneficial Owner | 40,000,000 | 9.52% | - Among substantial shareholders, **United Conquer Limited (UCL)** holds **21.33%** of shares, **Seventh Road Holdings Limited** holds **12.86%**, and **Shanghai Hutong Investment Center (Limited Partnership)** holds **11.90%**[154](index=154&type=chunk) - Through a series of controlled corporate interests, **Jinshiqi International Holdings Co., Ltd.** is deemed to hold **139,597,169 shares** (long position), representing approximately **33.24%** of the total share capital[156](index=156&type=chunk)[161](index=161&type=chunk) [Corporate Governance](index=32&type=section&id=Corporate%20Governance) The company's audit committee, comprising three independent non-executive directors, has reviewed the quarterly results report, and neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities during the reporting period - The Audit Committee comprises three independent non-executive directors: **Mr. Chen Ce (Chairman)**, **Ms. Ji Fang**, and **Mr. Gao Shuo**, and has reviewed the quarterly financial statements[165](index=165&type=chunk)[168](index=168&type=chunk) - For the nine months ended March 31, 2020, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[164](index=164&type=chunk)[167](index=167&type=chunk)

[Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended December 31, 2019, the company turned from loss to profit, driven by revenue growth and impairment loss reversal, despite a gross margin decline Overview of Profit or Loss and Other Comprehensive Income (For the six months ended December 31) | Indicator | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 274,149 | 189,366 | +44.89% | | Cost of Sales | (265,432) | (158,901) | +67.04% | | Gross Profit | 8,717 | 30,465 | -71.38% | | Operating Profit/(Loss) | 28,343 | (3,696) | N/A (Turned from loss to profit) | | Profit/(Loss) Before Tax | 25,434 | (3,822) | N/A (Turned from loss to profit) | | Profit/(Loss) for the Period | 25,332 | (3,885) | N/A (Turned from loss to profit) | | Basic and Diluted Earnings/(Loss) Per Share | HK6.03 cents | HK(0.97) cents | N/A (Turned from loss to profit) | - The company's profit for the period was primarily attributable to the reversal of impairment losses on trade and other receivables, amounting to **HK$41,238 thousand**[9](index=9&type=chunk) [Unaudited Condensed Consolidated Statement of Financial Position](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of December 31, 2019, the balance sheet shows significant increases in non-current assets and current liabilities, influenced by HKFRS 16 adoption, borrowings, and trade receivables, leading to an increase in net assets Overview of Financial Position (As of December 31) | Indicator | 2019 (HK$ Thousand) | June 30, 2019 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total Non-Current Assets | 95,182 | 6,209 | +1432.9% | | Total Current Assets | 391,726 | 282,442 | +38.69% | | Total Current Liabilities | 238,255 | 78,616 | +203.06% | | Net Current Assets | 153,471 | 203,826 | -24.70% | | Net Assets | 237,178 | 209,865 | +12.99% | | Total Equity | 237,178 | 209,865 | +12.99% | - The substantial increase in non-current assets was mainly due to the initial application of HKFRS 16, recognizing right-of-use assets of **HK$18,712 thousand**, new intangible assets of **HK$15,515 thousand**, and interests in an associate of **HK$55,870 thousand**[13](index=13&type=chunk) - Current liabilities significantly increased, primarily due to borrowings rising from **HK$14,522 thousand** to **HK$120,419 thousand** and contract liabilities from **HK$9,963 thousand** to **HK$43,317 thousand**[13](index=13&type=chunk) [Unaudited Condensed Consolidated Statement of Changes in Equity](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended December 31, 2019, total equity increased, primarily due to profit for the period and new share subscriptions, despite a decrease in the exchange fluctuation reserve Overview of Changes in Equity (As of December 31) | Indicator | December 31, 2019 (HK$ Thousand) | July 1, 2019 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Share Capital | 4,200 | 4,000 | +200 | | Share Premium | 44,582 | 39,782 | +4,800 | | Exchange Fluctuation Reserve | (14,324) | (11,305) | -3,019 | | Retained Earnings | 200,914 | 175,582 | +25,332 | | Total Equity | 237,178 | 209,865 | +27,313 | - New share subscriptions during the period generated **HK$5,000 thousand** in funds, with **HK$200 thousand** credited to share capital and **HK$4,800 thousand** to share premium[17](index=17&type=chunk) - The exchange fluctuation reserve decreased by **HK$3,019 thousand** due to exchange differences on the translation of foreign operations[17](index=17&type=chunk)[20](index=20&type=chunk)[23](index=23&type=chunk) [Unaudited Condensed Consolidated Statement of Cash Flow](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flow) For the six months ended December 31, 2019, net cash and cash equivalents decreased, despite significant cash inflows from financing activities, due to substantial outflows from operating and investing activities Overview of Cash Flows (For the six months ended December 31) | Indicator | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (35,784) | (35,148) | -636 | | Net Cash Used in Investing Activities | (73,534) | (140) | -73,394 | | Net Cash Generated From/(Used In) Financing Activities | 103,172 | (38,513) | +141,685 | | Net Decrease in Cash and Cash Equivalents | (6,146) | (73,801) | +67,655 | | Cash and Cash Equivalents at End of Period | 10,893 | 31,414 | -20,521 | - Net cash outflow from investing activities significantly increased, primarily due to the purchase of intangible assets and interests in an associate[27](index=27&type=chunk) - Net cash inflow from financing activities significantly increased, turning from an outflow in 2018 to an inflow in 2019, mainly driven by new borrowings and share subscriptions[27](index=27&type=chunk) [Notes to The Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20The%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section details the basis of preparation, accounting policy changes, revenue, segment information, expenses, taxation, EPS, dividends, receivables/payables, borrowings, lease commitments, and related party transactions for the six months ended December 31, 2019 - The Group first applied HKFRS 16 'Leases' during this interim period, replacing HKAS 17[36](index=36&type=chunk)[39](index=39&type=chunk) - HKFRS 16 introduces a single on-balance sheet accounting model, requiring lessees to recognize right-of-use assets and lease liabilities[36](index=36&type=chunk)[39](index=39&type=chunk) [1. BASIS OF PREPARATION AND BASIS OF PRESENTATION](index=11&type=section&id=1.%20BASIS%20OF%20PREPARATION%20AND%20BASIS%20OF%20PRESENTATION) This interim financial information is prepared under HKAS 34 and GEM Listing Rules, using a historical cost basis, reviewed by the audit committee but unaudited by external auditors, with consistent accounting policies except for HKFRS 16 - Financial information is prepared in accordance with HKAS 34 'Interim Financial Reporting' and the GEM Listing Rules[28](index=28&type=chunk)[31](index=31&type=chunk) - The statements are prepared on a historical cost basis, reviewed by the audit committee, but not audited by external auditors[29](index=29&type=chunk)[32](index=32&type=chunk) - Accounting policies remain consistent with the previous financial year, except for the adoption of HKFRS 16 'Leases'[30](index=30&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk) [2. CHANGES IN ACCOUNTING POLICIES](index=12&type=section&id=2.%20CHANGES%20IN%20ACCOUNTING%20POLICIES) The Group's first-time application of HKFRS 16 'Leases' significantly changed lease accounting, recognizing right-of-use assets and lease liabilities, impacting financial statements [2. (a) Definition of a lease](index=13&type=section&id=2.%20(a)%20Definition%20of%20a%20lease) Under the new HKFRS 16 definition, a contract is a lease if it conveys the right to control the use of an identified asset for a period in exchange for consideration; the Group applied a simplified transition approach - HKFRS 16 defines a contract as a lease if it conveys the right to control the use of an identified asset for a period in exchange for consideration[40](index=40&type=chunk)[42](index=42&type=chunk) - The Group adopted a simplified transition approach, applying HKFRS 16 only to contracts previously identified as leases, without reassessing contracts not identified as leases under HKAS 17[41](index=41&type=chunk)[42](index=42&type=chunk) [2. (b) As a lessee](index=14&type=section&id=2.%20(b)%20As%20a%20lessee) As a lessee, the Group recognized right-of-use assets and lease liabilities for office and equipment leases under HKFRS 16, with assets measured at cost and depreciated, and liabilities at the present value of unpaid lease payments - The Group leases offices and equipment, recognizing right-of-use assets and lease liabilities under HKFRS 16[44](index=44&type=chunk)[46](index=46&type=chunk) Total Right-of-Use Assets (As of December 31, 2019) | Category | Amount (HK$ Thousand) | | :--- | :--- | | Property | 18,666 | | Equipment | 46 | | **Total** | **18,712** | - Right-of-use assets are initially measured at cost, subsequently at cost less accumulated depreciation and impairment losses, and depreciated on a straight-line basis over the asset's useful life or lease term, whichever is shorter[49](index=49&type=chunk)[52](index=52&type=chunk) - Lease liabilities are initially measured at the present value of unpaid lease payments at the commencement date, using the Group's incremental borrowing rate as the discount rate[50](index=50&type=chunk)[52](index=52&type=chunk) [2. (c) Impacts of financial statements](index=18&type=section&id=2.%20(c)%20Impacts%20of%20financial%20statements) The initial application of HKFRS 16 led to the recognition of additional right-of-use assets and lease liabilities, reclassifying operating lease expenses to depreciation and finance costs, impacting the statement of financial position and profit or loss - Upon transition to HKFRS 16, the Group recognized additional right-of-use assets of **HK$22,725 thousand** and additional lease liabilities of **HK$22,725 thousand**[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) - For the six months ended December 31, 2019, the Group recognized depreciation expense of **HK$3,941 thousand** and finance costs of **HK$529 thousand**, replacing operating lease expenses[74](index=74&type=chunk)[75](index=75&type=chunk) Lease Liability Recognition (As of July 1, 2019) | Item | Amount (HK$ Thousand) | | :--- | :--- | | Operating lease commitments disclosed at June 30, 2019 | 6,279 | | Lease liabilities discounted at incremental borrowing rate | 23,216 | | Less: Short-term leases recognized as expense on a straight-line basis | (491) | | **Lease liabilities recognized at July 1, 2019** | **22,725** | | Of which: Current lease liabilities | 6,559 | | Non-current lease liabilities | 16,166 | [3. REVENUE AND OPERATING SEGMENT INFORMATION](index=21&type=section&id=3.%20REVENUE%20AND%20OPERATING%20SEGMENT%20INFORMATION) The Group's revenue primarily derives from internet advertising agency services, which saw significant growth in the second half of 2019; the Group has three operating segments and discloses major customer and geographical revenue sources - The Group's revenue primarily derives from providing internet advertising agency services, mobile payment technical support services, and selling leather products (which have been discontinued)[77](index=77&type=chunk)[78](index=78&type=chunk) Revenue Source Analysis (For the six months ended December 31) | Revenue Source | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Internet Advertising Agency Services | 274,149 | 159,456 | +71.93% | | Mobile Payment Technical Support Services | – | 99 | -100% | | Sale of Leather Products | – | 29,811 | -100% | | **Total Revenue** | **274,149** | **189,366** | **+44.89%** | - The Group has three operating segments: internet advertising agency services, mobile payment technical support services, and leather business (which has been discontinued)[82](index=82&type=chunk) [Segment revenue and results](index=23&type=section&id=Segment%20revenue%20and%20results) In 2019, the internet advertising agency services segment experienced substantial revenue growth, becoming the Group's primary revenue source and achieving positive segment results, while mobile payment and leather businesses were discontinued or contributed minimally Segment Revenue and Results (For the six months ended December 31) | Segment | 2019 Revenue (HK$ Thousand) | 2019 Segment Results (HK$ Thousand) | | :--- | :--- | :--- | | Internet Advertising Agency Services | 274,149 | 21,872 | | Mobile Payment Technical Support Services | – | N/A | | Leather Business | – | N/A | Segment Revenue and Results (For the six months ended December 31) | Segment | 2018 Revenue (HK$ Thousand) | 2018 Segment Results (HK$ Thousand) | | :--- | :--- | :--- | | Internet Advertising Agency Services | 159,456 | 7,816 | | Mobile Payment Technical Support Services | 99 | (1,533) | | Leather Business | 29,811 | (2,161) | [3. (a) Information about major customers](index=25&type=section&id=3.%20(a)%20Information%20about%20major%20customers) For the six months ended December 31, 2019, Customer A and Customer C became the Group's major revenue contributors, while Customer B was the primary customer in the corresponding period of 2018 Major Customer Revenue Contribution (For the six months ended December 31) | Customer | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Customer A | 106,332 | * | | Customer B | * | 90,696 | | Customer C | 35,463 | * | - Asterisks indicate that the customer's revenue contribution did not exceed **10%** of the Group's total revenue in the respective period[93](index=93&type=chunk)[95](index=95&type=chunk) [3. (b) Geographical information](index=25&type=section&id=3.%20(b)%20Geographical%20information) The Group's revenue primarily originates from Mainland China, where non-current assets are also mainly concentrated, with revenue from the United States, Hong Kong, and Canada decreasing in 2019 Revenue from External Customers (For the six months ended December 31) | Region | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | China (excluding Hong Kong) | 267,775 | 137,228 | | United States of America | 3,899 | 34,430 | | Hong Kong | 1,650 | 2,966 | | Canada | 825 | 6,260 | | Australia | – | 3,137 | | Malaysia | – | 1,426 | | Taiwan | – | 1,377 | | Switzerland | – | 956 | | Japan | – | 862 | | Netherlands | – | 665 | | South Africa | – | 51 | | Other | – | 8 | | **Total** | **274,149** | **189,366** | Geographical Distribution of Non-Current Assets (As of December 31) | Region | 2019 (HK$ Thousand) | June 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | China | 92,827 | 5,937 | | Hong Kong | 2,333 | 239 | | United States of America | 22 | 33 | | **Total** | **95,182** | **6,209** | [4. OTHER INCOME, GAINS/(LOSSES)](index=28&type=section&id=4.%20OTHER%20INCOME,%20GAINS/(LOSSES)) For the six months ended December 31, 2019, the Group's other income, gains/(losses) turned from a net gain in the prior year to a net loss, primarily due to losses on disposal of property, plant and equipment and reduced government grants Other Income, Gains/(Losses) (For the six months ended December 31) | Item | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Exchange gains, net | 1 | 427 | | Interest income | 34 | 51 | | Loss on disposal of property, plant and equipment | (653) | – | | Government grants | 6 | 517 | | Others | 29 | 4 | | **Total** | **(583)** | **999** | - Government grants represent one-off subsidies received for participating in design activities, which significantly decreased in 2019[106](index=106&type=chunk)[107](index=107&type=chunk) [5. FINANCE COSTS](index=28&type=section&id=5.%20FINANCE%20COSTS) For the six months ended December 31, 2019, the Group's finance costs significantly increased, mainly due to new interest on other borrowings and lease liabilities Finance Costs (For the six months ended June 30) | Item | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Interest on bank borrowings | 398 | 126 | | Interest on other borrowings | 1,977 | – | | Interest on lease liabilities | 529 | – | | **Total** | **2,904** | **126** | - Interest on lease liabilities of **HK$529 thousand** is a result of the initial application of HKFRS 16[109](index=109&type=chunk) [6. PROFIT/(LOSS) BEFORE TAX](index=29&type=section&id=6.%20PROFIT/(LOSS)%20BEFORE%20TAX) For the six months ended December 31, 2019, the Group's profit before tax was influenced by factors such as staff costs, depreciation expenses, and cost of inventories sold; staff costs significantly decreased, while depreciation of right-of-use assets was a new item Composition of Profit/(Loss) Before Tax (For the six months ended December 31) | Item | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Total staff costs | 10,833 | 23,144 | | Cost of inventories sold | – | 15,063 | | Depreciation of right-of-use assets | 3,941 | – | | Depreciation of property, plant and equipment | 739 | 905 | - Total staff costs decreased by approximately **53.2%** year-on-year, primarily due to reduced salaries and bonuses[110](index=110&type=chunk) - Cost of inventories sold was zero in 2019, indicating the discontinuation of the leather business[110](index=110&type=chunk) [7. INCOME TAX EXPENSE](index=29&type=section&id=7.%20INCOME%20TAX%20EXPENSE) The Group's income tax expense primarily consists of PRC Enterprise Income Tax, with Hong Kong profits tax levied under a two-tiered system, and certain PRC subsidiaries enjoying enterprise income tax exemptions in specific economic development zones - Hong Kong profits tax is provided at a rate of **16.5%**, with a two-tiered system introduced, taxing the first **HK$2 million** of assessable profits at **8.25%**[112](index=112&type=chunk)[113](index=113&type=chunk) - PRC Enterprise Income Tax is provided at a rate of **25%**[114](index=114&type=chunk) - Subsidiaries including Horgos Sifan, Horgos Xiangjiao, and Horgos Dongrun are exempt from income tax from 2017 to 2020 due to their location in a special economic development zone in Xinjiang and compliance with preferential policies[115](index=115&type=chunk)[116](index=116&type=chunk) Income Tax Expense (For the six months ended December 31) | Item | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Hong Kong profits tax | – | – | | PRC Enterprise Income Tax | 102 | 63 | | **Income Tax Expense for the Period** | **102** | **63** | [8. EARNING PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY](index=31&type=section&id=8.%20EARNING%20PER%20SHARE%20ATTRIBUTABLE%20TO%20OWNERS%20OF%20THE%20COMPANY) For the six months ended December 31, 2019, basic earnings per share attributable to owners of the company was **HK6.03 cents**, a significant improvement from a loss in the prior year, with diluted EPS being the same due to no dilutive potential ordinary shares - Basic earnings per share attributable to owners of the company was **HK6.03 cents** (2018: HK(0.97) cents)[10](index=10&type=chunk) - Basic earnings per share is calculated based on profit attributable to owners for the period and **420,000,000** issued shares (2018: 400,000,000 shares)[121](index=121&type=chunk) - Diluted earnings per share is the same as basic earnings per share as there were no dilutive potential ordinary shares outstanding during the period[122](index=122&type=chunk)[123](index=123&type=chunk) [9. DIVIDENDS](index=32&type=section&id=9.%20DIVIDENDS) For the period ended December 31, 2019, the company neither declared nor paid any dividends - For the periods ended December 31, 2019 and 2018, the company neither declared nor paid any dividends[125](index=125&type=chunk)[127](index=127&type=chunk) [10. TRADE RECEIVABLES](index=32&type=section&id=10.%20TRADE%20RECEIVABLES) As of December 31, 2019, the Group's total trade receivables increased, but the provision for doubtful debts significantly decreased, leading to a higher net amount, with a notable increase in receivables within 30 days Overview of Trade Receivables (As of December 31) | Item | 2019 (HK$ Thousand) | June 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Trade receivables | 154,075 | 141,481 | | Provision for doubtful debts | (2,179) | (27,973) | | **Net Amount** | **151,896** | **113,508** | - The provision for doubtful debts significantly decreased from **HK$27,973 thousand** to **HK$2,179 thousand**[129](index=129&type=chunk) Ageing Analysis of Trade Receivables (As of December 31) | Ageing | 2019 (HK$ Thousand) | June 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Within 30 days | 88,715 | 14,131 | | 31 to 60 days | 20,195 | 7,974 | | 61 to 90 days | 5,676 | 5,166 | | 91 to 180 days | 19,461 | 12,831 | | 181 to 365 days | 3,341 | 14,648 | | Over 365 days | 14,508 | 58,758 | | **Total** | **151,896** | **113,508** | [11. TRADE PAYABLES](index=33&type=section&id=11.%20TRADE%20PAYABLES) As of December 31, 2019, the Group's total trade payables increased, with a significant rise in amounts due within 30 days and a reduction in amounts over 90 days Ageing Analysis of Trade Payables (As of December 31) | Ageing | 2019 (HK$ Thousand) | June 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Within 30 days | 19,908 | 9,001 | | 31 to 60 days | 2,799 | 1,457 | | 61 to 90 days | 848 | 1,326 | | Over 90 days | 20,111 | 26,619 | | **Total** | **43,666** | **38,403** | - Trade payables within **30 days** increased from **HK$9,001 thousand** to **HK$19,908 thousand**, more than doubling[135](index=135&type=chunk) - Trade payables over **90 days** decreased from **HK$26,619 thousand** to **HK$20,111 thousand**[135](index=135&type=chunk) [12. INTEREST-BEARING BORROWINGS](index=34&type=section&id=12.%20INTEREST-BEARING%20BORROWINGS) As of December 31, 2019, the Group's total interest-bearing borrowings significantly increased, primarily from unsecured third-party loans, with most borrowings due within one year Overview of Interest-Bearing Borrowings (As of December 31) | Item | 2019 (HK$ Thousand) | June 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Bank loans — secured | 28,519 | 8,122 | | Third-party loans — unsecured | 91,900 | 6,570 | | **Total** | **120,419** | **14,692** | - Total interest-bearing borrowings significantly increased from **HK$14,692 thousand** to **HK$120,419 thousand**, an increase of approximately **719.6%**[138](index=138&type=chunk) - As of December 31, 2019, all interest-bearing borrowings (**HK$120,419 thousand**) are repayable within one year[141](index=141&type=chunk) - The Group borrowed unsecured loans of **HK$91,900 thousand** from third parties, bearing fixed annual interest rates of **3%-6%**[142](index=142&type=chunk) [13. LEASE COMMITMENTS](index=36&type=section&id=13.%20LEASE%20COMMITMENTS) As of December 31, 2019, due to the adoption of HKFRS 16, the Group recognized operating lease commitments as lease liabilities and no longer discloses future minimum lease payments under irrevocable operating leases Lease Commitments (As of December 31) | Item | 2019 (HK$ Thousand) | June 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Within one year | – | 4,959 | | In the second to fifth year inclusive | – | 1,320 | | **Total** | **–** | **6,279** | - As of December 31, 2019, the Group no longer has future minimum lease payment commitments under irrevocable operating leases, which is related to the adoption of HKFRS 16[144](index=144&type=chunk)[145](index=145&type=chunk) [14. RELATED PARTY TRANSACTIONS](index=36&type=section&id=14.%20RELATED%20PARTY%20TRANSACTIONS) This section discloses the Group's related party transactions, primarily directors' remuneration, which significantly decreased for the six months ended December 31, 2019 Directors' Remuneration (For the six months ended December 31) | Item | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Salaries, allowances and benefits in kind | 420 | 2,160 | | Contributions to pension schemes | 2 | 9 | | **Total** | **422** | **2,169** | - Total directors' remuneration decreased from **HK$2,169 thousand** in 2018 to **HK$422 thousand** in 2019, a decrease of approximately **80.5%**[149](index=149&type=chunk) [Management Discussion and Analysis](index=37&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a detailed analysis of business and financial performance for the six months ended December 31, 2019, highlighting significant revenue growth in internet advertising agency services, a decline in gross margin, a turnaround to profit, and capital raising through new share issuance [INTERIM DIVIDEND](index=37&type=section&id=INTERIM%20DIVIDEND) The Board does not recommend the payment of any interim dividend for the six months ended December 31, 2019 - The Board does not recommend the payment of any interim dividend for the six months ended December 31, 2019 (2018: nil)[150](index=150&type=chunk)[154](index=154&type=chunk) [INTRODUCTION](index=37&type=section&id=INTRODUCTION) Man Shing Holdings Limited is an integrated group specializing in internet advertising agency services - The Group is an integrated group specializing in internet advertising agency services[151](index=151&type=chunk)[155](index=155&type=chunk) [BUSINESS REVIEW](index=37&type=section&id=BUSINESS%20REVIEW) The Group's internet advertising agency services grew in Mainland China and overseas markets, expanding its customer base and sales through promotional measures despite macroeconomic challenges and increased industry competition - The Group primarily provides internet advertising placement services to various clients in Mainland China, with sales increasing by approximately **44.8%** compared to the same period last year[152](index=152&type=chunk)[156](index=156&type=chunk) - Dongrun Network (a wholly-owned subsidiary) provides information flow, search engine, application marketing, and navigation advertising agency services, primarily serving customers in e-commerce, online travel, and gaming industries, achieving revenue of approximately **HK$266 million** during the period[153](index=153&type=chunk)[156](index=156&type=chunk) - Man Shing Network (a wholly-owned subsidiary) develops overseas internet advertising markets through Facebook, providing global advertising placement services, and recorded revenue of approximately **HK$6 million** during the period[158](index=158&type=chunk)[162](index=162&type=chunk) [OUTLOOK](index=38&type=section&id=OUTLOOK) The Group plans to capitalize on the rapid development of the internet advertising industry by increasing investment, expanding new customers, businesses, and revenue sources to deliver higher returns to shareholders - The Group will seize opportunities in the rapidly developing internet advertising industry and increase investment in the internet advertising market[159](index=159&type=chunk)[163](index=163&type=chunk) - The Group will strive to expand new customers, businesses, and revenue sources to bring higher returns to shareholders[159](index=159&type=chunk)[163](index=163&type=chunk) [FINANCIAL REVIEW](index=38&type=section&id=FINANCIAL%20REVIEW) This section provides a comprehensive review of the Group's financial performance, including revenue, costs, profits, financial position, and liquidity, noting significant growth in revenue and net profit, but a decline in gross margin, alongside increased borrowings and liabilities [Overview](index=38&type=section&id=Overview) For the six months ended December 31, 2019, the Group's revenue significantly increased by **45%**, but gross profit decreased by **71%**, while profit attributable to owners of the company substantially increased by **752%**, turning from loss to profit - The Group's revenue for the six months ended December 31, 2019, was approximately **HK$274 million**, a significant increase of approximately **45%** compared to the same period in the previous financial year[160](index=160&type=chunk)[164](index=164&type=chunk) - The Group's gross profit for the six months ended December 31, 2019, was approximately **HK$9 million**, a decrease of approximately **71%** compared to the same period last year[160](index=160&type=chunk)[165](index=165&type=chunk) - Profit attributable to owners of the company for the six months ended December 31, 2019, was approximately **HK$25 million**, a significant increase of approximately **752%** compared to the same period last year[161](index=161&type=chunk)[165](index=165&type=chunk) [Revenue](index=39&type=section&id=Revenue) The Group's revenue primarily derives from internet advertising agency services, with a year-on-year increase of approximately **45%** for the six months ended December 31, 2019 - The Group's revenue primarily refers to income from providing internet advertising agency services[166](index=166&type=chunk)[169](index=169&type=chunk) - For the six months ended December 31, 2019, the Group's revenue was approximately **HK$274 million**, an increase of approximately **45%** compared to approximately **HK$189 million** in the same period last year[166](index=166&type=chunk)[169](index=169&type=chunk) [Cost of Sales and Gross Profit](index=39&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit) For the six months ended December 31, 2019, cost of sales increased by **67%** due to higher internet advertising agency service costs, leading to a decline in gross margin from **16%** to **3%** - Cost of sales primarily refers to costs incurred from providing internet advertising agency services and labor costs[167](index=167&type=chunk)[170](index=170&type=chunk) - For the six months ended December 31, 2019, cost of sales was approximately **HK$265 million**, an increase of approximately **67%** compared to the same period last year[167](index=167&type=chunk)[170](index=170&type=chunk) - Gross margin decreased from approximately **16%** in the same period of 2018 to approximately **3%** in the same period of 2019, mainly due to lower profit margins for internet advertising agency services[168](index=168&type=chunk)[170](index=170&type=chunk) [Other Income, Gains/(Losses)](index=40&type=section&id=Other%20Income,%20Gains/(Losses)) For the six months ended December 31, 2019, other income, gains/(losses) turned from a net gain to a net loss, primarily due to reduced government grants and losses from the disposal of property, plant and equipment - For the six months ended December 31, 2019, other income, gains/(losses) was a net loss of approximately **HK$1 million**, compared to a net gain of approximately **HK$1 million** in the same period last year[173](index=173&type=chunk)[177](index=177&type=chunk) - The main reasons were reduced government grants and losses from the disposal of property, plant and equipment[173](index=173&type=chunk)[177](index=177&type=chunk) [Selling and Distribution Expenses](index=40&type=section&id=Selling%20and%20Distribution%20Expenses) For the six months ended December 31, 2019, selling and distribution expenses slightly decreased, primarily due to strict cost control implemented in the internet advertising agency business - Selling and distribution expenses decreased from approximately **HK$5 million** in the same period of 2018 to approximately **HK$3 million** in the same period of 2019[174](index=174&type=chunk)[178](index=178&type=chunk) - The decrease was mainly due to strict cost control implemented for the internet advertising agency business[174](index=174&type=chunk)[178](index=178&type=chunk) [Administrative Expenses](index=40&type=section&id=Administrative%20Expenses) For the six months ended December 31, 2019, administrative expenses significantly decreased by **41%**, primarily due to the disposal of a subsidiary that contributed approximately **HK$11 million** in administrative expenses in the prior year - Administrative expenses decreased from approximately **HK$32 million** in the same period of 2018 to approximately **HK$19 million** in the same period of 2019, a decrease of approximately **41%**[175](index=175&type=chunk)[179](index=179&type=chunk) - The decrease in administrative expenses was mainly due to the disposal of a subsidiary, which had approximately **HK$11 million** in administrative expenses in the same period of 2018[176](index=176&type=chunk)[179](index=179&type=chunk) [Taxation](index=41&type=section&id=Taxation) The Group's tax policy includes Hong Kong profits tax and PRC Enterprise Income Tax, with certain PRC subsidiaries enjoying a five-year exemption from enterprise income tax due to their location in the Horgos Economic Development Zone - Hong Kong subsidiaries pay Hong Kong profits tax at a rate of **16.5%**, while PRC Foshan subsidiaries pay PRC Enterprise Income Tax at a rate of **25%**[180](index=180&type=chunk)[184](index=184&type=chunk) - Certain subsidiaries registered in the Horgos Economic Development Zone enjoy a five-year exemption from enterprise income tax[180](index=180&type=chunk)[184](index=184&type=chunk) [Profit/(Loss) for the Period](index=41&type=section&id=Profit/(Loss)%20for%20the%20Period) For the six months ended December 31, 2019, the Group achieved a profit for the period of approximately **HK$25 million**, a significant improvement from a loss in the prior year, primarily attributable to the reversal of impairment losses on trade and other receivables - The Group recorded a profit for the period of approximately **HK$25 million** for the six months ended December 31, 2019, compared to a loss of approximately **HK$4 million** in the same period last year[181](index=181&type=chunk)[185](index=185&type=chunk) - The profit for the period was primarily due to the reversal of impairment losses on trade and other receivables[181](index=181&type=chunk)[185](index=185&type=chunk) [Financial Position, Liquidity and Financial Resources](index=41&type=section&id=Financial%20Position,%20Liquidity%20and%20Financial%20Resources) The Group maintains prudent cash and financial management policies, with stable funding during the period; as of December 31, 2019, cash and bank balances decreased, while total borrowings and the gearing ratio significantly increased - The Group adopts prudent cash and financial management policies, with centralized treasury activities and cash generally held in banks in Hong Kong and China[182](index=182&type=chunk)[186](index=186&type=chunk) - As of December 31, 2019, total cash and bank balances were approximately **HK$17 million** (June 30, 2019: HK$23 million), primarily decreasing due to purchases of intangible assets, increased trade and other receivables, increased contract liabilities, and increased borrowings[183](index=183&type=chunk)[186](index=186&type=chunk) - As of December 31, 2019, the Group's outstanding borrowings were **HK$120 million** (June 30, 2019: HK$15 million), with a gearing ratio of approximately **51%** (June 30, 2019: 7%)[188](index=188&type=chunk)[193](index=193&type=chunk) [Charge Over Assets of the Group](index=42&type=section&id=Charge%20Over%20Assets%20of%20the%20Group) As of December 31, 2019, the Group's bank facilities were secured by pledged bank deposits of approximately **HK$6 million** - As of December 31, 2019, the Group's bank facilities were secured by the Group's pledged bank deposits of approximately **HK$6 million** (June 30, 2019: HK$4 million)[190](index=190&type=chunk)[194](index=194&type=chunk) [Financial Management Policies](index=42&type=section&id=Financial%20Management%20Policies) The Group's cash is primarily denominated in HKD, USD, and RMB, with no hedging undertaken, and foreign exchange risk is minimal due to stable major transaction currencies - Cash is generally held in banks in Hong Kong and Mainland China, mostly denominated in HKD, USD, and RMB, with no hedging undertaken during the period[191](index=191&type=chunk)[195](index=195&type=chunk) - Foreign exchange risk has minimal impact on the Group as most transactions are denominated in USD, RMB, and HKD[192](index=192&type=chunk)[195](index=195&type=chunk) [Capital Commitments and Contingent Liabilities](index=43&type=section&id=Capital%20Commitments%20and%20Contingent%20Liabilities) As of December 31, 2019, the Group had no significant capital commitments or contingent liabilities - As of December 31, 2019, the Group had no significant capital commitments (June 30, 2019: nil)[196](index=196&type=chunk)[201](index=201&type=chunk) - As of December 31, 2019, the Group had no significant contingent liabilities (June 30, 2019: nil)[196](index=196&type=chunk)[201](index=201&type=chunk) [MATERIAL ACQUISITIONS AND DISPOSALS](index=43&type=section&id=MATERIAL%20ACQUISITIONS%20AND%20DISPOSALS) For the six months ended December 31, 2019, the Group had no material acquisitions or disposals - For the six months ended December 31, 2019, the Group had no material acquisitions or disposals[197](index=197&type=chunk)[202](index=202&type=chunk) [EMPLOYEES AND REMUNERATION POLICY](index=43&type=section&id=EMPLOYEES%20AND%20REMUNERATION%20POLICY) As of December 31, 2019, the Group's employee count remained stable, with total staff costs significantly decreasing; the remuneration policy is set by the Remuneration Committee, offering training and share options, maintaining good employee relations - As of December 31, 2019, the Group had **109** employees (June 30, 2019: 109 employees)[198](index=198&type=chunk)[203](index=203&type=chunk) - Total staff costs for the six months ended December 31, 2019, were approximately **HK$11 million**, a decrease of approximately **HK$12 million** compared to the same period last year[198](index=198&type=chunk)[203](index=203&type=chunk) - The Group's remuneration policy is determined by the Remuneration Committee, referencing employee duties, experience, and capabilities, offering provident fund scheme contributions and share options as incentives[199](index=199&type=chunk)[200](index=200&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) [ISSUE OF SHARES](index=44&type=section&id=ISSUE%20OF%20SHARES) On December 9, 2019, the company completed the issuance of **20,000,000** new shares to an independent third-party subscriber, raising approximately **HK$5 million** for general working capital and future business development - On November 22, 2019, the company entered into a subscription agreement with Zhong Baomei, an independent third party, for the issuance of **20,000,000** ordinary shares[209](index=209&type=chunk)[210](index=210&type=chunk) - The subscription was completed on December 9, 2019, for a total subscription price of **HK$5,000,000**[209](index=209&type=chunk)[210](index=210&type=chunk) [Subscription Price](index=45&type=section&id=Subscription%20Price) The subscription price per share was **HK$0.25**, representing a discount of approximately **18.03%** to the closing price and the average closing price for five trading days prior to the subscription agreement date - The subscription price of **HK$0.25** per share represents a discount of approximately **18.03%** to the closing price of **HK$0.305** per share reported on the Stock Exchange on the date of the subscription agreement[212](index=212&type=chunk)[218](index=218&type=chunk) - This price was determined after fair negotiation between the company and the subscriber, considering current market conditions and the recent performance and liquidity of the shares[212](index=212&type=chunk)[215](index=215&type=chunk) [Reasons for and Benefit of the Subscription](index=45&type=section&id=Reasons%20for%20and%20Benefit%20of%20the%20Subscription) The subscription provided an opportunity to raise additional funds for the Group's business operations, enhancing its capital base and financial position for future development, and broadening the company's shareholder base, aligning with the overall interests of the company and its shareholders - The subscription provided an opportunity to raise additional funds for the Group's business operations[213](index=213&type=chunk)[216](index=216&type=chunk) - The subscription will enhance the Group's capital base and financial position for future business development and broaden the company's shareholder base[213](index=213&type=chunk)[216](index=216&type=chunk) - The Directors believe that the terms of the subscription agreement are fair and reasonable and in the overall interests of the company and its shareholders[214](index=214&type=chunk)[217](index=217&type=chunk) [Use of Proceeds](index=46&type=section&id=Use%20of%20Proceeds) The net proceeds from the share issuance, approximately **HK$4,990,000**, were fully utilized for the Group's general working capital and future business development - The estimated gross and net proceeds from the share issuance were approximately **HK$5,000,000** and **HK$4,990,000**, respectively[219](index=219&type=chunk)[221](index=221&type=chunk) - The company intends to use the net proceeds for the Group's general working capital and future business development[219](index=219&type=chunk)[221](index=221&type=chunk) Details of Use of Proceeds (As of December 31, 2019) | Net Proceeds Allocation | Amount Utilized (HK$ Thousand) | Net Proceeds Balance as of December 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | General working capital and future business development | 4,990 | NIL | [Other Information](index=47&type=section&id=Other%20Information) This section discloses directors' and chief executive's, and substantial shareholders' interests in shares, confirms no competing businesses or listed securities transactions, reports compliance with the Model Code for Securities Transactions and Corporate Governance Code, and details changes in directors' information and audit committee review [DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES](index=47&type=section&id=DIRECTORS'%20AND%20CHIEF%20EXECUTIVE'S%20INTERESTS%20AND%20SHORT%20POSITIONS%20IN%20SHARES,%20UNDERLYING%20SHARES%20AND%20DEBENTURES) As of December 31, 2019, Mr. Zhu Yongjun and Ms. Wang Fei held company shares as beneficial owners, representing **9.14%** and **9.52%** of the issued share capital, respectively Directors' Interests in the Company's Shares (As of December 31, 2019) | Director Name | Capacity | Interest in Shares | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zhu Yongjun | Beneficial owner | 38,398,786 (L) | 9.14% | | Ms. Wang Fei | Beneficial owner | 40,000,000 (L) | 9.52% | - As of December 31, 2019, the company had **420,000,000** issued shares[230](index=230&type=chunk)[232](index=232&type=chunk) [INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS](index=48&type=section&id=INTERESTS%20AND%20SHORT%20POSITIONS%20OF%20SUBSTANTIAL%20SHAREHOLDERS) As of December 31, 2019, several entities were listed as substantial shareholders, with Shanghai Angell, Zhongtian Partnership, Shanghai Tiger Platinum, Guiyang, Zhongtian Group, and Jinshiqi deemed to hold the same shares, totaling **33.24%** of the issued share capital Substantial Shareholders' Interests in the Company's Shares (As of December 31, 2019) | Shareholder Name | Capacity | Interest in Shares | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Jiang Peijie | Beneficial owner | 29,150,000 (L) | 6.94% | | Seventh Avenue Holdings Limited | Beneficial owner | 54,000,000 (L) | 12.86% | | United Conquer Limited ("UCL") | Beneficial owner | 89,597,169 (L) | 21.33% | | Shanghai Hutong Investment Centre (Limited Partnership) ("SHIC") | Beneficial owner | 50,000,000 (L) | 11.90% | | Shanghai Hutong Investment Centre (Limited Partnership) ("SHIC") | Interest in controlled corporation | 89,597,169 (L) | 21.33% | | Harvest Fund Management Co., Ltd. — Bank of China Overseas No. 1 QDII Asset Management Plan ("BOC Account") | Investment manager | 50,000,000 (L) | 11.90% | | Shanghai Angell Asset Management Co., Ltd. ("Shanghai Angell") | Interest in controlled corporation | 139,597,169 (L) | 33.24% | | Zhongtian Urban Investment Group Shanghai Equity Investment Fund Partnership (Limited Partnership) ("Zhongtian Partnership") | Interest in controlled corporation | 139,597,169 (L) | 33.24% | | Shanghai Tiger Platinum Equity Investment Fund Management Partnership (Limited Partnership) ("Shanghai Tiger Platinum") | Interest in controlled corporation | 139,597,169 (L) | 33.24% | | Guiyang Financial Holdings Co., Ltd. ("Guiyang") | Interest in controlled corporation | 139,597,169 (L) | 33.24% | | Zhongtian Financial Group Co., Ltd. ("Zhongtian Group") | Interest in controlled corporation | 139,597,169 (L) | 33.24% | | Jinshiqi International Holdings Co., Ltd. ("Jinshiqi") | Interest in controlled corporation | 139,597,169 (L) | 33.24% | - The **50,000,000** shares held by Shanghai Hutong and BOC Account refer to the same batch of shares[244](index=244&type=chunk) - The **89,597,169** shares held by UCL and Shanghai Hutong refer to the same batch of shares[244](index=244&type=chunk) - The **139,597,169** shares held by Shanghai Angell, Zhongtian Partnership, Shanghai Tiger Platinum, Guiyang, Zhongtian Group, and Jinshiqi refer to the same batch of shares, being the sum of the aforementioned **50,000,000** and **89,597,169** shares[244](index=244&type=chunk) [DIRECTORS' AND CONTROLLING SHAREHOLDERS' INTERESTS IN COMPETING BUSINESS](index=51&type=section&id=DIRECTORS'%20AND%20CONTROLLING%20SHAREHOLDERS'%20INTERESTS%20IN%20COMPETING%20BUSINESS) For the six months ended December 31, 2019, the Directors were unaware of any business or interest held by Directors or controlling shareholders that competed or might compete with the Group's business - For the six months ended December 31, 2019, the Directors were unaware of any business or interest held by Directors or the company's controlling shareholders that competed or might compete with the Group's business[240](index=240&type=chunk)[242](index=242&type=chunk) [PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES](index=51&type=section&id=PURCHASE,%20SALE%20OR%20REDEMPTION%20OF%20THE%20COMPANY'S%20LISTED%20SECU RITIES) For the six months ended December 31, 2019, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - For the six months ended December 31, 2019, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[241](index=241&type=chunk)[243](index=243&type=chunk) [MODEL CODE FOR SECURITIES TRANSACTIONS](index=52&type=section&id=MODEL%20CODE%20FOR%20SECURITIES%20TRANSACTIONS) The company adopted a strict model code for directors' securities transactions, and all directors confirmed compliance with the code for the six months ended December 31, 2019 - The company has adopted a model code for directors' securities transactions and dealings, with terms no less exacting than the required standard set out in the GEM Listing Rules[245](index=245&type=chunk)[248](index=248&type=chunk) - All Directors confirmed their compliance with the required standard set out in the Model Code and the code of conduct for the six months ended December 31, 2019[246](index=246&type=chunk)[249](index=249&type=chunk) [REPORT ON COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCE](index=52&type=section&id=REPORT%20ON%20COMPLIANCE%20WITH%20THE%20CODE%20ON%20CORPORATE%20GOVERNANCE) For the six months ended December 31, 2019, the Group consistently complied with the Corporate Governance Code as set out in Appendix 15 to the GEM Listing Rules - For the six months ended December 31, 2019, the Group consistently complied with the Corporate Governance Code as set out in Appendix 15 to the GEM Listing Rules[247](index=247&type=chunk)[250](index=250&type=chunk) [CHANGE OF DIRECTORS' INFORMATION](index=53&type=section&id=CHANGE%20OF%20DIRECTORS'%20INFORMATION) Since the company's last annual report, Director Ms. Wang Fei's salary changed to **HK$1** per annum, effective August 1, 2019 - Director Ms. Wang Fei's salary changed to **HK$1** per annum, effective August 1, 2019[253](index=253&type=chunk) [AUDIT COMMITTEE AND REVIEW OF FINANCIAL RESULTS](index=53&type=section&id=AUDIT%20COMMITTEE%20AND%20REVIEW%20OF%20FINANCIAL%20RESULTS) The Audit Committee, established under GEM Listing Rules and composed of independent non-executive directors, reviewed this interim report and unaudited consolidated results, recommending them for Board approval - The company's Audit Committee was established in accordance with the GEM Listing Rules, comprising Mr. Chan Chak (Chairman), Ms. Ji Fang, and Mr. Gao Shuo, all independent non-executive directors[254](index=254&type=chunk)[256](index=256&type=chunk) - The Audit Committee reviewed this interim report, including the unaudited consolidated results for the six months ended December 31, 2019, with management, and recommended them for Board approval[255](index=255&type=chunk)[256](index=256&type=chunk) - The Group's consolidated results for the six months ended December 31, 2019, have not been audited by the company's auditors[255](index=255&type=chunk)[256](index=256&type=chunk)

[Financial Statements](index=4&type=section&id=Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including profit or loss, comprehensive income, and equity changes, for the quarter ended September 30, 2019 [Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the quarter ended September 30, 2019, revenue grew 41% to HK$133 million, but gross profit fell 56% to HK$6.1 million, resulting in a net loss of HK$2.724 million Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric (For the three months ended September 30) | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 132,989 | 94,398 | +40.9% | | Cost of sales | (126,892) | (80,490) | +57.6% | | **Gross profit** | **6,097** | **13,908** | **-56.2%** | | Loss from operations | (2,280) | (2,481) | -8.1% | | **Loss for the period** | **(2,724)** | **(2,727)** | **-0.1%** | | Basic and diluted loss per share (HK cents) | (0.68) | (0.68) | 0.0% | [Unaudited Condensed Consolidated Statement of Changes in Equity](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) Total equity decreased from HK$210 million to HK$197 million, primarily due to a HK$2.724 million net loss and HK$10.394 million in exchange difference losses Equity Changes | Equity Changes (HK$ Thousand) | September 30, 2019 | July 1, 2019 | | :--- | :--- | :--- | | **Total Equity** | **196,747** | **209,865** | - The decrease in total equity was mainly due to two components: a loss for the period of **HK$2.724 million**, and exchange differences arising from the translation of foreign operations (loss on other comprehensive income) of **HK$10.394 million**[10](index=10&type=chunk) [Notes to The Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20The%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes on the unaudited condensed consolidated financial statements, covering general information, accounting policies, revenue, finance costs, income tax, loss per share, and dividends [1. General Information, Basis of Preparation and Accounting Policies](index=7&type=section&id=1.%20GENERAL%20INFORMATION%2C%20BASIS%20OF%20PREPARATION%20AND%20ACCOUNTING%20POLICIES) The unaudited financial statements for the quarter, reviewed by the audit committee, are prepared under HKFRS with consistent accounting policies and no significant impact from new standards - This quarter's financial statements are **unaudited** by the company's auditors but have been **reviewed by the company's audit committee**[25](index=25&type=chunk)[27](index=27&type=chunk) - Accounting policies remain **consistent** with the previous fiscal year's annual report, and the adoption of new standards has **no significant impact**[20](index=20&type=chunk)[21](index=21&type=chunk) [2. Revenue](index=9&type=section&id=2.%20REVENUE) Total revenue of HK$133 million was solely from internet advertising agency services, significantly up from HK$73.4 million, while the leather business generated no revenue Revenue Source | Revenue Source (For the three months ended September 30) | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Internet advertising agency services | 132,989 | 73,403 | | Mobile payment technical support services | – | – | | Leather business | – | 20,995 | | **Total** | **132,989** | **94,398** | [3. Finance Costs](index=10&type=section&id=3.%20FINANCE%20COSTS) Finance costs surged over 80 times to HK$508,000, driven entirely by new bank loan interest, indicating increased debt financing Composition of Finance Costs | Composition of Finance Costs (For the three months ended September 30) | 2019 (HK$ Thousand) | 2018 (HK$ Thousand) | | :--- | :--- | :--- | | Finance lease expenses | – | 6 | | Interest on bank borrowings | 508 | – | | **Total** | **508** | **6** | [5. Income Tax Expense](index=11&type=section&id=5.%20INCOME%20TAX%20EXPENSE) No income tax expense was incurred this quarter, compared to HK$240,000 last year, partly due to tax exemptions for Horgos subsidiaries - No income tax expense was incurred this quarter, compared to **HK$240,000** in the prior year[44](index=44&type=chunk) - Some of the company's subsidiaries registered in Horgos enjoy a **five-year corporate income tax exemption** tax incentive[78](index=78&type=chunk) [6. Loss Per Share](index=13&type=section&id=6.%20Loss%20PER%20SHARE) Basic and diluted loss per share remained at **HK$0.68 cents**, consistent with the prior year due to stable net loss and shares in issue Loss Per Share Calculation | Loss Per Share Calculation | 2019 | 2018 | | :--- | :--- | :--- | | Loss attributable to owners of the Company (HK$ Thousand) | 2,724 | 2,727 | | Number of shares in issue (shares) | 400,000,000 | 400,000,000 | | **Basic and diluted loss per share (HK cents)** | **(0.68)** | **(0.68)** | [7. Dividend](index=13&type=section&id=7.%20DIVIDEND) The Board did not recommend any dividend payment for the quarter - The Board **did not recommend** the payment of a dividend for the three months ended September 30, 2019[48](index=48&type=chunk) [Management Discussion and Analysis](index=14&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the Group's business transformation, financial performance, liquidity, and significant events for the quarter ended September 30, 2019 [Business Review and Outlook](index=14&type=section&id=BUSINESS%20REVIEW%20and%20Outlook) The Group has transformed into an internet advertising agency, operating domestically via Dongrun Network and internationally via Wanxing Network, with plans for increased investment and growth - The Group's core business is **internet advertising agency services**, with key domestic platforms including Dongqiudi, Cheetah Mobile, and Toutiao, and clients such as Tencent and Dianping[53](index=53&type=chunk)[56](index=56&type=chunk) - The Group expands its overseas internet advertising market through its subsidiary **Wanxing Network (MSIM)** and platforms like **Facebook**[54](index=54&type=chunk)[57](index=57&type=chunk) - The future outlook involves seizing industry opportunities, **increasing investment** in the internet advertising market, and **expanding new clients and revenue streams**[58](index=58&type=chunk)[63](index=63&type=chunk) [Financial Review](index=15&type=section&id=FINANCIAL%20REVIEW) Revenue grew **41%** to **HK$133 million**, but surging cost of sales led to a **56%** gross profit decline, while administrative expenses fell **47%** due to an impairment reversal, resulting in a stable **HK$2.7 million** net loss Key Financial Indicators | Key Financial Indicators (For the three months ended September 30) | 2019 (HK$ Million) | 2018 (HK$ Million) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 133.0 | 94.4 | +41% | | Gross profit | 6.1 | 13.9 | -56% | | Administrative expenses | 7.8 | 14.7 | -47% | | Loss attributable to shareholders | 2.7 | 2.7 | 0% | - The significant decrease in administrative expenses was primarily due to the reversal of **HK$2.9 million** in net impairment losses on trade and other receivables[77](index=77&type=chunk)[80](index=80&type=chunk) - The loss for the period was primarily due to the **lower profit margin** of internet advertising agency services and the **decrease in revenue and profit** from mobile payment technical support services[79](index=79&type=chunk)[82](index=82&type=chunk) [Financial Position, Liquidity and Financial Resources](index=18&type=section&id=Financial%20Position%2C%20Liquidity%20and%20Financial%20Resources) Cash and bank balances decreased to **HK$16.5 million**, while outstanding borrowings doubled to **HK$28 million**, causing the gearing ratio to rise from **7.0%** to **14.2%** Financial Position Indicators | Financial Position Indicators | September 30, 2019 | June 30, 2019 | | :--- | :--- | :--- | | Cash and bank balances (HK$ Million) | 16.5 | 23.5 | | Outstanding borrowings (HK$ Million) | 28.0 | 14.7 | | **Gearing ratio** | **14.2%** | **7.0%** | [Material Acquisition and Disposal](index=19&type=section&id=MATERIAL%20ACQUISITION%20AND%20DISPOSAL) The Group did not undertake any material acquisition or disposal activities during the reporting period - For the three months ended September 30, 2019, the Group had **no material acquisition and disposal activities**[95](index=95&type=chunk)[99](index=99&type=chunk) [Other Information](index=20&type=section&id=Other%20Information) This section details shareholdings of directors, chief executives, and substantial shareholders, along with the audit committee's review of the financial results [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=20&type=section&id=DIRECTORS'%20AND%20CHIEF%20EXECUTIVE'S%20INTERESTS%20AND%20SHORT%20POSITIONS%20IN%20SHARES%2C%20UNDERLYING%20SHARES%20AND%20DEBENTURES) As of September 30, 2019, directors Mr. Zhu Yongjun and Ms. Wang Fei held **9.60%** and **10.00%** of the company's shares Directors' Shareholdings | Director's Name | Capacity | Number of Shares Held (L) | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zhu Yongjun | Beneficial owner | 38,398,786 | 9.60% | | Ms. Wang Fei | Beneficial owner | 40,000,000 | 10.00% | [Interests and Short Positions of Substantial Shareholders](index=21&type=section&id=INTERESTS%20AND%20SHORT%20POSITIONS%20OF%20SUBSTANTIAL%20SHAREHOLDERS) United Conquer Limited holds **22.40%** as the largest direct beneficial shareholder, while Jin Shiqi International Holdings Co., Ltd. ultimately holds **34.90%** through a multi-layered structure - **United Conquer Limited** holds **89,597,169 shares** as a beneficial owner, representing **22.40%** of the company[109](index=109&type=chunk) - Through a series of controlled corporate interests, including Shanghai Hutong, Shanghai Angju, and Zhongtian Group, **Jin Shiqi International Holdings Co., Ltd. (Jin Shiqi)** is ultimately deemed to hold **139,597,169 shares**, representing **34.90%** of the company[109](index=109&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) [Audit Committee and Review of Financial Results](index=25&type=section&id=AUDIT%20COMMITTEE%20AND%20REVIEW%20OF%20FINANCIAL%20RESULTS) The Audit Committee, composed of three independent non-executive directors, reviewed the unaudited quarterly financial results and recommended Board approval, though they were not externally audited - The Audit Committee has **reviewed** the quarterly results report and **recommended it for Board approval**[121](index=121&type=chunk)[122](index=122&type=chunk) - The consolidated results for the quarter were **unaudited by the company's auditors**[121](index=121&type=chunk)[123](index=123&type=chunk)

MILLION STARS HOLDINGS LIMITED 萬星控股有限公司 Stock Code 股份代號：8093 (Incorporated in the Cayman Islands with limited liability ) （於開曼群島註冊成立之有限公司） ANNUAL REPORT 年度報告 2019 MILLION STARS HOLDINGS LIMITED 萬星控股有限公司 MILLION S TARS HOLDINGS LIMITED 萬星控股有限公司 ANNUAL REPORT 2019 年度報告 CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other comp ...

[Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the nine months ended March 31, 2019, revenue from continuing operations decreased by 22.5% to HK$227,362 thousand, with profit for the period significantly reduced to HK$3,215 thousand due to narrower margins and discontinued operations loss Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Nine Months Ended March 31) | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 227,362 | 293,596 | -22.5% | | Cost of sales | (190,006) | (146,410) | +29.8% | | Gross profit | 37,356 | 147,186 | -74.6% | | Profit from operations | 5,159 | 115,472 | -95.5% | | Profit before tax | 4,696 | 115,472 | -95.9% | | Income tax expense | (1,413) | (243) | +481.5% | | Profit for the period from continuing operations | 3,283 | 115,229 | -97.2% | | (Loss)/Profit for the period from discontinued operation, net of tax | (68) | 1,880 | -103.6% | | Profit for the period | 3,215 | 117,109 | -97.2% | | Profit for the period attributable to owners of the Company | 3,215 | 112,023 | -97.1% | | Basic and diluted earnings per share (continuing and discontinued operations) | HK$0.80 cents | HK$28.01 cents | -97.1% | | Basic and diluted earnings per share (continuing operations) | HK$0.82 cents | HK$27.54 cents | -97.0% | - Total comprehensive income for the period significantly decreased from **HK$125,361 thousand in 2018** to **(HK$431) thousand in 2019**, primarily due to exchange differences turning from gain to loss[13](index=13&type=chunk) [Unaudited Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) Total equity attributable to owners slightly decreased to HK$260,746 thousand for the nine months ended March 31, 2019, as profit was offset by negative exchange reserve movements and statutory reserve reduction from subsidiary disposal Condensed Consolidated Statement of Changes in Equity (Nine Months Ended March 31) | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | | :--- | :--- | :--- | | At July 1 (audited) | 261,177 | 59,593 | | Profit for the period | 3,215 | 117,109 | | Exchange differences on translation of foreign operations | (3,646) | 8,252 | | Total comprehensive income for the period | (431) | 125,361 | | Disposal of a subsidiary | – | 28 | | Transfer to statutory reserve | – | – | | Acquisition of non-controlling interests | – | – | | At March 31 (unaudited) | 260,746 | 184,982 | - Statutory reserve is transferred from profit according to relevant PRC laws and regulations, with usage restrictions for offsetting losses or increasing capital while maintaining minimum capital ratios[16](index=16&type=chunk)[19](index=19&type=chunk) - Exchange reserve reflects exchange differences arising from the translation of net assets of foreign operations, recognized directly in other comprehensive income and reclassified to profit or loss upon disposal of foreign operations[17](index=17&type=chunk)[20](index=20&type=chunk) - Other reserves originate from the difference between the issue price of shares for the GEM listing reorganization and the nominal value of subsidiary share capital[18](index=18&type=chunk)[21](index=21&type=chunk) [Notes to The Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=8&type=section&id=Notes%20to%20The%20Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This section details the basis of preparation, revenue sources, profit before tax, income tax expense, discontinued operations impact, and earnings per share calculation for the unaudited condensed consolidated financial statements for the nine months ended March 31, 2019, confirming no dividends declared [1. BASIS OF PREPARATION AND BASIS OF PRESENTATION](index=8&type=section&id=1.%20BASIS%20OF%20PREPARATION%20AND%20BASIS%20OF%20PRESENTATION) The Group's unaudited condensed consolidated financial statements are prepared on a historical cost basis under HKFRSs, reviewed by the audit committee but not audited, with no significant impact from new or revised HKFRSs - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards (HKFRSs) issued by the Hong Kong Institute of Certified Public Accountants and Chapter 18 of the GEM Listing Rules[23](index=23&type=chunk)[26](index=26&type=chunk) - Preparation adopts the historical cost basis and has been reviewed by the audit committee but not audited by the company's auditors[28](index=28&type=chunk)[31](index=31&type=chunk) - The adoption of new and revised HKFRSs has no significant impact on the financial statements, and there have been no material changes in accounting policies[25](index=25&type=chunk)[26](index=26&type=chunk) [2. REVENUE](index=9&type=section&id=2.%20REVENUE) The Group's revenue primarily derives from providing internet advertising agency services - Revenue mainly refers to income from providing internet advertising agency services[29](index=29&type=chunk)[32](index=32&type=chunk) [3. PROFIT BEFORE TAX](index=9&type=section&id=3.%20PROFIT%20BEFORE%20TAX) The Group's profit before tax is determined after deducting items such as depreciation of property, plant, and equipment Profit Before Tax Deductions (Nine Months Ended March 31) | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 1,114 | 489 | [4. INCOME TAX EXPENSE](index=10&type=section&id=4.%20INCOME%20TAX%20EXPENSE) The Group's income tax expense includes Hong Kong profits tax (16.5%) and PRC corporate income tax (25%), with the expense significantly increasing to HK$1,413 thousand for the period - Hong Kong profits tax rate is **16.5%**, and PRC corporate income tax rate is **25%**[35](index=35&type=chunk)[36](index=36&type=chunk) Income Tax Expense (Nine Months Ended March 31) | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong profits tax | 1,413 | 436 | | PRC corporate income tax | – | 243 | | Income tax expense for the period | 1,413 | 679 | [5. DISCONTINUED OPERATION](index=11&type=section&id=5.%20DISCONTINUED%20OPERATION) On February 18, 2019, the company sold its leather products business (Odella Group) for HK$10,000,000, classifying it as a discontinued operation, which recorded a loss of HK$1,677 thousand for the nine months ended March 31, 2019 - The company disposed of its entire interest in Odella International Limited, which operates the leather products business, for **HK$10,000,000** on February 18, 2019, classifying it as a discontinued operation[39](index=39&type=chunk)[41](index=41&type=chunk) Results of Discontinued Operation (Nine Months Ended March 31) | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | | :--- | :--- | :--- | | Turnover | 37,229 | 42,940 | | Cost of sales | (24,226) | (28,438) | | Gross profit | 13,003 | 14,502 | | (Loss)/Profit before tax | (1,652) | 2,316 | | (Loss)/Profit for the period from discontinued operation | (1,677) | 1,880 | Net Assets of Odella Group at Disposal Date | Net Asset Item | Amount (HK$ thousand) | | :--- | :--- | | Property, plant and equipment | 514 | | Bank and cash balances | 11,274 | | Trade and other receivables | 2,979 | | Inventories | 4,384 | | Trade and other payables | (9,896) | | Current tax liabilities | (859) | | Deferred tax liabilities | (5) | | **Total net assets disposed of** | **8,391** | | Gain on disposal | 1,609 | | **Total consideration** | **10,000** | [6. EARNING PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY](index=14&type=section&id=6.%20EARNING%20PER%20SHARE%20ATTRIBUTABLE%20TO%20OWNERS%20OF%20THE%20COMPANY) Basic earnings per share (continuing and discontinued operations) attributable to owners for the nine months ended March 31, 2019, significantly decreased to HK$0.80 cents from HK$28.01 cents, with no dilutive potential ordinary shares Basic Earnings Per Share Calculation Data (Nine Months Ended March 31) | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | | :--- | :--- | :--- | | Profit for basic EPS (continuing and discontinued operations) | 3,215 | 112,023 | | Profit for basic EPS (continuing operations) | 3,283 | 110,143 | | (Loss)/Profit for basic (loss)/earnings per share (discontinued operation) | (1,677) | 1,880 | Earnings Per Share (Nine Months Ended March 31) | Indicator | 2019 | 2018 | | :--- | :--- | :--- | | (Loss)/Earnings per share from discontinued operation – Basic | (0.42) HK cents | 0.47 HK cents | - Diluted earnings per share for the nine months ended March 31, 2019, and 2018, were the same as basic earnings per share, as there were no dilutive potential ordinary shares outstanding during the periods[59](index=59&type=chunk)[62](index=62&type=chunk) [7. DIVIDENDS](index=16&type=section&id=7.%20DIVIDENDS) No dividends were declared or paid by the company for the periods ended March 31, 2019, and 2018 - No dividends were declared or paid by the company for the periods ended March 31, 2019, and 2018[60](index=60&type=chunk)[63](index=63&type=chunk) [Management Discussion and Analysis](index=17&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the Group's business performance and financial position for the nine months ended March 31, 2019, highlighting a focus on internet advertising agency services, suspension of mobile payment support, and disposal of leather products business due to policy and market changes, resulting in significant revenue and profit decline, with future investment planned for internet advertising [INTERIM DIVIDEND](index=17&type=section&id=INTERIM%20DIVIDEND) The Board does not recommend the payment of any interim dividend for the nine months ended March 31, 2019 - The Board does not recommend the payment of any interim dividend for the nine months ended March 31, 2019 (2018: nil)[65](index=65&type=chunk)[68](index=68&type=chunk) [INTRODUCTION](index=17&type=section&id=INTRODUCTION) The Group is a diversified company primarily engaged in internet advertising agency services and the production and sale of own-brand leather products for clients during the period - The Group's main businesses are internet advertising agency services and the production and sale of leather products[66](index=66&type=chunk)[69](index=69&type=chunk) [BUSINESS REVIEW](index=17&type=section&id=BUSINESS%20REVIEW) The Group's internet advertising agency services, primarily through Dongrun Network and Wanxing Network, generated HK$185 million and HK$39 million in revenue respectively, while Aiwanyue's business significantly decreased, mobile payment support was suspended due to policy changes, and the loss-making leather products business was sold - Dongrun Network (Mainland China) provides internet advertising agency services, achieving approximately **HK$185 million** in operating revenue during the period, with key clients including Tencent, Toutiao, and Dianping[67](index=67&type=chunk)[70](index=70&type=chunk) - Aiwanyue's (Mainland China) mobile internet advertising business significantly decreased due to changes in the domestic legal environment and to mitigate policy risks, recording approximately **HK$1 million** in operating revenue during the period[72](index=72&type=chunk)[76](index=76&type=chunk) - Wanxing Network (Overseas) develops the overseas internet advertising market through its own platform and global mainstream platforms like Facebook and Yahoo, recording approximately **HK$39 million** in operating revenue during the period[73](index=73&type=chunk)[76](index=76&type=chunk) - Mobile payment technical support services have been suspended to mitigate operational risks due to new laws and regulations and tightening government supervision in China[74](index=74&type=chunk)[77](index=77&type=chunk) - The production and sale of leather products business experienced declining profits and recorded a net loss due to deteriorating market conditions and price competition, leading the Group to decide on its disposal to prevent further losses and streamline operations[75](index=75&type=chunk)[78](index=78&type=chunk) [OUTLOOK](index=19&type=section&id=OUTLOOK) The Group plans to capitalize on internet advertising opportunities, increase investment, and expand its client base and business to deliver higher shareholder returns - The Group will seize development opportunities in the internet advertising industry, increase investment, and expand new clients and businesses to bring higher returns to shareholders[80](index=80&type=chunk)[85](index=85&type=chunk) [FINANCIAL REVIEW](index=19&type=section&id=FINANCIAL%20REVIEW) For the nine months ended March 31, 2019, the Group experienced significant declines in revenue and profit due to suspended mobile payment services, reduced mainland China mobile internet advertising, and narrower internet advertising agency margins, alongside increased operating expenses, decreased cash, new financing, and a higher debt-to-equity ratio [Revenue](index=19&type=section&id=Revenue%20%28Financial%20Review%29) The Group's revenue for the nine months ended March 31, 2019, was approximately HK$227 million, a 23% decrease from HK$294 million, primarily due to the suspension of mobile payment support and reduction in mainland China mobile internet advertising to mitigate operational or policy risks Revenue Change (Nine Months Ended March 31) | Indicator | 2019 (HK$ million) | 2018 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 227 | 294 | -23% | - The decrease in revenue was mainly due to the suspension of mobile payment technical support services and the reduction of mainland China mobile internet advertising business to avoid potential operational or policy risks[82](index=82&type=chunk)[86](index=86&type=chunk) [Cost of Sales and Gross Profit](index=19&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit) For the nine months ended March 31, 2019, cost of sales increased by approximately 30% to HK$190 million, and gross profit margin significantly declined from 50% to 16%, mainly due to narrower margins in mainland China internet advertising agency services Cost of Sales and Gross Profit Margin Change (Nine Months Ended March 31) | Indicator | 2019 | 2018 | YoY Change | | :--- | :--- | :--- | :--- | | Cost of sales | Approx. HK$190 million | (Not provided) | Increased by approx. 30% | | Gross profit margin | Approx. 16% | Approx. 50% | Decreased by 34 percentage points | - The decline in gross profit margin is primarily attributable to narrower profit margins for internet advertising agency services in mainland China[84](index=84&type=chunk)[87](index=87&type=chunk) [Other Income and Other Gain/Loss, net](index=20&type=section&id=Other%20Income%20and%20Other%20Gain%2FLoss%2C%20net) For the nine months ended March 31, 2019, other income and other gain/loss, net, significantly increased to approximately HK$2 million from HK$0.1 million, primarily comprising interest income, net exchange differences, and reversal of impairment losses on trade receivables Other Income and Other Gain/Loss, net (Nine Months Ended March 31) | Indicator | 2019 (HK$ million) | 2018 (HK$ million) | | :--- | :--- | :--- | | Other income and other gain/loss, net | Approx. 2 | Approx. 0.1 | - Primarily includes interest income, net exchange differences, and reversal of impairment losses on trade receivables[89](index=89&type=chunk)[93](index=93&type=chunk) [Selling and Distribution Expenses](index=20&type=section&id=Selling%20and%20Distribution%20Expenses) For the nine months ended March 31, 2019, selling and distribution expenses slightly increased to approximately HK$5.6 million, mainly due to higher salaries and wages for internet advertising agency services Selling and Distribution Expenses Change (Nine Months Ended March 31) | Indicator | 2019 (HK$ million) | 2018 (HK$ million) | | :--- | :--- | :--- | | Selling and distribution expenses | Approx. 5.6 | Approx. 5.3 | - The increase in selling expenses is mainly due to higher salaries and wages incurred for internet advertising agency services during the period[90](index=90&type=chunk)[94](index=94&type=chunk) [Administrative Expenses](index=20&type=section&id=Administrative%20Expenses) For the nine months ended March 31, 2019, administrative expenses increased by approximately HK$1 million to HK$28 million, primarily due to higher salaries, wages, and office administrative expenses Administrative Expenses Change (Nine Months Ended March 31) | Indicator | 2019 (HK$ million) | 2018 (HK$ million) | | :--- | :--- | :--- | | Administrative expenses | Approx. 28 | Approx. 27 | - The increase in administrative expenses is primarily attributable to higher salaries and wages and office administrative expenses[92](index=92&type=chunk)[96](index=96&type=chunk) [Taxation](index=21&type=section&id=Taxation%20%28Financial%20Review%29) The Group's income tax comprises Hong Kong profits tax (16.5%) and PRC corporate income tax (25%), with certain subsidiaries in Horgos Economic Development Zone enjoying a five-year corporate income tax exemption - Hong Kong profits tax rate is **16.5%**, and PRC corporate income tax rate is **25%**[97](index=97&type=chunk)[102](index=102&type=chunk) - Subsidiaries registered in Horgos Economic Development Zone enjoy a five-year corporate income tax exemption policy[97](index=97&type=chunk)[102](index=102&type=chunk) [Profit for the Period](index=21&type=section&id=Profit%20for%20the%20Period%20%28Financial%20Review%29) For the nine months ended March 31, 2019, the Group recorded a profit of approximately HK$3 million, a significant decrease of HK$114 million from HK$117 million, primarily due to narrower internet advertising agency margins and reduced net profit from mobile payment technical support services Profit for the Period Change (Nine Months Ended March 31) | Indicator | 2019 (HK$ million) | 2018 (HK$ million) | YoY Change (HK$ million) | | :--- | :--- | :--- | :--- | | Profit for the period | Approx. 3 | Approx. 117 | Decreased by approx. 114 | - The significant decrease in profit is mainly due to narrower profit margins from providing internet advertising agency services and reduced net profit from mobile payment technical support services[98](index=98&type=chunk)[103](index=103&type=chunk) [Financial Position, Liquidity and Financial Resources](index=21&type=section&id=Financial%20Position%2C%20Liquidity%20and%20Financial%20Resources) The Group maintains prudent cash and financial management policies; as of March 31, 2019, total cash and bank balances decreased significantly to HK$33 million, primarily due to shareholder repayment, while new bank facilities of HK$31 million and unsecured third-party loans of HK$10 million were obtained, leading to a rise in the debt-to-equity ratio from 0.19% to approximately 9% Liquidity and Borrowing Situation | Indicator | March 31, 2019 (HK$ million) | June 30, 2018 (HK$ million) | | :--- | :--- | :--- | | Cash and bank balances (including pledged bank deposits) | Approx. 33 | Approx. 114 | | Bank facilities | 31 | Nil | | Total bank borrowings | 12 | Nil | | Unsecured third-party loans | 10 | Nil | | Total debt to equity ratio | Approx. 9% | 0.19% | - The decrease in cash and bank balances is mainly due to the repayment of amounts due to a shareholder[100](index=100&type=chunk)[104](index=104&type=chunk) - Floating rate bank borrowings bear interest at annual rates ranging from **5.48% to 5.63%**[101](index=101&type=chunk)[104](index=104&type=chunk) - Unsecured loans bear interest at a fixed annual rate of **3%**[106](index=106&type=chunk)[111](index=111&type=chunk) [Financial Management Policies](index=22&type=section&id=Financial%20Management%20Policies) The Group's risk management policies aim to minimize adverse impacts from currency and interest rate risks, with minimal foreign exchange exposure due to cash denominated in USD, HKD, and RMB, and no interest rate hedging contracts due to low prevailing rates, though interest rate risk is closely monitored - The Group faces currency risk and interest rate risk, with risk management policies designed to minimize adverse impacts[108](index=108&type=chunk)[112](index=112&type=chunk) - Cash is primarily denominated in USD, HKD, and RMB, resulting in minimal foreign exchange risk for the Group[109](index=109&type=chunk)[110](index=110&type=chunk)[112](index=112&type=chunk) - Due to low prevailing interest rates, the Group has not entered into any interest rate hedging contracts or derivative financial instruments but closely monitors related interest rate risks[113](index=113&type=chunk) [Charge Over Assets of the Group](index=23&type=section&id=Charge%20Over%20Assets%20of%20the%20Group) As of March 31, 2019, the Group's bank facilities were secured by pledged bank deposits of approximately HK$8 million, an increase from HK$1 million as of June 30, 2018 Pledged Bank Deposits (As of March 31) | Indicator | 2019 (HK$ million) | 2018 (HK$ million) | | :--- | :--- | :--- | | Pledged bank deposits | Approx. 8 | Approx. 1 | [Capital Commitments and Contingent Liabilities](index=23&type=section&id=Capital%20Commitments%20and%20Contingent%20Liabilities) As of March 31, 2019, the Group had no significant capital commitments or contingent liabilities - As of March 31, 2019, the Group had no significant capital commitments (June 30, 2018: nil)[115](index=115&type=chunk)[119](index=119&type=chunk) - As of March 31, 2019, the Group had no significant contingent liabilities (June 30, 2018: nil)[115](index=115&type=chunk)[119](index=119&type=chunk) [MATERIAL ACQUISITIONS AND DISPOSALS](index=23&type=section&id=MATERIAL%20ACQUISITIONS%20AND%20DISPOSALS) On February 18, 2019, the company completed the disposal of the entire issued share capital of Odella International Limited for HK$10,000,000, with no material acquisitions by the Group during the period - The company completed the disposal of the entire issued share capital of Odella International Limited for **HK$10,000,000** on February 18, 2019[116](index=116&type=chunk)[120](index=120&type=chunk) - The Group had no material acquisitions for the nine months ended March 31, 2019[117](index=117&type=chunk)[121](index=121&type=chunk) [Other Information](index=24&type=section&id=Other%20Information) This section discloses interests of directors, chief executives, and substantial shareholders in company shares, confirms no competing business interests for directors and controlling shareholders, no listed securities transactions by the company or its subsidiaries during the period, and outlines the audit committee's composition and review of the quarterly results report [DIRECTORS AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES](index=24&type=section&id=DIRECTORS%20AND%20CHIEF%20EXECUTIVE%27S%20INTERESTS%20AND%20SHORT%20POSITIONS%20IN%20SHARES%2C%20UNDERLYING%20SHARES%20AND%20DEBENTURES) As of March 31, 2019, Mr. Zhu Yongjun held 45.49% of the company's shares through a controlled corporation, while Ms. Wang Fei beneficially owned 10.00% of the shares Directors' Interests in the Company's Shares (As of March 31, 2019) | Director's Name | Capacity | Interest in Shares | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zhu Yongjun | Interest in controlled corporation | 181,995,955 (L) | 45.49% | | Ms. Wang Fei | Beneficial owner | 40,000,000 (L) | 10.00% | - Mr. Zhu Yongjun's interest is held through his **30%** interest in Power View Group Limited (PVG), which holds **45.49%** of the company's shares[127](index=127&type=chunk)[130](index=130&type=chunk) [INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS](index=25&type=section&id=INTERESTS%20AND%20SHORT%20POSITIONS%20OF%20SUBSTANTIAL%20SHAREHOLDERS) As of March 31, 2019, Power View Group Limited beneficially held 45.49% of the company's shares, with several entities holding between 45.49% and 57.99% through controlled corporations, and Mason Resources Finance Limited and Mason Group Holdings Limited holding 55.50% Substantial Shareholders' Interests in the Company's Shares (As of March 31, 2019) | Shareholder Name | Capacity | Interest in Shares | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Power View Group Limited | Beneficial owner | 181,995,955 (L) | 45.49% | | United Conquer Limited | Interest in controlled corporation | 181,995,955 (L) | 45.49% | | Shanghai Hutong Investments Centre (Limited Partnership)* | Beneficial owner | 50,000,000 (L) | 12.50% | | Shanghai Angell Asset Management Company Limited* | Interest in controlled corporation | 231,995,955 (L) | 57.99% | | Zhongtian Urban Development Group Shanghai Equity Investment Fund Partnership (Limited Partnership)* | Interest in controlled corporation | 231,995,955 (L) | 57.99% | | Guiyang Jinrong Konggu Company Limited* | Interest in controlled corporation | 231,995,955 (L) | 57.99% | | Zhongtian Urban Development Group Limited* | Interest in controlled corporation | 231,995,955 (L) | 57.99% | | Jin Shiqi Guoji Holdings Company Limited* | Interest in controlled corporation | 231,995,955 (L) | 57.99% | | Mason Resources Finance Limited | Person with security interest in shares | 221,995,955 (L) | 55.50% | | Mason Group Holdings Limited | Interest in controlled corporation | 221,995,955 (L) | 55.50% | - United Conquer Limited's deemed interest is held through its **70%** equity interest in Power View Group Limited[140](index=140&type=chunk) - Shanghai Hutong Investments Centre (Limited Partnership)'s deemed interest is held through its **100%** equity interest in United Conquer Limited[140](index=140&type=chunk) [DIRECTORS AND CONTROLLING SHAREHOLDERS' INTEREST IN COMPETING BUSINESS](index=28&type=section&id=DIRECTORS%20AND%20CONTROLLING%20SHAREHOLDERS%27%20INTEREST%20IN%20COMPETING%20BUSINESS) For the nine months ended March 31, 2019, directors were unaware of any competing business interests or conflicts of interest held by directors or controlling shareholders - Directors were unaware of any business or interest held by directors or controlling shareholders that competes or may compete with the Group's business[142](index=142&type=chunk)[145](index=145&type=chunk) [PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES](index=28&type=section&id=PURCHASE%2C%20SALE%20OR%20REDEMPTION%20OF%20THE%20COMPANY%27S%20LISTED%20SECURITIES) Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities for the nine months ended March 31, 2019 - Neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities for the nine months ended March 31, 2019[143](index=143&type=chunk)[146](index=146&type=chunk) [AUDIT COMMITTEE AND REVIEW OF FINANCIAL STATEMENTS](index=28&type=section&id=AUDIT%20COMMITTEE%20AND%20REVIEW%20OF%20FINANCIAL%20STATEMENTS) The Audit Committee, comprising three independent non-executive directors, was established under GEM Listing Rules and reviewed the quarterly results report, recommending approval of the unaudited consolidated results for the nine months ended March 31, 2019 - The Audit Committee was established in accordance with the GEM Listing Rules, comprising Mr. Chan Chak (Chairman), Ms. Ji Fang, and Mr. Gao Shuo, all independent non-executive directors[144](index=144&type=chunk)[147](index=147&type=chunk) - The Audit Committee has reviewed the quarterly results report with management and recommended its approval to the Board[144](index=144&type=chunk)[147](index=147&type=chunk) - The consolidated results for the nine months ended March 31, 2019, have not been audited by the company's auditors[149](index=149&type=chunk)

MILLION STARS HOLDINGS LIMITED 萬星控股有限公司 Stock Code 股份代號：8093 (Incorporated in the Cayman Islands with limited liability ) （於開曼群島註冊成立之有限公司） 2018-2019 萬星控股有限公司 Interim Report 中期報告 MILLION STARS HOLDINGS LIMITED CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors s ...