迪臣发展国际(00262) - 2022 - 中期财报

Interim Condensed Consolidated Financial Statements Interim Condensed Consolidated Statement of Profit or Loss For the six months ended September 30, 2021, the Group's revenue increased by 14% to HK$53,402 thousand, but loss before tax slightly expanded to HK$8,275 thousand due to a significant increase in finance costs, while loss attributable to owners of the Company narrowed | Indicator | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 53,402 | 46,783 | | Cost of sales | (26,911) | (25,906) | | Gross profit | 26,491 | 20,877 | | Other income and gains | 8,943 | 9,111 | | Administrative expenses | (33,871) | (32,635) | | Other operating income / (expenses), net | 2,746 | (1,949) | | Finance costs | (12,971) | (3,877) | | Share of profits and losses of associates | 387 | 257 | | Loss before tax | (8,275) | (8,216) | | Income tax expense | (807) | (1,673) | | Loss for the period | (9,082) | (9,889) | | Loss attributable to owners of the Company | (8,347) | (9,394) | | Basic loss per share (HK cents) | (0.85) | (0.96) | - Revenue for the period increased by 14% year-on-year, primarily due to business expansion[2] - Finance costs significantly increased by 234.5% to HK$12,971 thousand, a major factor contributing to the expanded loss before tax[2] Interim Condensed Consolidated Statement of Comprehensive Income The Group's total comprehensive income for the six months ended September 30, 2021, was HK$17,383 thousand, a significant decrease from HK$40,230 thousand in the prior year, mainly due to reduced exchange differences arising from the translation of overseas operations | Indicator | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :--- | :--- | :--- | | Loss for the period | (9,082) | (9,889) | | Exchange differences arising from translation of overseas operations | 25,631 | 48,593 | | Share of other comprehensive income of associates | 834 | 1,526 | | Total comprehensive income for the period | 17,383 | 40,230 | | Total comprehensive income attributable to owners of the Company | 18,067 | 40,677 | | Total comprehensive income attributable to non-controlling interests | (684) | (447) | - Exchange differences arising from the translation of overseas operations significantly decreased from HK$48,593 thousand in 2020 to HK$25,631 thousand in 2021, leading to a notable reduction in total comprehensive income[4] Interim Condensed Consolidated Statement of Financial Position As of September 30, 2021, the Group's total assets slightly increased, with both non-current and current assets rising, and total equity also grew, indicating a stable financial position | Indicator | September 30, 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Non-current assets | | | | Property, plant and equipment | 314,476 | 315,696 | | Investment properties | 1,059,000 | 1,041,350 | | Investments in associates | 28,939 | 27,606 | | Equity investments at fair value through profit or loss | 121,795 | 125,224 | | Current assets | | | | Properties under development for sale and properties held for sale | 796,582 | 760,270 | | Trade receivables | 23,543 | 22,536 | | Cash and cash equivalents | 19,328 | 20,372 | | Current liabilities | | | | Trade payables | 6,351 | 5,824 | | Interest-bearing bank and other borrowings | 280,538 | 266,572 | | Non-current liabilities | | | | Interest-bearing bank and other borrowings | 207,600 | 218,890 | | Deferred tax liabilities | 193,245 | 191,791 | | Equity | | | | Total equity | 1,604,463 | 1,586,422 | - Investment properties increased from HK$1,041,350 thousand to HK$1,059,000 thousand, and properties under development for sale and properties held for sale increased from HK$760,270 thousand to HK$796,582 thousand, indicating an expansion in property asset scale[6] - Total current liabilities increased from HK$393,936 thousand to HK$433,484 thousand, primarily due to an increase in interest-bearing bank and other borrowings[6] Interim Condensed Consolidated Statement of Changes in Equity For the six months ended September 30, 2021, the Group's total equity increased from HK$1,586,422 thousand at the beginning of the period to HK$1,604,463 thousand at the end, mainly influenced by an increase in the exchange fluctuation reserve - Total equity attributable to owners of the Company increased from HK$1,589,401 thousand to HK$1,607,514 thousand[8] - Exchange differences led to a significant increase in the exchange fluctuation reserve, which was the main contribution to total comprehensive income for the period[4][11] - Contributed surplus refers to the difference between the nominal value of shares in subsidiaries acquired during reorganization and the nominal value of shares issued, while reserve funds include statutory reserves that Chinese mainland subsidiaries are required to allocate from after-tax profits[15] Interim Condensed Consolidated Statement of Cash Flows For the six months ended September 30, 2021, the Group's net cash flow from operating activities was negative, but positive cash flows from investing and financing activities resulted in a net increase in cash and cash equivalents, improving the period-end cash position | Indicator | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :--- | :--- | :--- | | Net cash flows used in operating activities | (15,800) | (32,132) | | Net cash flows from / (used in) investing activities | 523 | (6,461) | | Net cash flows from financing activities | 17,041 | 32,212 | | Net increase / (decrease) in cash and cash equivalents | 1,764 | (6,381) | | Cash and cash equivalents at end of period | 10,165 | (3,775) | - Net cash flows used in operating activities narrowed from (HK$32,132) thousand in 2020 to (HK$15,800) thousand in 2021, indicating reduced cash outflow pressure from operating activities[17][19] - Cash flows from investing activities turned from a net outflow of (HK$6,461) thousand in 2020 to a net inflow of HK$523 thousand in 2021, primarily due to proceeds from equity investments at fair value through profit or loss[19] Notes to the Interim Condensed Consolidated Financial Statements 1. Basis of Preparation These interim financial statements are prepared in accordance with HKAS 34 and the Listing Rules, using the historical cost convention and fair value measurement for property, plant and equipment, investment properties, and equity investments, with no material impact from adopted amendments - The financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and Appendix 16 of the Listing Rules of the Stock Exchange[23] - The Group has adopted amendments related to interest rate benchmark reform and COVID-19-related rent concessions, but these have no material impact on the interim financial position and performance due to no interest rate replacement and insignificant rent relief effects[25][26][28] 2. Segment Information The Group has three reportable operating segments: property development and investment, trading, and "other" (hotel operations), with management independently monitoring each segment's performance based on adjusted profit/loss before tax, and inter-segment transactions conducted at market prices - The Group primarily operates three business segments: property development and investment, trading (medical equipment and home security), and hotel operations[30] - Segment performance is assessed based on adjusted profit/loss before tax, excluding bank interest income, dividend income, fair value gains, finance costs, share of profits and losses of associates, and unallocated head office and corporate expenses[31] Segment Revenue and Results For the six months ended September 30, 2021, trading business contributed the most revenue, property development and investment business saw significant growth in operating profit, while the "other" business (hotel) continued to record an operating loss | Segment | 2021 Revenue (HK$ Thousand) | 2020 Revenue (HK$ Thousand) | 2021 Operating Profit / (Loss) (HK$ Thousand) | 2020 Operating Profit / (Loss) (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Property development and investment business | 17,235 | 23,823 | 3,463 | 905 | | Trading business | 30,758 | 22,960 | 4,693 | 734 | | Other | 5,409 | — | (2,036) | (1,799) | | Total | 53,402 | 46,783 | 6,120 | (160) | - Trading business revenue increased by 34% year-on-year to HK$30,758 thousand, becoming the largest revenue source for the period[33] - Operating profit from property development and investment business significantly increased from HK$905 thousand to HK$3,463 thousand, a growth of 282.6%[33][35] Geographical Information The Group's revenue primarily originates from Hong Kong and Chinese mainland, with Chinese mainland contributing a slightly higher proportion, and both regions achieving revenue growth | Region | 2021 Revenue (HK$ Thousand) | 2020 Revenue (HK$ Thousand) | | :--- | :--- | :--- | | Hong Kong | 23,070 | 16,922 | | Chinese mainland | 30,332 | 29,861 | | Consolidated | 53,402 | 46,783 | - Hong Kong region revenue increased by 36.3% year-on-year to HK$23,070 thousand, while Chinese mainland revenue slightly increased by 1.6% to HK$30,332 thousand[37] Information about Major Customers During the reporting period, the property development and investment business segment generated approximately HK$7,588,000 in rental income from a single customer, whereas in the prior year, no single customer's revenue exceeded 10% of the Group's total revenue - The property development and investment business segment had one single customer contributing HK$7,588,000 in rental income[38] 3. Revenue, Other Income and Gains The Group's revenue primarily stems from trading business and total rental income, with hotel operations contributing revenue for the first time this period, while other income and gains mainly include dividend income and rental income, and government grants have ceased - Total revenue increased from HK$46,783 thousand to HK$53,402 thousand, primarily driven by trading business and hotel operations revenue[40] - Total other income and gains amounted to HK$8,943 thousand, a slight decrease from HK$9,111 thousand in the prior year, mainly due to the cessation of government grants[48] Revenue Analysis The revenue structure changed this period, with significant growth in trading business revenue, first-time contribution from hotel operations, and a decrease in property development and investment business revenue | Revenue Source | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue from property development and investment business | 5,385 | 13,550 | | Revenue from trading of medical equipment and home security and automation products | 30,758 | 22,960 | | Hotel operations | 5,409 | — | | Total rental income | 11,850 | 10,273 | | Total | 53,402 | 46,783 | - Trading business revenue increased by 34% year-on-year to HK$30,758 thousand, becoming the main revenue source[40] - Hotel operations contributed HK$5,409 thousand in revenue for the first time in 2021[40] Performance Obligations The Group's performance obligations vary across property sales, goods sales, and hotel operations, with property sales completed when the buyer obtains ownership, goods sales upon product delivery, and hotel operations upon service provision - Performance obligations for property sales are satisfied when the buyer obtains physical or legal title to the completed property[44] - Performance obligations for goods sales are satisfied upon product delivery, with accounts typically payable within 90 days after delivery[46] - Performance obligations for hotel operations are satisfied when services are provided, and for food and beverage operations, when control of food and beverages is transferred[47] Other Income and Gains Analysis Other income and gains primarily derived from dividend income and total rental income, while government grants ceased this period | Item | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :--- | :--- | :--- | | Bank interest income | 62 | 83 | | Dividend income from an equity investment at fair value through profit or loss | 1,500 | 1,300 | | Total rental income | 2,896 | 2,667 | | Government grants | — | 955 | | Others | 4,485 | 4,106 | | Total | 8,943 | 9,111 | - Government grants were zero in 2021, compared to HK$955 thousand in 2020, which is the main reason for the decrease in total other income and gains[48] 4. Loss Before Tax The Group's loss before tax was primarily affected by the cost of properties sold, employee benefit expenses, and finance costs, with fair value gains on equity investments at fair value through profit or loss recognized this period partially offsetting the loss | Item | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :--- | :--- | :--- | | Cost of properties sold | 3,848 | 9,884 | | Cost of inventories sold and services rendered | 23,063 | 16,022 | | Provision for / (reversal of provision for) inventories | 36 | (229) | | Depreciation | 6,530 | 6,577 | | Employee benefit expenses (including directors' emoluments) | 17,412 | 16,203 | | Directors' emoluments | 4,874 | 4,831 | | Fair value gain on an equity investment at fair value through profit or loss | (2,252) | — | | Exchange differences, net | (494) | 2,157 | - Employee benefit expenses (including directors' emoluments) increased from HK$16,203 thousand to HK$17,412 thousand[50] - A fair value gain of HK$2,252 thousand on an equity investment at fair value through profit or loss was recognized this period, with no such gain in the prior year[50] 5. Finance Costs The Group's finance costs significantly increased, primarily due to higher interest on bank and other borrowings, despite some interest being capitalized | Item | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :--- | :--- | :--- | | Interest on bank and other borrowings | 17,643 | 15,481 | | Less: Interest capitalised | (4,672) | (11,604) | | Total | 12,971 | 3,877 | - Total finance costs significantly increased by 234.5% from HK$3,877 thousand to HK$12,971 thousand[53] - Capitalized interest substantially decreased from HK$11,604 thousand to HK$4,672 thousand, leading to a notable increase in net finance costs[53] 6. Income Tax The Group's income tax expense primarily arose from Chinese mainland land appreciation tax and other regional taxes, with Hong Kong profits tax being zero this period, and overall income tax expense decreased compared to the prior year | Item | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :--- | :--- | :--- | | Hong Kong current period expense | — | 10 | | Other regions current period expense | 282 | 560 | | Chinese mainland land appreciation tax | 360 | 896 | | Deferred | 165 | 207 | | Total tax expense for the period | 807 | 1,673 | - Total tax expense for the period decreased from HK$1,673 thousand to HK$807 thousand, a reduction of 51.7%[57] - Chinese mainland land appreciation tax is levied at progressive rates from 30% to 60% on the appreciation of land value[56] 7. Dividends The Board does not recommend the payment of any interim dividend for the six months ended September 30, 2021, consistent with the prior year - No interim dividends were paid for the current period or the prior year[58] 8. Loss Per Share Attributable to Ordinary Equity Holders of the Company For the six months ended September 30, 2021, the basic and diluted loss per share attributable to owners of the Company was HK$0.85 cents, a narrowing from HK$0.96 cents in the prior year, mainly due to a decrease in loss attributable to owners of the Company | Indicator | 2021 (HK$ Thousand/Share) | 2020 (HK$ Thousand/Share) | | :--- | :--- | :--- | | Loss attributable to ordinary equity holders of the Company | (8,347) | (9,394) | | Weighted average number of ordinary shares in issue | 977,880,400 | 977,880,400 | | Basic and diluted loss per share (HK cents) | (0.85) | (0.96) | - Share options had an anti-dilutive effect on the basic loss per share for the period and were therefore not adjusted[61] - The weighted average number of ordinary shares in issue remained unchanged at 977,880,400 shares during the period[60][61] 9. Investment Properties The carrying amount of the Group's investment properties increased, primarily due to exchange adjustments, and some investment properties have been pledged as collateral for bank credit facilities | Item | September 30, 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Carrying amount at beginning of period / year | 1,041,350 | 947,100 | | Net gain from fair value adjustments | — | 24,950 | | Exchange adjustments | 17,650 | 69,300 | | Carrying amount at end of period / year | 1,059,000 | 1,041,350 | - The carrying amount of investment properties increased from HK$1,041,350 thousand as of March 31, 2021, to HK$1,059,000 thousand as of September 30, 2021[64] - Investment properties with a total carrying amount of HK$583,200 thousand have been pledged as collateral for bank credit facilities[65] 10. Equity Investments at Fair Value Through Profit or Loss The Group's total equity investments at fair value through profit or loss slightly decreased, mainly comprising unlisted equity investments in Century Rosy Limited, Dickson Development International Group Investment Limited, and Top Fortress International Limited, with HK$1,500 thousand in dividends received from DDIHIL this period | Investment Item | September 30, 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Century Rosy Limited | 13,172 | 13,172 | | Dickson Development International Group Investment Limited | 53,779 | 53,779 | | Top Fortress International Limited | 51,050 | 51,050 | | Pamfleet Shanghai Real Estate Fund II, L.P. | 3,794 | 3,794 | | Sky Fox Limited | — | 3,429 | | Total | 121,795 | 125,224 | - Dividends of HK$1,500 thousand were received from Dickson Development International Group Investment Limited (DDIHIL) this period, an increase from HK$1,300 thousand in the prior year[68] - The investment in Sky Fox Limited became zero this period, leading to a decrease in the total amount[66] 11. Properties Under Development for Sale and Properties Held for Sale The Group's total properties under development for sale and completed properties held for sale increased, with most properties under development expected to be recovered within one year, and some properties pledged as collateral for bank credit facilities | Item | September 30, 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Completed properties held for sale | 569,283 | 563,971 | | Properties under development for sale | 227,299 | 196,299 | | Total | 796,582 | 760,270 | - Properties under development for sale increased from HK$196,299 thousand to HK$227,299 thousand, and all are expected to be recovered within one year[69] - Completed properties held for sale and properties under development for sale with a total carrying amount of HK$170,640 thousand have been pledged as collateral for bank credit facilities[69] 12. Trade Receivables The Group's total trade receivables slightly increased, primarily concentrated in amounts due within 90 days, and the Group maintains strict oversight over trade receivables with no significant concentration of credit risk | Ageing | September 30, 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Within 90 days | 15,435 | 13,620 | | 91 to 180 days | 3,932 | 5,565 | | 181 to 360 days | 2,544 | 1,227 | | Over 360 days | 1,632 | 2,124 | | Total | 23,543 | 22,536 | - Total trade receivables increased from HK$22,536 thousand to HK$23,543 thousand[72] - The Group primarily enters into trade terms with customers on an open account basis, with credit periods generally 90 days for goods sales and up to 180 days for property sales[71] 13. Trade Payables The Group's total trade payables slightly increased, primarily concentrated in amounts due over 360 days, and trade payables are interest-free and generally settled within 30 days | Ageing | September 30, 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Within 90 days | 2,312 | 1,391 | | 91 to 180 days | 187 | 584 | | 181 to 360 days | 175 | 191 | | Over 360 days | 3,677 | 3,658 | | Total | 6,351 | 5,824 | - Total trade payables increased from HK$5,824 thousand to HK$6,351 thousand[74] - Trade payables due over 360 days accounted for the largest proportion, at HK$3,677 thousand[74] 14. Share Capital The Company's authorized share capital is HK$150,000 thousand, and its issued and fully paid share capital is HK$97,788 thousand, remaining unchanged during the reporting period | Item | September 30, 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Authorized share capital: 1,500,000,000 ordinary shares of HK$0.10 each | 150,000 | 150,000 | | Issued and fully paid share capital: 977,880,400 ordinary shares of HK$0.10 each | 97,788 | 97,788 | - The Company's issued and fully paid share capital is HK$97,788 thousand, comprising 977,880,400 ordinary shares of HK$0.10 each, with no changes during the reporting period[75] 15. Related Party Transactions The Group engaged in several significant transactions with related parties, including management fee income, management fee payments, and rental income, all constituting continuing connected transactions as defined by the Listing Rules | Transaction Type | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :--- | :--- | :--- | | Management fee income from a related company | 27 | 58 | | Management fee income from an associate | 380 | 163 | | Management fee paid to a related company | 210 | — | | Rental income from a related company | 113 | 153 | | Rental income from an associate | 50 | — | - Management fee income from associates significantly increased from HK$163 thousand to HK$380 thousand[77] - This period marked the first payment of HK$210 thousand in management fees to a related company and the first receipt of HK$50 thousand in rental income from an associate[77] 16. Fair Value and Fair Value Hierarchy of Financial Instruments The Group's fair value measurement of financial instruments primarily involves equity investments at fair value through profit or loss and interest-bearing bank and other borrowings, with unlisted equity investments classified as Level 3, using market-based valuation methods and considering illiquidity discounts | Item | Carrying Amount as of September 30, 2021 (HK$ Thousand) | Fair Value as of September 30, 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Equity investments at fair value through profit or loss | 121,795 | 121,795 | | Interest-bearing bank and other borrowings (with non-current portion) | 237,600 | 237,600 | - Fair value measurement of unlisted equity investments is classified as Level 3, with valuation based on assumptions supported by observable market prices or rates, and applying a discount for lack of marketability[87][90] - The Group has no financial liabilities measured at fair value, and there were no transfers between fair value hierarchy levels for financial assets and liabilities during the reporting period[88][92] 17. Events After the Reporting Period The Company proposes a rights issue to allot 499,390,200 rights shares at a subscription price of HK$0.10 per share, aiming to raise a gross amount of approximately HK$49,900,000, with net proceeds of approximately HK$48,000,000 to be used for repaying unsecured loans and general working capital - The Company plans a rights issue on the basis of one rights share for every two existing shares held[94] - The rights issue is expected to raise a gross amount of approximately HK$49,900,000, with net proceeds estimated at no more than approximately HK$48,000,000[94] - The net proceeds will primarily be used to repay approximately HK$38,000,000 in unsecured loans and approximately HK$10,000,000 for general working capital[94] Management Discussion and Analysis Business Review Despite the global economy being affected by the COVID-19 pandemic, the Group's turnover still increased by 14%, with property development and investment revenue decreasing but operating profit growing, trading business revenue and profit significantly increasing, and hotel business contributing revenue for the first time but still recording a loss - The Group's turnover was approximately HK$53,402 thousand, an increase of approximately 14% compared to the prior year[99] - Net loss attributable to owners of the Company was approximately HK$8,347 thousand, a decrease from HK$9,394 thousand in the prior year, mainly due to increased medical equipment sales and fair value gains on equity investments[112] Macroeconomic Environment Global economic recovery is affected by COVID-19 variants, leading to subdued economic activity, while the Chinese mainland economy shows encouraging recovery with government stimulus, and Hong Kong's economy, despite pandemic impacts, is generally regaining momentum - Global economic recovery was severely impacted by the outbreak of COVID-19, with variants leading to cross-border restrictions and subdued economic activity[96] - Chinese mainland saw a recovery in trade and business activities under strict prevention measures and loose monetary policy, recording significant year-on-year GDP growth[96] - Hong Kong's economy, despite pandemic effects, has generally regained momentum with improved consumption and merchandise exports, as vaccination rates increased and infection cases remained low[96] Property Development and Investment Business Property development and investment business turnover decreased by 28% to HK$17,235 thousand, mainly due to a significant drop in property sales revenue; however, investment property rental income grew by 15%, and segment operating profit significantly increased, benefiting from other income received for constructing buildings as required by the government - Property development and investment business turnover was approximately HK$17,235 thousand, a decrease of approximately 28% compared to the prior year[100] - Property sales turnover significantly decreased by approximately 60% to HK$5,385 thousand, primarily from the sale of remaining residential units at Kaifeng Expo Plaza in China[101] - Investment property rental income increased by approximately 15% to HK$11,850 thousand, mainly because no rent concessions were provided during this reporting period[102] - Segment operating profit was approximately HK$3,463 thousand, a significant increase from approximately HK$905 thousand in the prior year, primarily due to other income received for constructing buildings as required by local authorities in Kaifeng[104] Trading Business Trading business turnover increased by 34% to HK$30,758 thousand, driven by increased sales of medical equipment, health, and anti-epidemic products, including a HK$4,200 thousand contribution from the installation of a hydrotherapy pool at Haven of Hope Hospital in Hong Kong, with segment operating profit also significantly growing - Trading business turnover was approximately HK$30,758 thousand, an increase of approximately 34% compared to the previous reporting period[105] - Turnover from trading of medical equipment, health, and anti-epidemic products increased by approximately 37% to HK$22,519 thousand, including a HK$4,200 thousand contribution from the installation of a hydrotherapy pool for Haven of Hope Hospital in Hong Kong[106] - Turnover from trading of home security and automation products increased by approximately 26% to HK$8,239 thousand, benefiting from the recovery of the Chinese market and rising demand[107] - Segment operating profit was approximately HK$4,693 thousand, a significant increase from HK$734 thousand in the prior year, primarily due to increased medical equipment sales[109] "Other" Business (Mainly Operating a Hotel) The "Other" business (mainly operating the Holiday Inn Express Kaifeng) generated turnover of HK$5,409 thousand, contributing revenue for the first time; however, this segment recorded an operating loss of HK$2,036 thousand, mainly due to increased depreciation expenses and fixed costs, despite lower occupancy rates - "Other" business turnover was approximately HK$5,409 thousand, a 100% increase compared to the prior year, mainly from the operation of Holiday Inn Express Kaifeng[110] - This segment recorded an operating loss of approximately HK$2,036 thousand, with the loss increasing primarily due to higher hotel depreciation expenses and fixed costs, despite lower occupancy rates[110] - Holiday Inn Express Kaifeng has a total gross floor area of approximately 14,000 square meters, with 243 guest rooms and 3 meeting rooms[110] Financial Review The Group's turnover increased by 14%, gross margin rose to 50%, other operating income turned into net income, liquidity remained healthy, and the net gearing ratio was stable, with Group assets pledged and a prudent treasury policy and foreign exchange risk management in place - Turnover was approximately HK$53,000 thousand, an increase of approximately 14% compared to the prior year[114] - Gross margin was approximately 50%, an increase of approximately 5 percentage points from 45% in the prior year, mainly due to a higher proportion of rental income in property development and investment business turnover[115] - Other operating income / (expenses), net, turned from a net expense of approximately HK$1,900 thousand in the prior year to a net income of approximately HK$2,700 thousand this period, primarily due to a fair value gain of approximately HK$2,300 thousand recognized from the disposal of the "Embassy Project"[117] - As of September 30, 2021, the current ratio was 2.11, and the net gearing ratio was approximately 29%, indicating a healthy liquidity position[118] Turnover The Group's total turnover increased by 14%, with significant growth contributed by trading and hotel businesses, while property development and investment business revenue decreased - Total turnover was approximately HK$53,000 thousand, an increase of approximately 14% compared to the prior year[114] - Trading business turnover increased by approximately 34%, hotel business turnover increased by 100%, and property development and investment business turnover decreased by approximately 28%[114] Gross Margin The Group's gross margin increased to 50%, primarily due to a higher proportion of rental income in property development and investment business turnover, as rental income has a significantly higher gross margin than property sales - Gross margin was approximately 50%, an increase of approximately 5 percentage points from 45% in the prior year[115] - The proportion of rental income in the property development and investment business segment's turnover increased from approximately 43% to approximately 69%[115] Other Operating Income / (Expenses), Net Other operating income / (expenses) for the period turned from a net expense to a net income, mainly due to a fair value gain of approximately HK$2,300 thousand recognized from the disposal of the "Embassy Project" in Shanghai - The amount changed from a net expense of approximately HK$1,900 thousand in the prior year to a net income of approximately HK$2,700 thousand this period[117] - The main change was due to a fair value gain of approximately HK$2,300 thousand recognized from the full disposal of the "Embassy Project"[117] Liquidity and Financial Resources The Group maintains a healthy liquidity position with a current ratio of 2.11 and a net gearing ratio of approximately 29%, and plans to improve liquidity and capital structure by accelerating property sales and exploring financing opportunities - As of September 30, 2021, total assets were approximately HK$2,438,792 thousand, with a current ratio of 2.11 (March 31, 2021: 2.24)[118] - The net gearing ratio was approximately 29% (March 31, 2021: 29%)[118] - The Group's strategy includes accelerating pre-sales of properties in Kaifeng Century Garden Zone G in China and actively seeking to dispose of the Haikou commercial project in China to improve liquidity and financial position[118] Capital Expenditure For the six months ended September 30, 2021, total capital expenditure was approximately HK$2,671 thousand, primarily for the acquisition of property, plant and equipment for the hotel in Kaifeng, China - Total capital expenditure was approximately HK$2,671 thousand, primarily for the acquisition of property, plant and equipment for the hotel in Kaifeng, China[119] Contingent Liabilities and Commitments As of the reporting date, the Group had no significant contingent liabilities but had capital commitments of approximately HK$8,946 thousand contracted but not provided for - The Group had no significant contingent liabilities[121] - Capital commitments contracted but not provided for amounted to approximately HK$8,946 thousand[122] Pledge of Group's Assets The Group's bank credit facilities are secured by various assets, including leasehold land and buildings in Hong Kong and China, investment properties, properties held for sale and under development for sale, rental income, and time deposits - Pledged assets include leasehold land and buildings of HK$290,484 thousand, investment properties of HK$583,200 thousand, and properties held for sale and under development for sale of HK$170,640 thousand[123] - Rental income from certain properties and time deposits of HK$4,500 thousand are also pledged[123] Treasury Policy and Foreign Exchange Risk The Group adopts a prudent financial management approach, maintaining a healthy liquidity position and striving to reduce credit risk, primarily facing risks from RMB-denominated balances, but currently has no foreign currency hedging policy in place - The Group adopts a prudent financial management approach, managing risks through continuous credit assessment and monitoring of liquidity position[124] - The Group primarily faces risks from RMB-denominated balances but currently has no foreign currency hedging policy to eliminate currency risk[126] Prospects The Group plans to improve liquidity and financial position through a rights issue, accelerating property sales, controlling costs, and expanding new businesses, while seizing opportunities in China's economic development and actively responding to pandemic challenges to pursue high-quality and profitable growth - The Group will conduct a rights issue to raise funds for repaying unsecured loans and general working capital[127] - Significant sales from properties in Kaifeng Century Garden Zone G in China are expected to be recognized in the second half of the 2022 financial year[127] - The Group will accelerate pre-sales and sales of properties under development, completed properties, and investment properties, while controlling costs and capital expenditure[127] - The Group will continue to assess the impact of the COVID-19 pandemic, adjust property sales strategies, and expand its medical equipment trading business and increase the variety of security products[127][154] Overall Outlook The Group has implemented various measures to improve liquidity and financial position, including a rights issue, accelerating property sales, and controlling costs, and will closely monitor pandemic developments to adjust operational strategies - The Group proposes a rights issue to raise approximately HK$49,900,000 for repaying unsecured loans and general working capital[127] - Significant sales from properties in Kaifeng Century Garden Zone G are expected to be recognized in the second half of the 2022 financial year[127] - The Group will accelerate pre-sales and sales of properties under development, completed properties, and investment properties, while controlling costs and capital expenditure[127] Property Development and Investment The Group is optimistic about the Chinese property market, seizing "14th Five-Year Plan" opportunities, with Kaifeng Century Garden Zone G pre-sales commenced and Kaifeng Expo Plaza completed, while the Shanghai Embassy Project was sold and Stone Project leased, and the Group also participates in real estate investment funds - Looking ahead to 2022, the Chinese economy has an optimistic outlook, and the Group will adopt a prudent and pragmatic approach, exploring new concepts to achieve high-quality and profitable growth[129] - Kaifeng Century Garden Zone G commenced pre-sales in May 2021, with sales expected to be recognized in the 2022 financial year, and total pre-sale contract amount approximately RMB24,000,000 (equivalent to approximately HK$29,000,000) as of the interim report date[130][133] - Kaifeng Expo Plaza project has been completed, with unsold areas including a hotel, shops, apartments, and parking spaces[137][138] - All remaining properties of the Shanghai Embassy Project have been sold, recognizing a fair value gain of approximately HK$2,300,000[139] - The Stone Project, an office building, has been leased to third parties to generate rental income[143] - The Group holds a 1.5% limited partner interest in Pamfleet Shanghai Real Estate Fund II (PSREFII), which primarily invests in real estate with repositioning and value-add potential in Shanghai and other tier-one cities in Chinese mainland[147] Kaifeng Century Garden Kaifeng Century Garden project has developed approximately 190,000 square meters of gross floor area, with Zone G under construction and pre-sales commenced in May 2021, with sales expected to be recognized in the 2022 financial year, and the Group plans to sell Zone C together with Zone G for synergistic benefits - Kaifeng Century Garden has developed approximately 190,000 square meters of gross floor area, with Zone G under construction and pre-sales commenced in May 2021[130] - As of the interim report date, the total pre-sale contract amount for Zone G properties was approximately RMB24,000,000 (equivalent to approximately HK$29,000,000)[133] - The Group plans to sell Zone C together with Zone G to achieve higher returns[132] Kaifeng Expo Plaza Kaifeng Expo Plaza project has been completed, with total sales contract amount of approximately RMB564,000,000, and unsold areas include a hotel, shops, apartments, and parking spaces - Kaifeng Expo Plaza project has been completed, with a total sales contract amount of approximately RMB564,000,000[137] | Area | Current Use | Gross Floor Area (Approx. Square Meters) | | :--- | :--- | :--- | | Commercial Zone A | Property, plant and equipment — Hotel | 14,000 | | Commercial Zone B | Properties held for sale — Shops | 8,900 | | Residential Blocks 1–3 | Properties held for sale — Apartments | 6,500 | | Car Park | Car Park | 147 | Shanghai Property Investment and/or Redevelopment All remaining properties of the Shanghai Embassy Project have been sold, recognizing a fair value gain of approximately HK$2,300,000; the Stone Project, an office building, has been leased for rental income; and a sale and purchase agreement for the equity interest in the Natural Residence Project was signed in October 2021 - All remaining properties of the Embassy Project have been sold, recognizing a fair value gain of approximately HK$2,300,000[139] - The Stone Project is an office building with a total gross floor area of approximately 6,668 square meters, which has been leased to third parties to generate rental income[143] - A sale and purchase agreement for the entire equity interest in the Natural Residence Project was entered into with an independent third party in October 2021, with completion expected in January 2022[144] Participation in Real Estate Investment Funds The Group partners with Pamfleet Group under Schroders Capital as a general partner of the fund manager and holds a 1.5% limited partner interest in Pamfleet Shanghai Real Estate Fund II (PSREFII), which primarily invests in real estate with repositioning and value-add potential in Shanghai and other tier-one cities in Chinese mainland, currently operating Project Hub - The Group owns a 30% equity interest in Pamfleet China and is a limited partner of PSREFII (holding 1.5%)[147] - PSREFII's investment strategy is to identify, organize, and execute successful asset repositioning investments in Shanghai and other tier-one cities in Chinese mainland[147] - PSREFII currently operates Project Hub in Jing'an District, Shanghai, which comprises 4 office buildings with a total gross floor area of approximately 37,547 square meters[150] Trading of Medical Equipment and Home Security and Automation Products The Group will continue to invest in the medical equipment segment, stimulating sales growth by expanding distribution channels and introducing diversified products, while also providing solutions for smart city development and broadening its range of health and anti-epidemic products, including PPP medical-grade air purifiers - The Group will stimulate medical equipment sales growth by expanding distribution channels and introducing more diversified products[151] - The aim is to provide a range of solutions for smart city development, applicable to shopping malls, government facilities, borders, and airports[151] - The Group is the exclusive agent in Hong Kong for PPP medical-grade air purifiers, which have been adopted by several government departments[153] Hotel Operations The Group is implementing measures to address pandemic challenges, including establishing stringent disinfection protocols, introducing marketing and sales recovery strategies, reducing operating costs, and will continue to improve service quality, with future goals including improving the investment portfolio, reviewing management systems, accelerating project progress, and developing the medical equipment business - The Group has established stringent disinfection and hygiene protocols, introduced marketing and sales recovery strategies, and made decisive decisions to reduce operating costs[154] - Future goals include improving the investment portfolio through acquiring quality properties and disposing of mature ones, reviewing management systems and cost structures to enhance efficiency, accelerating project progress, and further developing the medical equipment trading business[154] Other Information Material Investments Held, Material Acquisitions and Disposals of Subsidiaries During the reporting period, the Group did not hold any other material investments, nor did it undertake any material acquisitions or disposals of subsidiaries and associates - During the reporting period, the Group did not undertake any other material investments, material acquisitions, or disposals of subsidiaries and associates[156] Future Plans for Material Investments or Capital Assets Other than those disclosed in this interim report, as of September 30, 2021, the Group had no other plans for material investments or capital assets - As of the reporting date, the Group had no other future plans for material investments or capital assets[157] Human Resources As of September 30, 2021, the Group employed a total of 190 employees, with 131 based in China, and total employee benefit expenses increased to approximately HK$18,000 thousand, mainly due to the commencement of hotel operations and expansion of the health and anti-epidemic products business - The Group employed a total of 190 employees, with 131 based in China[158] - Total employee benefit expenses (including directors' emoluments) increased from approximately HK$17,000 thousand to approximately HK$18,000 thousand[158] - The increase in expenses was primarily due to the commencement of operations of Holiday Inn Express Kaifeng and the expansion of the health and anti-epidemic products trading business[158] Share Option Scheme The Company has a share option scheme, effective August 15, 2012, for a period of ten years, aimed at incentivizing and rewarding eligible participants who contribute to the Group, with exercise prices determined by the Directors and subject to limits on the number of options granted - The share option scheme became effective on August 15, 2012, for a period of ten years, aiming to incentivize and reward eligible participants who contribute to the Group[159][161] - The exercise price of share options shall not be less than the highest of the closing price on the offer date, the average closing price for the five trading days immediately preceding the offer date, and the nominal value of an ordinary share[162] | Participant Name | Number of Unexercised Share Options as of September 30, 2021 | Exercise Price (HK$) | Date of Grant of Share Options | Exercise Period of Share Options | | :--- | :--- | :--- | :--- | :--- | | Mr. Tse Man Shing | 800,000 | 0.125 | November 27, 2020 | November 27, 2020 to November 26, 2022 | | Mr. Wong King Ning | 9,000,000 | 0.125 | November 27, 2020 | November 27, 2020 to November 26, 2022 | | Mr. Tse Wai Yip | 8,000,000 | 0.125 | November 27, 2020 | November 27, 2020 to November 26, 2022 | | Dr. Ho Chung Tai, Raymond | 800,000 | 0.125 | November 27, 2020 | November 27, 2020 to November 26, 2022 | | Ir. Siu Man Po | 800,000 | 0.125 | November 27, 2020 | November 27, 2020 to November 26, 2022 | | Mr. Siu Kam Chau | 800,000 | 0.125 | November 27, 2020 | November 27, 2020 to November 26, 2022 | | Other Employees (Total) | 18,500,000 | 0.125 | November 27, 2020 | November 27, 2020 to November 26, 2022 | | Total | 38,700,000 | | | | Directors' and Chief Executive's Interests and Short Positions in Shares and Underlying Shares As of September 30, 2021, several Directors held long positions in the Company's ordinary shares, with Mr. Tse Man Shing holding the largest interest, including direct beneficial ownership and through controlled corporations, and Directors also held share options | Director Name | Directly Beneficially Owned (Shares) | Through Controlled Corporations (Shares) | Share Options (Shares) | Total (Shares) | Percentage of Issued Share Capital (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Tse Man Shing | 86,001,600 | 349,935,000 | 800,000 | 436,736,600 | 44.66 | | Mr. Wong King Ning | 26,429,400 | — | 9,000,000 | 35,429,400 | 3.62 | | Mr. Tse Wai Yip | 2,400,000 | — | 8,000,000 | 10,400,000 | 1.06 | | Dr. Ho Chung Tai, Raymond | 727,500 | — | 800,000 | 1,527,500 | 0.16 | | Ir. Siu Man Po | 920,000 | — | 800,000 | 1,720,000 | 0.18 | | Mr. Siu Kam Chau | — | — | 800,000 | 800,000 | 0.08 | - Mr. Tse Man Shing holds 349,935,000 shares in the Company through Sparta Assets Limited, which he wholly owns, bringing his total interest to 436,736,600 shares, representing 44.66% of the issued share capital[170][173] - Mr. Tse Man Shing, Mr. Wong King Ning, and Mr. Tse Wai Yip have undertaken not to exercise any share options during the period from November 1, 2021, to November 26, 2022[168][173] Disclosure of Directors' Information Pursuant to Rule 13.51B(1) of the Listing Rules Dr. Ho Chung Tai, Raymond resigned as an independent non-executive director of Richly Field Financial Holdings Limited on October 1, 2021 - Dr. Ho Chung Tai, Raymond resigned as an independent non-executive director of Richly Field Financial Holdings Limited (stock code: 2263) on October 1, 2021[179] Directors' Rights to Acquire Shares or Debentures During the six months ended September 30, 2021, no rights to acquire benefits by way of acquisition of shares or debentures of the Company were granted to any Director or their spouse or minor children, nor were any such rights exercised by them - During the reporting period, no rights to subscribe for shares or debentures were granted to or exercised by Directors or their associates[180] Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares As of September 30, 2021, Sparta Assets Limited and Granda Overseas Holding Co., Ltd. were the Company's substantial shareholders, holding 35.79% and 17.76% of the shares, respectively | Name | Capacity and Nature of Interest | Number of Ordinary / Underlying Ordinary Shares Held (Shares) | Percentage of the Company's Issued Share Capital (%) | | :--- | :--- | :--- | :--- | | Sparta Assets | Beneficial owner | 349,935,000 | 35.79 | | Granda Overseas Holding Co., Ltd. | Beneficial owner | 173,698,740 | 17.76 | | Mr. Chan Fai Fat | Interest of controlled corporation | 173,698,740 | 17.76 | - Sparta Assets is wholly owned by Mr. Tse Man Shing, and Granda Overseas Holding Co., Ltd. is wholly owned by Mr. Chan Fai Fat[173][183] Interim Dividends The Board does not recommend the payment of any interim dividend for the six months ended September 30, 2021, consistent with the prior year - No interim dividends were paid for the current period or the prior year[186] Purchase, Redemption or Sale of Listed Securities Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the reporting period - During the reporting period, neither the Company nor its subsidiaries purchased, redeemed, or sold any listed securities[187] Sufficiency of Public Float The Company maintained a sufficient public float throughout the six months ended September 30, 2021 - The Company maintained a sufficient public float during the reporting period[188] Capital Structure There was no change in the Company's capital structure during the six months ended September 30, 2021 - The Company's capital structure did not change during the reporting period[189] Corporate Governance The Company complied with most Corporate Governance Code provisions during the reporting period, but there were two deviations: the roles of Chairman and Chief Executive Officer being combined, and independent non-executive directors having no specific term of appointment - The Company complied with most Corporate Governance Code provisions but deviated from Code Provision A.2.1 (combined roles of Chairman and Chief Executive Officer) and A.4.1 (non-executive directors without specific terms of appointment)[190][192][193] - Mr. Tse Man Shing serves as both Chairman and Chief Executive Officer, which the Board believes facilitates effective implementation of business strategies and ensures consistent leadership[192] - Although independent non-executive directors do not have specific terms of appointment, they are subject to retirement by rotation once every three years as per the Company's Articles of Association[193] Standard Code for Securities Transactions The Company has adopted the Model Code set out in Appendix 10 of the Listing Rules, and all Directors confirmed compliance throughout the reporting period, with the same code also adopted for employees who may possess price-sensitive information - The Company has adopted the Model Code set out in Appendix 10 of the Listing Rules, and all Directors confirmed compliance with the code during the reporting period[195] - The Company has also adopted the same Model Code for employees who may possess price-sensitive information[195] Audit Committee The Audit Committee, comprising three independent non-executive directors, is responsible for reviewing and monitoring the Group's internal controls, risk management, and financial reporting matters, and has reviewed this interim report and financial statements, deeming them compliant with accounting standards - The Audit Committee comprises Dr. Ho Chung Tai, Raymond, Ir. Siu Man Po, and Mr. Siu Kam Chau (Chairman), all independent non-executive directors[197] - The Committee is responsible for reviewing and monitoring the Group's internal controls, risk management, and financial reporting matters, and has reviewed this interim report and financial statements[197] - The Audit Committee believes that the Group's 2021 interim report and financial statements comply with applicable accounting standards and are appropriately disclosed[197] Nomination Committee The Nomination Committee, composed of two executive directors and three independent non-executive directors, is responsible for reviewing the Board's composition and selecting and nominating candidates for directorships - The Nomination Committee includes Mr. Tse Man Shing, Mr. Wong King Ning (Executive Directors), and Dr. Ho Chung Tai, Raymond, Ir. Siu Man Po (Chairman), Mr. Siu Kam Chau (Independent Non-executive Directors)[198] - The Committee is responsible for reviewing the Board's composition and for selecting and nominating candidates for appointment to the Board[198] Remuneration Committee The Remuneration Committee, consisting of two executive directors and three independent non-executive directors, is responsible for reviewing remuneration policies and determining the remuneration packages for all Directors and key management personnel - The Remuneration Committee includes Mr. Tse Man Shing, Mr. Wong King Ning (Executive Directors), and Dr. Ho Chung Tai, Raymond, Ir. Siu Man Po, Mr. Siu Kam Chau (Chairman) (Independent Non-executive Directors)[200] - The Committee is responsible for reviewing remuneration policies and determining the remuneration packages for all Directors and key management personnel[200] Events After the Reporting Period The Company proposes a rights issue to allot 499,390,200 rights shares at a subscription price of HK$0.10 per share, aiming to raise a gross amount of approximately HK$49,900,000, with net proceeds of approximately HK$48,000,000 to be used for repaying unsecured loans and general working capital - The Company proposes a rights issue to allot 499,390,200 rights shares at a subscription price of HK$0.10 per rights share[201] - The rights issue aims to raise a gross amount of up to approximately HK$49,900,000, with net proceeds estimated at no more than approximately HK$48,000,000[201] - The net proceeds will be used to repay the Group's unsecured loans (approximately HK$38,000,000) and for general working capital (approximately HK$10,000,000)[201] Board of Directors As of the date of this report, the Company's executive directors are Mr. Tse Man Shing, Mr. Wong King Ning, and Mr. Tse Wai Yip, and the independent non-executive directors are Dr. Ho Chung Tai, Raymond, Ir. Siu Man Po, and Mr. Siu Kam Chau - Executive Directors include Mr. Tse Man Shing, Mr. Wong King Ning, and Mr. Tse Wai Yip[203] - Independent Non-executive Directors include Dr. Ho Chung Tai, Raymond, Ir. Siu Man Po, and Mr. Siu Kam Chau[203]