博华太平洋(01076) - 2023 - 中期业绩

Announcement Information This section presents key announcements, including the suspension of share trading and the unaudited interim results - Company shares have been suspended from trading on the Stock Exchange since 9:00 a.m. on April 1, 2022, and will remain suspended until further notice[1] - This announcement sets out the company's unaudited interim results for the six months ended June 30, 2022, in compliance with the relevant requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[492] Corporate Information This section provides essential corporate details, including registration, key contacts, and changes in company officers 2.1 Company Basic Information This section details the company's registration, principal business locations, company secretary changes, and key financial service providers - Ms. Li Yuen Ting resigned as Company Secretary on February 6, 2023, and Ms. Tsang Yuk Ting was appointed on October 20, 2023[4] - The company's registered office is in Bermuda, with its principal place of business at 22/F, On Hong Commercial Building, 145 Hennessy Road, Wan Chai, Hong Kong[4] - The independent auditor is W. H. Tang & Co. CPA Limited, and principal bankers include DBS Bank (Hong Kong) Limited and Bank of Saipan[4] - The company's stock code is 01076[4] 2.2 Board Members The Board comprises three executive and four independent non-executive directors, with several changes in appointments and resignations during the period - The Board includes Executive Directors Mr. Guan Detian, Mr. Xu Zhongxiang, and Mr. Chen Feng[2] - Independent Non-executive Directors include Mr. Robert James Woolsey, Mr. Lam Pak Sum, Dr. Zhao Zhihua, and Mr. Shi Lisheng[2] - Mr. Chen Feng was appointed Executive Director on March 25, 2022, and Mr. Guan Detian was appointed Executive Director on October 20, 2023[495] - Independent Non-executive Director Mr. Li Kwok Leung resigned on August 12, 2022, Mr. Chi Yuan resigned on October 10, 2023, and Mr. Luk Chi Shing resigned on June 1, 2023[495] - Mr. Lam Pak Sum, Dr. Zhao Zhihua, and Mr. Shi Lisheng were all appointed Independent Non-executive Directors on October 10, 2023[495] Management Discussion and Analysis This section provides an overview of the company's business, financial performance, and future outlook, including challenges and strategic plans 3.1 Business Review The company's primary business is Saipan's integrated resort, which generated no revenue due to COVID-19 related suspension and ongoing license fee disputes 3.1.1 Company's Main Business The company is an investment holding entity focused on developing and operating an integrated resort in Saipan through its subsidiary - The company is an investment holding company primarily engaged in gaming and resort operations, including the development and operation of an integrated resort in Saipan[5][508] - The company's indirect wholly-owned subsidiary, Imperial Pacific International (CNMI), LLC, entered into a casino license agreement with the Commonwealth of the Northern Mariana Islands for an exclusive Saipan casino resort developer license[17][497] 3.1.2 Saipan Integrated Resort Business Saipan's Imperial Pacific Resort casino, operational since 2017, suspended operations in March 2020 due to COVID-19, generating no revenue and facing license fee disputes - The Imperial Pacific Resort • Saipan casino commenced operations on July 6, 2017, with a maximum capacity of 193 gaming tables and 365 slot machines upon completion[507][509] - Since March 17, 2020, the Imperial Pacific Resort • Saipan casino has suspended operations to curb the spread of COVID-19, resulting in no revenue for the six months ended June 30, 2022[23][48][42] - The Commonwealth Casino Commission ordered a license suspension on April 23, 2021, and demanded payment of annual license and regulatory fees; the company believes it is exempt under force majeure clauses and has submitted the matter for judicial review to the Saipan Superior Court[510][6] - As of June 30, 2022, the company had invested approximately US$914 million (approximately HK$7.098 billion) in the design, consultancy, engineering, construction materials, and labor for the Saipan integrated resort[510][18] 3.2 Business Outlook The company aims to boost Saipan tourism, plans to resume casino operations post-restrictions and favorable court rulings, and considers debt/equity fundraising to strengthen finances - The company is committed to enhancing Saipan's tourism and creating local opportunities, believing in the significant long-term growth potential of Saipan's tourism, benefiting from its pleasant climate, attractions, convenient location, and flexible visa policies[21][512] - The Commonwealth of the Northern Mariana Islands welcomed its first travel bubble tourists in July 2021, and the US government has approved the re-inclusion of Hong Kong in the Northern Mariana Islands visa waiver program[20][513] - Once Saipan's travel restrictions are lifted and a favorable review outcome is issued by the Saipan Superior Court, the Imperial Pacific Resort • Saipan casino will resume operations and open to the public[21][512] - The Board does not rule out the possibility of the company undertaking debt and/or equity fundraising plans to further strengthen the Group's financial position, thereby supporting the Group's development, including the casino and integrated resort in Saipan[21][44] 3.3 Financial Review The company reported an expanded net loss of HK$487 million for the six months ended June 30, 2022, facing significant trade receivables impairment and net current liabilities 3.3.1 Overall Financial Performance The company reported no revenue and an expanded loss, primarily due to casino suspension and increased finance costs - For the six months ended June 30, 2022, the loss attributable to company owners was approximately HK$487 million, compared to HK$359 million in the prior period[22][516] - Basic and diluted loss per share were 0.35 HK cents, compared to 0.13 HK cents in the prior period[22][516] - No revenue was generated from the operation of Imperial Pacific Resort • Saipan during the period[22] 3.3.2 Revenue and Costs No gaming revenue was generated due to casino suspension, while operating and administrative expenses slightly increased, and finance costs rose significantly Revenue Situation (For the six months ended June 30, 2022) | Business Type | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :------- | :-------------- | :-------------- | | VIP Gaming | – | – | | Mass Market Gaming | – | – | | Slot Machines and Electronic Table Gaming | – | – | | Food and Beverage | – | – | - Operating and administrative expenses slightly increased to approximately HK$179 million (2021: HK$171 million)[84][233] - Finance costs significantly increased to HK$308 million (2021: HK$188 million), primarily from interest on other borrowings and loans from related parties[233][397] 3.3.3 Impairment Provisions As of June 30, 2022, total trade receivables were HK$9.164 billion, with HK$8.140 billion provided for expected credit losses, and collection efforts are ongoing - As of June 30, 2022, the Group had total trade receivables of HK$9.164 billion (December 31, 2021: HK$9.106 billion)[47][146] - As of June 30, 2022, impairment provisions for trade receivables owed by the Group's largest and top ten debtors were approximately HK$1.082 billion and HK$2.763 billion, respectively[28][50] - The Group generally grants a 30-day credit period for gaming business and regularly identifies customers with overdue debts for collection[32][56] - If receivables remain unpaid for six months after their due date, the Group may consider legal action to recover outstanding debts[33][54] 3.3.4 Liquidity and Financial Resources The company faces severe liquidity challenges, with net current liabilities of HK$11.455 billion and minimal cash, resulting in a negative capital gearing ratio - As of June 30, 2022, net current liabilities were HK$11.455 billion (December 31, 2021: HK$11.000 billion)[280][379] - As of June 30, 2022, cash and cash equivalents were only approximately HK$2.082 million (December 31, 2021: HK$2.075 million)[353][257] - The capital gearing ratio was approximately negative 49.7% as of June 30, 2022 (December 31, 2021: negative 52.5%)[59][85] - The Group's business transactions are primarily conducted in HKD and USD, and given the HKD's peg to the USD, the Group faces limited exchange rate risk[38][62] 3.3.5 Capital Structure and Commitments As of June 30, 2022, the company had 10.65 billion shares issued, HK$518 million in capital commitments, and substantial casino license and community fund obligations - As of June 30, 2022, the total number of issued ordinary shares of HK$0.01 par value increased to 10,649,240,383 shares (December 31, 2021: 7,149,240,383 shares)[62][87] - As of June 30, 2022, the Group's capital commitments were approximately HK$518 million (December 31, 2021: HK$515 million)[61][89] - No capital expenditure was incurred for the six months ended June 30, 2022 (December 31, 2021: zero)[37][58] 3.3.6 Contingent Liabilities The company faces multiple contingent liabilities, including Bank Secrecy Act investigations, federal inquiries, casino commission fines, and civil lawsuits, with provisions made Contingent Liabilities (As of June 30, 2022) | Type | Description | Status | Impact | | :--- | :--- | :--- | :--- | | Bank Secrecy Act Compliance | FinCEN identified potential violations of the Bank Secrecy Act and its implementing regulations and is considering civil penalties or other enforcement actions | The licensee is still preparing information to be submitted to FinCEN. Based on external advice, provisions have been made for estimated civil penalties for identified and potential violations | The resolution of this matter, including its duration or potential impact on the Group, cannot be accurately predicted | | Federal Government Agency Investigations | A federal grand jury issued two grand jury subpoenas to the licensee in December 2019, requesting documents and information | The investigation is ongoing, and the licensee has fully cooperated | The potential fines, penalties, or other consequences cannot be assessed, nor can the timing of resolving these matters be determined | | Commonwealth Casino Commission | Involves unpaid annual license fees, unpaid social welfare contributions, lack of cash reserves, and unpaid regulatory fees, totaling US$19.8 million (approximately HK$153 million) | The licensee has filed a petition with the Saipan Superior Court for review of whether the COVID-19 pandemic constitutes a natural disaster or force majeure | The review is ongoing, and provisions have been made in the unaudited interim condensed consolidated financial information | | Other Litigation Matters | The Group is involved in several civil lawsuits as plaintiff or defendant | After considering respective legal advice, provisions have been made in the unaudited interim condensed consolidated financial information | Potential financial impact has been considered | - As of June 30, 2022, the Group pledged property, plant and equipment with a carrying value of approximately HK$81 million and issued shares of the company's subsidiaries as collateral for interest-bearing loans with carrying values of approximately HK$10 million and HK$1.168 billion, respectively[74][76] 3.4 Winding-up Petitions and Listing Status Update The company faces ongoing winding-up petitions and a delisting decision from the Stock Exchange, for which an appeal has been filed 3.4.1 Winding-up Petitions The company received two winding-up petitions, one of which has been withdrawn, while the hearing for the other, involving HK$20.83 million, has been adjourned - The company received a winding-up petition (Petition I) from Mr. Guan Chubin on September 14, 2023, for failure to pay a judgment sum of HK$20,832,277 plus interest and legal costs; the hearing has been adjourned to January 31, 2024[75][76][126][17] - The company received a winding-up petition (Petition II) from Ms. Wang Yi on October 3, 2023, for failure to pay a judgment sum of HK$5,300,000 plus interest and legal costs; Petition II was granted leave to be withdrawn on January 16, 2024[101][125][126][17] 3.4.2 Listing Status Update The Stock Exchange Listing Committee decided to delist the company, and an application for review has been submitted to the Listing Review Committee - On October 13, 2023, the company received a letter from the Stock Exchange Listing Committee, deciding to reject the company's request for an extension of the remedial period to fulfill the resumption guidance and to proceed with canceling the company's listing status[79][106] - On October 25, 2023, the company submitted an application requesting the delisting decision be referred to the Listing Review Committee for review[80][129] Other Information This section covers employee and remuneration policies, share option schemes, directors' and major shareholders' interests, directors' biographical details, and corporate governance practices 4.1 Employees and Remuneration Policy As of June 30, 2022, the group had 356 employees, with remuneration reviewed annually based on market and individual performance, including provident fund benefits - As of June 30, 2022, the Group had a total of 356 employees (December 31, 2021: 385 employees)[130] - Remuneration packages are reviewed annually and determined with reference to market conditions and individual performance, with other employee benefits such as provident funds also provided in addition to salaries[130] 4.2 Share Option Scheme The company's 2013 share option scheme aims to attract and retain talent, with 70.54 million unexercised options as of June 30, 2022, and no activity during the period - The Group's existing share option scheme, adopted on June 27, 2013, aims to help the Group attract, retain, and incentivize talented participants to focus on the Group's future development and expansion[109][133] - As of June 30, 2022, there were 70,539,564 share options outstanding[114][138][142] - During the review period, no grantees exercised any share options, no share options were granted, and no share options lapsed[142][168] - The subscription price for share options will be determined by the Board and shall be at least the highest of the closing price of the shares on the date of grant, the average closing price for the five business days immediately preceding the date of grant, and the nominal value of the shares[111][134] 4.3 Directors' and Chief Executives' Interests As of June 30, 2022, directors and chief executives held interests in company shares and related securities, including specific share options Directors' and Chief Executives' Long Positions in Shares and Related Shares (As of June 30, 2022) | Director Name | Capacity | Long/Short Position | Number of Shares/Related Shares Held | % of Company's Issued Share Capital | | :------- | :--- | :-------- | :-------------------- | :----------------------- | | Mr. Robert James Woolsey | Beneficial Owner | Long Position | 43,056 | 0.00% | | Mr. Li Kwok Leung | Beneficial Owner | Long Position | 10,000 | 0.00% | - Mr. Robert James Woolsey was granted 43,056 share options under the share option scheme on April 5, 2017[158][174] - Mr. Li Kwok Leung was granted 10,000 share options under the share option scheme on April 5, 2017[174] 4.4 Major Shareholders As of June 30, 2022, Inventive Star Limited, Ms. Cui Lijie, Allied Group Limited, and other entities were identified as major shareholders Major Shareholders' Long/Short Positions in Shares and Related Shares (As of June 30, 2022) | Shareholder Name | Capacity | Long/Short Position | Number of Shares | Approximate % of Interest | | :------------ | :--- | :-------- | :------- | :------------- | | Inventive Star Limited | Beneficial Owner | Long Position | 4,258,880,463 | 39.99% | | Inventive Star Limited | Beneficial Owner | Short Position | 3,615,542,766 | 33.95% | | Ms. Cui Lijie | Interest in Controlled Corporation | Long Position | 4,258,880,463 | 39.99% | | Ms. Cui Lijie | Interest in Controlled Corporation | Short Position | 3,615,542,766 | 33.95% | | Allied Group Limited | Interest in Controlled Corporation | Long Position | 2,955,800,000 | 27.75% | | Fresh Idea Ventures Limited | Person with Security Interest in Shares | Long Position | 2,977,166,100 | 27.96% | | Huarong International Financial Holdings Limited | Interest in Controlled Corporation | Long Position | 2,977,166,100 | 27.96% | | Lee Seng Huang | Interest in Controlled Corporation | Long Position | 2,955,800,000 | 27.75% | | Lee Seng Hui | Interest in Controlled Corporation | Long Position | 2,955,800,000 | 27.75% | | Lee Su Hwei | Interest in Controlled Corporation | Long Position | 2,955,800,000 | 27.75% | | Shipshape Investments Limited | Interest in Controlled Corporation | Long Position | 2,955,800,000 | 27.75% | | Sun Hung Kai & Co. Limited | Interest in Controlled Corporation | Long Position | 2,955,800,000 | 27.75% | | Sun Hung Kai Structured Finance Limited | Person with Security Interest in Shares | Long Position | 2,955,800,000 | 27.75% | | China Huarong Asset Management Co., Ltd. | Interest in Controlled Corporation | Long Position | 2,977,166,100 | 27.96% | | DONG JIMING | Beneficial Owner | Long Position | 3,000,000,000 | 28.17% | | Mr. Ji Xiaobo | Interest in Controlled Corporation | Long Position | 2,933,362,000 | 27.55% | | Super Champion Global Limited | Beneficial Owner | Long Position | 2,900,000,000 | 27.23% | - Inventive Star Limited is wholly and beneficially owned by Ms. Cui Lijie[205] - Super Champion Global Limited is wholly and beneficially owned by Mr. Ji Xiaobo[205] - As of the reporting date, the company has maintained sufficient public float as required by the Listing Rules[205] 4.5 Biographical Details of Directors This section provides detailed biographical information, including education, qualifications, and experience, for the company's executive and independent non-executive directors - Executive Director Mr. Chen Feng (aged 50) holds a diploma in accounting and auditing and an intermediate accountant qualification, having served as financial manager at Fuzhou Material Trade Center and financial director at Fuzhou Zhongwei Industrial[181][183] - Executive Director Mr. Xu Zhongxiang (aged 69) graduated from Harbin Light Industry School and has 30 years of experience in human resources and management, responsible for the Group's strategic planning and business management[206][208] - Executive Director Mr. Guan Detian (aged 35) has extensive experience in mechanical trade and electrical engineering, having managed several institutions in Malaysia[207][209] - Independent Non-executive Director Mr. Robert James Woolsey (aged 79) previously served as Director of Central Intelligence Agency and Under Secretary of the Navy, possessing extensive government service experience[185][186][215] - Independent Non-executive Director Mr. Lam Pak Sum (aged 62) holds an MBA from the University of Warwick, UK, is a Fellow of the Hong Kong Institute of Certified Public Accountants, and has over 25 years of experience in compliance, finance, monetary, and capital markets[190][214][216] - Independent Non-executive Director Dr. Zhao Zhihua (aged 59) holds a Doctor of Business Administration degree, is a Fellow of the Institute of Public Accountants of Australia, and has over 30 years of experience in corporate management, consulting, and restructuring[244][31][246] - Independent Non-executive Director Mr. Shi Lisheng (aged 64) holds a Master of Science in Corporate Governance and Directorship from Hong Kong Baptist University and has over 40 years of experience in fund and portfolio management, securities trading, and investment advisory services[198][221][222] 4.6 Corporate Governance The company adheres to high corporate governance standards, complying with the Model Code, with minor deviations regarding directors' insurance and the combined Chairman/CEO roles - The company has adopted the Model Code set out in Appendix 10 of the Listing Rules, committed to maintaining a high level of corporate governance with principles of transparency, accountability, and independence[225][228][251] - For the six months ended June 30, 2022, the company fully complied with the code provisions set out in Appendix 14 of the Listing Rules, except for deviations regarding the lack of appropriate insurance coverage for directors facing legal actions and the non-separation of the roles of Chairman and Chief Executive[247][248][249] - The company's audit committee has reviewed and approved the Group's condensed consolidated financial statements for the six months ended June 30, 2022[227][229][251] - The Board does not recommend the payment of a dividend for the six months ended June 30, 2022[226][251][436] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement summarizes the company's financial performance, showing a net loss and other comprehensive loss for the six months ended June 30, 2022 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary (For the six months ended June 30, 2022) | Indicator | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :-------------- | :-------------- | | Revenue | – | – | | Net other income, gains and losses | 417 | 413 | | Operating and administrative expenses | (178,523) | (171,034) | | Share-based payment expenses | (449) | (470) | | Finance costs | (308,347) | (188,360) | | Share of loss of a joint venture | – | (83) | | Loss before tax | (486,902) | (359,534) | | Income tax expense | – | – | | Loss for the period attributable to owners of the company | (486,902) | (359,534) | | Other comprehensive loss for the period | (15,713) | (787) | | Total comprehensive loss for the period attributable to owners of the company | (502,615) | (360,321) (Restated) | | Basic loss per share (HK cents) | (0.35) | (0.13) | | Diluted loss per share (HK cents) | (0.35) | (0.13) | Condensed Consolidated Statement of Financial Position This statement presents the company's financial position, detailing assets, liabilities, and equity as of June 30, 2022 Condensed Consolidated Statement of Financial Position Summary (As of June 30, 2022) | Indicator | 2022 June 30 (HK$ Thousand) | 2021 December 31 (HK$ Thousand) | | :--- | :--------------------- | :---------------------- | | Non-current assets: | | | | Property, plant and equipment | 2,591,985 | 2,604,980 | | Investment in a joint venture | 55,840 | 55,840 | | Prepayments, deposits and other receivables | 31,965 | 31,774 | | Equity investments designated at fair value through other comprehensive income | 2,609 | 3,550 | | Current assets: | | | | Inventories | 24,410 | 24,254 | | Trade receivables | 1,024,185 | 1,017,646 | | Prepayments, deposits and other receivables | 136,177 | 135,583 | | Cash and cash equivalents | 2,082 | 2,075 | | Current liabilities: | | | | Trade payables | 74,233 | 73,759 | | Other payables and accruals | 8,189,507 | 7,728,274 | | Other borrowings | 4,227,252 | 4,226,835 | | Lease liabilities | 895 | 889 | | Unsecured bonds and notes | 120,266 | 120,031 | | Loans from a joint venture | 8,530 | 8,530 | | Tax payable | 21,714 | 21,591 | | Net current liabilities | (11,455,543) | (11,000,351) | | Total assets less current liabilities | (8,773,144) | (8,304,207) | | Non-current liabilities: | | | | Lease liabilities | 16,111 | 18,313 | | Unsecured bonds and notes | 30,055 | 29,624 | | Net liabilities | (8,819,310) | (8,352,144) | | Equity and reserves: | | | | Share capital | 106,492 | 71,492 | | Reserves | (8,925,802) | (8,423,636) | | Deficiency in assets | (8,819,310) | (8,352,144) | Condensed Consolidated Statement of Changes in Equity This statement outlines changes in the company's equity for the six months ended June 30, 2022, including losses and share capital adjustments Condensed Consolidated Statement of Changes in Equity Summary (For the six months ended June 30, 2022) | Indicator | 2022 June 30 (HK$ Thousand) | 2021 December 31 (HK$ Thousand) | | :--- | :--------------------- | :---------------------- | | Total equity at beginning of period | (8,352,144) | (2,732,575) | | Loss for the period | (486,902) | (359,534) | | Change in exchange reserve | (14,772) | (2,747) | | Fair value change of equity investments | (941) | 1,960 | | Share option arrangements | 449 | 470 | | Share capital conversion | 35,000 | – | | Total equity at end of period | (8,819,310) | (8,352,144) | Condensed Consolidated Statement of Cash Flows This statement summarizes the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2022 Condensed Consolidated Statement of Cash Flows Summary (For the six months ended June 30, 2022) | Indicator | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :-------------- | :-------------- | | Net cash flows used in operating activities | (293) | (44,376) | | Net cash flows used in investing activities | – | (8,344) | | Net cash flows from financing activities | (136) | 50,475 | | Net decrease in cash and cash equivalents | (429) | (2,245) | | Cash and cash equivalents at beginning of period | 2,075 | 10,013 | | Net effect of exchange rate changes | 436 | 8 | | Cash and cash equivalents at end of period | 2,082 | 7,776 | Notes to Interim Financial Information This section provides detailed notes to the interim financial information, explaining accounting policies, significant judgments, and key financial figures 9.1 Company Information The company is a Bermuda-registered investment holding company focused on Saipan's gaming and resort business, with its shares suspended from trading - Imperial Pacific International Holdings Limited is an investment holding company incorporated in Bermuda under the Companies Act 1981 of Bermuda, primarily engaged in gaming and resort operations, including the development of an integrated resort in Saipan, Commonwealth of the Northern Mariana Islands[378] - The company's shares have been suspended from trading on the Stock Exchange since April 1, 2022[378] - Inventive Star Limited is the company's ultimate holding company, and Ms. Cui Lijie is the ultimate controlling party[354][378] 9.2 Basis of Presentation and Preparation Interim financial information is prepared under HKAS 34 and Listing Rules, using historical cost, with directors affirming going concern despite significant financial challenges 9.2.1 Basis of Presentation Despite substantial losses and liabilities, the Board believes the company can continue as a going concern, supported by forecasts and potential financing - For the six months ended June 30, 2022, the Group recorded a net loss of HK$487 million, with net current liabilities of HK$11.455 billion, net liabilities of HK$8.819 billion, and capital commitments of HK$518 million as of June 30, 2022[379] - The directors believe that based on the Group's business forecasts and cash flow projections, the Group will have sufficient funds to operate as a going concern, taking into account, among other things, the Group's past actual operating performance and the outcome of the Saipan Superior Court's review of the license fee dispute[379] - Inventive Star and other related parties have committed to providing additional funds to the Group if needed, to settle operating costs, debts, potential liabilities related to litigation, annual casino license fees, social welfare funds, and capital investments[402] - Management will consider other financing arrangements to increase the Group's market capitalization/equity; and management will continue to refinance and/or extend the Group's existing loans to improve the Group's liquidity[402] 9.2.2 Basis of Preparation and Accounting Policies Interim financial information is presented in HK$ thousands, with accounting policies consistent with 2021 annual statements, except for new HKFRS amendments - The unaudited interim condensed consolidated financial information for the six months ended June 30, 2022, has been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[381][406] - Except for equity investments designated at fair value through other comprehensive income, the unaudited interim condensed consolidated financial information has been prepared on a historical cost basis[359][407] - Except for additional accounting policies arising from the application of amendments to Hong Kong Financial Reporting Standards, the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended June 30, 2022, are the same as those presented in the Group's annual financial statements for the year ended December 31, 2021[383][405][408] 9.2.3 Application of Amendments to HKFRSs The company adopted amendments to HKFRS 3, HKAS 16, HKAS 37, and annual improvements, which had no significant financial impact - The revised Hong Kong Financial Reporting Standards adopted for the first time in this period's financial information include: HKFRS 3 (Reference to the Conceptual Framework), HKAS 16 (Property, Plant and Equipment: Proceeds before Intended Use), HKAS 37 (Onerous Contracts: Cost of Fulfilling a Contract), and Annual Improvements to HKFRSs 2018–2020[387] - The revised standards had no significant financial impact on these financial statements[387] 9.3 Operating Segment Information The company operates a single gaming and resort segment in Saipan, with all revenue and over 95% of non-current assets originating from this region - The Group is primarily engaged in gaming and resort operations, including the development of an integrated resort in Saipan. As the Group has only one operating segment, no separate operating segment information is presented[387] - As all the Group's revenue is derived from Saipan, no geographical information is presented. Over 95% of the Group's non-current assets are located in Saipan[387] 9.4 Revenue The company has four revenue streams: VIP gaming, mass market gaming, slots, and F&B; however, no revenue was generated due to casino suspension - The Group has four types of revenue: (1) VIP gaming business, (2) mass market gaming business, (3) slot machine and electronic table gaming business, and (4) food and beverage[392][412] - Due to the suspension of casino operations, no revenue was generated during the period (2021: nil)[390][413] 9.5 Loss Before Tax For the six months ended June 30, 2022, the company's loss before tax was HK$487 million, driven by operating expenses, finance costs, and share-based payments - For the six months ended June 30, 2022, the Group's loss before tax was HK$486,902 thousand[233][391] Loss Before Tax Components (For the six months ended June 30, 2022) | Item | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :-------------- | :-------------- | | Depreciation of property, plant and equipment | 15,734 | 68,471 | | Depreciation of right-of-use assets | 2,908 | 6,738 | | Casino license fees | 60,688 | 58,222 | | Rental expenses for short-term leases | 570 | 1,240 | | Total staff costs | 364 | 10,250 | - For the six months ended June 30, 2022, no staff costs under property, plant and equipment were capitalized, as construction activities for the integrated resort were suspended due to COVID-19[393][414] 9.6 Finance Costs For the six months ended June 30, 2022, total finance costs were HK$308 million, mainly from interest on other borrowings and related party loans Finance Costs Analysis (For the six months ended June 30, 2022) | Item | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :-------------- | :-------------- | | Interest on lease liabilities | 2,729 | 2,393 | | Interest on other borrowings and loans from related parties | 300,644 | 183,813 | | Interest on unsecured bonds and notes | 4,974 | 2,154 | | Total | 308,347 | 188,360 | 9.7 Income Tax Expense No taxable profit was generated in Saipan or Hong Kong for the six months ended June 30, 2022, resulting in no income tax provision - As the Group did not generate any taxable profit in the Commonwealth of the Northern Mariana Islands for the six months ended June 30, 2022 and 2021, no provision was made for Commonwealth of the Northern Mariana Islands corporate income tax payable by subsidiaries operating the casino business[396] - As the Group did not generate any taxable profit in Hong Kong for the six months ended June 30, 2022 and 2021, no provision was made for Hong Kong profits tax[418][420] 9.8 Interim Dividend The Board does not recommend paying an interim dividend for the six months ended June 30, 2022 - The company did not pay or propose to pay any dividends for the six months ended June 30, 2022 and 2021[419][436] 9.9 Loss Per Share For the six months ended June 30, 2022, basic and diluted loss per share were HK$0.35 cents, with no dilution adjustment due to anti-dilutive share options - For the six months ended June 30, 2022, basic and diluted loss per share were 0.35 HK cents (2021: 0.13 HK cents)[255] - The basic loss per share amount for the period is calculated based on the loss for the period attributable to owners of the company and the weighted average number of ordinary shares outstanding during the period, approximately 138,281,837,000 shares[164][439] - As the outstanding share options had an anti-dilutive effect on the basic loss per share for the period, no adjustment was made to the basic loss per share amount presented for the periods ended June 30, 2022 and 2021, to calculate the diluted loss per share[164][425] 9.10 Property, Plant and Equipment The company did not acquire any property, plant, and equipment for the six months ended June 30, 2022 - For the six months ended June 30, 2022, the Group did not acquire any property, plant and equipment (for the six months ended June 30, 2021: approximately HK$8,344,000)[9][10] 9.11 Trade Receivables As of June 30, 2022, total trade receivables were HK$9.164 billion, with HK$8.140 billion provided for expected credit losses, and all were overdue by over one year Trade Receivables Aging Analysis (As of June 30, 2022) | Aging | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :-------------- | :-------------- | | Within one month | – | – | | More than one month but within three months | – | – | | More than three months but within six months | – | – | | More than six months but within one year | – | – | | More than one year | 9,164,033 | 9,105,530 | | Provision for expected credit losses | (8,139,848) | (8,087,884) | | Net | 1,024,185 | 1,017,646 | - As of June 30, 2022, the Group had received deposits of HK$1,024,185,000 from certain customers/guarantors, which can be used to offset the total trade receivables owed by these customers if the Group fails to recover certain aforementioned trade receivables from certain casino customers in the ordinary course of business[146][147] 9.12 Trade Payables As of June 30, 2022, total trade payables were HK$74.233 million, with all amounts overdue by over one year Trade Payables Aging Analysis (As of June 30, 2022) | Aging | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :-------------- | :-------------- | | Within one month | – | – | | More than one month but within three months | – | – | | More than three months but within six months | – | – | | More than six months but within one year | – | – | | More than one year | 74,233 | 73,759 | | Total | 74,233 | 73,759 | 9.13 Other Payables and Accruals As of June 30, 2022, other payables and accruals totaled HK$8.190 billion, mainly comprising customer deposits, construction payables, and regulatory provisions Other Payables and Accruals (As of June 30, 2022) | Item | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :-------------- | :-------------- | | Customer deposits and other grant liabilities | 2,443,258 | 2,427,660 | | Deposits received | 479,822 | 479,822 | | Loyalty program liabilities | 235,425 | 233,922 | | Outstanding clip liabilities | 4,209 | 4,182 | | Construction-related payables | 1,663,373 | 1,652,754 | | Provisions for regulatory matters | 326,231 | 324,148 | | Other payables and accruals | 3,037,189 | 2,605,786 | | Total | 8,189,507 | 7,728,274 | 9.14 Other Borrowings As of June 30, 2022, other borrowings totaled HK$4.227 billion, mostly short-term, with some secured by assets or subsidiary shares and guaranteed by key individuals Other Borrowings Repayment Terms (As of June 30, 2022) | Term | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :-------------- | :-------------- | | Within one year or on demand | 4,227,252 | 4,226,835 | | Less: Non-current portion | 4,227,252 | 4,226,835 | | Current portion | – | – | - As of June 30, 2022, interest-bearing loans were unsecured and bore interest at annual rates ranging from 6% to 15%[119][121] - Interest-bearing loans of HK$10,423,000 were secured by the Group's aircraft with a carrying value of HK$74,859,000 and bore interest at LIBOR plus 4% per annum[119][121] - Interest-bearing loans of HK$1,168,250,000 were secured by the issued shares of the company's subsidiaries, guaranteed by Mr. Ji Xiaobo, Ms. Cui, and Inventive Star, and bore a fixed annual interest rate of 12%[119][121] - A total of HK$688,384,000 of the Group's other interest-bearing loans were pledged by certain customers/guarantors to guarantee the repayment of certain trade receivables owed by some of the Group's customers[120][122] 9.15 Share Capital As of June 30, 2022, authorized share capital was HK$150 million, with issued and fully paid share capital increasing to HK$106.49 million Share Capital (As of June 30, 2022) | Item | 2022 June 30 (HK$ Thousand) | 2021 December 31 (HK$ Thousand) | | :--- | :--------------------- | :---------------------- | | Authorized: 15,000,000,000 ordinary shares of HK$0.01 each | 150,000 | 150,000 | | Issued and fully paid: 10,649,240,383 ordinary shares of HK$0.01 each | 106,492 | 71,492 | 9.16 Fair Value and Fair Value Hierarchy Financial instruments' fair values approximate carrying amounts due to short-term maturities; listed equity investments are Level 1, with no transfers between fair value hierarchy levels - Management has assessed that the fair values of financial instruments such as cash and cash equivalents, trade receivables, and trade payables are similar to their carrying amounts, primarily due to their short-term maturities[441] - The fair values of unsecured bonds and notes and the non-current portion of lease liabilities are calculated by discounting expected future cash flows using current available rates for instruments with similar terms, credit risk, and remaining maturities[441] - The fair value of listed equity investments is calculated based on market quotations. As of June 30, 2022, the Group's equity investments designated at fair value through other comprehensive income of HK$2,609,000 are measured at Level 1 fair value[441] - During the period, there were no transfers between Level 1 and Level 2 fair value measurements, and no financial assets or financial liabilities were transferred into or out of Level 3[441] 9.17 Commitments As of June 30, 2022, the company had HK$518 million in capital commitments and significant obligations for casino license fees and community development funds Commitments (As of June 30, 2022) | Item | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :-------------- | :-------------- | | Capital Commitments: | | | | Property, plant and equipment | 439,804 | 436,980 | | Leasehold land | 78,556 | 78,051 | | Total Capital Commitments | 518,360 | 515,031 | | Other Commitments: | | | | Casino license fees (Total) | 2,002,722 | 2,048,416 | | Community development fund fees (Total) | 2,270,926 | 2,332,166 | | Total Other Commitments | 4,273,648 | 4,380,582 | 9.18 Related Party Transactions During the period, the company had interest expense transactions with related parties and a joint venture, and disclosed key management personnel compensation Related Party Transactions (For the six months ended June 30, 2022) | Item | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :-------------- | :-------------- | | Interest expense on related party loans | 4,755 | – | | Interest expense on joint venture loans | 231 | – | - Related party loans bore annual interest rates ranging from 8% to 12%, and joint venture loans bore an annual interest rate of 6%[445] - The remuneration of the Group's key management personnel includes short-term employee benefits, post-employment benefits, and share-based payments[448][450] 9.19 Events After Reporting Period Post-reporting period, the company faced winding-up petitions and a delisting decision; one petition was withdrawn, another adjourned, and an appeal filed against delisting - The hearing for Winding-up Petition I, submitted by Mr. Guan Chubin, has been adjourned to January 31, 2024[447][449][473][476] - Winding-up Petition II, submitted by Ms. Wang Yi, was granted leave to be withdrawn on January 16, 2024[469][471][453][456] - The Stock Exchange Listing Committee decided to cancel the company's listing status on October 13, 2023, and the company applied for a review on October 25, 2023[459][461][479][487] 9.20 Comparative Figures Certain comparative figures have been reclassified to align with the current period's presentation and disclosure requirements - Certain comparative figures have been reclassified to conform to the presentation and disclosure requirements of the current period[485][488] 9.21 Approval of Interim Financial Information The condensed consolidated interim financial statements were approved and authorized for issue by the Board on January 17, 2024 - The condensed consolidated interim financial statements were approved and authorized for issue by the Board of Directors on January 17, 2024[462][486]