（股份代號：8187） JIMU GROUP LIMITED （於開曼群島註冊成立的有限公司） 積木集團有限公司 第三季度報告 2019 香港聯合交易所有限公司（「聯交所」）GEM的特色 GEM 乃為較於聯交所上市的其他公司帶有更高投資風險的中小型公司提供上市的市場。有意 投資者應了解投資於該等公司的潛在風險，並應經過審慎周詳考慮後方作出投資決定。 由於GEM 上市公司普遍為中小型公司，在GEM 買賣的證券可能會較於主板買賣的證券承受較 高的市場波動風險，且概不保證在GEM買賣的證券會有高流通量的市場。 香港交易及結算所有限公司及聯交所對本報告的內容概不負責，對其準確性或完整性亦不發表 任何聲明，並明確表示概不就因本報告全部或任何部分內容而產生或依賴該等內容而引致的任 何損失承擔任何責任。 本報告乃遵照聯交所GEM證券上市規則（「GEM上市規則」）規定提供有關積木集團有限公司（「本 公司」）資料的詳情，本公司董事（「董事」）就本報告共同及個別地承擔全部責任。董事在作出 一切合理查詢後確認，就彼等所深知及確信，本報告所載的資料在各重大方面乃準確完整，並 無誤導或欺詐成份，且概無遺漏任何其他事宜致使本報告所載任何 ...

[Financial Statements](index=3&type=section&id=Financial%20Statements) [Auditor's Review Report](index=3&type=section&id=Auditor%27s%20Review%20Report) Deloitte Touche Tohmatsu reviewed the Group's condensed consolidated financial statements for the six months ended June 30, 2019, concluding no material non-compliance with HKAS 34 - Auditor Deloitte issued an unmodified review conclusion on the interim financial statements, confirming compliance with **HKAS 34**[5](index=5&type=chunk)[7](index=7&type=chunk) [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements) For the six months ended June 30, 2019, the Group achieved a turnaround to a profit of HKD 1.038 million from a loss of HKD 14.985 million in the prior period, with improved cash flow and the adoption of HKFRS 16 impacting the balance sheet 2019 H1 Key Financial Data Overview | Metric | For the six months ended June 30, 2019 (HKD thousands) | For the six months ended June 30, 2018 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | **Revenue** | 72,798 | 73,972 | -1.6% | | **Profit (Loss) before tax** | 3,857 | (14,984) | Turnaround to profit | | **Profit (Loss) for the period** | 1,038 | (14,985) | Turnaround to profit | | **Basic earnings per share (HK cents)** | 0.22 | (3.12) | Turnaround to profit | | **Net cash from operating activities** | 11,989 | (22,941) | Turned positive | Key Balance Sheet Items as of June 30, 2019 | Metric | June 30, 2019 (HKD thousands) | December 31, 2018 (HKD thousands) | | :--- | :--- | :--- | | **Total Assets** | 105,472 | 113,673 | | **Total Liabilities** | 68,202 | 73,129 | | **Net Assets** | 37,270 | 40,544 | | **Bank Balances and Cash** | 51,612 | 42,166 | | **Bank Borrowings** | 0 | 17,373 | [Notes to the Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail accounting policies, segment information, and financial item specifics, highlighting the adoption of HKFRS 16, the shift to loan intermediary services as the primary revenue and profit driver, and disclosures on related party transactions and debt repayment [Note 2.1 Application of HKFRS 16 Leases](index=9&type=section&id=Note%202.1%20Application%20of%20HKFRS%2016%20Leases) Effective January 1, 2019, the Group adopted HKFRS 16 Leases, recognizing right-of-use assets and lease liabilities for previously operating leases, with an initial recognition of HKD 14.1 million in lease liabilities and a HKD 4.24 million impairment loss on right-of-use assets impacting opening accumulated losses - Upon initial application of the new leasing standard on January 1, 2019, **HKD 9.981 million** in right-of-use assets and **HKD 14.097 million** in lease liabilities were recognized, with an impairment leading to a **HKD 4.24 million** reduction in opening reserves[40](index=40&type=chunk)[43](index=43&type=chunk)[45](index=45&type=chunk) [Note 4 Segment Information](index=15&type=section&id=Note%204%20Segment%20Information) The Group's business is divided into footwear and loan intermediary services, with the latter significantly surpassing the former in revenue and profitability during the period, becoming the core driver as footwear revenue declined and incurred losses Segment Results (For the six months ended June 30, 2019) | Segment | Revenue (HKD thousands) | Segment Results (HKD thousands) | | :--- | :--- | :--- | | **Footwear Business** | 25,927 | (4,340) | | **Loan Intermediary Services** | 46,871 | 12,564 | | **Total** | 72,798 | 8,224 | - Compared to the prior period, footwear business revenue decreased from **HKD 62.163 million** to **HKD 25.927 million**, while loan intermediary service revenue surged from **HKD 11.809 million** to **HKD 46.871 million**, indicating a successful shift in business focus[50](index=50&type=chunk) [Note 5 Revenue from goods and services](index=18&type=section&id=Note%205%20Revenue%20from%20goods%20and%20services) For the six months ended June 30, 2019, total Group revenue was HKD 72.8 million, with footwear contributing HKD 25.93 million and loan intermediary services HKD 46.87 million, primarily from China and overseas markets respectively, with most revenue recognized at a point in time Revenue by Business and Region (For the six months ended June 30, 2019) | Business Segment | Goods/Service Type | Revenue (HKD thousands) | Primary Markets | | :--- | :--- | :--- | :--- | | **Footwear Business** | Footwear Trading | 25,927 | Australia, UAE, UK | | **Loan Intermediary Services** | Pre/Post-Loan Services | 46,871 | China | | **Total** | | **72,798** | | [Note 13, 19, 18 Key Asset and Liability Items](index=23&type=section&id=Note%2013%2C%2019%2C%2018%20Key%20Asset%20and%20Liability%20Items) At the period-end, the Group's balance sheet saw significant changes, including a substantial reduction in trade receivables and contract assets reflecting footwear business contraction, full repayment of bank borrowings, and the addition of an unsecured, interest-free HKD 7 million amount due to a director - Trade receivables significantly decreased from **HKD 20.84 million** to **HKD 6.85 million**[67](index=67&type=chunk) - Contract assets, primarily related to loan intermediary services, decreased from **HKD 35.47 million** to **HKD 19.16 million**[71](index=71&type=chunk) - Bank borrowings of **HKD 17.37 million** have been fully repaid[78](index=78&type=chunk)[79](index=79&type=chunk) - A new amount of **HKD 7 million** is due to a director, which is unsecured, interest-free, and repayable on demand[76](index=76&type=chunk) [Note 25 Related Party Disclosures](index=29&type=section&id=Note%2025%20Related%20Party%20Disclosures) The Group's loan intermediary business is closely linked to related parties, with most business originating from clients obtaining financing through online information intermediary platforms operated by the Company's associates, and as of end-2018, bank borrowings were secured by Executive Director Mr. Ho Kin Wai's investment property - The vast majority of the Group's loan intermediary services rely on online information intermediary platforms operated by related parties to acquire customers and investors[87](index=87&type=chunk) [Management Discussion and Analysis](index=30&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review and Outlook](index=30&type=section&id=Business%20Review%20and%20Outlook) The Group is strategically transforming from traditional footwear to emerging loan intermediary services, with the footwear business facing challenges and under review, while the loan intermediary business, launched in 2018, shows strong growth in China's lower-tier cities and is a key driver for future investment [Footwear Business](index=30&type=section&id=Footwear%20Business) The footwear business faced negative impacts from macro factors like Brexit, EU economic slowdown, and US-China trade tensions, leading to reduced customer confidence, lower revenue, and profit pressure, resulting in a loss despite cost-cutting measures, prompting management to assess its long-term viability - Due to global economic uncertainties and intense industry competition, the footwear business faces declining revenue and profit pressure, with management assessing its long-term viability[92](index=92&type=chunk) [Loan Intermediary Business](index=30&type=section&id=Loan%20Intermediary%20Business) Since its launch in April 2018, the loan intermediary business has rapidly expanded with over 50 branches in China, focusing on serving SMEs, sole proprietors, and farmers in lower-tier cities, leveraging its credit rating system and offline teams for continuous growth, with management optimistic about future expansion - The loan intermediary business focuses on China's third and fourth-tier cities, with over **50** branches established to serve small and micro enterprises, individual businesses, and farmers[93](index=93&type=chunk) Loan Intermediary Business Key Operating Data (For the six months ended June 30) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | **Number of Customers** | 3,518 | 1,455 | | **Loans Facilitated (RMB thousands)** | 292,955 | 101,870 | | **Average Loan Facilitated Amount (RMB thousands)** | 83.3 | 70.0 | - Management is optimistic about the loan intermediary business outlook and plans to invest more resources, including increasing regional coverage, expanding the target customer base, and developing upstream and downstream opportunities[96](index=96&type=chunk) [Financial Review](index=32&type=section&id=Financial%20Review) In H1 2019, the Group's total revenue slightly decreased by 1.6% year-on-year, but internal structure shifted dramatically with footwear revenue halving while loan intermediary revenue tripled to account for 64.4% of total revenue, leading to adjusted cost structures, increased staff welfare expenses, and an overall turnaround to approximately HKD 1 million net profit due to strong loan business profitability [Revenue Analysis](index=32&type=section&id=Revenue%20Analysis) For the six months ended June 30, 2019, total revenue was HKD 72.8 million, with footwear business revenue significantly decreasing by 58.3% to HKD 25.9 million due to global economic uncertainties, while loan intermediary business revenue tripled to HKD 46.9 million due to full operation and stable customer growth Segment Revenue Details (For the six months ended June 30) | Segment | 2019 (HKD thousands) | 2018 (HKD thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | **Footwear Trading** | 25,927 | 62,163 | -58.3% | | **Loan Intermediary Services** | 46,871 | 11,809 | +296.9% | | **Total** | **72,798** | **73,972** | **-1.6%** | [Cost and Expense Analysis](index=33&type=section&id=Cost%20and%20Expense%20Analysis) During the period, inventory purchase costs decreased by 57.4% in line with declining footwear sales, while staff welfare expenses significantly increased to HKD 38.8 million due to the expansion of the loan intermediary business, and finance costs rose primarily due to interest on lease liabilities recognized under the new leasing standard - Cost of purchases and changes in inventories decreased by **57.4%** year-on-year to **HKD 23.2 million**, consistent with the decline in footwear business revenue[103](index=103&type=chunk) - Staff welfare expenses increased by **73.9%** year-on-year to **HKD 38.8 million**, primarily due to an increase in staff for the loan intermediary business[106](index=106&type=chunk) [Profit for the Period Analysis](index=34&type=section&id=Profit%20for%20the%20Period%20Analysis) The Group achieved a significant turnaround to a profit of approximately HKD 1 million in H1 2019, compared to a loss of HKD 15 million in the prior period, primarily driven by the loan intermediary services segment's HKD 12.6 million pre-tax profit, which offset the footwear business segment's HKD 4.3 million pre-tax loss - The Group turned from a loss of **HKD 15 million** in the prior period to a profit of **HKD 1 million** in the current period[111](index=111&type=chunk) - The loan intermediary services segment contributed **HKD 12.6 million** in pre-tax profit, while the footwear business segment recorded a pre-tax loss of **HKD 4.3 million**[111](index=111&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2019, the Group's financial position was robust with no outstanding bank borrowings and a zero debt-to-equity ratio, cash and cash equivalents increased to approximately HKD 51.6 million, and a current ratio of about 1.9 times indicated ample working capital, with operations primarily funded by business revenue, cash, and director advances Liquidity Metrics | Metric | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Cash and Cash Equivalents** | Approx. HKD 51.6 million | Approx. HKD 42.2 million | | **Bank Borrowings** | 0 | Approx. HKD 17.4 million | | **Debt-to-Equity Ratio** | Zero | Zero | | **Current Ratio** | Approx. 1.9 times | Approx. 1.8 times | [Use of Proceeds from Prospectus](index=39&type=section&id=Use%20of%20Proceeds%20from%20Prospectus) The company's net proceeds from listing were approximately HKD 44.6 million, with HKD 28.8 million utilized and HKD 15.8 million remaining as of June 30, 2019, following multiple reallocations of over HKD 15 million from brand licensing, corporate image, and IT system enhancements to general working capital and other corporate purposes - As of June 30, 2019, of the **HKD 44.6 million** net proceeds from the listing, **HKD 28.8 million** has been utilized, with **HKD 15.8 million** remaining[137](index=137&type=chunk) - The company repeatedly changed the use of proceeds, reallocating funds originally designated for brand licensing, corporate image, and IT systems to general working capital[136](index=136&type=chunk)[140](index=140&type=chunk) [Corporate Governance and Other Information](index=41&type=section&id=Corporate%20Governance%20and%20Other%20Information) [Corporate Governance](index=41&type=section&id=Corporate%20Governance) The company complied with the GEM Listing Rules' Corporate Governance Code during the period, with one deviation regarding the absence of specific terms for non-executive directors, which the company believes is mitigated by their rotation and re-election at annual general meetings, and all directors confirmed compliance with the adopted code of conduct for securities transactions - The company complied with the Corporate Governance Code, with the sole deviation being the absence of specific terms for non-executive directors, who are subject to retirement by rotation[141](index=141&type=chunk) [Directors' and Substantial Shareholders' Interests](index=42&type=section&id=Directors%27%20and%20Substantial%20Shareholders%27%20Interests) As of June 30, 2019, controlling shareholder Jimu Group Holdings Limited held 73% of the company's shares, while Executive Director Mr. Ho Kin Wai held 2% through his controlled corporation, and Mr. Dong Jun and Mr. Wen Junming held interests in the associated corporation Jimu Holdings - Controlling shareholder Jimu Group Holdings Limited holds **350,400,000** shares, representing **73%** of the total share capital[150](index=150&type=chunk) - Executive Director Mr. Ho Kin Wai holds **9,600,000** shares, representing **2%** of the total share capital, through his controlled corporation[146](index=146&type=chunk) [Changes in Directors' Information and Audit Committee](index=44&type=section&id=Changes%20in%20Directors%27%20Information%20and%20Audit%20Committee) During the period, the Board experienced several changes, including the retirement/resignation of a non-executive director and an independent non-executive director, along with new appointments, and the Audit Committee, comprising four independent non-executive directors, reviewed the unaudited interim results with assistance from external auditor Deloitte - In May 2019, the company's Board of Directors underwent several personnel changes, including the retirement of Mr. Cheung Chung Yee, the resignation of Mr. Liu Jiangtao, and the appointments of Mr. Lau Kai Pong and Mr. Li Tai Yan[154](index=154&type=chunk)[155](index=155&type=chunk) - The Audit Committee, comprising four independent non-executive directors, reviewed the interim financial statements with the assistance of auditor Deloitte[157](index=157&type=chunk)

Revenue Performance - Revenue from goods and services for the three months ended March 31, 2019, was HKD 32,378,000, a decrease of 11.5% compared to HKD 36,743,000 in the same period of 2018[6] - For the three months ended March 31, 2019, total revenue was HKD 32,378,000, a decrease from HKD 36,743,000 for the same period in 2018, representing a decline of approximately 11.5%[20] - The group's revenue decreased by approximately 11.9% from about HKD 36,700,000 for the three months ended March 31, 2018, to about HKD 32,400,000 for the three months ended March 31, 2019, primarily due to a significant decline in the footwear business segment[41] Business Segments - The footwear business generated revenue of HKD 14,620,000, down from HKD 36,743,000 in the previous year, indicating a significant decrease of approximately 60%[23] - The footwear business segment recorded a loss of approximately HKD 3,300,000 for the three months ended March 31, 2019, an increase of about 32.1% compared to a loss of approximately HKD 2,500,000 in the same period of 2018[44] - The loan brokerage service contributed HKD 17,758,000 in revenue, which was not present in the previous year, marking a new revenue stream for the company[23] - The loan brokerage service segment contributed revenue of approximately HKD 17,800,000 for the three months ended March 31, 2019, following its launch in April 2018[41] - The group established over 40 branches in various regions of China to provide loan brokerage services, focusing on individual clients in third and fourth-tier cities[39] - The group plans to invest more resources into the loan brokerage business, including expanding geographic coverage and target customer base, with Sichuan Province identified as the next focus area[39] Financial Losses and Expenses - The company reported a pre-tax loss of HKD 4,552,000, slightly improved from a loss of HKD 4,835,000 in the previous year[6] - The total comprehensive loss for the period was HKD 4,396,000, compared to HKD 4,870,000 in the same period last year, indicating a reduction in losses[6] - Basic loss per share improved to HKD 0.93 from HKD 1.01 year-on-year, reflecting a 7.9% decrease in loss per share[6] - Employee benefit expenses rose significantly to HKD 19,321,000 from HKD 5,002,000, marking an increase of 286.5%[6] - Employee costs for the period amounted to HKD 19,321,000, significantly higher than HKD 5,002,000 in the previous year, reflecting an increase in operational expenses[27] Other Income and Financial Adjustments - Other income increased significantly to HKD 3,037,000 from HKD 262,000 year-on-year, representing an increase of 1,058.4%[6] - Other income increased approximately tenfold from about HKD 300,000 in the same period of 2018 to about HKD 3,000,000 for the three months ended March 31, 2019, mainly due to commission income and government subsidies[43] - The deferred tax expense for the three months ended March 31, 2019, was HKD 99,000, with no current tax expense reported for both periods[25] Accounting Standards and Compliance - The company has adopted new accounting standards, including HKFRS 16, which may impact future financial reporting[10] - The implementation of HKFRS 16 has led to the recognition of right-of-use assets and lease liabilities based on the present value of future lease payments[17] - The company has chosen to apply the straight-line method for recognizing lease expenses for short-term leases and low-value asset leases[16] - The audit committee reviewed the unaudited condensed consolidated financial statements for the three months ending March 31, 2019, ensuring compliance with applicable accounting standards[56] Shareholder Information - As of March 31, 2019, Mr. He Jianwei holds 9,600,000 ordinary shares, representing 2% of the company's total shares[47] - Mr. Dong Jun holds 23,722,804 shares in Jimu Holdings Limited, accounting for 32.95% of the company[48] - Jimu Group Holdings Limited owns 350,400,000 shares, which is 73% of the company's total shares[50] - The company did not repurchase any shares during the period ending March 31, 2019[53] Future Outlook - The group anticipates 2019 to be a challenging year due to continued economic weakness, which may lead to more cautious lending behavior[40] - The group aims to enhance its business model and long-term viability in the footwear segment to create greater value for shareholders[36] Post-Reporting Events - No significant post-reporting date events occurred after March 31, 2019[58]

Business Performance - The company has established over 40 branches in various regions of China since April 2018, achieving profitability in the loan brokerage segment[12]. - The footwear business segment recorded a loss for the year, prompting management to evaluate the long-term viability of the current business model[14]. - The company is optimistic about the future development of its loan brokerage business and plans to allocate more resources when appropriate[12]. - The footwear business revenue decreased by 48.0% from approximately HKD 236,700,000 in 2017 to about HKD 123,100,000 in 2018, primarily due to global economic uncertainties[23]. - The loan brokerage service contributed approximately HKD 96,200,000 in revenue in 2018, marking a significant entry into the market since its launch in April 2018[25]. - In 2018, the company recorded revenue of approximately HKD 219,400,000, a slight decrease of 7.3% compared to HKD 236,700,000 in 2017[21]. - The company reported a loss of approximately HKD 4,000,000 in 2018, an improvement from a loss of HKD 9,000,000 in 2017[33]. - The loan brokerage service division achieved a profit of approximately HKD 24,300,000 in 2018, driven by strong demand and foundational work laid in previous months[33]. Economic Environment - The global economic environment remains challenging due to factors such as Brexit and the US-China trade war, impacting customer confidence and profit margins in the footwear industry[14]. - The company expects 2019 to be a challenging year due to ongoing economic weakness, but remains optimistic about opportunities arising from government support for financial services in rural areas[20]. - Cost control measures are being implemented to navigate the anticipated challenges in 2019[12]. Employee and Operational Changes - Employee benefits expenses increased from approximately HKD 20,900,000 in 2017 to about HKD 77,700,000 in 2018, mainly due to an increase in staff for the loan brokerage business[28]. - The total number of employees increased from approximately 70 to about 750, primarily due to the launch of loan brokerage services in April 2018[46]. - The company has been actively recruiting experienced footwear technicians to better understand customer requirements and standards[69]. Financial Position - Total borrowings as of December 31, 2018, were approximately HKD 17,400,000, down from HKD 31,300,000 in 2017[34]. - The current ratio as of December 31, 2018, was approximately 1.8, compared to 1.5 in 2017, indicating improved liquidity[34]. - As of December 31, 2018, the group's net current assets were approximately HKD 48.9 million, an increase from HKD 38.9 million in 2017[35]. - Other income increased from approximately HKD 3,000,000 in 2017 to about HKD 4,500,000 in 2018, primarily due to an increase in commission income[27]. - The group's pledged bank deposits amounted to approximately HKD 100,000, a significant decrease from HKD 15.2 million in 2017[36]. - Trade receivables were approximately HKD 3.6 million, down from HKD 10.6 million in 2017[36]. Corporate Governance - The company has adopted the corporate governance code as per the GEM Listing Rules and has complied with all applicable code provisions, except for a few deviations[155]. - The board of directors includes a mix of executive, non-executive, and independent non-executive directors, ensuring diverse governance[163]. - The company has established a risk management committee to monitor and assess risks related to sanctions, ensuring compliance with international regulations[139]. - The company has a remuneration committee to review the compensation policy for directors and senior management based on performance and market standards[142]. - The audit committee consists of four members, all of whom are independent non-executive directors, ensuring impartial oversight of financial reporting[171]. - The board has established specific committees to oversee various aspects of the company's affairs, ensuring adequate resources are provided for their responsibilities[169]. Strategic Decisions and Future Plans - The company is continuously evaluating its business objectives and may revise plans based on market conditions[80]. - The company has engaged in a strategic decision to allocate approximately HKD 3,000,000 from the net proceeds of a placement for the purchase of two vehicles in Hong Kong[82]. - The company has not been able to identify suitable licenses, resulting in a remaining balance of HKD 21.9 million from the planned expenditures[79]. - The company has established a three-year service agreement for its executive directors, which can be terminated with a three-month notice[160]. Shareholder Information - The board does not recommend the payment of a final dividend for the year ended December 31, 2018, consistent with the previous year[89]. - Jimu Group Holdings Limited holds a beneficial interest in 350,400,000 shares, representing 73% of the company's equity[119]. - The company has no provisions for preemptive rights for existing shareholders to purchase new shares according to its articles of association or Cayman Islands law[111]. Risk Management - The company has implemented a corporate governance framework to ensure effective internal controls and risk management, based on the COSO framework[197]. - The effectiveness of the risk management framework is evaluated at least once a year, with regular management meetings to update on risk monitoring activities[199]. - The company currently does not have an internal audit function, opting for external independent professionals to fulfill this role due to cost-effectiveness considerations[200].