新耀莱(00970) - 2024 - 中期业绩

Interim Results Announcement Overview Condensed Consolidated Statement of Comprehensive Income For the six months ended September 30, 2023, the Group recorded total revenue of approximately HKD 1,733.7 million, an 18.4% decrease year-on-year, leading to an operating loss of HKD 8.9 million and a loss attributable to owners of HKD 51.7 million Summary of Condensed Consolidated Statement of Comprehensive Income (For the six months ended September 30) | Metric | 2023 (thousand HKD) | 2022 (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,733,707 | 2,123,602 | (18.4%) | | Gross Profit | 214,033 | 337,233 | (36.5%) | | Operating (Loss)/Profit | (8,901) | 49,478 | (118.0%) | | (Loss)/Profit Before Income Tax | (53,110) | 763 | (7062.5%) | | (Loss)/Profit for the Period | (50,620) | 3,484 | (1552.6%) | | (Loss)/Profit for the Period Attributable to Owners of the Company | (51,747) | 6,934 | (847.7%) | | Basic (Loss)/Earnings Per Share | (15.0) HK cents | 2.0 HK cents | (850.0%) | | Diluted (Loss)/Earnings Per Share | (15.0) HK cents | 2.0 HK cents | (850.0%) | - Total comprehensive income for the period was a loss of HKD 175.8 million, narrowing from a loss of HKD 422.9 million in the prior year period[92] Condensed Consolidated Statement of Financial Position As of September 30, 2023, the Group's total assets were approximately HKD 3,636.1 million, a decrease from March 31, 2023, with net current assets of HKD 493.9 million and net assets of HKD 2,086.0 million Summary of Condensed Consolidated Statement of Financial Position | Metric | September 30, 2023 (thousand HKD) | March 31, 2023 (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current Assets | 2,055,828 | 2,253,825 | (8.8%) | | Current Assets | 1,580,335 | 1,732,135 | (8.7%) | | Current Liabilities | 1,086,404 | 1,127,330 | (3.6%) | | Non-current Liabilities | 463,733 | 630,710 | (26.5%) | | Total Assets | 3,636,163 | 3,985,960 | (8.8%) | | Total Liabilities | 1,550,137 | 1,758,040 | (11.8%) | | Net Assets | 2,086,026 | 2,227,920 | (6.4%) | | Net Current Assets | 493,931 | 604,805 | (18.3%) | - The decrease in total assets was primarily due to reductions in property, plant and equipment, investment properties, goodwill, and financial assets at fair value through other comprehensive income[101][103] Notes to the Condensed Consolidated Interim Financial Statements General Information The Company is a limited company incorporated in Bermuda with shares listed on the Hong Kong Stock Exchange, primarily engaged in luxury goods and automotive distribution, after-sales services, property management, property leasing, film-related business, and money lending in Hong Kong and mainland China - The Group's principal businesses include luxury goods and automotive distribution, after-sales services, property management, property leasing, film-related business, and money lending[105] - The Company's directors believe that the Company has no direct or ultimate controlling party[105] Basis of Preparation These condensed consolidated interim financial statements, prepared in accordance with the Listing Rules and HKAS 34, were authorized for issue on November 30, 2023, and involve management judgments, estimates, and assumptions, with actual results potentially differing from estimates, and have been reviewed by the audit committee but not audited by external auditors - These condensed consolidated interim financial statements have not been audited or reviewed by the Company's external auditors but have been reviewed by the Company's Audit Committee[109] Changes in Accounting Policies The Group adopted several new or revised HKFRSs, including HKFRS 17 "Insurance Contracts" and HKAS 12 "Income Taxes: International Tax Reform – Pillar Two Model Rules," with HKFRS 17 having no impact and HKAS 12 amendments leading to the Group no longer recognizing deferred tax related to Pillar Two income taxes - The Group has assessed its contracts and operations, concluding that the adoption of HKFRS 17 has no impact on the condensed consolidated interim financial statements[112] - Effective January 1, 2023, the Group has revised its accounting policy in accordance with the exception, no longer recognizing deferred tax related to Pillar Two income taxes[120] Segment Information The Group's operating segments include automotive distribution, non-automotive distribution, and property management and others, with automotive distribution remaining the primary revenue source but experiencing declines in both revenue and results, while non-automotive distribution saw a slight revenue decrease and property management and others recorded a loss Revenue and Results by Segment (For the six months ended September 30) | Segment | 2023 Revenue (thousand HKD) | 2023 Results (thousand HKD) | 2022 Revenue (thousand HKD) | 2022 Results (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Automotive Distribution | 1,504,350 | 48,656 | 1,871,507 | 130,010 | | Non-automotive Distribution | 193,920 | 11,806 | 203,320 | (23,357) | | Property Management and Others | 35,437 | (16,507) | 48,775 | (3,847) | | Total | 1,733,707 | 43,955 | 2,123,602 | 102,806 | - Automotive distribution segment revenue decreased by 19.6% year-on-year, with results decreasing by 62.5% year-on-year[130] - The property management and other segment's loss expanded from HKD 3.8 million in the prior year period to HKD 16.5 million in the current period[130] Revenue, Other Income, Gains and Losses Total revenue for the period was approximately HKD 1,733.7 million, primarily from car sales, while other income, gains, and losses recorded a net loss of HKD 18.8 million, mainly due to fair value changes in investment properties and increased goodwill impairment Revenue Sources (For the six months ended September 30) | Revenue Source | 2023 (thousand HKD) | 2022 (thousand HKD) | | :--- | :--- | :--- | | Car Sales | 1,461,805 | 1,825,070 | | Sales of Other Goods | 193,920 | 203,320 | | Provision of After-sales Services | 42,545 | 46,437 | | Provision of Property Management Services | 1,618 | – | | Provision of Property Leasing Services | 33,819 | 37,670 | | Film Investment Income | – | 9,402 | | Total | 1,733,707 | 2,123,602 | Other Income, Gains and Losses (For the six months ended September 30) | Item | 2023 (thousand HKD) | 2022 (thousand HKD) | | :--- | :--- | :--- | | Bank Interest Income | 400 | 938 | | Gain on Disposal of Property, Plant and Equipment | 4,750 | 112 | | Gain/(Loss) on Sales of Used Cars | 1,381 | (764) | | Impairment of Goodwill | (7,437) | – | | Fair Value Change of Investment Properties | (31,506) | (22,545) | | Total | (18,813) | (11,808) | - Film investment income and interest income from money lending services were both zero in the current period, compared to HKD 9.4 million and HKD 1.7 million respectively in the prior year period[138] Operating Profit The operating loss for the period was HKD 8.9 million, primarily influenced by inventory costs, depreciation, goodwill impairment, and employee benefit expenses, with total employee benefit expenses (including directors' emoluments and share-based payments) increasing year-on-year Key Deductions/(Additions) to Operating Profit (For the six months ended September 30) | Item | 2023 (thousand HKD) | 2022 (thousand HKD) | | :--- | :--- | :--- | | Cost of Inventories Recognized as Expense | 1,514,628 | 1,780,826 | | Depreciation of Property, Plant and Equipment | 36,473 | 39,173 | | Impairment of Goodwill | 7,437 | – | | Employee Costs, Including Directors' Emoluments | 28,101 | 26,437 | | Equity-settled Share-based Payment Expenses | 12,154 | 9,904 | | Contributions to Retirement Benefit Schemes | 6,839 | 6,254 | | Total Employee Benefit Expenses | 47,094 | 42,595 | - Goodwill impairment for the current period was HKD 7.4 million, with no such item in the prior year period[142] - Total employee benefit expenses increased by 10.6% year-on-year[142] Finance Costs The Group's finance costs for the six months ended September 30, 2023, were approximately HKD 44.2 million, a 9.2% decrease from the prior year, mainly due to reduced interest on bank borrowings Finance Costs Breakdown (For the six months ended September 30) | Item | 2023 (thousand HKD) | 2022 (thousand HKD) | | :--- | :--- | :--- | | Interest on Bank Borrowings | 12,931 | 17,267 | | Interest on Other Loans | 19,689 | 18,492 | | Interest on Lease Liabilities | 11,240 | 12,631 | | Accrued Interest on Convertible Bonds | 349 | 325 | | Total | 44,209 | 48,715 | - Interest on bank borrowings decreased by 25.2% year-on-year[144] Income Tax Income tax for the period was HKD 2.49 million, a decrease from HKD 2.72 million in the prior year, primarily reflecting income tax expenses in other jurisdictions and the impact of deferred tax Income Tax Breakdown (For the six months ended September 30) | Item | 2023 (thousand HKD) | 2022 (thousand HKD) | | :--- | :--- | :--- | | Hong Kong Profits Tax for the Period | – | – | | Income Tax Expense in Other Jurisdictions for the Period | 2,861 | 1,454 | | Under-provision in Prior Years | 21 | 113 | | Total Tax for the Period | 2,882 | 1,567 | | Deferred Tax | (5,372) | (4,288) | | Total | (2,490) | (2,721) | - Subsidiaries in mainland China are subject to income tax at a rate of 25%, except for one subsidiary that enjoys a tax exemption[145] Dividends For the six months ended September 30, 2023, the Company neither paid nor proposed any dividends - For the six months ended September 30, 2023, the Company neither paid nor proposed any dividends, nor has it proposed any dividends since the end of the reporting period[148] Earnings/(Loss) Per Share For the six months ended September 30, 2023, both basic and diluted loss per share attributable to owners of the Company were 15.0 HK cents, compared to earnings per share of 2.0 HK cents in the prior year, with unexercised share options and convertible bonds having an anti-dilutive effect on basic loss per share this period Earnings/(Loss) Per Share Calculation (For the six months ended September 30) | Metric | 2023 | 2022 (Restated) | | :--- | :--- | :--- | | (Loss)/Profit for Basic (Loss)/Earnings Per Share (thousand HKD) | (51,747) | 6,934 | | Weighted Average Number of Ordinary Shares for Basic (Loss)/Earnings Per Share | 344,829,877 | 341,997,090 | | Basic (Loss)/Earnings Per Share | (15.0) HK cents | 2.0 HK cents | | Diluted (Loss)/Earnings Per Share | (15.0) HK cents | 2.0 HK cents | - For the six months ended September 30, 2023, unexercised share options and convertible bonds had an anti-dilutive effect on basic loss per share, resulting in identical basic and diluted loss per share[158] Property, Plant and Equipment/Investment Properties For the six months ended September 30, 2023, the Group acquired property, plant and equipment with a total cost of HKD 22.0 million and disposed of items with a net book value of HKD 9.4 million, while fair value changes in investment properties resulted in a recognized loss of approximately HKD 31.5 million, mainly due to fair value decreases and foreign currency translation differences - The Group acquired property, plant and equipment items with a total cost of HKD 22.0 million (2022: HKD 33.3 million)[159] - Property, plant and equipment items with a net book value of HKD 9.4 million were disposed of (2022: HKD 6 thousand)[159] - A loss of approximately HKD 31.5 million was recognized from fair value changes in investment properties (2022: HKD 22.5 million)[154] Goodwill As of September 30, 2023, the Group's net book value of goodwill was HKD 278.8 million, a decrease from March 31, 2023, primarily due to foreign currency translation differences and a HKD 7.4 million impairment of goodwill related to the property management business Goodwill Net Book Value and Impairment (As at September 30) | Metric | September 30, 2023 (thousand HKD) | March 31, 2023 (thousand HKD) | | :--- | :--- | :--- | | Goodwill Net Book Value | 278,784 | 302,315 | | Cost at Beginning of Period/Year | 770,030 | 836,575 | | Exchange Differences | (41,400) | (66,545) | | Impairment Loss Recognized | (7,437) | (4,452) | | Goodwill Allocated to Automotive Distribution | 195,898 | 207,029 | | Goodwill Allocated to Property Management Services | 82,886 | 95,286 | - The recoverable amount of the property management services cash-generating unit was lower than its carrying amount, resulting in a goodwill impairment loss of approximately HKD 7.4 million[167] Financial Assets at Fair Value Through Other Comprehensive Income As of September 30, 2023, the Group's financial assets at fair value through other comprehensive income were approximately HKD 137.4 million, primarily comprising listed equity investments in Bang & Olufsen A/S (B&O) and New Aid Group Limited, with the value decline mainly attributable to fair value changes in B&O shares Financial Assets at Fair Value Through Other Comprehensive Income (As at September 30) | Item | September 30, 2023 (thousand HKD) | March 31, 2023 (thousand HKD) | | :--- | :--- | :--- | | Listed Equity Securities in Denmark (B&O) | 134,752 | 157,087 | | Listed Equity Securities in Hong Kong (New Aid) | 2,670 | 1,308 | | Total | 137,422 | 158,395 | - The decrease in the carrying amount of the Group's financial assets at fair value through other comprehensive income was due to the decline in the market price of B&O shares[208] Balances with Non-controlling Interests Amounts due from/(to) non-controlling interests are unsecured, interest-free, and repayable on demand - Amounts due from/(to) non-controlling interests are unsecured, interest-free, and repayable on demand[172] Trade Receivables As of September 30, 2023, the Group's total trade receivables were HKD 34.7 million, a decrease from March 31, 2023, with credit terms typically up to three months and overdue balances regularly reviewed by management Ageing Analysis of Trade Receivables (As at September 30) | Ageing | September 30, 2023 (thousand HKD) | March 31, 2023 (thousand HKD) | | :--- | :--- | :--- | | 0 to 30 Days | 29,153 | 26,919 | | 31 to 120 Days | 318 | 3,662 | | 121 to 365 Days | 5,193 | 5,647 | | Total | 34,664 | 36,228 | - Trade receivables primarily refer to rents due from tenants and sales proceeds from customers, with credit terms typically up to three months[173] Trade Payables As of September 30, 2023, the Group's total trade payables were HKD 47.1 million, an increase from March 31, 2023 Ageing Analysis of Trade Payables (As at September 30) | Ageing | September 30, 2023 (thousand HKD) | March 31, 2023 (thousand HKD) | | :--- | :--- | :--- | | 0 to 30 Days | 28,311 | 10,578 | | 31 to 60 Days | 15,463 | 18,129 | | 61 to 90 Days | 1,267 | – | | Over 90 Days | 2,079 | 1,710 | | Total | 47,120 | 30,417 | Borrowings As of September 30, 2023, the Group's total borrowings were approximately HKD 879.8 million, a 11.7% decrease from March 31, 2023, primarily denominated in RMB and secured by pledged assets and corporate guarantees Borrowings Breakdown (As at September 30) | Item | September 30, 2023 (thousand HKD) | March 31, 2023 (thousand HKD) | | :--- | :--- | :--- | | Current Bank Loans | 195,180 | 142,523 | | Current Other Loans | 523,366 | 569,445 | | Non-current Bank Loans | 161,290 | 284,943 | | Total | 879,836 | 996,911 | | Effective Annual Interest Rate Range (Fixed-rate Borrowings) | 4.5% to 8.5% | 4.5% to 8.5% | - The decrease in borrowings was mainly due to reduced purchases of car inventories during the review period[20] - Certain assets of the Group have been pledged as collateral for loan facilities granted to the Group, along with corporate guarantees executed by the Company and certain subsidiaries[180] Management Discussion and Analysis Outlook and Market Environment While global economic growth is slow and uneven, China's economy is expected to maintain a positive recovery, with the luxury market projected to reach RMB 550 billion in 2023, growing 15% to 20% year-on-year and showing a younger consumer trend, though the Group's property management business may face downward pressure, and film investment and money lending businesses will be managed cautiously - The IMF forecasts global economic growth of 3% in 2023 and 2.9% in 2024[182] - China's Q3 2023 GDP grew by 4.9% year-on-year, exceeding market expectations, with recovery expected to continue into Q4[182] - The "Insight Report on Digital Trends in China's Luxury Market (2023 Edition)" projects China's mainland luxury consumption to reach RMB 550 billion in 2023, with a year-on-year growth rate of 15% to 20%[185] - The Group's property management business may continue to face downward pressure in the coming year, with no plans for expansion or new investments in film investment and money lending businesses[2] Business Review During the period, automotive distribution revenue declined across all brands, and after-sales service gross profit margin decreased, while non-automotive distribution revenue slightly fell, with B&O products performing best, and other businesses (including property management, film investment, and money lending) saw a significant revenue reduction due to no contribution from film investment and money lending - Revenue from the Group's Rolls-Royce, Bentley, and Lamborghini brands all declined[190] - Bentley sales saw the mildest decline, approximately 7.1% to HKD 700.6 million, with 219 units sold[190] - Lamborghini total sales were approximately HKD 177.2 million, a 17.4% decrease, with 54 units sold[192] - Rolls-Royce total sales were approximately HKD 584.0 million, a 31.8% decrease, with 84 units sold[192] - After-sales service revenue was approximately HKD 42.5 million, an 8.4% decrease, with gross profit margin falling from 47.6% to 33.3%[192] - Non-automotive distribution segment sales performance decreased by 4.6% to HKD 193.9 million, with gross profit margin falling from 31.2% to 31.1%[193][195] - Other segment revenue decreased by 27.3% to HKD 35.4 million, mainly due to no revenue from film investment and money lending businesses, coupled with a decline in sub-lease income[196] - In property management, the Group initiated four legal proceedings against tenants to recover approximately RMB 11 million in outstanding rent[201] - In money lending, two legal proceedings against borrowers and guarantors are ongoing[202] Detailed Financial Performance Review For the six months ended September 30, 2023, the Group experienced declines in revenue, gross profit, and gross profit margin, primarily due to fewer car sales and reduced gross profit from car sales, while other income, gains, and losses saw an increased net loss, administrative expenses rose due to share-based payments, and finance costs decreased due to reduced borrowings, with property, plant and equipment, investment properties, other intangible assets, and goodwill all decreasing Key Financial Performance Indicators (For the six months ended September 30) | Metric | 2023 (thousand HKD) | 2022 (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,733,700 | 2,123,600 | (18.4%) | | Gross Profit | 214,000 | 337,200 | (36.5%) | | Gross Profit Margin | 12.3% | 15.9% | (3.6)pp | | Other Income, Gains and Losses (Net Loss) | (18,800) | (11,800) | 59.3% | | Selling and Distribution Costs | 156,200 | 221,600 | (29.5%) | | Administrative Expenses | 48,000 | 46,700 | 2.8% | | Finance Costs | 44,200 | 48,700 | (9.2%) | - The decrease in gross profit was mainly due to reduced gross profit from car sales and lower incentive bonuses from car suppliers[6] - The change in other income, gains and losses was primarily due to fair value changes in investment properties and an increased goodwill impairment of approximately HKD 7.4 million related to the property management business[7] - The decrease in selling and distribution costs was mainly due to reduced marketing and promotional expenses[8] - The increase in administrative expenses was primarily due to higher share-based payments during the review period[9] - The decrease in finance costs was due to reduced borrowings used for car inventory purchases during the review period[11] Key Asset Values (As at September 30) | Asset Category | September 30, 2023 (thousand HKD) | March 31, 2023 (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Property, Plant and Equipment | 1,120,100 | 1,208,500 | (7.3%) | | Investment Properties | 341,900 | 393,900 | (13.3%) | | Other Intangible Assets | 174,600 | 187,600 | (6.9%) | | Goodwill | 278,800 | 302,300 | (7.7%) | - The change in investment property value was mainly due to fair value decreases and foreign currency translation differences[13] - The decrease in goodwill was primarily due to foreign currency translation differences and goodwill impairment related to the property management business[16] Liquidity and Financial Resources Overall Financial Position As of September 30, 2023, the Group's total assets were approximately HKD 3,636.1 million, total liabilities were approximately HKD 1,550.1 million, and total equity was approximately HKD 2,086.0 million Overall Financial Position (As at September 30) | Metric | September 30, 2023 (thousand HKD) | March 31, 2023 (thousand HKD) | | :--- | :--- | :--- | | Total Assets | 3,636,100 | 3,985,900 | | Total Equity | 2,086,000 | 2,227,900 | | Total Liabilities | 1,550,100 | 1,758,000 | Cash Flow As of September 30, 2023, the Group's cash and cash equivalents were approximately HKD 180.4 million, an increase from March 31, 2023, and the Directors believe the Group maintains sufficient working capital and financial resources - The Group's cash and cash equivalents were approximately HKD 180.4 million (March 31, 2023: approximately HKD 146.7 million)[18] - The increase in bank and cash on hand was mainly attributable to a decrease in deposits pledged for bank and other financing and the exercise of share options by option holders in September 2023[18] - The Directors believe that the Group continues to have sufficient working capital and financial resources to meet its current business needs and future business expansion[18] Borrowings As of September 30, 2023, the Group's borrowings were approximately HKD 879.8 million, a 11.7% decrease from March 31, 2023, primarily due to reduced purchases of car inventories - The Group's borrowings were approximately HKD 879.8 million, a decrease of approximately 11.7% from approximately HKD 996.9 million as at March 31, 2023[20] - The decrease in borrowings was mainly due to reduced purchases of car inventories during the review period[20] Capital Gearing Ratio As of September 30, 2023, the Group's capital gearing ratio decreased to approximately 42.6% (March 31, 2023: approximately 45.2%) - The Group's capital gearing ratio (calculated as total borrowings divided by total equity) decreased to approximately 42.6% (March 31, 2023: approximately 45.2%)[21] Inventories As of September 30, 2023, the Group's inventories decreased by 12.5% to approximately HKD 1,075.6 million, mainly due to reductions in cars and audio equipment, while the average inventory turnover days increased from 133 days to 139 days - The Group's inventories decreased by approximately 12.5% from approximately HKD 1,229.8 million as at March 31, 2023, to approximately HKD 1,075.6 million[22] - The decrease in inventories was mainly due to reductions in cars and audio equipment, which accounted for approximately 55.5% and 22.7% of the Group's inventories, respectively[22] - The Group's average inventory turnover days increased from 133 days for the six months ended September 30, 2022, to 139 days for the six months ended September 30, 2023[22] Foreign Exchange Risk The Group's revenue and expenses are primarily denominated in RMB and HKD, while production costs, purchases, and investments are denominated in RMB, HKD, DKK, and USD, with no foreign currency forward contracts entered into during the review period - The Group's revenue and expenses are primarily denominated in RMB and HKD, while its production costs, purchases, and investments are denominated in RMB, HKD, DKK, and USD[23] - During the review period, the Group did not enter into any foreign currency forward contracts[23] Contingent Liabilities and Capital Commitments As of September 30, 2023, the Board of Directors believes the Group has no significant contingent liabilities or material capital commitments related to the acquisition of property, plant and equipment - As of September 30, 2023, the Board of Directors believes the Group has no significant contingent liabilities[25] - As of September 30, 2023, the Board of Directors believes the Group has no material capital commitments related to the acquisition of property, plant and equipment[25] Pledge of Assets As of September 30, 2023, the Group had pledged land and buildings, investment properties, pledged deposits, and inventories to secure general banking and other financing facilities Total Pledged Assets (As at September 30) | Asset Category | September 30, 2023 (thousand HKD) | March 31, 2023 (thousand HKD) | | :--- | :--- | :--- | | Land and Buildings | 876,300 | 942,100 | | Investment Properties | 37,600 | 42,000 | | Pledged Deposits | 47,500 | 75,200 | | Inventories | 526,000 | 610,300 | - Pledged assets are used to secure general banking and other financing facilities granted to the Group[26] Corporate Developments and Governance Human Resources As of September 30, 2023, the Group had 436 employees with staff costs of approximately HKD 47.1 million, providing benefits such as basic salaries, commissions, bonuses, medical insurance, retirement funds, and share-based payments, along with training for future development - As of September 30, 2023, the Group had 436 employees (March 31, 2023: 456 employees)[26] - Staff costs charged to the income statement for the six months ended September 30, 2023, were approximately HKD 47.1 million (2022: HKD 42.6 million)[26] - The Group provides employees with benefits such as basic salaries, commissions, discretionary bonuses, medical insurance, retirement funds, and equity-settled share-based payments, and offers training for their future development[33][34] Loan Agreement Breaches Borrowers of two Company loan agreements (HKD 58 million and HKD 32 million) failed to repay principal and interest on time, leading the Group to initiate legal proceedings against both borrowers and guarantors, with some judgments obtained and enforcement underway HK$58 Million Loan The first borrower failed to repay the HKD 58 million loan principal and accrued interest, prompting the Group to restart legal proceedings, with a High Court hearing scheduled for December 20, 2023 - The first borrower failed to repay the outstanding principal amount of HKD 58,000,000 and accrued interest of the first loan on its due date (March 4, 2022)[30] - The Group has restarted legal proceedings in the High Court of Hong Kong against the first borrower and guarantor to recover the loan and other losses and damages[37] - A High Court hearing has been scheduled for December 20, 2023[37] HK$32 Million Loan The second borrower failed to repay the HKD 32 million loan principal and accrued interest, leading the Group to obtain judgments against the borrower and guarantor and file a bankruptcy petition against the second borrower with the Hong Kong High Court - The second borrower failed to repay the outstanding principal amount of HKD 32,000,000 and accrued interest of the second loan on its due date (March 22, 2022)[39] - The lender obtained judgments against the second borrower and guarantor on December 6, 2022, and February 17, 2023, respectively[40] - The lender filed a bankruptcy petition against the second borrower with the High Court of Hong Kong on September 19, 2023, with a court hearing scheduled for December 22, 2023[40] Equity Dispute The Company received a letter from a law firm alleging an equity dispute between a beneficial owner and certain major shareholders, which led to the postponement of the Annual General Meeting, and the Company is still assessing the impact of the dispute and complaint - The Company received a letter from a law firm, acting on behalf of an individual beneficially owning a substantial number of the Company's shares, alleging an equity dispute with certain major shareholders of the Company[42] - The equity dispute led to the postponement of the Annual General Meeting originally scheduled for September 5, 2023[42] - The Company is still assessing the impact, if any, of the equity dispute and complaint on the Company[42] Proposed Placement of Convertible Bonds The Company initially planned to issue convertible bonds with a total principal amount of HKD 64.5 million to repay existing loans, but the placement agreement lapsed due to shareholders seeking an injunction and the failure to meet precedent conditions - The Company entered into a conditional placement agreement with a placing agent to issue convertible bonds with a total principal amount of HKD 64.5 million, with net proceeds intended for repayment of existing loans[43] - Two shareholders sought an urgent injunction, and the High Court granted an interim injunction prohibiting the Company from proceeding with the convertible bond placement[45] - As the conditions precedent to the convertible bond placement agreement were not fulfilled by October 10, 2023, the placement agreement lapsed, and the placement will not proceed[48] Voluntary Conditional Cash Offer Mr. Shi Qingliu made a voluntary conditional cash offer to acquire all issued ordinary shares of the Company at HKD 0.9 per share and cancel unexercised share options, to which the Company responded and applied for resumption of share trading - Mr. Shi Qingliu (the "Offeror") sent a letter notifying the Board of his firm intention to make an offer through Shenwan Hongyuan Financing (Hong Kong) Limited to acquire all issued ordinary shares and unconverted convertible bonds of the Company, and to cancel all unexercised share options[49] - The offer price was HKD 0.9 in cash per issued share, HKD 0.225 in cash per convertible bond with a nominal value of HKD 1, and HKD 0.01 in cash per share option for cancellation[52] - The Company responded to the Offeror's announcement and applied for the resumption of trading in the Company's shares[52] Principal Business The Company is an investment holding company whose subsidiaries are primarily engaged in luxury goods and automotive distribution, after-sales services, property management, property leasing, film-related business, and money lending, mainly operating in Hong Kong and mainland China - The Company is an investment holding company, and its subsidiaries are principally engaged in luxury goods and automotive distribution, provision of after-sales services, property management services, property leasing services, film-related business (including film and television program production and investment), and money lending business[54] - The Group's businesses are primarily located in Hong Kong and mainland China[54] Interim Dividend The Board has resolved not to recommend an interim dividend for the six months ended September 30, 2023, to retain more capital for future challenges - The Board has resolved not to recommend an interim dividend for the six months ended September 30, 2023 (six months ended September 30, 2022: nil)[60] - This decision aims to retain more capital to seize opportunities and meet future challenges[60] Share Option Schemes The Company operates Old and New Share Option Schemes to incentivize eligible participants contributing to the Group's business, with 15,425,000 options unexercised under the Old Scheme and 4,300,000 options unexercised under the New Scheme as of September 30, 2023, and HKD 12.154 million in share-based payments recognized during the period - The Old Share Option Scheme expired on August 19, 2022, and the New Share Option Scheme was adopted on September 29, 2022, with a ten-year validity period[56] - As of September 30, 2023, 15,425,000 options remained unexercised under the Old Scheme, and 4,300,000 options remained unexercised under the New Scheme[56][61] - For the six months ended September 30, 2023, HKD 12,154,000 in share-based payments was recognized[67] Details and Changes of Share Options Granted (As at September 30) | Name or Category of Grantee | Share Option Scheme | Exercise Price (HKD) | As at April 1, 2023 | Granted during the Period | Exercised during the Period | As at September 30, 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Employees | Old Scheme | 1.6 | 18,125,000 | – | 2,700,000 | 15,425,000 | | Mr. Zheng Haojiang (Executive Director) | New Scheme | 1 | – | 3,400,000 | 3,400,000 | – | | Mr. Zhao Xiaodong (Executive Director) | New Scheme | 1 | – | 3,400,000 | 3,400,000 | – | | Mr. Zhu Lei (Executive Director) | New Scheme | 1 | – | 3,400,000 | 3,400,000 | – | | Mr. Cai Sicong (Independent Non-executive Director) | New Scheme | 1 | – | 300,000 | – | 300,000 | | Mr. Lin Guochang (Independent Non-executive Director) | New Scheme | 1 | – | 300,000 | – | 300,000 | | Mr. Gao Yu (Independent Non-executive Director) | New Scheme | 1 | – | 300,000 | – | 300,000 | | Employees | New Scheme | 1 | – | 2,500,000 | 2,500,000 | – | | Employees | New Scheme | 1 | – | 3,400,000 | – | 3,400,000 | | Employees | New Scheme | 1 | – | 17,000,000 | 17,000,000 | – | | Total | | | 18,125,000 | 34,000,000 | 32,400,000 | 19,725,000 | Change of Principal Place of Business Effective May 29, 2023, the Company's principal place of business in Hong Kong changed to 23rd Floor, China Huarong Tower, 60 Gloucester Road, Wanchai, Hong Kong - Effective May 29, 2023, the Company's principal place of business in Hong Kong changed to 23rd Floor, China Huarong Tower, 60 Gloucester Road, Wanchai, Hong Kong[70] Pre-emptive Rights Neither the Company's bye-laws nor Bermuda law contain provisions for pre-emptive rights requiring the Company to offer new shares to existing shareholders in proportion to their holdings - Neither the Company's bye-laws nor Bermuda law contain provisions for pre-emptive rights requiring the Company to offer new shares to its existing shareholders in proportion to their holdings[71] Standard Code for Securities Transactions by Directors The Company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers, as set out in Appendix 10 of the Listing Rules, to regulate directors' securities transactions, and no instances of non-compliance were found for the six months ended September 30, 2023 - The Company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers, as set out in Appendix 10 of the Listing Rules, to regulate directors' securities transactions[85] - For the six months ended September 30, 2023, the Company found no instances of non-compliance with the Standard Code[85] Corporate Governance Practices The Group is committed to maintaining high standards of corporate governance and has complied with the principles and code provisions of the Corporate Governance Code in Appendix 14 of the Listing Rules, except for a deviation from code provision C.2.1 (separation of roles of Chairman and Chief Executive) since January 1, 2018, as the Board believes combining these roles ensures consistent leadership - The Company has complied with the Code throughout the year ended March 31, 2023, except for a deviation from code provision C.2.1 (the roles of Chairman and Chief Executive should be separate and not performed by the same individual) since January 1, 2018[74] - The Board believes that combining the roles of Chairman and Chief Executive Officer in the same individual facilitates consistent leadership within the Group and enables the Company to make and implement decisions promptly and effectively[76] Audit Committee The Audit Committee, comprising three independent non-executive directors, has reviewed and approved the Group's condensed consolidated interim financial statements for the six months ended September 30, 2023, without objection to the accounting treatments - The Audit Committee comprises three independent non-executive directors: Mr. Cai Sicong (Chairman of the Audit Committee), Mr. Lin Guochang, and Mr. Gao Yu[77] - The Audit Committee has reviewed and approved the Group's condensed consolidated interim financial statements for the six months ended September 30, 2023, and raised no objections to the accounting treatments adopted by the Company[77] Purchase, Sale or Redemption of Listed Securities For the six months ended September 30, 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the six months ended September 30, 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[79] Publication of Interim Results Announcement and Interim Report This interim results announcement is available on the HKEXnews website and the Company's website, and the Company's interim report will be dispatched to shareholders and accessible on these websites in due course - This interim results announcement is available on the HKEXnews website (www.hkexnews.hk) and the Company's website (www.hk970.com)[80](index=80&type=chunk) - The Company's interim report will be dispatched to the Company's shareholders in due course and will also be available on the aforementioned websites[80]