耀才证券金融(01428) - 2021 - 中期财报

Corporate Information Directors and Committees The report lists the company's executive and independent non-executive directors and committee members, with Mr. Yip Mau Lin as Chairman and Mr. Hui Yik Bun as CEO - The company's Chairman is Mr. Yip Mau Lin, and the Chief Executive Officer is Mr. Hui Yik Bun[5] - The chairmen of the Audit, Remuneration, and Risk Management Committees are all Mr. Yu Yan Kong, an independent non-executive director[4][5][7] Corporate Offices and Advisors This section provides key operational information including the company's registered office, principal place of business, share registrar, principal bankers, and auditor, KPMG - The company's head office and principal place of business are located at 10th and 23rd Floors, Wing On House, 71 Des Voeux Road Central, Hong Kong[7][9] - The company's auditor is KPMG[12] Management Discussion and Analysis Market Review Despite H1 2020 economic weakness, the Hong Kong stock market saw significant growth in trading volume and a 57.9% increase in IPO fundraising, driven by returning Chinese concept stocks and loose monetary policies - In H1 2020 (Q2 and Q3), the average daily turnover of Hong Kong stocks was approximately HKD 128.08 billion, a significant year-on-year increase of approximately 49.9%[24][26] - In the first nine months of 2020, Hong Kong's IPO market raised HKD 211.4 billion, a 57.9% year-on-year increase, primarily benefiting from the return of Chinese concept stocks[24][26][27] - The "stay-at-home economy" and strong online investment demand due to the pandemic, coupled with loose monetary policies globally, led to Hong Kong's banking system balance exceeding HKD 450 billion, driving active stock market trading[21][23] Operating Results For the six months ended September 30, 2020, the Group achieved strong growth with total revenue increasing by 48.0% to HKD 583 million and profit attributable to shareholders surging by 63.6% to HKD 346 million, driven by active market trading and the IPO boom Key Performance Indicators for H1 FY2020/21 | Indicator | For the Six Months Ended September 30, 2020 | For the Six Months Ended September 30, 2019 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 582.9 million | HKD 393.8 million | +48.0% | | Profit Attributable to Shareholders | HKD 346.1 million | HKD 211.5 million | +63.6% | | Basic Earnings Per Share | 20.39 HK cents | 12.46 HK cents | +63.6% | - The Board does not recommend the payment of an interim dividend for the period[30][31] Client Accounts and Assets During the period, the Group's client base and assets under management continued to expand, driven by the launch of mobile trading applications, resulting in significant year-on-year growth in both metrics Client Data Growth | Indicator | September 30, 2020 | September 30, 2019 | Year-on-Year Growth | | :--- | :--- | :--- | :--- | | Total Client Accounts | 405,761 accounts | 300,555 accounts | +35.0% | | Client Assets Under Management | approx. HKD 53.6 billion | approx. HKD 42.1 billion | +27.3% | - During the period, 67,957 new accounts were opened (net of closed accounts)[36][37] Revenue Breakdown The Group's total revenue grew by 48.0%, primarily driven by explosive growth in securities brokerage, IPO brokerage, and IPO financing interest income, with securities brokerage becoming the largest revenue source and IPO-related businesses surging over 16 times, while margin financing interest income decreased by 24.2% due to lower interest rates Revenue Overview by Business Segment (For the Six Months Ended September 30) | Business Segment | 2020 (HKD thousand) | 2019 (HKD thousand) | Increase/Decrease | | :--- | :--- | :--- | :--- | | Securities Brokerage | 219,990 | 113,080 | +94.5% | | IPO Brokerage | 21,416 | 3,857 | +455.1% | | IPO Financing Interest | 95,321 | 2,693 | +3,439.6% | | Margin Financing Interest | 114,092 | 150,421 | -24.2% | | Hong Kong Futures and Options Brokerage | 62,460 | 62,393 | +0.1% | | Global Futures Brokerage | 53,754 | 46,606 | +15.3% | | Total | 582,891 | 393,757 | +48.0% | Operating Expenses and Net Profit Margin Total operating expenses increased by 24.1% to HKD 329.6 million, but the net profit margin improved from 53.7% to 59.4% due to stronger revenue growth, with increased financial costs, advertising, and brokerage fees contributing to the expense rise - Net profit margin increased by 5.7 percentage points from 53.7% to 59.4% year-on-year[60][63][64] Key Operating Expense Changes (For the Six Months Ended September 30) | Expense Item | 2020 (HKD thousand) | 2019 (HKD thousand) | Increase/Decrease | | :--- | :--- | :--- | :--- | | Financial Costs | 99,139 | 55,967 | +77.1% | | Advertising and Promotion Expenses | 15,707 | 5,148 | +205.1% | | Brokerage Commissions, Handling Fees and Clearing Charges | 66,406 | 40,252 | +65.0% | | Staff Costs | 64,199 | 71,365 | -10.0% | | Total Operating Expenses | 329,641 | 265,643 | +24.1% | Future Plans The Group plans to diversify global financial products, invest in FinTech for digital trading, enhance online security, expand into mainland China, optimize branch networks, recruit talent, and boost brand competitiveness - The Group will continue to develop new features for the "Bright Smart Securities (Baby)" and "Bright Smart Futures (Doudou)" apps, advancing client trading services towards digitalization and intelligence[75][77][79] - Plans include expanding into the mainland China market through diversified online channels and enhancing brand recognition domestically[83][85] - Continuous investment in enhancing the efficiency, capacity, and security of online trading systems, including simulation tests exceeding five times the current peak transaction volume[80][82] - The Group will continue to explore more global financial products to meet market demand for Hong Kong stocks, US stocks, A-shares, various futures, and foreign exchange products[74][76] Capital Structure, Liquidity and Financial Resources The Group relies on equity, cash flow, and bank borrowings for funding, maintaining ample liquidity; as of September 30, 2020, bank balances were HKD 407 million, total bank borrowings surged to HKD 23.765 billion, resulting in a 1340.4% gearing ratio and 1.1x current ratio Financial Position Indicators | Indicator | September 30, 2020 | March 31, 2020 | | :--- | :--- | :--- | | Bank Deposits, Balances and Cash | HKD 407.3 million | HKD 477.7 million | | Total Bank Borrowings | HKD 23.7651 billion | HKD 2.8588 billion | | Gearing Ratio | 1,340.4% | 150.3% | | Current Ratio | 1.1 times | 1.4 times | | Unutilized Bank Facilities | HKD 11.6478 billion | HKD 18.0496 billion | Risk Management The Group has established a comprehensive risk management framework to address credit, liquidity, interest rate, foreign currency, and price risks, managing credit risk through client assessment and collateral, and liquidity risk by monitoring funding needs and maintaining sufficient cash and bank facilities - Credit Risk: Primarily arises from amounts due from clients, brokers, and clearing houses, managed by individual credit assessments, requiring securities collateral or cash deposits, and daily monitoring of margin levels[96][97][99] - Liquidity Risk: The Group regularly monitors liquidity requirements, ensuring sufficient cash reserves and adequate committed financing facilities from major financial institutions[103][104] - Price Risk: Primarily arises from listed equity investments, futures contracts, and receivables linked to the fair value of client collateral; the Group regularly monitors investment portfolio performance[109][110][112] Employees and Remuneration Policies As of September 30, 2020, the Group had 261 employees and implements a market-competitive remuneration policy, including bonus schemes, to attract, retain, and motivate staff, while also providing appropriate training and development programs - As of September 30, 2020, the Group had 261 employees, a slight decrease from 263 as of March 31, 2020[111][113] Other Information Directors' and Substantial Shareholders' Interests The report discloses the shareholdings of directors and substantial shareholders as of September 30, 2020, indicating that Mr. Yip Mau Lin, the company's Chairman, is the controlling shareholder, holding approximately 68.67% of the shares through his wholly-owned Bright Smart Holdings Limited and personal beneficial ownership Substantial Shareholders' Shareholdings (September 30, 2020) | Shareholder Name | Nature of Interest | Number of Shares | % of Issued Shares | | :--- | :--- | :--- | :--- | | Mr. Yip Mau Lin | Interest in Controlled Corporation | 900,000,000 | 53.02% | | Mr. Yip Mau Lin | Beneficial Owner | 265,746,280 | 15.65% | | Bright Smart Holdings Limited | Beneficial Owner | 900,000,000 | 53.02% | Corporate Governance During the reporting period, the company fully complied with the Corporate Governance Code set out in Appendix 14 of the Listing Rules, adopted the Model Code for directors' securities transactions, and confirmed all directors' compliance, with the Audit Committee having reviewed the interim financial report - The company fully complied with the code provisions of the Corporate Governance Code during the reporting period[138][142] - The Audit Committee, together with external auditor KPMG, reviewed the Group's unaudited consolidated results and this interim report[140][144] Consolidated Financial Statements Consolidated Statement of Comprehensive Income For the six months ended September 30, 2020, the Group reported revenue of HKD 583 million (+48%), operating profit of HKD 500 million (+70.9%), profit before tax of HKD 401 million (+69.4%), and profit for the period (net profit) of HKD 346 million (+63.6%) Consolidated Statement of Comprehensive Income Summary (For the Six Months Ended September 30) | Item (HKD thousand) | 2020 | 2019 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 582,891 | 393,757 | +48.0% | | Operating Profit | 500,176 | 292,695 | +70.9% | | Profit Before Tax | 401,037 | 236,728 | +69.4% | | Profit for the Period | 346,053 | 211,505 | +63.6% | Consolidated Statement of Financial Position As of September 30, 2020, total assets significantly increased to HKD 28.513 billion, mainly due to a substantial rise in receivables from IPO financing; total liabilities also increased to HKD 26.740 billion due to higher bank loans, while total equity decreased to HKD 1.773 billion from HKD 1.902 billion primarily due to dividends paid Consolidated Statement of Financial Position Summary (HKD thousand) | Item | September 30, 2020 | March 31, 2020 | | :--- | :--- | :--- | | Total Non-Current Assets | 214,091 | 260,390 | | Total Current Assets | 28,299,166 | 6,198,745 | | Total Current Liabilities | 26,697,700 | 4,490,487 | | Net Assets (Total Equity) | 1,772,972 | 1,902,306 | Condensed Consolidated Cash Flow Statement For the six months ended September 30, 2020, the Group reported a net cash outflow of HKD 21.466 billion from operating activities, primarily due to increased client financing for IPOs, while financing activities generated a net cash inflow of HKD 21.302 billion from new bank loans, with cash and cash equivalents at period-end totaling HKD 407 million Cash Flow Statement Summary (For the Six Months Ended September 30, HKD thousand) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash from Operating Activities | (21,466,443) | 510,202 | | Net Cash from Investing Activities | 82,666 | 80,531 | | Net Cash from Financing Activities | 21,301,756 | (584,409) | | Net (Decrease)/Increase in Cash and Cash Equivalents | (82,021) | 6,324 | | Cash and Cash Equivalents at End of Period | 407,312 | 400,863 | Notes to the Unaudited Interim Financial Report Note 11 Segment Reporting The Group's operations are divided into three reportable segments: securities brokerage, commodities and futures brokerage, and spot gold trading, with securities brokerage being the largest contributor to revenue and EBIT, generating HKD 459 million in revenue and HKD 442 million in EBIT during the period Segment Performance Summary (For the Six Months Ended September 30, 2020, HKD thousand) | Segment | Reportable Segment Revenue | Reportable Segment Profit (EBIT) | | :--- | :--- | :--- | | Securities Brokerage | 458,526 | 441,928 | | Commodities and Futures Brokerage | 117,420 | 49,304 | | Spot Gold Trading | 6,682 | 4,263 | | Total | 582,628 | 495,495 | Note 13 Accounts Receivable As of September 30, 2020, total accounts receivable surged from HKD 5.645 billion to HKD 27.861 billion, primarily driven by HKD 18.712 billion in financing for IPO subscriptions, with margin client receivables also increasing from HKD 4.386 billion to HKD 7.438 billion Accounts Receivable Composition (HKD thousand) | Item | September 30, 2020 | March 31, 2020 | | :--- | :--- | :--- | | Receivables from Clearing Houses, Brokers and Dealers | 1,283,237 | 995,494 | | Receivables from Cash Clients | 427,473 | 263,480 | | Receivables from Margin Clients | 7,437,894 | 4,385,813 | | Receivables for IPO Subscriptions | 18,712,291 | — | | Total | 27,860,895 | 5,644,787 | Note 18 Bank Loans To support business expansion, especially IPO financing, the Group's total bank loans significantly increased from HKD 2.859 billion to HKD 23.765 billion, including HKD 16.8 billion specifically for IPOs, with most loans secured by client securities as re-pledged collateral Bank Loan Composition (HKD thousand) | Item | September 30, 2020 | March 31, 2020 | | :--- | :--- | :--- | | Secured Bank Loans | 4,830,130 | 2,423,789 | | Secured IPO Bank Loans | 16,800,000 | — | | Unsecured Bank Loans | 2,135,000 | 435,000 | | Total | 23,765,130 | 2,858,789 | Independent Auditor's Review Report Auditor's Conclusion KPMG, the auditor, reviewed the interim financial report in accordance with Hong Kong Standard on Review Engagements and found no matters suggesting it was not prepared in all material respects according to HKAS 34 "Interim Financial Reporting" - The auditor concluded that nothing came to their attention to suggest the interim financial report was not prepared in all material respects in accordance with HKAS 34 "Interim Financial Reporting"[259][260]