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辰罡科技(08131) - 2020 - 中期财报

Company Information and Disclaimer GEM Characteristics and Directors' Responsibilities The GEM market offers listing opportunities for SMEs with higher investment risks, and the board of directors assumes full responsibility for the report's accuracy - The GEM market targets small and medium-sized companies, entailing higher investment risks and market volatility, requiring prudent investor consideration2 - The company's board of directors confirms the report's content is true, complete, and free from misleading or fraudulent elements, assuming full responsibility3 Interim Results Overview Interim Results The Group's unaudited revenue and net loss significantly decreased for the three and six months ended May 31, 2020, with a corresponding increase in basic loss per share Interim Results Overview for the Period Ended May 31, 2020 | Metric | For the 3 months ended May 31, 2020 (HK$ Thousand) | For the 3 months ended May 31, 2019 (HK$ Thousand) | For the 6 months ended May 31, 2020 (HK$ Thousand) | For the 6 months ended May 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 2,144 | 8,519 | 4,643 | 11,162 | | Net Loss | (2,627) | (937) | (4,233) | (2,353) | | Basic Loss Per Share (HK Cents) | (0.87) | (0.31) | (1.41) | (0.78) | Unaudited Condensed Consolidated Interim Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For the three and six months ended May 31, 2020, the Group experienced significant declines in revenue and gross profit, with operating and pre-tax losses expanding, leading to an increased loss for the period Consolidated Statement of Profit or Loss and Other Comprehensive Income (Unaudited) | Metric | For the 3 months ended May 31, 2020 (HK$ Thousand) | For the 3 months ended May 31, 2019 (HK$ Thousand) | For the 6 months ended May 31, 2020 (HK$ Thousand) | For the 6 months ended May 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 2,144 | 8,519 | 4,643 | 11,162 | | Cost of Sales | (381) | (5,918) | (854) | (6,244) | | Gross Profit | 1,763 | 2,601 | 3,789 | 4,918 | | Loss from Operations | (1,762) | (425) | (2,523) | (1,340) | | Finance Costs | (981) | (594) | (1,940) | (1,175) | | Loss Before Tax | (2,743) | (1,019) | (4,463) | (2,515) | | Loss for the Period | (2,627) | (937) | (4,233) | (2,353) | | Basic and Diluted Loss Per Share (HK Cents) | (0.87) | (0.31) | (1.41) | (0.78) | Consolidated Statement of Financial Position As at May 31, 2020, the Group's total assets and equity attributable to owners decreased, while total liabilities increased, resulting in expanded net current liabilities and net liabilities Consolidated Statement of Financial Position (Unaudited) | Metric | As at May 31, 2020 (HK$ Thousand) | As at November 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Total Assets | 5,869 | 7,753 | | Equity Attributable to Owners of the Company | (26,450) | (22,217) | | Total Liabilities | 32,319 | 29,970 | | Net Current (Liabilities)/Assets | (1,323) | 1,226 | | Net Liabilities | (26,450) | (22,217) | Condensed Consolidated Statement of Cash Flows For the six months ended May 31, 2020, the Group continued to utilize cash in operating and investing activities, with no cash generated from financing activities, leading to an expanded net decrease in cash and cash equivalents Condensed Consolidated Statement of Cash Flows (Unaudited) | Metric | For the 6 months ended May 31, 2020 (HK$ Thousand) | For the 6 months ended May 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (2,590) | (7,247) | | Net Cash Used in Investing Activities | (62) | (30) | | Net Cash Generated from Financing Activities | – | 5,000 | | Net Decrease in Cash and Cash Equivalents | (2,652) | (2,277) | | Cash and Cash Equivalents at End of Period | 2,033 | 559 | Consolidated Statement of Changes in Equity For the six months ended May 31, 2020, total equity attributable to owners of the company further decreased due to the loss for the period, leading to a continuous expansion of accumulated losses Consolidated Statement of Changes in Equity (Unaudited) | Metric | As at May 31, 2020 (HK$ Thousand) | As at May 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Share Capital | 42,464 | 42,464 | | Share Premium | 113,656 | 113,656 | | Accumulated Losses | (242,828) | (235,983) | | Total Equity | (26,450) | (19,605) | - The loss for the period and total comprehensive loss led to a further decrease in total equity attributable to owners of the company14 Notes to the Financial Statements Basis of Preparation The unaudited consolidated financial statements are prepared in accordance with Hong Kong Generally Accepted Accounting Principles, HKICPA standards, and GEM Listing Rules, using the historical cost convention, and have been reviewed by the Audit Committee - The financial statements are prepared in accordance with Hong Kong Generally Accepted Accounting Principles and GEM Listing Rules, and have been reviewed by the Audit Committee15 Impact of New Hong Kong Financial Reporting Standards and Hong Kong Accounting Standards The Group adopted several new and revised HKFRS and HKAS for the first time, with HKFRS 16 'Leases' leading to the recognition of right-of-use assets and lease liabilities, along with related depreciation and interest expenses - The Group adopted several new and revised Hong Kong Financial Reporting Standards and Hong Kong Accounting Standards for the first time, with no significant impact on the financial statements, but resulting in new accounting policies and disclosure requirements1617 - The adoption of HKFRS 16 'Leases' resulted in the recognition of right-of-use assets of approximately HK$86,000 and lease liabilities of approximately HK$86,000, generating depreciation of HK$13,000 and interest expenses of HK$3,0001819 Revenue The Group's main businesses include computer software licensing, leasing, maintenance, hardware sales, FinTech resource services, and overseas mortgage loan consultancy, with revenue significantly decreasing year-on-year for the three and six months ended May 31, 2020, primarily due to a large drop in computer hardware sales - The Group primarily engages in sales of computer software licenses, software leasing, maintenance services, computer hardware sales, FinTech resource services, and overseas mortgage loan consultancy services22 Revenue Analysis (Unaudited) | Source of Revenue | For the 3 months ended May 31, 2020 (HK$ Thousand) | For the 3 months ended May 31, 2019 (HK$ Thousand) | For the 6 months ended May 31, 2020 (HK$ Thousand) | For the 6 months ended May 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Sales of computer software licenses, software leasing and provision of related services | 460 | 2,285 | 1,711 | 3,072 | | Provision of maintenance services | 1,155 | 735 | 2,313 | 2,168 | | Sales of computer hardware | 125 | 5,189 | 153 | 5,324 | | Provision of FinTech resource services | 356 | 310 | 418 | 598 | | Provision of overseas mortgage loan consultancy services | 48 | – | 48 | – | | Total Revenue from Contracts with Customers | 2,144 | 8,519 | 4,643 | 11,162 | Segment Information The Group's operations are divided into three segments: financial solutions, FinTech resources, and overseas property mortgage consultancy services, with revenue from financial solutions and FinTech resources decreasing for the six months ended May 31, 2020, while the new overseas property mortgage consultancy service began contributing revenue - The Group operates in three business segments: financial solutions, FinTech resources, and overseas property mortgage consultancy services24 - To assist Hong Kong overseas property investors affected by the pandemic, the Group launched a new overseas property mortgage loan consultancy service in the second quarter of 202027 Segment Revenue and Results For the six months ended May 31, 2020, revenue from financial solutions and FinTech resources segments decreased year-on-year, while the newly launched consultancy services segment contributed HK$48,000 in revenue Segment Revenue and Results (Unaudited) | Segment | For the 6 months ended May 31, 2020 (HK$ Thousand) | For the 6 months ended May 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Financial Solutions Revenue | 4,177 | 10,564 | | FinTech Resources Revenue | 418 | 598 | | Consultancy Services Revenue | 48 | – | | Total Revenue | 4,643 | 11,162 | | Financial Solutions Segment Results | 1,855 | 2,379 | | FinTech Resources Segment Results | 318 | 138 | | Consultancy Services Segment Results | (48) | – | | Total Loss for the Period | (4,233) | (2,353) | Segment Assets and Liabilities As at May 31, 2020, both assets and liabilities of the financial solutions segment decreased, while those of the FinTech resources and consultancy services segments remained relatively small Segment Assets and Liabilities (Unaudited) | Metric | As at May 31, 2020 (HK$ Thousand) | As at November 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Financial Solutions Segment Assets | 3,843 | 6,665 | | FinTech Resources Segment Assets | 58 | 60 | | Consultancy Services Segment Assets | 7 | – | | Consolidated Total Assets | 5,869 | 7,109 | | Financial Solutions Segment Liabilities | 5,542 | 3,935 | | FinTech Resources Segment Liabilities | 236 | 225 | | Consultancy Services Segment Liabilities | 142 | 19 | | Consolidated Total Liabilities | 32,319 | 26,689 | Geographical Segments and Major Customers All of the Group's revenue and non-current assets are derived from Hong Kong, thus no geographical segment information is presented, and two customers contributed 10% or more of the Group's revenue for the six months ended May 31, 2020 - All of the Group's revenue and non-current assets are located in Hong Kong, thus no geographical segment information is presented32 - For the six months ended May 31, 2020, two customers contributed 10% or more of the Group's revenue33 Loss from Operations For the three and six months ended May 31, 2020, the Group's loss from operations was primarily impacted by increased staff costs and a significant decrease in the cost of sales of computer hardware Composition of Loss from Operations (Unaudited) | Item | For the 3 months ended May 31, 2020 (HK$ Thousand) | For the 3 months ended May 31, 2019 (HK$ Thousand) | For the 6 months ended May 31, 2020 (HK$ Thousand) | For the 6 months ended May 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 47 | 58 | 112 | 118 | | Depreciation of right-of-use assets | 7 | – | 13 | – | | Staff costs (excluding directors' emoluments) | 2,111 | 1,933 | 3,991 | 3,965 | | Cost of sales of computer hardware | 99 | 5,102 | 104 | 5,226 | Finance Costs For the three and six months ended May 31, 2020, the Group's finance costs primarily comprised imputed interest expenses on promissory notes and convertible bonds, further increasing due to interest expenses on lease liabilities Finance Costs (Unaudited) | Item | For the 3 months ended May 31, 2020 (HK$ Thousand) | For the 3 months ended May 31, 2019 (HK$ Thousand) | For the 6 months ended May 31, 2020 (HK$ Thousand) | For the 6 months ended May 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Imputed interest expense on promissory note | 278 | – | 542 | – | | Imputed interest expense on convertible bonds | 701 | 594 | 1,395 | 1,175 | | Interest expense on lease liabilities | 2 | – | 3 | – | | Total | 981 | 594 | 1,940 | 1,175 | Income Tax Credit The Group did not generate assessable profits during the period, thus no Hong Kong profits tax provision was made, and no deferred tax assets were recognized due to uncertainty of future profit sources, despite having unutilized tax losses that can be carried forward indefinitely - The Group had no estimated assessable profits for the period, thus no Hong Kong profits tax provision was made37 - No deferred tax assets were recognized due to the uncertainty of future profit sources, but the Group has unutilized tax losses of approximately HK$75,446,000 (2019: HK$68,218,000) that can be carried forward indefinitely3752 Dividends The Board of Directors recommended no interim dividend for the six months ended May 31, 2020 - The Board of Directors recommended no interim dividend for the six months ended May 31, 202040 Loss Per Share For the three and six months ended May 31, 2020, the basic loss per share attributable to owners of the company was 0.87 HK cents and 1.41 HK cents, respectively, with diluted loss per share being the same as basic loss per share due to the anti-dilutive nature of convertible bonds and convertible preference shares Loss Per Share (Unaudited) | Metric | For the 3 months ended May 31, 2020 (HK Cents) | For the 3 months ended May 31, 2019 (HK Cents) | For the 6 months ended May 31, 2020 (HK Cents) | For the 6 months ended May 31, 2019 (HK Cents) | | :--- | :--- | :--- | :--- | :--- | | Basic Loss Per Share | (0.87) | (0.31) | (1.41) | (0.78) | | Diluted Loss Per Share | (0.87) | (0.31) | (1.41) | (0.78) | - The exercise of convertible bonds and convertible preference shares would reduce loss per share, thus they are anti-dilutive, resulting in diluted loss per share being the same as basic loss per share42 Trade and Other Receivables As at May 31, 2020, the Group's total trade and other receivables slightly increased, with the aging analysis of trade receivables showing a significant increase in overdue amounts exceeding 90 days Trade and Other Receivables (Unaudited) | Item | As at May 31, 2020 (HK$ Thousand) | As at November 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Trade receivables (net of impairment) | 840 | 860 | | Prepayments, deposits and other receivables | 1,359 | 1,310 | | Total | 2,199 | 2,170 | Aging Analysis of Trade Receivables (Unaudited) | Aging | As at May 31, 2020 (HK$ Thousand) | As at November 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Current | 141 | 576 | | 31 to 60 days | 168 | 192 | | 61 to 90 days | 96 | – | | Over 90 days | 435 | 98 | | Total | 840 | 866 | - The Group's credit period ranges from 0 to 30 days, with close monitoring of collections to mitigate credit risk44 Reserves The Group's reserves and their movements are presented in the consolidated statement of changes in equity - The Group's reserves and their movements are presented in the consolidated statement of changes in equity47 Promissory Note On November 28, 2019, the Group issued a new promissory note of HK$8,000,000 to related company Active Investments Capital Limited, non-interest bearing and due on March 1, 2021, with the total amount approximately HK$7,102,000 as at May 31, 2020 - On November 28, 2019, the Group issued a new promissory note of principal amount HK$8,000,000 to related company Active Investments Capital Limited, which is non-interest bearing and due on March 1, 202148 Carrying Value of Promissory Note (Unaudited) | Item | As at May 31, 2020 (HK$ Thousand) | As at November 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Promissory note due to a related company | 7,102 | 6,560 | Convertible Bonds On November 22, 2018, the Company issued zero-interest convertible bonds with a total principal amount of approximately HK$29,700,000 to Maximizer International Limited, with no conversions occurring during the period, and the carrying value of the liability component increased to HK$16,562,000 - On November 22, 2018, the Company issued zero-interest convertible bonds with a total principal amount of approximately HK$29,700,000 to Maximizer International Limited, with a conversion price of HK$0.17 per share50 - No convertible bonds were converted by holders during the two periods ended May 31, 2020 and 201951 Movement in Convertible Bonds Liability Component (Unaudited) | Item | Amount (HK$ Thousand) | | :--- | :--- | | Liability component as at November 30, 2019 and December 1, 2019 | 15,167 | | Imputed interest expense | 1,395 | | Liability component as at May 31, 2020 | 16,562 | Deferred Tax Liabilities As at May 31, 2020, deferred tax liabilities decreased to HK$1,712,000 due to a credit to the consolidated statement of profit or loss and other comprehensive income, and the Group did not recognize any deferred tax assets due to unpredictable future profit sources Movement in Deferred Tax Liabilities (Unaudited) | Item | Convertible Bonds (HK$ Thousand) | | :--- | :--- | | As at November 30, 2019 and December 1, 2019 | 1,942 | | Credited to consolidated statement of profit or loss and other comprehensive income | (230) | | As at May 31, 2020 | 1,712 | - The Group did not recognize any deferred tax assets due to unpredictable future profit sources52 Other Payables and Accrued Charges As at May 31, 2020, the Group's total other payables and accrued charges amounted to HK$4,021,000, a slight decrease from November 30, 2019 Other Payables and Accrued Charges (Unaudited) | Item | As at May 31, 2020 (HK$ Thousand) | As at November 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Accrued charges | 3,005 | 3,275 | | Other payables | 1,016 | 1,038 | | Total | 4,021 | 4,313 | Contract Liabilities As at May 31, 2020, the Group's contract liabilities increased to HK$2,630,000, primarily comprising maintenance service fees and contract revenue received in advance Contract Liabilities (Unaudited) | Item | As at May 31, 2020 (HK$ Thousand) | As at November 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Maintenance service fees received in advance | 1,623 | 1,278 | | Contract revenue received in advance | 1,007 | 481 | | Total | 2,630 | 1,759 | Amount Due to a Related Company The amount due to related company Maximizer Services Inc. is primarily for software purchases, royalty fees, and expenses paid on behalf, being interest-free, unsecured, and repayable on demand - The amount due to related company Maximizer Services Inc. is primarily for software purchases, royalty fees, and expenses paid on behalf54 - This amount is interest-free, unsecured, and repayable on demand54 Management Discussion and Analysis Financial Review For the three months ended May 31, 2020, the Group's revenue decreased by 75% year-on-year, and net loss expanded, mainly due to increased professional and legal fees, more sales and marketing staff, and higher finance costs, while the Group continued strict cost control and invested in new product development and business diversification Key Financial Review Data (Unaudited) | Metric | For the 3 months ended May 31, 2020 (HK$ Thousand) | For the 3 months ended May 31, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 2,144 | 8,519 | | Net loss attributable to shareholders | (2,627) | (937) | | Operating expenses | 3,532 | 3,033 | | Staff costs (excluding directors' emoluments) | 2,111 | 1,933 | - Revenue decreased by 75%, and net loss expanded, primarily due to increased finance costs, professional and legal fees, and an expanded sales and marketing team555658 - The Group continues to invest in developing existing products, enhancing customer support services, and allocating resources to the second phase development of the new 'FinReg Innovation Tool' and the overseas property mortgage loan consultancy service platform56 Liquidity and Financial Resources The Group maintains a prudent treasury policy, investing only in cash and short-term bank deposits, and as at May 31, 2020, its debt-to-equity ratio was 4.03, higher than 2.67 in 2019, with major liabilities including promissory notes and convertible bonds due to related companies - The Group maintains a prudent treasury policy, not investing in anything other than cash and other short-term bank deposits59 Repayment Schedule (Unaudited) | Repayment Period | As at May 31, 2020 (HK$ Thousand) | As at November 30, 2019 (HK$ Thousand) | | :--- | :--- | :--- | | Within one year | 218 | 229 | | Within one to two years | 7,102 | 6,560 | | Within three to five years | 16,562 | 15,167 | | To be fully repaid within five years | 23,882 | 21,956 | - As at May 31, 2020, the Group's debt-to-equity ratio was 4.03 (2019: 2.67)61 Pledge of Assets As at May 31, 2020, the Group had not pledged or mortgaged any of its assets - The Group had not pledged or mortgaged any of its assets as at May 31, 202062 Foreign Exchange Fluctuation Risk and Related Hedging All of the Group's assets, liabilities, and transactions are denominated in Hong Kong Dollars or Canadian Dollars, and no foreign currency hedging is undertaken due to perceived minimal foreign exchange risk - All of the Group's assets, liabilities, and transactions are denominated in Hong Kong Dollars or Canadian Dollars63 - The Group has not undertaken any foreign currency investment hedging, as foreign exchange risk is considered minimal6465 Treasury Policy The Group's cash and bank deposits are denominated in Hong Kong Dollars and Canadian Dollars, with core business transactions primarily in Hong Kong Dollars, and no derivative instruments are used to hedge foreign exchange risk - The Group's cash and bank deposits are denominated in Hong Kong Dollars and Canadian Dollars, with core business transactions primarily in Hong Kong Dollars65 - The Group does not use any derivative instruments to hedge foreign exchange risk, as foreign exchange risk is considered minimal65 Contingent Liabilities As at May 31, 2020, the Group had no significant contingent liabilities - As at May 31, 2020, the Group had no significant contingent liabilities66 Material Investments The Group held no material investments for the three months ended May 31, 2020 - The Group held no material investments for the three months ended May 31, 202067 Major Events As at May 31, 2020, the Group had no significant capital commitments and no future plans for material investments or acquisitions of capital assets - As at May 31, 2020, the Group had no significant capital commitments and no future plans for material investments or acquisitions of capital assets68 Employees and Remuneration Policy The Group's remuneration package is determined by employee performance, experience, and market levels, including basic salary, MPF scheme, and medical plans, with 24 employees in Hong Kong as at May 31, 2020, and total staff costs of approximately HK$2,111,000 - The Group's remuneration package is determined by employee performance, experience, and market levels, with benefits including basic salary, Mandatory Provident Fund scheme, and medical plans69 - As at May 31, 2020, the Group employed 24 staff in Hong Kong (2019: 22 staff), with total staff costs of approximately HK$2,111,00069 - Eight employees are eligible for long service payments, with an estimated maximum amount of approximately HK$389,00069 Pension Scheme The Group participates in the Mandatory Provident Fund scheme for all Hong Kong employees, contributing 5% of relevant employee income, with contributions to retirement benefit schemes amounting to approximately HK$82,000 for the three months ended May 31, 2020 - The Group participates in the Mandatory Provident Fund scheme for all Hong Kong employees, contributing 5% of relevant employee income70 - For the three months ended May 31, 2020, contributions to retirement benefit schemes amounted to approximately HK$82,000 (2019: HK$78,000)70 Operational Review For the three months ended May 31, 2020, the Group's revenue significantly decreased by 75% year-on-year, impacted by the COVID-19 pandemic, Hong Kong's economic recession, and political instability, leading the Group to improve existing products, expand its customer base, enhance online promotion, successfully promote the 'FinReg Innovation Tool,' and participate in the Distance Business Programme - For the three months ended May 31, 2020, revenue was approximately HK$2,144,000, a year-on-year decrease of 75%71 - The COVID-19 pandemic, Hong Kong's economic recession, and political instability posed threats to the Group, leading to a slowdown in customer business activities and delayed project progress71 - The Group implemented various measures to address difficulties, including hosting online seminars, enhancing online media promotion, collaborating with new business partners, identifying new business opportunities, and strictly controlling fixed costs72 - The 'FinReg Innovation Tool' has secured sales contracts with one new brokerage client and one existing client, and is in close discussions with no less than ten potential clients73 - The Group successfully registered as an IT service provider for the HKSAR Government's Distance Business (D-Biz) Programme, expanding its customer base to non-financial institutions74 - Since 2019, the Group has collaborated with no less than ten new business partners to provide cloud services, cybersecurity, compliance solutions, and partnered with a globally renowned multinational company to offer voice AI-driven solutions75 Outlook The Group's top priorities for 2020 are to enhance operational efficiency and revenue growth, focusing on improving and upgrading OCTOSTP, launching diversified solutions like the 'FinReg Innovation Tool,' and exploring new business opportunities to expand its customer base and revenue - Operational efficiency and revenue growth are the Group's top priorities for 202077 - The Group will focus more R&D on improving and upgrading OCTOSTP and launching more new diversified solutions to the market, such as the 'FinReg Innovation Tool'77 - The Group will explore new business opportunities to expand its existing and potential customer base and believes it will achieve growth when market conditions improve77 Supplementary Information for the Six Months Ended May 31, 2020: Expansion Plans Sales of Computer Software Licenses, Software Leasing and Provision of Related Services The Group plans to expand this segment by upgrading its flagship OCTOSTP system to a C version, extending its customer base to non-financial institutions, enhancing the 'FinReg Innovation Tool' product foundation, and strengthening its media promotion platform - The Group intends to expand this segment by upgrading the OCTOSTP system, expanding its customer base, and expanding its product base81 Upgrade of OCTOSTP System The Group is developing a new C version of the OCTOSTP system, has signed a new contract with a Singaporean broker, and has entered into sales contracts with no less than five brokerage firms for optimizations related to new HKEX ETFs and leveraged/inverse products - The Group is developing a new C version of the OCTOSTP system to replace the old Visual Basic version, offering better technical performance and stability82 - A new contract for the OCTOSTP system upgrade to the C version has been signed with a renowned Singaporean brokerage firm, with user acceptance testing expected to be completed in the third quarter of the current fiscal year82 - New sales contracts have been entered into with no less than five brokerage firms for optimizations related to new Exchange Traded Funds and leveraged and inverse products launched by the Stock Exchange83 Expansion of Customer Base The Group is expanding its customer base to non-financial institutions, asset management companies, and insurance companies, promoting the new 'FinReg Innovation Tool' through seminars and online live broadcasts, and has signed two sales contracts - The Group is expanding its customer base to non-financial institutions, asset management companies, and insurance companies83 - Through seminars and collaborations with business partners to promote the 'FinReg Innovation Tool,' two sales contracts have been signed with one new brokerage client and one existing client84 - Actively utilizing online platforms, conducting live broadcasts on Facebook at least once a month with business partners to promote the latest developments and services85 Expansion of Product Base The Group is investing resources to enhance the 'FinReg Innovation Tool,' which automates and improves efficiency in risk management and regulatory compliance for clients, and provides OCTOSTP middle-office operational modules to boost brokerage firm operational efficiency - The Group is investing resources to enhance the 'FinReg Innovation Tool,' aiming to assist clients in achieving automation and efficiency in risk management and regulatory compliance85 - The OCTOSTP middle-office operational module provides customer relationship management, marketing, risk and compliance management, and administrative functions, including a Central Clearing and Settlement System report generator85 Enhancement of Media Promotion Platform The Group is strengthening media promotion through website redesign, launching a Facebook page, and live streaming on Facebook and YouTube channels, also leveraging the Technology Voucher Programme to help clients enhance productivity and expand its customer base - The Group is strengthening media promotion through website redesign, launching a Facebook page, and live streaming on Facebook and YouTube channels86 - The Group promotes the Technology Voucher Programme through its Facebook page, aiming to help clients utilize technology services and solutions to enhance productivity, thereby expanding its customer base8687 Provision of Overseas Mortgage Loan Consultancy Services To assist Hong Kong overseas property investors affected by the pandemic, the Group launched a new overseas mortgage loan consultancy business in 2020, renamed its subsidiary to Canada Mortgage Limited, developed an application platform using existing mobile app architecture, and has received nine customer applications - The Group launched a new business in 2020 to provide overseas mortgage loan consultancy services to assist Hong Kong overseas property investors88 - Subsidiary ABC Enterprise Limited has been renamed Canada Mortgage Limited, focusing on overseas property mortgage loan consultancy services88 - The Group developed a mortgage loan application platform using existing mobile application architecture and has assembled a new business team, receiving nine customer applications88 Provision of Maintenance Services The provision of maintenance services is an integral part of OCTOSTP direct sales, and its performance will improve with the expansion of the computer software licensing, software leasing, and related services segment - The provision of maintenance services is an integral part of OCTOSTP direct sales, and its performance will improve with the expansion of the computer software licensing, software leasing, and related services segment89 Sales of Computer Hardware The Group plans to expand its computer hardware sales business by extending its customer base to non-financial clients and other departments within brokerage firms and banks, and by broadening its product offerings to include non-financial solution modules, managed services, and infrastructure services, collaborating with various business partners - The Group intends to expand its computer hardware sales segment by expanding its customer base and broadening its product offerings91 Expansion of Customer Base The Group has expanded its customer base to non-financial clients, signing five hardware sales contracts with one non-financial client in 2020, and is actively engaging other departments within brokerage firms and banks - The Group has expanded its customer base to non-financial clients, signing five hardware sales contracts with one non-financial client in 202092 - Engaging other departments within brokerage firms and banks through telemarketing and seminars, and discussing upgrades for computer hardware, firewalls, and other third-party products with multiple clients92 Expansion of Product Base The Group is introducing non-financial solution modules, managed service solutions, and infrastructure services, and collaborating with no less than ten new business partners to offer diversified services including cloud, cybersecurity, and AI voice-driven solutions - The Group has begun exploring and introducing non-financial solution modules, managed service solutions, and infrastructure services93 - Since early 2019, the Group has collaborated with no less than ten new business partners to provide cloud services, cybersecurity solutions, compliance solutions, and more93 - In 2020, the Group partnered with a globally renowned multinational company to provide hardware and software, particularly voice AI-driven solutions93 Provision of FinTech Resource Services The Group plans to expand FinTech resource services by recruiting HR professionals, collaborating with headhunters, utilizing recruitment portals, and participating in career fairs to build and maintain a large talent pool of IT professionals, and has signed a new secondment contract with an existing financial client - The Group intends to expand FinTech resource services by recruiting human resources professionals and collaborating with headhunting firms94 - A new secondment contract has been signed with an existing financial client, and the Group plans to bid for IT support secondment services for non-profit organizations94 - The Group has hired HR personnel, engaged seven recruitment agencies, advertised on prominent recruitment portals, and participated in career fairs, to expand its talent pool of IT professionals95 Other Information Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures As at May 31, 2020, the register recorded no disclosable long or short positions held by directors and the chief executive in the shares, underlying shares, and debentures of the Company and its associated corporations - As at May 31, 2020, the register recorded no disclosable long or short positions held by directors and the chief executive in the shares, underlying shares, and debentures of the Company and its associated corporations979899100101102103 Interests Discloseable Under the Securities and Futures Ordinance and Major Shareholders As at May 31, 2020, Maximizer International Limited, Pacific East Limited, and DGM Trust Corporation were major shareholders of the Company, holding long positions in shares, with Maximizer International Limited also holding convertible preference shares and convertible bonds Major Shareholders' Long Positions in Shares (Unaudited) | Name | Capacity | Number of Ordinary Shares | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Maximizer International Limited | Beneficial owner | 177,793,941 | 59.05% | | Pacific East Limited | Beneficial owner | 16,450,838 | 5.46% | | DGM Trust Corporation | Trustee | 194,244,779 | 64.51% | - DGM Trust Corporation is the trustee of The City Place Trust, which wholly owns Maximizer International Limited and Pacific East Limited106 - Maximizer International Limited holds 123,529,400 convertible preference shares and convertible bonds with a principal amount of HK$29,699,876.20, both convertible at HK$0.17 per share108112 Audit Committee The Audit Committee, comprising three independent non-executive directors, reviews financial reporting, internal controls, and misconduct concerns, serving as the primary liaison with external auditors, and held two meetings during the period to review and confirm interim results compliance with applicable accounting standards - The Audit Committee comprises three independent non-executive directors: Mr. Liu Kwong Sang, Mr. Wong Kim Ho, and Mr. William Keith Jacobsen, with Mr. Liu Kwong Sang as Chairman111 - The committee is responsible for reviewing financial reporting, internal controls, misconduct concerns, and serves as the primary liaison between the Company and external auditors113 - During the six months ended May 31, 2020, the Audit Committee held two meetings, reviewing and confirming that the interim results were prepared in accordance with applicable accounting standards113 Code of Conduct for Securities Transactions by Directors For the six months ended May 31, 2020, the Company adopted a code of conduct no less stringent than the required dealing standards, with no instances of non-compliance by directors found - The Company adopted a code of conduct no less stringent than the required dealing standards, with no instances of non-compliance by directors found114 Corporate Governance Code The Company is committed to maintaining high standards of corporate governance, with one deviation noted: three independent non-executive directors have served for over nine years but are deemed capable by the board and re-elected by shareholders - The Company is committed to maintaining high standards of corporate governance, complying with the Corporate Governance Code set out in Appendix 15 of the GEM Listing Rules, except for the disclosed deviation115 - Three independent non-executive directors have served for over nine years, but the board believes they can still fulfill their duties and have been re-elected by shareholders, which constitutes a deviation from Code Provision A.4.3116 Financial Reporting The Company's management provides financial updates and consolidated financial statements to the board quarterly instead of monthly, a deviation from Code Provision C.1.2, though management provides timely updates on significant changes - Management provides financial updates and consolidated financial statements to the board quarterly instead of monthly, which is a deviation from Code Provision C.1.2117 - Management provides timely updates to all board members regarding any significant changes in the Company's performance, financial position, and outlook117 Internal Audit Function The Group has not had an internal audit function since its listing, a deviation from Code Provision C.2.5, but maintains an internal control committee responsible for reviewing the effectiveness of internal control systems annually - The Group has not had an internal audit function since its listing, which is a deviation from Code Provision C.2.5118 - The Group has an internal control committee responsible for reviewing the effectiveness of internal control systems annually118 Purchase, Sale or Redemption of Listed Securities For the six months ended May 31, 2020, neither the Company nor any of its subsidiaries redeemed, purchased, or sold any of the Company's listed securities - For the six months ended May 31, 2020, neither the Company nor any of its subsidiaries redeemed, purchased, or sold any of the Company's listed securities119