Financial Performance - The Group recorded a consolidated net loss of HK$60.83 million for the year ended 31 December 2018, compared to a loss of HK$7.74 million in 2017[26]. - Total revenue from continuing operations was HK$124.61 million for the year, an increase of 42% from HK$87.90 million in 2017[26]. - The increase in turnover was primarily due to higher revenue from investment operations and asset management income[26]. - Impairment losses related to fixed income investments amounted to HK$53.40 million, significantly impacting operational losses[26]. - Losses attributed to the securities trading and investments segment were HK$27.28 million, a decline from a profit of HK$23.39 million in 2017[26]. - The Group's securities and fixed income investment portfolio generated income of HK$45.56 million, up from HK$34.45 million in 2017[26]. Investment Strategy - The Group plans to increase investments in fixed income products, listed securities, and equity investment portfolios to enhance revenue and operational contribution[20]. - The Group's strategy includes investing in large state-owned enterprises and sectors such as real estate, education, renewable energy, consumables, and innovative technology[20]. - The Group actively invested in fixed income products, considering factors such as credit ratings and financial performance of underlying assets[30]. - The investment strategy includes leveraging fixed income products through financial arrangements like total return swaps and repurchase agreements[30]. - The Group aims to manage interest rate risk through a developed fixed income portfolio[27]. - The Group anticipates a reasonable return through the amount receivable on redemption of the LP Note[71]. Market Conditions and Challenges - The Group faced significant credit liquidity issues in the private business sector during the first half of 2018 due to China's de-leveraging monetary policy, impacting investment performance[10]. - The Group expects monetary and fiscal measures to continue in 2019, increasing liquidity risk and further slowing economic growth[16]. - The Group anticipates a challenging year for business management in 2019 due to uncertainties in global economic growth[16]. - The Group aims to focus on investing in the Greater China area, which has continuous economic growth potential despite challenges in 2019[19]. Asset Management and Operations - The Group launched a fund of HK$5,000 million in June 2018 and recorded asset management fee income of HK$51.91 million for the Year Under Review[13]. - The Group's asset management subsidiary was registered for regulated activities on May 9, 2018, allowing it to provide a range of asset management services[89]. - The Group plans to focus on investing in fixed income financial products and further develop its asset management business, including new investment funds[95]. - The Group will continue its business model in premium wine trading and will not pursue mass market wine trading in China due to the uncertain economic environment[96]. Legal and Recovery Actions - One of the investment notes held by the Group, issued by Sanpower (Hong Kong) Company Limited, defaulted in the second half of 2018, prompting recovery actions and negotiations for repayment solutions[10]. - The Group appointed Allbright Law Offices as its PRC legal adviser on November 1, 2018, to pursue legal proceedings against the Corporate Guarantor and the Personal Guarantor[36]. - A Mediation Order was issued by the Court on December 20, 2018, regarding the payment obligations of the Corporate Guarantor and the Personal Guarantor under the SP Note[36]. - The Group's financial position was impacted by the legal disputes involving the Corporate Guarantor and the Personal Guarantor, affecting the recoverability of the SP Note[36]. Corporate Governance - The Company has complied with the Corporate Governance Code (CG Code) except for a deviation regarding the appointment of Mr. Lam Man Sum Albert as an Independent non-executive Director without a specific term of office[108]. - The Board consists of 3 Executive Directors, 2 Non-executive Directors, and 5 Independent non-executive Directors[108]. - The Board is responsible for the overall strategic development and financial performance of the Group, with daily operations delegated to management[111]. - The Audit Committee was established in 2001 and includes Independent non-executive Directors, ensuring effective oversight of financial reporting and risk management[150]. Employee and Shareholder Relations - As of 31 December 2018, the Group employed 6 employees in the PRC and 21 employees in Hong Kong, maintaining good relationships with staff[105]. - The Company established a dividend policy in January 2019 to balance sufficient capital for business expansion and rewarding shareholders[162]. - Procedures for directing Shareholders' enquiries to the Board allow for direct communication at any time[199].
东建国际(00329) - 2018 - 年度财报