现代健康科技(00919) - 2021 - 中期财报

Management Discussion and Analysis Business Review The Group's beauty, slimming, and healthcare service revenue declined in Hong Kong due to trade war and COVID-19, with mixed results in Mainland China and Singapore - Hong Kong retail sales plummeted by 30% in the first nine months of 2020 compared to the same period in 2019[5] - The Group currently operates 34 beauty and spa service centers, with total floor area decreasing by 8.9% compared to September 30, 2019[5] Regional Business Revenue Changes (Six Months Ended September 30, 2020) | Region | Service Revenue (HKD) | Year-on-Year Change | Prepaid Beauty Package Revenue (HKD) | Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | | Hong Kong | 185,502,000 | -22.6% | 127,658,000 | -46.8% | | Mainland China | 6,030,000 | -0.02% | 6,276,000 | +15.8% | | Singapore | 17,915,000 | -28.7% | 12,089,000 | -47.9% | Financial Review Group revenue decreased by 24.5% to HKD 218 million due to economic recession, yet net profit surged to HKD 65.938 million with basic EPS at HKD 0.0728, despite no interim dividend Revenue Breakdown (Six Months Ended September 30) | Sales Mix | 2020 (HKD thousands) | 2020 (% of Revenue) | 2019 (HKD thousands) | 2019 (% of Revenue) | Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Beauty and Facial Treatments | 156,469 | 71.7% | 204,860 | 70.9% | –23.6% | | Slimming | 41,374 | 19.0% | 50,981 | 17.6% | –18.8% | | Spa Baths and Massages | 11,604 | 5.3% | 15,079 | 5.2% | –23.0% | | Beauty and Healthcare Services (Total) | 209,447 | 96.0% | 270,920 | 93.7% | –22.7% | | Sale of Skincare and Healthcare Products | 8,781 | 4.0% | 18,301 | 6.3% | –52.0% | | Total | 218,228 | 100% | 289,221 | 100% | –24.5% | - Employee benefits expenses decreased by 46.1% to HKD 88.54 million, and headcount decreased by 10.9% to 1,051 employees, primarily due to cost-efficiency initiatives[13] - Net profit was approximately HKD 65.938 million, a significant increase from HKD 5.474 million in the same period last year[20] - Basic earnings per share were HKD 0.0728, compared to HKD 0.0059 in the same period last year[18] - The Board did not approve the payment of an interim dividend for the six months ended September 30, 2020[20] Liquidity, Capital Structure, and Treasury Policy The Group maintains a robust financial position with HKD 220 million in total equity and HKD 210 million in cash, no bank borrowings, and significantly reduced capital expenditure - As of September 30, 2020, total equity was HKD 220.084 million[21] - Cash and bank balances were HKD 210.229 million, an increase from March 31, 2020[21] - Total capital expenditure was approximately HKD 0.325 million, a significant decrease from HKD 16.623 million in the same period last year[21] - Pledged bank deposits amounted to HKD 54.309 million, securing bank credit for subsidiaries[21] - The Group has no material contingent liabilities[21] Human Resources and Training Total employee benefits expenses decreased by 46.1% for 1,051 employees, with ongoing professional training and a merit-based remuneration policy to attract and retain talent - Total employee benefits expenses were HKD 88.54 million, a 46.1% decrease from the same period last year[21] - As of September 30, 2020, 1,051 employees were employed, including frontline service center staff in Hong Kong, Mainland China, and Singapore[21] - Regular training is provided to employees on the latest beauty technologies, service skills, and product knowledge[21] - Remuneration policies are regularly reviewed based on legal framework, market conditions, and employee performance[21] Corporate Social Responsibility The Group prioritizes service and product safety, operates an academy for professional training, and implements environmental policies to reduce resource consumption in service centers - The Group maintains strict product quality standards, with internationally recognized product ingredients and packaging hygiene, and advanced equipment passing multiple safety tests[24] - The International Academy of Beauty Experts was established in 2002 to cultivate skilled professionals and offer training or further education opportunities to employees[25] - The Group has specific policies to minimize air conditioning and water usage in service centers, supporting environmental protection[25] Outlook Facing a challenging 2020, the Group will enhance operational efficiency, reduce costs, cautiously expand its network, optimize product sourcing, and develop employment agency services as a new growth driver - 2020 presented significant challenges for the beauty industry due to a weak economic outlook, US-China trade friction, and the COVID-19 pandemic[25] - Stores in Hong Kong and Singapore were temporarily closed due to pandemic control measures, and the Group received government subsidies to mitigate anticipated losses[25] - The Group will focus on improving operational efficiency, reducing rental expenses, optimizing workflows, and adjusting business strategies to achieve a turnaround[25] - Developing employment agency services has the potential to become a new growth driver for the future[25] - Looking ahead, the Group will proceed cautiously with new store openings, focus on enhancing the performance of its store network, and optimize its skincare product sourcing strategy[25] Subsequent Events The Group will closely monitor the ongoing and uncertain COVID-19 pandemic's impact on operations and financial performance, making announcements as appropriate - The COVID-19 pandemic continues with uncertain developments, and its impact on the Group's operations and financial performance remains undetermined[25] - The Group will closely monitor the pandemic's development, further assess its impact, and make announcements as appropriate[25] Company Information This section provides essential company details, including board composition, key personnel, registered offices, auditor, stock code, and investor relations contacts - Board members include Dr. Tsang Yuk, Chairman, along with several executive and independent non-executive directors[26] - The auditor is KPMG[26] - The stock code is 919[26] - The company website is www.modernhealthcaretech.com[26](index=26&type=chunk) Corporate Governance and Other Information This section details the Group's corporate governance practices, including directors' and major shareholders' interests, securities trading, and the structure and responsibilities of board committees Directors' and Chief Executives' Interests and Short Positions in Shares, Underlying Shares, and Debentures As of September 30, 2020, Dr. Tsang Yuk held 74.88% of the Company's issued share capital through a trust, with no short positions held by directors or chief executives Directors' and Chief Executives' Long Positions in Shares (As of September 30, 2020) | Name | Capacity in which Interests are Held | Share Interest | Total Interest | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | | Dr. Tsang Yuk | Founder of a discretionary trust | 677,247,942 | 677,247,942 | 74.88% | | Dr. Tsang Yuk | Spouse's interest | 650,000 | 650,000 | 0.07% | | Mr. Yip Kai Wing | Beneficial owner | 185,000 | 185,000 | 0.02% | | Ms. Yeung Sze Man | Beneficial owner | 172,000 | 172,000 | 0.02% | - Except as disclosed, no directors or chief executives held any interests or short positions in the shares, underlying shares, or debentures of the Company or its associated corporations[31] Substantial Shareholders' and Other Persons' Long Positions in the Company's Shares and Underlying Shares As of September 30, 2020, Dr. Tsang Yuk, her spouse, and controlled entities collectively held 74.88% of the Company's issued share capital Substantial Shareholders' and Other Persons' Long Positions in Shares (As of September 30, 2020) | Name/Company Name | Capacity in which Interests are Held | Share Interest | Total Interest | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | | Dr. Tsang Yuk | Founder of a discretionary trust | 677,247,942 | 677,247,942 | 74.88% | | Dr. Lee Sau Yee | Beneficial owner | 650,000 | 650,000 | 0.07% | | TMF (Cayman) Ltd. | Trustee (other than a passive trustee) | 677,247,942 | 677,247,942 | 74.88% | | Kelday International Limited | Nominee of another person (other than a passive trustee) | 677,247,942 | 677,247,942 | 74.88% | | Allied Chance Management Limited | Interest in controlled corporation | 677,247,942 | 677,247,942 | 74.88% | | Allied Wealth Limited | Beneficial owner | 209,247,942 | 209,247,942 | 23.13% | | Silver Compass Holdings Corp. | Beneficial owner | 367,200,000 | 367,200,000 | 40.60% | | Silver Hendon Enterprises Corp. | Beneficial owner | 100,800,000 | 100,800,000 | 11.14% | - Dr. Tsang Yuk is the spouse of Dr. Lee Sau Yee and is deemed to have an interest in the shares that Dr. Lee Sau Yee is deemed or taken to have an interest in under the Securities and Futures Ordinance[35] Purchase, Sale, or Redemption of the Company's Listed Securities Neither the Company nor its subsidiaries redeemed, purchased, or sold any listed securities during the review period - Neither the Company nor any of its subsidiaries redeemed, purchased, or sold any of the Company's listed securities during the review period[39] Corporate Governance Practices The Company adheres to the Corporate Governance Code, with deviations in Chairman/CEO roles and AGM attendance mitigated by collective decision-making and clear duty segregation - The Company has adopted the Corporate Governance Code set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[39] - Dr. Tsang Yuk serves as both Chairman and Chief Executive Officer, deviating from Code Provision A.2.1[39] - Dr. Tsang Yuk, the Chairman of the Board, did not attend the Company's Annual General Meeting held on August 28, 2020, due to personal reasons, deviating from Code Provision E.1.2[39] Standard Code for Securities Transactions by Directors All directors confirmed compliance with the Standard Code for Securities Transactions by Directors of Listed Issuers during the review period, with no non-compliance - All directors confirmed compliance with the Standard Code for Securities Transactions by Directors of Listed Issuers during the review period, with no non-compliance identified[39] Board Committees The Board has established Remuneration, Nomination, and Audit Committees, all with robust terms of reference and a strong independent non-executive director presence to ensure independence and effectiveness - The Board has established Remuneration, Nomination, and Audit Committees[39] - All committees have the authority to appoint external advisors or experts[39] - All members of the Audit Committee are independent non-executive directors, and the Nomination and Remuneration Committees have a majority of independent non-executive directors[39] Remuneration Committee Composed of three independent non-executive directors and one executive director, the Remuneration Committee reviews and determines compensation for directors and senior management - The Remuneration Committee comprises Dr. Wong Man Yin (Chairman, Independent Non-executive Director), Ms. Liu Mei Ling (Independent Non-executive Director), Mr. Hong Po Kui (Independent Non-executive Director), and Dr. Tsang Yuk (Executive Director)[41] - Its responsibilities include reviewing and determining the terms of remuneration packages, bonuses, and other benefits payable to directors and senior management in accordance with established policies[41] Nomination Committee Composed of an executive director (Chairman) and three independent non-executive directors, the Nomination Committee advises the Board on director appointments, composition, independence, and succession - The Nomination Committee comprises Dr. Tsang Yuk (Chairman, Executive Director), Ms. Liu Mei Ling (Independent Non-executive Director), Dr. Wong Man Yin (Independent Non-executive Director), and Mr. Hong Po Kui (Independent Non-executive Director)[41] - Its responsibilities include making recommendations to the Board on director appointments, board composition assessment, independent non-executive director independence assessment, and board succession planning[41] Audit Committee Composed of three independent non-executive directors with professional qualifications, the Audit Committee reviews financial reporting, internal controls, and corporate governance, approving interim results - The Audit Committee comprises Ms. Liu Mei Ling (Chairman, Independent Non-executive Director), Dr. Wong Man Yin (Independent Non-executive Director), and Mr. Hong Po Kui (Independent Non-executive Director)[42] - All Audit Committee members possess the appropriate professional qualifications, accounting, or relevant financial management expertise as required by the Listing Rules[42] - The Audit Committee reviews the Group's financial reporting, internal controls, and corporate governance matters, and reviewed and approved the interim results prior to Board approval[42] Review Report KPMG reviewed this interim financial report under HKSRE 2410, finding no material non-compliance with HKAS 34, despite a scope less than an audit - This interim financial report has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[44] - Based on the review, the auditor has not noted anything that causes them to believe the interim financial report is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[45] Consolidated Statement of Profit or Loss Profit for the period surged to HKD 65,938 thousand (2019: HKD 5,474 thousand), driven by increased other income and operating profit, despite a 24.5% revenue decrease Key Data from Consolidated Statement of Profit or Loss (Six Months Ended September 30) | Indicator | 2020 (HKD thousands) | 2019 (HKD thousands) | | :--- | :--- | :--- | | Revenue | 218,228 | 289,221 | | Other Income | 48,689 | 3,675 | | Employee Benefits Expenses | (88,540) | (164,344) | | Depreciation and Amortization | (58,586) | (33,101) | | Operating Profit | 75,577 | 7,248 | | Profit Before Tax | 70,581 | 6,662 | | Income Tax Expense | (4,643) | (1,188) | | Profit for the Period | 65,938 | 5,474 | | Basic Earnings Per Share (HK cents) | 7.28 | 0.59 | | Diluted Earnings Per Share (HK cents) | 7.28 | 0.59 | - Profit for the period was HKD 65,938 thousand, a significant increase from HKD 5,474 thousand in the same period last year[48] - Operating profit was HKD 75,577 thousand, a substantial increase from HKD 7,248 thousand in the same period last year[48] Consolidated Statement of Profit or Loss and Other Comprehensive Income Total comprehensive income for the period significantly increased to HKD 67,974 thousand, driven by higher profit and a positive exchange difference from foreign operations Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income (Six Months Ended September 30) | Indicator | 2020 (HKD thousands) | 2019 (HKD thousands) | | :--- | :--- | :--- | | Profit for the Period | 65,938 | 5,474 | | Exchange Difference on Translation of Foreign Operations | 2,036 | (705) | | Total Comprehensive Income for the Period | 67,974 | 4,769 | - Total comprehensive income for the period was HKD 67,974 thousand, a significant increase from HKD 4,769 thousand in the same period last year[53] - Exchange difference on translation of foreign operations turned from a loss of HKD 705 thousand in 2019 to a gain of HKD 2,036 thousand in 2020[53] Consolidated Statement of Financial Position As of September 30, 2020, net assets increased to HKD 220,084 thousand, driven by higher property, plant, and equipment, significant cash growth, and improved net current assets Key Data from Consolidated Statement of Financial Position (As of September 30, 2020) | Indicator | September 30, 2020 (HKD thousands) | March 31, 2020 (HKD thousands) | | :--- | :--- | :--- | | Property, Plant and Equipment | 172,458 | 144,374 | | Investment Properties | 11,507 | 13,920 | | Cash and Bank Balances | 210,229 | 174,779 | | Trade and Other Receivables, Deposits and Prepayments | 183,353 | 188,081 | | Deferred Revenue (Current Liabilities) | 239,155 | 301,822 | | Lease Liabilities (Current) | 70,090 | 48,602 | | Lease Liabilities (Non-current) | 66,920 | 32,281 | | Net Assets | 220,084 | 152,110 | - Net assets increased to HKD 220,084 thousand, a significant growth from HKD 152,110 thousand as of March 31, 2020[63] - Net current assets increased from HKD 10,127 thousand as of March 31, 2020, to HKD 83,875 thousand[60] Consolidated Statement of Changes in Equity Total equity increased from HKD 152,110 thousand to HKD 220,084 thousand, primarily due to HKD 65,817 thousand in profit and HKD 2,036 thousand in foreign exchange gains Key Data from Consolidated Statement of Changes in Equity (As of September 30, 2020) | Indicator | Share Capital (HKD thousands) | Share Premium (HKD thousands) | Merger Reserve (HKD thousands) | Exchange Reserve (HKD thousands) | Property Revaluation Reserve (HKD thousands) | Retained Earnings (HKD thousands) | Total (HKD thousands) | Non-controlling Interests (HKD thousands) | Total Equity (HKD thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance at March 31, 2020 and April 1, 2020 | 90,448 | 318,791 | (373,253) | (3,618) | 3,552 | 110,873 | 146,793 | 5,317 | 152,110 | | Profit for the Period | – | – | – | – | – | 65,817 | 65,817 | 121 | 65,938 | | Exchange Difference on Translation of Foreign Operations | – | – | – | 2,036 | – | – | 2,036 | – | 2,036 | | Balance at September 30, 2020 | 90,448 | 318,791 | (373,253) | (1,582) | 3,552 | 176,690 | 214,646 | 5,438 | 220,084 | - Total equity increased from HKD 152,110 thousand as of March 31, 2020, to HKD 220,084 thousand as of September 30, 2020[66] - Profit for the period attributable to equity holders of the Company was HKD 65,817 thousand[66] Condensed Consolidated Statement of Cash Flows Net cash from operating activities increased to HKD 70,757 thousand, while net cash used in investing activities significantly decreased, resulting in HKD 210,229 thousand in cash and cash equivalents at period-end Key Data from Condensed Consolidated Statement of Cash Flows (Six Months Ended September 30) | Indicator | 2020 (HKD thousands) | 2019 (HKD thousands) | | :--- | :--- | :--- | | Net Cash From Operating Activities | 70,757 | 43,810 | | Net Cash Used In Investing Activities | (748) | (16,454) | | Net Cash Used In Financing Activities | (35,918) | (25,926) | | Net Increase in Cash and Cash Equivalents | 34,091 | 1,430 | | Cash and Cash Equivalents at End of Period | 210,229 | 183,294 | - Net cash from operating activities was HKD 70,757 thousand, an increase from HKD 43,810 thousand in the same period last year[68] - Net cash used in investing activities significantly decreased to HKD 748 thousand, primarily due to reduced purchases of property, plant, and equipment[68] - Cash and cash equivalents at the end of the period were HKD 210,229 thousand[68] Notes to the Unaudited Interim Financial Report This section provides detailed notes to the unaudited interim financial report, covering general information, basis of preparation, accounting policy changes, segment information, revenue, other income, profit before tax, income tax, earnings per share, property, plant and equipment, trade and other receivables, cash and bank balances, trade and other payables, deferred revenue, share capital, reserves and dividends, commitments, contingent liabilities, and significant related party transactions 1 General Information Modern Healthcare Technology Holdings Limited, listed on the Stock Exchange (Stock Code: 919), primarily offers beauty and healthcare services and products, with Dr. Tsang Yuk as the ultimate controlling party - The Company's shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited under stock code 919[71] - The Group's principal activities are the provision of beauty and healthcare services and the sale of skincare and healthcare products[71] - Dr. Tsang Yuk is the ultimate controlling party of the Company[71] 2 Basis of Preparation This unaudited interim financial report, authorized on November 27, 2020, is prepared under Listing Rules and HKAS 34, reviewed by KPMG, with comparative data from unqualified annual statements - This interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and in compliance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the HKICPA[72] - This interim financial report is unaudited but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[72] - The statutory financial statements for the year ended March 31, 2020, received an unqualified opinion from the auditor[73] 3 Changes in Accounting Policies The Group early adopted amendments to HKFRS 3 (Definition of a Business) and HKFRS 16 (Covid-19 Related Rent Concessions) from the year ended March 31, 2020 - The Group early adopted amendments to HKFRS 3, Definition of a Business, and HKFRS 16, Covid-19 Related Rent Concessions, from the year ended March 31, 2020[75] 4 Segment Information The Group operates in two reportable segments: beauty and healthcare services, and skincare and healthcare products, with segment profit excluding certain corporate items - The Group's two reportable segments are beauty and healthcare services, and skincare and healthcare products[75] - Segment profit excludes other income, interest income, fair value changes of investment properties, unallocated costs, and income tax expense[76] 4(a) Reportable Segment Information For the six months ended September 30, 2020, beauty and healthcare services generated HKD 209,447 thousand in revenue and HKD 70,315 thousand in segment profit Reportable Segment Revenue and Profit (Six Months Ended September 30) | Segment | 2020 Revenue (HKD thousands) | 2019 Revenue (HKD thousands) | 2020 Segment Profit (HKD thousands) | 2019 Segment Profit (HKD thousands) | | :--- | :--- | :--- | :--- | :--- | | Beauty and Healthcare Services | 209,447 | 270,920 | 70,315 | 7,201 | | Skincare and Healthcare Products | 8,781 | 18,301 | 5,417 | 9,211 | | Total | 218,228 | 289,221 | 75,732 | 16,412 | 4(b) Reconciliation of Reportable Segment Profit or Loss This section reconciles reportable segment profit to consolidated profit for the period, detailing the impact of other income, fair value changes, unallocated costs, and income tax Reconciliation of Reportable Segment Profit to Consolidated Profit (Six Months Ended September 30) | Indicator | 2020 (HKD thousands) | 2019 (HKD thousands) | | :--- | :--- | :--- | | Reportable Segment Profit | 75,732 | 16,412 | | Other Income | 5,528 | 3,675 | | Interest Income | 554 | 656 | | Fair Value Change of Investment Properties | (2,413) | 178 | | Net Loss on Disposal of a Subsidiary | (591) | – | | Unallocated Costs | (8,229) | (14,259) | | Income Tax Expense | (4,643) | (1,188) | | Consolidated Profit for the Period | 65,938 | 5,474 | 5 Revenue Total revenue for the six months ended September 30, 2020, was HKD 218,228 thousand, mainly from beauty and healthcare services and product sales Revenue Categories (Six Months Ended September 30) | Revenue Category | 2020 (HKD thousands) | 2019 (HKD thousands) | | :--- | :--- | :--- | | Revenue from providing beauty and healthcare services and recognized from expired prepaid beauty packages | 209,447 | 270,920 | | Sale of skincare and healthcare products | 8,781 | 18,301 | | Total | 218,228 | 289,221 | 6 Other Income Other income surged to HKD 48,689 thousand (2019: HKD 3,675 thousand), mainly driven by HKD 43,946 thousand in government subsidies and HKD 3,180 thousand in COVID-19 rent concessions Other Income Details (Six Months Ended September 30) | Income Category | 2020 (HKD thousands) | 2019 (HKD thousands) | | :--- | :--- | :--- | | Government Subsidies | 43,946 | – | | COVID-19 Related Rent Concessions Received | 3,180 | – | | Income from Providing Domestic Helper Placement Services | 773 | 2,462 | | Net Gain on Disposal of Property, Plant and Equipment | – | 500 | | Rental Income | – | 423 | | Others | 790 | 290 | | Total | 48,689 | 3,675 | - Government subsidies amounted to HKD 43,946 thousand, primarily for financial support to businesses during the COVID-19 pandemic[84] 7 Profit Before Tax Profit before tax is calculated after deducting directors' emoluments, depreciation, amortization, foreign exchange losses, and lease liability interest, with some items decreasing and others increasing Deductions from Profit Before Tax (Six Months Ended September 30) | Item | 2020 (HKD thousands) | 2019 (HKD thousands) | | :--- | :--- | :--- | | Directors' Emoluments | 4,083 | 6,196 | | Depreciation – Owned Property, Plant and Equipment | 18,266 | 11,022 | | Depreciation – Right-of-Use Assets | 40,320 | 22,079 | | Foreign Exchange Loss, Net | 115 | 49 | | Finance Costs – Interest on Lease Liabilities | 2,546 | 1,420 | 8 Income Tax Expense Income tax expense was HKD 4,643 thousand, including Hong Kong profits tax at 16.5% (or 8.25% for the first HKD 2 million of assessable profits), overseas tax, and deferred tax Income Tax Expense Details (Six Months Ended September 30) | Tax Category | 2020 (HKD thousands) | 2019 (HKD thousands) | | :--- | :--- | :--- | | Current Tax – Hong Kong Profits Tax | 670 | 875 | | Current Tax – Overseas | 1,472 | 1,042 | | Deferred Tax | 2,501 | (729) | | Income Tax Expense | 4,643 | 1,188 | - Hong Kong profits tax provision is calculated at an estimated annual effective rate of 16.5%, with the first HKD 2 million of assessable profits for qualifying corporations under the two-tiered profits tax regime taxed at 8.25%[87][88] 9 Earnings Per Share Basic earnings per share were HKD 0.0728 (2019: HKD 0.0059), based on HKD 65,817 thousand profit and 904,483,942 weighted average shares, with diluted EPS being identical - Basic earnings per share were HKD 0.0728, compared to HKD 0.0059 in the same period last year[91] - Profit attributable to ordinary equity holders of the Company was HKD 65,817 thousand[91] - Diluted earnings per share were the same as basic earnings per share due to the absence of potentially dilutive ordinary shares[91] 10 Property, Plant and Equipment and Right-of-Use Assets This section details changes in right-of-use assets and property, plant, and equipment, noting a significant increase in the former due to new leases and a decrease in acquisition costs for the latter 10(a) Right-of-Use Assets For the six months ended September 30, 2020, the Group recognized HKD 97,335 thousand in right-of-use asset additions and received HKD 3,180 thousand in COVID-19 rent concessions - Additions to right-of-use assets amounted to HKD 97,335 thousand, a significant increase from HKD 10,088 thousand in the same period last year[92] - COVID-19 related rent concessions of HKD 3,180 thousand were received[92] COVID-19 Rent Concessions by Region (Six Months Ended September 30, 2020) | Region | COVID-19 Rent Concessions (HKD thousands) | | :--- | :--- | | Hong Kong Service Centers | (827) | | Mainland China Service Centers | (259) | | Singapore Service Centers | (2,094) | 10(b) Acquisitions For the six months ended September 30, 2020, property, plant, and equipment acquisitions cost approximately HKD 325 thousand, a significant decrease from the prior year - The cost of property, plant, and equipment acquisitions was approximately HKD 325 thousand, a significant decrease from HKD 16,623 thousand in the same period last year[93] 11 Trade and Other Receivables, Deposits and Prepayments As of September 30, 2020, total trade and other receivables, deposits, and prepayments were HKD 199,188 thousand, with trade receivables decreasing and trade deposits remaining stable Trade and Other Receivables, Deposits and Prepayments (As of September 30, 2020) | Item | September 30, 2020 (HKD thousands) | March 31, 2020 (HKD thousands) | | :--- | :--- | :--- | | Non-current Assets: Deposits and Prepayments | 15,835 | 10,264 | | Current Assets: Trade Receivables, Net of Loss Allowance for Expected Credit Losses | 15,861 | 21,929 | | Current Assets: Trade Deposits Retained by Banks/Credit Card Companies | 133,854 | 133,490 | | Current Assets: Rental and Other Deposits, Prepayments and Other Receivables | 33,165 | 32,599 | | Current Assets: Amounts Due from Related Companies | 473 | 63 | | Total | 199,188 | 198,345 | Ageing Analysis of Trade Receivables (As of September 30, 2020) | Ageing | September 30, 2020 (HKD thousands) | March 31, 2020 (HKD thousands) | | :--- | :--- | :--- | | 0 to 30 Days | 9,261 | 9,504 | | 31 to 60 Days | 487 | 3,395 | | 61 to 90 Days | 1,956 | 3,693 | | 91 to 180 Days | 4,157 | 5,337 | | Total | 15,861 | 21,929 | - Credit periods granted by banks/credit card companies for credit card payments typically range from 7 to 180 days[97] 12 Cash and Bank Balances As of September 30, 2020, cash and bank balances increased to HKD 210,229 thousand, primarily consisting of cash at bank and in hand and short-term bank deposits Cash and Bank Balances (As of September 30, 2020) | Item | September 30, 2020 (HKD thousands) | March 31, 2020 (HKD thousands) | | :--- | :--- | :--- | | Cash at Bank and in Hand | 146,730 | 111,169 | | Short-term Bank Deposits with Original Maturity of Less Than Three Months | 63,499 | 63,610 | | Total | 210,229 | 174,779 | 13 Trade and Other Payables, Deposits Received and Accrued Charges As of September 30, 2020, total trade and other payables, deposits received, and accrued charges slightly decreased to HKD 78,059 thousand, with trade payables increasing and other payables decreasing Trade and Other Payables, Deposits Received and Accrued Charges (As of September 30, 2020) | Item | September 30, 2020 (HKD thousands) | March 31, 2020 (HKD thousands) | | :--- | :--- | :--- | | Trade Payables | 743 | 442 | | Other Payables, Deposits Received and Accrued Charges | 77,189 | 79,171 | | Amounts Due to Ultimate Controlling Party | 2 | 2 | | Amounts Due to Related Companies | 125 | 87 | | Total | 78,059 | 79,702 | Ageing Analysis of Trade Payables (As of September 30, 2020) | Ageing | September 30, 2020 (HKD thousands) | March 31, 2020 (HKD thousands) | | :--- | :--- | :--- | | Within 90 Days | 520 | 442 | | Over 90 Days | 223 | – | | Total | 743 | 442 | 14 Deferred Revenue As of September 30, 2020, deferred revenue decreased to HKD 239,155 thousand, reflecting recognized revenue from expired prepaid beauty packages and new sales 14(a) Ageing Analysis of Deferred Revenue As of September 30, 2020, all deferred revenue, totaling HKD 239,155 thousand, was due within one year Ageing Analysis of Deferred Revenue (As of September 30, 2020) | Ageing | September 30, 2020 (HKD thousands) | March 31, 2020 (HKD thousands) | | :--- | :--- | :--- | | Within 1 Year | 239,155 | 301,822 | 14(b) Movement in Deferred Revenue Deferred revenue began at HKD 301,822 thousand, increased by HKD 146,023 thousand from new sales, and decreased by HKD 209,447 thousand from recognized revenue, ending at HKD 239,155 thousand Movement in Deferred Revenue (As of September 30, 2020) | Item | September 30, 2020 (HKD thousands) | March 31, 2020 (HKD thousands) | | :--- | :--- | :--- | | At Beginning of Period/Year | 301,822 | 297,621 | | Total Revenue from Sale of Prepaid Beauty Packages | 146,023 | 496,257 | | Revenue from Providing Beauty and Healthcare Services and Recognized from Expired Prepaid Beauty Packages | (209,447) | (492,327) | | Exchange Differences | 757 | 271 | | At End of Period/Year | 239,155 | 301,822 | 15 Share Capital, Reserves and Dividends This section details the Group's dividend policy and share capital structure, noting no interim dividend, with HKD 90,448 thousand in issued capital and equal rights for ordinary shareholders 15(a) Dividends The Board resolved not to declare an interim dividend for the six months ended September 30, 2020 - The Board resolved not to declare an interim dividend for the six months ended September 30, 2020[102] 15(b) Share Capital The Company's authorized share capital is HKD 1,000,000 thousand, with HKD 90,448 thousand issued and fully paid, granting equal rights to ordinary shareholders Authorized and Issued Share Capital (As of September 30, 2020) | Item | September 30, 2020 Number of Shares | Amount (HKD thousands) | March 31, 2020 Number of Shares | Amount (HKD thousands) | | :--- | :--- | :--- | :--- | :--- | | Authorized: Ordinary Shares of HKD 0.1 Each | 10,000,000,000 | 1,000,000 | 10,000,000,000 | 1,000,000 | | Issued and Fully Paid: Ordinary Shares of HKD 0.1 Each | 904,483,942 | 90,448 | 904,483,942 | 90,448 | - Ordinary shareholders are entitled to receive dividends declared from time to time, and have one vote per ordinary share at general meetings, with all ordinary shares having equal rights to the Company's residual assets[104] 16 Commitments As of September 30, 2020, contracted but unprovided capital commitments for plant and equipment acquisitions increased to HKD 437 thousand Capital Commitments (As of September 30, 2020) | Item | September 30, 2020 (HKD thousands) | March 31, 2020 (HKD thousands) | | :--- | :--- | :--- | | Contracted but Not Provided For: Acquisition of Plant and Equipment | 437 | 130 | 17 Contingent Liabilities The Board believes that complaints and claims related to beauty services will not have a material financial impact on the Group - The Board believes that losses or settlements from complaints and claims related to beauty services will not have a material financial impact on the Group[106] 18 Significant Related Party Transactions and Balances This section details significant related party transactions and balances, including key management emoluments, rental expenses, right-of-use assets, and salaries, with Dr. Tsang Yuk as the ultimate controlling party 18(a) Key Management Personnel Emoluments For the six months ended September 30, 2020, key management personnel emoluments decreased to HKD 4,083 thousand, including fees, salaries, and retirement contributions Key Management Personnel Emoluments (Six Months Ended September 30) | Item | 2020 (HKD thousands) | 2019 (HKD thousands) | | :--- | :--- | :--- | | Fees | 426 | 558 | | Salaries and Allowances | 3,606 | 5,584 | | Retirement Benefit Scheme Contributions | 51 | 54 | | Total | 4,083 | 6,196 | 18(b) Significant Related Party Transactions The Group paid no rental expenses to related companies this period, but held HKD 78,017 thousand in right-of-use assets from them, and paid HKD 1,585 thousand in salaries and benefits to related parties - Rental expenses paid to related companies were nil this period, compared to HKD 16,883 thousand in the same period last year[110] - The carrying value of right-of-use assets from related companies was HKD 78,017 thousand[110] - Rental income received from related companies was nil this period, compared to HKD 423 thousand in the same period last year[112] Salaries and Other Benefits Paid to Related Parties (Six Months Ended September 30) | Related Party | 2020 (HKD thousands) | 2019 (HKD thousands) | | :--- | :--- | :--- | | Related Party A (Dr. Tsang's Spouse) | 573 | 866 | | Related Party B (Dr. Tsang's Son) | 878 | 1,109 | | Related Party C (Mr. Yip Kai Wing's Spouse) | 134 | 331 | | Total | 1,585 | 2,306 | 18(c) Related Party Balances Amounts due from/to related companies and the ultimate controlling party are unsecured, interest-free, and repayable/recoverable on demand, with Dr. Tsang Yuk as the ultimate controlling party - Amounts due from/to related companies and the ultimate controlling party are unsecured, interest-free, and repayable/recoverable on demand[116] - Dr. Tsang Yuk is the ultimate controlling party of these related companies[116]