电子交易集团(08036) - 2020 Q3 - 季度财报

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Unaudited) Third Quarter Results The Group's unaudited results show a significant profit increase despite a revenue decline, driven by cost control and government subsidies Financial Performance Highlights | Indicator | For the three months ended Sep 30, 2020 (HK$'000) | For the three months ended Sep 30, 2019 (HK$'000) | For the nine months ended Sep 30, 2020 (HK$'000) | For the nine months ended Sep 30, 2019 (HK$'000) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 9,919 | 10,289 | 29,721 | 33,868 | | Other income | 836 | 322 | 1,489 | 534 | | Other gains and losses, net | (20) | – | (1,077) | – | | Operating profit | 1,814 | 91 | 2,049 | 2,292 | | Profit before tax | 1,770 | 30 | 1,898 | 2,097 | | Income tax credit/(expense) | 53 | (46) | (32) | (566) | | Profit/(loss) for the period attributable to owners of the Company | 1,823 | (16) | 1,866 | 1,531 | | Basic earnings/(loss) per share (HK cents per share) | 0.16 | (–)* | 0.17 | 0.13 | - For the three months ended September 30, 2020, revenue decreased by 3.6% year-on-year, but profit attributable to owners of the Company turned from a loss of HK$16 thousand in the same period of 2019 to a profit of HK$1,823 thousand[7] - For the nine months ended September 30, 2020, revenue decreased by 12.2% year-on-year, but profit attributable to owners of the Company increased by 21.9% to HK$1,866 thousand[7] Condensed Consolidated Statement of Changes in Equity (Unaudited) For the nine months ended September 30, 2020 The Group's total equity decreased in the first nine months of 2020, mainly impacted by shares held for the share award scheme, while retained profits increased Equity Position | Indicator | As at Sep 30, 2019 (HK$'000) | As at Sep 30, 2020 (HK$'000) | | :--- | :--- | :--- | | Share capital | 1,230 | 1,230 | | Share premium | 61,921 | 61,921 | | Capital reserve | (54,333) | (54,333) | | Foreign currency translation reserve | – | 241 | | Shares held for share award scheme | (7,701) | (23,300) | | Share-based compensation reserve | – | 245 | | Retained profits | 68,549 | 69,898 | | Total equity | 69,666 | 55,902 | - As of September 30, 2020, shares held for the share award scheme increased to (HK$23,300 thousand) from (HK$7,701 thousand) on September 30, 2019, indicating the implementation of the scheme[9] - Total equity decreased from HK$69,666 thousand as of September 30, 2019, to HK$55,902 thousand as of September 30, 2020[9] Notes to the Condensed Consolidated Financial Statements 1. General Information e-Brokerage Group Limited was incorporated in the Cayman Islands in 2016 and was listed on the GEM of the Hong Kong Stock Exchange on February 19, 2019 - The Company was incorporated in the Cayman Islands as an exempted company with limited liability on May 23, 2016[12] - The Company's shares were listed on the GEM of The Stock Exchange of Hong Kong Limited on February 19, 2019[12] 2. Basis of Preparation The unaudited condensed consolidated financial statements are prepared in accordance with HKAS 34 and are consistent with the 2019 audited financial statements - The unaudited condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA[13] - The principal accounting policies used are consistent with those followed in the preparation of the 2019 audited consolidated financial statements, except for new and amended standards[13] 3. Adoption of New and Amended Hong Kong Financial Reporting Standards The adoption of new and amended HKFRSs effective January 1, 2020, did not have a material impact on the Group's results and financial position - The Directors believe that the adoption of new and amended HKFRSs effective for the accounting period beginning on January 1, 2020, will not have a material impact on the results and financial position[17] - The Group is assessing the potential impact of newly issued HKFRSs that are not yet effective or have not been early adopted[17] 4. Revenue The Group's revenue, primarily from fintech solutions, declined by 12.2% year-on-year for the nine months ended September 30, 2020 Revenue Breakdown | Revenue Category | For the three months ended Sep 30, 2020 (HK$'000) | For the three months ended Sep 30, 2019 (HK$'000) | For the nine months ended Sep 30, 2020 (HK$'000) | For the nine months ended Sep 30, 2019 (HK$'000) | | :--- | :--- | :--- | :--- | :--- | | Front-office trading solution services income | 5,314 | 5,701 | 16,326 | 18,345 | | Back-office settlement solution services income | 2,551 | 2,854 | 7,603 | 8,948 | | Installation and customisation services income | 427 | 437 | 1,595 | 2,716 | | Managed cloud services income | 964 | 750 | 2,755 | 2,543 | | Others | 663 | 547 | 1,442 | 1,316 | | Total | 9,919 | 10,289 | 29,721 | 33,868 | - For the nine months ended September 30, 2020, front-office trading solution services income decreased by 11.0%, back-office settlement solution services income decreased by 14.6%, and installation and customisation services income decreased by 41.3% year-on-year[18] - Managed cloud services income grew slightly by 8.3% year-on-year for the nine months ended September 30, 2020[18] 5. Other Income, and Other Gains and Losses, Net Other income increased significantly due to government employment support subsidies, while financial assets at FVTPL resulted in a net loss Breakdown of Other Income and Gains/Losses | Indicator | For the three months ended Sep 30, 2020 (HK$'000) | For the three months ended Sep 30, 2019 (HK$'000) | For the nine months ended Sep 30, 2020 (HK$'000) | For the nine months ended Sep 30, 2019 (HK$'000) | | :--- | :--- | :--- | :--- | :--- | | Interest income from bank deposits | 19 | 291 | 345 | 438 | | Management fee from an associate | 31 | 31 | 95 | 96 | | Government subsidies under Employment Support Scheme | 786 | – | 1,049 | – | | Total other income | 836 | 322 | 1,489 | 534 | | Fair value gain/(loss) on financial assets at FVTPL | (20) | – | (1,077) | – | | Total other gains and losses, net | (20) | – | (1,077) | – | - For the nine months ended September 30, 2020, other income grew by 178.8% year-on-year, driven by HK$1,049 thousand in government subsidies from the Employment Support Scheme[26] - For the nine months ended September 30, 2020, financial assets at FVTPL generated a loss of HK$1,077 thousand, primarily from derivative investments[26] 6. Segment Information The Group operates as a single reportable segment providing services to customers, with revenue predominantly generated from the Hong Kong market - The Group has one reportable segment, which is the provision of services to its customers, and separate financial information is not available due to resource integration[27] - For the nine months ended September 30, 2020, revenue from the Hong Kong market was HK$28,930 thousand, accounting for the vast majority of total revenue[30] Revenue by Geographical Market | Geographical Market | For the three months ended Sep 30, 2020 (HK$'000) | For the three months ended Sep 30, 2019 (HK$'000) | For the nine months ended Sep 30, 2020 (HK$'000) | For the nine months ended Sep 30, 2019 (HK$'000) | | :--- | :--- | :--- | :--- | :--- | | Hong Kong | 9,793 | 10,079 | 28,930 | 33,658 | | Macau | 126 | 210 | 791 | 210 | | Total | 9,919 | 10,289 | 29,721 | 33,868 | 7. Income Tax (Credit)/Expense The Group's income tax expense decreased significantly due to Hong Kong's two-tiered profits tax rates and losses incurred by a PRC subsidiary Current Tax - Hong Kong Profits Tax | Indicator | For the three months ended Sep 30, 2020 (HK$'000) | For the three months ended Sep 30, 2019 (HK$'000) | For the nine months ended Sep 30, 2020 (HK$'000) | For the nine months ended Sep 30, 2019 (HK$'000) | | :--- | :--- | :--- | :--- | :--- | | Provision for the period | (53) | 46 | 32 | 566 | - For the nine months ended September 30, 2020, income tax expense was HK$32 thousand, a 94.3% decrease from HK$566 thousand in the same period of 2019[31][61] - Hong Kong Profits Tax is calculated at 8.25% on the first HK$2 million of assessable profits and 16.5% thereafter; no provision was made for the PRC subsidiary due to losses[31][32] 8. Profit Before Tax The Group's profit before tax is stated after charging various operating expenses and finance costs, with depreciation and short-term lease expenses increasing Expenses by Nature | Expense Item | For the three months ended Sep 30, 2020 (HK$'000) | For the three months ended Sep 30, 2019 (HK$'000) | For the nine months ended Sep 30, 2020 (HK$'000) | For the nine months ended Sep 30, 2019 (HK$'000) | | :--- | :--- | :--- | :--- | :--- | | Auditor's remuneration | 200 | 151 | 600 | 446 | | Cost of inventories sold | 170 | 5 | 170 | – | | Depreciation of property, plant and equipment | 255 | 51 | 519 | 143 | | Depreciation of right-of-use assets | 575 | 520 | 1,728 | 1,544 | | Listing expenses | – | – | – | 1,835 | | Legal and professional fees | 552 | 1,056 | 2,190 | 2,309 | | Expenses relating to short-term leases | 56 | 52 | 448 | 209 | Finance Costs | Finance Costs | For the three months ended Sep 30, 2020 (HK$'000) | For the three months ended Sep 30, 2019 (HK$'000) | For the nine months ended Sep 30, 2020 (HK$'000) | For the nine months ended Sep 30, 2019 (HK$'000) | | :--- | :--- | :--- | :--- | :--- | | Other interest expenses | 7 | – | 20 | – | | Interest expenses on lease liabilities | 37 | 61 | 131 | 195 | | Total | 44 | 61 | 151 | 195 | - For the nine months ended September 30, 2020, depreciation of property, plant and equipment increased by 262.9% year-on-year, and depreciation of right-of-use assets increased by 11.9%[34] 9. Earnings/(Loss) Per Share The Group's basic earnings per share for the nine months ended September 30, 2020, was 0.17 HK cents, an increase from the prior year EPS Calculation | Indicator | For the three months ended Sep 30, 2020 | For the three months ended Sep 30, 2019 | For the nine months ended Sep 30, 2020 | For the nine months ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Profit/(loss) attributable to owners of the Company (HK$'000) | 1,823 | (16) | 1,866 | 1,531 | | Weighted average number of ordinary shares ('000 shares) | 1,110,000 | 1,212,696 | 1,110,000 | 1,182,886 | | Basic earnings/(loss) per share (HK cents per share) | 0.16 | (–)* | 0.17 | 0.13 | - For the nine months ended September 30, 2020, basic earnings per share was 0.17 HK cents, an improvement from 0.13 HK cents in the same period of 2019[41] - Diluted earnings/(loss) per share was not presented as there were no potential dilutive ordinary shares in existence[41] 10. Dividend The Board does not recommend the payment of any dividend for the nine months ended September 30, 2020, consistent with the prior year - The Directors do not recommend the payment of a dividend for the nine months ended September 30, 2020 (2019: Nil)[43] 11. Reserves The amounts of the Group's reserves and the movements therein are presented in the condensed consolidated statement of changes in equity - The amounts of the Group's reserves for the current and prior periods and the movements therein are presented in the unaudited condensed consolidated statement of changes in equity[44] Management Discussion and Analysis Business Review The Group's turnover decreased by 12.2% while profit attributable to owners increased by 21.9%, driven by cost reductions and government subsidies - The Group primarily generates revenue from front-office trading solution services, back-office settlement solution services, installation and customisation services, managed cloud services, and other services[47] - For the nine months ended September 30, 2020, turnover was approximately HK$29.7 million, a decrease of approximately 12.2% from the prior year period[47] - Profit attributable to owners of the Company reached approximately HK$1.9 million, an increase of approximately 21.9%, mainly due to decreased listing expenses, subcontracting costs, service costs, and government subsidies[47] Outlook The Group aims to solidify its market position by expanding its wealth management client base, enhancing user applications, and extending cloud services - The Group intends to focus on expanding the client base for its wealth management solutions, improving user trading applications, and extending managed cloud services to brokerage clients in the Asia-Pacific region[48] - The Group's next-generation wealth management solution, set to launch by the end of 2020, aims to empower individual investors on mobile applications[48] - The Group will closely monitor the COVID-19 pandemic's impact on its financial condition and operating results while strictly adhering to cost control measures[50] Financial Review This section details the Group's financial performance for the nine months ended September 30, 2020, analyzing key drivers of change - For the nine months ended September 30, 2020, total revenue was approximately HK$29.7 million, a decrease of about 12.2% year-on-year, mainly due to a significant drop in installation, back-office, and front-office service income[51] - Managed cloud services revenue slightly increased by approximately 8.3% to about HK$2.8 million[51] - Profit attributable to owners of the Company increased by approximately 21.9% to about HK$1.9 million, driven by a combination of reduced expenses and government subsidies[62] Revenue The Group's total revenue for the nine months ended September 30, 2020, was HK$29.7 million, a decrease of 12.2% year-on-year - For the nine months ended September 30, 2020, revenue was approximately HK$29.7 million, a decrease of about 12.2% from approximately HK$33.9 million in the prior period[51] - Installation and customisation services income decreased by approximately 41.3% to about HK$1.6 million[51] - Front-office trading services income decreased by approximately 11.0% to about HK$16.3 million, and back-office settlement solution services income decreased by approximately 14.6% to about HK$7.6 million[51] Purchases and Changes in Inventories Purchases and changes in inventories increased by approximately HK$155,000 for the nine months ended September 30, 2020, due to higher sales of goods - The Group's purchases and changes in inventories increased by approximately HK$155,000 for the nine months ended September 30, 2020[52] - The increase was mainly due to a rise in revenue from the sale of goods by approximately HK$169,000 during the period[52] Profit Before Tax The Group's profit before tax was HK$1.9 million for the nine months ended September 30, 2020, a decrease of 9.5% year-on-year - The Group's profit before tax for the nine months ended September 30, 2020, was approximately HK$1.9 million, a decrease of about 9.5% from the prior year period[55] - The decrease was mainly due to a reduction in non-recurring installation and customisation service income of approximately HK$1.1 million and front-office trading solution service income of approximately HK$2.0 million[55] - This decrease was partially offset by a reduction in listing expenses of approximately HK$1.8 million[55] Other Income Other income for the nine months ended September 30, 2020, increased to approximately HK$1.5 million, primarily from government employment subsidies - For the nine months ended September 30, 2020, the Group's other income increased from approximately HK$0.5 million to approximately HK$1.5 million[56] - The increase was mainly due to government subsidies of approximately HK$1.0 million received under the Employment Support Scheme during the period[56] Staff Costs Staff costs for the nine months ended September 30, 2020, were HK$17.1 million, a 14.6% year-on-year increase due to inflation and R&D expansion - For the nine months ended September 30, 2020, the Group's staff costs were approximately HK$17.1 million, an increase of about 14.6% from the prior year period[57] - The increase was mainly due to a general inflation rate rise in staff costs and the establishment of an R&D center in the PRC[57] Depreciation Depreciation expense for the nine months ended September 30, 2020, increased significantly by 33.2% to approximately HK$0.6 million due to asset additions - The Group's depreciation expense for the nine months ended September 30, 2020, increased significantly by approximately HK$0.6 million, a 33.2% rise from the prior year period[58] - The increase was mainly due to the addition of fixed assets during the period[58] Other Operating Expenses Other operating expenses for the nine months ended September 30, 2020, were HK$8.5 million, a 44.8% year-on-year decrease due to cost reductions - The Group's other operating expenses for the nine months ended September 30, 2020, were approximately HK$8.5 million, a decrease of about 44.8% from the prior year period[59] - The decrease was mainly attributable to reductions in service costs (HK$2.6 million), subcontracting costs (HK$1.8 million), and listing expenses (HK$1.8 million) following the establishment of an in-house R&D team in Shenzhen, PRC[59] Income Tax Expense Income tax expense for the nine months ended September 30, 2020, was HK$32,000, a 94.3% year-on-year decrease, with the effective tax rate dropping to 1.7% - The Group's income tax expense for the nine months ended September 30, 2020, was approximately HK$32,000, a decrease of about 94.3% from the prior year period[61] - The effective income tax rate decreased from approximately 27% in the same period of 2019 to approximately 1.7% in 2020[61] - The decrease in the effective tax rate was mainly due to non-deductible government subsidies and the capitalization of development costs that were fully deducted as incurred[61] Profit Attributable to Owners of the Company for the Period Profit attributable to owners for the nine months ended September 30, 2020, reached HK$1.9 million, a 21.9% year-on-year increase - For the nine months ended September 30, 2020, profit attributable to owners of the Company was approximately HK$1.9 million, an increase of about 21.9% from the prior year period[62] - The increase was mainly attributable to the decrease in listing expenses of approximately HK$1.8 million and service costs of approximately HK$2.6 million[62] - The growth was partially offset by a decrease in non-recurring installation and customisation service income of approximately HK$1.1 million and front-office trading solution service income of approximately HK$2.0 million[62] Dividend The Board does not recommend the payment of any dividend for the nine months ended September 30, 2020, consistent with the prior year - The Board does not recommend the payment of any dividend for the nine months ended September 30, 2020 (2019: Nil)[63] Use of Proceeds The net proceeds of approximately HK$23.3 million from the listing are allocated for business expansion, with some plans delayed due to external factors - The net proceeds from the Share Offer amounted to approximately HK$23.3 million[65] - The use of some proceeds has been delayed, primarily due to the significant impact of social unrest in Hong Kong in the second half of 2019 and the COVID-19 outbreak on the local and global economy[66] Allocation and Utilization of Net Proceeds | Intended Use | Approx. % of Net Proceeds | Utilised Amount as of Sep 30, 2020 (HK$ million) | Unutilised Amount as of Sep 30, 2020 (HK$ million) | | :--- | :--- | :--- | :--- | | Expanding wealth management solution business | 11% | 0.64 | 1.96 | | Improving user trading applications | 29% | 0.65 | 6.15 | | Expanding managed cloud services for local brokerage clients | 11% | 0.42 | 2.18 | | Establishing an R&D center in the PRC | 46% | 9.43 | 1.27 | | General working capital | 3% | – | 0.6 | | Total | 100% | 11.14 | 12.16 | Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures As of September 30, 2020, Mr. Chan Lidor and Mr. Lo Chi Ho held long positions in the Company's shares and underlying shares Directors' Interests | Name of Director | Capacity and Nature of Interest | Number of Shares/Underlying Shares Held | Approx. % of Issued Shares | | :--- | :--- | :--- | :--- | | Mr. Chan Lidor | Interest of spouse | 2,291,420 | 0.19% | | Mr. Lo Chi Ho (also Chief Executive) | Beneficial interest | 9,830,010 | 0.80% | - Mr. Lo Chi Ho's interest comprises 9,100,010 Shares and 730,000 underlying Shares in respect of the awarded Shares granted under the Share Award Scheme[70] Substantial Shareholders' Interests and Short Positions in Shares, Underlying Shares and Debentures As of September 30, 2020, several entities and individuals held substantial long positions in the Company's shares Substantial Shareholders' Interests | Name | Capacity and Nature of Interest | Number of Shares Held | Approx. % of Issued Shares | | :--- | :--- | :--- | :--- | | Quantsmile (BVI) Limited | Beneficial interest | 411,902,870 | 33.49% | | Eagle Soar Corporate Advisory Limited | Beneficial interest & interest of controlled corporation | 652,896,910 | 53.08% | | Good Steward Foundation Limited | Interest of controlled corporation | 652,896,910 | 53.08% | | Financial Data Technologies Limited | Beneficial interest | 130,000,000 | 10.57% | | Mr. Nie Fanqi | Interest of controlled corporation | 130,000,000 | 10.57% | | Bank of Communications Trustee Limited | Trustee | 120,000,000 | 9.76% | - Eagle Soar Corporate Advisory Limited holds a total interest of approximately 53.08% in the Company through direct holdings and its control over Quantsmile (BVI) Limited[73][75] - Bank of Communications Trustee Limited, as the trustee of the Share Award Scheme, holds 120,000,000 Shares of the Company[73][75] Share Option Scheme The Company adopted a share option scheme on January 22, 2019, but no options were granted during the nine months ended September 30, 2020 - The Company adopted a share option scheme on January 22, 2019[77] - No share options were granted during the nine months ended September 30, 2020[77] Share Award Scheme The Company adopted a share award scheme on August 12, 2019, under which 8,010,000 awarded shares were granted during the period - The Company adopted a share award scheme on August 12, 2019, for a term of 10 years[80] - The maximum number of shares to be awarded under the scheme shall not exceed 1% of the issued share capital of the Company from time to time within any 12-month period[80] - As of September 30, 2020, the trustee held 120,000,000 Shares, and 8,010,000 awarded shares were granted to 40 selected persons, of which 310,000 had lapsed[80][81] Purchase, Sale or Redemption of Listed Securities Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period - During the nine months ended September 30, 2020, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company's listed securities[82][87] Competing Interests No Director or controlling shareholder had any interest in a business that competes or is likely to compete with the Group's business - During the nine months ended September 30, 2020, and up to the date of this report, no Director or controlling shareholder had any interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group[83] Interests of the Compliance Adviser The Group has appointed Somerley Capital Limited as its compliance adviser, which holds no disclosable interest in the Company beyond its advisory agreement - The Group has appointed Somerley Capital Limited as its compliance adviser to provide advice and guidance on compliance with applicable laws and the GEM Listing Rules[85] - Apart from the compliance adviser agreement dated December 19, 2018, neither the compliance adviser nor its associates had any interest in relation to the Company which is required to be notified to the Group[85] Review of Financial Statements The Audit Committee has reviewed the Group's unaudited condensed consolidated financial statements for the nine months ended September 30, 2020 - The Audit Committee comprises three independent non-executive Directors, with Mr. Au Yeung Po Fung as the chairman[86] - The Audit Committee has reviewed the unaudited condensed consolidated financial statements, the accounting policies and practices adopted by the Group, and this report[86] Definitions Glossary of Terms This section provides definitions for key terms used in this report to ensure a clear understanding of the content - This section lists the specific meanings of terms such as "Board", "China", "Company", "Controlling Shareholders", "Directors", "GEM Listing Rules", "Group", "HK$", "Hong Kong", "Listing", "Listing Date", "Prospectus", "SFO", "Share", "Shareholders", "Share Award Scheme", "Share Option Scheme", and "Stock Exchange"[89]