中国长远(00110) - 2024 - 中期财报

Company Information Board of Directors This chapter lists the company's Board of Directors, including the Chairman and Executive Director, Mr. Liu Xiaoying, and other directors - The Chairman and Executive Director of the Board is Mr. Liu Xiaoying[1] - Ms. Liu Zixian was appointed Executive Director on August 27, 2024[1] - Mr. Wang Xuan retired as Executive Director on May 31, 2024[1] Audit Committee This chapter introduces the company's Audit Committee members, chaired by Mr. Leung Wai Hung, with Dr. Lo Chun Kwong and Dr. Lo Wai Shun as members - The Audit Committee Chairman is Mr. Leung Wai Hung, with members including Dr. Lo Chun Kwong and Dr. Lo Wai Shun[1] Remuneration Committee This chapter lists the company's Remuneration Committee members, chaired by Mr. Leung Wai Hung, with Mr. Liu Xiaoying, Dr. Lo Chun Kwong, and Dr. Lo Wai Shun as members - The Remuneration Committee Chairman is Mr. Leung Wai Hung, with members including Mr. Liu Xiaoying, Dr. Lo Chun Kwong, and Dr. Lo Wai Shun[1] Nomination Committee This chapter introduces the company's Nomination Committee members, chaired by Mr. Liu Xiaoying, including retired and newly appointed members - The Nomination Committee Chairman is Mr. Liu Xiaoying[1] - Ms. Liu Zixian was appointed a member of the Nomination Committee on August 27, 2024[1] Registered Office The company's registered office is located at Clarendon House, 2 Church Street Hamilton HM11, Bermuda - The registered office is at Clarendon House, 2 Church Street Hamilton HM11, Bermuda[1] Hong Kong Head Office The company's Hong Kong Head Office is located at Room 1505-06, Block A, Regent Centre, 63 Wo Yi Hop Road, Kwai Chung, Hong Kong - The Hong Kong Head Office is at Room 1505-06, Block A, Regent Centre, 63 Wo Yi Hop Road, Kwai Chung, Hong Kong[1] China Head Office The company's China Head Office is located at Room 9008, Yongxin Building, 887 Huaihai Middle Road, Shanghai, China - The China Head Office is at Room 9008, Yongxin Building, 887 Huaihai Middle Road, Shanghai, China[1] Shanghai Office The company's Shanghai Office is located at Room 328, Xinmao Building, No. 2 Taizhong South Road, Waigaoqiao Free Trade Zone, Shanghai, China - The Shanghai Office is at Room 328, Xinmao Building, No. 2 Taizhong South Road, Waigaoqiao Free Trade Zone, Shanghai, China[1] Principal Share Registrar and Transfer Office The company's Principal Share Registrar and Transfer Office is Codan Services Limited, located in Bermuda - The Principal Share Registrar and Transfer Office is Codan Services Limited[1] Hong Kong Branch Share Registrar and Transfer Office The company's Hong Kong Branch Share Registrar and Transfer Office is Tricor Abacus Limited, located at 17th Floor, Far East Finance Centre, 16 Harcourt Road, Hong Kong - The Hong Kong Branch Share Registrar and Transfer Office is Tricor Abacus Limited[1] Auditor The company's auditor is UHY F.T. CPA Limited, a registered public interest entity auditor - The auditor is UHY F.T. CPA Limited[1] Legal Advisers The company's legal advisers are Ho & Chan for Hong Kong law and Conyers Dill & Pearman for Bermuda law - For Hong Kong law, the legal adviser is Ho & Chan[1] - For Bermuda law, the legal adviser is Conyers Dill & Pearman[1] Compliance Adviser The company's compliance adviser is Faber Capital Limited, located at Room 710, 7th Floor, Wing On Group Building, 71 Des Voeux Road Central, Hong Kong - The compliance adviser is Faber Capital Limited[1] Principal Bankers The company's principal bankers include China Construction Bank, China Merchants Bank, ICBC Asia, and Hang Seng Bank - Principal bankers include China Construction Bank, China Merchants Bank, ICBC Asia, and Hang Seng Bank[1] Company Website The company websites are www.fortunetele.com and www.chinafortune.com - Company websites are www.fortunetele.com and **www.chinafortune.com**[1](index=1&type=chunk) Stock Code The company's stock code is 0110 - The company stock code is 0110[1] Review and Prospects Revenue The Group's total revenue for the six months ended June 30, 2024, was HK$34.5 million, a 10.9% decrease year-on-year, primarily due to reduced mobile phone and electronics trading in China and Hong Kong Revenue (HK$ thousand) | Indicator | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Total Revenue | 34,500 | 38,700 | -10.9% | | Hong Kong Revenue | 33,400 | 34,700 | -3.7% | | China Revenue | 1,100 | 4,000 | -72.5% | | Hong Kong Revenue % of total | 96.8% | 89.7% | +7.1% | | China Revenue % of total | 3.2% | 10.3% | -7.1% | - Revenue decrease solely due to reduced revenue from mobile phone and electronic product trading businesses in China and Hong Kong[2] - Low revenue level due to global economic slowdown adversely affecting wholesale and retail of mobile phones and electronic products in China[2] Gross Profit and Gross Profit Margin The Group's gross profit for the six months ended June 30, 2024, was HK$95,000, with a gross profit margin of 0.3%, a significant year-on-year decrease due to reduced trading and increased bargaining power of telecom chains Gross Profit and Gross Profit Margin | Indicator | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Gross Profit | 95 | 200 | -52.5% | | Gross Profit Margin | 0.3% | 0.5% | -0.2% | - Lower gross profit and gross profit margin due to reduced performance of the Group's mobile phone and electronic product trading business in both reporting periods[3] - Lower gross profit margin due to increased bargaining power of telecom chain stores and mobile operators purchasing mobile phones and electronic products[5] Other Income Other income for the six months ended June 30, 2024, was approximately HK$100,000, a significant decrease from HK$1.4 million in the prior year, mainly because the mobile application business's database traffic monetization did not generate other income Other Income (HK$ thousand) | Indicator | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Other Income | 100 | 1,400 | -92.9% | - Decrease in other income mainly due to no other income generated from database traffic monetization of the mobile application business[5] Other Gains and Losses, Net For the six months ended June 30, 2024, the Group recorded a net other loss of HK$300,000, compared to a net gain of HK$22,000 in the prior year, primarily due to fair value losses on financial assets at fair value through profit or loss Other Gains and Losses, Net (HK$ thousand) | Indicator | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Other Gains and Losses, Net | (300) | 22 | | Of which: Fair value changes of financial assets at fair value through profit or loss | (300) (Loss) | 17 (Gain) | - Net other loss mainly includes fair value loss of HK$300,000 on financial assets at fair value through profit or loss[5] Selling and Distribution Costs Selling and distribution costs for the six months ended June 30, 2024, were approximately HK$13,000, a significant decrease from HK$100,000 in the prior year, primarily comprising logistics, transportation, rental, and travel expenses Selling and Distribution Costs (HK$ thousand) | Indicator | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Selling and Distribution Costs | 13 | 100 | -87.0% | - Selling and distribution costs mainly include logistics and transportation expenses, rental expenses, and travel expenses[5] Administrative Expenses Administrative expenses decreased by 2.2% to approximately HK$8.7 million for the six months ended June 30, 2024, primarily due to reduced salaries, allowances, and promotion expenses from the Beijing Daizhangmen mobile application data traffic monetization business, reflecting strict cost policies Administrative Expenses (HK$ thousand) | Indicator | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Administrative Expenses | 8,700 | 8,900 | -2.2% | - Decrease in administrative expenses mainly attributable to reduced salaries and allowances and promotion expenses from the Beijing Daizhangmen mobile application data traffic monetization business, resulting from the implementation of strict cost policies[5] Finance Costs Finance costs for the six months ended June 30, 2024, were approximately HK$49,000, largely unchanged from the prior year, primarily consisting of interest on lease liabilities Finance Costs (HK$ thousand) | Indicator | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Finance Costs | 49 | 48 | - Finance costs mainly represent interest on lease liabilities for both periods[6] Income Tax Expense The Group incurred no income tax expense for the six months ended June 30, 2024, and 2023, as there was no estimated taxable profit - No income tax expense recorded for the six months ended June 30, 2024, and 2023[7] Loss for the Period Attributable to Owners of the Company The Group's loss attributable to owners of the Company for the six months ended June 30, 2024, expanded to HK$6.8 million, compared to HK$5.3 million in the prior year Loss for the Period Attributable to Owners of the Company (HK$ thousand) | Indicator | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Loss for the Period Attributable to Owners of the Company | (6,800) | (5,300) | +28.3% (Loss widened) | Loss Per Share Basic loss per share for the six months ended June 30, 2024, increased to HK$0.0313, compared to HK$0.0290 in the prior year Basic Loss Per Share (HK cents) | Indicator | H1 2024 (HK cents) | H1 2023 (HK cents) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Basic Loss Per Share | 3.13 | 2.90 | +7.9% (Loss widened) | Financial Assets at Fair Value Through Profit or Loss As of June 30, 2024, the Group held HK$1.3 million in unlisted fund investments and HK$300,000 in listed equity investments, with listed equity investments decreasing from HK$600,000 as of December 31, 2023 Financial Assets at Fair Value Through Profit or Loss (HK$ thousand) | Investment Type | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Unlisted Fund Investments | 1,300 | 1,300 | 0% | | Listed Equity Investments | 300 | 600 | -50% | - Unlisted fund investments refer to a 13.3% equity interest in a fund focused on the property market, including a property development project in China[10] - Listed equity investments refer to the Group's listed equity investments in ordinary shares of entities listed on the Shanghai/Shenzhen Stock Exchange[10] Inventories As of June 30, 2024, the Group had no recognized inventories, compared to HK$2.0 million as of December 31, 2023, due to all mobile phones and electronic products being delivered and recognized as revenue Inventories (HK$ thousand) | Indicator | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Inventories | 0 | 2,000 | -100% | - Decrease in inventories due to all mobile phones and electronic products being delivered and recognized as revenue before June 30, 2024[11] Trade and Other Receivables As of June 30, 2024, the Group's trade and other receivables increased by HK$16.4 million to HK$35.9 million, primarily due to a HK$14.2 million increase in trade receivables from sales generated before the period end Trade and Other Receivables (HK$ thousand) | Indicator | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Trade and Other Receivables | 35,900 | 19,500 | +84.1% | | Of which: Trade Receivables | 31,500 | 17,300 | +82.1% | - Increase in trade and other receivables mainly due to sales of approximately HK$21.4 million generated before June 30, 2024[12] Cash and Cash Equivalents As of June 30, 2024, total cash and cash equivalents were approximately HK$7.5 million, a decrease from HK$11.9 million as of December 31, 2023, primarily due to cash used in operating activities, partially offset by net proceeds from new share subscriptions Cash and Cash Equivalents (HK$ thousand) | Indicator | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 7,500 | 11,900 | -37.0% | - Decrease in cash and cash equivalents mainly due to cash used in operating activities, resulting in net proceeds of approximately HK$6.72 million after deducting the new share subscription completed in June 2024 under general mandate[13] - The Group adopts a prudent financial management approach regarding financial and treasury policies, with no significant potential currency risks[13] Trade and Other Payables As of June 30, 2024, the Group's trade and other payables increased by HK$14.1 million to HK$55.7 million, primarily due to a HK$12.3 million increase in trade payables from purchases generated before the period end Trade and Other Payables (HK$ thousand) | Indicator | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Trade and Other Payables | 55,700 | 41,600 | +33.9% | | Of which: Trade Payables | 31,400 | 19,100 | +64.4% | - Increase in trade and other payables mainly due to purchases of approximately HK$21.4 million generated before June 30, 2024[14] - Other payables and accrued expenses mainly include directors' remuneration, staff costs, auditor's remuneration, legal and professional fees, and rental payables[15] Liquidity and Gearing Ratio As of June 30, 2024, net assets attributable to owners of the Company decreased to HK$26.8 million, or HK$0.11 per share. Net current liabilities increased to HK$23.4 million, and the current ratio slightly improved to 0.65 times but remained below 1. The gearing ratio remained low Liquidity and Gearing Ratio (HK$ thousand) | Indicator | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Net Assets Attributable to Owners of the Company | 26,800 | 28,000 | -4.3% | | Net Assets Per Share | HK$0.11 | HK$0.14 | -21.4% | | Net Current Liabilities | 23,400 | 21,800 | +7.3% (Liabilities widened) | | Current Ratio | 0.65 times | 0.61 times | +0.04 times | | Gearing Ratio | 0.01 | 0.02 | -0.01 | Capital Commitments As of June 30, 2024, the Group had no contracted capital expenditures for leasehold improvements that were not provided for in the unaudited condensed consolidated financial statements - As of June 30, 2024, the Group had no contracted capital expenditures for leasehold improvements that were not provided for in the unaudited condensed consolidated financial statements[17] Contingent Liabilities As of June 30, 2024, the Group had no contingent liabilities or guarantees - As of June 30, 2024, the Group had no contingent liabilities or guarantees[18] Significant Acquisitions and Disposals of Subsidiaries, Associates or Joint Ventures For the six months ended June 30, 2024, the Group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures - For the six months ended June 30, 2024, the Group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures[19] Future Plans for Material Investments or Capital Assets As of June 30, 2024, the Group had no plans for any material investments or capital assets - As of June 30, 2024, the Group had no plans for any material investments or capital assets[20] Employees and Remuneration Policy As of June 30, 2024, the Group employed 32 staff, a decrease from 34 as of December 31, 2023. Remuneration is based on job nature and market trends, with staff benefits and pension contributions provided. The share option scheme expired on May 28, 2024 Number of Employees | Indicator | June 30, 2024 | December 31, 2023 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Number of Employees | 32 | 34 | -2 | - Remuneration for all employees is determined by the nature of their positions and market trends, with the Group providing staff benefits and pension contributions in accordance with current regulations in China and Hong Kong[21] - The Group had a share option scheme (which expired on May 28, 2024)[21] Material Investments Held by the Group As of June 30, 2024, the Group maintained an unlisted fund investment and three listed equity investments in China, classified as financial assets at fair value through profit or loss, with a total fair value of approximately HK$1.6 million, a decrease from HK$1.9 million as of December 31, 2023 Total Fair Value of Material Investments (HK$ thousand) | Indicator | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Total Fair Value of Material Investments | 1,600 | 1,900 | -15.8% | - The Group maintains an unlisted fund investment and three listed equity investments in China, classified as financial assets at fair value through profit or loss[22] Subscription of New Shares under General Mandate The Company completed the subscription of 26,000,000 shares at HK$0.26 per share with independent third parties from March to May 2024, for a cash consideration of approximately HK$6.76 million. The net proceeds of approximately HK$6.72 million will be used for the Group's general working capital - On June 3, 2024, the 2024 Subscription was completed, with 26,000,000 shares issued at HK$0.26 per share[23] - Net proceeds (after deducting all related expenses) of approximately HK$6.72 million will be used for the Group's general working capital[23] Charge on Assets As of June 30, 2024, the Group had no assets charged - As of June 30, 2024, the Group had no assets charged[24] Dividends The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2024 - The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2024[25] Market Overview China's mobile phone market is vast with approximately 1.7 billion users, and the 5G economy is rapidly developing, with 3.4 million 5G base stations deployed and over 800 million 5G users by the end of 2023 - China has approximately 1.7 billion mobile phone service users[26] - By the end of 2023, telecom operators had deployed 3.4 million 5G base stations, with over 800 million mobile phone users having used 5G services[27] - China plans to have 26 5G base stations per 10,000 people by the end of 2025 and is preparing to develop more advanced 6G wireless systems in the coming years[27] Operations Review The Chinese mobile phone market slowed in 2023 and H1 2024 due to trade conflicts, economic uncertainty, and reduced consumer spending, with a projected decline in coming years, partially offset by 5G/6G developments - The Chinese mobile phone market has slowed and contracted due to escalating international trade conflicts, economic uncertainties, and reduced consumer spending in China[28] - The Group is pleased and confident in rebuilding its network, service strategies, development, and improving its financial performance[28] Business Review This section details the Group's core mobile phone and electronic products business, including new distribution rights, and updates on the mining business, which remains stagnant - Mobile phone and electronic product trading and distribution remain the Group's core business[29] - The Group has successfully obtained exclusive distribution rights for "Philips" brand routers and related electronic products in the People's Republic of China, Hong Kong, and Macau[29] - The mining business has only been permitted for exploration activities since 2012, and full impairment provisions have been made for mining rights and related plant and equipment[38][39] Mobile Phone and Electronic Products Business Mobile phone and electronic product trading and distribution remain the Group's core business. The Group secured exclusive distribution rights for "Philips" brand routers and related electronic products in China, Hong Kong, and Macau, and mobile devices in Bangladesh - The Group has successfully obtained exclusive distribution rights for "Philips" brand routers and related electronic products in the People's Republic of China, Hong Kong, and Macau[29] - Changsha Changyuan Angxun Shuangyu Network Technology Co., Ltd., an indirect 51%-owned subsidiary of the Company incorporated in China, entered into a five-year exclusive distribution agreement with TPV Technology (Shenzhen) Co., Ltd[29] - The Group also successfully obtained exclusive distribution rights for "Philips" brand mobile devices in Bangladesh from the licensor[35] - The Group estimates "Philips" router sales of approximately 50,000 units with a gross profit margin of approximately 10% for 2024-2025[38] Mining Business The Group's mining business (Huangshi Zongfa Mining Co., Ltd.) has only been permitted for exploration activities since its mining license expired in 2012, with full impairment provisions made for mining rights and related plant and equipment in 2017 - Mining rights refer to the right of Huangshi Zongfa Mining Co., Ltd. to conduct mining activities in Huangshi City, Hubei Province, China[38] - After the five-year mining license expired on September 25, 2012, Zongfa Mining was granted a renewed exploration license for two years, only permitted for exploration activities and not mining[38] - Full impairment provisions of HK$174.6 million for mining rights and HK$9.0 million for related plant and equipment have been made[39] - For the six months ended June 30, 2024, Zongfa Mining had no exploration, development, or production activities[40] Future Prospects and Outlook The Group anticipates continued economic slowdown in China due to the US-China trade war, impacting consumer and retail segments. However, China's vast mobile phone market, driven by 5G/6G technology and mobile application opportunities, remains a business focus - The Group expects the consumer and retail segments to continue to be affected by the US-China trade war, leading to uncertainties in the coming years[41] - China's mobile phone market remains strong, with significant increases in 5G users and network users, reflecting vast opportunities in mobile applications and mobile commerce markets[41] - The Group will closely monitor changes in the economic environment and actively address and seize opportunities in the Hong Kong and ASEAN trade markets[41] - 5G technology will transform several customer experiences such as smart homes, smart cars, and smart retail, with a large number of new software, applications, and related products expected to be launched[42] Stepping Up Promotion of Eco-Bag Dispensing Machines and Related Database Traffic Monetization Business The Group's "Daizhangmen" business provides free eco-bags via smart IoT terminals, monetizing offline traffic through advertising. In response to environmental policies, these machines are installed in hospitals and supermarkets across China - The "Daizhangmen" business integrates smart IoT terminals to provide free eco-bags to customers, leveraging offline eco-bag demand to acquire offline traffic through an IoT system and free model, matching advertisers' traffic, and achieving a closed-loop business model for database traffic monetization[43] - The new business has installed eco-bag dispensing machines in various hospitals, supermarkets, shopping malls, hotels, clubs, communities, scenic spots, and vegetable markets across China[43] - In 2024, "Daizhangmen" launched new database traffic monetization business models, including private domain community e-commerce monetization and developing desktop power bank mobile device charging services[44] - In the long term, the Group is optimistic about the development of China's environmentally related products and services industry[44] Use of Proceeds This section details the use of proceeds from two new share subscriptions in 2023 and 2024, primarily for the Group's general working capital. As of June 30, 2024, unutilized amounts were HK$3.101 million and HK$3.221 million, respectively - Net proceeds from the 2023 subscription of approximately HK$7.2 million will be used for the Group's general working capital[46] - Net proceeds from the 2024 subscription of approximately HK$6.72 million will be used for the Group's general working capital[49] 2023 Subscription Net proceeds from the 2023 subscription were approximately HK$7.2 million. As of June 30, 2024, HK$4.059 million was utilized, with HK$3.101 million unutilized, expected to be used by December 31, 2024 2023 Subscription Proceeds (HK$ thousand) | Indicator | Disclosed Net Proceeds Allocation (HK$ thousand) | Utilized Amount as of June 30, 2024 (HK$ thousand) | Unutilized Amount as of June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | :--- | | General Working Capital | 7,160 | 4,059 | 3,101 | - Expected timetable for unutilized proceeds is by December 31, 2024[46] - Utilized funds were mainly for audit fees, salaries and allowances, office expenses, professional fees, and rental expenses[48] 2024 Subscription Net proceeds from the 2024 subscription were approximately HK$6.72 million. As of June 30, 2024, HK$3.499 million was utilized, with HK$3.221 million unutilized, expected to be used by December 31, 2025 2024 Subscription Proceeds (HK$ thousand) | Indicator | Disclosed Net Proceeds Allocation (HK$ thousand) | Utilized Amount as of June 30, 2024 (HK$ thousand) | Unutilized Amount as of June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | :--- | | General Working Capital | 6,720 | 3,499 | 3,221 | - Expected timetable for unutilized proceeds is by December 31, 2025[50] - Utilized funds were mainly for audit fees, salaries and allowances, office expenses, professional fees, and rental expenses[51] Other Information Directors' and Chief Executive's Interests in Shares and Underlying Shares As of June 30, 2024, directors and the chief executive held interests in the Company's shares. Mr. Liu Xiaoying held a total of 48.98% of the issued share capital through discretionary trust and beneficial ownership Directors' and Chief Executive's Interests in Shares | Director Name | Capacity | Number of Ordinary Shares | Percentage of Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Liu Xiaoying | Held by discretionary trust | 37,660,002 | 15.86% | | | Beneficial owner | 78,685,479 | 33.12% | | | Total | 116,345,481 | 48.98% | | Mr. Li Jianwu | Beneficial owner | 10,000,000 | 4.21% | - Shareholding percentage is calculated based on the Company's total issued shares of 237,555,888 as of June 30, 2024[53] Share Options The Company's share option scheme adopted on May 28, 2014, expired on May 28, 2024. No share options were granted, exercised, cancelled, or lapsed under the scheme since its adoption - The Company adopted a share option scheme on May 28, 2014, which became effective on the same day and expired on May 28, 2024[55] - No share options were granted, exercised, cancelled, or lapsed under the share option scheme from its adoption until May 28, 2024[56] Directors' Rights to Acquire Shares or Debentures During the period, neither the Company, its holding company, nor any of its subsidiaries were involved in any arrangements enabling the Company's directors to acquire benefits by purchasing shares or debentures of the Company or any other body corporate - At no time during the period was the Company, its holding company, or any of its subsidiaries a party to any arrangement to enable the Company's directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate[56] Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares As of June 30, 2024, substantial shareholders held interests in the Company's shares. Mr. Liu Xiaoying held a total of 48.98% of the issued share capital. Mr. Li Wei was deemed to have a 15.86% share interest due to his control over Future 2000 Limited Substantial Shareholders' Interests in Shares | Substantial Shareholder Name | Capacity | Number of Issued Ordinary Shares Held | Percentage of Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Liu Xiaoying | Held by discretionary trust | 37,660,002 | 15.86% | | | Beneficial owner | 78,685,479 | 33.12% | | | Total | 116,345,481 | 48.98% | | Mr. Li Wei | Held by controlled entity | 37,660,002 | 15.86% | - Pursuant to the Securities and Futures Ordinance, Mr. Li Wei is deemed to be interested in the Company's shares as he is entitled to exercise more than one-third of the voting power at the general meetings of Future 2000 Limited[59] Appointment and Retirement of Directors Mr. Wang Xuan retired as an Executive Director on May 31, 2024. Ms. Liu Zixian, daughter of Chairman and Executive Director Mr. Liu Xiaoying, was appointed Executive Director and Nomination Committee member on August 27, 2024, with an annual remuneration of HK$240,000 - Mr. Wang Xuan was not re-elected as an Executive Director of the Company at the Annual General Meeting held on May 31, 2024, and retired after the Annual General Meeting[61] - Ms. Liu Zixian was appointed as an Executive Director and a member of the Nomination Committee of the Company, effective August 27, 2024, and is entitled to an annual director's fee of HK$240,000[61] - Ms. Liu Zixian is the daughter of Mr. Liu Xiaoying, the Chairman and Executive Director of the Company[61] Changes in Directors' Information Mr. Leung Wai Hung, an Independent Non-Executive Director of the Company, was appointed as an Independent Non-Executive Director of Oceanwide Holdings (HK) Limited (Stock Code: 174), effective April 20, 2024 - Mr. Leung Wai Hung, an Independent Non-Executive Director of the Company, was appointed as an Independent Non-Executive Director of Oceanwide Holdings (HK) Limited (Stock Code: 174), effective April 20, 2024[62] Purchase, Sale or Redemption of the Company's Listed Securities For the six months ended June 30, 2024, and up to the date of this report, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the six months ended June 30, 2024, and up to the date of this report, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[63] Material Events After Reporting Period Except as disclosed in this report, there were no material events after the six months ended June 30, 2024 - Except as disclosed in this report and up to the date of this report, there were no material events after the six months ended June 30, 2024[64] Corporate Governance The Board is committed to maintaining high corporate governance. For the six months ended June 30, 2024, the Company complied with the Corporate Governance Code in Appendix C1 Part 2 of the HKEX Listing Rules, with two deviations: the Chairman and CEO roles are combined, and the Chairman is not subject to rotation - The Company has complied with the Corporate Governance Code set out in Appendix C1 Part 2 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, with the following deviations: the roles of Chairman and Chief Executive should be separate and not performed by the same individual, but Mr. Liu Xiaoying currently holds both titles as Chairman and Chief Executive of the Company[65] - Code Provision B.2.2 stipulates that every director should retire by rotation at least once every three years, however, Mr. Liu, the Chairman of the Board, is not subject to retirement by rotation[65] - The Board believes that this arrangement facilitates the execution of the Group's business strategies and maximizes business efficiency at the Group's current stage of development[65] Compliance with Corporate Governance Code The Company complies with the Corporate Governance Code, but Chairman and CEO Mr. Liu Xiaoying holds both roles and is not subject to rotation, deviating from the code. The Board believes this arrangement is beneficial for business execution at the current stage - Code Provision C.2.1 stipulates that the roles of Chairman and Chief Executive should be separate and not performed by the same individual, but Mr. Liu Xiaoying currently holds both titles as Chairman and Chief Executive of the Company[65] - Code Provision B.2.2 stipulates that every director should retire by rotation at least once every three years, however, the Chairman of the Board Mr. Liu is not subject to retirement by rotation[65] Audit Committee The Audit Committee, comprising three independent non-executive directors chaired by Mr. Leung Wai Hung, reviewed the Group's unaudited condensed consolidated financial statements and this report for the six months ended June 30, 2024 - The Audit Committee members include three independent non-executive directors: Mr. Leung Wai Hung (Chairman of the Audit Committee), Dr. Lo Chun Kwong, and Dr. Lo Wai Shun[66] - The Audit Committee has discussed and reviewed the Group's unaudited condensed consolidated financial statements and this report for the six months ended June 30, 2024, with the Group's management[66] Compliance with the Model Code for Securities Transactions The Company adopted a securities dealing code no less exacting than the Model Code in Appendix C3 of the Listing Rules. All directors confirmed compliance with both the Model Code and the Company's securities dealing code from January 1, 2024, to the report date - The Company has adopted a code of conduct for securities transactions by directors and employees that is no less exacting than the Model Code set out in Appendix C3 of the Listing Rules[67] - Following specific enquiries with all directors, they have confirmed compliance with the Model Code and the securities dealing code throughout the period from January 1, 2024, to the date of this report[67] Condensed Consolidated Income Statement Condensed Consolidated Income Statement For the six months ended June 30, 2024, the Group recorded a loss for the period of HK$8.771 million, with a loss attributable to owners of the Company of HK$6.753 million, a year-on-year decrease in revenue, and a significant reduction in gross profit Condensed Consolidated Income Statement (HK$ thousand) | Indicator | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 34,506 | 38,703 | | Cost of sales | (34,411) | (38,513) | | Gross profit | 95 | 190 | | Other income | 142 | 1,428 | | Administrative expenses | (8,673) | (8,903) | | Loss for the period | (8,771) | (7,441) | | Loss for the period attributable to owners of the Company | (6,753) | (5,332) | | Basic and diluted loss per share | (3.13) HK cents | (2.90) HK cents | Condensed Consolidated Statement of Comprehensive Income Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2024, the Group recorded total comprehensive expense for the period of HK$8.932 million, with total comprehensive expense attributable to owners of the Company of HK$7.975 million, impacted by exchange rate changes Condensed Consolidated Statement of Comprehensive Income (HK$ thousand) | Indicator | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Loss for the period | (8,771) | (7,441) | | Exchange differences arising from translation of functional currency to presentation currency | (161) | (36) | | Total comprehensive expense for the period | (8,932) | (7,477) | | Total comprehensive expense for the period attributable to owners of the Company | (7,975) | (6,442) | Condensed Consolidated Statement of Financial Position Condensed Consolidated Statement of Financial Position As of June 30, 2024, the Group's total non-current assets were HK$4.648 million, total current assets were HK$44.088 million, and total current liabilities were HK$67.484 million, resulting in net current liabilities of HK$23.396 million Condensed Consolidated Statement of Financial Position (HK$ thousand) | Indicator | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Non-current assets | 4,648 | 4,611 | | Current assets | 44,088 | 34,291 | | Current liabilities | 67,484 | 56,049 | | Net current liabilities | (23,396) | (21,758) | | Equity attributable to owners of the Company | 26,790 | 28,041 | | Total equity and liabilities | (18,748) | (17,147) | Condensed Consolidated Statement of Changes in Equity Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2024, equity attributable to owners of the Company decreased from HK$28.041 million at the beginning of the period to HK$26.790 million at the end, primarily due to loss for the period and exchange differences, partially offset by new share subscriptions Condensed Consolidated Statement of Changes in Equity (HK$ thousand) | Indicator | January 1, 2024 (Audited) (HK$ thousand) | June 30, 2024 (Unaudited) (HK$ thousand) | | :--- | :--- | :--- | | Equity attributable to owners of the Company | 28,041 | 26,790 | | Loss for the period (attributable to owners of the Company) | (6,753) | (6,753) | | Exchange differences arising from translation of functional currency to presentation currency | (1,222) | (1,222) | | Subscription of new shares | 6,760 | 6,760 | | Total equity | (17,682) | (18,956) | Condensed Consolidated Statement of Cash Flows Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2024, the Group's net cash used in operating activities was HK$7.759 million, net cash used in investing activities was HK$611,000, and net cash from financing activities was HK$4.251 million Condensed Consolidated Statement of Cash Flows (HK$ thousand) | Indicator | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Net cash (used in) from operating activities | (7,759) | 1,116 | | Net cash (used in) from investing activities | (611) | 34 | | Net cash from financing activities | 4,251 | 2,759 | | Net (decrease) increase in cash and cash equivalents | (4,119) | 3,909 | | Cash and cash equivalents at end of period | 7,475 | 9,969 | Notes to the Condensed Consolidated Interim Financial Statements General Information The Company is an exempted company incorporated in Bermuda, listed on the HKEX. Its principal businesses are mobile phone and electronic product distribution and trading, and mining and processing of celestite, zinc, and lead ores - The Company is an exempted company incorporated in Bermuda under the Companies Act 1981 of Bermuda (as amended)[81] - The principal activities of the Group are the distribution and trading of mobile phones and electronic products and the mining and processing of celestite, zinc, and lead ores[81] - The functional currency of the Company is RMB, and the condensed consolidated financial statements are presented in HKD[81] Basis of Preparation The unaudited condensed consolidated financial statements are prepared in accordance with Appendix C2 of the Listing Rules and HKAS 34. Despite a loss and net current liabilities, the directors deem the going concern basis appropriate due to management measures and controlling shareholder commitments - The unaudited condensed consolidated financial statements are prepared in accordance with the applicable disclosure requirements of Appendix C2 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[82] - For the six months ended June 30, 2024, the Group incurred a loss attributable to owners of the Company of approximately HK$6.753 million, and its current liabilities exceeded its current assets by HK$23.396 million[83] - These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern[83] Going Concern Assessment Despite losses and net current liabilities, the Board, considering cash flow forecasts, controlling shareholder Mr. Liu Xiaoying's funding commitment, 2024 new share subscription proceeds, and cost control, deems the going concern basis appropriate for the next twelve months - The Company directors have carefully considered the Group's future liquidity and reviewed the Company's management-prepared cash flow forecasts[84] - The Company obtained a letter of undertaking from Mr. Liu Xiaoying, the Chief Executive Officer, Executive Director, and controlling shareholder of the Company, on March 28, 2024, stating his agreement to provide sufficient funds to enable the Group to meet its liabilities as they fall due and its third-party financial obligations[84] - The Company has completed the 2024 new share subscription, and the net proceeds of approximately HK$6.76 million will be used for the Group's general working capital[84] Significant Accounting Policies and Changes in Accounting Policies The unaudited condensed consolidated financial statements are prepared on a historical cost basis, except for certain financial instruments measured at fair value. The adoption of new/revised HKFRSs effective January 1, 2024, had no significant impact, and future standards are not expected to have a material effect - The unaudited condensed consolidated financial statements are prepared on a historical cost basis, except for certain financial instruments measured at fair value[88] - The adoption of new or revised standards effective on or after January 1, 2024, had no significant impact on the Group's results and financial position[88] - The Directors expect that the application of new Hong Kong Financial Reporting Standards and amendments to Hong Kong Financial Reporting Standards issued but not yet effective will not have a significant impact on the Group's consolidated financial performance and position and/or the disclosures in the Group's consolidated financial statements[92] Adoption of New or Revised Hong Kong Financial Reporting Standards - Effective January 1, 2024 The new or revised HKFRSs, including HKAS 1 (amended) and related amendments, first applied in this period, had no significant impact on the Group's results and financial position - The adoption of new and revised standards effective on or after January 1, 2024, had no significant impact on the Group's results and financial position[88] New or Revised Hong Kong Financial Reporting Standards Issued But Not Yet Effective New or revised HKFRSs issued but not yet effective, including HKAS 21 (amended) and HKFRS 18 and 19, are not expected to have a significant impact on the Group's consolidated financial performance and position - New or revised Hong Kong Financial Reporting Standards issued but not yet effective include HKAS 21 (amendment) "Lack of Exchangeability", HKFRS 18 "Presentation and Disclosure in Financial Statements", etc[91][92] - The Directors expect that the application of the new Hong Kong Financial Reporting Standards and amendments to Hong Kong Financial Reporting Standards will not have a significant impact on the Group's consolidated financial performance and position and/or the disclosures in the Group's consolidated financial statements[92] Use of Judgements and Estimates The significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty in preparing the condensed consolidated financial statements are the same as those applied to the consolidated financial statements for the year ended December 31, 2023 - Management's significant judgments in applying the Group's accounting policies and key sources of estimation uncertainty are the same as those applied to the consolidated financial statements for the year ended December 31, 2023[94] Segment Information and Revenue The Group has two reportable segments: mobile phone and electronic products business and mining business. For the six months ended June 30, 2024, all revenue was from the mobile phone and electronic products business, with the mining business generating no revenue - The Group has two reportable segments: (i) mobile phone and electronic products business; and (ii) mining business[96] - For the six months ended June 30, 2024, the Company's mining business did not generate any revenue[96] - The mobile phone and electronic products business contributed all reportable segment revenue of HK$34.506 million[106] Reconciliation of Reportable Segments and Reportable Segment Revenue, Profit or Loss, Assets and Liabilities This section details the revenue, loss, assets, and liabilities for the mobile phone and electronic products business and mining business segments. The mobile phone and electronic products business contributed all revenue of HK$34.506 million in H1 2024, but both segments recorded losses. The mining business generated no revenue in H1 2024 Reportable Segment Performance (HK$ thousand) | Indicator | Mobile Phone and Electronic Products Business (HK$ thousand) | Mining Business (HK$ thousand) | Total (HK$ thousand) | | :--- | :--- | :--- | :--- | | H1 2024 Reportable Segment Revenue | 34,506 | - | 34,506 | | H1 2024 Reportable Segment Loss | (1,145) | (413) | (1,558) | | June 30, 2024 Reportable Segment Assets | 42,298 | 462 | 42,760 | | June 30, 2024 Reportable Segment Liabilities | (33,679) | (14,780) | (48,459) | - Corporate expenses, corporate assets, and corporate liabilities are not included in the measurement of segment profit or loss, segment assets, and segment liabilities used by the chief operating decision maker to assess segment performance[96] Geographical Information The Group's customer revenue primarily originated from Hong Kong (HK$33.425 million) and China (HK$1.081 million). Non-current assets are mainly located in Hong Kong (HK$1.114 million) and China (HK$2.269 million) Revenue by Region (HK$ thousand) | Region | H1 2024 Revenue (HK$ thousand) | H1 2023 Revenue (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong | 33,425 | 34,695 | | China | 1,081 | 4,008 | | Total | 34,506 | 38,703 | Non-current Assets by Region (HK$ thousand) | Region | June 30, 2024 Non-current Assets (HK$ thousand) | December 31, 2023 Non-current Assets (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong | 1,114 | 1,311 | | China | 2,269 | 2,000 | | Total | 3,383 | 3,311 | Revenue All of the Group's revenue is derived from the trading of mobile phones and electronic products, with revenue recognized at a point in time Revenue by Source and Timing (HK$ thousand) | Revenue Source | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Trading of mobile phones and electronic products | 34,506 | 38,703 | | Timing of revenue recognition: At a point in time | 34,506 | 38,703 | Finance Costs For the six months ended June 30, 2024, finance costs were HK$49,000, primarily comprising interest on lease liabilities, largely consistent with the prior year Finance Costs (HK$ thousand) | Indicator | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Interest on lease liabilities | 47 | 48 | | Other interest expenses | 2 | - | | Total | 49 | 48 | Income Tax Expense The Group incurred no income tax expense for the six months ended June 30, 2024, and 2023, as there was no estimated taxable profit - For the six months ended June 30, 2024, and 2023, the Group conducted certain businesses through its subsidiaries incorporated in China and was subject to a corporate income tax rate of 25%, except where preferential tax rates applied in the cities where these subsidiaries are located[135] - No provision for corporate income tax was made as the Group had no estimated taxable profit during both reporting periods[135] Loss for the Period For the six months ended June 30, 2024, the loss before income tax was HK$8.771 million, an increase from the prior year. This section details major expense items such as staff costs, auditor's remuneration, and cost of inventories recognized as expense Loss for the Period (HK$ thousand) | Indicator | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Loss before income tax | (8,771) | (7,441) | | Staff costs | 4,174 | 4,686 | | Auditor's remuneration | 645 | 546 | | Cost of inventories recognized as expense | 34,411 | 38,513 | | Interest income | (43) | (34) | Loss Per Share For the six months ended June 30, 2024, basic and diluted loss per share attributable to owners of the Company was HK$0.0313, based on a loss of HK$6.753 million and adjusted weighted average number of ordinary shares - For the six months ended June 30, 2024, basic and diluted loss per share attributable to owners of the Company was calculated based on the loss attributable to owners of the Company of HK$6.753 million for the period[137] - For the purpose of calculating basic and diluted loss per share for the six months ended June 30, 2024, the weighted average number of ordinary shares of 215,555,888 shares has been adjusted due to the subscription of new shares of the Company[137] - No potentially dilutive ordinary shares were in issue for the six months ended June 30, 2024, and 2023, hence diluted loss per share is not presented[137] Trade and Other Receivables As of June 30, 2024, total trade and other receivables (net of allowance for credit losses) were HK$35.876 million, a significant increase from December 31, 2023. Net trade receivables were HK$31.450 million, all aged within 0 to 60 days Trade and Other Receivables (HK$ thousand) | Indicator | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Trade receivables (net of allowance for credit losses) | 31,450 | 17,274 | | Prepayments to suppliers | 23,965 | 23,493 | | Other receivables and deposits (net of allowance for credit losses) | 4,426 | 2,205 | | Total | 35,876 | 19,479 | - The aging analysis of trade receivables (net of allowance) as at the end of the reporting period, presented based on invoice date: 0 to 60 days was HK$31.450 million[140] Trade and Other Payables As of June 30, 2024, total trade and other payables were HK$55.742 million, an increase from December 31, 2023. Trade payables (0 to 90 days) were HK$31.411 million Trade and Other Payables (HK$ thousand) | Indicator | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Trade payables (0 to 90 days) | 31,411 | 19,141 | | Customer prepayments | 1,739 | 1,025 | | Other payables and accrued expenses | 11,124 | 9,638 | | Provision for mine closure and restoration costs | 11,461 | 11,783 | | Total | 55,742 | 41,589 | Share Capital As of June 30, 2024, the Company's issued and fully paid share capital increased due to the subscription of 26,000,000 new shares, reaching a total share capital of HK$2.376 million, with 237,555,888 ordinary shares Share Capital (HK$ thousand) | Indicator | Number of Ordinary Shares | Share Capital (HK$ thousand) | | :--- | :--- | :--- | | As of December 31, 2023 | 211,555,888 | 2,116 | | Subscription of new shares | 26,000,000 | 260 | | As of June 30, 2024 | 237,555,888 | 2,376 | - The 2024 Subscription Shares represented approximately 12.29% of the Company's issued share capital immediately before completion; and approximately 10.94% of the Company's issued share capital as enlarged by the issue and allotment of the 2024 Subscription Shares immediately upon completion on June 3, 2024[144] Amount Due to a Related Party As of June 30, 2024, the amount due to related party Mr. Liu Xiaoying was HK$9.203 million, which is unsecured, interest-free, and repayable on demand Amount Due to a Related Party (HK$ thousand) | Related Party | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Mr. Liu Xiaoying | 9,203 | 11,663 | - The balance is unsecured, interest-free, and repayable on demand[146] Dividends The Board of Directors did not declare an interim dividend for the six months ended June 30, 2024, and 2023 - The Board of Directors did not declare an interim dividend for the six months ended June 30, 2024, and 2023[148] Related Party Disclosures This section discloses transactions with related parties, including amounts due from/to non-controlling shareholders of subsidiaries and key management personnel and senior management remuneration - Amounts due from/to non-controlling shareholders of subsidiaries are unsecured, interest-free, and repayable on demand[150] - Compensation of key management personnel and senior management members includes short-term benefits and post-employment benefits[152] Amounts Due From/To Non-Controlling Shareholders of Subsidiaries Amounts due from/to non-controlling shareholders of subsidiaries are unsecured, interest-free, and repayable on demand - The balance is unsecured, interest-free, and repayable on demand[150] Compensation of Key Management Personnel and Senior Management Members Total remuneration for directors and other key management personnel of the Group for the period was HK$2.055 million, primarily short-term benefits, a slight decrease from the prior year Compensation of Key Management Personnel and Senior Management Members (HK$ thousand) | Indicator | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Short-term benefits | 2,031 | 2,146 | | Post-employment benefits | 24 | 28 | | Total | 2,055 | 2,174 | Fair Value Measurement of Financial Instruments The Group's financial instruments measured at fair value are categorized into three levels. As of June 30, 2024, unlisted fund investments (HK$1.265 million) are Level 3, and listed equity investments (HK$331,000) are Level 1 - HKFRS 13 requires fair value measurement hierarchy disclosure for financial instruments measured at fair value, categorized into Level 1, Level 2, and Level 3[154] Fair Value Measurement of Financial Instruments (HK$ thousand) | Investment Type | Level 1 (HK$ thousand) | Level 2 (HK$ thousand) | Level 3 (HK$ thousand) | Total (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Unlisted Fund Investments | - | - | 1,265 | 1,265 | | Listed Equity Investments | 331 | - | - | 331 | | Total | 331 | - | 1,265 | 1,596 | - The fair value of financial assets under Level 3 is determined using market approach valuation techniques[159] - The fair value of unlisted fund investments is determined by the fund manager with reference to the expected returns of property development projects in the People's Republic of China[160]