Hong Kong Exchanges and Clearing : ANNOUNCEMENT OF ANNUAL RESULTS FOR THE YEAR ENDED 30 APRIL 2019 AND RESUMPTION OF TRADING

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

VONGROUP LIMITED

黃 河 實 業 有 限 公 司*

(incorporated in the Cayman Islands with limited liability)

(Stock code: 318)

ANNOUNCEMENT OF ANNUAL RESULTS

FOR THE YEAR ENDED 30 APRIL 2019

AND

RESUMPTION OF TRADING

The board of directors (the "Directors") of Vongroup Limited (the "Company") wishes to announce the audited consolidated results of the Company and its subsidiaries (the "Group") for the year ended 30 April 2019 together with comparative figures for the previous year as follows:

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 30 April 2019

		2019		2018
	Notes	HK$'000	HK$'000
Revenue	4	33,953		23,541
Other revenue	4	1,085	1,068
Other gains	4	5	35
Cost of inventories consumed		-	(1,947)
Staff costs		(6,971)	(5,478)
Operating lease rentals		(644)	(610)
Depreciation		(773)	(773)
Operating expenses		(10,226)	(8,402)
Administrative expenses		(4,172)	(3,749)
Net impairment losses recognised in respect of financial assets at
amortised cost		(4,679)	-
Change in fair value of investment properties		15,320	35,817
Profit from operations	5	22,898		39,502
Finance costs	6	(640)	(535)
Profit before taxation		22,258		38,967
Income tax	7	(98)	(191)
Profit for the year		22,160		38,776
Other comprehensive (loss)/income for the year, net of tax
Items that will not be reclassified to profit or loss:
Gain on revaluation of investment property		-	1,231
Changes in fair value of financial assets at fair value through other
comprehensive income		(15,861)	-
Items that may be reclassified subsequently to profit or loss:
Exchange difference on translating of foreign operations		(1,551)	1,966
Other comprehensive (loss)/income for the year, net of tax		(17,412)	3,197
Total comprehensive income for the year
attributable to the owners of the Company		4,748	41,973
Earnings per share (HK$)	9
- Basic and diluted		0.1153		0.2018

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 April 2019

		2019		2018
	Note	HK$'000	HK$'000
Non-current assets
Property, plant and equipment		13,092		13,838
Investment properties		246,697	232,073
Deposits paid for acquisition of property, plant and equipment		364	367
Available-for-sale investments		-	48,499
Financial assets at fair value through profit or loss		1,650	-
Financial assets at fair value through other comprehensive income		24,139	-
		285,942		294,777
Current assets
Forfeited collateral held for sale		723		768
Accounts receivable	10	33,641		16,924
Loans and advances to money lending customers		9,957		12,851
Deposits, prepayments and other receivables		45,200		40,596
Financial assets at fair value through profit or loss		8,274		17,355
Cash and bank balances		34,434		34,626
		132,229		123,120
Current liabilities
Accruals and deposits received		7,075		4,312
Bank borrowings		26,295		28,188
Tax payables		829		829
		34,199		33,329
Net current assets		98,030		89,791
Total assets less current liabilities		383,972		384,568
Non-current liabilities
Deferred tax liabilities		896		801
NET ASSETS		383,076		383,767
CAPITAL AND RESERVES
Share capital		7,688		7,688
Reserves		375,388		376,079
TOTAL EQUITY		383,076		383,767

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 30 April 2019

1. SIGNIFICANT ACCOUNTING POLICIES

1. Statement of compliance
   These consolidated financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards ("HKFRSs"), which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ("HKASs") and Interpretations issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") and accounting principles generally accepted in Hong Kong. These consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").
   The HKICPA has issued certain new and revised HKFRSs which are first effective or available for early adoption for the current accounting period of the Group. Information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Group for the current and prior accounting periods reflected in these consolidated financial statements are set out in Note 2.
2. Basis of preparation of the consolidated financial statements
   Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). These consolidated financial statements are presented in Hong Kong dollars ("HK$"), rounded to the nearest thousand (HK$'000) except otherwise indicated. Hong Kong dollar is the functional currency of the Company and of the most of the subsidiaries.
   Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
   Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of HKFRS 2, leasing transactions that are within the scope of HKAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in HKAS 2 or value in use in HKAS 36.
   In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
3. • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
   • Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
   • Level 3 inputs are unobservable inputs for the asset or liability.

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2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS ("HKFRSs")

The Group has applied the following new and amendments to HKFRSs issued by HKICPA for the first time in the current year:

HKFRS 9

HKFRS 15

HKFRS 15 (Amendments) HK(IFRIC) Int 22 HKFRS 2 (Amendments) HKFRS 4 (Amendments) Amendments to HKFRSs HKAS 40 (Amendments)

Financial Instruments

Revenue from Contracts with Customers and related Amendments Clarification to HKFRS 15 Revenue from Contracts with Customers Foreign Currency Transactions and Advance Consideration Classification and Measurement of Share-based Payment Transactions Applying HKFRS 9 Financial Instruments with HKFRS 4 Insurance Contracts Annual Improvements to HKFRSs 2014-2016 Cycle

Transfers of Investment Property

Except as described below, the application of the new and revised HKFRSs in the current year has had no material impact on the Group's financial performance and positions for the current and prior years and/or on the disclosures set out in these consolidated financial statements. The above new HKFRSs have been applied in accordance with the relevant transition provision in respective standards and amendments which result in change in accounting policies, amounts reported and/or disclosures as described below.

1. Impact on the consolidated financial statements
   The following tables show the adjustments recognised for each individual line item. Line items that were not affected by the application of new HKFRSs have not been included. As a result, the sub-totals and totals disclosed cannot be recalculated from the numbers provided. The adjustments are explained in more detail by standard below.

	At 30 April			At 1 May
Consolidated statement of	2018		HKFRS 9	2018
financial position (extract)	HK$'000	HK$'000	HK$'000
Non-current assets
Available-for-sale investments ("AFS")	48,499	(48,499)	-
Financial assets at fair value through profit or loss ("FVTPL")	-	1,650		1,650
Financial assets at fair value through other
comprehensive income ("FVTOCI")	-	47,754		47,754
Deposits paid for acquisition of property, plant and equipment	367	(3)	364
Current assets
Accounts receivable	16,924		(2,512)	14,412
Loans and advances to money lending customers	12,851	(1,660)	11,191
Deposits, prepayments and other receivables	40,596	(2,169)	38,427
Net current assets	89,791		(6,341)	83,450
Total assets less current liabilities	384,568		(5,439)	379,129
Net assets	383,767		(5,439)	378,328
Capital and reserves
Reserves	376,079		(5,439)	370,640
Total equity	383,767		(5,439)	378,328

1. HKFRS 9 Financial Instruments
   In the current year, the Group has applied HKFRS 9 "Financial Instruments" and the related consequential amendments to other HKFRSs. HKFRS 9 introduces new requirements for (1) the classification and measurement of financial assets and financial liabilities, (2) expected credit losses ("ECL") for financial assets and (3) general hedge accounting.
   The Group has applied HKFRS 9 in accordance with the transition provisions set out in HKFRS 9, i.e. applied the classification and measurement requirements (including impairment) retrospectively to instruments that have not been derecognised as at 1 May 2018 (date of initial application) and has not applied the requirements to instruments that have already been derecognised as at 1 May 2018. The difference between carrying amounts as at 30 April 2018 and the carrying amounts as at 1 May 2018 are recognised in the opening accumulated losses and other components of equity, without restating comparative information.
   Accordingly, certain comparative information may not be comparable as comparative information was prepared under HKAS 39 "Financial Instruments: Recognition and Measurement".

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Accounting policies resulting from application of HKFRS 9 disclosed in the consolidated financial statements.

Summary of effects arising from initial application of HKFRS 9

Below illustrates the classification and measurement (including impairment) of financial assets and financial liabilities and other items subject to ECL under HKFRS 9 and HKAS 39 at the date of initial application, 1 May 2018.

Classification and measurement
							Deposits
			Financial		Financial		paid for			Loans and
					acquisition			advances to
	Available-	assets		assets	of property,			money	Deposits
	for-sale	measured		measured		plant and	Accounts	lending	and other
	investments	at FVTOCI		at FVTPL		equipment	receivable	customers	receivables
	HK$'000	HK$'000		HK$'000		HK$'000	HK$'000	HK$'000	HK$'000
Closing balances at 30 April 2018	48,499		-		-	367	16,924	12,851	40,596
Effect arising from initial
application of HKFRS 9:
Reclassification
from available-for-sale investments	(48,499)	46,967	1,532		-	-	-	-
Re-measurement:
Impairment under ECL	-	-		-	(3)	(2,512)	(1,660)	(2,169)
Fair value changes	-	787	118		-	-	-	-
Opening balances at 1 May 2018	-	47,754	1,650	364	14,412	11,191	38,427
Note:

1. Reclassification from AFS to financial assets at FVTPL
   The investment in club memberships of the Group with aggregated amount of approximately HK$1,650,000 as at 1 May 2018 were reclassified from AFS to financial assets at FVTPL. This is because even though the Group's business model is to hold financial assets in order to collect contractual cash flows, the cash flows of these investments do not meet the HKFRS 9 criteria as solely payments of principal and interest on the principal amount outstanding. A fair value gain of approximately HK$118,000 relating to club memberships previously carried at cost less impairment were adjusted to accumulated losses at 1 May 2018.
2. Reclassification from AFS to financial assets at FVTOCI
   The investment in unlisted equity securities of the Group with aggregated amount of approximately HK$47,754,000 as at 1 May 2018 were reclassified from available-for-sale investments to financial assets at FVTOCI. These investments are not held for trading and not expected to be sold in the foreseeable future. The unlisted equity securities do not have a quoted market price in an active market and are measured at cost less impairment under HKAS 39. A fair value gain of approximately HK$787,000 were adjusted to financial assets at FVTOCI reserves at 1 May 2018.
   The measurement categories for all financial liabilities remain the same. The carrying amounts for all financial liabilities at 1 May 2018 have not been impacted by the initial application of HKFRS 9.

Impairment under ECL model

The Group applies the HKFRS 9 simplified approach to measure ECL which uses a lifetime ECL for all accounts receivable. Except for those which had been determined as credit impaired under HKAS 39, the remaining balances are grouped based on internal credit rating and/or past due analysis. The Group has therefore estimated the expected loss rates for the accounts receivable on the same basis.

Except for those which had been determined as credit impaired under HKAS 39, ECL for other financial assets at amortised cost, including deposits paid for acquisition of property, plant and equipment, loans and advances to money lending customers, deposit and other receivables and cash and bank balances, are assessed on 12-month ECL ("12m ECL") basis as there had been no significant increase in credit risk since initial recognition.

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