国富量子(00290) - 2024 - 中期业绩

Company Information and Report Overview This section provides an overview of GoFintech Innovation Limited, its business scope, and the basis for preparing its interim financial report Company Profile GoFintech Innovation Limited is an investment holding company registered in the Cayman Islands, with subsidiaries primarily engaged in securities and insurance brokerage, equity investment, asset management, corporate finance, margin financing, and money lending services, and this report covers the unaudited interim results for the six months ended September 30, 2023 - The company is an investment holding company, with its subsidiaries primarily engaged in securities and insurance brokerage, equity investment, asset management, corporate finance, margin financing, and money lending services[5] - The company's shares are listed on The Stock Exchange of Hong Kong Limited ("SEHK") under stock code: 290[42][46] Basis of Preparation and Accounting Policies The Group's interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 and the HKEX Listing Rules, adopting all new and revised HKFRSs effective April 1, 2023, without significant changes to accounting policies or financial statement presentation - The Group's interim financial information for the period is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of the Rules Governing the Listing of Securities on the SEHK[6] - The Group has adopted all new and revised Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants that are effective for accounting periods beginning on April 1, 2023, but the adoption of these standards has not resulted in significant changes to the Group's accounting policies, the presentation of the consolidated financial statements, or the amounts reported for the current and prior years[7] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This section presents the Group's key financial performance, highlighting revenue growth and a significant reduction in net loss for the period Key Financial Performance For the six months ended September 30, 2023, the Group's revenue increased to HK$18,349 thousand, and net loss significantly narrowed to HK$17,425 thousand, with basic and diluted loss per share decreasing to 1.3 HK cents, primarily due to reduced net investment losses, lower staff costs, and decreased expected credit losses Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended September 30) | Indicator | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 18,349 | 14,695 | | Net loss on investments at fair value through profit or loss | (9,661) | (450) | | Cost of brokerage and other services | (2,020) | (3,492) | | Net other income | 2,070 | 1,988 | | Net expected credit losses | (2,491) | (8,708) | | Staff costs | (16,839) | (23,326) | | Other operating expenses | (7,130) | (6,157) | | Finance costs | (1,299) | (3,643) | | Share of profit of an associate | 1,598 | 4,478 | | Loss before tax | (17,423) | (24,615) | | Income tax (expense) / credit | (2) | 8 | | Loss for the period attributable to owners of the company | (17,425) | (24,607) | | Total comprehensive expense for the period attributable to owners of the company | (24,385) | (36,715) | | Loss per share – Basic and diluted (HK cents) | (1.3) | (2.7) | - The decrease in loss for the period was mainly due to (i) an increase in revenue; and (ii) a decrease in staff costs and expected credit losses on loans receivable and trade receivables compared to the same period in 2022[129] Condensed Consolidated Statement of Financial Position This section provides an overview of the Group's assets and liabilities, showing an increase in net assets and equity, indicating an improved financial position Assets and Liabilities Overview As of September 30, 2023, the Group's total assets slightly increased, with changes in financial assets at fair value through profit or loss and loans receivable within non-current assets, and both current and non-current liabilities decreased, leading to an increase in net assets and total equity, reflecting an improved financial position Condensed Consolidated Statement of Financial Position (As of September 30) | Indicator | September 30, 2023 (HK$ thousand) | March 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Non-current assets | | | | Investments at fair value through profit or loss | 76,660 | 71,491 | | Loans and trade receivables | 28,517 | 42,644 | | Interests in an associate | 96,335 | 99,647 | | Current assets | | | | Bank balances and cash – Trust | 135,458 | 136,902 | | Bank balances and cash – General | 122,021 | 111,748 | | Current liabilities | | | | Trade payables, other payables and accrued charges | 132,684 | 141,682 | | Corporate bonds | 27,518 | 29,185 | | Non-current liabilities | | | | Lease liabilities | 9 | 106 | | Corporate bonds | – | 2,017 | | Net assets | 324,802 | 296,469 | | Total equity | 324,802 | 296,469 | Notes to the Condensed Consolidated Financial Statements This section provides detailed notes on the Group's financial statements, covering general information, accounting policies, revenue breakdown, segment information, and other financial disclosures General Information and Basis of Preparation This section reiterates the company's primary business scope, including securities and insurance brokerage, equity investment, asset management, corporate finance, margin financing, and money lending services, confirming the interim financial information's compliance with HKAS 34 and HKEX Listing Rules - The company is an investment holding company, with its subsidiaries primarily engaged in securities and insurance brokerage, equity investment, asset management, corporate finance, margin financing, and money lending services[5] - The Group's interim financial information for the period is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules")[6] Adoption of New and Revised Hong Kong Financial Reporting Standards The Group has adopted all new and revised Hong Kong Financial Reporting Standards effective April 1, 2023, with no significant changes to its accounting policies, financial statement presentation, or reported amounts - During the period, the Group has adopted all new and revised Hong Kong Financial Reporting Standards issued by the HKICPA that are effective for accounting periods beginning on April 1, 2023[7] - The adoption of these new and revised Hong Kong Financial Reporting Standards has not resulted in significant changes to the Group's accounting policies, the presentation of the Group's consolidated financial statements, or the amounts reported for the current and prior years[7] Revenue For the six months ended September 30, 2023, the Group's total revenue increased by 24.87% year-on-year to HK$18,349 thousand, primarily driven by a significant increase in securities brokerage revenue, while corporate finance and asset management revenues decreased Revenue Breakdown (For the six months ended September 30) | Revenue Source | 2023 (HK$ thousand) | 2022 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Income from securities brokerage business | 10,469 | 1,747 | +499.25% | | Interest income from money lending business | 1,837 | 1,459 | +25.91% | | Income from advisory and insurance brokerage business | 306 | 369 | -17.07% | | Income from asset management business | 2,624 | 5,509 | -52.37% | | Income from equity investment business | – | 10 | -100.00% | | Margin interest income from securities brokerage business | 1,412 | 1,811 | -22.03% | | Service income from corporate finance | 1,701 | 3,790 | -55.12% | | Total Revenue | 18,349 | 14,695 | +24.87% | Segment Information The Group classifies its business into several reportable operating segments under HKFRS 8, including securities brokerage and margin financing, corporate finance, money lending, advisory and insurance brokerage, asset management, and equity investment, with comparative figures re-presented due to the separate reporting of equity investment - The Group's reportable and operating segments under HKFRS 8 are as follows: (1) Securities brokerage and margin financing segment; (2) Corporate finance segment; (3) Money lending segment; (4) Advisory and insurance brokerage segment; (5) Asset management segment; and (6) Equity investment segment[12][55] - For the purpose of segment presentation for the period, due to the materiality of equity investment, its segment information has been separated from asset management, and comparative figures have been re-presented accordingly[13] Segment Revenue and Results For the six months ended September 30, 2023, the securities brokerage and margin financing segment achieved a profit of HK$4,762 thousand, reversing a loss from the prior year, and the money lending segment also turned profitable, while corporate finance and equity investment segments recorded losses, with a significant increase in equity investment losses Segment Revenue and Results (For the six months ended September 30) | Segment | 2023 Revenue (HK$ thousand) | 2023 Segment Results (HK$ thousand) | 2022 Revenue (HK$ thousand) | 2022 Segment Results (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Securities brokerage and margin financing | 11,881 | 4,762 | 3,558 | (6,470) | | Corporate finance | 1,701 | (1,609) | 3,790 | 19,864 | | Money lending | 1,837 | 1,703 | 1,459 | (2,567) | | Advisory and insurance brokerage | 374 | (50) | 469 | 48 | | Asset management | 2,624 | 265 | 5,509 | (431) | | Equity investment | – | (9,977) | 10 | (813) | | Unallocated | – | (14,115) | – | (38,724) | | Consolidated Total | 18,349 | (19,021) | 14,695 | (29,093) | - The securities brokerage and margin financing segment recorded a segment profit of HK$4,762 thousand, compared to a segment loss of HK$6,470 thousand in the same period of 2022, mainly due to an increase in securities brokerage income[153] - The equity investment segment recorded segment revenue and net investment losses of HK$9,661 thousand (2022: HK$461 thousand), with a segment loss of HK$9,977 thousand for the period (2022: HK$813 thousand)[144] Segment Assets and Liabilities As of September 30, 2023, the Group's total segment assets slightly decreased, with a reduction in securities brokerage and margin financing assets, while money lending, asset management, and equity investment assets increased, and total segment liabilities also decreased Segment Assets and Liabilities (As of September 30) | Segment | September 30, 2023 Assets (HK$ thousand) | March 31, 2023 Assets (HK$ thousand) | September 30, 2023 Liabilities (HK$ thousand) | March 31, 2023 Liabilities (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Securities brokerage and margin financing | 177,197 | 220,225 | 129,654 | 137,616 | | Corporate finance | 4,155 | 3,821 | 136 | 167 | | Money lending | 38,776 | 25,574 | – | – | | Advisory and insurance brokerage | 1,323 | 1,337 | 244 | 209 | | Asset management | 21,653 | 11,692 | 3,000 | 3,000 | | Equity investment | 95,959 | 82,758 | 83 | 114 | | Segment Total | 339,063 | 345,407 | 133,117 | 141,106 | | Unallocated | 148,773 | 130,354 | 29,917 | 38,186 | | Consolidated Total | 487,836 | 475,761 | 163,034 | 179,292 | Net Other Income For the six months ended September 30, 2023, the Group's net other income slightly increased to HK$2,070 thousand, primarily due to a significant rise in interest income from financial institutions, despite decreases in net exchange losses and miscellaneous income Net Other Income (For the six months ended September 30) | Indicator | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Interest income from financial institutions | 1,476 | 435 | | Net exchange (loss) / gain | (238) | 84 | | Miscellaneous income | 832 | 1,469 | | Total | 2,070 | 1,988 | - During the period, the Group recognized government grants of HK$756,000 related to the establishment of an open-ended fund company in Hong Kong[20] - In the same period of 2022, the Group recognized COVID-19-related government grants of HK$1,155,000 related to the Employment Support Scheme provided by the Hong Kong Government[21] Finance Costs For the six months ended September 30, 2023, the Group's finance costs significantly decreased to HK$1,299 thousand, mainly due to a substantial reduction in interest on loans payable and corporate bonds Finance Costs (For the six months ended September 30) | Indicator | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Interest on lease liabilities | 53 | 101 | | Interest on loans payable and others | 3 | 1,713 | | Interest on corporate bonds | 1,243 | 1,829 | | Total | 1,299 | 3,643 | Loss Before Tax For the six months ended September 30, 2023, the Group's loss before tax narrowed to HK$17,423 thousand, primarily benefiting from a significant decrease in staff costs, despite an increase in other operating expenses such as legal and professional fees Other Operating Expenses (For the six months ended September 30) | Indicator | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Auditor's remuneration | 100 | 270 | | Announcement and listing fees | 323 | 183 | | Bank charges | 45 | 71 | | Computer expenses | 612 | 650 | | Entertainment expenses | 314 | 630 | | Information and communication fees | 813 | 812 | | Short-term lease expenses | 50 | 158 | | Legal and professional fees | 2,723 | 1,125 | | Membership fees | 19 | 33 | | Rates and building management fees | 398 | 418 | | Telecommunication fees | 176 | 190 | | Travel expenses | 195 | 412 | | Other expenses | 1,362 | 1,205 | | Total | 7,130 | 6,157 | Staff Costs (For the six months ended September 30) | Indicator | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Directors' emoluments | 3,988 | 5,162 | | Salaries and allowances | 12,309 | 17,446 | | Retirement benefit scheme contributions | 542 | 718 | | Total | 16,839 | 23,326 | Income Tax (Expense) / Credit For the six months ended September 30, 2023, the Group recorded an income tax expense of HK$2 thousand, primarily for PRC enterprise income tax, compared to an HK$8 thousand Hong Kong profits tax credit in the prior period, with no Hong Kong profits tax provision due to no estimated taxable profit Income Tax (Expense) / Credit (For the six months ended September 30) | Indicator | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Current tax – Hong Kong profits tax – Over-provision in prior years | – | 8 | | Current tax – PRC enterprise income tax | (2) | – | | Total income tax (expense) / credit | (2) | 8 | - No Hong Kong profits tax provision has been made for the period as the Group did not generate any estimated taxable profit in Hong Kong during the period[26] - The tax rate for the PRC subsidiary was 25% for the six months ended September 30, 2023[27] Dividends No dividends were paid or proposed by the company during or since the end of the period - No dividends were paid or proposed during the period, nor have any dividends been proposed since the end of the period (six months ended September 30, 2022: nil)[28] Loss Per Share For the six months ended September 30, 2023, the company's basic and diluted loss per share narrowed to 1.3 HK cents from 2.7 HK cents in the prior period, mainly due to a reduction in loss attributable to owners of the company Loss Per Share (For the six months ended September 30) | Indicator | 2023 (HK cents) | 2022 (HK cents) | | :--- | :--- | :--- | | Basic and diluted loss per share | (1.3) | (2.7) | | Loss attributable to owners of the company (HK$ thousand) | 17,425 | 24,607 | | Weighted average number of ordinary shares (thousand shares) | 1,384,226 | 923,308 | - Diluted loss per share is not presented as the company had no potential dilutive ordinary shares for the six months ended September 30, 2023 and 2022[29] Property and Equipment The Group did not purchase any property and equipment or enter into new lease agreements for its branch offices during the period - The Group did not purchase any property and equipment during the six months ended September 30, 2023 (six months ended September 30, 2022: nil)[30] - The Group did not enter into any new lease agreements for its branch offices during the six months ended September 30, 2023 (six months ended September 30, 2022: nil)[30] Interests in Associates As of September 30, 2023, the Group's total interests in associates amounted to HK$96,335 thousand, slightly lower than HK$99,647 thousand as of March 31, 2023, primarily due to a decrease in the share of net assets, with China Sparkle Financial Holdings Limited being a key associate where the Group holds a 25% equity interest Interests in Associates (As of September 30) | Indicator | September 30, 2023 (HK$ thousand) | March 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Unlisted investment – Share of net assets | 92,283 | 95,595 | | Goodwill | 4,052 | 4,052 | | Total | 96,335 | 99,647 | - The Group holds 25% of the nominal value of the issued share capital and 33% of the board voting rights in China Sparkle Financial Holdings Limited[33] Investments at Fair Value Through Profit or Loss As of September 30, 2023, the Group's total investments at fair value through profit or loss amounted to HK$76,660 thousand, an increase from March 31, 2023, driven by significant growth in unlisted equity investments, while listed equity securities and fund investments decreased Investments at Fair Value Through Profit or Loss (As of September 30) | Indicator | September 30, 2023 (HK$ thousand) | March 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Listed equity securities – in Hong Kong | 5,364 | 10,922 | | Unlisted equity investments | 22,075 | 5,115 | | Fund investments | 49,188 | 55,421 | | Derivative financial instruments | 33 | 33 | | Total | 76,660 | 71,491 | Loans and Trade Receivables As of September 30, 2023, the Group's total loans and trade receivables amounted to HK$42,017 thousand, a slight decrease from March 31, 2023, with a significant reduction in trade receivables (net of expected credit losses) and an increase in loans receivable (net of expected credit losses) Loans and Trade Receivables (As of September 30) | Indicator | September 30, 2023 (HK$ thousand) | March 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Trade receivables | 6,258 | 30,397 | | Loans receivable – Current | 22,259 | 12,247 | | Loans receivable – Non-current | 13,500 | – | | Total | 42,017 | 42,644 | Trade Receivables As of September 30, 2023, trade receivables (net of expected credit losses) amounted to HK$6,258 thousand, a significant decrease from March 31, 2023, primarily due to a substantial reduction in trade receivables from margin and cash clients Trade Receivables (Net of Expected Credit Losses) (As of September 30) | Source | September 30, 2023 (HK$ thousand) | March 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Trade receivables from securities brokerage business: – Hong Kong Securities Clearing Company Limited | 758 | 908 | | Trade receivables from securities brokerage business: – Margin and cash clients | 5,332 | 40,749 | | Trade receivables from other businesses | 3,994 | 3,344 | | Less: Expected credit losses | (3,826) | (14,604) | | Total | 6,258 | 30,397 | Ageing Analysis of Trade Receivables (Excluding Margin Clients) (As of September 30) | Ageing | September 30, 2023 (HK$ thousand) | March 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Within 30 days | 1,065 | 1,307 | | 31 to 60 days | – | 315 | | 61 to 90 days | 232 | 3 | | Over 90 days | 1,399 | 413 | | Total | 2,714 | 2,038 | - Trade receivables from margin clients are collateralized by clients' pledged securities, which the Group may realize at its discretion to settle any margin calls issued for securities transactions conducted by them[88] Loans Receivable As of September 30, 2023, loans receivable (net of expected credit losses) significantly increased to HK$35,759 thousand from March 31, 2023, with growth in both current and non-current portions of secured loans receivable, and a high concentration of risk Loans Receivable (Net of Expected Credit Losses) (As of September 30) | Type | September 30, 2023 (HK$ thousand) | March 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Non-current portion Secured loans receivable | 13,500 | – | | Current portion Secured loans receivable | 24,151 | 14,139 | | Unsecured loans receivable | 3,014 | 3,014 | | Less: Expected credit losses | (4,906) | (4,906) | | Total Loans Receivable | 35,759 | 12,247 | - As of September 30, 2023, secured loans receivable were collateralized by all monies and deposits in securities accounts, and sub-mortgages over equity shares of listed companies and certain property units, bearing fixed annual interest rates ranging from 8% to 13% (March 31, 2023: 12% to 13%)[78] - As of September 30, 2023, the Group's loans receivable had a certain degree of concentration risk, with outstanding balances from five customers amounting to HK$40,665,000 (March 31, 2023: three customers HK$17,153,000)[80][90] Bank Balances and Cash – Trust The Group maintains separate trust accounts at licensed banks for client funds from its securities brokerage and margin financing businesses, classifying these as current assets and corresponding trade payables to clients, with restrictions on using them for its own debts - The Group maintains separate trust accounts with licensed banks to hold client monies arising from its securities brokerage and margin financing businesses[112] - The Group classifies client monies as bank balances and cash – trust under current assets in the condensed consolidated statement of financial position, and simultaneously recognizes these amounts as trade payables to relevant clients, as the Group is responsible for any loss or misappropriation of such client monies[112] - The Group is not permitted to use client monies to discharge its own debts[112] Trade Payables, Other Payables and Accrued Charges As of September 30, 2023, the Group's total trade payables, other payables, and accrued charges amounted to HK$132,684 thousand, a decrease from March 31, 2023, primarily due to a reduction in trade payables from margin and cash clients Trade Payables, Other Payables and Accrued Charges (As of September 30) | Indicator | September 30, 2023 (HK$ thousand) | March 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Trade payables from securities brokerage business: – Margin and cash clients | 125,327 | 137,157 | | Other payables and accrued charges | 7,357 | 4,525 | | Total | 132,684 | 141,682 | - An ageing analysis of trade payables is not disclosed as the Group's margin and cash clients are accounted for on a running account basis[113] Corporate Bonds As of September 30, 2023, the Group's total outstanding corporate bonds amounted to HK$27,518 thousand, entirely current and due within one year, representing a decrease from March 31, 2023, with no new corporate bonds issued during the period Corporate Bonds Repayment Period (As of September 30) | Repayment Period | September 30, 2023 (HK$ thousand) | March 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Within one year | 27,518 | 29,185 | | More than one year but not exceeding two years | – | 2,017 | | Total | 27,518 | 31,202 | - As of September 30, 2023, the outstanding corporate bonds bore an annual coupon rate of 6.50% and an effective interest rate of 9.10%[115] - No corporate bonds were issued during the period and for the year ended March 31, 2023[263] Share Capital As of September 30, 2023, the company's issued and fully paid share capital increased to HK$158,156 thousand from March 31, 2023, primarily due to the issuance of 263,593,577 new shares in August 2023 following a subscription by an independent third party Share Capital Movement (As of September 30) | Indicator | Number of Shares (thousand shares) | Amount (HK$ thousand) | | :--- | :--- | :--- | | Authorized share capital as of September 30, 2023 | 20,000,000 | 2,000,000 | | Issued and fully paid share capital as of April 1, 2023 | 1,317,968 | 131,797 | | Shares issued (August 2023) | 263,593 | 26,359 | | Issued and fully paid share capital as of September 30, 2023 | 1,581,561 | 158,156 | - In March 2023, the company passed a resolution to increase its authorized share capital from HK$200,000,000 to HK$2,000,000,000 by creating an additional 18,000,000,000 shares[96] - In August 2023, upon completion of a subscription by an independent third party, a total of 263,593,577 ordinary shares of HK$0.10 par value each were issued, and the total proceeds received by the company from the subscription amounted to HK$52,718,000[99] Related Party Transactions During the period, the Group engaged in asset management revenue and lease payment transactions with related parties, and had trade receivables from a related company, with total remuneration for executive directors amounting to HK$3,600 thousand Related Party Transactions and Balances (As of September 30) | Transaction Type | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Asset management business income received from a related company | 610 | – | | Lease payments made to a related company | (261) | – | | Trade receivables from a related company | 1,253 (September 30, 2023) | 643 (March 31, 2023) | Key Management Personnel Remuneration (For the six months ended September 30) | Remuneration Type | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Short-term benefits | 3,564 | 3,818 | | Retirement benefits | 36 | 26 | | Total | 3,600 | 3,844 | Commitments As of September 30, 2023, the Group's capital commitments primarily consisted of contracted but unprovided investments at fair value through profit or loss, and short-term lease commitments due within one year Capital Commitments (As of September 30) | Commitment Type | September 30, 2023 (HK$ thousand) | March 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Contracted but not provided for: Investments at fair value through profit or loss | 7,424 | 7,907 | | Short-term lease commitments (within one year) | 52 | – | Fair Value Measurement The Group uses a three-level fair value hierarchy for financial instruments, with total investments at fair value through profit or loss amounting to HK$76,660 thousand, where unlisted equity instruments and some fund investments are classified as Level 3, with valuations managed and regularly reviewed by an internal team - The fair value hierarchy used for fair value measurement categorizes inputs to valuation techniques used to measure fair value into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[103][122][254] Fair Value Measurement Hierarchy (As of September 30) | Description | Level 1 (HK$ thousand) | Level 2 (HK$ thousand) | Level 3 (HK$ thousand) | Total (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Recurring fair value measurements: Investments at fair value through profit or loss | | | | | | – Listed equity securities in Hong Kong | 5,364 | – | – | 5,364 | | – Unlisted equity instruments | – | – | 22,075 | 22,075 | | – Fund investments | – | 25,903 | 23,285 | 49,188 | | – Derivative financial instruments | 33 | – | – | 33 | | Total recurring fair value measurements | 5,397 | 25,903 | 45,360 | 76,660 | - For Level 3 fair value measurements, the Group has a team that manages the valuation work for Level 3 financial instruments, and this team determines the fair value of the Group's Level 3 financial instruments using valuation techniques at least twice a year[106] Management Discussion and Analysis This section provides an overview of the Group's financial performance, business operations, strategic outlook, and capital structure, along with details on significant investments and risk management Performance Review The Group's loss narrowed to HK$17,425 thousand during the period, with basic and diluted loss per share at 1.3 HK cents, primarily due to increased revenue, reduced staff costs, and decreased expected credit losses on loans and trade receivables, as the Group focuses on consolidating securities operations and integrating corporate finance and wealth management services - The Group recorded a loss of HK$17,425,000 for the period, compared to a loss of HK$24,607,000 for the same period in 2022[129] - Basic and diluted loss per share for the period was 1.3 HK cents, compared to 2.7 HK cents for the same period in 2022[110] - The Group's strategy is to focus on and consolidate its existing securities operations, and to work closely with the Group's corporate finance business and wealth management business to provide higher quality one-stop integrated financial services to institutional clients and high-net-worth individuals[111] Business Review During the period, the securities brokerage and margin financing business performed strongly, turning profitable, and the money lending business saw growth in both revenue and profit, while corporate finance, advisory and insurance brokerage, and equity investment businesses recorded losses or revenue declines due to intense market competition and macroeconomic challenges - The Group's revenue and net investment losses for the period amounted to HK$8,688,000, a 39.01% decrease compared to HK$14,245,000 for the six months ended September 30, 2022[152] Securities Brokerage and Margin Financing During the period, the securities brokerage and margin financing business saw a significant 231.96% increase in revenue and net investment income to HK$11,881 thousand, achieving a segment profit of HK$4,762 thousand, reversing the prior year's loss, mainly driven by a substantial rise in securities brokerage income - During the period, the Group's securities brokerage and margin financing business recorded revenue and net investment income of HK$11,881,000, an increase of 231.96% compared to revenue and net investment income of HK$3,579,000 for the same period in 2022[130] - A segment profit of HK$4,762,000 was recorded for the period, compared to a segment loss of HK$6,470,000 for the same period in 2022, with the segment turning profitable mainly due to an increase in securities brokerage income[153] Corporate Finance Due to intense market competition, corporate finance segment revenue decreased by 55.12% to HK$1,701 thousand during the period, resulting in a segment loss of HK$1,609 thousand, primarily because no other income from debt forgiveness was recognized - Segment revenue from corporate finance business decreased by 55.12% from HK$3,790,000 to HK$1,701,000[154] - A segment loss of HK$1,609,000 was recorded for the period, compared to a segment profit of HK$19,864,000 for the same period in 2022, with the decrease in segment profit mainly due to no other income from debt forgiveness being recognized during the period compared to the same period in 2022[154] Money Lending The Group's money lending business, operated through its wholly-owned subsidiary Rich Strong Finance Limited, saw interest income grow by 25.91% to HK$1,837 thousand and achieved a segment profit of HK$1,703 thousand, successfully turning profitable, with loans managed through strict three-tier assessment and credit risk policies - The Group conducts its money lending business through Rich Strong Finance Limited ("Rich Strong Finance"), which is a licensed money lender under the Money Lenders Ordinance (Chapter 163 of the Laws of Hong Kong) and a wholly-owned subsidiary of the company[156] - The Group recorded interest income from money lending of HK$1,837,000 (six months ended September 30, 2022: HK$1,459,000), an increase of 25.91% compared to the same period in 2022[256] - Segment profit for the period was HK$1,703,000 (six months ended September 30, 2022: segment loss of HK$2,567,000)[256] Overview Rich Strong Finance provides property mortgage loans, share collateralized loans, and personal loans, typically with terms of 6 to 60 months, serving clients primarily referred by existing customers and management, including companies and individuals in retail, IT, and finance sectors - Rich Strong Finance provides money lending services with the assistance of funds from the Group, including property mortgage loans, share collateralized loans, and personal loans, with loan terms generally ranging from 6 to 60 months[133] - Rich Strong Finance's clients are primarily referred by existing clients and the Group's management, including companies engaged in retail and information technology, and individuals employed in the retail and finance sectors[133] Internal Control Procedures and Credit Risk Assessment Policy All loan applications undergo a three-tier assessment and approval process, involving evaluation by Rich Strong Finance directors, consultation with the Risk and Compliance Committee, and final approval by designated Group directors, with credit policies covering collateral valuation, LTV ratios, borrower creditworthiness, and repayment ability - All loan applications submitted to Rich Strong Finance are subject to a three-tier assessment and approval process by personnel[134] - The credit policy applies to all types of money lending businesses, including secured and unsecured loans, with assessments conducted from various aspects, including the market value of pledged assets, due diligence on collateral ownership, loan-to-value ratio, legal background checks on borrowers, borrower's creditworthiness, and repayment ability[230] Determination of Loan Terms Loan terms are determined based on the borrower's intended use of funds, credit history, repayment record, liquidity, loan size, and other risk factors, with unsecured loans typically having higher interest rates to reflect increased risk, requiring borrowers to demonstrate sufficient asset levels - Loan terms are determined based on the following factors: the borrower's stated use of funds; the borrower's creditworthiness and repayment history; the borrower's liquidity position; the size of the loan application compared to the Group's internal capital resource allocation and planning; and other risk factors[135][159] - The interest rate for unsecured loans will be correspondingly higher than that for secured loans to reflect their higher risk, but borrowers must demonstrate a sufficient asset level[231] Borrowing Status As of September 30, 2023, Rich Strong Finance had five outstanding loans with a total principal of HK$40,500 thousand, bearing annual interest rates between 8% and 13%, and regularly reports to management on outstanding loans, due loans, and collection status - As of September 30, 2023, there were a total of five outstanding loans, with an aggregate outstanding principal amount of HK$40,500,000, and annual interest rates ranging from 8% to 13%[138] - Rich Strong Finance regularly submits updated reports to the Group's management on a weekly basis to review the total outstanding loan balances, overdue loans, and collection status of repayments[139] Collection of Loans Receivable Rich Strong Finance has delinquency collection guidelines, including timely borrower contact, legal counsel engagement for demand letters after 30 days of delinquency, and a final warning with potential legal action after 90 days, with any deviations requiring director review and approval - If repayment is overdue for 30 days, Rich Strong Finance will verify and confirm the borrower's latest outstanding amount and appoint legal counsel to issue a formal demand letter to the borrower[162] - If repayment is overdue for 90 days, Rich Strong Finance will issue a final warning: if the overdue repayment is not settled within 14 days, Rich Strong Finance will take legal action against the borrower[162] Credit Risk Assessment The Group applies a general approach to measure expected credit losses for loans receivable, classifying them into three stages based on increased credit risk, and management references external credit ratings, industry trends, and forward-looking economic data when assessing default risk - The Group applies a general approach to measure loss allowances for expected credit losses on loans receivable[140] - Management classifies loans receivable in the following manner: Stage 1 (no significant increase in credit risk), Stage 2 (significant increase in credit risk but no impairment), and Stage 3 (credit impaired)[142][194][166][233] - When assessing the default risk of loans receivable, management refers to default rate studies conducted by certain external credit rating agencies and uses industry trends and experienced credit judgment as forward-looking economic information[142] Advisory and Insurance Brokerage During the period, the advisory and insurance brokerage segment's revenue decreased by 20.26% to HK$374 thousand, resulting in a segment loss of HK$50 thousand, compared to a segment profit in the prior year - During the period, the Group's advisory services and insurance brokerage services recorded segment revenue of HK$374,000 (six months ended September 30, 2022: HK$469,000), a 20.26% decrease compared to the same period in 2022[168] - Segment loss for the period was HK$50,000 (six months ended September 30, 2022: segment profit of HK$48,000)[168] Asset Management During the period, the asset management segment's revenue was HK$2,624 thousand, a decrease from HK$5,509 thousand in the prior year, but successfully achieved a segment profit of HK$265 thousand, reversing the loss from the same period last year - During the period, the Group recorded asset management segment revenue of HK$2,624,000 (six months ended September 30, 2022: HK$5,509,000)[196] - Segment profit for the period was HK$265,000 (six months ended September 30, 2022: segment loss of HK$431,000)[196] Equity Investment During the period, the equity investment segment recorded revenue and net investment losses of HK$9,661 thousand, with a segment loss of HK$9,977 thousand, a significant increase from the prior year, reflecting the challenging global economic market outlook - During the period, the Group recorded segment revenue and net investment losses of HK$9,661,000 in equity investment (six months ended September 30, 2022: HK$461,000)[144] - Segment loss for the period was HK$9,977,000 (six months ended September 30, 2022: segment loss of HK$813,000)[144] - In 2023, the continued increase in geopolitical risks, volatile interest rate trends, and monetary policy adjustments, among other factors, led to an unfavorable outlook for global economic market growth, with the Hong Kong financial market also affected[170] Outlook The company aims to leverage national and Hong Kong development opportunities, attract strategic investors, optimize management, expand fintech innovation, enhance integrated financial services, and become an ideal partner for corporate and individual investors, connecting mainland and international capital and investors to create returns for stakeholders - The company will seize the historical opportunities for national and Hong Kong development, strive for progress, actively introduce strategic investors, reorganize and optimize its management team, expand fintech innovation businesses and service dimensions, comprehensively enhance its various business capabilities, and strive to promote the rapid development of Hong Kong's Web3.0 ecosystem through innovation[198] - The company will continuously optimize itself, deeply cultivate customer needs and segmented markets, and, relying on its rich business lines, is committed to becoming an ideal integrated financial service partner for corporate and individual investors, and providing clients with an excellent technology-driven one-stop integrated financial service platform[198] - The company will also combine its own advantages, fully leverage its position as a "bridgehead" for internal and external communication, connect mainland and international capital and investors, serve the needs of all sectors, create more opportunities for the financial industry of the nation and Hong Kong, and generate ideal returns for the company's shareholders, employees, clients, and stakeholders[198] Subscription of New Shares Under General Mandate On August 7, 2023, the company entered into an agreement to allot and issue 263,593,577 subscription shares to an independent third party at HK$0.20 per share, raising net proceeds of approximately HK$52.64 million, aimed at enhancing liquidity, increasing operational flexibility, funding business development, and serving as working capital without increasing interest burden - On August 7, 2023, the company entered into a subscription agreement with the subscriber, pursuant to which the company conditionally agreed to allot and issue, and the subscriber conditionally agreed to subscribe for, a total of 263,593,577 subscription shares at the subscription price of HK$0.20 per subscription share[146] - The total gross proceeds from the subscription amounted to HK$52.72 million, and the net proceeds received by the company from the subscription (after deducting related expenses) were approximately HK$52.64 million[235] - The subscription provides an opportunity for the Group to raise additional funds to enhance its liquidity level, increase its operational flexibility, maintain its ability to fund any potential business development opportunities for its existing businesses, and serve as the Group's working capital[202] Subscription Shares The subscription involved 263,593,577 shares, representing approximately 20.00% of the issued share capital on the announcement date and 16.67% of the enlarged issued share capital, with the subscription shares ranking pari passu with existing shares upon issuance - The subscription shares represent approximately (a) 20.00% of the company's issued share capital as of the announcement date of the subscription of new shares; and (b) approximately 16.67% of the company's issued share capital as enlarged by the allotment and issue of the subscription shares[200] - The subscription shares, upon allotment, issue, and being fully paid, will rank pari passu in all respects among themselves and with other shares in issue on the completion date[173] Subscription Price The subscription price was HK$0.20 per share, representing a premium of approximately 14.29% over the closing price of HK$0.175 per share on the HKEX on the date of the subscription agreement - The subscription price of HK$0.20 per subscription share represents a premium of approximately 14.29% over the closing price of HK$0.175 per share as quoted on the SEHK on August 7, 2023 (the date of the subscription agreement)[261] Reasons for Subscription The Directors believe the subscription is an opportunity to raise additional funds for the Group to enhance liquidity, increase operational flexibility, fund potential business developments, and serve as working capital without increasing interest burden, thereby strengthening its financial position - The Directors believe that through the allotment and issue of the subscription shares, the subscription provides an opportunity for the Group to raise additional funds to enhance its liquidity level, increase the Group's operational flexibility, maintain its ability to fund any potential business development opportunities for its existing businesses, and serve as the Group's working capital[202] - The subscription strengthens the Group's financial position, enabling the Group to increase its working capital through the subscription without increasing its interest burden, and to enhance the Group's ability to withstand liquidity risks through equity fundraising[202] Use of Proceeds from Subscription The net proceeds from the subscription, approximately HK$52.64 million, are primarily allocated for investments in blockchain technology and cryptocurrency trading entities, cryptocurrency custody service banking entities, repayment of corporate bond principal and interest, with the remainder for general working capital Use of Proceeds from Subscription (As of September 30) | Intended Use | Approximate Amount (HK$) | Amount Utilized During the Period (HK$) | Unutilized Proceeds (HK$) | Expected Timeline | | :--- | :--- | :--- | :--- | :--- | | Investment in blockchain technology and cryptocurrency trading entities | 23.71 million | 11.86 million | 11.85 million | Before end of 2023 | | Investment in cryptocurrency custody service banking entities | 12.48 million | 0 | 12.48 million | Fully utilized as of this announcement date | | Repayment of corporate bond principal and interest | 13.70 million | 0.20 million | 13.50 million | Fully utilized as of this announcement date | | General working capital | 2.75 million | 2.75 million | 0 | Not applicable | Capital Structure The Group actively manages its capital structure to ensure flexible capital turnover for licensed subsidiaries and compliance with minimum capital requirements, with both capital gearing ratio and debt ratio decreasing during the period, reflecting an improved financial position, and has previously raised funds through convertible bonds for business expansion - The Group actively and regularly reviews and manages its capital structure, and makes adjustments to its capital structure in response to changes in the economic environment[177] - During the period and for the year ended March 31, 2023, all licensed subsidiaries of the Group complied with the liquidity requirements under the Securities and Futures (Financial Resources) Rules (Chapter 571N of the Laws of Hong Kong)[177] Capital Risk Management The Group manages its capital to ensure the continued operation of its entities and maximize shareholder returns by optimizing the balance between debt and equity, with the Board regularly reviewing the capital structure and ensuring compliance with regulatory capital requirements for member companies - The Group manages its capital to ensure that its entities can continue as going concerns and to maximize returns to shareholders through optimizing the balance between debt and equity[178] - During the period and for the year ended March 31, 2023, there were no instances of the Group's member companies violating the capital requirements imposed by relevant regulatory authorities[180] Liquidity, Financial Resources and Gearing Ratio As of September 30, 2023, the Group's current assets were HK$371,186 thousand, current liabilities were HK$163,025 thousand, resulting in a current ratio of 2.28 times, with cash and cash equivalents at HK$122,021 thousand, and the capital gearing ratio decreased to 9.10% and debt ratio to 33.42%, mainly due to repayment of corporate bonds and lease liabilities Liquidity and Gearing Ratio (As of September 30) | Indicator | September 30, 2023 | March 31, 2023 | | :--- | :--- | :--- | | Current assets | HK$371,186 thousand | HK$369,299 thousand | | Current liabilities | HK$163,025 thousand | HK$177,169 thousand | | Current ratio | 2.28 times | 2.08 times | | Cash and cash equivalents | HK$122,021 thousand | HK$111,748 thousand | | Capital gearing ratio | 9.10% | 12.40% | | Debt ratio | 33.42% | 37.69% | - The decrease in the capital gearing ratio was mainly due to the repayment of corporate bonds and lease liabilities[210] - One of the Group's subsidiaries is a licensed insurance intermediary under the Insurance Ordinance (Chapter 41 of the Laws of Hong Kong) and is required to maintain a minimum net asset value of HK$300,000 at all times[207] Issuance of Convertible Bonds The company previously issued multiple tranches of convertible bonds totaling HK$570 million through subscription agreements with Wan Jia, PAL, and Jiang Xian Capital in 2016 and 2017, to expand margin financing, underwriting, money lending, private equity investment, and asset management businesses, with some bonds repaid or converted and others not issued due to unfulfilled conditions - On November 22, 2016, the company entered into the Cinda Subscription Agreement, the PAL Subscription Agreement, and the Jiang Xian Capital Subscription Agreement, respectively, for the issuance of convertible bonds with an aggregate principal amount of HK$570 million[211] - The net proceeds from the first tranche of convertible bonds, approximately HK$385 million, were used for capital injection into joint ventures and expansion of margin financing and underwriting businesses, money lending businesses, participation in private equity investments, strengthening the capital base of subsidiaries, and general working capital[213] - The Wan Jia convertible bonds matured on March 30, 2020, and the outstanding principal amount of HK$53,454,000 together with all accrued and unpaid interest was paid on April 3, 2020[187] First Tranche of Convertible Bonds The first tranche of convertible bonds (Wan Jia, PAL, and Jiang Xian Capital) was completed on March 30, 2017, bearing interest at 2% per annum and a conversion price of HK$0.06 per share, with portions of Wan Jia and Jiang Xian Capital convertible bonds converted into shares in April 2017 - The first tranche of convertible bonds was completed on March 30, 2017, with the convertible bonds of Wan Jia, PAL, and Jiang Xian Capital all bearing interest at 2% per annum, maturing on the third (3rd) anniversary from the issue date of the convertible bonds, and a conversion price of HK$0.06 per conversion share[184] - The Wan Jia convertible bonds were exercised on April 27, 2017, at a conversion price of HK$0.06 for approximately 51.74% of the original principal amount, equivalent to HK$57,300,000, and 955,000,000 shares of the company were issued on April 28, 2017, upon completion of the conversion[185] Second Tranche of Jiang Xian Capital Convertible Bonds The second tranche of Jiang Xian Capital convertible bonds was completed on June 28, 2017, raising net proceeds of HK$60 million primarily for expanding margin financing and underwriting businesses, and the outstanding principal and interest were repaid on September 4, 2020, after an extension was not approved by shareholders - The second tranche of subscription was completed on June 28, 2017, raising net proceeds of HK$60,000,000 from the issuance of the second tranche of Jiang Xian Capital convertible bonds, of which approximately HK$50,000,000 was used to further expand its margin financing business and approximately HK$10,000,000 for underwriting business[214] - The second tranche of Jiang Xian Capital convertible bonds matured on June 28, 2020, and in accordance with the terms and conditions of the Jiang Xian Capital convertible bonds, the outstanding principal amount of HK$60,000,000 together with all accrued and unpaid interest was paid on September 4, 2020[239] Third Tranche of Jiang Xian Capital Convertible Bonds The third tranche of Jiang Xian Capital convertible bonds was completed on July 5, 2018, raising net proceeds of HK$60 million for strengthening proprietary trading, private equity investment, and asset management businesses, with some bonds converted into shares in January 2019 and the remainder repaid on July 5, 2021 - The third tranche of subscription was completed on July 5, 2018, raising net proceeds of HK$60,000,000 from the issuance of the third tranche of Jiang Xian Capital convertible bonds, of which approximately HK$36,000,000 was used to further strengthen its proprietary trading business, approximately HK$12,000,000 for participation in private equity investments, and approximately HK$12,000,000 for its asset management business[186] - The third tranche of Jiang Xian Capital convertible bonds was exercised on January 11, 2019, at a conversion price of HK$0.06 for 65% of the original principal amount, equivalent to HK$39,000,000, and 650,000,000 shares of the company were issued on January 14, 2019, upon completion of the conversion[215] - The third tranche of Jiang Xian Capital convertible bonds matured on July 5, 2021, and in accordance with the terms and conditions of the Jiang Xian Capital convertible bonds, the outstanding principal amount of HK$21,000,000 together with all accrued and unpaid interest was paid on July 5, 2021[217] Adjustment to Convertible Bonds Due to a share consolidation, the conversion price and the number of consolidated shares to be issued upon conversion of outstanding convertible bonds were adjusted from HK$0.06 per share for 350,000,000 existing shares to HK$0.60 per share for 35,000,000 consolidated shares, with all other terms and conditions remaining unchanged Convertible Bond Adjustment (As of September 30) | Before Adjustment | | After Adjustment | | | :--- | :--- | :--- | :--- | | Number of existing shares to be issued upon full conversion of outstanding convertible bonds | 350,000,000 | Number of consolidated shares to be issued upon full conversion of outstanding convertible bonds | 35,000,000 | | Conversion price per existing share | HK$0.06 | Conversion price per consolidated share | HK$0.60 | - Save for the convertible bond adjustment, all other terms and conditions of the company's convertible bonds remain unchanged[270] Significant Investments The company holds a significant investment in its associate, China Sparkle Financial Holdings Limited ("Sparkle"), with a 25% equity interest and a carrying amount of HK$96,335 thousand, representing 19.75% of the Group's total assets, with Sparkle Group primarily engaged in loan financing and advisory services in Hong Kong and mainland China - The company has a significant investment in its associate, Sparkle[223] - Sparkle and its subsidiaries (collectively, the "Sparkle Group") are principally engaged in the provision of loan financing and advisory services in Hong Kong and mainland China[246] - As of September 30, 2023, the carrying amount of this investment was HK$96,335,000, representing 19.75% of the Group's total assets as of September 30, 2023[225] Investment in Associates Gold Kingdom Holdings Limited, a wholly-owned subsidiary of the company, acquired a 25% equity interest in Sparkle on August 22, 2012, for approximately HK$64,131 thousand, which the company considers a passive, medium-to-low risk investment with no current intention to alter its investment level - On August 22, 2012, Gold Kingdom Holdings Limited, a wholly-owned subsidiary of the company, acquired a 25% equity interest in Sparkle for a consideration of approximately HK$64,131,000[247] - The company's investment in Sparkle Group is considered a passive, medium-to-low risk investment for the company, and as of the date of this announcement, the company has no intention to change its investment level in Sparkle Group[248] Material Acquisitions and Disposals The Group did not make any material acquisitions or disposals during the period - The Group did not make any material acquisitions or disposals during the period[249] Contingent Liabilities As of September 30, 2023, the Group had no significant contingent liabilities - As of September 30, 2023, the Group had no significant contingent liabilities (March 31, 2023: nil)[250] Pledge of the Group's Assets As of September 30, 2023, the Group ha