新丝路文旅(00472) - 2021 - 中期财报

Interim Condensed Financial Statements Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income During the reporting period, the company's loss significantly narrowed, primarily due to a substantial increase in gross profit and reduced operating expenses, with exchange differences causing fluctuations in other comprehensive income | Indicator | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Revenue | 50,020 | 49,572 | | Gross profit | 25,080 | 2,180 | | Loss from operations | (11,467) | (46,079) | | Loss for the period | (14,647) | (49,290) | | Exchange differences on translation of overseas operations | 27,622 | (66,312) | | Total comprehensive income/(loss) for the period | 12,975 | (115,602) | - Loss for the period significantly decreased from HKD 49,290 thousand in 2020 to HKD 14,647 thousand in 2021, a 70.3% reduction[6] - Gross profit surged from HKD 2,180 thousand in 2020 to HKD 25,080 thousand in 2021, an increase of 1,050.5%[6] Interim Condensed Consolidated Statement of Financial Position As of June 30, 2021, the company's total assets and liabilities both increased, with a slight decrease in non-current assets and increases in both current assets and liabilities, while net current assets remained stable and total equity slightly rose | Indicator | June 30, 2021 (HKD thousands) | December 31, 2020 (HKD thousands) | | :--- | :--- | :--- | | Non-current assets | 1,499,846 | 1,512,572 | | Current assets | 3,089,510 | 2,858,398 | | Current liabilities | 2,344,533 | 2,133,573 | | Net current assets | 744,977 | 724,825 | | Total assets less current liabilities | 2,244,823 | 2,237,397 | | Total equity | 2,080,909 | 2,067,934 | - Total assets increased by 5.0% from HKD 4,370,970 thousand as of December 31, 2020, to HKD 4,589,356 thousand as of June 30, 2021[110] - Total liabilities increased by 8.9% from HKD 2,303,036 thousand as of December 31, 2020, to HKD 2,508,447 thousand as of June 30, 2021[110] Interim Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2021, total comprehensive income attributable to owners of the company was HKD 12,972 thousand, and to non-controlling interests was HKD 3 thousand, resulting in a total comprehensive income of HKD 12,975 thousand, a significant improvement from the prior period's loss | Indicator | June 30, 2021 (HKD thousands) | June 30, 2020 (HKD thousands) | | :--- | :--- | :--- | | Total comprehensive income attributable to owners of the Company | 12,972 | (98,675) | | Total comprehensive income attributable to non-controlling interests | 3 | (16,927) | | Total comprehensive income/(loss) for the period | 12,975 | (115,602) | Interim Condensed Consolidated Statement of Cash Flows During the reporting period, net cash used in operating activities significantly increased, net cash used in investing activities decreased, and net cash from financing activities declined, leading to a decrease in cash and cash equivalents at period-end | Indicator | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (301,798) | (160,492) | | Net cash used in investing activities | (2,573) | (7,595) | | Net cash from financing activities | 254,575 | 78,838 | | Net decrease in cash and cash equivalents | (49,796) | (89,249) | | Cash and cash equivalents at end of period | 167,116 | 172,128 | Notes to the Interim Condensed Financial Statements General Information The company is an exempted company incorporated in Bermuda with shares listed on the Hong Kong Stock Exchange, primarily engaged in integrated resorts and cultural tourism in Korea, real estate in Korea and Australia, wine production and distribution in China, and entertainment in Korea - The company is an investment holding company with businesses spanning integrated resorts and cultural tourism in Korea, real estate in Korea and Australia, wine production and distribution in China, and entertainment in Korea[34] Basis of Preparation and Principal Accounting Policies The unaudited interim condensed financial statements are prepared in accordance with Appendix 16 of the Listing Rules and HKAS 34, consistent with the accounting policies used in the 2020 annual financial statements, with no material impact from adopted amendments on financial position or performance - The interim financial statements are prepared in accordance with Appendix 16 of the Listing Rules and HKAS 34 issued by the Hong Kong Institute of Certified Public Accountants[35] - Accounting policies used are consistent with those in the 2020 financial statements, and adopted amendments have no material financial impact on the Group's financial position or performance[35] Revenue During the reporting period, the company's revenue primarily derived from wine production and distribution, with zero revenue from entertainment business, resulting in a slight increase in total revenue | Revenue Source | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Production and distribution of wine | 50,020 | 49,192 | | Entertainment business | - | 380 | | Total Revenue | 50,020 | 49,572 | Segment Information The company is organized into three reportable segments: real estate, integrated resorts and cultural tourism, wine production and distribution, and entertainment business, with segment revenue primarily from external customers and no inter-segment sales - The Group has three reportable segments: (i) development and operation of real estate, integrated resorts and cultural tourism business; (ii) production and distribution of wine; and (iii) entertainment business[40] - Segment revenue is derived from external customer revenue, with no inter-segment sales during these periods[44] Segment Revenue and Results This section details the revenue and results for each of the company's operating segments, highlighting the performance of real estate, wine, and entertainment businesses | Segment | 2021 Segment (Loss)/Profit (HKD thousands) | 2020 Segment (Loss)/Profit (HKD thousands) | | :--- | :--- | :--- | | Real estate, integrated resorts and cultural tourism | (9,615) | (10,347) | | Wine | 6,771 | (16,821) | | Entertainment business | (5,257) | (14,495) | | Loss before tax | (14,683) | (50,982) | - Wine business turned profitable, from a loss of HKD 16,821 thousand in 2020 to a profit of HKD 6,771 thousand in 2021[45] - Entertainment business loss significantly narrowed from HKD 14,495 thousand in 2020 to HKD 5,257 thousand in 2021[45] Segment Assets and Liabilities This section presents the assets and liabilities allocated to each reportable segment, providing insight into the capital structure and financial resources of each business area | Segment | June 30, 2021 Segment Assets (HKD thousands) | December 31, 2020 Segment Assets (HKD thousands) | | :--- | :--- | :--- | | Real estate, integrated resorts and cultural tourism | 3,650,495 | 3,396,529 | | Wine | 472,134 | 479,807 | | Entertainment business | 449,989 | 472,813 | | Total consolidated assets | 4,589,356 | 4,370,970 | | Total consolidated liabilities | 2,508,447 | 2,303,036 | - The real estate, integrated resorts and cultural tourism segment holds the largest assets and liabilities, both of which have increased[49] Geographical Information This section provides a geographical breakdown of the company's revenue from external customers and non-current assets, illustrating the distribution of its business activities across different regions | Region | 2021 External Customer Revenue (HKD thousands) | 2020 External Customer Revenue (HKD thousands) | | :--- | :--- | :--- | | China (including Hong Kong) | 50,020 | 49,192 | | Korea | - | 380 | | Australia | - | - | | Total | 50,020 | 49,572 | | Region | June 30, 2021 Non-current Assets (HKD thousands) | December 31, 2020 Non-current Assets (HKD thousands) | | :--- | :--- | :--- | | China (including Hong Kong) | 248,642 | 212,386 | | Korea | 1,236,094 | 1,283,198 | | Australia | 8,064 | 9,923 | | Total | 1,492,800 | 1,505,507 | - In 2021, all external customer revenue was generated from China (including Hong Kong)[53] - Korea holds the largest non-current assets, followed by China (including Hong Kong)[53] Other Income, Gains and Losses During the reporting period, total other income, gains, and losses significantly decreased, primarily due to a reduction in government grants | Item | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Government grants | 6,744 | 10,961 | | Bank interest income | 275 | 1,587 | | Service income | - | 853 | | Gain on disposal of property, plant and equipment | - | 678 | | Others | 1,059 | 506 | | Total | 8,078 | 14,585 | - Total other income, gains and losses decreased by 44.6%, mainly due to a 38.5% reduction in government grants[54][98] Loss from Operations During the reporting period, loss from operations significantly narrowed, primarily due to reductions in staff costs, inventory costs, and depreciation and amortization | Item | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Total staff costs | 17,190 | 21,281 | | Amortisation of intangible assets | - | 308 | | Depreciation of right-of-use assets | - | 3,948 | | Inventory costs recognised as expenses | 19,333 | 39,356 | | Loss/(gain) on disposal of property, plant and equipment | 9 | (678) | | Depreciation of property, plant and equipment | 6,110 | - | - Loss from operations narrowed by 75.1% from HKD 46,079 thousand in 2020 to HKD 11,467 thousand in 2021[6] - Total staff costs and inventory costs recognized as expenses both decreased[58] Income Tax Credit During the reporting period, the company received an income tax credit, mainly from deferred tax credits, while China corporate income tax was negative | Item | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Current tax – China corporate income tax | (190) | (270) | | Deferred tax credit | 226 | 1,962 | | Total Income Tax Credit | 36 | 1,692 | - Total income tax credit significantly decreased from HKD 1,692 thousand in 2020 to HKD 36 thousand in 2021[59] - The tax rate for the company's Chinese subsidiaries was 25% for both periods[59] Loss Per Share During the reporting period, basic and diluted loss per share attributable to owners of the company significantly decreased, and with no potential dilutive ordinary shares, basic and diluted losses per share were identical | Indicator | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Loss for the period attributable to owners of the Company | (11,793) | (43,489) | | Weighted average number of shares for basic and diluted loss per share | 3,207,591,674 | 3,207,591,674 | | Basic and diluted loss per share | (0.37) HK cents | (1.36) HK cents | - Loss per share attributable to owners of the Company decreased from (1.36) HK cents in 2020 to (0.37) HK cents in 2021[6] - There were no potential dilutive ordinary shares during the period, so diluted loss per share was the same as basic loss per share[64] Property, Plant and Equipment During the reporting period, the total cost of property, plant and equipment purchased by the company decreased, and a loss was incurred from the disposal of related assets | Item | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Total cost of property, plant and equipment purchased | 2,848 | 3,166 | | Loss/(gain) on disposal of property, plant and equipment | 9 | (678) | Properties Under Development As of June 30, 2021, the value of properties under development significantly increased, primarily due to an Australian property development project, which has been pledged as collateral for bank borrowings | Item | June 30, 2021 (HKD thousands) | December 31, 2020 (HKD thousands) | | :--- | :--- | :--- | | Properties under development (at cost) | 2,413,341 | 2,135,141 | - Properties under development refer to project costs, land acquisition costs, finance costs, and other initial infrastructure costs related to the Group's property development project in Australia[68] - Properties under development have been pledged as collateral for the Group's bank borrowings[68] Trade and Bills Receivables As of June 30, 2021, total trade and bills receivables slightly increased, but the provision for expected credit losses remained stable, with the company generally granting customers credit periods of 30 to 180 days | Item | June 30, 2021 (HKD thousands) | December 31, 2020 (HKD thousands) | | :--- | :--- | :--- | | Trade and bills receivables | 11,006 | 10,043 | | Receivables from entertainment business | 23,092 | 24,042 | | Less: Provision for expected credit losses | (25,712) | (25,736) | | Total | 8,386 | 8,349 | - The company generally grants trade customers credit periods of 30 to 180 days, and entertainment business receivables typically have a credit period of six months[69] Ageing Analysis of Trade and Bills Receivables This section provides an ageing analysis of trade and bills receivables, categorizing them by their outstanding duration to assess credit risk exposure | Ageing | December 31, 2020 (HKD thousands) | | :--- | :--- | | Within 30 days | 1,102 | | 30 to 60 days | – | | 60 to 90 days | 183 | | 90 to 180 days | 1,308 | | 180 to 365 days | 5,793 | | Total | 8,386 | - All trade and bills receivables are denominated in RMB[74] Receivables from Entertainment Business This section details the receivables specifically from the entertainment business, including their valuation and any impairment provisions - As of June 30, 2021, and December 31, 2020, all receivables from the entertainment business denominated in KRW were fully impaired[75] Trade Payables As of the end of the reporting period, trade payables decreased, with an average credit period of 90 days, non-interest bearing, and unsecured | Ageing | June 30, 2021 (HKD thousands) | December 31, 2020 (HKD thousands) | | :--- | :--- | :--- | | Within 90 days | 8,698 | 35,425 | | 90 to 180 days | 688 | 25,401 | | 180 to 360 days | 2,314 | 11,322 | | Over 360 days | 25,401 | 2,314 | | Total | 37,101 | 56,114 | - Total trade payables decreased from HKD 56,114 thousand as of December 31, 2020, to HKD 37,101 thousand as of June 30, 2021[76] - The average credit period for goods purchased is 90 days, and trade payables are non-interest bearing and unsecured[76] Share Capital As of the end of the reporting period, the company's authorized share capital and issued and fully paid share capital remained stable, with a par value of HKD 0.01 per share | Item | Number of Shares (thousands) | Par Value (HKD thousands) | | :--- | :--- | :--- | | Authorized share capital (ordinary shares of HKD 0.01 each) | 16,000,000 | 160,000 | | Issued and fully paid share capital (ordinary shares of HKD 0.01 each) | 3,207,592 | 32,076 | Related Party Transactions During the reporting period, the company engaged in goods sales transactions with related party Yunnan Jinliufu Trading Co., Ltd., and disclosed key management personnel compensation - The company conducted goods sales with Yunnan Jinliufu Trading Co., Ltd., whose major shareholder is the brother-in-law of the ultimate controlling shareholder[80] - Sales transactions were conducted on a cost-plus gross profit basis, qualifying as continuing connected transactions exempt under the Listing Rules[82] Transactions This section details specific transactions with related parties, including the nature and value of goods sold | Transacting Party | 2021 Sales of Goods (HKD thousands) | 2020 Sales of Goods (HKD thousands) | | :--- | :--- | :--- | | Yunnan Jinliufu Trading Co., Ltd. | 1,143 | 450 | - Sales of goods to Yunnan Jinliufu Trading Co., Ltd. increased[80] Key Management Personnel Compensation This section outlines the compensation provided to key management personnel, including salaries and other short-term benefits | Item | 2021 (HKD thousands) | 2020 (HKD thousands) | | :--- | :--- | :--- | | Salaries and other short-term benefits | 959 | 1,318 | - Key management personnel compensation and other short-term benefits decreased[88] Capital Commitments As of the end of the reporting period, the company's contracted but unprovided capital commitments primarily related to land acquisition, with a slight decrease in amount | Item | June 30, 2021 (HKD thousands) | December 31, 2020 (HKD thousands) | | :--- | :--- | :--- | | Contracted but not provided for: related to land acquisition | 10,290 | 10,695 | Fair Value Hierarchy The directors believe that the carrying amounts of financial assets and liabilities recorded at amortized cost approximate their fair values, with no financial instruments measured at fair value at period-end and no transfers between fair value hierarchies - The directors believe that the carrying amounts of financial assets and financial liabilities recorded at amortized cost approximate their fair values[91] - At the end of the reporting period, the Group had no financial instruments measured at fair value after initial recognition[91] - There were no transfers between fair value hierarchies during the period[91] Approval of Interim Condensed Financial Statements The Board of Directors approved and authorized for issue the interim condensed financial statements on August 25, 2021 - The Board of Directors approved and authorized for issue the interim condensed financial statements on August 25, 2021[92] Management Discussion and Analysis Financial Information During the reporting period, the company's revenue slightly increased, gross profit significantly improved, and loss substantially narrowed, while liquidity saw decreased cash and increased total borrowings due to real estate development loans, leading to a higher gearing ratio - Revenue slightly increased by 0.9% to approximately HKD 50.0 million, primarily contributed by the wine business[96] - Gross profit surged by 1,050.5% to approximately HKD 25.1 million, mainly due to improved product mix in the wine business[97] - Loss before tax decreased to approximately HKD 14.7 million, and loss attributable to owners of the Company decreased to approximately HKD 11.8 million[103][105] - Total borrowings increased by 14.5% to approximately HKD 2,152.3 million, mainly due to new real estate development loans of approximately HKD 265.1 million[109] - Gearing ratio increased to 103.4% (December 31, 2020: 90.9%)[110] Revenue This section discusses the company's revenue performance, detailing contributions from different business segments and factors influencing changes - Revenue for the period slightly increased by 0.9% to approximately HKD 50.0 million (2020: HKD 49.6 million)[96] - Wine business revenue increased by 1.68% to HKD 50.0 million due to China's economic recovery[96] - Entertainment business had no revenue during the period (2020: HKD 0.4 million) due to the impact of the COVID-19 pandemic in Korea[96] Gross Profit This section analyzes the company's gross profit, highlighting the significant increase and the factors contributing to improved profitability across business segments - The Group's gross profit surged by 1,050.5% to approximately HKD 25.1 million (2020: HKD 2.2 million)[97] - Wine business gross profit jumped by 277.5% to approximately HKD 27.2 million, with a gross profit margin of 54.4% (2020: 14.6%), primarily by improving revenue mix through increased sales of mid-to-high-end wine products[97] - Entertainment business gross loss decreased by 58.0% to approximately HKD 2.1 million due to cost control measures[97] Other Income This section reviews the company's other income, detailing the decrease and the primary reasons behind it, such as reduced government grants - Other income decreased by 44.6% to approximately HKD 8.1 million (2020: HKD 14.6 million)[98] - Government grants decreased by 38.5% to approximately HKD 6.7 million (2020: HKD 11.0 million)[98] Selling and Distribution Expenses This section examines the company's selling and distribution expenses, noting the decrease and attributing it to reduced promotional activities in the wine business - Selling and distribution expenses decreased by 8.2% to approximately HKD 18.3 million (2020: HKD 19.9 million), mainly due to reduced promotional expenses in the wine business[101] Administrative and Other Operating Expenses This section analyzes administrative and other operating expenses, highlighting the significant reduction achieved through cost-saving measures in the entertainment business - Administrative and other operating expenses decreased by 32.1% to approximately HKD 25.5 million (2020: HKD 37.5 million), mainly due to reduced operating expenses in the entertainment business after implementing various cost-saving measures[102] Loss Before Tax This section discusses the company's loss before tax, noting the significant reduction primarily driven by the wine business turning profitable - Loss before tax decreased to approximately HKD 14.7 million (2020: HKD 51.0 million), mainly due to the wine business turning profitable[103] Taxation This section details the company's taxation, including current income tax expenses and deferred tax credits - Taxation primarily includes current income tax expense of approximately HKD 190 thousand (2020: HKD 270 thousand)[104] - Deferred tax credit of approximately HKD 226 thousand (2020: HKD 2.0 million) was recognized for expected credit loss provisions[104] Loss Attributable to Owners of the Company This section reports the company's net loss and the portion attributable to its owners, showing a substantial reduction compared to the prior period - Loss after tax for the period decreased by 70.3% to approximately HKD 14.6 million (2020: HKD 49.3 million)[105] - Loss attributable to owners of the Company decreased to approximately HKD 11.8 million (2020: HKD 43.5 million)[105] Liquidity and Financial Resources This section assesses the company's liquidity and financial resources, noting the decrease in cash and increase in borrowings, while affirming sufficient resources for future obligations - Cash and cash equivalents decreased by 21.7% to approximately HKD 167.1 million (December 31, 2020: HKD 213.4 million)[106] - Total borrowings increased by 14.5% to approximately HKD 2,152.3 million (December 31, 2020: HKD 1,880.3 million), mainly due to new real estate development loans of approximately HKD 265.1 million[109] - The company is confident it has ample resources to meet its debt obligations and working capital needs for the foreseeable future[109] Balance Sheet Analysis This section provides an analysis of the company's balance sheet, detailing changes in total assets, total liabilities, gearing ratio, and current ratio - Total assets increased by 5.0% to approximately HKD 4,589.3 million (December 31, 2020: HKD 4,371.0 million)[110] - Total liabilities increased by 8.9% to approximately HKD 2,508.4 million (December 31, 2020: HKD 2,303.1 million)[110] - Gearing ratio increased to 103.4% (December 31, 2020: 90.9%) due to new loans[110] - Current ratio remained stable at 1.32 (December 31, 2020: 1.34)[110] Inventories This section reviews the company's inventory levels, noting a slight increase and changes in finished goods and inventory turnover for the wine business - Inventories slightly increased by 0.6% to approximately HKD 210.5 million (December 31, 2020: HKD 209.3 million)[112] - Finished goods increased by 34.0% to approximately HKD 39.5 million (December 31, 2020: HKD 29.5 million)[112] - Inventory turnover for the wine business increased to 270 days (December 31, 2020: 204 days)[112] Interim Dividend This section states the Board's decision regarding the payment of an interim dividend for the reporting period - The Board of Directors does not recommend the payment of any interim dividend for the period[113] Pledge of Assets This section details the company's assets pledged as collateral for bank financing and real estate development loans - Pledged land use rights, property, plant and equipment with a net book value of approximately HKD 23.4 million as collateral for general bank financing[116] - Pledged properties under development in Sydney, Australia, with a book value of approximately HKD 2,413.3 million to a financial institution for real estate development loans[116] Contingent Liabilities This section addresses the company's contingent liabilities, noting no significant items other than those disclosed in legal proceedings - Other than legal proceedings disclosures, the Group had no significant contingent liabilities as of June 30, 2021[117] Exchange Rate Fluctuation Risk This section discusses the company's exposure to exchange rate fluctuations and its approach to managing this risk - The Group's revenue, expenses, assets, and liabilities are denominated in HKD, RMB, KRW, CAD, and AUD[118] - Foreign currency exchange risk has a minor impact, and the Group believes there is no need to use financial instruments for hedging, but it will review financial management functions and closely monitor currency and interest rate risks periodically[118] Significant Acquisitions and Disposals This section confirms the absence of any significant acquisitions or disposals of subsidiaries, associates, or joint ventures during the reporting period - During the period, the Group had no significant matters regarding acquisitions and disposals of subsidiaries, associates, or joint ventures[118] Significant Investments This section states that the company had no significant investments representing 5% or more of its total assets at the end of the reporting period - As of June 30, 2021, the Group had no significant investments representing 5% or more of its total assets[119] Employee Information and Remuneration Policy This section provides details on the company's employee count and its remuneration policy, which is performance-based and reviewed annually - As of June 30, 2021, the Group employed 314 full-time employees (December 31, 2020: 381 employees)[120] - The Group's remuneration policy is performance-based for individual employees and reviewed annually[120] Litigation Updates The company faces multiple legal proceedings, including contract disputes and counterclaims between NSR Toronto and CIM defendants, and claims by plaintiffs against the company and NSR Toronto, with the Board deeming it too early to assess potential financial impact and thus making no provisions - NSR Toronto and CIM Development (Markham) LP and other project defendants are involved in contract disputes and counterclaims, including alleged breaches of contract and fiduciary duties[124] - CIM defendants are claiming CAD 50 million (approximately HKD 290 million) in damages from NSR Toronto[125] - Other plaintiffs have filed claims against the company, NSR Toronto, and its executives, seeking CAD 8 million (approximately HKD 47.7 million) in damages, including CAD 5 million for advisory fees related to the Group's 2019 real estate investment project sale[128] - The directors believe it is too early to assess the potential financial impact on the company, and therefore, no provisions have been made in the interim accounts for the revised counterclaim and the revised 2020 claims at this stage[132] Legal Proceedings of NSR Toronto Holdings Ltd. This section details the legal proceedings initiated by NSR Toronto Holdings Ltd. against CIM defendants, including claims for breach of contract and fiduciary duties - NSR Toronto filed a lawsuit against CIM defendants on May 30, 2019, seeking damages for losses due to breach of contract and fiduciary duties[124] - CIM defendants filed a counterclaim on August 16, 2019, denying liability, seeking dismissal of the lawsuit, and claiming lost profits related to the development project from NSR Toronto[124] - CIM defendants filed an amended counterclaim on June 16, 2020, seeking CAD 50 million (approximately HKD 290 million) in damages from NSR Toronto[125] Plaintiffs' Claims Against the Company, NSR Toronto, and NSR Toronto Executives This section outlines the claims made by plaintiffs against the company, NSR Toronto, and its executives, including allegations of breach of contract and conspiracy - Two Ontario companies filed a lawsuit against the company, NSR Toronto, and its executives on March 13, 2020[128] - Plaintiffs are seeking a total of CAD 8 million (approximately HKD 47.7 million) in punitive damages for alleged breach of contract, conspiracy, etc., including CAD 5 million (approximately HKD 29.8 million) for advisory fees related to the Group's 2019 real estate investment project sale[128] NSR Toronto's Claim Against Global King Inc. This section details NSR Toronto's lawsuit against Global King Inc. for obstructing the disposal of the Mackenzie Creek project, seeking damages and punitive damages - NSR Toronto filed a lawsuit against Global King Inc. on June 9, 2021, claiming CAD 7.2 million for obstructing the disposal of the Mackenzie Creek project, and CAD 0.1 million in punitive damages[132] Business Review and Outlook Economic Conditions In the first half of 2021, the global COVID-19 pandemic continued to impact economies, but China's economy recovered after controlling the outbreak, with domestic demand resuming, creating a divergent economic environment - In the first half of 2021, the COVID-19 pandemic continued to rage globally, posing significant problems for various countries[135] - As the pandemic was brought under control in China, the Chinese government eased certain restrictions in the first half, leading to a recovery in goods consumption and service usage, and a resurgence of domestic demand driven by China's economic growth[135] Operations Review During the reporting period, the wine business benefited from China's economic recovery with revenue growth, while the Korean entertainment business continued to be hampered by the pandemic, and hotel development projects faced challenges, with the Australian real estate project completed and expected for second-half delivery - Wine business revenue increased by 1.68% year-on-year, benefiting from the improving COVID-19 situation in China[136] - Korean entertainment business continues to be affected by the highly unstable COVID-19 situation in South Korea, with Jeju Island maintaining lockdown measures[137] - The hotel development project at Geumjeongsan Mountain also faced delays due to financing difficulties and strict COVID-19 prevention measures[137] - The Opera Residences project in Sydney, Australia, was completed in the first half of 2021, and government and company acceptance processes are finalized[138] - Due to COVID-19 lockdowns in Sydney in July-August, vacant possession delivery to owners can only proceed in the second half of the year[138] - Expected to generate significant revenue and investment returns for the Group after delivery to owners in the second half of 2021[138] Wine Business This section reviews the performance of the wine business, highlighting its revenue growth driven by China's economic recovery and future strategic focus - Wine business benefited from the improving COVID-19 prevention and control situation in China, with revenue increasing by 1.68% year-on-year[136] - In the coming year, the wine business is expected to account for a significant portion of the Group's total revenue, with continued focus on increasing marketing and revenue[136] South Korean Entertainment Business Operations This section discusses the challenges faced by the South Korean entertainment business due to the ongoing COVID-19 pandemic and its impact on operations and development projects - The Korean entertainment business continues to be affected by the highly unstable COVID-19 situation in South Korea, with Jeju Island maintaining lockdown measures[137] - The hotel development project at Geumjeongsan Mountain also faced delays due to financing difficulties and strict COVID-19 prevention measures[137] Real Estate Business This section provides an update on the real estate business, focusing on the completion and expected delivery of the Australian property project and its anticipated financial contribution - The Opera Residences project in Sydney, Australia, was completed in the first half of 2021, and government and company acceptance processes are finalized[138] - Due to COVID-19 lockdowns in Sydney in July-August, vacant possession delivery to owners can only proceed in the second half of the year[138] - Expected to generate significant revenue and investment returns for the Group after delivery to owners in the second half of 2021[138] Performance Report During the reporting period, the company's revenue slightly increased by 0.9%, recording a loss of HKD 14.6 million, with a loss attributable to shareholders of HKD 11.8 million and basic loss per share of HKD 0.37 cents, while total assets and net assets were HKD 4,589.4 million and HKD 2,080.9 million, respectively - Revenue for the period slightly increased by 0.9% to approximately HKD 50.0 million (2020: HKD 49.6 million)[141] - Recorded a loss of approximately HKD 14.6 million (2020: loss of HKD 49.3 million)[141] - Loss attributable to shareholders was HKD 11.8 million (2020: loss of HKD 43.5 million); basic loss per share was 0.37 HK cents (2020: loss of 1.36 HK cents)[141] - As of June 30, 2021, the Group's total assets and net assets were approximately HKD 4,589.4 million and HKD 2,080.9 million, respectively[141] Outlook Looking ahead, despite the pandemic's impact, with vaccine rollout and consumer confidence recovery, the company will prudently utilize project proceeds, optimize strategic plans and resource allocation, and refine investment layouts to deliver substantial returns to shareholders - With the approval and phased rollout of vaccines in 2021, consumer confidence in most countries is expected to further recover[142] - The Group believes that under these circumstances, it needs to prudently utilize funds repatriated from projects to formulate better strategic plans, resource allocation, and refine investment layouts to provide substantial and attractive investment returns to shareholders[142] Events After the Reporting Period No events or circumstances have occurred after the reporting period that have had or may have a significant impact on the company's business, performance, or financial condition - No events or circumstances have occurred after the reporting period that have had or may have a significant impact on the Group's business, performance, or financial condition[143] Other Information Disclosure of Interests This section details the interests and short positions of directors, chief executives, and substantial shareholders in the company's shares and underlying shares - Directors and chief executives of the company held interests and short positions in the shares, underlying shares, and debentures of the company or its associated corporations as recorded in the company's register[145] - Substantial shareholders (other than directors or chief executives of the company) held or were deemed to hold interests or short positions in the company's shares and underlying shares required to be disclosed to the company and the Stock Exchange under Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance[152] Directors' and Chief Executives' Interests This section provides a table of interests held by directors and chief executives in the company's shares and related shares, including those under share options | Director Name | Nature of Interest | Share Interest | Relevant Share Interest under Share Options | Total Interest | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Fu Jun | Beneficial owner | - | 7,850,400 | 7,850,400 | 0.24% | | Mr. Hang Guanyu | Beneficial owner | - | 7,850,400 | 7,850,400 | 0.24% | | Mr. Jian Caoming | Beneficial owner | - | 7,850,400 | 7,850,400 | 0.24% | - Mr. Fu Jun holds a 3.36% interest in the registered capital of Changshi Investment Co., Ltd. in RMB[146] Substantial Shareholders' Interests This section lists the interests of substantial shareholders in the company's shares and underlying shares, including those held through controlled corporations | Shareholder Name/Entity | Nature of Interest | Number of Shares/Underlying Shares Held | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Xinhua Lian International Land Co., Ltd. | Beneficial owner | 1,757,450,743 | 54.79% | | Xinhua Lian Cultural Tourism Development Co., Ltd. | Controlled corporation | 1,757,450,743 | 54.79% | | Xinhua Lian International Investment Co., Ltd. | Beneficial owner | 215,988,336 | 6.73% | | Xinhua Lian Industrial Investment Co., Ltd. | Controlled corporation | 215,988,336 | 6.73% | | Xinhua Lian Holdings Co., Ltd. | Controlled corporation | 1,973,439,079 | 61.52% | | Mr. Fu Jun | Controlled corporation | 1,973,439,079 | 61.52% | | Mr. Fu Jun | Beneficial owner | 10,000,000 | 0.31% | | Changshi Investment Co., Ltd. | Controlled corporation | 1,973,439,079 | 61.52% | | Ms. Xiao Wenhui | Controlled corporation | 1,973,439,079 | 61.52% | | Ms. Xiao Wenhui | Beneficial owner | 6,010,000 | 0.19% | - Xinhua Lian Holdings Co., Ltd. and its controlled corporations are the largest shareholders, collectively holding 1,973,439,079 shares, representing 61.52% of the issued share capital[152] Share Option Scheme The company's share option scheme adopted in 2012 saw no new grants or exercises during the reporting period, but some options lapsed, resulting in a slight decrease in total outstanding options at period-end | Participant Name and Category | Grant Date | Exercise Period | Exercise Price Per Share (HKD) | Balance as at January 1, 2021 | Granted During Period | Exercised During Period | Cancelled During Period | Lapsed During Period | Balance as at June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Directors (Mr. Fu Jun, Mr. Hang Guanyu, Mr. Jian Caoming) | 04/07/2016 | 04/07/2016 to 03/07/2026 | 2.0381 | 7,850,400 (each) | - | - | - | - | 7,850,400 (each) | | Other Eligible Participants | 04/07/2016 | 04/07/2016 to 03/07/2026 | 2.0381 | 67,709,700 | - | - | - | (1,962,600) | 65,747,100 | | Ms. Xiao Wenhui | 31/03/2017 | 31/03/2017 to 30/03/2027 | 2.0000 | 3,000,000 | - | - | - | - | 3,000,000 | | Mr. Fu Jun | 31/03/2017 | 31/03/2017 to 30/03/2027 | 2.0000 | 10,000,000 | - | - | - | - | 10,000,000 | | Total | | | | 104,260,900 | - | - | - | (1,962,600) | 102,298,300 | - The company adopted the share option scheme on August 23, 2012, valid until August 22, 2022[161] - No share options were granted or exercised during the period, but 1,962,600 share options lapsed[162] - All share options have no vesting period or vesting conditions[162] Purchase, Sale or Redemption of the Company's Listed Securities During the reporting period, 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 during the period[165] Corporate Governance The company is committed to maintaining high standards of corporate governance and complies with the Corporate Governance Code in Appendix 14 of the Listing Rules, with deviations noted for the Chairman also serving as CEO and an independent non-executive director's absence from the AGM - The company is committed to maintaining high standards of corporate governance and complies with the Corporate Governance Code set out in Appendix 14 of the Listing Rules[165] - Chairman Mr. Ma Chenshan also holds the position of Chief Executive Officer, which deviates from Code Provision A.2.1[165] - Independent Non-executive Director Mr. Cao Kuangyu was unable to attend the Annual General Meeting held on June 9, 2021, due to other official engagements, which deviates from Code Provision A.6.7[165] Standard Code for Securities Transactions by Directors The company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules, and all directors confirmed compliance throughout the reporting period - The company has adopted the Standard Code set out in Appendix 10 of the Listing Rules[166] - All directors confirmed compliance with the required standards of the Standard Code throughout the period[166] Audit Committee The Audit Committee, comprising three independent non-executive directors, has reviewed the Group's unaudited interim condensed financial information and discussed accounting principles and financial reporting matters with management - The Audit Committee comprises three independent non-executive directors: Mr. Ding Lianghui (Chairman), Mr. Xie Guanghan, and Mr. Cao Xiyu[168] - The Audit Committee has reviewed the Group's unaudited interim condensed financial information for the period[168] - The Audit Committee has reviewed the accounting principles and practices adopted by the Group and financial reporting matters with management[168]