梧桐国际(00613) - 2024 - 中期财报

Company Information Company Overview Wutong International Development Limited's corporate overview covers board composition, key committees, and essential corporate details - Board members include Dr. Zhuang Youheng (Chairman), Mr. Zhang Tingji (Vice Chairman), and Dr. Mai Jialong (Managing Director)[4] - The company's principal place of business is 8/F, Wah Hoi Centre, 28 Marble Road, North Point, Hong Kong, changing to 23/F from September 23, 2024[4] - The company's stock code is 613[4] Management Discussion and Analysis Overall Financial Performance The Group experienced significant revenue decline and increased losses, primarily from fair value adjustments and associate losses, declaring no interim dividend Key Financial Indicators for H1 2024 | Indicator | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | Change (HK$ '000) | Change % | | :--------------- | :-------------------- | :-------------------- | :------------ | :--------- | | Total Revenue | 53,600 | 108,100 | (54,500) | -50.4% | | Loss Before Tax | (94,200) | (30,500) | (63,700) | -208.85% | | Loss Attributable to Company Shareholders | (91,100) | (30,700) | (60,400) | -196.74% | | Other Comprehensive Expenses | (67,300) | (24) | (67,276) | -280316.67% | - Loss primarily due to net unrealized fair value loss on financial assets at fair value through profit or loss of approximately HK$39.9 million and share of losses of associates of approximately HK$46.4 million[5] - No interim dividend was paid for the period (2023: nil)[5] Business Review The Group's H1 2024 business performance declined due to macroeconomic challenges, geopolitical tensions, and interest rate uncertainties - Hong Kong's economy experienced moderate growth, but geopolitical tensions, trade conflicts, and uncertain US interest rate trends increased business environment uncertainty[5] - The volatile global environment and high-interest rate climate exerted significant pressure on the Group's core businesses, leading to decreased revenue and profitability[5] Financial Services Financial services revenue grew by 32.0% to HK$39.1 million, driven by increased margin loan interest, despite asset management income decline - Holds Type 1, 2, 4, 5, 6, 7, 8, and 9 licenses under the SFO, and has applied for a Type 3 (leveraged foreign exchange trading) license, expected to be approved in Q2 2025[6] Financial Services Segment Performance | Indicator | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | Change (HK$ '000) | Change % | | :--------------- | :-------------------- | :-------------------- | :------------ | :--------- | | Asset Management Service Income | 1,200 | 1,900 | (700) | -36.84% | | Margin Loan Interest Income | 35,600 | 24,500 | 11,100 | 45.31% | | Corporate Finance Advisory Revenue | 1,800 | 2,700 | (900) | -33.33% | | Segment Revenue | 39,100 | 29,600 | 9,500 | 32.03% | | Segment Profit | 22,600 | 18,600 | 4,000 | 21.51% | Credit and Lending Services Credit and lending services revenue and profit significantly declined due to a prior period's bad debt recovery and reduced loan disbursements - Holds two Money Lenders Ordinance licenses, with clients primarily being corporations and high-net-worth individuals[7] Credit and Lending Services Segment Performance | Indicator | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | Change (HK$ '000) | Change % | | :--------------- | :-------------------- | :-------------------- | :------------ | :--------- | | Segment Revenue | 1,600 | 66,100 | (64,500) | -97.58% | | Segment Profit | 400 | 64,000 | (63,600) | -99.38% | - Loan and interest receivables decreased from approximately HK$504.8 million as at December 31, 2023, to approximately HK$119 million as at June 30, 2024[7] - Impairment allowance of approximately HK$2 million (December 31, 2023: approximately HK$0.9 million) was recognized[7] Other Financial Services Other financial services revenue increased to HK$7.2 million, with profit reaching HK$2.0 million, driven by client demand for advisory services Other Financial Services Segment Performance | Indicator | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | Change (HK$ '000) | Change % | | :------- | :-------------------- | :-------------------- | :------------ | :--------- | | Segment Revenue | 7,200 | 5,700 | 1,500 | 26.32% | | Segment Profit | 2,000 | 800 | 1,200 | 150.00% | - Revenue growth primarily driven by more clients facing financial pressure and challenges due to increased competition, business disruptions, and global market uncertainties[8] Property Investment and Leasing Property investment and leasing revenue slightly decreased, and segment loss increased to HK$11.6 million due to higher interest and fair value losses Property Investment and Leasing Segment Performance | Indicator | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | Change (HK$ '000) | Change % | | :------- | :-------------------- | :-------------------- | :------------ | :--------- | | Segment Revenue | 5,700 | 6,000 | (300) | -5.00% | | Segment Loss | (11,600) | (7,800) | (3,800) | -48.72% | - Increased segment loss mainly due to increased loan interest expenses of HK$1 million and increased fair value losses on investment properties of HK$2.6 million[9] - As of June 30, 2024, the Group held 4 commercial properties with a total fair value of HK$495.8 million[9] Tactical and Strategic Investments Tactical and strategic investments recorded an HK$88.2 million loss, primarily from associate losses and fair value losses on financial assets Tactical and Strategic Investments Segment Performance | Indicator | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | Change (HK$ '000) | Change % | | :------- | :-------------------- | :-------------------- | :------------ | :--------- | | Segment Revenue | 1 | 800 | (799) | -99.88% | | Segment Loss | (88,200) | (81,500) | (6,700) | -8.22% | - Loss mainly due to share of losses of associates of approximately HK$46.4 million (2023: HK$15.1 million) and net fair value loss on financial assets at fair value through profit or loss of approximately HK$39.9 million (2023: HK$70.5 million)[10] Outlook The Group maintains cautious optimism for long-term growth, focusing on strategic initiatives amidst global economic uncertainties and potential interest rate changes - Remains cautiously optimistic about the Group's long-term growth prospects, expecting Hong Kong's economy to continue moderate growth[11] - Will closely monitor global developments and potential US Federal Reserve interest rate cuts in September 2024[11] - Strategic focus includes strengthening competitive advantages in key business segments, diversifying revenue sources, strict cost management, optimizing resource allocation, and exploring new growth opportunities[11] Financial Review Overall revenue declined, comprehensive expenses rose, and net assets decreased, while the Group maintained strong liquidity and a conservative financial policy Revenue Composition for H1 2024 | Revenue Source | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | Change (HK$ '000) | Change % | | :----------------------- | :-------------------- | :-------------------- | :------------ | :--------- | | Overall Revenue | 53,400 | 65,100 | (11,700) | -17.97% | | Financial Services Income (incl. Other Financial) | 46,200 | 34,800 | 11,400 | 32.76% | | Lending Business Interest Income | 1,600 | 24,100 | (22,500) | -93.36% | | Rental Income | 5,700 | 6,000 | (300) | -5.00% | | Tactical and Strategic Business Revenue | – | 300 | (300) | -100.00% | Other Comprehensive Expenses Other comprehensive expenses significantly increased to HK$67.3 million, primarily due to fair value changes in equity investments Other Comprehensive Expenses | Indicator | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | Change (HK$ '000) | Change % | | :----------- | :-------------------- | :-------------------- | :------------ | :--------- | | Other Comprehensive Expenses | 67,300 | 24 | 67,276 | 280316.67% | - Mainly due to the recognition of fair value changes in equity investments measured at fair value through other comprehensive income of approximately HK$66.3 million[5][12] Net Assets Consolidated net assets decreased to HK$1,745.6 million, with net assets per share at HK$1.85 Net Assets | Indicator | As at Jun 30, 2024 (HK$ '000) | As at Dec 31, 2023 (HK$ '000) | Change (HK$ '000) | Change % | | :------------------- | :--------------------- | :---------------------- | :------------ | :--------- | | Consolidated Net Assets | 1,745,600 | 1,907,100 | (161,500) | -8.47% | | Consolidated Net Assets Per Share (HK$) | 1.85 | N/A | N/A | N/A | Capital Structure Capital expenditures are funded by internal resources and bank loans, with a conservative financial policy and no hedging activities - Capital expenditures and investments are primarily funded by cash on hand, internally generated funds, and bank loans[12] - Adopts a conservative financial policy, with most cash denominated in HKD and held in short-term deposits[12] - No financial instruments are used for hedging purposes[12] Liquidity and Capital Resources The Group maintains strong liquidity with HK$42.5 million in cash and a current ratio of 4.0, despite a slight decrease in bank loans Liquidity Position | Indicator | As at Jun 30, 2024 (HK$ '000) | As at Dec 31, 2023 (HK$ '000) | Change (HK$ '000) | Change % | | :----------------------- | :--------------------- | :---------------------- | :------------ | :--------- | | Cash and Cash Equivalents | 42,500 | 38,500 | 4,000 | 10.39% | | Cash and Cash Equivalents + FVTPL | 90,500 | 103,300 | (12,800) | -12.39% | | Current Ratio | 4.0 | 3.9 | 0.1 | 2.56% | | Bank Loans | 233,300 | 239,700 | (6,400) | -2.67% | - As of June 30, 2024, the Group had no available short-term revolving bank credit facilities[13] Exchange Rate Fluctuation Risk and Related Hedging The Group faces minimal exchange rate risk as most transactions are in HKD and USD, and therefore uses no hedging instruments - Primary income, expenses, assets, and bank deposits are denominated in HKD and USD, resulting in very low exchange rate fluctuation risk[14] - The Group does not use any related hedging instruments[14] Gearing Ratio The gearing ratio slightly increased to 13.6% due to a decrease in shareholders' equity Gearing Ratio | Indicator | As at Jun 30, 2024 | As at Dec 31, 2023 | | :------- | :------------ | :------------- | | Gearing Ratio | 13.6% | 13.0% | - The slight increase in gearing ratio was mainly due to a decrease in shareholders' equity[15] Contingent Liabilities The Group had no significant contingent liabilities as of June 30, 2024 - As of June 30, 2024, the Group had no significant contingent liabilities (December 31, 2023: nil)[15] Pledge of Group Assets Investment properties with a carrying value of HK$443 million were pledged as collateral for the Group's bank credit facilities Pledge of Group Assets | Pledged Assets | As at Jun 30, 2024 (HK$ '000) | As at Dec 31, 2023 (HK$ '000) | | :------- | :--------------------- | :---------------------- | | Investment Properties | 443,000 | 452,900 | - Investment properties are pledged as collateral for general bank credit facilities granted to the Group[16] Significant Investments Investments in associates, Green River Marshall and HEC Securities, incurred increased losses from fair value adjustments, leading to a cautious approach Overview of Significant Investments (As at Jun 30, 2024) | Investee Name | Carrying Value (HK$ '000) | Percentage of Total Assets | Equity Percentage | Share of Loss (HK$ '000) | | :--------------- | :-------------- | :------------- | :--------- | :---------------- | | Green River Marshall | 170,100 | 8.4% | 47.8% | 43,300 | | HEC Securities | 101,739 | 5.0% | 33.0% | 3,054 | - Share of loss from Green River Marshall primarily attributable to fair value losses on its financial assets[17] - Share of loss from HEC Securities primarily due to realized losses on its financial assets[17] - The Group expects to adopt a cautious approach to investments in Green River Marshall and HEC Securities, but these investments are intended to create long-term value[17] Material Events After the Period End No material events affecting the Group have occurred since the end of the reporting period - No material events affecting the Group have occurred since the end of the period[19] Review of Accounts Unaudited condensed consolidated financial statements were reviewed by RSM Hong Kong and the Audit Committee, adhering to HK Standard on Review Engagements 2410 - Unaudited condensed consolidated financial statements have been reviewed by RSM Hong Kong Certified Public Accountants Limited in accordance with Hong Kong Standard on Review Engagements 2410[21] - The Company's Audit Committee has reviewed the financial statements, accounting principles and practices, and discussed financial reporting matters[21] Operations Review The operations review covers human resources practices, focusing on competitive compensation and employee benefits, alongside corporate governance adherence Human Resources Practices Human resources practices focus on competitive remuneration, employee benefits, and a share option scheme to attract and retain talent - Remuneration policy is based on business needs and industry practices, aiming to attract, retain, and motivate the best employees[22] - As of June 30, 2024, the Group had 38 staff members (including all directors)[22] - Provides employee benefits such as MPF, medical insurance, discretionary training subsidies, and a discretionary share option scheme[22] Additional Information The Group adheres to corporate governance and Model Code, confirming no listed securities transactions during the period Compliance with Corporate Governance Code The Company complied with all code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules - The Company has complied with all code provisions of Part 2 of Appendix C1 to the Listing Rules' Corporate Governance Code[22] Compliance with Model Code The Company adopted and its directors complied with the Model Code for Securities Transactions by Directors of Listed Issuers - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules[22] - Each director confirmed compliance with the required standards set out in the Model Code during the period[22] Purchase, Sale or Redemption of the Company's Listed Securities Neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities during the period - During the period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[22] Other Information Directors' and Chief Executive's Interests As of June 30, 2024, no directors or chief executive held disclosable interests or short positions in the Company's securities - As of June 30, 2024, directors and the chief executive held no disclosable interests or short positions in the Company's shares, underlying shares, or debentures[23] Share Option Scheme The share option scheme, adopted in 2015, had 93,352,767 shares available for grant, with no activity or outstanding options during the period - The share option scheme was approved and adopted on May 21, 2015[24] - As of the beginning and end of the period, the total number of shares available for grant under the share option scheme was 93,352,767[24] - During the period, no share options were granted, exercised, cancelled, or lapsed, and no outstanding share options remained[24] Share Award Scheme The 2020 share award scheme had no activity during the period, and no new awards will be granted until a new Listing Rules-compliant scheme is adopted - The share award scheme was adopted on May 8, 2020[25] - The maximum number of award shares that may be issued is 10% of the Company's issued share capital (93,052,767 shares), with an annual limit of 3%[26] - During the period, no share awards were granted, vested, cancelled, or lapsed, and no unvested award shares remained[27] - The Company will not grant share awards until a new share award scheme compliant with Chapter 17 of the Listing Rules is adopted[27] Directors' Rights to Acquire Shares or Debentures No arrangements existed for directors to acquire shares or debentures, and no directors or their associates held such rights or interests during the period - During the period, no arrangements enabled directors to benefit from acquiring shares or debentures[28] - No directors or their associates held any interests in shares or were granted any rights to subscribe for shares[28] Changes in Directors' Information The Board experienced multiple changes in director roles and appointments, including re-designations, new appointments, and a resignation - Mr. Zhang Tingji was re-designated from Acting Chairman to Managing Director (effective February 1, 2024) and further re-designated to Vice Chairman (effective May 1, 2024)[28] - Dr. Zhuang Youheng was appointed as Non-executive Director and Chairman of the Board (effective February 1, 2024)[28] - Mr. Xing Shaonan was appointed as Executive Director and Vice Chairman (effective March 1, 2024) and resigned on May 1, 2024[28] - Dr. Mai Jialong was appointed as Executive Director and Managing Director (effective May 1, 2024)[28] Major Shareholders' Interests Ms. Luo Qiyin and Future Capital Group Limited are major shareholders, holding significant long positions in the Company's issued share capital Major Shareholders' Interests (As at Jun 30, 2024) | Name/Designation | Capacity and Nature of Interest | Number of Ordinary Shares Held | Approximate Percentage of Total Issued Share Capital | | :----------------------- | :------------- | :------------- | :--------------------------- | | Ms. Luo Qiyin | Controlled Corporation Interest | 628,263,640 | 66.45% | | | Beneficial Owner | 5,271,800 | 0.56% | | Total | | 633,535,440 | 67.01% | | Future Capital Group Limited | Beneficial Owner | 628,263,640 | 66.45% | - Future Capital Group Limited is wholly and beneficially owned by Ms. Luo Qiyin[31] Acknowledgement The Board expresses sincere gratitude to management and all staff for their efforts and contributions during the period - The Board extends sincere gratitude and appreciation to the management and all staff[31] Interim Financial Information Review Report Review Conclusion RSM Hong Kong reviewed the interim financial information, finding no material non-compliance with HKAS 34, and no audit opinion is expressed - The reviewer is RSM Hong Kong Certified Public Accountants Limited[32] - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410 issued by the Hong Kong Institute of Certified Public Accountants[33] - The review concluded that nothing has come to the reviewer's attention that causes them to believe the interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[33] - The scope of a review is substantially less than an audit, and consequently, no audit opinion is expressed[33] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Overview of Profit or Loss and Comprehensive Income The Group reported decreased revenue, significant losses, and increased other comprehensive expenses, resulting in a basic and diluted loss per share of 9.63 HK cents Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | | :----------------------- | :-------------------- | :-------------------- | | Total Revenue | 53,446 | 65,166 | | Other Income and Gains | 184 | 43,005 | | Loss Before Tax | (94,204) | (30,486) | | Loss for the Period | (94,291) | (31,118) | | Loss Attributable to Owners of the Company for the Period | (91,050) | (30,690) | | Total Other Comprehensive Expenses | (67,254) | (24) | | Total Comprehensive Expenses for the Period | (161,545) | (31,142) | | Basic and Diluted Loss Per Share (HK cents) | (9.63) | (3.25) | - Other comprehensive expenses primarily due to fair value changes in equity investments measured at fair value through other comprehensive income (HK$66,336 thousand)[35] Condensed Consolidated Statement of Financial Position Overview of Financial Position Total assets and net assets decreased, with reductions in non-current assets like investments in associates and fair value financial assets Summary of Condensed Consolidated Statement of Financial Position | Indicator | As at Jun 30, 2024 (HK$ '000) | As at Dec 31, 2023 (HK$ '000) | | :----------------------- | :--------------------- | :---------------------- | | Non-current Assets | 953,626 | 1,118,613 | | Current Assets | 1,066,013 | 1,065,815 | | Total Assets | 2,019,639 | 2,184,428 | | Current Liabilities | 264,400 | 272,536 | | Non-current Liabilities | 9,689 | 4,797 | | Net Assets | 1,745,550 | 1,907,095 | | Equity Attributable to Owners of the Company | 1,457,360 | 1,615,664 | | Non-controlling Interests | 288,190 | 291,431 | | Total Equity | 1,745,550 | 1,907,095 | - Investments in associates decreased to HK$271,839 thousand (December 31, 2023: HK$319,111 thousand)[36] - Financial assets designated at fair value through other comprehensive income decreased to HK$66,379 thousand (December 31, 2023: HK$155,586 thousand)[36] Condensed Consolidated Statement of Changes in Equity Overview of Changes in Equity Equity attributable to owners decreased to HK$1,457,360 thousand, primarily due to the period's loss and fair value changes in financial assets Summary of Condensed Consolidated Statement of Changes in Equity | Indicator | As at Jun 30, 2024 (HK$ '000) | As at Jan 1, 2024 (HK$ '000) | | :----------------------- | :--------------------- | :-------------------- | | Equity Attributable to Owners of the Company (Period End) | 1,457,360 | 1,615,664 | | Loss and Total Comprehensive Expenses for the Period | (158,304) | (30,714) | - Within the total loss and comprehensive expenses for the period, fair value changes of financial assets designated at fair value through other comprehensive income amounted to (HK$66,336) thousand[37] Condensed Consolidated Statement of Cash Flows Overview of Cash Flows The Group's cash flows showed net usage in operations and financing, offset by investing activities, leading to a net increase of HK$4,017 thousand in cash and equivalents Summary of Condensed Consolidated Statement of Cash Flows | Indicator | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | | :----------------------- | :-------------------- | :-------------------- | | Net Cash Used in Operating Activities | (28,918) | (22,695) | | Net Cash From (Used in) Investing Activities | 50,872 | (62,516) | | Net Cash Used in Financing Activities | (17,937) | (16,797) | | Net Increase (Decrease) in Cash and Cash Equivalents | 4,017 | (102,008) | | Cash and Cash Equivalents at End of Period | 42,534 | 127,300 | - Net cash from investing activities primarily derived from proceeds from disposal of financial assets designated at fair value through other comprehensive income of HK$30,347 thousand and interest received of HK$28,001 thousand[42] Notes to the Condensed Consolidated Financial Statements Company and Group Information The Company is a Bermuda-incorporated, HKEX-listed entity primarily engaged in diverse financial services and property investment - The Company is a limited company incorporated in Bermuda, with its shares listed on the Main Board of The Stock Exchange of Hong Kong Limited[43] - The Group is principally engaged in financial services, credit and lending services, other financial services, property investment and leasing, and tactical and strategic investments[43] Principal Accounting Policies Interim financial statements adhere to HKAS 34 and Listing Rules, with consistent accounting policies and no significant impact from new HKFRSs - Interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 and Appendix D2 to the Listing Rules[43] - The adoption of new/revised Hong Kong Financial Reporting Standards has no significant impact on the Group's current or prior period results and financial position[44] Segment Information The Group's five operating segments show varied performance, with financial and other financial services growing, while other segments experienced losses or declines, all within Hong Kong - The Group has five reportable operating segments: financial services, credit and lending services, other financial services, property investment and leasing, and tactical and strategic investments[45] Segment Revenue and Results (For the six months ended Jun 30, 2024) | Segment Name | Revenue (HK$ '000) | Profit (Loss) (HK$ '000) | | :----------------- | :------------ | :-------------------- | | Financial Services | 38,975 | 22,630 | | Credit and Lending Services | 1,550 | 435 | | Other Financial Services | 7,219 | 1,967 | | Property Investment and Leasing | 5,702 | (11,572) | | Tactical and Strategic Investments | – | (88,152) | | Consolidated Total | 53,446 | (74,692) | Segment Assets and Liabilities (As at Jun 30, 2024) | Segment Name | Assets (HK$ '000) | Liabilities (HK$ '000) | | :----------------- | :------------ | :------------ | | Financial Services | 868,312 | (3,294) | | Credit and Lending Services | 127,991 | (5,602) | | Other Financial Services | 14,500 | (154) | | Property Investment and Leasing | 500,933 | (204,641) | | Tactical and Strategic Investments | 446,861 | (43,369) | | Unallocated | 61,042 | (17,029) | | Consolidated Total | 2,019,639 | (274,089) | - The Group's operations and all non-current assets (excluding certain financial assets) are located in Hong Kong[52] Revenue, Other Income and Gains Total revenue decreased to HK$53,446 thousand, with a significant drop in other income and gains due to a prior period's bad debt recovery Summary of Revenue, Other Income and Gains | Item | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | | :------------------- | :-------------------- | :-------------------- | | Total Revenue | 53,446 | 65,166 | | Interest Income from Margin Clients and Loans Receivable | 37,108 | 48,524 | | Total Rental Income | 5,702 | 5,973 | | Total Other Income and Gains | 184 | 43,005 | - Other income and gains significantly decreased, mainly due to the recovery of a HK$42,000 thousand bad debt in H1 2023[53] Other Losses Total other losses were HK$49,838 thousand, mainly from fair value losses on financial assets and investment properties Summary of Other Losses | Item | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | | :----------------------- | :-------------------- | :-------------------- | | Net Fair Value Loss on Financial Assets at Fair Value Through Profit or Loss | 39,937 | 70,534 | | Net Fair Value Loss on Investment Properties | 9,900 | 7,300 | | Total | 49,838 | 77,974 | Finance Costs Finance costs increased to HK$8,175 thousand, primarily due to higher interest on interest-bearing loans Summary of Finance Costs | Item | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | | :------------- | :-------------------- | :-------------------- | | Interest on Interest-Bearing Loans | 7,303 | 6,304 | | Interest on Margin Accounts | 525 | 478 | | Imputed Interest on Lease Liabilities | 347 | 218 | | Total | 8,175 | 7,000 | Loss Before Tax Loss before tax was primarily influenced by employee benefit expenses and intangible asset amortization Summary of Loss Before Tax Components | Item | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | | :------------------- | :-------------------- | :-------------------- | | Employee Benefit Expenses | 12,202 | 13,919 | | Amortization of Intangible Assets | 25 | 25 | Income Tax Expense Income tax expense decreased to HK$87 thousand, calculated using Hong Kong's two-tiered profits tax rates, with most subsidiaries taxed at 16.5% Summary of Income Tax Expense | Item | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | | :--------- | :-------------------- | :-------------------- | | Hong Kong Profits Tax | 87 | 632 | - Hong Kong profits tax is calculated under the two-tiered rates, where the first HK$2,000,000 of assessable profits for qualifying entities is taxed at 8.25%, and the remainder at 16.5%[57] Dividends The Board does not recommend an interim dividend payment for the six months ended June 30, 2024 - The Company's Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2024 (H1 2023: nil)[58] Loss Per Share Loss attributable to owners was HK$91,050 thousand, resulting in a basic and diluted loss per share of 9.63 HK cents Summary of Loss Per Share Calculation | Indicator | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | | :----------------------- | :-------------------- | :-------------------- | | Loss Attributable to Owners of the Company for the Period | (91,050) | (30,690) | | Weighted Average Number of Ordinary Shares Issued | 945,527,675 | 945,527,675 | - Basic and diluted loss per share was 9.63 HK cents (H1 2023: 3.25 HK cents)[35] - As there were no potential dilutive ordinary shares outstanding during the period, the diluted loss per share was the same as the basic loss per share[60] Investments in Associates Investments in associates, primarily Green River Associates and HEC Securities, decreased to a carrying value of HK$271,839 thousand Carrying Value of Investments in Associates | Item | As at Jun 30, 2024 (HK$ '000) | As at Dec 31, 2023 (HK$ '000) | | :------------- | :--------------------- | :---------------------- | | Share of Net Assets | 271,839 | 319,111 | - Primarily refers to the Group's investments in Green River Associates Limited (48% interest) and HEC Securities Company Limited (33% interest)[61] Trade Receivables, Loans Receivable and Other Receivables Total receivables were HK$965,103 thousand, including significant margin client and loan receivables, with associated loss allowances and concentrated credit risk Summary of Trade Receivables, Loans Receivable and Other Receivables | Item | As at Jun 30, 2024 (HK$ '000) | As at Dec 31, 2023 (HK$ '000) | | :----------------------- | :--------------------- | :---------------------- | | Trade Receivables (Margin Clients) | 653,227 | 636,419 | | Less: Loss Allowance | (16,997) | (1,361) | | Loans and Interest Receivables | 121,079 | 133,125 | | Less: Loss Allowance | (2,030) | (896) | | Other Receivables | 177,394 | 172,058 | | Total | 965,103 | 953,316 | - Trade receivables from margin clients are secured by pledged marketable securities with a total fair value of approximately HK$734,870 thousand[63] - The Group's largest margin client and top five margin clients accounted for 24% and 91% respectively of the total outstanding margin loans[63] - Loans to the largest borrower and top five borrowers accounted for 15% and 67% respectively of the total loans receivable[66] Financial Assets Designated at Fair Value Through Other Comprehensive Income Listed equity securities designated at fair value through OCI decreased to HK$66,379 thousand, with a net fair value change of HK$66,336 thousand recognized as other comprehensive expenses Financial Assets Designated at Fair Value Through Other Comprehensive Income | Item | As at Jun 30, 2024 (HK$ '000) | As at Dec 31, 2023 (HK$ '000) | | :------------- | :--------------------- | :---------------------- | | Listed Securities in Hong Kong | 66,379 | 155,586 | - For the six months ended June 30, 2024, a net fair value change of HK$66,336 thousand for equity investments under financial assets designated at fair value through other comprehensive income was recognized in other comprehensive expenses[69] Financial Assets at Fair Value Through Profit or Loss Financial assets at fair value through profit or loss totaled HK$108,295 thousand, comprising unlisted and listed equity securities held for long-term investment Financial Assets at Fair Value Through Profit or Loss | Item | As at Jun 30, 2024 (HK$ '000) | As at Dec 31, 2023 (HK$ '000) | | :------------- | :--------------------- | :---------------------- | | Unlisted Equity Securities | 60,341 | 83,400 | | Listed Securities in Hong Kong | 47,954 | 64,832 | | Total | 108,295 | 148,232 | - The Company's directors consider these investments to be held for long-term investment[70] Trade Payables and Other Payables Total trade and other payables were HK$21,101 thousand, including brokerage-related payables and secured margin loans Summary of Trade Payables and Other Payables | Item | As at Jun 30, 2024 (HK$ '000) | As at Dec 31, 2023 (HK$ '000) | | :----------------------- | :--------------------- | :---------------------- | | Trade Payables from Securities Brokerage Business | 15,072 | 14,994 | | Other Payables and Accrued Expenses | 4,979 | 6,990 | | Lease Deposits Received | 1,792 | 1,562 | | Total Current Portion | 21,101 | 21,984 | - Secured margin loans from securities brokers amounted to HK$12,019 thousand, collateralized by debt and equity securities with a total market value of approximately HK$26,847 thousand[72] Interest-Bearing Loans Interest-bearing loans totaled HK$233,304 thousand, secured by investment properties and corporate guarantees, classified as current liabilities despite on-demand terms Summary of Interest-Bearing Loans | Item | As at Jun 30, 2024 (HK$ '000) | As at Dec 31, 2023 (HK$ '000) | | :------------- | :--------------------- | :---------------------- | | Secured Bank Loans Repayable on Demand | 233,304 | 239,720 | - Interest rate is one-month HIBOR plus 1.5% to 1.7% per annum[73] - Bank loans are secured by investment properties with a carrying value of approximately HK$443,000 thousand and corporate guarantees of HK$282,300 thousand from the Company[74] - Despite the on-demand repayment clause, directors expect banks not to exercise their rights, thus classifying them as current liabilities[74] Share Capital Authorized share capital is HK$500,000 thousand, with issued and fully paid capital of HK$94,553 thousand, remaining unchanged during the period Summary of Share Capital | Item | Number of Shares | Share Capital (HK$ '000) | | :------------- | :------------ | :------------ | | Authorized Share Capital | 5,000,000,000 | 500,000 | | Issued and Fully Paid Share Capital | 945,527,675 | 94,553 | - No change in share capital as of June 30, 2024[75] Related Party Transactions The Group conducted various related party transactions, including income from associates, lease payments to controlled entities, and increased director emoluments Summary of Related Party Transactions | Related Party Relationship | Nature of Transaction | H1 2024 (HK$ '000) | H1 2023 (HK$ '000) | | :----------- | :----------------- | :-------------------- | :-------------------- | | Associates | Asset Management Income | 397 | 568 | | | Commission Income from Margin Clients | 46 | 19 | | | Interest Income from Margin Clients | 3,501 | 10 | | Companies Controlled by Ultimate Controlling Party | Lease Payments | 2,014 | 2,014 | - Key management personnel (directors') emoluments were HK$2,537 thousand (H1 2023: HK$2,217 thousand)[76] Fair Value Measurement Financial assets and investment properties measured at fair value are classified by hierarchy, with Level 3 assets experiencing fair value decreases during the period - Fair value measurements are categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[78] Summary of Level 3 Fair Value Measurement Changes | Item | As at Jun 30, 2024 (HK$ '000) | As at Dec 31, 2023 (HK$ '000) | | :----------------------- | :--------------------- | :---------------------- | | Financial Assets at Fair Value Through Profit or Loss (Period End) | 49,962 | 66,400 | | Fair Value Decrease | (16,438) | (11,600) | | Investment Properties (Period End) | 495,800 | 505,700 | | Fair Value Decrease | (9,900) | (8,100) | - During the period, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into or out of Level 3 fair value measurements[79][80] - The Group's management considers that the carrying amounts of financial assets and financial liabilities recorded at amortized cost approximate their fair values[82]