保德国际发展(00372) - 2022 - 中期财报

Abbreviations Definition of Abbreviations This section defines key terms and abbreviations used in the interim report to ensure clarity and consistency of content List of Key Abbreviations | Abbreviation | Meaning | | :----------- | :---------------------------------------- | | Board of Directors | The board of directors of the Company | | The Company | Prudential International Development Corporation Limited | | The Period | The six months ended September 30, 2021 | | The Group | The Company and its subsidiaries | | HKEX | The Stock Exchange of Hong Kong Limited | | HKD | Hong Kong Dollars, the lawful currency of Hong Kong | Company Information Basic Company Information This section provides basic company information, including Board members, principal bankers, registered office, principal place of business in Hong Kong, share registrar, website, stock code, auditors, and legal advisors - Board members include Executive Directors Mr. Cheng Man Chun (Chairman and Managing Director), Ms. Xu Wei, Mr. Yang Jianting, Mr. Ge Kanning, and Independent Non-executive Directors Mr. Yam Kwong Chun, Mr. Wong Yee Sum, and Mr. Lam Yi Tung[17] - Principal bankers include Bank of Communications Co., Ltd. Hong Kong Branch, DBS Bank (Hong Kong) Limited, Fubon Bank (Hong Kong) Limited, among others[17] - The Company's stock code is 372 on HKEX[17] Review Report on Condensed Consolidated Financial Statements Conclusion of Review Report Deloitte Touche Tohmatsu has reviewed the Group's condensed consolidated financial statements for the six months ended September 30, 2021, and found no matters leading them to believe the statements are not prepared in all material respects in accordance with HKAS 34 - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, which is less in scope than an audit, thus no audit opinion is expressed[21] - The review concluded that nothing has come to the reviewer's attention that causes them to believe the condensed consolidated financial statements are not prepared, in all material respects, in accordance with HKAS 34[22] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Overview of Profit or Loss and Comprehensive Income The Group recorded a loss for the six months ended September 30, 2021, a stark contrast to the profit in the prior period, primarily due to fair value changes in financial instruments and the absence of gain on disposal of an associate Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended September 30) | Indicator | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :------------------------------------------------ | :------------------ | :------------------ | | Total Revenue | 497,060 | 702,905 | | Cost of Sales | (463,382) | (695,647) | | Gross Profit | 33,678 | 7,258 | | Net (Loss) Gain on Financial Instruments | (72,433) | 11,866 | | (Loss) Profit Before Tax | (96,653) | 153,305 | | (Loss) Profit for the Period | (96,653) | 153,300 | | (Loss) Profit for the Period Attributable to Owners of the Company | (95,573) | 153,649 | | Basic (Loss) Earnings Per Share | (4.74) HK Cents | 7.61 HK Cents | - Total revenue decreased by 29.3% year-on-year, from HK$702,905 thousand to HK$497,060 thousand[25] - Gross profit significantly increased from HK$7,258 thousand to HK$33,678 thousand, but a net loss on financial instruments led to an overall shift from profit to loss[25] Condensed Consolidated Statement of Financial Position Overview of Financial Position As of September 30, 2021, the Group's total assets and net assets both decreased, primarily due to a reduction in financial assets at fair value through profit or loss within non-current assets and a decrease in bank balances and cash within current assets Condensed Consolidated Statement of Financial Position (As at September 30) | Indicator | 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :-------------------------------------- | :------------------ | :---------------------------- | | Non-current Assets | 491,029 | 445,978 | | Current Assets | 247,229 | 343,059 | | Current Liabilities | 74,738 | 72,380 | | Net Current Assets | 172,491 | 270,679 | | Total Assets Less Current Liabilities | 663,520 | 716,657 | | Non-current Liabilities | 41,755 | 1,509 | | Net Assets | 621,765 | 715,148 | | Total Equity | 621,765 | 715,148 | - Financial assets at fair value through profit or loss decreased from HK$197,704 thousand to HK$143,647 thousand[31] - Bank balances and cash decreased from HK$239,325 thousand to HK$168,866 thousand[31] - Non-current liabilities significantly increased, primarily due to new borrowings[31] Condensed Consolidated Statement of Changes in Equity Analysis of Changes in Equity For the six months ended September 30, 2021, total equity attributable to owners of the Company decreased due to the loss for the period, while non-controlling interests increased, reflecting capital contributions from non-controlling shareholders of a subsidiary Condensed Consolidated Statement of Changes in Equity (For the six months ended September 30) | Indicator | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :------------------------------------------------ | :------------------ | :------------------ | | Equity Attributable to Owners of the Company at Beginning of Period | 709,546 | 523,718 | | Loss for the Period | (95,573) | 153,649 | | Exchange Differences Arising from Translation of Foreign Operations | 569 | 2,392 | | Capital Contribution from Non-controlling Shareholders of a Subsidiary | 2,701 | – | | Equity Attributable to Owners of the Company at End of Period | 614,542 | 693,186 | | Non-controlling Interests at End of Period | 7,223 | 5,856 | | Total Equity at End of Period | 621,765 | 699,042 | - Equity attributable to owners of the Company decreased from HK$709,546 thousand at the beginning of the period to HK$614,542 thousand at the end of the period, primarily due to a loss of HK$95,573 thousand for the period[33] - Non-controlling interests increased by HK$2,701 thousand, reflecting capital contributions from non-controlling shareholders of a subsidiary[33] Condensed Consolidated Statement of Cash Flows Analysis of Cash Flows For the six months ended September 30, 2021, the Group experienced negative net cash from operating activities and negative net cash from investing activities, but positive cash flow from financing activities, ultimately resulting in a net decrease in cash and cash equivalents Condensed Consolidated Statement of Cash Flows (For the six months ended September 30) | Indicator | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :------------------------------------------------ | :------------------ | :------------------ | | Net Cash Used in Operating Activities | (62,014) | (15,552) | | Net Cash Used in Investing Activities | (79,727) | 194,943 | | Net Cash From Financing Activities | 71,545 | (3,969) | | Net (Decrease) Increase in Cash and Cash Equivalents | (70,196) | 175,422 | | Cash and Cash Equivalents at End of Period | 168,866 | 254,147 | - Net cash used in operating activities was negative HK$62,014 thousand, primarily due to loss before tax and unrealized losses on financial instruments[35] - Net cash outflow from investing activities was HK$79,727 thousand, mainly for additions to property, plant and equipment and loans granted to third parties[35] - Net cash inflow from financing activities was HK$71,545 thousand, primarily from new borrowings and capital contributions from non-controlling shareholders of a subsidiary[35] Notes to the Condensed Consolidated Financial Statements 1. Basis of Preparation These condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA and the disclosure requirements of Appendix 16 to the HKEX Listing Rules, presented in HKD - The financial statements comply with HKAS 34 and Appendix 16 of the HKEX Listing Rules[39] - The functional currency is HKD[40] 2. Significant Accounting Policies The condensed consolidated financial statements are prepared under the historical cost convention, with certain financial instruments measured at fair value. The application of revised HKFRSs during the period had no significant impact on financial position or performance - Accounting policies are consistent with those used in the annual consolidated financial statements for the year ended March 31, 2021, except for the application of revised HKFRSs[41] - The application of revised HKFRSs, including amendments to HKFRS 16 and HKFRS 9, had no significant impact on the financial position and performance for the period[42] 3. Revenue and Segment Information The Group's revenue primarily derives from contracts with customers, with commodity trading revenue being the largest component. Total revenue decreased year-on-year, and operating segment performance varied, with the metal recycling business not yet operational Revenue Analysis (For the six months ended September 30) | Revenue Category | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :------------------------------------ | :------------------ | :------------------ | | Revenue from Contracts with Customers | 494,935 | 702,730 | | - Commodity Trading Revenue | 494,089 | 702,685 | | - Insurance Brokerage Income | 846 | 45 | | Interest under Effective Interest Method | 2,125 | 175 | | Total Revenue | 497,060 | 702,905 | Revenue from Contracts with Customers by Goods or Service Type (For the six months ended September 30) | Goods or Service Type | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :--------------------------- | :------------------ | :------------------ | | Commodity Trading Revenue | 494,089 | 702,685 | | - Metals | 291,348 | 679,786 | | - Chemicals and Energy | 202,741 | 22,899 | | Insurance Brokerage Income | 846 | 45 | Segment Results (For the six months ended September 30) | Segment | 2021 Segment Results (HK$ Thousand) | 2020 Segment Results (HK$ Thousand) | | :--------------------------- | :---------------------------------- | :---------------------------------- | | Commodity Trading | (8,611) | (1,612) | | Metal Recycling | (8,108) | – | | Long-Term Investments | (55,113) | 12,805 | | Chemicals | (1,168) | (1,422) | | Financial Institution Business | (3,501) | (2,543) | | Financing | 107 | – | | Other Investments | 888 | 21 | | Total | (75,506) | 7,249 | - The metal recycling segment recorded a loss of HK$8,108 thousand during the period but has not yet commenced business operations[55][56] 4. Net (Loss) Gain on Financial Instruments The Group recorded a net loss of HK$72,433 thousand on financial instruments during the period, primarily due to a decrease in the fair value of financial assets at fair value through profit or loss and a decrease in the fair value of derivative financial instruments Net (Loss) Gain on Financial Instruments (For the six months ended September 30) | Item | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :------------------------------------------------ | :------------------ | :------------------ | | (Decrease) Increase in Fair Value of Financial Assets at Fair Value Through Profit or Loss | (54,057) | 16,161 | | Increase in Fair Value of Equity Investments Held for Trading | 888 | 21 | | Decrease in Fair Value of Derivative Financial Instruments | (19,264) | (4,316) | | Total | (72,433) | 11,866 | - The decrease in fair value of financial assets at fair value through profit or loss by HK$54,057 thousand was the primary reason for the net loss[62] 5. (Loss) Profit Before Tax The loss before tax for the period was HK$96,653 thousand, primarily after deducting expenses such as depreciation of property, plant and equipment, depreciation of right-of-use assets, and inventory provisions Items Deducted in Arriving at (Loss) Profit Before Tax (For the six months ended September 30) | Item | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :---------------------------------------- | :------------------ | :------------------ | | Depreciation of Property, Plant and Equipment | 2,135 | 1,018 | | Depreciation of Right-of-Use Assets | 3,460 | 4,638 | | Provision for Inventories | 1,095 | – | 6. Income Tax Expense No income tax provision was made for Hong Kong, China, or the UK during the current and prior periods, as the Group did not generate assessable profits in these jurisdictions - Hong Kong profits tax is calculated at 16.5%, China corporate income tax at 25%, and UK corporate tax at 19%[64][68] - No income tax provision was made as the Group did not generate assessable profits in Hong Kong, China, and the UK[64][68] 7. Distributions During the interim period, the Board resolved not to pay, declare, or propose any dividends - The Directors of the Company resolved not to pay any dividend for the interim period[69] 8. (Loss) Earnings Per Share For the six months ended September 30, 2021, basic and diluted loss per share attributable to owners of the Company was 4.74 HK cents, compared to basic earnings per share of 7.61 HK cents in the prior period (Loss) Earnings Per Share (For the six months ended September 30) | Indicator | 2021 (HK Cents) | 2020 (HK Cents) | | :-------- | :-------------- | :-------------- | | Basic | (4.74) | 7.61 | | Diluted | (4.74) | Not Applicable | - The calculation of diluted loss per share did not assume the exercise of the subscription options granted to the non-controlling shareholders of Cupral, as their assumed exercise would result in a reduction in loss per share[71] 9. Movements in Property, Plant and Equipment and Right-of-Use Assets During the period, the Group acquired HK$58,057 thousand in property, plant and equipment, primarily for Cupral's business operations, and recognized HK$24,043 thousand in right-of-use assets and related lease liabilities - The Group acquired property, plant and equipment of HK$58,057 thousand, of which HK$27,045 thousand was for Cupral's business operations[74] - Right-of-use assets of HK$24,043 thousand and lease liabilities of HK$21,747 thousand were recognized for Cupral's leased plant in the UK[74] 10. Debt Instruments at Amortised Cost The Group holds preference shares of Qianyang Investment Limited with a total subscription price of HK$200,000,000, and the redemption date has been extended to April 16, 2022. Subsequent to the reporting period, the Group completed the subscription of a 65% equity interest in Qianyang - The Group subscribed for Qianyang preference shares of HK$200,000,000, with dividends calculated at an annual interest rate of 2%, guaranteed by Qianyang's sole shareholder[75] - The redemption date for the preference shares has been extended to April 16, 2022[76] - Subsequent to the reporting period, the Group completed the subscription of a 65% equity interest in Qianyang and expects to obtain control over the Qianyang Group[80][81] 11. Financial Assets at Fair Value Through Profit or Loss The Group primarily invested in a Korean private equity fund (AFC Mercury Fund), which recorded a fair value loss of HK$54,057 thousand during the period, and this investment is classified as a non-current asset - The Group invested in a Korean private equity fund with a total consideration of US$20,000,000 (approximately HK$156,000,000), representing approximately 29.71% of the fund's issued share capital[85] - For the six months ended September 30, 2021, the fund generated a fair value loss of HK$54,057 thousand[86] - This investment is classified as a non-current asset, as it is held for long-term strategic investment purposes[86] 12. Loans Receivable The Group's total loans receivable amounted to HK$24,946 thousand, primarily comprising loans granted to non-controlling shareholders of Cupral and secured loans granted to third parties Loans Receivable (As at September 30) | Item | 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :---------------------------------- | :------------------ | :---------------------------- | | Loans to Non-controlling Shareholders | 2,815 | – | | Loans to Third Parties | 22,131 | – | | Total | 24,946 | – | | Analyzed for reporting purposes as: | | | | - Current Assets | 3,096 | – | | - Non-current Assets | 21,850 | – | - Loans granted to third parties are secured, bear interest at an annual rate of 7%, and are due in June 2023[87] 13. Trade Receivables, Deposits and Prepayments As of September 30, 2021, the Group's total trade receivables, deposits, and prepayments amounted to HK$29,858 thousand, a significant increase from HK$9,053 thousand as of March 31 Trade Receivables, Deposits and Prepayments (As at September 30) | Item | 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :---------------------------------------- | :------------------ | :---------------------------- | | Trade Receivables | 7,031 | 3,825 | | - Contracts with Customers | 1,201 | – | | - Interest | 5,830 | 3,825 | | Prepayments to Suppliers | 16,146 | – | | Prepaid Expenses, Deposits and Other Receivables | 6,681 | 5,228 | | Total | 29,858 | 9,053 | - Prepayments to suppliers increased from zero to HK$16,146 thousand, which is the main reason for the total increase[90] 14. Borrowings As of September 30, 2021, the Group incurred new borrowings of HK$72,689 thousand, comprising secured borrowings (for Cupral's business) and unsecured borrowings (for commodity trading business) Borrowings (As at September 30) | Item | 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :---------------------------------- | :------------------ | :---------------------------- | | Secured | 20,306 | – | | Unsecured | 52,383 | – | | Total | 72,689 | – | | Repayable within: | | | | - One year | 52,383 | – | | - More than one year but not exceeding two years | 20,306 | – | - Secured borrowings of HK$20,306 thousand were for Cupral's business operations, collateralized by plant and equipment, bearing interest at an annual rate of 10%[92] - Unsecured borrowings of HK$52,383 thousand were for commodity trading business, bearing interest at an annual rate of 1.83%, repayable within four months[93] 15. Share Capital As of September 30, 2021, the Company's authorized share capital was HK$1,028,000 thousand, issued and fully paid share capital was HK$20,183 thousand, with 2,018,282,827 shares, remaining unchanged from the beginning of the period Share Capital (As at September 30) | Item | Number of Shares (2021) | Number of Shares (2020) | Value (2021 HK$ Thousand) | Value (2020 HK$ Thousand) | | :------------------------ | :---------------------- | :---------------------- | :------------------------ | :------------------------ | | Authorized: | 102,800,000,000 | 102,800,000,000 | 1,028,000 | 1,028,000 | | Issued and Fully Paid: | 2,018,282,827 | 2,018,282,827 | 20,183 | 20,183 | - Ordinary shares with a par value of HK$0.01 per share, with 2,018,282,827 shares issued[96] 16. Subscription of Interest in Cupral The Group completed the subscription of a 90% equity interest in Cupral for a total consideration of GBP2,250,000 (approximately HK$24,260 thousand), with Cupral primarily engaged in metal recycling and processing. The Group also provided a loan to Cupral's non-controlling shareholders - The Group subscribed for a 90% equity interest in Cupral for a total consideration of approximately HK$24,260 thousand, making Cupral a subsidiary of the Company[97] - Cupral's business involves constructing a metal recycling and processing plant in the UK for the recycling, processing, and sale of copper granules and high-quality aluminum scrap, with no business operations commenced as of the reporting period end[98] - The Group advanced a loan of GBP250,000 (approximately HK$2,696 thousand) to Cupral's non-controlling shareholders, bearing interest at an annual rate of 10%, secured by their shares in Cupral[102] 17. Disposal of Interest in an Associate The Group completed the disposal of its entire equity interest in Blue River Holdings Limited in April and July 2020, realizing a total gain of HK$163,480 thousand - The Group disposed of a 19.57% equity interest in Blue River Holdings Limited for a consideration of HK$181,440 thousand, and placed the remaining 4.08% equity interest[103] - The Group received net proceeds of HK$196,687 thousand from the disposal and recognized a total gain on disposal of interest in an associate of HK$163,480 thousand in profit or loss[103][104] 18. Related Party Transactions Related party transactions during the period primarily consisted of key management personnel's remuneration, totaling HK$6,085 thousand, an increase from the prior period Key Management Personnel Remuneration (For the six months ended September 30) | Item | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | | :------------------------ | :------------------ | :------------------ | | Fees | 225 | 225 | | Salaries and Other Emoluments | 5,860 | 4,845 | | Total | 6,085 | 5,070 | 19. Fair Value Measurement of Financial Instruments Certain financial assets of the Group are measured at fair value and classified according to the fair value hierarchy (Levels 1 to 3), primarily including listed equity securities, derivative financial instruments, and unlisted funds Fair Value Measurement of Financial Assets (As at September 30) | Financial Assets | 2021 (HK$ Thousand) | Fair Value Hierarchy | Valuation Techniques and Key Inputs | | :------------------------------------------------ | :------------------ | :------------------- | :------------------------------------------------------------------------------------------------------------------------------------------------------ | | Listed Equity Securities | 6,595 | Level 1 | Quoted closing prices in active markets | | Derivative Financial Instruments | | | | | - Assets | 1,969 | Level 2 | Discounted cash flow, based on estimated future cash flows from forward commodity prices and contracted commodity prices | | - Liabilities | 5,052 | Level 2 | Discounted cash flow, based on estimated future cash flows from forward exchange rates and contracted forward exchange rates | | Financial Assets at Fair Value Through Profit or Loss | | | | | - Unlisted Funds | 143,647 | Level 2 | Net asset value of the fund determined based on observable quotes from active markets for the underlying investment portfolio (primarily listed shares) | - There were no transfers between Level 1, Level 2, and Level 3 during the current and prior periods[112] 20. Capital Commitments As of September 30, 2021, the Group's capital commitments amounted to HK$64,132 thousand, primarily for the acquisition of contracted construction in progress not yet provided for Capital Commitments (As at September 30) | Item | 2021 (HK$ Thousand) | March 31, 2021 (HK$ Thousand) | | :------------------------------------------------ | :------------------ | :---------------------------- | | Capital expenditure contracted for the acquisition of construction in progress but not yet provided for in the condensed consolidated financial statements | 64,132 | 60,603 | 21. Events After the Reporting Period Subsequent to the reporting period, the Group completed the subscription of a 65% equity interest in Qianyang on October 11, 2021, and the Board is assessing its financial impact on the annual consolidated financial statements - The subscription of a 65% equity interest in Qianyang was completed on October 11, 2021[117] - The Board is assessing the financial impact of this subscription on the annual consolidated financial statements for the year ending March 31, 2022[117] Management Discussion and Analysis Business Review The Group continues to implement its long-term investment strategy, actively participating in the management of investee companies to enhance value. A loss was recorded for the period, primarily due to unrealized fair value losses on financial instruments, with varied performance across business segments and some new businesses hindered by the pandemic - The Group recorded a loss attributable to owners of the Company of HK$95,573 thousand and basic loss per share of 4.74 HK cents, primarily due to unrealized fair value losses on financial instruments[120] Financial Performance Review The Group recorded a loss for the period, contrasting with a profit in the prior period, primarily attributable to unrealized fair value losses on financial instruments, particularly the investment in AFC Mercury Fund - Loss attributable to owners of the Company was HK$95,573 thousand (2020: profit of HK$153,649 thousand)[120] - Basic loss per share was 4.74 HK cents (2020: basic earnings per share of 7.61 HK cents)[120] - The loss was primarily due to unrealized fair value losses on financial instruments, especially the investment in AFC Mercury Fund[120] Commodity Trading Commodity trading revenue decreased to HK$494,089 thousand, recording a segment loss of HK$8,611 thousand, primarily impacted by supply chain issues, high freight costs, and a decrease in the fair value of derivative financial instruments - Commodity trading segment revenue was HK$494,089 thousand (2020: HK$702,685 thousand), with a segment loss of HK$8,611 thousand (2020: HK$1,612 thousand)[121] - The decrease in revenue was mainly due to supply chain issues, including warehouse shipment delays, vessel delays, high freight costs, and reduced production[121] - Revenue from chemicals and energy business increased, accounting for 41% of total trading revenue[122] Metal Recycling The Group completed the subscription of a 90% equity interest in Cupral, and this metal recycling business recorded zero revenue and a segment loss of HK$8,108 thousand during the period, not yet operational, with the recycling plant expected to commence production in December 2021 - The Group subscribed for a 90% equity interest in Cupral for a total consideration of approximately HK$24,300 thousand[123] - The metal recycling business recorded zero revenue and a segment loss of HK$8,108 thousand, and had not commenced operations as of September 30, 2021[123] - The recycling plant is expected to commence production in December 2021 and reach maximum capacity before the financial year ending March 2022[126] Long-Term Strategic Investments Long-term investment business recorded revenue of HK$2,005 thousand and a segment loss of HK$55,113 thousand, primarily from Qianyang preference share dividends and unrealized losses from AFC Mercury Fund. The fair value of CEC Fund has decreased to zero - Long-term investments recorded revenue of HK$2,005 thousand (2020: HK$175 thousand) and a segment loss of HK$55,113 thousand (2020: segment profit of HK$12,805 thousand)[127] - The segment loss primarily resulted from unrealized losses from AFC Mercury Fund[127] Chemical Storage The Group invested in Jiangsu Hongmao Storage Co., Ltd., which is constructing chemical storage and related facilities but had not commenced operations as of September 30, 2021 - The Group invested in Yangtze Prosperity Development (HK) Limited through loan capitalization, which owns the entire equity interest in Jiangsu Hongmao Storage Co., Ltd[143] - Jiangsu Hongmao Storage Co., Ltd. is constructing and operating chemical storage and related facilities but had not commenced operations as of the reporting period end[143] Financial Institution Business The Group actively expands its asset management, insurance brokerage, and investment banking businesses, aiming to establish a cross-border investment platform between Asia and Africa, but the ongoing global pandemic has hindered full business development - Huahui Asset Management (Hong Kong) Limited holds Type 4 and Type 9 licenses from the Securities and Futures Commission[146] - Prudential Insurance Brokers Limited was acquired, authorized to operate long-term insurance brokerage business in Hong Kong[146] - Mauritius subsidiary Muhabura Capital Limited (MCL) was granted an investment banking license, but business has been slow due to pandemic-related travel restrictions[146][147] Loan Financing Services Loan financing business recorded a segment profit of HK$107 thousand for the period, with a loan portfolio of HK$2,815 thousand - Loan financing business recorded HK$107 thousand segment profit (2020: zero)[149] - As of September 30, 2021, the loan portfolio was HK$2,815 thousand[149] Other Investments Other investments contributed a segment profit of HK$888 thousand during the period - Other investments contributed segment profit of HK$888 thousand (2020: HK$21 thousand)[150] Financial Review The Group's total assets and equity attributable to owners both decreased, but the current ratio remained healthy. The Group was in a net cash position with a zero gearing ratio. The acquisition of Qianyang equity was completed after the reporting period - Total assets were HK$738,258 thousand, a 6.4% decrease from the previous period[153] - Equity attributable to owners of the Company was HK$614,542 thousand, a 13.4% decrease from March 31, 2021, primarily due to unrealized fair value losses on financial instruments[153] Liquidity and Financial Resources The Group's net current assets were HK$172,491 thousand, with a current ratio of approximately 3, indicating healthy liquidity - Current assets were HK$247,229 thousand, and current liabilities were HK$74,738 thousand[154] - The current ratio was approximately 3 (March 31, 2021: 5)[154] Gearing Ratio The Group was in a net cash position at the end of the reporting period, resulting in a zero gearing ratio - Bank balances and cash were HK$168,866 thousand, and bank and other borrowings were HK$72,689 thousand[155] - Due to being in a net cash position, the gearing ratio was zero[155] Material Acquisitions or Disposals and Future Plans for Material Investments There were no material acquisitions or disposals of subsidiaries, associates, and joint ventures during the period. Subsequent to the reporting period, the subscription of a 65% equity interest in Qianyang was completed - There were no material acquisitions or disposals of subsidiaries, associates, and joint ventures during the period[156] - Subsequent to the reporting period end, the subscription of a 65% equity interest in Qianyang was completed on October 11, 2021[156] Foreign Exchange Management The Group's monetary assets and liabilities are primarily denominated in HKD, KRW, RMB, USD, JPY, and GBP, and foreign exchange forward contracts and currency swaps are entered into for hedging purposes - Principal monetary assets and liabilities are denominated in HKD, KRW, RMB, USD, JPY, and GBP[157] - The Group enters into foreign exchange forward contracts and currency swaps for hedging purposes[157] Pledged Assets As of September 30, 2021, the Group pledged plant and equipment assets amounting to HK$22,813 thousand to a third party - The Group pledged plant and equipment assets amounting to HK$22,813 thousand to a third party[158] Contingent Liabilities As of September 30, 2021, the Group had no material contingent liabilities - The Group had no material contingent liabilities[161] Capital Commitments The Group's capital commitments amounted to HK$64,312 thousand, primarily for construction contracts related to the chemical storage business in China - Capital commitments amounted to HK$64,312 thousand for the construction of chemical storage and related facilities[162] Issued Securities As of September 30, 2021, the Company had 2,018,282,827 issued shares, with no changes in its capital structure during the period - A total of 2,018,282,827 shares were issued[163] - There were no changes in the Company's capital structure during the period[163] Interim Dividend The Board resolved not to recommend the payment of an interim dividend for the period - The Board resolved not to recommend the payment of an interim dividend for the period[164] Employees and Remuneration Policy The Group employed 66 employees, and its remuneration policy aims to attract, retain, and motivate high-quality talent, offering benefits such as discretionary bonuses, training, and provident funds - The Group employed a total of 66 employees (March 31, 2021: 45 employees)[165] - The remuneration policy aims to attract, retain, and motivate high-quality talent, offering discretionary bonuses, training, and provident funds[165] - No share options were granted during the period, and there were no outstanding share options[165] Outlook Facing challenges from the COVID-19 pandemic and geopolitical tensions, the Group's management maintains cautious optimism. Logistics bottlenecks are expected to ease in early 2022, benefiting commodity trading and metal recycling businesses. The recovery of financial intermediary businesses depends on travel reopening and relaxed quarantine requirements - Global pandemic and geopolitical tensions pose challenges, leading to a slowdown in the launch of several new business initiatives for the Group[168] - Cupral metal recycling plant construction was delayed by three months, with an estimated maximum annual production capacity of approximately 14,000 tonnes by the end of March 2022, producing a mix of copper and aluminum products[170] - Logistics bottlenecks are expected to ease in early 2022, benefiting commodity trading in Asia and commodity recycling in the UK[171] - The recovery of financial intermediary businesses will largely depend on the extent of travel reopening and the relaxation or removal of quarantine requirements in Hong Kong[171] - The recent acquisition of Qianyang is also expected to bring stronger revenue in the 2022 calendar year[171] Additional Information Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures As of September 30, 2021, Executive Director Mr. Cheng Man Chun held interests in the Company's shares, including 100,000,000 beneficially owned shares and 488,000,000 shares held through a controlled corporation Directors' Long Positions in the Company's Shares (As at September 30) | Name of Director | Capacity | Number of Shares Held | Approximate Percentage of the Company's Issued Share Capital | | :--------------- | :------------------------- | :-------------------- | :----------------------------------------------------------- | | Mr. Cheng Man Chun | Beneficial Owner | 100,000,000 | 4.95% | | | Interest in a Controlled Corporation | 488,000,000 | 24.18% | - Mr. Cheng Man Chun held 488,000,000 shares through his wholly-owned Champion Choice Holdings Limited[175] Share Option Scheme The Company adopted a new share option scheme on August 20, 2021, aiming to provide incentives to eligible persons. The total number of shares available for issue under the scheme is 201,828,282, representing approximately 10% of the issued share capital. No share options were granted or exercised during the period - The Company adopted a new share option scheme on August 20, 2021, replacing the expired old scheme[176] - The share option scheme aims to provide incentives or rewards to eligible persons who have contributed to the Company or its subsidiaries and/or investment entities[177] - The total number of shares available for issue under the share option scheme is 201,828,282 shares, representing approximately 10% of the Company's issued shares[179] - No share options were granted, cancelled, exercised, or lapsed during the period, and there were no outstanding share options[185] Substantial Shareholders' Interests and Short Positions Discloseable Under the SFO As of September 30, 2021, substantial shareholder Mr. Cheng Man Chun and his controlled corporation, Champion Choice Holdings Limited, held significant interests in the Company's shares Substantial Shareholders' Interests and Short Positions (As at September 30) | Name of Substantial Shareholder | Capacity | Number of Issued Shares Held | Approximate Percentage of the Company's Issued Shares | | :------------------------------ | :------------------------- | :--------------------------- | :---------------------------------------------------- | | Mr. Cheng | Beneficial Owner | 100,000,000 | 4.95% | | | Interest in a Controlled Corporation | 488,000,000 | 24.18% | | Champion Choice | Beneficial Owner | 488,000,000 | 24.18% | - Mr. Cheng Man Chun is deemed to be interested in 488,000,000 shares of the Company directly held by Champion Choice[188] Events After the Reporting Period Subsequent to the reporting period, the subscription of a 65% equity interest in Qianyang was completed on October 11, 2021, and its financial impact is currently being assessed - The subscription of a 65% equity interest in Qianyang was completed on October 11, 2021[191] - The Board is assessing the financial impact of the completion of the subscription on the Group's annual consolidated financial statements for the year ending March 31, 2022[191] Interim Dividend The Board resolved not to recommend the payment of an interim dividend for the period - The Board resolved not to recommend the payment of an interim dividend for the period[192] Purchase, Sale or Redemption of the Company's Listed Securities For the six months ended September 30, 2021, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[193] Corporate Governance The Company has consistently complied with the Corporate Governance Code in Appendix 14 of the Listing Rules, with a deviation where the roles of Chairman and Chief Executive Officer are held by the same person, an arrangement the Board believes enhances efficiency - The Company has consistently complied with the Corporate Governance Code, with a deviation from code provision A.2.1 (roles of Chairman and Chief Executive Officer should be separate)[194][195] - The Board believes that combining the roles of Chairman and Chief Executive Officer in one person allows for more efficient and effective planning and implementation of business strategies[195] Changes in Directors' Information Ms. Xu Wei was appointed as an Independent Non-executive Director of Coretronic Holdings Limited on December 6, 2021 - Ms. Xu Wei was appointed as an Independent Non-executive Director of Coretronic Holdings Limited (stock code: 2166) on December 6, 2021[198] Model Code for Securities Transactions by Directors The Company has adopted the Model Code set out in Appendix 10 of the Listing Rules, and all Directors confirmed compliance with the code throughout the period - The Company has adopted the Model Code set out in Appendix 10 of the Listing Rules as the code of conduct for Directors' securities transactions[199] - All Directors confirmed compliance with the standards set out in the Model Code throughout the period[199] Review of Interim Results The interim results for the six months ended September 30, 2021, are unaudited but have been reviewed by the auditor, Deloitte Touche Tohmatsu, and the Company's Audit Committee - The interim results are unaudited but have been reviewed by the auditor, Deloitte Touche Tohmatsu, in accordance with Hong Kong Standard on Review Engagements 2410[200] - The interim results have also been reviewed by the Company's Audit Committee[200] By Order of the Board This interim report was signed and released by Mr. Cheng Man Chun, Chairman and Managing Director, on behalf of the Board on November 29, 2021 - This report was signed by Mr. Cheng Man Chun, Chairman and Managing Director, on behalf of the Board[201] - The signing date was November 29, 2021[201]