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.
AMBER HILL FINANCIAL HOLDINGS LIMITED τʆږછٰ΅Ϟࠢʮ̡
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 33)
SECOND INTERIM RESULTS ANNOUNCEMENT FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2020
The board (the "Board") of directors (the "Directors") of Amber Hill Financial Holdings Limited (the "Company") would like to announce the unaudited interim results of the Company and its subsidiaries (collectively referred to as the "Group") for the twelve months ended 31 December 2020 (the "Reporting Period"), together with the comparative figures for the corresponding period in 2019.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the twelve months ended 31 December 2020
Twelve months ended
31 December
2020 2019
Notes
HK$'000 HK$'000 (Unaudited) (Audited)
Revenue | 4 | 71,778 | 135,613 |
Cost of sales and services | (48,473) | (105,104) | |
Gross profit | 23,305 | 30,509 | |
Other revenue and other net gain | 5 | 2,173 | 6,625 |
Fair value gain on contingent consideration receivables | - | 54,510 | |
Operating expenses | (40,251) | (79,193) | |
(Loss)/profit from operations | (14,773) | 12,451 | |
Finance costs | 6(a) | (14,169) | (15,684) |
Other non-operating expenses | 6(b) | (7,392) | (117,699) |
Impairment losses | 6(c) | (16,298) | (268,290) |
Share of profit of an associate | - | 5,396 | |
Loss before tax | 6 | (52,632) | (383,826) |
Income tax (expense)/credit | 7 | (3) | 428 |
Loss for the period | (52,635) | (383,398) |
Twelve months ended
31 December 2020 2019
Notes
HK$'000 HK$'000 (Unaudited) (Audited)Other comprehensive income/(loss) for the period:
Items may be reclassified to profit or loss:
Release of translation reserve upon disposal of
foreign subsidiaries | 101 | (75) | |
Release of translation reserve upon | |||
deconsolidation of foreign subsidiaries | - | (2,020) | |
101 | (2,095) | ||
Exchange differences on translating | |||
financial statements of: | |||
- subsidiaries | 530 | (126) | |
- associate | - | 253 | |
530 | 127 | ||
631 | (1,968) | ||
Total comprehensive loss for the period | (52,004) | (385,366) | |
Loss for the period attributable to: | |||
Equity shareholders of the Company | (52,635) | (380,376) | |
Non-controlling interests | - | (3,022) | |
(52,635) | (383,398) | ||
Total comprehensive loss for the period | |||
attributable to: | |||
Equity shareholders of the Company | (52,004) | (382,151) | |
Non-controlling interests | - | (3,215) | |
(52,004) | (385,366) | ||
(restated) | |||
Loss per share | |||
- Basic | 9 | HK45.51 cents | HK406.83 cents |
- Diluted | 9 | HK45.51 cents | HK406.83 cents |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2020
As at | As at | ||
31 December | 31 December | ||
2020 | 2019 | ||
Notes | HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | ||
Non-current assets | |||
Property, plant and equipment | 14,733 | 17,180 | |
Right-of-use assets | 526 | - | |
Intangible assets | - | 11,188 | |
Deposit paid | 400 | 400 | |
Goodwill | - | 489 | |
Contingent consideration receivables | - | 34,230 | |
Interest in an associate | 586 | 586 | |
16,245 | 64,073 | ||
Current assets | |||
Trading securities | 174 | 114 | |
Loan receivable | 4,911 | - | |
Trade receivables | 10 | 56,514 | 18,654 |
Prepayments, deposits and other receivables | 19,083 | 26,577 | |
Contingent consideration receivables | 11 | - | 26,110 |
Tax recoverable | - | 45 | |
Client trust bank balance | 819 | 1,924 | |
Cash and cash equivalents | 25,604 | 13,525 | |
107,105 | 86,949 | ||
Total Assets | 123,350 | 151,022 | |
Capital and reserves | |||
Share capital | 12 | 1,343 | 938 |
Reserves | (122,493) | (111,085) | |
Equity attributable to shareholders of the Company | (121,150) | (110,147) | |
Non-controlling interests | (70) | 8,829 | |
Total Equity | (121,220) | (101,318) |
As at | As at | ||
31 December | 31 December | ||
2020 | 2019 | ||
Notes | HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | ||
Non-current liabilities | |||
Convertible bonds | 14 | - | 52,890 |
Lease liabilities | 541 | - | |
Deferred tax liabilities | - | 2,797 | |
541 | 55,687 | ||
Current liabilities | |||
Trade payables | 13 | 15,010 | 7,764 |
Accruals and other payables | 56,281 | 43,304 | |
Lease liabilities | - | 5,976 | |
Other loan | 13,000 | 13,000 | |
Shareholder's loan | 19(c) | 38,500 | - |
Convertible bonds | 14 | 112,768 | 108,601 |
Amount due to a deconsolidated subsidiary | 8,467 | 8,467 | |
Tax payables | 3 | 2,961 | |
Provisions | 15 | - | 6,580 |
244,029 | 196,653 | ||
Total Equity and Liabilities | 123,350 | 151,022 | |
Net current liabilities | (136,924) | (109,704) | |
Total assets less current liabilities | (120,679) | (45,631) |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the twelve months ended 31 December 2020
Attributable to equity shareholders of the Company
Share | Convertible | Non- | |||||||||
Share | Share | Translation | options | Capital | bonds | Statutory | Accumulated | controlling | |||
capital | premium | reserve | reserve | reserve | reserve | reserve | losses | Subtotal | interests | Total | |
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
Unaudited | |||||||||||
At 1 January 2020 | 938 | 3,995,137 | (1,842) | 15,570 | (15,000) | 25,893 | - | (4,130,843) | (110,147) | 8,829 | (101,318) |
Share issuance | 405 | 40,596 | - | - | - | - | - | - | 41,001 | - | 41,001 |
Lapse of share options | - | - | - | (15,570) | - | - | - | 15,570 | - | - | - |
Disposal of a subsidiary (note 18) | - | - | - | - | - | - | - | - | - | (8,899) | (8,899) |
Release of convertible bonds reserve | - | - | - | - | - | (24,400) | - | 24,400 | - | - | - |
Total comprehensive loss | |||||||||||
for the period | - | - | 631 | - | - | - | - | (52,635) | (52,004) | - | (52,004) |
At 31 December 2020 | 1,343 | 4,035,733 | (1,211) | - | (15,000) | 1,493 | - | (4,143,508) | (121,150) | (70) | (121,220) |
Audited | |||||||||||
At 1 January 2019 | 932,717 | 3,058,278 | (67) | 14,690 | (15,000) | 37,063 | 3,420 | (3,765,181) | 265,920 | 26,698 | 292,618 |
Convertible bonds restructure | - | - | - | - | - | (11,170) | - | 11,114 | (56) | - | (56) |
Share issuance | 5,080 | - | - | - | - | - | - | - | 5,080 | - | 5,080 |
Capital reorganisation | (936,859) | 936,859 | - | - | - | - | - | - | - | - | - |
Lapse of share options | - | - | - | (180) | - | - | - | 180 | - | - | - |
Equity settled share-based payment | - | - | - | 1,060 | - | - | - | - | 1,060 | - | 1,060 |
Deconsolidation of subsidiaries | |||||||||||
(Note 17) | - | - | - | - | - | - | (3,420) | 3,420 | - | (13,170) | (13,170) |
Disposal of subsidiaries (Note 18) | - | - | - | - | - | - | - | - | - | (1,484) | (1,484) |
Total comprehensive loss | |||||||||||
for the year | - | - | (1,775) | - | - | - | - | (380,376) | (382,151) | (3,215) | (385,366) |
At 31 December 2019 | 938 | 3,995,137 | (1,842) | 15,570 | (15,000) | 25,893 | - | (4,130,843) | (110,147) | 8,829 | (101,318) |
- 5 - |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the twelve months ended 31 December 2020
Twelve months ended
31 December 2020 2019
Notes
HK$'000 HK$'000 (Unaudited) (Audited)Net cash (used in)/generated from
operating activities | (52,247) | 281 | |
Cash flows from investing activities | |||
Net cash outflow from disposal of subsidiaries | 18 | (10,723) | (841) |
Acquisition of a subsidiary | (492) | - | |
Interest received | - | 18 | |
Proceeds from disposal of property, | |||
plant and equipment | 534 | 32 | |
Purchase of property, plant and equipment | (1,027) | (27) | |
Net cash outflow from deconsolidation of subsidiaries | 17 | - | (8,380) |
Net cash used in investing activities | (11,708) | (9,198) | |
Cash flows from financing activities | |||
Consideration paid for convertible bonds restructure | - | (499) | |
Dividend received | - | - | |
Interest paid | - | (111) | |
Capital element of lease payments | (3,944) | (5,589) | |
Interest element of lease payments | (53) | (325) | |
Proceeds from issuance of shares | 41,001 | 5,080 | |
Loan from a shareholder | 38,500 | - | |
Advances from other payables | - | 1,199 | |
Net cash generated | |||
from/(used in) financing activities | 75,504 | (245) | |
Net increase/(decrease) in cash and | |||
cash equivalents | 11,549 | (9,162) | |
Cash and cash equivalents at beginning of the period | 13,525 | 22,910 | |
Effect of foreign exchange rate changes | 530 | (223) | |
Cash and cash equivalents at end of the period | 25,604 | 13,525 |
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Amber Hill Financial Holdings Limited (the "Company") was incorporated and domiciled in the Cayman Islands under Companies Law (2004 Revision) of the Cayman Islands as an exempted company with limited liability on 20 March 2007. The Company's shares were listed on The Stock Exchange of Hong Kong Limited ("Stock Exchange") on 19 November 2007.
The Company is an investment holding company. The Company and its subsidiaries (the "Group") are principally engaged in trading of party products, securities and commodities brokerage and assets management, advancing business and trading of commodities.
As set out in the announcement of the Company dated 7 July 2020, the credit guarantee and investment business of the Group had ceased due to loss of control and deconsolidation of the relevant operating subsidiaries in the People's Republic of China (the "PRC") since 2019 and during the Reporting Period. The security products trading business of the Group had ceased due to cessation of control over the relevant operating subsidiary in early 2020, while provision of security services business had ceased in late 2020 upon completion of the conditional sale and purchase agreement as set out in the announcement of the Company dated 30 June 2020.
The address of the principal place of business of the Company is 19/F, One Hennessy, 1 Hennessy Road, Wan Chai, Hong Kong and the Company has been registered as a non-Hong Kong company under Part XI
of the Hong Kong Companies Ordinance since 4 September 2007.
2. BASIS OF PREPARATION
The unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and Hong Kong Accounting Standard ("HKAS") 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA").
The unaudited interim condensed consolidated financial statements have been prepared in accordance with the same accounting policies adopted in the consolidated financial statements of the Company for the year ended 31 December 2019, except for the accounting policy changes that are expected to be reflected in the consolidated financial statements for the eighteen months ending 30 June 2021. Details of these changes in accounting policies are set out in note 3.
The preparation of the unaudited interim condensed consolidated financial statements in conformity with HKAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.
On 31 December 2020, the Company announced the change in its financial year end date from 31 December to 30 June. Accordingly, the current financial period will cover an eighteen-month period from 1 January 2020 to 30 June 2021. The unaudited interim condensed consolidated financial information now presented covers a twelve-month period from 1 January 2020 to 31 December 2020, and the comparative figures in this unaudited interim condensed consolidated financial information cover a twelve-month period from 1 January 2019 to 31 December 2019.
The unaudited interim condensed consolidated financial statements contain the condensed consolidated statement of financial position of the Group as at 31 December 2020 and the related condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the twelve-month period then ended and selected explanatory notes. The notes include an explanation of events and transactions that are significant to understanding the changes in financial position and performance of the Group since 31 December 2019, being the date to which the latest published audited consolidated financial statements were made up. The interim condensed consolidated financial statements and notes thereto do not include all of the information required for a full set of financial statements prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs"). The interim condensed consolidated financial statements are unaudited, but have been reviewed by the audit committee and the board (the "Board") of directors (the "Directors") of the Company.
The financial information relating to the financial year ended 31 December 2019 that is included in the unaudited interim condensed consolidated financial statements as comparative information does not constitute the Company's statutory financial statements for that financial year but is derived from those financial statements.
Deconsolidation of subsidiaries of the Company
As disclosed in the consolidated financial statements for the year ended 31 December 2019 contained in the annual report for that year (the "2019 Annual Report"), during the time between 31 December 2019 and the publication of the 2019 Annual Report, despite repeated verbal, written request and physical meeting in Beijing, PRC, the Board has been unable to obtain cooperation from legal representative, directors and key management of its subsidiary, ձऎࢠፄ༟ዄڭϞࠢʮ̡ (Harmonic Strait Credit Guarantee Company Limited*) ("Harmonic Strait" or the "Deconsolidated Subsidiary"), and the subsidiaries of Harmonic Strait namely ଉέᖍ҃ԶᏐᗡ၍ଣϞࠢʮ̡ (Shenzhen Hanhong SCM Co., Ltd.*) and ଉέᔜ̵۾ყ൱Ϟ ࠢʮ̡ (Shenzhen Sunnyway International Trade Company Limited*) (together with Harmonic Strait, collectively known as the "Deconsolidated Subsidiaries").
Due to the inability to obtain cooperation from the legal representative, directors and key management of the Deconsolidated Subsidiaries, the Board has been unable to access the books and records of the Deconsolidated Subsidiaries.
Given these circumstances, the Board has not consolidated the financial statements of the Deconsolidated Subsidiaries in the consolidated financial statements of the Group for the year ended 31 December 2019 and the twelve months ended 31 December 2020. As such, the results, assets, liabilities and cash flows of the Deconsolidated Subsidiaries have been deconsolidated from the consolidated financial statements of the Group since 1 January 2019.
In the opinion of the Board, although apparent evidence and information available to the Board did not substantiate that the Group had lost control of the Deconsolidated Subsidiaries since 1 January 2019, the consolidated financial statements of the Group for the year ended 31 December 2019 and the twelve months ended 31 December 2020 were prepared on the basis that the deconsolidation of the Deconsolidated Subsidiaries was deemed to be effective on 1 January 2019 (the "Deconsolidation"), which presented more fairly the results, state of affairs and cashflows of the Group as a whole in light of incomplete books and records of the Deconsolidated Subsidiaries. Had the Deconsolidated Subsidiaries been consolidated up to the date when the control over the Deconsolidated Subsidiaries was lost, many elements in the consolidated financial statements would have been materially affected.
Further details of the Deconsolidated Subsidiaries are set out in Note 17 to these unaudited interim condensed consolidated financial statements.
Going concern basis
The Group recorded a loss attributable to equity shareholders of the Company of approximately HK$52,635,000 for the twelve months ended 31 December 2020 and, as of that date, the Group had net current liabilities and net liabilities of approximately HK$136,924,000 and HK$121,150,000 respectively. These conditions indicate the existence of a material uncertainty which may cast doubt on the Group's ability to continue as a going concern and therefore, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.
Notwithstanding the above conditions, the unaudited interim condensed consolidated financial statements were prepared based on the assumption that the Group can be operated as a going concern after taking into consideration the completion of the rights issue (the "Rights Issue") and the subscription (the "Subscription") as stipulated in the circular dated 4 November 2020 and the prospectus of the Company dated 11 December 2020 which raised net proceeds of approximately HK$284 million in aggregate in January 2021.
Should the Group be unable to continue in business as a going concern, adjustments would have to be made in the unaudited interim condensed consolidated financial statements to write down the values of the assets to their net realisable amounts, to provide for any further liabilities which might arise, and to reclassify non-current assets and non-current liabilities as current assets and current liabilities, respectively. The effect of these adjustments has not been reflected in these unaudited interim condensed consolidated financial statements.
3.
CHANGE IN ACCOUNTING POLICIES
The HKICPA has issued a number of new HKFRSs and amendments to HKFRSs that are first effective for the current accounting period of the Group. Of these, the following developments are relevant to the Group's interim condensed consolidated financial statements:
Amendment to HKFRS 16 | Covid-19-Related Rent Concessions4 |
Amendments to HKFRS 3 | Reference to the Conceptual Framework2 |
Amendments to HKFRS 9, | Interest Rate Benchmark Reform - Phase 25 |
HKAS 39, HKFRS 7, | |
HKFRS 4 and HKFRS 16 | |
Amendments to HKFRS 10 | Sale or Contribution of Assets between an Investor and its Associate or |
and HKAS 28 | Joint Venture3 |
Amendments to HKAS 1 | Classification of Liabilities as Current or Non-current and related |
amendments to Hong Kong Interpretation 5 (2020)1 | |
Amendments to HKAS 16 | Property, Plant and Equipment - Proceeds before Intended Use2 |
Amendments to HKAS 37 | Onerous Contracts - Cost of Fulfilling a Contract2 |
Amendments to HKFRSs | Annual Improvements to HKFRSs 2018-20202 |
1 Effective for annual periods beginning on or after 1 January 2023.
2 Effective for annual periods beginning on or after 1 January 2022.
3 Effective for annual periods beginning on or after a date to be determined.
4 Effective for annual periods beginning on or after 1 June 2020.
5 Effective for annual periods beginning on or after 1 January 2021.
4.
REVENUE
The principal activities of the Group are sales of party products, provision of securities and commodities brokerage and assets management service and trading of commodities and provision of security services.
Disaggregation of Revenue
Disaggregation by major products or service lines within the scope of HKFRS 15
Twelve months ended
31 December
2020 | 2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Sales of party products | 26,463 | 40,965 |
Brokerage commission income and assets management income | ||
(excluded interest income from cash and margin client and | ||
investment income) | - | 76 |
Trading of commodities | 21,033 | - |
Sales of security products | - | 79,502 |
Provision of security services | 784 | 2,419 |
48,280 | 122,962 | |
Revenue from other sources | ||
Interest income from cash and margin client earned from | ||
securities brokerage and assets management business | 756 | 650 |
Investment income under assets management segment | 22,742 | - |
Interest income from advancing business | - | 12,001 |
23,498 | 12,651 | |
Total | 71,778 | 135,613 |
Disaggregation by timing of revenue recognition within | ||
the scope of HKFRS 15 | ||
- At a point in time | 47,496 | 120,543 |
- Over time | 784 | 2,419 |
48,280 | 122,962 |
5. | ||
2019 | ||
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Reversal of lease liabilities | 1,390 | - |
Net exchange (loss)/gain | (15) | 954 |
Interest income | 119 | 18 |
Dividend income | 1 | - |
Loss on convertible bonds restructure (note 14(a)) | - | (1,693) |
Fair value loss on derivative financial assets | - | (1,546) |
Realised loss on disposal of trading securities | - | (498) |
Unrealised loss on fair value changes in trading securities | - | (67) |
Sundry income | 639 | 11,057 |
Loss on written off of property, plant and equipment | - | (1,600) |
Gain on disposal of property, plant and equipment | 39 | - |
2,173 | 6,625 | |
6. | LOSS BEFORE TAX | |
Loss before tax has been arrived at after charging/(crediting): |
OTHER REVENUE AND OTHER NET GAIN
Twelve months ended
31 December 2020
Twelve months ended
2019 | ||
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
(a) | Finance costs | |
Interest on convertible bonds | 12,308 | 14,000 |
Interest on shareholder's loan | 806 | - |
Interest on lease liabilities | 29 | 762 |
Interest on other borrowings | 1,026 | 922 |
Total | 14,169 | 15,684 |
(b) | Other non-operating expenses | |
Gain on disposal of subsidiaries | (190) | (2,616) |
Loss on termination of profit guarantees and | ||
cancellation of convertible bonds | 6,939 | - |
Loss on deregistration of a subsidiary | - | 159 |
Loss on deconsolidation of subsidiaries | - | 120,156 |
Others | 643 | - |
Total | 7,392 | 117,699 |
31 December 2020
Twelve months ended
31 December 2020
2019
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
(c) | Impairment losses on: | |
Impairment loss on goodwill | - | 43,235 |
Impairment loss on intangible assets | - | 28,681 |
Impairment loss on interest in an associate | - | 46,445 |
Impairment loss on property, plant and equipment | - | 294 |
Impairment loss on right-of-use asset | - | 1,912 |
Impairment loss on loan receivable, net | 89 | 111,128 |
Impairment loss on trade receivables, net | 5,430 | 18,245 |
Impairment loss on prepayments, deposits and | ||
other receivables, net | 10,779 | 18,350 |
Total | 16,298 | 268,290 |
(d) | Other items | |
Amortisation of intangible assets | - | 5,411 |
Depreciation on property, plant and equipment | 2,981 | 5,630 |
Depreciation on right-of-use assets | 72 | 11,083 |
7.
INCOME TAX (EXPENSES)/CREDIT
The amount of taxation (charged)/credited to the condensed consolidated statement of profit or loss and other comprehensive income represents:
Twelve months ended
2019 | ||
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Current tax - Hong Kong Profits Tax | ||
Under-provision in prior years | - | (276) |
Current tax - PRC Income Tax | ||
Charged for the period | (3) | (3,050) |
Under-provision in prior years | - | (172) |
(3) | (3,498) | |
Deferred tax credit | - | 3,926 |
Total income tax (expense)/credit | (3) | 428 |
31 December 2020
No provision for Hong Kong Profits Tax has been made for the twelve months ended 31 December 2020 as the Group has no assessable profits for the period (year ended 31 December 2019: HK$Nil).
The provision for PRC Income Tax for the twelve months ended 31 December 2020 was calculated at 25% of the estimated assessable profits for the period (2019: 25%).
Pursuant to the rules and regulations of the Cayman Islands and the British Virgin Islands (the "BVI"), the Group is exempted from income tax in the Cayman Islands and the BVI.
8. DIVIDEND
The Board did not recommend the payment of an interim dividend for the twelve months ended
31 December 2020 and year ended 31 December 2019.
9. LOSS PER SHARE
The calculation of basic loss per share is based on:
Twelve months ended
31 December 2020
2019
The consolidated loss attributable to equity shareholders of the Company
HK$'000 | HK$'000 |
(Unaudited) | (Audited) |
(52,635) | (380,376) |
Number of shares
*(restated)The weighted average number of ordinary shares in issue
115,646,512 93,498,580
*Restated as a result of share consolidation on the basis of every ten then existing shares of HK$0.001 each be consolidated into one consolidated share of HK$0.01 each with effect from 1 December 2020.
The calculation of diluted loss per share does not assume the exercise of the Company's outstanding share options or conversion of outstanding convertible bonds which had anti-dilutive effect and would result in a reduction in loss per share during the twelve months ended 31 December 2020 and year ended 31 December 2019. Therefore, the diluted loss per share is same as basic loss per share during the twelve months ended
31 December 2020 and year ended 31 December 2019.
10. TRADE RECEIVABLES
At | At | |
31 December | 31 December | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Trade receivables arising from securities brokerage | ||
and assets management: | ||
- Clients arising from dealing in securities | 3,555 | 2,788 |
- Investment income | 22,681 | - |
26,236 | 2,788 | |
Trade receivables arising from trading of party products | 10,077 | 9,303 |
Trade receivables arising from trading of commodities | 23,969 | - |
Interest receivables arising from advancing business | 12,387 | 12,387 |
Trade receivables arising from trading of security products | - | 5,449 |
Trade receivables arising from provision of security services | - | 7,834 |
72,669 | 37,761 | |
Less: Impairment | (16,155) | (19,107) |
56,514 | 18,654 |
Customers from trading of party products, customers from trading of commodities and customers from provision of security services are usually offered a credit period of up to 90 days. Amounts relating to sales to customers from trading of security products are due immediately when goods are delivered. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by senior management.
An ageing analysis of trade receivables based on the date of the invoice and net of provision of impairment loss is as follows:
At | At | |
31 December | 31 December | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Within 30 days | 35,094 | 5,265 |
31 to 60 days | 969 | 5,294 |
61 to 90 days | 2,872 | 4,056 |
Over 90 days | 17,579 | 4,039 |
56,514 | 18,654 |
11. CONTINGENT CONSIDERATION RECEIVABLES
Contingent consideration receivables as at 31 December 2019 represent the profit guarantee in respect of ᅃ ۾̙ڦ ( ̏ԯ ) ߅ҦϞࠢʮ̡ (Dewe Kexin (Beijing) Technology Co., Ltd*) ("Dewe Kexin") and International Security Net Co., Limited ("International Security Net") (collectively the "Acquired Group") for each of the years ended 31 December 2018, 2019 and 2020 (the "Relevant Years") given by the vendors (the "Vendors") to the Group in relation to the acquisition of the Acquired Group by the Group on 17 December 2018.
Non-fulfillment and termination of profit guarantees
On 30 June 2020, the Vendors and the Company entered into a supplemental deed in relation to the agreement for the acquisition of the Acquired Group by the Group in 2018. Pursuant thereto, it was mutually agreed the following:
(i) to determine the profit guarantee of the Acquired Group for the financial year ended 31 December 2019 (the "2019 Profit Guarantee") based on the audited financial statements of the Acquired Group for the year ended 31 December 2019 with a limitation on the scope of audit opinion expressed by the auditor nominated by the Company and waive any right of claim in relation thereto by the Group (the "Assessment Accounts");
(ii) based on the Assessment Accounts, the Acquired Group recorded a net loss for the financial year ended 31 December 2019, representing a complete non-fulfillment of the 2019 Profit Guarantee, and the Vendors irrevocably agreed to pay to the Group compensation for the non-fulfillment by way of surrendering the relevant convertible bonds in the principal amount of HK$26,250,000 issued by the Company as contingent consideration for the then acquisition of the Acquired Group by the Group in 2018; and
(iii) the profit guarantee of the Acquired Group for the financial year ended 31 December 2020 (the "2020 Profit Guarantee") be terminated and the Vendors of the Acquired Group irrevocably agreed to pay to the Group compensation by way of surrendering relevant convertible bonds in the principal amount of HK$35,000,000 issued by the Company as contingent consideration for the then acquisition of the Acquired Group by the Group in 2018.
The cancellation of convertible bonds and termination of profit guarantee has been completed during the Reporting Period. For details, please refer to note 14(b).
12. SHARE CAPITAL
At 31 December 2020 Number of
shares | Amount | |
'000 | HK$'000 | |
Authorised: | ||
Ordinary shares of HK$0.001 each | ||
At 1 January 2020 | 10,000,000,000 | 10,000,000 |
Share consolidation (note (c)) | (9,000,000,000) | - |
Ordinary shares of HK$0.01 each | ||
At 31 December 2020 | 1,000,000,000 | 10,000,000 |
At 31 December 2020 Number of
shares '000
Amount HK$'000
Issued and fully paid:
Ordinary shares of HK$0.001 each At 1 January 2020
937,797 938
Issue of new shares (notes (a) and (b) Share consolidation (note (c))
405,316 405
(1,208,802)
-
Ordinary shares of HK$0.01 each At 31 December 2020
134,311
1,343
At 31 December 2019 Number of
shares '000
Amount HK$'000
Authorised:
Ordinary shares of HK$0.1 each At 1 January 2019
Capital reorganisation (note (d))
100,000,000 9,900,000,000
10,000,000 -
Ordinary shares of HK$0.001 each At 31 December 2019
10,000,000,000 10,000,000
Issued and fully paid: Ordinary shares of HK$0.1 each At 1 January 2019
9,327,172 932,717
Issue of new shares (note (e)) Capital reorganisation (note (d))
50,800 5,080
(8,440,175)
(936,859)
Ordinary shares of HK$0.001 each At 31 December 2019
937,797
938
Notes:
(a) During the Reporting Period, the Company completed a placing of new shares under the general mandate granted to Directors by the shareholders of the Company at the annual general meeting of the Company held on 18 June 2019. An aggregate of 181,463,440 shares were successfully placed at issue price of HK$0.1 each to not fewer than six placees in accordance with the terms and conditions of the relevant placing agreement dated 26 February 2020. The placing of the new shares was completed on 20 April 2020.
(b)During the Reporting Period, the Company completed another placing of new shares under the general mandate granted to the Directors by the Company's shareholders at the extraordinary general meeting of the Company held on 7 July 2020. On 17 July 2020, the Company and a placing agent entered into a placing agreement pursuant to which the Company has conditionally agreed to place through the placing agent, on a best effort basis, of up to 223,852,128 shares, to not less than six independent third parties at a price of HK$0.105 per placing share. The placing was completed on 4 August 2020.
(c) The share consolidation (the "Share Consolidation") which consolidated the issued shares of the
Company on the basis of every ten shares of HK$0.001 each into one consolidated share of HK$0.01 each was approved by the Company's shareholders at an extraordinary general meeting of the Company held on 27 November 2020 and became effective on 1 December 2020.
(d) The capital reorganisation (the "Capital Reorganisation") announced by the Company on 4 April 2019 was approved by the Company's shareholders at an extraordinary general meeting of the Company on 23 May 2019 and completed on 24 July 2019. The number of authorised shares of the Company was increased from 100,000 million shares of HK$0.1 each to 10,000,000 million shares of HK$0.001 each and its authorised capital of HK$10,000 million remained unchanged on the completion date of the Capital Reorganisation. The Company's issued share capital was reduced from HK$937,797,200 divided into 9,377,972,000 shares of HK$0.1 each to HK$937,797 divided into 937,797,200 shares of HK$0.001 each on the completion date of the Capital Reorganisation. The Capital Reorganisation comprised the following: (i) the par value of each issued ordinary share of the Company of HK$0.1 was reduced to HK$0.0001 by cancelling the paid-up share capital to the extent of HK$0.0999 on each issued share (the "Capital Reduction"); (ii) immediately after the Capital Reduction becoming effective, each authorised but unissued share was subdivided into 1,000 new ordinary shares of the Company of HK$0.0001 each ("New Shares") (the "Subdivision"); and (iii) immediately after the Capital Reduction and Subdivision becoming effective, the New Shares were consolidated on the basis that every ten issued and unissued New Shares of HK$0.0001 each were consolidated into one new ordinary shares of the Company of HK$0.001 each. A credit of approximately HK$936,859,000 arising from the Capital Reduction was transferred to the share premium account of the Company. Details of the Capital Reorganisation were set out in the Company's circular dated 26 April 2019 and its announcements dated 4 April 2019, 23 May 2019, 8 July 2019 and 24 July 2019.
(e) On 18 March 2019, the Company and four subscribers entered into the subscription agreements to issue a total of 300,000,000 new shares of HK$0.1 each. Subsequently, the Company entered into a termination agreement with one of the four subscribers to terminate issuance of 100,000,000 shares of HK$0.1 each with effect on 15 July 2019. On the same date, the Company entered into supplemental agreements with each of remaining three subscribers to reduce issuance of shares from 200,000,000 shares to 50,800,000 shares in aggregate. On 22 July 2019, 50,800,000 shares of HK$0.1 each were allotted and issued to the three subscribers, giving rise to a gross proceeds of approximately HK$5,080,000. Details of the above were set out in the Company's announcements dated 18 March 2019, 15 July 2019, 17 July 2019 and 22 July 2019.
13. TRADE PAYABLES
At | At | |
31 December | 31 December | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Trade payables arising from trading of party products | 9,874 | 2,796 |
Trade payables arising from assets management | 1,880 | - |
Trade payables arising from dealing in securities: | ||
- Clients' money | 819 | 1,924 |
Trade payable arising from trading of commodities | 2,437 | - |
Trade payables arising from trading of security products | - | 3,044 |
15,010 | 7,764 |
The ageing analysis of trade payables based on the date of the invoices is as follows:
At | At | |
31 December | 31 December | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Within 30 days | 10,708 | 4,720 |
31 to 60 days | 192 | - |
61 to 90 days | 2,539 | - |
Over 90 days | 1,571 | 3,044 |
15,010 | 7,764 |
The trade payables arising from trading of party products, trading of commodities and trading of security products are non-interest bearing and are normally settled within 90 days. The carrying amounts of the trade payables at the end of the Reporting Period approximated their fair values.
14. CONVERTIBLE BONDS
At 31 December 2020 (Unaudited) Liability Equity portion portion Total
At 31 December 2019 (Audited) Liability Equity portion portion Total
Note | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
2020 Convertible Bonds | (a) | 112,768 | 1,493 | 114,261 | 108,601 | 1,493 | 110,094 |
2021 Convertible Bonds | (b) | - | - | - | 52,890 | 24,400 | 77,290 |
Total | 112,768 | 1,493 | 114,261 | 161,491 | 25,893 | 187,384 | |
Representing: | |||||||
Current liabilities | 112,768 | - | 112,768 | 108,601 | - | 108,601 | |
Non-current liabilities | - | - | - | 52,890 | - | 52,890 | |
Convertible bonds reserve | - | 1,493 | 1,493 | - | 25,893 | 25,893 |
(a)On 18 February 2019, the Company and Internet Finance Investment Co. Ltd. (the "Original Bondholder"), a company wholly owned by Ms. Cheung Kwan, a former-executive Director and the former-chairlady of the Board, entered into a deed of variation, pursuant to which the parties agreed that, subject to fulfilment of the conditions precedent, the terms of the convertible bonds in the principal amount of HK$100,000,000 with maturity date on 18 February 2019 ("2019 Convertible Bonds") would be amended as follows:
(i) the maturity date to be extended from 18 February 2019 to 18 February 2020;
(ii) the 2019 Convertible Bonds would bear interest at the rate of 5% per annum commencing from 18 February 2019 (originally zero coupon); and
(iii) the Company would issue additional convertible bonds in the principal amount of HK$5,000,000 to the Original Bondholder, the principal amount of 2019 Convertible Bonds would increase from HK$100,000,000 to HK$105,000,000.
Save as disclosed above, all the remaining terms and conditions of the 2019 Convertible Bonds remain unchanged. The above amendments (the "Convertible Bonds Restructure") was approved by the shareholders at the Company's extraordinary general meeting on 18 June 2019 and completed on 25 June 2019. Details of the Convertible Bonds Restructure are set out in the Company's circular to shareholders dated 20 May 2019 and announcements dated 18 February 2019, 18 June 2019 and 25 June 2019.
The Convertible Bonds Restructure was considered to be a substantial modification of terms and conditions of the 2019 Convertible Bonds. Accordingly, the 2019 Convertible Bonds have been accounted for as extinguishment and the convertible bonds resulting from the Convertible Bonds Restructure (the "2020 Convertible Bonds") have been recognised upon the completion of the Convertible Bonds Restructure on 25 June 2019.
The Group recognised a loss of the Convertible Bonds Restructure of HK$1,693,000 and transferred the equity component of the 2019 Convertible Bonds to accumulated losses of HK$11,114,000 during the year ended 31 December 2019. The Group recognised the transaction costs for the Convertible Bonds Restructure of HK$499,000 during the year ended 31 December 2019. The Group recognised the liability component and derivatives of the 2020 Convertible Bonds on 25 June 2019 which were determined based on the valuations performed by an independent firm of professional valuers with recognised qualifications and experiences using discounted cash flow model at an equivalent market interest rate for a similar bond without a conversion option and binomial option pricing model, respectively. The effective interest rate of the liability component was 11% per annum. The derivatives of the 2020 Convertible Bonds include early redemption option and mandatory conversion option, both options are interdependent.
The early redemption option and mandatory conversion option represent that the Company would redeem the outstanding convertible bonds at a value equal to the aggregate principal amount then outstanding on the maturity date. The Company should be entitled to early redeem any part of the outstanding convertible bonds at any time prior to the maturity date at 103% of the principal amount. The Company should be entitled to give notice to the bondholders at any time within 5 business days prior to the maturity date to require mandatory conversion of all outstanding convertible bonds.
As announced by the Company on 24 July 2019, the conversion price of 2020 Convertible Bonds was adjusted to HK$1.0 per share of the Company with effect from 24 July 2019. The maximum number of shares that would be issued by the Company upon conversion of all the outstanding 2020 Convertible Bonds at the adjusted conversion price of HK$1.00 is 105,000,000 shares. Details of the then adjustment of the conversion price of the 2020 Convertible Bonds are set out in the Company's announcement on 24 July 2019.
On 6 November 2019, the 2020 Convertible Bonds with the principal amount of HK$100,000,000 was transferred to Neo Tech. Inc. (the "New Bondholder") of which Mr. Ng Yu, the chairman, executive Director and the substantial shareholder of the Company, is the beneficial owner.
Upon maturity of the 2020 Convertible Bonds on 18 February 2020, there is default interest at the rate of 10% per annum under the terms of the 2020 Convertible Bonds. The New Bondholder agreed to the Company that it would only charge the Company default interest at the rate of 2.5% per annum until the date of actual repayment by the Company of the total outstanding amount under the 2020 Convertible Bonds with principal amount of HK$100,000,000.
Reference is made to the circular of the Company dated 4 November 2020 in relation to, among other things, the Share Consolidation. The Share Consolidation has become effective on 1 December 2020. As a result of the Share Consolidation and pursuant to the terms of the 2020 Convertible Bonds, the conversion price of the outstanding 2020 Convertible Bonds has been adjusted from HK$1.00 per share of HK$0.001 to HK$10.00 per consolidated share of HK$0.01. The maximum number of shares that would be issued upon conversion of all the outstanding 2020 Convertible Bonds at the adjusted conversion price of HK$10.00 is 10,500,000 consolidated shares. The said adjustments took effect from the close of business on 30 November 2020.
The Rights Issue and the Subscription have been completed as at 25 January 2021. As a result, the following adjustments took place in relation to the outstanding 2020 Convertible Bonds issued by the Company. Immediately prior to the completion of the Rights Issue and the Subscription, the 2020 Convertible Bonds had an outstanding principal amount of HK$105,000,000, with the maximum number of shares that would be issued upon conversion at the conversion price of HK$10.00 of all the outstanding 2020 Convertible Bonds being 10,500,000 shares. As a result of completion of the Rights Issue and the Subscription and pursuant to the terms of the 2020 Convertible Bonds, the conversion price of the outstanding 2020 Convertible Bonds has been adjusted from HK$10.00 per share to HK$7.91 per share. The maximum number of shares that would be issued upon the conversion of all the outstanding 2020 Convertible Bonds at the adjusted conversion price of HK$7.91 is 13,274,336 shares. The said adjustments took effect retrospectively from 11 December 2020 (being the day immediately following the record date with regard to determination of the entitlements under the Rights Issue). Notwithstanding the above adjustments to the 2020 Convertible Bonds, the Company intends to repay all the outstanding overdue 2020 Convertible Bonds with part of the net proceeds from the Rights Issue and the Subscription.
As at 31 December 2020, the outstanding interest of the 2020 Convertible Bonds amounted to HK$7.77 million.
(b) On 17 December 2018, the Company issued convertible bonds in the principal amount of
HK$70,000,000 (the "2021 Convertible Bonds") as consideration for the acquisition of the Acquired Group. The 2021 Convertible Bonds include three tranches in principal amounts of HK$8,750,000, HK$26,250,000 and HK$35,000,000 respectively which would be convertible from the date of settlement of the Compensation (as defined below) for each of the years ended 31 December 2018, 2019 and 2020 (the "Relevant Years") (details refer to below) until maturity date. The Vendors guaranteed that the combined audited consolidated profit after tax (excluding extraordinary and exceptional items) (the "Guaranteed Profit") of the Acquired Group under the HKFRSs (the "Net Profit of Each of the Relevant Years") should be not less than HK$10,000,000, HK$30,000,000 and HK$40,000,000 for each of the three years ended 31 December 2018, 2019 and 2020 respectively (the "Guaranteed Profit of Each of the Relevant Years"), failing which the Vendors shall pay the compensation (the "Compensation") to the Group to be calculated as follows:
The consideration x (the Guaranteed Profit of Each of the Relevant Years - the Net Profit of Each of the Relevant Years)/the total Guaranteed Profit of the Relevant Years
The Vendors and the Group should procure the auditor nominated by the Group to complete the audited financial statements of the Acquired Group for each of the year ended 31 December 2018, 2019 and 2020 within 3 months after the end of the Relevant Years or any other date as agreed between the Vendors and the Group. The Compensation (if any) should be paid by the Vendors to the Group within 7 business days after determination of the Net Profit of Each of the Relevant Years. The Vendors should be entitled to elect to pay the Compensation in cash or by way of set off against an equivalent principal amount of the 2021 Convertible Bonds. Based on the audited financial statements of the Acquired Group issued on 27 August 2019, the combined audited consolidated profit after tax (excluding extraordinary items and exceptional items) of the Acquired Group under HKFRSs for the year ended 31 December 2018 was approximately HK$11 million which was not less than the Guaranteed Profit for the year ended 31 December 2018 of HK$10 million. Accordingly, no Compensation was required to be paid by the Vendors to the Group in relation to the Guarantee Profit for the year ended 31 December 2018.
The 2021 Convertible Bonds did not bear interest and would be mature on the third anniversary of the date of issue with conversion price of HK$0.1 per share. As at the date of issue of the 2021 Convertible Bonds, the fair value of the liability component of the 2021 Convertible Bonds were determined based on a valuation performed by an independent valuer using discounted cash flow model at an equivalent market interest rate for a similar bond without a conversion option. The effective interest rate of the liability component was 15.34% per annum.
The conversion price of 2021 Convertible Bonds was adjusted from HK$0.1 per share of HK$0.1 to HK$1.0 per share of HK$0.001 with effect from 24 July 2019 as a result of completion of the Capital Reduction. The maximum number of shares that would be issued upon conversion of all the outstanding 2021 Convertible Bonds at the adjusted conversion price of HK$1.00 is 70,000,000 shares. Details of the adjustments of the conversion price of the 2021 Convertible Bonds are set out in the Company's announcement on 24 July 2019.
On 30 June 2020, the Vendors entered into the sale and purchase agreement with the Group in relation to the disposal by the Group of the entire issued share capital of International Security Net and other receivables for a total consideration of HK$8,750,000 by way of surrendering by the Vendors of the relevant 2021 Convertible Bonds in principal amount of HK$8,750,000 issued by the Company and arising from the profit guarantee of the Acquired Group for the financial year ended 31 December 2018 (the "2018 Profit Guarantee"). The transaction has been completed during the Reporting Period.
On 30 June 2020, the Vendors and the Group entered into a supplemental deed, pursuant to which it was mutually agreed that profit guarantee for the years ended 31 December 2019 and 2020 was unfulfilled and be terminated respectively. The Vendors agreed to surrender the corresponding 2021 Convertible Bonds in the principal amount of HK$26,250,000 and HK$35,000,000 respectively to the Company for cancellation. The cancellation has been completed during the Reporting Period.
15. PROVISIONS
As described in section "Charge of Assets" under Management Discussion and Analysis, provision was made by the Group for the best estimate of the expected legal claim for the vessel with the carrying amount of HK$16,875,000 as at 31 December 2019. The amount of provision as at 31 December 2019 took into account the then outstanding fees and expenses claimed by Market Speed Limited and Li Yee Man Anly (trading as Ming Fai Marine Service) which was subsequently settled in May 2020. The vessel was released, unencumbered, back to the Group's ownership and possession on 4 June 2020.
16. SEGMENT REPORTING
The Group determines its operating segments based on the reports reviewed by the chief operating decision maker that are used to make strategic decisions.
The Group has five (2019: six) reportable segments. The segments are managed separately as each business offers different products and services and requires different business strategies. The following summary describes the operations in each of the Group's reportable segments:
- Trading of party products
- Securities brokerage and assets management
- Trading of commodities
- Advancing business
- Trading of security products and provision of security services
During the Reporting Period, the credit guarantee and investment business segment was ceased due to loss of control and deconsolidation of the relevant operating subsidiaries in the PRC (note 2).
(a) Segment Revenues and Results
The accounting policies of the operating segments are the same as the accounting policies of the Group. Management monitors the results of the Group's operating segments separately for the purpose of making decisions about resources allocation and performance assessment. Segment performance is evaluated based on reportable segment profit or loss, which is a measure of adjusted profit or loss before tax. The adjusted profit or loss before tax is measured consistently with the Group's profit or loss before tax except that certain other revenue and other net gain, other non-operating expenses, finance costs, share of profit of an associate, unallocated corporate income and unallocated corporate expenses are excluded from such measurement.
The following is an analysis of the Group's revenue and results by operation segment:
Trading of party products
Securities brokerage and assets management Trading of commodities
Advancing business
Trading of security products and provision of security services
Credit guarantee and investment business
Revenue | Segment results |
Twelve months ended | Twelve months ended |
31 December | 31 December |
2020
HK$'000 (Unaudited)
26,463
23,498
21,033
-
784
- 71,778
2019
HK$'000 (Audited)
40,965 726 - 12,001 81,921 - 135,613
2020
2019
HK$'000 (Unaudited)
HK$'000 (Audited)
(8,995) (4,541) 19,296 (36,237)
55 (11,241)
(611) (130,671)
(5,173) (1,600)
- 4,572
375
(183,915)Reconciliation: Bank interest income Unallocated corporate expenses Unallocated corporate income
- (38,173) 1,887
18 (34,966) 13,768
Impairment loss on interest in an associate - (46,445)
Loss on convertible bonds restructure - (1,693)
Fair value loss on derivative financial assets - (1,546)
Equity settled share-based payment expenses - (1,060)Finance costs
Share of profit of an associate
Loss on deregistration of subsidiaries Loss on termination of profit guarantees and cancellation of convertible bonds Gain on disposal of subsidiaries
Loss on deconsolidation of subsidiaries
(14,169) (15,684)
- -
5,396 (159)
(6,939)
190
- 2,616
- (120,156)
Loss before tax
Income tax (expense)/credit
(52,632) (383,826)
(3)
428
Loss for the period
(52,635)
(383,398)
(b) Segment Assets and Liabilities
For the purpose of monitoring segment performances and allocating resources between segments:
- all assets are allocated to operating segments other than loan receivable, certain right-of-use assets, interest in an associate, tax recoverable, certain prepayments, deposits and other receivables and cash and cash equivalents; and
- all liabilities are allocated to operating segments other than certain accruals and other payables, other loan, shareholder's loan, amount due to a deconsolidated subsidiary, certain lease liabilities and convertible bonds.
The following is an analysis of the Group's assets and liabilities by operating segment:
As at 31 December 2020
Trading of securityTrading of party
Securities brokerage and assets
Trading ofproducts management commodities
HK$'000
HK$'000
HK$'000
Advancing business HK$'000
products and provision of security services HK$'000
Total HK$'000
Unaudited
ASSETS Segment assets
12,170
23,705
33,377
424 - 69,676
Cash and cash equivalents
(including restricted cash) 26,423
Loan receivable 4,911
Interest in an associate 586
Unallocated corporate assets 21,754
Consolidated total assets 123,350
LIABILITIES
Segment liabilities
10,474
3,528
33,380
713 - 48,095
Convertible bonds 112,768
Shareholder's loan 38,500
Other loan 13,000
Amount due to a deconsolidated
subsidiary 8,467
Unallocated corporate liabilities 23,740
Consolidated total liabilities 244,570
As at 31 December 2019
Audited
ASSETS Segment assets
Bank balances and cashTrading of party
Securities brokerage and assets
Trading ofproducts management commodities
HK$'000
HK$'000
HK$'000
Advancing business HK$'000
Trading of security products and provision of security services HK$'000
Credit guarantee and investment business HK$'000
Total HK$'000
11,075
19,755
567
104
87,098
- 118,599
(including restricted cash) 15,449
Interest in an associate 586
Tax recoverable 45
Unallocated corporate assets 16,343
Consolidated total assets 151,022
LIABILITIES
Segment liabilities
3,460
11,523
2,118
635
13,449
20 31,205
Convertible bonds 161,491
Tax payables 2,961
Other loan 13,000 Amount due to a deconsolidated
subsidiary 8,467
Unallocated corporate liabilities 35,216
Consolidated total liabilities 252,340
(c) Geographic information
Revenue
The following table sets out information about the geographical location of the Group's revenue from external customers. The geographical location of customers is based on the location at which the services were provided or the goods were delivered.
For the twelve months ended
31 December
2020 | 2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Revenue from contracts with customers within | ||
the scope of HKFRS 15 | ||
Hong Kong | 27,247 | 43,460 |
Mainland China | 21,033 | 79,502 |
48,280 | 122,962 | |
Revenue from other sources | ||
Hong Kong | 23,498 | 12,651 |
Mainland China | - | - |
23,498 | 12,651 | |
Total | 71,778 | 135,613 |
Specified non-current assets
The following table sets out information about the geographical location of the Group's property, plant and equipment, intangible assets, goodwill and interest in an associate ("Specified Non-Current Assets"). The geographical location of the Specified Non-Current Assets is based on the physical location of the asset for property, plant and equipment, the location of the operation to which they are allocated for intangible assets and goodwill, and the location of operation of the associate.
At | At | |
31 December | 31 December | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Hong Kong | 15,254 | 16,875 |
Mainland China | 591 | 12,568 |
Total | 15,845 | 29,443 |
(d) Revenues from customers contributing 10% or more of the total revenue of the Group are as follows:
For the twelve months ended
31 December
2020 | 2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Unaudited) | |
Customer A | # | 32,556 |
Customer B | 22,681 | * |
Customer C | 21,033 | * |
Customer D | 9,912 | * |
*The transactions with each of these customers from securities brokerage and assets management business, trading of commodities and trading of party products business did not contribute 10% or more of total revenue of the Group for the twelve months ended 31 December 2019.
#
The transaction with this customer from trading of security products business did not contribute 10% more of total revenue of the Group for the twelve months ended 31 December 2020.
17. DECONSOLIDATION OF SUBSIDIARIES
As described in note 2 to these unaudited interim condensed consolidated financial statements, the Group deconsolidated the Deconsolidated Subsidiaries from its consolidated financial statements for the financial year ended 31 December 2019 and the Reporting Period.
(a)The following is a list of the subsidiaries which have been deconsolidated with effect from 1 January 2019:
Name
Harmonic Strait#
ଉέᖍ҃ԶᏐᗡ၍ଣϞࠢʮ̡
Shenzhen Hanhong SCM Co., Ltd.*
ଉέᔜ̵۾ყ൱Ϟࠢʮ̡
Shenzhen Sunnyway International Trading Company Limited*
Place of establishment/ incorporation and operation
Particulars of issued and paid up capital
PRC
US$20,000,000
PRC
RMB10,000,000
PRC
RMB25,000,000
Group's effective interest
Principal activities
90% Provision of credit service, conduct investment business and advancing business
90% Provision of supply chain management service, operating import and export business and trading of metals
90% Provision of credit service and conduct investment business
#
This deconsolidated subsidiary is registered as a sino-foreign joint venture limited liability company incorporated in the PRC.
*
The English name is for identification purpose only.
(b) The net assets of the Deconsolidated Subsidiaries as of 1 January 2019, which is based on their financial information as of 31 December 2018 are set out below:
Total | |
HK$'000 | |
Net assets deconsolidated of: | |
Property, plant and equipment | 104 |
Loan receivables | 62,929 |
Trade receivables, prepayments, deposits and other receivables | 66,938 |
Amounts due from the fellow subsidiaries | 8,487 |
Cash and cash equivalent | 8,380 |
Accruals and other payables | (11,492) |
Non-controlling interests | (13,170) |
122,176 | |
Loss on deconsolidation of subsidiaries | (120,156) |
Translation reserve release upon deconsolidation | (2,020) |
- | |
Net cash outflow arising on deconsolidation of subsidiaries | |
Cash and bank balances disposed of | (8,380) |
18. DISPOSAL OF SUBSIDIARIES For the twelve months ended 31 December 2020
Pursuant to a loan agreement entered into between the Company's subsidiary as borrower and an independent third party as lender, a share pledge (the "Share Pledge") over the Group's 51% equity interest in Dewe Kexin created as security for a loan in principal amount of RMB5,000,000 (the "Loan") was registered on 14 January 2020. The Share Pledge was subsequently enforced on 17 February 2020. As a result, Dewe Kexin ceased to be a subsidiary of the Company ("Dewe Deconsolidation").
HK$'000 | |
Net assets disposed of: | |
Property, plant and equipment | 16 |
Cash and cash equivalents | 10,740 |
Trade receivables | 5,449 |
Prepayment, deposits and other receivables | 5,749 |
Trade payables | (3,044) |
Accruals and other payables | (6,179) |
Tax payable | (2,961) |
9,770 | |
Loss on disposal of a subsidiary: | |
Loan payable pledged by the Company's equity interest in Dewe Kexin | 5,595 |
Less: | |
Net assets disposed of | 9,770 |
Goodwill | 11,188 |
Intangible assets | 489 |
Deferred tax liabilities | (2,797) |
Non-controlling interest | (8,899) |
Translation reserve release upon disposal | 101 |
Loss in disposal of a subsidiary | (4,257) |
Net cash outflow arising on disposal: | |
Cash and bank balances disposed of | (10,740) |
As disclosed in the above note 14(b) to these unaudited interim condensed financial statements, on 30 June 2020, the Vendors entered into the sale and purchase agreement with the Group in relation to the disposal by the Group of the entire issued share capital of International Security Net and the other receivables for a total consideration of HK$8,750,000 by way of surrendering by the Vendors of the relevant 2021 Convertible Bonds in principal amount of HK$8,750,000 issued by the Company and arising from the 2018 Profit Guarantee. The disposal has been completed on 31 December 2020.
HK$'000 | |
Net liabilities disposed of: | |
Cash and cash equivalents (overdrawn) | (17) |
Trade receivables | 199 |
Prepayment, deposits and other receivables | 3,626 |
Accruals and other payables | (6,220) |
(2,412) | |
Gain on disposal of a subsidiary: | |
Convertible bonds surrendered and cancelled | 7,629 |
Less: | |
Net liabilities disposed of | (2,412) |
Other receivables disposed of | 5,594 |
Gain on disposal of a subsidiary | 4,447 |
Net cash inflow arising on disposal: | |
Cash and bank balances (overdrawn) disposed of | 17 |
For the year ended 31 December 2019 |
(a) Disposal Group 1
In December 2019, the Company entered into sale and purchase agreement with an independent third party ("Purchaser 1") to dispose certain subsidiaries which listed as below. The disposal was completed on 27 December 2019.
List of disposed subsidiaries and its subsidiaries (collectively "Disposal Group 1"):
Particulars
Place of | of issued and | |||
establishment/ | paid up/ | Group's | ||
incorporation | registered | effective | ||
Name of subsidiary | and operation | capital | interest | Principal activities |
Gold Classic Group Limited | BVI | USD1 | 100% | Investment holding |
Blooming Charm Company Limited | BVI | USD1 | 100% | Investment holding |
AIF Corporate Management Limited | BVI | USD1 | 100% | Investment holding |
World Paradise Limited | BVI | USD1 | 100% | Investment holding |
Aceland Enterprises Limited | BVI | USD1 | 100% | Investment holding |
Asiaciti Limited | BVI | USD1 | 100% | Investment holding |
AIF Fund Management Holdings Limited | BVI | USD50,000 | 100% | Investment holding |
AIF Television Culture Communication | BVI | USD1 | 100% | Investment holding |
Company Limited | ||||
China Cloud Copper Company Limited | BVI | USD1 | 100% | Inactive |
Name of subsidiaryPlace of establishment/ incorporation and operation
Particulars of issued and paid up/ registered capital
Group's effective interest Principal activities
ࠠᅅబ͠˂ɨٰᛆҳ༟ਿږ၍ଣϞࠢʮ̡ PRC
RMB50,000,000
90% Inactive
Chongqing Fujia Tianxia Equity Investment Fund Management Co., Limited*
Ϫᘽڗڡᘒ߅ҦϞࠢʮ̡
PRC
RMB10,000,000
70% Inactive
Jiangsu Chang Qing Bao Technology Co., Ltd*
*The English name is for identification purpose only.
Details of net assets of Disposal Group 1 at date of disposal were as follows: | |
HK$'000 | |
Net assets disposed of: | |
Deposits and other receivables, net of impairment | 7,721 |
Cash and cash equivalents | 723 |
Accruals and other payables | (1,878) |
6,566 | |
Gain on disposal of subsidiaries: | |
Consideration receivables | 6,110 |
Less: | |
Net assets disposed of | 6,566 |
Non-controlling interest | (1,484) |
Translation reserve release upon disposal | (72) |
Gain on disposal of subsidiaries | 1,100 |
Net cash outflow arising on disposal: | |
Cash and bank balances disposal of | (723) |
(b) Disposal Group 2
In December 2019, the Company entered into sale and purchase agreement with an independent third party ("Purchaser 2") to dispose certain subsidiaries which listed as below. The disposal was completed on 27 December 2019.
List of disposed subsidiaries and its subsidiaries (collectively "Disposal Group 2"):
Place of
establishment/ | Particulars of | Group's | ||
incorporation | issued and | effective | ||
Name of subsidiary | and operation | paid up capital | interest | Principal activities |
Hycolon Limited | Hong Kong | HK$1 | 100% | Inactive |
AIF Energy and Resources | Hong Kong | HK$1 | 100% | Investment holding |
Investments Limited | ||||
AIF Healthtech Limited | Hong Kong | HK$1 | 100% | Investment holding |
AIF Mining Technology | Hong Kong | HK$100 | 100% | Investment holding |
Development Limited | ||||
Asia Investment Finance Limited | Hong Kong | HK$1 | 100% | Inactive |
Details of net assets of Disposal Group 2 at date of disposal were as follows: | |
HK$'000 | |
Net assets disposed of: | |
Right-of-use assets | 2,471 |
Deposits and other receivables, net of impairment | 664 |
Cash and cash equivalents | 118 |
Lease liabilities | (4,338) |
Accruals and other payables | (310) |
(1,395) | |
Gain on disposal of subsidiaries: | |
Consideration receivables | 118 |
Less: | |
Net liabilities disposed of | (1,395) |
Translation reserve release upon disposal | (3) |
Gain on disposal of subsidiaries | 1,516 |
Net cash outflow arising on disposal: | |
Cash and bank balances disposal of | (118) |
Total gain on disposal of Disposal Group 1 and Disposal Group 2 | 2,616 |
19. RELATED PARTY TRANSACTIONS
During the Reporting Period, the Group had the following significant transactions with related parties:
(a) During the Reporting Period, the Group entered into agreements (the "Agreements") with Neo Tech
Inc., pursuant to which the Group, by paying a premium, would be entitled to the profits (the "Relevant Profits"), if any, from the difference between the opening value and the closing value of the long position of certain investment funds as the underlying assets respectively specified in the Agreements as at the respective dates of expiry of the Agreements. Neo Tech Inc. and its sole beneficial owner, namely Mr. Ng Yu (who is also the chairman of the Company and an executive Director), are the substantial shareholders of the Company. The transactions contemplated under the Agreements (including the payment of the abovementioned premium) were of normal commercial terms and exempted connected transactions according to Chapter 14A of the Listing Rules. Upon expiry of the Agreements, the Relevant Profits in the total amount of HK$22,681,000 were recognised during the Reporting Period.
(b) As at 31 December 2020, the Company had outstanding unsecured convertible bonds in principal amount of HK$100,000,000 held by Neo Tech Inc.. The convertible bonds are charged at 5% (2019: 5%) coupon rate, unsecured and overdue on 18 February 2020. Neo Tech Inc. agreed to the Company that it would only charge the Company default interest at the rate of 2.5% per annum until the date of actual repayment by the Company of the total outstanding amount under the convertible bonds. Further details of the convertible bonds are set out in note 14(a).
(c) During the Reporting Period, Mr. Ng Yu provided loans in total amount of HK$38,500,000 to the Company at interest rate of 2.5%, unsecured and repayable on demand. As at 31 December 2020, principal of HK$38,500,000 and interest of HK$806,000 were outstanding. The relevant principal and interest were repaid in full on 27 January 2021.
(d) On 11 September 2020, the Company announced that, among other things, an agreement was entered into by the Company (as issuer) and Neo Tech Inc. (as subscriber) on 31 July 2020 in relation to the Subscription. It was further announced by the Company on 25 January 2021 that the Subscription was completed on that date, pursuant to which a total of 284,673,884 shares were issued and allotted by the Company to Neo Tech Inc. at the price of HK$0.71 per share. Details of the Subscription were set out in the Company's announcements dated 11 September 2020, 3 November 2020, 13 January 2021 and 25 January 2021, and its circular dated 3 November 2020.
(e) Compensation to key management of the Group is as follows:
For the twelve months ended
31 December
2020 | 2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Salaries, allowances and other benefits | 2,185 | 11,437 |
Contributions to defined contribution retirement plans | 27 | 73 |
Discretionary bonus | - | 150 |
Equity-settled share-based payment | - | 419 |
2,212 | 12,079 |
20. CAPITAL COMMITMENTS
As at 31 December 2020 and 2019, the Group did not have capital commitments contracted but not provided for in the consolidated financial statements.
21. EVENTS AFTER THE REPORTING PERIOD
Completion of the Rights Issue and the Subscription
References are made to (i) the announcements dated 11 September 2020, 3 November 2020, 31 December 2020, 13 January 2021 and 25 January 2021, (ii) the circular dated 3 November 2020, and (iii) the prospectus dated 11 December 2020 relating to, among other things, the Rights Issue and the Subscription of the Company. The Rights Issue was approximately 29.35% subscribed and became unconditional on 7 January 2021. 118,259,944 rights shares were issued by the Company for a total consideration of approximately HK$84 million at the issue price of HK$0.71 per share. On 25 January 2021, 284,673,884 subscription shares were allotted and issued by the Company to Neo Tech Inc. for a total consideration of approximately HK$202 million at the subscription price of HK$0.71 per share. Total net proceeds of approximately HK$284 million had been raised from the Rights Issue and the Subscription after the Reporting Period.
22.
APPROVAL OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited interim condensed consolidated financial statements for the twelve months ended 31 December 2020 were approved by the Board on 26 February 2021.
MANAGEMENT DISCUSSION AND ANALYSIS COMPANY PROFILE
Amber Hill Financial Holdings Limited (the "Company", together with its subsidiaries, the "Group") was incorporated and domiciled in the Cayman Islands under Companies Law (2004 Revision) of the Cayman Islands as an exempted company with limited liability on 20 March 2007. The Company's shares are listed on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). On 31 December 2020, the Company announced the change of its financial year end date from 31 December to 30 June. Accordingly, the current financial reporting period will cover an eighteen-month period from 1 January 2020 to 30 June 2021, and the unaudited interim results of the Group disclosed herein covers a twelve-month period from 1 January 2020 to 31 December 2020 (the "Reporting Period").
The Group is principally engaged in trading of party products, securities and commodities brokerage and asset management, advancing business and trading of commodities.
FINANCIAL REVIEW
During the second half of 2020, the Group prudently maintained its existing business operations and continued its stringent control over the operating costs.
The Group recorded revenue of HK$71.78 million for the Reporting Period (corresponding period in 2019: HK$135.61 million), representing a year-on-year decrease of 47%. The decrease in revenue was mainly due to the cessation of trading of security products in early 2020, no new loans granted from the advancing business and decrease in sales of party products. For details, please refer to Business Review Section.
Cost control measures continue to be in place in second half of 2020, and operating expenses decreased by 49% to HK$40.25 million during the Reporting Period as compared with the corresponding period in 2019. Loss from operations of HK$14.77 million for the Reporting Period was recorded. Net loss attributable to equity shareholders of the Company for the Reporting Period was HK$52.64 million (corresponding period in 2019: HK$380.38 million), which was mainly attributable to the abovementioned loss from operations, and (i) interest of HK$12.31 million on convertible bonds issued by the Company, (ii) loss resulting from termination of profit guarantees provided to the Group and cancellation of the corresponding convertible bonds issued by the Company of HK$6.94 million; and (iii) impairment on certain receivables of HK$16.30 million.
During the Reporting Period, the loss per share of the Company was HK45.51 cents (corresponding period in 2019: HK406.83 cents (restated as a result of completion of the share consolidation of the Company with effect from 1 December 2020)).
BUSINESS REVIEW Trading of Party Products
The revenue generated from the trading of party products segment decreased to HK$26.46 million (corresponding period in 2019: HK$40.97 million) during the Reporting Period. The trading of party products segment of the Group comprises of designing, developing, merchandising and providing consumer hard goods, primarily party and festivity products. The drop in revenue is primarily due to the impact of COVID-19 pandemic on normal social and business orders in North America and Hong Kong, the two major markets of the Group's trading of party products segment.
The board (the "Board") of directors (the "Directors") of the Company is, however, confident about the future prospects of this business segment with promising long-term growth rates and believes that the effect of the COVID-19 pandemic would only be temporary and would be lessened gradually when vaccines become available to the public worldwide. As previously disclosed, the Company intends to apply approximately HK$30 million from the proceeds of the Rights Issue and the Subscription as additional capital for this segment. With the additional financial resources, the Group will continue to explore ways to broaden its customer base which include, in particular, the development of an electronic trading platform to capture demand without geographical boundary. The Group also targets to further expand into the PRC market which has a promising market size of approximately US$528.4 million in 2019. The PRC has also recovered rapidly from the COVID-19 pandemic as a result of the effective quarantine and hygiene measures taken since early 2020.
The Company will continue with its efforts in developing this business segment despite the economic uncertainties caused by the spread of COVID-19. As at the date hereof, the Company has already secured first batch of confirmed orders in an aggregate amount of approximately HK$26 million for this business segment which are expected to be due for delivery in the first quarter of 2021.
Securities and Commodities Brokerage and Asset Management
The Group recorded a revenue of HK$23.50 million (corresponding period in 2019: HK$0.73 million) from this segment during the Reporting Period.
The relevant licenses of the Group to carry out Type 1 (Dealing in Securities), Type 2 (Dealing in Futures Contracts) and Type 5 (Advising on Futures Contracts) regulated activities (collectively the "Securities Licenses"); as well as Type 4 (Advising on Securities) and Type 9 (Asset Management) regulated activities (collectively the "Asset Management Licenses") under the Securities and Futures Ordinance (Chapter 571 of laws of Hong Kong) (the "SFO") were suspended in 2019 before the existing management joined the Group for the reason of failure to meet the requirements of required liquid capital and responsible officers under the SFO. The Group has already taken steps to comply with such requirements under the SFO and is awaiting for the SFC to approve the applications for resumption of the Asset Management Licenses and Securities Licenses.
As previously disclosed, the Company intends to apply approximately HK$15 million from the proceeds from the Rights Issue and the Subscription for strengthening the liquid capitals and supporting the development of the securities and commodities brokerage and asset management business of the Group, including but not limited to promoting the business, attracting more customers and recruiting new staff to expand the business team. The securities and commodities brokerage business of the Group will focus on providing securities and commodities brokerage services to retail and institutional clients in Hong Kong. The asset management business of the Group is expected to focus on providing fund management, discretionary account and investment advisory services to clients who are professional investors in Hong Kong, the PRC, and other Asia markets. The Group will also continue to identify and evaluate suitable business expansion and investment management opportunities for the asset management business of the Group in other countries and regions.
Trading of Commodities
During the Reporting Period, the Group generated revenue of HK$21.03 million (corresponding period in 2019: Nil) from this segment. The Group has completed the business review and has resumed this segment in the second half of 2020. It is anticipated that the Group will expand this segment by purchasing different commodities from upstream companies and sell them to downstream companies as well as exploring other business opportunities in the Asian regions.
Advancing Business
To properly assess the status of the existing loan portfolio of the Group and to protect the interests of the Company and its shareholders, no new loans have been granted since the inception of the current management in December 2019, hence the Group did not generate any revenue from this segment during the Reporting Period (corresponding period in 2019: HK$12 million).
As previously disclosed, the Company intends to apply approximately HK$15 million from the proceeds of the Rights Issue and Subscription for financing the advancing business of the Group. The Company is currently developing an electronic platform to provide retail loans with the application of financial technology. The business model is designed in such a way that short-term microadvances will be provided to individuals while at the same time the credit risk borne by the Company will be relatively low. The Company is also developing the business of provision of advances of relatively larger sum to borrowers who are capable of providing personal guarantee, asset pledge or other collaterals to secure the loans. It is anticipated that interest from the advances will generate stable source of revenue to the Group.
Although the existing loan portfolio was fully impaired in 2019 as the recoverability of the relevant receivables was considered as doubtful as previously disclosed, the Group has been actively seeking opportunities to dispose of the impaired loan receivables and/or the pledged assets as distressed assets to suitable buyer(s) on such terms and conditions which are fair and reasonable to the Company. Based on the advice of the Company's legal advisors, the Group is also taking legal actions in Hong Kong against certain borrowers in Hong Kong or who may have assets in Hong Kong.
Trading of Security Products and Provision of Security Services
The security products trading business of the Group had ceased due to the cessation of control over Dewe Kexin in early 2020, while provision of security services business had ceased during the Reporting Period upon completion of the disposal of the entire issued share capital of International Security Net, details of which were set out in the announcement of the Company dated 30 June 2020.
Credit Guarantee and Investment Business
The Board resolved on 7 July 2020 that the results of the relevant operating subsidiaries of the credit guarantee and investment business of the Group in the PRC would be deconsolidated from the consolidated financial statements of the Group for the financial year ended 31 December 2019. Based on the advice of the Company's legal advisors, the Group has commenced legal actions in the PRC against those deconsolidated subsidiaries with a view to upholding its shareholder's right. It is also seeking suitable buyer(s) to dispose of its interest in the deconsolidated subsidiaries as distressed assets on such terms and conditions which are fair and reasonable to the Company.
LIQUIDITY AND FINANCIAL RESOURCES
As at 31 December 2020, (i) the Group's net current liabilities were HK$136.92 million (31 December 2019: HK$109.70 million); (ii) the Group's net liabilities were HK$121.15 million (31 December 2019: HK$110.15 million); (iii) the Group's current ratio was 0.44 (31 December 2019: 0.44); and (iv) the Group's gearing ratio was 112% (31 December 2019: 107%). The Group's gearing ratio was calculated as net debts divided by total assets. The Group's net debts include convertible bonds, shareholder's loan and other loan less cash and bank balances.
The Group's liquidity and financial resources were significantly improved upon the completion in January 2021 of the Rights Issue and the Subscription as stipulated in the circular dated 4 November 2020 and the prospectus of the Company dated 11 December 2020 which raised net proceeds of HK$284 million in aggregate, and the Directors consider that the Group is able to meet in full its financial obligations as they fall due in the foreseeable future.
As at 31 December 2020, the Group had loans from a shareholder and an independent third party with principal amount of HK$38.50 million (31 December 2019: Nil) and of HK$13 million (31 December 2019: HK$13 million) respectively, which were unsecured, and bear fixed interest rates of 2.5% and 5% per annum respectively. In addition, the outstanding amount (including both principal and interest thereon) of HK$112.77 million in total (31 December 2019: HK$108.60 million) under the convertible bonds was due by the Company to the bondholders as at 31 December 2020. The loans and convertible bonds are expected to be settled in the first quarter of 2021 by proceeds raised from the Rights Issue.
As at 31 December 2020, the Group had cash and bank balances of HK$25.60 million (31 December 2019: HK$13.53 million). The cash and bank balances were denominated in HK dollar, Renminbi and US dollar. The Group had no structured investment products and foreign exchange contracts as at 31 December 2020. The Group is not exposed to material fluctuations in exchange rates. The Company received net proceeds of HK$284 million from the Rights Issue and the Subscription in January 2021.
CAPITAL STRUCTURE AND FUND-RAISING ACTIVITIES
Major changes in relation to the capital structure of the Company for the Reporting Period are as follows:
A. Share Capital
On 11 September 2020, the Company announced, among other things, consolidation (the "Share Consolidation") of the issued shares on the basis of ten shares of HK$0.001 each into one share of HK$0.01 each. The Share Consolidation was approved by the shareholders at the extraordinary general meeting of the Company held on 27 November 2020 and became effective on 1 December 2020. Upon the Share Consolidation becoming effective on 1 December 2020 and as at 31 December 2020, the authorised share capital of the Company was HK$10,000,000,000 divided into 1,000,000,000,000 shares of HK$0.01 each, and the issued share capital of the Company was HK$1,343,112.76 divided into 134,311,276 shares of HK$0.01 each. Details of the Share Consolidation were set out in the Company's announcements dated 11 September 2020 and 27 November 2020, and its circular dated 4 November 2020.
During the Reporting Period, the Company completed a placing of new shares under the general mandate granted to the Directors by the shareholders of the Company at the annual general meeting of the Company held on 18 June 2019. An aggregate of 181,463,440 shares were successfully placed at issue price of HK$0.1 each to not fewer than six placees in accordance with the terms and conditions of the relevant placing agreement dated 26 February 2020. The placing of the 181,463,440 new shares was completed on 20 April 2020.
During the Reporting Period, the Company completed another placing of new shares under the general mandate granted to the Directors by the Company's shareholders at the extraordinary general meeting of the Company held on 7 July 2020. An aggregate of 223,852,128 shares were successfully placed at issue price of HK$0.105 per share to not fewer than six places in accordance with the terms and conditions of the relevant placing agreement dated 17 July 2020. The placing of 223,852,128 new shares was completed on 4 August 2020.
Details of the use of proceeds of the fund-raising activities during the Reporting Period are as follows:
Date of | Intended use of | Actual use of | ||
announcements | Event | Net proceeds | proceeds | proceeds |
26 February 2020 and | Placing of new shares under | Approximately | Working capital of | The proceeds were |
20 April 2020 | general mandate granted on | HK$17.97 million | the Group | fully utilised as |
18 June 2019 | intended | |||
17 July 2020 and | Placing of new shares under | Approximately | Working capital of | The proceeds were |
4 August 2020 | general mandate granted on | HK$22.96 million | the Group | fully utilised as |
7 July 2020 | intended |
On 11 September 2020, the Company announced, among other things, the Rights Issue and the Subscription. Both the Rights Issue and the Subscription were completed in January 2021.
Save as disclosed above, the Company had not conducted any fund-raising activity involving issue of its securities in the Reporting Period.
B. Convertible Bonds
Details on the movements of the convertible bonds during the Reporting Period are set out in note 14 to the unaudited interim condensed consolidated financial statements.
MERGERS, ACQUISITIONS AND DISPOSAL
Save for the sale and purchase agreement dated 30 June 2020 entered into by the Group in relation to the disposal by the Group of the entire issued share capital of International Security Net and other receivables, which was completed in late 2020, the Group did not have any significant merger, acquisition or disposal during the Reporting Period.
SIGNIFICANT INVESTMENTS
The Group did not have any significant investments during the Reporting Period.
CHARGE OF ASSETS
As at 31 December 2020, the Group did not have any charge of assets.
As disclosed in the 2019 Annual Report, Market Speed Limited and Li Yee Man Anly (trading as Ming Fai Marine Service) (the "Plaintiffs") took out an action in rem under the Admiralty Jurisdiction of the High Court on 3 July 2019 for arrest of a vessel named "ԭҳږፄ" (the "Vessel") held by AIF Happy Services Limited ("AIF"). The Plaintiffs and AIF executed a deed of settlement on 3 June 2020 relating to withdrawal by the Plaintiffs of all claims relating to the Vessel. The Vessel was released, unencumbered, back to AIF's ownership and possession on 4 June 2020. As at 31 December 2020, the carrying value of the Vessel was HK$14,175,000 (31 December 2019: HK$16,875,000).
CONTINGENT LIABILITIES
As at 31 December 2020, the Group did not have any material contingent liabilities.
FOREIGN CURRENCY RISK
The Group's main operations are located in Hong Kong and the PRC. Most of the assets, income, payments and cash balance are denominated in Hong Kong dollar and Renminbi. The Group did not enter into any forward foreign exchange contracts to manage its foreign currency risk during the Reporting Period as the management considered that the Group's exposure to exchange rate risk could be managed.
HUMAN RESOURCES
As at 31 December 2020, the Group had 27 employees (31 December 2019: 27 employees). It is the Group's policy to recruit the right person for each position based on the person's qualification and experience. The remuneration of each employee is reviewed every year based on the performance of the employee with reference to the prevailing market conditions.
CAPITAL COMMITMENTS
As at 31 December 2020, the Group did not have any material capital commitment.
PROSPECTS
Since January 2020, the new management of the Group has conducted a detailed business review and restructuring of the operations with a view of further developing the existing businesses, improving the financial situation, strengthening the internal controls, streamlining the operating costs and efficiency. The Board believes that the business performance of the Group will continue to improve after the removal of the legacy issues of the Group and the implementation of new business strategies; and the business environment will continue to improve with the introduction of vaccines to curb the spread of COVID-19.
In order to strengthen the financial position of the Group for its business development in the coming future, the Company announced a number of fund-raising activities during the Reporting Period, in particular the Rights Issue and the Subscription which were announced on 11 September 2020 and completed in January 2021. Aggregate net proceeds of approximately HK$284 million have been raised from the Rights Issue and the Subscription.
After the restructuring of the business and operations as well as the completion of the Rights Issue and the Subscription mentioned above, the Group will have additional financial resources to develop its existing businesses.
PURCHASE, SALES OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY
Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed securities during the Reporting Period.
COMPLIANCE WITH CODE ON CORPORATE GOVERNANCE PRACTICES
During the Reporting Period, the Company has complied with the code provisions set out in the Corporate Governance Code (the "CG Code") as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules") except for the following.
Under A.2.1 of the CG Code, the role of Chairman and Chief Executive Officer should be separated and should not be performed by the same individual and the division of responsibilities between Chairman and Chief Executive Officer should be established and set out in writing. Since 10 January 2011, the Company had no Chief Executive Officer. The functions of Chief Executive Officer were performed by the Executive Committee of the Board. The Board considered that this structure would not impair the balance of the power and authority between the Board and the management of the Company, and had been effective in discharging its responsibilities satisfactorily and facilitating the Company's operation and business development. Subsequently, Mr. Chan Chi Ming was appointed as the Chief Executive Officer of the Company on 6 April 2020.
MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuer (the "Model Code") as set out in Appendix 10 of the Listing Rules regarding directors' securities transactions. Having made specific enquiries to all Directors, all Directors have confirmed that they have complied with the required standard set out in the Model Code during the Reporting Period.
AUDIT COMMITTEE
The audit committee of the Company has, together with the Directors, reviewed this interim results announcement and the unaudited interim condensed consolidated financial statements, accounting principles and practices adopted by the Group for the Reporting Period.
On behalf of the Board
Amber Hill Financial Holdings Limited
Ng Yu
Chairman and Executive Director
Hong Kong, 26 February 2021
As at the date of this announcement, (i) the executive Directors of the Company are Mr. Ng Yu, Mr. Wei Weicheng, Mr. Lin Feng and Mr. Chan Chi Ming; (ii) the non-executive Director of the Company is Mr. Huang Shao Long; and (iii) the independent non-executive Directors of the Company are Mr. Anthony Espina, Mr. Wang Jun Sheng and Mr. Lo Hang Fong.
* For identification purposes only
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Amber Hill Financial Holdings Ltd. published this content on 26 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 February 2021 12:17:04 UTC.