REF HOLDINGS(01631) - 2023 - 中期财报

Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2023, the Group's revenue increased by 4.9% year-on-year to HKD 75.55 million, with gross profit rising 10.1% to HKD 40.08 million, resulting in profit attributable to owners of the company of HKD 10.09 million, a 2.9% increase, and basic earnings per share of 3.94 HK cents Performance Summary for the Six Months Ended June 30, 2023 | Metric | For the Six Months Ended June 30, 2023 (HKD thousands) | For the Six Months Ended June 30, 2022 (HKD thousands) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 75,551 | 72,053 | +4.9% | | Gross Profit | 40,082 | 36,404 | +10.1% | | Profit Before Tax | 11,861 | 11,421 | +3.9% | | Profit for the Period | 10,087 | 9,801 | +2.9% | | Basic Earnings Per Share (HK cents) | 3.94 | 3.83 | +2.9% | Condensed Consolidated Statement of Financial Position As of June 30, 2023, the Group's total assets decreased to HKD 119.26 million from HKD 147.80 million at the end of 2022, with total liabilities at HKD 48.15 million and net assets at HKD 71.11 million, a 28.5% decrease from HKD 99.42 million at the beginning of the period, primarily due to dividend distribution Financial Position Summary | Metric | As of June 30, 2023 (HKD thousands) | As of December 31, 2022 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Non-current Assets | 26,613 | 42,078 | -36.8% | | Current Assets | 92,648 | 105,723 | -12.4% | | Total Assets | 119,261 | 147,801 | -19.3% | | Current Liabilities | 46,277 | 40,488 | +14.3% | | Non-current Liabilities | 1,874 | 7,890 | -76.2% | | Total Liabilities | 48,151 | 48,378 | -0.5% | | Net Assets | 71,110 | 99,423 | -28.5% | Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2023, total shareholders' equity decreased from HKD 99.42 million at the beginning of the period to HKD 71.11 million, primarily due to a HKD 38.40 million dividend distribution, partially offset by HKD 10.09 million in profit for the period - During the period, the total equity attributable to owners of the company significantly decreased due to a dividend payment of HKD 38.40 million, despite recording a profit of HKD 10.09 million[4] Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2023, the Group generated net cash inflow of HKD 11.95 million from operating activities, a reversal from a net outflow in the prior period, with net cash inflow of HKD 60.03 million from investing activities primarily due to fixed deposit withdrawals, and net cash outflow of HKD 48.37 million from financing activities mainly for dividends and lease liabilities, increasing period-end cash and cash equivalents to HKD 40.97 million Cash Flow Summary | Cash Flow Activities | For the Six Months Ended June 30, 2023 (HKD thousands) | For the Six Months Ended June 30, 2022 (HKD thousands) | | :--- | :--- | :--- | | Net Cash From/(Used in) Operating Activities | 11,953 | (3,689) | | Net Cash From/(Used in) Investing Activities | 60,027 | (14,404) | | Net Cash Used in Financing Activities | (48,367) | (61,521) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 23,613 | (79,614) | | Cash and Cash Equivalents at End of Period | 40,972 | 47,951 | Notes to the Condensed Consolidated Financial Statements General Information, Basis of Preparation and Accounting Policies The Group primarily engages in financial printing services and investment holding, with financial statements presented in HKD, prepared in accordance with HKAS 34, and new/revised HKFRSs applied without significant impact on financial position - The company is an investment holding company, with its subsidiaries primarily engaged in financial printing services in Hong Kong[10] - This interim report is unaudited but has been reviewed by the company's audit committee[12] - New and revised Hong Kong Financial Reporting Standards were applied during the period, but they did not have a significant impact on the Group's financial position and performance[16] Revenue and Segment Information All of the Group's revenue is derived from financial printing services, operating under a single segment with all business and assets located in Hong Kong, where translation service revenue significantly grew by 46.1% year-on-year while printing service revenue declined by 12.7%, with no single customer contributing over 10% of total revenue Revenue Breakdown | Service Type | For the Six Months Ended June 30, 2023 (HKD thousands) | For the Six Months Ended June 30, 2022 (HKD thousands) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Printing | 39,920 | 45,719 | -12.7% | | Translation | 29,592 | 20,255 | +46.1% | | Media Publication | 6,039 | 6,079 | -0.7% | | Total | 75,551 | 72,053 | +4.9% | - The Group operates only one business segment, providing financial printing services, with all revenue and assets originating from Hong Kong[20] - No single customer contributed more than 10% of the Group's total revenue during the period[21] Key Profit or Loss Items Net other income for the period was HKD 1.13 million, a year-on-year decrease primarily due to a HKD 1.60 million government grant in the prior period, while finance costs decreased by 43.3% to HKD 0.35 million, and tax expense increased by 9.5% to HKD 1.77 million, consistent with the growth in profit before tax - Net other income and losses decreased from HKD 1.52 million in the prior period to HKD 1.13 million, mainly due to a HKD 1.60 million government grant from the "Employment Support Scheme" received in the prior period, which was not present in the current period[22] - Finance costs decreased from HKD 0.61 million to HKD 0.35 million, primarily due to a reduction in interest on lease liabilities[23] - Tax expense was HKD 1.77 million, an increase of 9.5% from HKD 1.62 million in the prior period[25] Dividends and Earnings Per Share The Board does not recommend an interim dividend for the six months ended June 30, 2023, while a final dividend totaling HKD 38.40 million for the year ended 2022 was paid during the period, and basic earnings per share increased to 3.94 HK cents from 3.83 HK cents in the prior period - The Board does not recommend the declaration of any interim dividend for the six months ended June 30, 2023[27] - On May 12, 2023, the company paid a final dividend of 15 HK cents per share for the year ended 2022, totaling HKD 38.40 million[27] - Basic earnings per share increased from 3.83 HK cents in the prior period to 3.94 HK cents, with diluted earnings per share being the same as basic earnings per share due to the absence of potentially dilutive ordinary shares[28] Details of Assets and Liabilities This section details the composition and changes in the Group's major assets and liabilities, noting a significant increase in trade receivables and corresponding rise in expected credit loss provisions, alongside an increase in bank balances and cash due to full withdrawal of fixed deposits, while trade payables remained stable Trade Receivables As of June 30, 2023, net trade receivables significantly increased by 66.9% to HKD 42.16 million from HKD 25.26 million at the end of 2022, with expected credit loss provisions rising from HKD 3.49 million to HKD 5.82 million, and the most notable increase observed in receivables aged 61 to 90 days Changes in Trade Receivables | Item | As of June 30, 2023 (HKD thousands) | As of December 31, 2022 (HKD thousands) | | :--- | :--- | :--- | | Trade Receivables | 47,976 | 28,747 | | Less: Provision for Expected Credit Losses | (5,819) | (3,488) | | Net | 42,157 | 25,259 | - Bad debts written off during the period amounted to HKD 0.45 million, primarily due to the delisting or liquidation of the relevant debtors by the Stock Exchange[37] Cash and Deposits As of June 30, 2023, the Group's cash and cash equivalents significantly increased to HKD 40.97 million from HKD 17.36 million at the end of 2022, with fixed deposits of HKD 59.00 million originally maturing beyond three months fully withdrawn during the period Composition of Cash and Deposits | Item | As of June 30, 2023 (HKD thousands) | As of December 31, 2022 (HKD thousands) | | :--- | :--- | :--- | | Bank Balances and Cash | 10,472 | 17,359 | | Fixed deposits with original maturity within three months | 30,500 | – | | Cash and Cash Equivalents | 40,972 | 17,359 | | Fixed deposits with original maturity over three months | – | 59,000 | Share Capital, Financial Instruments and Related Party Transactions As of June 30, 2023, the company's issued share capital remained unchanged at 256,000,000 ordinary shares, with financial assets at fair value through profit or loss (primarily actively traded assets) valued at HKD 1.03 million, and no other significant related party transactions during the period apart from directors' remuneration - The company's issued share capital is 256,000,000 shares with a par value of HKD 0.01 per share, and there was no change in the share capital structure during the period[45] - Financial assets at fair value through profit or loss (Level 1 fair value measurements) had a fair value of HKD 1.03 million at period-end, higher than HKD 0.96 million at the beginning of the year[50] - Significant related party transactions during the period consisted of remuneration for key management personnel (i.e., directors), details of which are disclosed in Note 8[52] Management Discussion and Analysis Business Review Despite a weak Hong Kong capital market due to global interest rate hikes and geopolitical factors, leading to record low IPO fundraising, the Group successfully offset declining printing service revenue by optimizing its income mix, particularly through robust growth in translation services, coupled with prudent cost control measures, enhancing profitability and achieving a slight increase in profit for the period - Facing a weak Hong Kong IPO market, the Group adjusted its strategy to focus on developing translation services to meet challenges and expand its customer base[55] Revenue by Service Category | Service Category | For the Six Months Ended June 30, 2023 (HKD thousands) | % of Total Revenue | For the Six Months Ended June 30, 2022 (HKD thousands) | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Printing Services | 39,920 | 52.8% | 45,719 | 63.5% | | Translation Services | 29,592 | 39.2% | 20,255 | 28.1% | | Media Publication Services | 6,039 | 8.0% | 6,079 | 8.4% | | Total | 75,551 | 100.0% | 72,053 | 100.0% | - Revenue from printing services decreased by 12.7% year-on-year due to the postponement of existing initial public offering projects[57] - The Group implemented significant sales and marketing initiatives in translation services, leading to a substantial 46.1% year-on-year increase in revenue for this segment[58] Financial Review During the period, the Group's overall financial performance showed stable growth, with total revenue increasing by 4.9%, gross profit by 10.1%, and gross margin improving to 53.1%, while effective cost control led to reduced administrative and finance expenses, resulting in a 2.9% net profit increase to HKD 10.09 million, maintaining healthy gearing and current ratios Financial Summary | Metric | For the Six Months Ended June 30, 2023 | For the Six Months Ended June 30, 2022 | Change | | :--- | :--- | :--- | :--- | | Revenue (HKD thousands) | 75,551 | 72,053 | +4.9% | | Gross Profit (HKD thousands) | 40,082 | 36,404 | +10.1% | | Gross Margin | 53.1% | 50.5% | +2.6 percentage points | | Net Profit (HKD thousands) | 10,087 | 9,801 | +2.9% | | Net Profit Margin | 13.4% | 13.6% | -0.2 percentage points | - Administrative expenses decreased by 2.9% year-on-year, primarily due to reduced costs for personal protective equipment provided to employees and clients[66] - As of June 30, 2023, the gearing ratio was 0.24, a decrease from 0.26 at the beginning of the year[72] Capital Management and Operations The Board did not recommend an interim dividend for the period, but a final dividend of HKD 38.40 million for the previous year was paid, with the company's capital structure remaining stable and no changes in share capital, while the Group had 101 full-time employees at period-end, with reduced staff costs year-on-year, and no significant capital commitments, asset pledges, or contingent liabilities during the period - The Board does not recommend the declaration of any interim dividend for the current period[76] - As of June 30, 2023, the Group had 101 full-time employees in Hong Kong, a decrease from 109 in the prior period[78] - There were no significant capital expenditures, major acquisitions or disposals, asset pledges, or contingent liabilities during the period[80][82][83][85] Prospects Looking ahead, management anticipates continued volatility in the Hong Kong capital market due to global economic uncertainties, but favorable policies such as the Stock Exchange's recent listing regime for specialist technology companies may present opportunities, which the Group is committed to seizing promptly as they arise - Management believes that while the effects of economic stimulus policies remain to be seen, new policies from the Stock Exchange, such as the listing regime for specialist technology companies, are expected to boost Hong Kong's IPO market and enhance the city's competitiveness[88] - The Group will remain vigilant and ready to seize market opportunities as they emerge[88] Other Information Directors' and Shareholders' Interests This section discloses the shareholdings of directors and major shareholders, noting that as of June 30, 2023, Mr. Lau Man Tak, Chairman and Non-executive Director, is deemed to hold 75% of the company's shares through his controlled corporation, with Jumbo Ace Enterprises Limited being the direct controlling shareholder beneficially owning 75% of the shares - Mr. Lau Man Tak, Chairman of the Board, is deemed to have an interest in 192,000,000 shares, representing 75% of the company's issued share capital[90] - Major shareholder Jumbo Ace Enterprises Limited beneficially owns 192,000,000 shares, representing 75% of the total[91] Corporate Governance The company has adopted and complied with all applicable code provisions of the Hong Kong Listing Rules' Corporate Governance Code during the reporting period, with the Board committed to maintaining good corporate governance for long-term sustainable shareholder growth, and all directors confirming compliance with the standard code for securities transactions - The Board is satisfied that the company has complied with all applicable code provisions set out in the Corporate Governance Code during the period[93] - All directors confirmed that they have complied with the standard code for securities transactions by directors throughout the period[94] Other Disclosures This section provides other compliance information, stating that neither the company nor its subsidiaries purchased, redeemed, or sold any listed securities during the period, no share options have been granted since the adoption of the share option scheme in 2015, and the Audit Committee has reviewed this interim results report - During the period, neither the company nor any of its subsidiaries purchased, redeemed, or sold any of the company's listed securities[97] - Since the adoption of the share option scheme in 2015, the company has not granted any share options, and thus there are no outstanding share options[98] - The Audit Committee has reviewed the Group's unaudited condensed consolidated results and is of the opinion that they have been prepared in compliance with applicable accounting standards and regulations, with adequate disclosures made[100]