易通讯集团(08031) - 2022 - 中期财报

I. Company Information and GEM Characteristics This section outlines the GEM market's role for SMEs, highlighting investment risks and the report's compliance with GEM listing rules 1.1 GEM Listing Rules and Investment Risks This section describes the GEM market's positioning for small and medium-sized companies, noting high investment risks and uncertain securities liquidity, while confirming report compliance with GEM listing rules - The GEM market is positioned for small and medium-sized companies, with higher investment risks and no guaranteed securities liquidity[3] - This report's information is published in compliance with GEM listing rules, with directors confirming its accuracy, completeness, and lack of misleading content[3] II. Financial Summary This section provides a high-level overview of the group's financial performance, noting a revenue decrease but a significant turnaround to profit 2.1 Financial Summary For the six months ended June 30, 2022, the Group's total revenue decreased by 17.5% year-on-year, but profit attributable to owners turned from a loss to a profit, increasing by 208.1%, with earnings per share also turning positive 2022 First Half Financial Summary | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 42,246 | 51,186 | -17.5% | | Profit/(Loss) Attributable to Owners of the Company | 1,419 | (1,313) | +208.1% (Turned from loss to profit) | | Earnings/(Loss) Per Share (HK cents) | 0.51 | (0.47) | N/A | III. Unaudited Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, including comprehensive income, financial position, equity changes, and cash flows 3.1 Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2022, the Group's revenue was HKD 42,246 thousands, a decrease from the prior year, but profit for the period turned from a loss of HKD 1,313 thousands to a profit of HKD 1,419 thousands, with earnings per share of HKD 0.51 cents, driven by cost control and increased other income Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30, 2022) | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | | :--- | :--- | :--- | | Revenue | 42,246 | 51,186 | | Other income | 2,393 | 153 | | Employee benefit expenses | (34,796) | (36,538) | | Depreciation and amortization | (3,310) | (5,228) | | Other operating expenses | (4,464) | (10,004) | | Operating profit/(loss) | 2,024 | (441) | | Profit/(loss) before tax | 1,907 | (553) | | Profit/(loss) for the period | 1,419 | (1,313) | | Earnings/(loss) per share (HK cents) | 0.51 | (0.47) | 3.2 Condensed Consolidated Statement of Financial Position As of June 30, 2022, the Group's non-current and current assets both increased, with total assets less current liabilities rising to HKD 108,867 thousands, and net assets and total equity also increasing, indicating a robust financial position Condensed Consolidated Statement of Financial Position (As of June 30, 2022) | Metric | June 30, 2022 (HKD thousands) | December 31, 2021 (HKD thousands) | | :--- | :--- | :--- | | Non-current assets | 10,778 | 9,539 | | Current assets | 129,376 | 127,102 | | Current liabilities | 31,287 | 29,120 | | Net current assets | 98,089 | 97,982 | | Net assets | 100,566 | 99,147 | | Total equity | 100,566 | 99,147 | 3.3 Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2022, total equity attributable to owners of the company increased from HKD 99,147 thousands at the beginning of the period to HKD 100,566 thousands at the end, primarily due to a profit of HKD 1,419 thousands for the period Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30, 2022) | Metric | January 1, 2022 (HKD thousands) | June 30, 2022 (HKD thousands) | | :--- | :--- | :--- | | Total equity (beginning of period) | 99,147 | N/A | | Profit for the period | 1,419 | N/A | | Total equity (end of period) | N/A | 100,566 | 3.4 Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2022, the Group generated net cash of HKD 17,054 thousands from operating activities, a positive turnaround from the prior year, with reduced net cash outflows from investing and financing activities, leading to a net increase in cash and cash equivalents of HKD 13,473 thousands and an ending balance of HKD 55,182 thousands Condensed Consolidated Statement of Cash Flows (For the six months ended June 30, 2022) | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | | :--- | :--- | :--- | | Net cash generated from/(used in) operating activities | 17,054 | (5,802) | | Net cash used in investing activities | (1,728) | (13,543) | | Net cash used in financing activities | (1,853) | (5,021) | | Net increase/(decrease) in cash, cash equivalents and bank overdrafts | 13,473 | (24,366) | | Cash, cash equivalents and bank overdrafts at end of period | 55,182 | 35,089 | IV. Notes to the Financial Information This section provides detailed notes to the financial information, covering accounting policies, segment performance, various expenses, tax, earnings per share, and financial asset and liability details 4.1 General Information and Accounting Policies The company was incorporated in the Cayman Islands on June 29, 2011, and listed on GEM of the Stock Exchange on January 9, 2012, with interim financial information prepared under HKAS 34 and GEM Listing Rules, using consistent accounting policies, and new HKFRS having no material impact - The company was incorporated in the Cayman Islands on June 29, 2011, and listed on GEM of the Stock Exchange on January 9, 2012[22] - Interim financial information is prepared in accordance with HKAS 34 and GEM Listing Rules, with accounting policies consistent with the prior year, and new standards having no material impact[23] 4.2 Segment Information and Revenue The Group's reportable operating segments include outsourced inbound/outbound customer contact services, staffing services, customer contact centre equipment management services, financial services, and other businesses, with total revenue of HKD 42,246 thousands and total segment results of HKD 6,497 thousands in the first half of 2022, a decrease from the prior year - The company's main operating segments include outsourced inbound/outbound customer contact services, staffing services, customer contact centre equipment management services, financial services, and other businesses (system and software sales, licensing fees, system maintenance fees, and human resources services)[26] 2022 First Half Segment Revenue and Performance Overview | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | | :--- | :--- | :--- | | Total Segment Revenue | 42,246 | 51,186 | | Total Segment Results | 6,497 | 7,991 | 4.2.1 2022 First Half Segment Revenue and Performance In the first half of 2022, staffing services contributed the largest revenue of HKD 23,369 thousands, while financial services showed significant segment performance contribution of HKD 1,412 thousands 2022 First Half Segment Revenue and Performance by Segment | Segment | Revenue (HKD thousands) | Performance (HKD thousands) | | :--- | :--- | :--- | | Outsourced Inbound Customer Contact Services | 5,935 | 476 | | Staffing Services | 23,369 | 1,934 | | Customer Contact Centre Equipment Management Services | 6,415 | 1,779 | | Financial Services | 3,871 | 1,412 | | Other | 2,656 | 896 | | Total | 42,246 | 6,497 | 4.2.2 2021 First Half Segment Revenue and Performance In the first half of 2021, staffing services were the Group's largest revenue source at HKD 25,732 thousands, and financial services contributed the highest segment performance of HKD 2,791 thousands 2021 First Half Segment Revenue and Performance by Segment | Segment | Revenue (HKD thousands) | Performance (HKD thousands) | | :--- | :--- | :--- | | Outsourced Inbound Customer Contact Services | 6,449 | 427 | | Staffing Services | 25,732 | 2,781 | | Customer Contact Centre Equipment Management Services | 6,655 | 1,231 | | Financial Services | 9,622 | 2,791 | | Other | 2,728 | 761 | | Total | 51,186 | 7,991 | 4.2.3 Reconciliation of Segment Results to Profit Before Tax In the first half of 2022, the Group's profit before tax was HKD 1,907 thousands, a significant improvement from a loss of HKD 553 thousands in the same period of 2021, primarily due to increased other income and reduced corporate and other unallocated expenses Reconciliation of Segment Results to Profit Before Tax | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | | :--- | :--- | :--- | | Segment results for reportable segments | 6,497 | 7,991 | | Unallocated: Other income | 2,393 | 153 | | Unallocated: Other losses – net | (45) | (10) | | Unallocated: Depreciation and amortization | (1,089) | (926) | | Unallocated: Finance costs | (81) | (86) | | Unallocated: Corporate and other unallocated expenses | (5,768) | (7,675) | | Profit/(loss) before tax | 1,907 | (553) | 4.3 Employee Benefit Expenses For the six months ended June 30, 2022, the Group's total employee benefit expenses, including directors' emoluments, amounted to HKD 35,393 thousands, a decrease from the prior year, mainly due to reduced salaries and allowances Employee Benefit Expenses (For the six months ended June 30, 2022) | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | | :--- | :--- | :--- | | Salaries and allowances | 33,614 | 35,554 | | Pension costs – defined contribution plans | 1,779 | 1,612 | | Total employee benefit expenses | 35,393 | 37,166 | | Less: Amount capitalised in deferred development costs | (597) | (628) | | Total | 34,796 | 36,538 | 4.4 Profit/(Loss) Before Income Tax For the six months ended June 30, 2022, the Group's total depreciation and amortization was HKD 3,310 thousands, a decrease from the prior year, with research and development costs also falling from HKD 1,542 thousands to HKD 1,200 thousands Depreciation and Amortization, Research and Development Costs (For the six months ended June 30, 2022) | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 365 | 504 | | Depreciation of right-of-use assets | 1,745 | 3,182 | | Amortization of intangible assets | 1,200 | 1,542 | | Total depreciation and amortization | 3,310 | 5,228 | | Research and development costs | 1,200 | 1,542 | 4.5 Income Tax Expense For the six months ended June 30, 2022, Hong Kong profits tax was provided at a rate of 16.5%, resulting in current income tax expense of HKD 488 thousands, with no deferred tax provision made due to the absence of significant timing differences - Hong Kong profits tax is provided at a rate of 16.5%[41] Income Tax Expense (For the six months ended June 30, 2022) | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | | :--- | :--- | :--- | | Current income tax | 488 | 760 | | Deferred income tax | – | – | | Total | 488 | 760 | - No deferred tax provision was made due to the absence of significant timing differences[43] 4.6 Earnings/(Loss) Per Share For the six months ended June 30, 2022, the company's basic earnings per share was HKD 0.51 cents, a significant improvement from a loss of HKD 0.47 cents per share in the prior year, primarily due to the profit attributable to owners turning positive, with diluted earnings per share equal to basic earnings per share as there are no outstanding potential dilutive ordinary shares Earnings/(Loss) Per Share (For the six months ended June 30, 2022) | Metric | 2022 First Half | 2021 First Half | | :--- | :--- | :--- | | Profit/(loss) attributable to owners of the company (HKD thousands) | 1,419 | (1,313) | | Weighted average number of ordinary shares in issue (shares) | 280,000,000 | 280,000,000 | | Basic earnings/(loss) per share (HK cents) | 0.51 | (0.47) | - Diluted earnings or loss per share is equal to basic earnings per share as there are no outstanding potential dilutive ordinary shares[45] 4.7 Financial Assets at Fair Value Through Profit or Loss As of June 30, 2022, the Group's total financial assets at fair value through profit or loss amounted to HKD 3,423 thousands, an increase from HKD 2,435 thousands as of December 31, 2021, primarily driven by growth in unlisted equity investments Financial Assets at Fair Value Through Profit or Loss (As of June 30, 2022) | Category | June 30, 2022 (HKD thousands) | December 31, 2021 (HKD thousands) | | :--- | :--- | :--- | | Listed equity securities in Hong Kong | 223 | 235 | | Unlisted equity investments | 3,200 | 2,200 | | Total | 3,423 | 2,435 | 4.8 Trade and Other Receivables As of June 30, 2022, the Group's total trade and other receivables amounted to HKD 52,566 thousands, a decrease from HKD 58,472 thousands as of December 31, 2021, with an average credit period of 30 days for sales Trade and Other Receivables (As of June 30, 2022) | Metric | June 30, 2022 (HKD thousands) | December 31, 2021 (HKD thousands) | | :--- | :--- | :--- | | Trade receivables – net | 48,722 | 52,509 | | Other receivables, deposits and prepayments – net | 3,844 | 5,963 | | Total | 52,566 | 58,472 | - The Group's average credit period for sales is 30 days[52] Ageing Analysis of Trade Receivables (As of June 30, 2022) | Ageing | June 30, 2022 (HKD thousands) | December 31, 2021 (HKD thousands) | | :--- | :--- | :--- | | 0 to 30 days | 7,628 | 6,619 | | 31 to 60 days | 2,370 | 2,670 | | 61 to 90 days | 586 | 845 | | Over 90 days | 9,352 | 8,514 | | Total (partial) | 19,936 | 18,648 | 4.9 Cash and Cash Equivalents The Group's cash and cash equivalents primarily consist of bank and hand cash deposits held with reputable banks with no recent default history, earning interest at floating rates based on daily bank deposit rates - Cash and cash equivalents comprise bank and hand cash deposits held with reputable banks, earning interest at floating rates[53] 4.10 Trade and Other Payables As of June 30, 2022, the Group's total trade and other payables amounted to HKD 26,764 thousands, an increase from HKD 25,757 thousands as of December 31, 2021, with a significant rise in trade payables Trade and Other Payables (As of June 30, 2022) | Metric | June 30, 2022 (HKD thousands) | December 31, 2021 (HKD thousands) | | :--- | :--- | :--- | | Trade payables | 1,106 | 125 | | Payables arising from financial services business | 19,605 | 17,336 | | Other payables and accrued charges | 6,053 | 8,296 | | Total | 26,764 | 25,757 | Ageing Analysis of Trade Payables (As of June 30, 2022) | Ageing | June 30, 2022 (HKD thousands) | December 31, 2021 (HKD thousands) | | :--- | :--- | :--- | | 0 to 30 days | 605 | 59 | | 31 to 60 days | 375 | 49 | | 61 to 90 days | 21 | 1 | | Over 90 days | 105 | 16 | | Total | 1,106 | 125 | 4.11 Share Capital As of June 30, 2022, the company's authorized share capital was HKD 50,000 thousands, with issued and fully paid share capital of HKD 2,800 thousands, comprising 280,000,000 ordinary shares at a par value of HKD 0.01 each, consistent with the end of 2021 Share Capital Structure (As of June 30, 2022) | Metric | Number | Amount (HKD thousands) | | :--- | :--- | :--- | | Authorized share capital (ordinary shares) | 5,000,000,000 | 50,000 | | Issued and fully paid share capital (ordinary shares) | 280,000,000 | 2,800 | | Par value per share | 0.01 HKD | N/A | 4.12 Related Party Transactions For the six months ended June 30, 2022, the Group engaged in various related party transactions, including lease liability repayments, system maintenance income, asset management service income, consulting service income, seasonal activity expenses, cleaning expenses, and property lease expenses, with key management personnel remuneration totaling HKD 243 thousands Key Related Party Transactions (For the six months ended June 30, 2022) | Related Party Name | Nature of Transaction | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | | :--- | :--- | :--- | :--- | | Space Unlimited Co., Limited | Repayment of lease liabilities/Property lease expenses | – | 531 | | Hong Kong Commercial Finance Limited | System maintenance income | (25) | (27) | | Kai Yuen Sing Yu Development Limited | Asset management service income | (1,148) | (4,559) | | Pacific Paradise Development Limited | Consulting service income | – | (3,000) | | Sing Yu (Holdings) Limited | Seasonal activity expenses/Repayment of lease liabilities | 223 | 1 | | Sure Guard Management Limited | Cleaning expenses | – | 4 | | Legendary Limited | Property lease expenses | 4 | 41 | | Fook Woo Investment Limited | Property lease expenses | 61 | – | Key Management Personnel Remuneration (For the six months ended June 30, 2022) | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | | :--- | :--- | :--- | | Salaries and short-term employee benefits | 240 | 260 | | Post-employment benefits | 3 | 3 | | Total | 243 | 263 | V. Management Discussion and Analysis This section provides management's discussion and analysis of the Group's business review, financial performance, segment results, and key income and expense drivers 5.1 Business Review and Prospects The Group primarily offers multimedia customer contact centre services, system solutions, and regulated financial businesses, navigating Hong Kong's improving economy but facing labor shortages and rising costs due to emigration, while actively investing in Yuanzheng Group and VAX to capitalize on blockchain and virtual asset opportunities and enhance financial service synergies - The company primarily operates in multimedia customer contact centre services, system solutions, and regulated financial businesses (securities dealing, advisory, and asset management)[70] - Hong Kong's economy is gradually improving, but a large-scale emigration wave has led to labor shortages and rising costs, which the company is addressing by increasing recruitment channels[70][71] - The company has invested in approximately 40% equity of Yuanzheng Group (providing security tokenization services) and in VAX (applying for a virtual asset trading license) to seize blockchain and virtual asset investment opportunities and enhance financial service synergies[73][79][81] Financial Assets at Fair Value Through Profit or Loss (FAFVTPL) Investment Details (As of June 30, 2022) | Investment Description | Carrying Amount (HKD thousands) | | :--- | :--- | | Listed equity securities in Hong Kong (FAFVTPL I) | 223 | | Unlisted equity securities at cost (FAFVTPL II) | – | | Unlisted equity securities at cost (FAFVTPL III) | 2,200 | | Unlisted equity securities at cost (FAFVTPL IV) | 1,000 | | Total | 3,423 | - FAFVTPL I: Holds listed shares of Tracker Fund of Hong Kong, with a carrying amount of approximately HKD 222,800[77] - FAFVTPL III: Investment in Hong Kong Virtual Asset Exchange Limited (VAX), with a carrying amount of approximately HKD 2,200,000, where VAX is applying for a virtual asset trading license[79][80] - FAFVTPL IV: Investment in 1,000,000 shares of Yuanzheng Group Limited, representing approximately 40% of the issued share capital, at a consideration of HKD 1,000,000, providing asset tokenization consulting services[81] 5.2 Financial Review For the six months ended June 30, 2022, the Group's total revenue was approximately HKD 42,200,000, a year-on-year decrease of approximately HKD 9,000,000, with gross profit margin slightly declining to 15.4%, yet profit attributable to owners turned from a loss of HKD 1,300,000 in the prior year to a profit of HKD 1,400,000 Key Financial Review Metrics (For the six months ended June 30, 2022) | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Total Revenue | 42,200 | 51,200 | Decreased by approximately 9,000 | | Gross Profit Margin | 15.4% | 15.6% | Slightly decreased | | Profit/(Loss) Attributable to Owners of the Company | 1,400 (Profit) | (1,300) (Loss) | Turned from loss to profit | 5.3 Revenue and Segment Performance Analysis This section provides a detailed analysis of revenue and performance across business segments, noting decreases in outsourced inbound, staffing, and customer contact centre equipment management services revenue, with some segments showing improved gross profit margins, a significant reduction in financial services revenue, and stable other business revenue 5.3.1 Outsourced Inbound Customer Contact Services For the six months ended June 30, 2022, outsourced inbound customer contact services revenue decreased by approximately 8% year-on-year to HKD 5,900,000, mainly due to fewer sales orders from existing clients, while segment performance increased to HKD 500,000, and gross profit margin slightly rose to 8%, primarily benefiting from reduced staff costs Outsourced Inbound Customer Contact Services Performance (For the six months ended June 30, 2022) | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 5,900 | 6,400 | Decreased by approximately 8% | | Segment Performance | 500 | 400 | Increased | | Gross Profit Margin | 8% | 6.6% | Slightly increased | - Revenue decrease was primarily due to fewer sales orders from existing clients[84] - Gross profit margin increase was primarily due to reduced staff costs[84] 5.3.2 Staffing Services For the six months ended June 30, 2022, staffing services revenue decreased by approximately 9.2% year-on-year to HKD 23,400,000, mainly due to reduced demand from existing clients, with segment performance falling to HKD 2,000,000 and gross profit margin decreasing to 8.3%, primarily impacted by lower revenue Staffing Services Performance (For the six months ended June 30, 2022) | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 23,400 | 25,700 | Decreased by approximately 9.2% | | Segment Performance | 2,000 | 2,800 | Decreased | | Gross Profit Margin | 8.3% | 10.8% | Decreased | - Revenue decrease was primarily due to continuously reduced demand for staffing services from existing clients[86] - Gross profit margin decrease was primarily due to reduced revenue[86] 5.3.3 Customer Contact Centre Equipment Management Services For the six months ended June 30, 2022, customer contact centre equipment management services revenue decreased by approximately 3.6% year-on-year to HKD 6,400,000, mainly due to reduced customer service demand, while segment performance increased to HKD 1,800,000, and gross profit margin significantly rose to 27.7% Customer Contact Centre Equipment Management Services Performance (For the six months ended June 30, 2022) | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 6,400 | 6,700 | Decreased by approximately 3.6% | | Segment Performance | 1,800 | 1,200 | Increased | | Gross Profit Margin | 27.7% | 18.5% | Significantly increased | - Revenue decrease was primarily due to reduced customer service demand[87] 5.3.4 Financial Services For the six months ended June 30, 2022, financial services revenue significantly decreased to HKD 3,900,000, primarily due to reduced demand for securities and asset management-related advisory services from a major client, while gross profit margin increased to 36.5% Financial Services Performance (For the six months ended June 30, 2022) | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 3,900 | 9,600 | Significantly decreased | | Gross Profit Margin | 36.5% | 29% | Increased | - Revenue and segment performance decrease was primarily due to reduced demand for securities and asset management-related advisory services from a major client[89] 5.3.5 Other Businesses For the six months ended June 30, 2022, revenue from other services related to Weis remained stable at HKD 2,700,000, with gross profit increasing to HKD 900,000, primarily due to reduced outsourced human resources input Other Businesses Performance (For the six months ended June 30, 2022) | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | | :--- | :--- | :--- | | Revenue | 2,700 | 2,700 | | Gross Profit | 900 | 800 | - Gross profit increase was primarily due to reduced outsourced human resources input[90] 5.4 Other Income and Expenses For the six months ended June 30, 2022, other income significantly increased to HKD 2,400,000, primarily due to approximately HKD 2,200,000 in government employment subsidies, while other operating expenses included expected credit losses, audit fees, and legal and professional expenses Other Income (For the six months ended June 30, 2022) | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | | :--- | :--- | :--- | | Other income | 2,400 | 200 | - The significant increase in other income was primarily due to approximately HKD 2,200,000 in government employment subsidies received[91] - Other operating expenses primarily include expected credit losses, auditor's remuneration, insurance, legal and professional expenses, short-term lease-related expenses, repairs and maintenance, subcontracting expenses, telephone expenses, travel, entertainment, and utilities expenses[93] 5.5 Profit/(Loss) Attributable to Owners of the Company For the six months ended June 30, 2022, profit attributable to owners of the company turned from a loss of HKD 1,300,000 in the prior year to a profit of HKD 1,400,000, primarily benefiting from increased subsidy-related other income Profit/(Loss) Attributable to Owners of the Company (For the six months ended June 30, 2022) | Metric | 2022 First Half (HKD thousands) | 2021 First Half (HKD thousands) | | :--- | :--- | :--- | | Profit/(Loss) Attributable to Owners of the Company | 1,400 (Profit) | (1,300) (Loss) | - The increase in profit was primarily due to increased subsidy-related other income[94] VI. Corporate Governance and Shareholder Information This section details the company's corporate governance practices, directors' conduct, share option schemes, non-competition commitments, and shareholder information 6.1 Compliance with Corporate Governance Code For the six months ended June 30, 2022, the company complied with all code provisions of the Corporate Governance Code in Appendix 15 to the GEM Listing Rules - The company has complied with all code provisions of the Corporate Governance Code in Appendix 15 to the GEM Listing Rules[94] 6.2 Directors' and Chief Executive's Securities Transactions The company has adopted a code of conduct for directors' securities transactions, with terms no less exacting than GEM Listing Rules, and all directors confirmed compliance with the required standards during the reporting period - The company has adopted a code of conduct for directors' securities transactions no less exacting than required by the GEM Listing Rules[95] - All directors confirmed compliance with the required standards for securities transactions during the reporting period[95] 6.3 Share Option Scheme and Directors' Rights to Shares For the six months ended June 30, 2022, no share options were granted, exercised, lapsed, or cancelled under the share option scheme, and neither the company nor any associated corporation engaged in arrangements enabling directors to benefit from acquiring shares or debentures, nor did directors, their spouses, or minor children hold or exercise rights to subscribe for company shares or debentures - During the reporting period, no share options were granted, exercised, lapsed, or cancelled under the share option scheme[96] - Neither the company nor any associated corporation participated in arrangements enabling directors to benefit from acquiring shares or debentures[98] - Directors, their spouses, or minor children did not hold or exercise rights to subscribe for company shares or debentures[98] 6.4 Non-Competition Undertaking The company entered into a non-competition deed with the late Chairman and Non-executive Director Mr. Tang Shing Bor, CEO and Executive Director Mr. Tang Yiu Sing, Hong Kong Commercial Finance Limited, and Hong Kong Credit Limited (collectively, "Covenantors") to protect company and shareholder interests by restricting Covenantors and their close associates from engaging in "Restricted Businesses" competitive with the Group, requiring timely disclosure of new business opportunities and offering them first to the company - The company entered into a non-competition deed with the Covenantors, including the late Chairman Mr. Tang Shing Bor, CEO Mr. Tang Yiu Sing, Hong Kong Commercial Finance Limited, and Hong Kong Credit Limited[99] - The Covenantors undertake not to directly or indirectly engage in "Restricted Businesses" that compete with the Group's existing operations, including multimedia contact services, customer contact centre systems, staffing services, financial services, and money lending businesses[101] - The Covenantors are required to promptly notify the company in writing of any "new business opportunities" and offer them first to the company for evaluation, with the company having 5 to 10 business days to decide whether to invest[103] - The company has received annual declarations from all Covenantors regarding their compliance with the non-competition deed[103] 6.5 Directors' and Chief Executive's Interests in Shares As of June 30, 2022, other than the late Non-executive Director Mr. Tang Shing Bor holding 75% of the company's shares through his controlled corporation, Mastermind Enterprises Limited, no other directors or chief executives had interests or short positions in the shares, underlying shares, or debentures of the company or its associated corporations requiring disclosure under the Securities and Futures Ordinance Directors' and Chief Executive's Long Positions in the Company's Shares (As of June 30, 2022) | Name of Director/Chief Executive | Capacity | Nature of Interest | Number of Shares/Underlying Shares Held | Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | | Mr. Tang Shing Bor | Interest in controlled corporation | Corporate interest | 210,000,000 | 75% | - Mr. Tang Shing Bor's interest is held by Mastermind Enterprises Limited and forms part of his will[108] - Save as disclosed above, no other directors or chief executives had disclosable interests or short positions[110] 6.6 Major Shareholders' Interests in Shares As of June 30, 2022, Mastermind Enterprises Limited held 75% of the company's shares, and Pine Care Group Limited, through its wholly-owned subsidiary Pine Care Elite Limited, held a 5.58% interest in underlying shares derived from convertible bonds Major Shareholders' Long Positions in the Company's Shares (As of June 30, 2022) | Name of Major Shareholder | Capacity | Number of Shares/Underlying Shares Held | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mastermind Enterprises Limited | Beneficial owner | 210,000,000 | 75% | | Pine Care Group Limited | Interest in controlled corporation | 15,625,000 | 5.58% | | Pine Care Elite Limited | Beneficial owner | 15,625,000 | 5.58% | - Pine Care Elite is a holder of the company's convertible bonds, convertible into 15,625,000 shares, and Pine Care Group is deemed to have an interest in these shares[112] 6.7 Audit Committee and Pre-emptive Rights The Audit Committee reviewed the Group's unaudited interim results for the six months ended June 30, 2022, confirming compliance of accounting policies with HK GAAP, Stock Exchange, and legal requirements, with adequate disclosures, and noted no pre-emptive rights provisions in the company's articles of association or Cayman Islands law requiring proportional new share offerings to existing shareholders - The Audit Committee reviewed the interim results, confirming accounting policies comply with HK GAAP, Stock Exchange, and legal requirements, with adequate disclosures[113] - There are no pre-emptive rights provisions in the company's articles of association or Cayman Islands law[114] 6.8 Dealings in Listed Securities For the six months ended June 30, 2022, neither the company nor any of its subsidiaries redeemed, purchased, or sold any of the company's listed securities - During the reporting period, neither the company nor any of its subsidiaries redeemed, purchased, or sold any of the company's listed securities[116] 6.9 Board Approval and Composition The unaudited condensed consolidated interim financial information was approved by the Board on August 5, 2022, and as of the reporting date, the Board comprises Executive Directors Mr. Tang Yiu Sing and Mr. Yeung Ka Wing, and Independent Non-executive Directors Mr. Wong Sek Kei, Mr. Cheung Kong Ting, and Mr. Wong Kam Tai - The unaudited condensed consolidated interim financial information was approved by the Board on August 5, 2022[67] - The Board comprises 2 Executive Directors (Mr. Tang Yiu Sing, Mr. Yeung Ka Wing) and 3 Independent Non-executive Directors (Mr. Wong Sek Kei, Mr. Cheung Kong Ting, Mr. Wong Kam Tai)[116]