G Resources : Interim Financial Report For The Six Months Ended 30 June 2019

For the six months ended 30 June 2019 (Incorporated in Bermuda with limited liability)

Stock Code: 1051

INTERIM

FINANCIAL

REPORT

2019

CORPORATE PHILOSOPHY

OUR VALUES

We strive to be a GREAT company in all of our operations and dealings with people. The GREAT values are the foundation of our Company, and provide a core commitment to achieve the best we can for all of G-Resources' stakeholders.

GREAT VALUES

GROWTH in value for all our stakeholders

RESPECT for our people, our communities and for all stakeholders

EXCELLENCE in everything we do

ACTION to deliver on our commitments

TRANSPARENCY openness, honesty and good governance

G-Resources is a company listed on the Hong Kong Stock Exchange focusing on principal investment business, financial services business, money lending business and real property business (HKEx: 1051).

CONTENTS

1. Corporate Information
2. Biographical Details of Directors and Senior Management

1. Management Discussion and Analysis

1. Other Information

1. Condensed Consolidated Statement of Profit or Loss
2. Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
3. Condensed Consolidated Statement of Financial Position
4. Condensed Consolidated Statement of Changes in Equity
5. Condensed Consolidated Statement of Cash Flows
6. Notes to the Condensed Consolidated Financial Statements

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 1

CORPORATE INFORMATION

BOARD OF DIRECTORS

Non-Executive Director

Ms Li Zhongye, Cindy, Chairperson

Executive Directors

Mr Leung Oi Kin

Mr Leung Wai Yiu, Malcoln

Independent Non-Executive Directors

Mr Lo Wa Kei, Roy

Mr Chen Gong

Mr Martin Que Meideng

EXECUTIVE COMMITTEE

Mr Leung Oi Kin

Mr Leung Wai Yiu, Malcoln

AUDIT COMMITTEE

Mr Lo Wa Kei, Roy, Chairman

Mr Chen Gong

Mr Martin Que Meideng

PRINCIPAL BANKERS

Industrial and Commercial Bank of China (Asia) Limited Bank of Communications Co., Ltd.

Shanghai Pudong Development Bank Co., Ltd. Hang Seng Bank Limited

SHARE REGISTRARS

Hong Kong

Union Registrars Limited

Suites 3301-04, 33/F.

Two Chinachem Exchange Square

338 King's Road

North Point, Hong Kong

Bermuda

MUFG Fund Services (Bermuda) Limited 4th floor North

Cedar House

41 Cedar Avenue

Hamilton HM 12 Bermuda

REMUNERATION COMMITTEE	REGISTERED OFFICE
Victoria Place, 5th Floor
Mr Lo Wa Kei, Roy, Chairman
31 Victoria Street
Mr Chen Gong
Hamilton HM 10
Mr Martin Que Meideng
Bermuda
NOMINATION COMMITTEE	HEAD OFFICE AND PRINCIPAL PLACE OF
Ms Li Zhongye, Cindy, Chairperson
BUSINESS
Mr Chen Gong
Mr Martin Que Meideng	Room 1801, 18/F
		Capital Centre
COMPANY SECRETARY	No. 151 Gloucester Road
Wanchai, Hong Kong
Mr Leung Oi Kin
AUDITOR		WEBSITE
	www.g-resources.com
Deloitte Touche Tohmatsu
LEGAL ADVISORS
Hong Kong:	Fangda Partners
Bermuda:	Appleby

2 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT

Non-Executive Director

Li Zhongye, Cindy, aged 51

was appointed as a chairperson and non-executive director ("Director") of G-Resources Group Limited (the "Company", together with its subsidiaries, the "Group") on 12 October 2018. Ms Li has twenty years of experience in finance and information technology industry and possesses extensive corporate management experience. She has been working as a director of WeAreHAH since January 2019 and a board advisor of Chengdu Yushuo Technology Company Ltd. since January 2017. Ms Li also served as an independent non-executive director of Wan Kei Group Holdings Limited, a company listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange"), a director of Sunny Education Inc., and the China chairperson and managing director of Covalis Capital LLP, a London based hedge fund. Ms Li obtained a medical degree in Capital Medical University, in the People's Republic of China in 1992.

Executive Directors

Leung Oi Kin, aged 45

was appointed as an executive Director and company secretary of the Company on 8 November 2016 and 16 December 2016, respectively. Mr Leung has more than twenty years of experience in accounting and financial management. He is a professional accountant and a fellow member of the CPA Australia. He is currently an independent non-executive director of Austar Lifesciences Limited (whose shares are listed on the Main Board of the Stock Exchange). Prior to joining the Group, he was the company secretary and chief financial officer of Wisdom Sports Group (formerly known as Wisdom Holdings Group) (whose shares are listed on the Main Board of the Stock Exchange); and the chief financial officer of Linekong Interactive Group Co., Ltd. (formerly known as Linekong Interactive Co., Ltd.) (whose shares are listed on GEM of the Stock Exchange). Mr Leung also worked in PricewaterhouseCoopers as an auditor. Mr Leung graduated from University of Adelaide, Australia in 1997 with a bachelor's degree in commerce.

Leung Wai Yiu, Malcoln, aged 37

was appointed as an executive Director on 16 April

2018. Mr Malcoln Leung currently serves as executive director, chief investment officer of the Company and is primarily responsible for the Group's investment, asset management and strategic planning, as well as formulating the Group's overall business and asset portfolio strategy. He is also responsible for the day-to-day operations and overall management of the Company's investment management team. He is a director of various subsidiaries of the Company. Mr Malcoln Leung has over fifteen years of extensive experience in asset management, investment banking and technology industry, based in the United States, Singapore and Hong Kong. Prior to joining the Group in 2017, Mr Malcoln Leung held key positions in various multinational financial institutions and investment banks including Bank of America Merrill Lynch, Standard Chartered

and HSBC, and he was responsible for leading global private equity investments and cross-border merger and acquisition transactions, covering different industries such as technology, real estate, financials, insurance and healthcare. Mr Malcoln Leung obtained a master's degree in business administration from the Massachusetts Institute of Technology in 2008 in the United States.

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 3

BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT

Independent Non-Executive Directors

Lo Wa Kei, Roy, aged 48

was appointed as an independent non-executive Director on 17 July 2017. Mr Lo is a practicing accountant in Hong Kong and is a certified public accountant in Hong Kong, a fellow member of the Hong Kong Institute of Certified Public Accountants, a fellow member of CPA Australia and a fellow of the Institute of Chartered Accountants

in England and Wales. He serves as the managing partner of SHINEWING (HK) CPA Limited, which is a full service accounting and consulting firm engaged in the provision of, among other things, audit and business advisory services. He is also a member of the Shanghai Pudong New Area Committee of the Chinese People's Political Consultative Conference, the founding executive vice-president and council member of the Hong Kong Independent Non-Executive Director Association and the Divisional President 2019 - Greater China of CPA Australia. Mr Lo has over twenty-five years of experience in auditing, accounting, risk management and finance and has been serving as an independent non-executive director of a number of companies listed on the Stock Exchange, including China Tonghai International Financial Limited (formerly known as China Oceanwide International Financial Limited), Wan Kei Group Holdings Limited, Sun Hing Vision Group Holdings Limited, China Zhongwang Holdings Limited, Sheen Tai Holdings Group Company Limited, China Oceanwide Holdings Limited (formerly known as Hutchison Harbour Ring Limited) and Xinming China Holdings Limited. Mr Lo received a bachelor's degree of business administration from The University of Hong Kong in 1993 and a master's degree of professional accounting from The Hong Kong Polytechnic University in 2000.

Chen Gong, aged 49

was appointed as an independent non-executive Director on 3 February 2017. Mr Chen has more than twenty years of extensive experience in finance management, mergers

• acquisitions, financing, negotiation and restructuring in a cross-culture environment. Mr Chen has participated in cross-border merger & acquisition and financing transactions. He has been involved in the management of various public companies listed on the Toronto Stock Exchange, in the capacity of director and/or chief executive officer/chief financial officer. He is currently also an independent director of Newmac Resources Inc. (whose shares are listed on TSX Venture Exchange);
  a president, chief executive officer and director of Ord Mountain Resources Corp. (whose shares are listed on TSX Venture Exchange NEX); and an independent director of Evermount Ventures Inc. (whose shares are listed on TSX Venture Exchange NEX). Mr Chen is also the founder and managing director of DoubleOcean Financial Group, a financial advisory company that facilitates the cross-border investments between North America and China. Mr Chen was a director and chief executive officer of First Growth Holdings Ltd. (whose shares are listed on TSX Venture Exchange) and an independent director of Credent Capital Corp. (whose shares are listed on TSX Venture Exchange NEX). Mr Chen also worked in various financial management positions at two Fortune 100 companies in the United States for about eight years. Mr Chen received a bachelor's degree in International Economics from Peking (Beijing) University in 1992
  and a master of business administration (MBA) from the University of Arizona in 1997. He is a United States Certified Public Accountant (CPA).

Martin Que Meideng, aged 58

was appointed as an independent non-executive Director on 3 February 2017. Mr Que has over twenty years

of extensive experience of North American financial investment and management, Certified Financial Planner in North American and tax planning and investment risk management. Mr Que is a president and owner of Allvista Financial and Planning Services Inc., British Columbia, Canada; a vice-president of Marketing of Citistar Financial, British Columbia, Canada; a chief financial officer of Blue-O Technology Inc., British Columbia, Canada, a fuel cell technology company. He was a chief financial officer and a director of McVicar Energy Inc., Ontario, Canada, a natural resources and investment company; He is also a member of the Million Dollar Round Table (MDRT) of The Premier Association of Financial Professionals®,

a Certified Financial Planner of the Financial Planning Standards Council and a Chartered Life Underwriter of The American College of Financial Services. Mr Que received a bachelor of engineering from Wuhan College of Geology in 1983 and a master of science from China University of Geosciences of China in 1986.

4 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT

Senior Management

Clive Derek Conway Louis Rigby, aged 72

is the managing director of Funderstone Securities Limited ("FSL") (formerly known as Lippo Securities Limited) and Funderstone Futures Limited ("FFL")

(formerly known as Lippo Futures Limited) (both are wholly-owned subsidiaries of the Company) and was a founding shareholder of Anderson Man (Investment Services) Limited (now known as Funderstone Securities Holdings Limited) in 1983. Mr Rigby has been continually engaged in London, Brussels, New York, Amsterdam and Hong Kong in financial services since his first employment by Merrill Lynch in 1964. Mr Rigby has acted as a director and shareholder in private companies in a variety of sectors including: food and beverage, technology, manufacturing, financial services, oil services and engineering. He has been giving evidence as an expert witness in various cases of financial market misconduct for the last forty years. He has lived continuously in Hong Kong since 1976. Mr Rigby holds type 1, type 2, type 4 (effective from March 2019), type 5 and type 9 licenses under the SFO and has been a responsible officer since 2005.

John Lawrence Sigerson, aged 48

is an executive director and chief operating officer of FSL and FFL. Mr Sigerson has twenty-five years of continuous experience in the Hong Kong financial industry covering equities, derivatives and asset management. Since 2014, he has been licensed under the SFO as a responsible officer for regulated activities type 1, type 4 and type 9 with FSL, type 2, type 5 and type 9 with FFL and type 9 (effective from January 2019) with Funderstone Asset Management (HK) Limited (formerly known as Lippo Asset Management (HK) Limited). Mr Sigerson graduated from Newcastle University, United Kingdom in 1992 with a bachelor's degree in Theoretical Physics.

Lau Yue Wah, Brian, aged 45

is a director of Enhanced Financial Services Group Limited (a wholly-owned subsidiary of the Company) and its various subsidiaries. He is a co-founder of Enhanced Securities Limited ("ESL") and Enhanced Finance Limited ("EFL"). Mr Lau has over twenty years of experience

in the financial services industry. He had held different positions in ESL and EFL. He was a responsible officer of ESL from 2011 to 2014, supervising type 1 regulated activities under the SFO. He is holding a type 1 and type 4 license under the SFO and is a responsible officer for type 1 and type 2 regulated activities under the SFO. Mr Lau graduated from The University of New South Wales in Sydney, Australia.

Nguyen Gia Vinh, Patrick, aged 44

is a co-founder of Enhanced Investment Management Limited ("EIML") and currently holds the roles of director and responsible officer at EIML. Mr Nguyen has over fifteen years of investment advisory and discretionary portfolio management experience. He is in charge

of overseeing the strategic development and daily operations of EIML. Before founding EIML, Mr Nguyen was a director at the International Private Banking division of CTBC Bank (formerly known as Chinatrust Commercial Bank). From 2007 to 2011, he worked as the Head of Investment at Crosby Wealth Management. Prior to that, he was a senior investment advisor of AIG Private Bank, responsible for formulating portfolio allocation strategies and providing investment recommendations/solutions to relationship managers and clients. Mr Nguyen graduated from Boston College, USA and is a CFA charterholder since 2003.

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 5

MANAGEMENT DISCUSSION AND ANALYSIS

Business Review and Results

Below is a summary of the financial information:
		For the six months ended 30 June
		2019	2018
		USD'000	USD'000
Revenue	13,114	12,773
Administrative expenses	5,595	8,440
EBITDA	29,911	35,025
Profit before taxation	29,390	33,877
Profit for the period	29,394	33,816
Analysis of profit/(loss) before taxation by operating segment:
(i)	Principal Investment Business	33,398	32,535
(ii)	Financial Services Business	(1,082)	(883)
(iii)	Real Property Business	1,138	1,139

The Group achieved a net profit for the period of USD29.4 million (the six months ended 30 June 2018: USD33.8 million). Despite the increase in revenue and fair value changes of financial assets at fair value through profit or loss ("financial assets at FVTPL"), the profit for the period decreased was mainly due to the slow down of increase in fair value of investment properties and provision for impairment on non-financial assets.

Revenue was USD13.1 million (the six months ended 30 June 2018: USD12.8 million), mainly generated by the dividend and distribution income as well as interest income from financial products; interest income from financial institutions, margin financing and money lending business; rental income; and commission income and handling charges from financial services. The increase in revenue was mainly due to the increase in commission income and handing charges from financial services as a result of the acquisition of Funderstone Securities Holdings Limited ("FSHL") (formerly known as Lippo Securities Holdings Limited) and its subsidiaries ("FSHL Group") in December 2018.

Administrative expenses was USD5.6 million for the six months ended 30 June 2019, a decrease of USD2.8 million as compared to the corresponding six months ended 30 June 2018 of USD8.4 million. Such decrease was partially due to effective performance on expenses control for the period.

General description on the Group's investment strategies

The Group has been continuously reviewing its business and investment strategies, especially for its principal investment business pursuant to the Group's financial needs and change of financial circumstances. The Group generates profit from the interest income, dividend income and distribution income from the financial assets held by the Group in its principal investment business. The Group takes a prudent approach on allocating its financial assets. As such, apart from equity investments which are always accompanied by higher market risks, the Group has been exploring different fixed income investment portfolios as part of its assets allocation plan, including the selection of fixed income assets and the vehicles the Group uses to access them.

Since the beginning of 2018, after considering the trend of interest rate, risk tolerance, capital preservation, liquidity and yield, the Group constructed its fixed income investment portfolios by pairing its bond investment with cash investment. The Group believes that a strong fixed income component can serve as a safety net for the Group's overall investment portfolios.

6 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

MANAGEMENT DISCUSSION AND ANALYSIS

The Group has allocated approximately 40% of its financial assets to fixed income investment, which were divided equally between bond investment and cash investment (including term deposits with financial institutions), as part of its on-going investment strategies to eliminate the impact from market fluctuations that are typical of equity investment.

1. Principal Investment Business

During the period, the Group invested approximately USD10.5 million in listed and unlisted financial assets, which were mainly unlisted security investments. The profit before taxation was USD33.4 million which included interest income, dividend income and distribution income of USD10.6 million from the financial assets held by the Group.

As at 30 June 2019, the Group held approximately USD408.7 million non-cash financial assets, as follows:

		30 June		31 December
	2019		2018
		USD'000		USD'000
Listed shares	61,224		57,189
Listed debt securities	171,059		181,797
Unlisted managed investment funds		-	889
Unlisted security investments	176,363		159,723
Total		408,646		399,598

The Group held limited partner interest of a fund (the "Fund") as an unlisted security investment. The investment portfolio of the Fund operates as a limited partnership, yielding returns from investing in equity-related securities of growth and late-stage PRC companies in the technology, media and telecommunications industry. The fair value of the investment as at 30 June 2019 was USD129.8 million, which accounted for 9% of the total assets of the Group as at 30 June 2019.

The Fund has achieved income generation and seen capital appreciation. For the six months ended 30 June 2019, the increase in fair value of the investment was USD0.6 million.

Moving forward, the Group is optimistic of the potential of the investment. It is of the view that by leveraging the strategic and extensive resources available and the Fund management team's extensive experience in investment and fund operation in the technology, media and telecommunications industry, the investment will continue to bring about valuable investment opportunities and increasing financial returns, as much as it will add to the diversity of the investment portfolio.

Except for the investment disclosed above, there was no other single investment (for example, financial assets at FVTPL and investments in debt instruments measured at amortised cost) in the Group's diversified investment portfolio that was considered a significant investment given that none of the investments has a carrying amount accounting for more than 5% of the Group's unaudited total assets as at 30 June 2019.

The interest income from term deposits from financial institutions has been classified as the revenue as the principal activities.

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 7

MANAGEMENT DISCUSSION AND ANALYSIS

1. Financial Services Business

On top of the acquisition of FSHL Group in December 2018, the Group also acquired the remaining 25% of the equity interests in Enhanced Financial Services Group Limited ("EFSGL") in May 2019. EFSGL and its subsidiaries now became indirect wholly-owned subsidiaries of the Company.

Interest income from money lending business and margin financing were USD0.2 million (the six months ended 30 June 2018: USD1.4 million). The commission income and handling charges from financial services and asset management fee was USD1.2 million (the six months ended 30 June 2018: USD0.3 million). The loss before taxation was USD1.1 million (the six months ended 30 June 2018: USD0.9 million).

(iii) Real Property Business

The Group had three floors of commercial office (including 17th, 18th and 19th floor) and ten car parks located in Capital Centre, No. 151 Gloucester Road, Wanchai, Hong Kong. The commercial offices are used as our head office and leased to third parties for office use under a lease of not more than three years. The rental income earned and the profit before taxation were USD1.1 million and USD1.1 million (the six months ended 30 June 2018: USD1.2 million and USD1.1 million) for the six months ended 30 June 2019, respectively.

Review of Group Financial Position

	30 June	31 December
	2019	2018
	USD'000	USD'000
Current Assets
Bank balances and cash	928,836	887,070
Financial assets at FVTPL	61,224	57,189
Investments in debt instruments measured at amortised cost	7,185	4,147
Others	52,646	67,196
Non-current Assets
Financial assets at FVTPL	176,363	160,612
Financial assets at fair value through other comprehensive income	-	15,852
Investments in debt instruments measured at amortised cost	163,874	177,650
Others	137,161	133,842
Total Assets	1,527,289	1,503,558
Other Liabilities	(50,550)	(58,372)
Net Assets	1,476,739	1,445,186

Non-current assets were USD477.4 million (31 December 2018: USD488.0 million), representing a decrease of USD10.6 million which was mainly due to the net decrease in investment in debt instruments and financial assets of USD13.9 million. Current assets were USD1,049.9 million (31 December 2018: USD1,015.6 million), representing an increase of USD34.3 million which was mainly due to an increase in bank balances and cash of USD41.7 million.

8 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

MANAGEMENT DISCUSSION AND ANALYSIS

Net Asset Value

As at 30 June 2019, the Group's net assets amounted to approximately USD1,476.7 million, representing an increase of USD31.5 million as compared to approximately USD1,445.2 million as at 31 December 2018. The increase in net assets was mainly due to the profit for the period of USD29.4 million.

Cash Flow, Liquidity and Financial Resources

Cash Flow Summary

		For the six months ended 30 June
				2018
	2019
		USD'000			USD'000
Net cash from Operating Activities	12,798		4,791
Net cash from Investing Activities	39,689		24,444
Cash used in Financing Activities		(13,707)	(447)
Net increase in cash and cash equivalents		38,780			28,788
Cash and cash equivalents at beginning of the period	887,070		780,142
Effect of foreign exchange rate changes		2,986		(2,157)
Cash and cash equivalents at end of the period		928,836			806,773

The Group's cash balance as at 30 June 2019 was USD928.8 million (31 December 2018: USD887.1 million). The Group generated net cash from operating activities for the six months ended 30 June 2019 of USD12.8 million, which was mainly contributed to working capital of operations. Net cash from investing activities were USD39.7 million which mainly includes net amount of acquire, dispose and redeem of investment in financial assets of USD33.4 million

and interest received of USD10.7 million. Cash used in financing activities were mainly from the repayment of other borrowings of USD13.4 million.

The Group's gearing ratio, expressed as the percentage of the Group's total borrowings over shareholders' equity, was nil as at 30 June 2019, as the Group did not have any borrowings as at the end of the reporting period. The Group's gearing ratio as the percentage of the Group's total borrowings (USD13.4 million, equivalent to HKD104.8 million as the currencies of such borrowings made) over shareholders' equity, was 0.9% as at 31 December 2018.

Capital Structure of the Group

The capital structure of the Group has not changed materially since 31 December 2018, being the end of the reporting period of the Group's annual report.

Material Acquisitions and Disposals

On 10 May 2019, G-Financial Services Group Holding Ltd. ("Purchaser"), an indirect wholly-owned subsidiary of the Company, Enhanced Group Holdings Limited ("Vendor") and Ms. Ip Yeuk Ping Gloria (the "Vendor's Guarantor") entered into the sale and purchase agreement, pursuant to which the Purchaser has agreed to acquire and the Vendor has agreed to sell 45,000,000 ordinary shares of EFSGL, which represent 25% of the equity interests in EFSGL at the consideration of HKD42 million. After completion, the shareholding of the Purchaser in EFSGL increased from 75% to 100% and EFSGL became an indirect wholly-owned subsidiary of the Company.

Save as disclosed above, there was no material acquisition or disposal of subsidiaries, associates and joint ventures during the period and as at the publication of the Company's interim results announcement for the period.

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 9

MANAGEMENT DISCUSSION AND ANALYSIS

Exposure to Fluctuations in Exchange Rates and Related Hedge

The Group conducted most of its business in United States dollars ("USD") and Hong Kong dollars ("HKD"). The foreign currency exposure of HKD to USD is minimal as HKD is pegged to USD.

The management will continue to monitor the Group's foreign currency exposure and consider other hedging policies should the need arise.

Pledge of Assets

As at 30 June 2019, no assets of the Group had been pledged.

Business Outlook

Due to the on-goingUS-China trade war, global monetary tightening, and geopolitical concerns in the Middle East, the global equity market and oil market experienced significant volatilities and challenging environment. For many economies, including Hong Kong, moderated growth, and for many companies, diminished business and financial results in the first half of 2019 appear inevitable.

In response to the weakened global economy, the Group continued to carry on with our two-pronged "investment + finance" development strategy. Banking on our existing solid capital base, we actively optimised resources allocation and maintained our conservative and diligent investment philosophy. We believe that this strategy enables us to minimise the impact on the Group's business and financial performance in the first half of 2019 under the current economic environment.

Principal investment business. Since 2016, the Group has been engaging in principal investment business as one of our crucial business segments. Leveraging the experienced investment team we built in the past three years, the Group created a well-maintained investment portfolio with a combination of investment in funds, bonds and securities (including listed or unlisted securities). In the past six months, the Group is dedicated to tapping quality investment projects in the technology, media and telecommunications, healthcare, banking, insurance, financial service and education industries, in order to elevate the Group's overall profitability and returns. On the other hand, the Group has been and will be seeking for other suitable investment opportunities in projects with strong growth outlooks, recognised catalysts for development and attractive valuations to further strengthen its investment portfolios. Moreover, the Group has been adhering to our on-going investment strategies and strives to diversify its investment portfolio and achieve risk dispersion. The Group also differentiates itself by focusing on "how" we invest rather than "what" we invest only. Apart from being an investor, the Group starts to take on management role in investment projects, such as being general partners in funds established by us with our clients as limited partners. We believe that our achievement in investment portfolios and continually accumulated experience in investment management are setting a solid foundation for our asset management business development and better leveraging our subsidiaries licensed by the Securities and Futures Commission ("SFC") which are eligible to carry out asset management business.

10 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

MANAGEMENT DISCUSSION AND ANALYSIS

Financial services business. The Group will continue to expand our existing securities, brokerage and margin financing businesses, and seek business opportunities in other financial sectors such as fund management as mentioned in our principal investment business segment above. Since the Group acquired the entire equity interests in FSHL (together with its subsidiaries), our client base has been enlarged, especially in securities and commodities brokerage, asset management and money lending businesses. In the past six months, the Group focused on the four key financial services business areas, which were (i) securities trading and brokerage, (ii) margin financing, (iii) money lending, and (iv) asset management. In light of the tightened measures imposed by the SFC regarding the securities margin financing activities in April 2019, by setting more stringent guidelines, imposing a cap on margin loans, requiring brokers to control their exposure to individual clients and securities collaterals to avoid concentration risks, conducting more frequent stress tests, and strictly enforcing margin calls, we are in the six months' transition period and will be in full compliance with such guidelines before its effective date in October 2019 which allow us to be better structured

to serve our existing and new clients. Meanwhile, the Group will persist with a prudent approach in developing our money lending business to achieve a risk-gain balance. Based on the annual Asset and Wealth Management Activities Survey released by the SFC in July 2019, the assets under management of the asset and wealth management business (including comprises asset management, fund advisory, private banking and private wealth management, SFC-authorised real estate investment trusts and assets held under trusts) in Hong Kong amounted to approximately USD3,059 billion as at 31 December 2018. This shows the underlying strengths of the asset and wealth management industry in a challenging global market environment in 2018. In respect of securities trading business, given an increasing demand for diversification and cross-border wealth management services from high net worth and high grade investors, we could be benefited from the possible relaxation on marketing to the Greater Bay Area on securities brokerages and enabled us to enlarge our client base by capturing mainland clients.

Real property business. The Group will carry on seeking investment opportunities for real property in Hong Kong and other countries, including the United States and European countries, in line with our sustained effort to secure stable income sources for the Group.

Human Resources

As at 30 June 2019, the Group had 67 employees in Hong Kong. Employees are remunerated at a competitive level and are rewarded according to their performance. Our Group's remuneration packages include a medical scheme, group insurance, mandatory provident fund, performance bonus and options for our employees.

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 11

OTHER INFORMATION

Directors and Executive Officers' Interests and Short Positions in Shares and Underlying Shares of the Company

As at 30 June 2019, none of the Directors and executive officers of the Company or their respective associates had any interests and short positions in the shares, underlying shares, convertible notes or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register maintained by the Company pursuant to Section 352 of the SFO or otherwise notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which were taken or deemed to have under such provisions of the SFO) or pursuant to the Model Code for Securities Transactions by directors and chief executives of the Company (the "Model Code") required to be disclosed in accordance with the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules").

Disclosable Interests and Short Positions of Substantial Shareholders other than Directors and Executive Officers

As at 30 June 2019, so far as known to the Directors or executive officers of the Company, the following persons/entities are the shareholders (other than the Directors or executive officers of the Company) who had interests or short positions in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or be directly or indirectly interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances of general meetings of the Company or who were recorded in the register of substantial shareholders maintained by the Company pursuant to Section 336 of the SFO or had otherwise notified the Company.

Long positions in shares and underlying shares of the Company

			Approximate%
			of the issued
		Number of shares/	share capital
Name of shareholders	Capacity	underlying shares	of the Company	Notes
Xie Pengfei	Interest of a controlled corporation	7,676,346,022 (L)	28.38%	2
PX Global Advisors, LLC	Interest of a controlled corporation	7,676,346,022 (L)	28.38%	2
PX Capital Management Ltd.	Interest of a controlled corporation	7,676,346,022 (L)	28.38%	2
PX Capital Partners L.P.	Beneficial owner	7,676,346,022 (L)	28.38%	2

Notes:

1. "L" denotes long position.
2. PX Global Advisors, LLC is wholly-owned by Mr Xie Pengfei. PX Global Advisors, LLC owns 40% equity interests of PX Capital Management Ltd.. PX Capital Partners L.P. is wholly-owned by PX Capital Management Ltd.. Under Part XV of the SFO, Mr Xie Pengfei, PX Global Advisors, LLC and PX Capital Management Ltd. are deemed to have interest in the shares of the Company held by PX Capital Partners L.P..

Save as disclosed above, the Company has not been notified by any person (other than the Directors or executive officers of the Company) who had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or be directly or indirectly interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances of general meetings of the Company or who were recorded in the register of substantial shareholders maintained by the Company pursuant to Section 336 of the SFO or had otherwise notified the Company as at 30 June 2019.

12 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

OTHER INFORMATION

Share Option

Particulars of the share option scheme of the Company are set out in note 16 to the financial statements contained in this interim report.

Share Option Scheme

In order to continue to provide incentives and rewards to the eligible employees and participants, the Company adopted a share option scheme pursuant to a resolution passed by the shareholders of the Company on 18 June 2014 (the "2014 Share Option Scheme") which will remain in force for 10 years from the date becoming effective. The general scheme limit under the 2014 Share Option Scheme has been changed from 2,649,007,613 to 1,352,442,239 pursuant to the approval from the shareholders of the Company on 15 June 2018.

As at 30 June 2019, the total number of shares of the Company issuable pursuant to the 2014 Share Option Scheme on the date of its adoption was 1,352,442,239 shares of the Company, representing 5.0% of the issued share capital of the Company as at the date of this interim report and there was no share option granted, exercised, cancelled or lapsed under the 2014 Share Option Scheme during six months ended 30 June 2019.

Purchase, Sale or Redemption of the Company's Listed Securities

During the six months ended 30 June 2019, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities.

Interim Dividend

The board of directors of the Company (the "Board") does not recommend the proposal and payment of an interim dividend for the six months ended 30 June 2019 (no interim dividend was proposed or paid for 2018).

Compliance with the Corporate Governance Code

The Company has adopted the principles and complied with all the applicable code provisions of the Corporate Governance Code and Corporate Governance Report (the "Corporate Governance Code") as set out in Appendix 14 to the Listing Rules for the six months ended 30 June 2019.

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 13

OTHER INFORMATION

Model Code for Securities Transactions by Directors

The Company has adopted the Model Code set out in Appendix 10 to the Listing Rules as its own code of conduct regarding directors' securities transactions. Enquiry has been made of all Directors, and the Directors have confirmed compliance with the required standard set out in the Model Code during the six months ended 30 June 2019.

Audit Committee

The Audit Committee of the Company ("Audit Committee"), with terms of reference in compliance with the provisions set out in the Corporate Governance Code, comprises three members who were all independent non-executive Directors for the six months ended 30 June 2019. The Audit Committee has reviewed with the management the accounting principles and practices adopted by the Group and discussed the auditing, internal controls and financial reporting matters. The interim report for the six months ended 30 June 2019 has been reviewed by the Audit Committee.

By Order of the Board

Li Zhongye, Cindy

Chairperson

Hong Kong, 28 August 2019

14 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended 30 June 2019

		For the six months ended 30 June
			2018
		2019
	NOTES	USD'000	USD'000
		(Unaudited)	(Unaudited)
Revenue
Interest income	4	9,625	6,106
Dividend and distribution income	4	1,188	5,217
Fee and commission income	4	1,181	291
Rental income	4	1,120	1,159
		13,114	12,773
Other income		7,912	7,686
Administrative expenses		(5,595)	(8,440)
Fair value changes of financial assets at fair value through
profit or loss		16,790	12,186
Gain from disposal of investments in debt instruments
measured at amortised cost		44	1,532
Increase in fair value of investment properties		3,481	6,800
Provision of impairment on non-financial assets	6	(4,327)	-
Reversal of expected credit losses on financial assets, net of
provision		151	7
Other (loss)/gain		(2,347)	1,447
Finance cost		(126)	-
Gain on disposal of associates		313	-
Share of results of associates		(20)	(114)
Profit before taxation		29,390	33,877
Taxation	5	4	(61)
Profit for the period	6	29,394	33,816
Profit/(loss) for the period attributable to:
Owners of the Company		29,461	34,233
Non-controlling interests		(67)	(417)
		29,394	33,816
Earnings per share
- Basic and diluted (US cent)	8	0.11	0.13

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 15

CONDENSED CONSOLIDATED STATEMENT OF

PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 30 June 2019

Profit for the period

Other comprehensive income/(expenses):

Items that will not be reclassified subsequently to profit or loss: Exchange differences arising on translation

Fair value gain/(loss) on financial assets at fair value through other comprehensive income

Items that may be reclassified subsequently to profit or loss: Exchange differences arising on translation

Other comprehensive income/(expenses) for the period Total comprehensive income for the period

Total comprehensive income/(expenses) for the period attributable to: Owners of the Company

Non-controlling interests

For the six months ended 30 June

20192018

USD'000 USD'000

(Unaudited) (Unaudited)

29,39433,816

4,395(4,185)

4,043(2,057)

8,438(6,242)

1. 1,178

1. 1,178

7,511	(5,064)
36,905	28,752
35,671	29,706
1,234	(954)
36,905	28,752

16 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2019

		30 June	31 December
		2019	2018
	NOTES	USD'000	USD'000
		(Unaudited)	(Audited)
NON-CURRENT ASSETS
Property, plant and equipment	9	18,397	18,576
Right-of-use assets		358	-
Investment properties	10	97,897	94,095
Financial assets at fair value through profit or loss	11	176,363	160,612
Investments in debt instruments measured at amortised cost	11	163,874	177,650
Financial assets at fair value through other comprehensive
income		-	15,852
Other receivables and deposits	12	791	789
Interests in associates		-	664
Intangible assets		1,746	1,746
Goodwill		17,972	17,972
		477,398	487,956
CURRENT ASSETS
Accounts and other receivables	12	8,990	27,669
Loans receivable		-	1,185
Investments in debt instruments measured at amortised cost	11	7,185	4,147
Financial assets at fair value through profit or loss	11	61,224	57,189
Tax recoverable		80	-
Bank trust accounts balances	13	37,903	28,342
Bank balances and cash		928,836	887,070
		1,044,218	1,005,602
Non-current asset classified as held for sale		5,673	10,000
		1,049,891	1,015,602
CURRENT LIABILITIES
Other borrowings		-	13,381
Lease liabilities		265	-
Accounts and other payables	14	49,878	44,213
Tax payable		21	490
		50,164	58,084
NET CURRENT ASSETS		999,727	957,518
TOTAL ASSETS LESS CURRENT LIABILITIES		1,477,125	1,445,474
NON-CURRENT LIABILITIES
Deferred tax liabilities		288	288
Lease liabilities		98	-
		386	288
		1,476,739	1,445,186
CAPITAL AND RESERVES
Share capital	15	34,871	34,871
Reserves		1,441,868	1,406,060
Equity attributable to owners of the Company		1,476,739	1,440,931
Non-controlling interests		-	4,255
TOTAL EQUITY		1,476,739	1,445,186

The condensed consolidated financial statements on pages 15 to 38 were approved and authorised for issue by the Board of Directors on 28 August 2019 and are signed on its behalf by:

Leung Oi Kin	Leung Wai Yiu, Malcoln
Director	Director

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 17

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2019

			Attributable to owners of the Company
			Capital			Investment			Non-
	Share	Share	redemption	Contributed	Exchange	revaluation	Retained		controlling
	capital	premium	reserve	surplus	reserve	reserve	earnings	Total	interests	Total
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000
(Unaudited)
At 31 December 2017	34,871	1,023,183	212	11,658	(4,128)	14,027	303,795	1,383,618	6,040	1,389,658
Adjustments	-	-	-	-	-	(14,027)	32,028	18,001	(134)	17,867
At 1 January 2018 (restated)	34,871	1,023,183	212	11,658	(4,128)	-	335,823	1,401,619	5,906	1,407,525
Profit/(loss) for the period	-	-	-	-	-	-	34,233	34,233	(417)	33,816
Fair value loss on financial assets
at fair value through other
comprehensive income	-	-	-	-	-	(1,543)	-	(1,543)	(514)	(2,057)
Exchange difference arising on
translation	-	-	-	-	(2,984)	-	-	(2,984)	(23)	(3,007)
Total comprehensive (expenses)/
income for the period	-	-	-	-	(2,984)	(1,543)	34,233	29,706	(954)	28,752
Dividend paid to non-controlling
interests	-	-	-	-	-	-	-	-	(447)	(447)
At 30 June 2018	34,871	1,023,183	212	11,658	(7,112)	(1,543)	370,056	1,431,325	4,505	1,435,830
(Unaudited)
At 31 December 2018 and
1 January 2019	34,871	1,023,183	212	11,658	(9,092)	(3,932)	384,031	1,440,931	4,255	1,445,186
Profit/(loss) for the period	-	-	-	-	-	-	29,461	29,461	(67)	29,394
Fair value gain on financial assets
at fair value through other
comprehensive income	-	-	-	-	-	3,033	-	3,033	1,010	4,043
Exchange difference arising on
translation	-	-	-	-	3,477	-	-	3,477	(9)	3,468
Release of investment revaluation
reserve upon disposal of
financial assets at fair value
through other comprehensive
income	-	-	-	-	-	899	(1,199)	(300)	300	-
Total comprehensive (expenses)/
income for the period	-	-	-	-	3,477	3,932	28,262	35,671	1,234	36,905
Acquisition of additional interest
in a subsidiary	-	-	-	-	-	-	137	137	(5,489)	(5,352)
At 30 June 2019	34,871	1,023,183	212	11,658	(5,615)	-	412,430	1,476,739	-	1,476,739

18 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2019

	For the six months ended 30 June
		2018
	2019
	USD'000	USD'000
	(Unaudited)	(Unaudited)
OPERATING ACTIVITIES
Cash generated from operations	13,342	4,791
Income taxes paid	(544)	-
Net cash from Operating Activities	12,798	4,791
INVESTING ACTIVITIES
Purchase of property, plant and equipment	(20)	(30)
Purchase of financial assets at fair value through profit or loss	(10,548)	(10,981)
Acquisition of additional interest in a subsidiary	(5,352)	-
Purchase of financial assets at fair value through other comprehensive
income	-	(9,311)
Purchase of investments in debt instruments measured at amortised cost	-	(38,897)
Proceeds from disposal of investments in debt instruments measured
at amortised cost	21,060	41,418
Proceeds from disposal of financial assets at fair value through other
comprehensive income	19,610	-
Proceeds from disposal of financial assets at fair value through profit or loss	-	6,179
Proceeds from return of capital of financial assets at fair value through
profit or loss	3,317	9,151
Proceeds from disposal of associates	956	-
Proceeds from disposal of property, plant and equipment through
disposal of a subsidiary	-	12,121
Interest received	10,666	13,091
Receipt of deferred cash consideration in relation to disposal of mining
business	-	1,703
Net cash from Investing Activities	39,689	24,444
FINANCING ACTIVITIES
Repayment of other borrowings	(13,365)	-
Repayments of leases liabilities	(134)	-
Interest expenses paid	(208)	-
Dividend paid to non-controlling shareholder	-	(447)
Cash used in Financing Activities	(13,707)	(447)
Net increase in cash and cash equivalents	38,780	28,788
Cash and cash equivalents at beginning of the period	887,070	780,142
Effect of foreign exchange rate changes	2,986	(2,157)
Cash and cash equivalents at end of the period, represented by
Bank Balances and Cash	928,836	806,773

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 19

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

1. BASIS OF PREPARATION

The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Hong Kong Stock Exchange").

The condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2018.

2. PRINCIPAL ACCOUNTING POLICIES

The condensed consolidated financial statements have been prepared on the historical cost basis, except for investment properties and certain financial instruments, which are measured at revalued amounts or fair values.

Other than changes in accounting policies resulting from application of new and amendments to Hong Kong Financial Reporting Standards ("HKFRSs"), the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2019 are the same as those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2018.

Application of new and amendments to HKFRSs

In the current interim period, the Group has applied, for the first time, the following new and amendments to HKFRSs issued by the HKICPA which are mandatory effective for the annual period beginning on or after 1 January 2019 for the preparation of the Group's condensed consolidated financial statements:

HKFRS 16	Leases
HK(IFRIC)-Int 23	Uncertainty over Income Tax Treatments
HKFRS 9 (Amendments)	Prepayment Features with Negative Compensation
HKAS 19 (Amendments)	Plan Amendment, Curtailment or Settlement
HKAS 28 (Amendments)	Long-term Interests in Associates and Join Ventures
HKFRSs (Amendments)	Annual Improvements to HKFRSs 2015-2017 Cycle

The new and amendments to HKFRSs have been applied in accordance with the relevant transition provisions in the respective standards and amendments which results in changes in accounting policies, amounts reported and/or disclosures as described below.

2.1 Impacts and changes in accounting policies of application on HKFRS 16 Leases

The Group has applied HKFRS 16 for the first time in the current interim period. HKFRS 16 superseded HKAS 17 Leases ("HKAS 17"), and the related interpretations.

20 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

2. PRINCIPAL ACCOUNTING POLICIES (continued)

Application of new and amendments to HKFRSs (continued)

2.1 Impacts and changes in accounting policies of application on HKFRS 16 Leases (continued)

2.1.1 Key changes in accounting policies resulting from application of HKFRS 16

The Group applied the following accounting policies in accordance with the transition provisions of HKFRS 16.

Definition of a lease

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

For contracts entered into or modified on or after the date of initial application, the Group assesses whether a contract is or contains a lease based on the definition under HKFRS 16 at inception or modification date. Such contract will not be reassessed unless the terms and conditions of the contract are subsequently changed.

As a lessee

Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to leases of land and building that have a lease term of 12 months or less from the commencement date and do not contain a purchase option. It also applies the recognition exemption for lease of low-value assets. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

Right-of-use assets

Except for short-term leases and leases of low value assets, the Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.

The cost of right-of-use asset includes:

• the amount of the initial measurement of the lease liability;
• any lease payments made at or before the commencement date, less any lease incentives received;
• any initial direct costs incurred by the Group; and
• an estimate of costs to be incurred by the Group in dismantling and removing the underlying assets, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

Right-of-use assets in which the Group is reasonably certain to obtain ownership of the underlying leased assets at the end of the lease term is depreciated from commencement date to the end of the useful life. Otherwise, right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.

The Group presents right-of-use assets as a separate line item on the condensed consolidated statement of financial position.

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 21

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

2. PRINCIPAL ACCOUNTING POLICIES (continued)

Application of new and amendments to HKFRSs (continued)

2.1 Impacts and changes in accounting policies of application on HKFRS 16 Leases (continued)

2.1.1 Key changes in accounting policies resulting from application of HKFRS 16 (continued) As a lessee (continued)

Leasehold land and building

For payments of a property interest which includes both leasehold land and building elements, the entire property is presented as property, plant and equipment of the Group when the payments cannot be allocated reliably between the leasehold land and building elements, except for those that are classified and accounted for as investment properties.

Refundable rental deposits

Refundable rental deposits paid are accounted under HKFRS 9 Financial Instruments ("HKFRS 9") and initially measured at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments and included in the cost of right-of-use assets.

Lease liabilities

At the commencement date of a lease, the Group recognizes and measures the lease liability at the present value of lease payments that are unpaid at that date. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable.

The lease payments include:

• fixed payments (including in-substance fixed payments) less any lease incentives receivable; and
• payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate.

After the commencement date, lease liabilities are adjusted by interest accretion and lease payments.

The Group remeasures lease liabilities (and makes a corresponding adjustment to the related right-of-use assets) whenever the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the related lease liability is remeasured by discounting the revised lease payments using a revised discount rate at the date of reassessment.

Taxation

For the purposes of measuring deferred tax for leasing transactions in which the Group recognises the right-of-use assets and the related lease liabilities, the Group first determines whether the tax deductions are attributable to the right-of-use assets or the lease liabilities.

22 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

2. PRINCIPAL ACCOUNTING POLICIES (continued)

Application of new and amendments to HKFRSs (continued)

2.1 Impacts and changes in accounting policies of application on HKFRS 16 Leases (continued)

1. Key changes in accounting policies resulting from application of HKFRS 16 (continued)
   As a lessor
   Allocation of consideration to components of a contract
   Effective on 1 January 2019, the Group applies HKFRS 15 Revenue from Contracts with Customers ("HKFRS 15") to allocate consideration in a contract to lease and non-lease components. Non-lease components are separated from lease component on the basis of their relative stand-alone selling prices.
   Refundable rental deposits
   Refundable rental deposits received are accounted under HKFRS 9 and initially measured at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments from lessees.
   Sublease
   When the Group is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The sub-lease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset.
   Lease modification
   The Group accounts for a modification to an operating lease as a new lease from the effective date of the modification, considering any prepaid or accrued lease payments relating to the original lease as part of the lease payments for the new lease.
2. Transition and summary of effects arising from initial application of HKFRS 16
   Definition of a lease
   The Group has elected the practical expedient to apply HKFRS 16 to contracts that were previously identified as leases applying HKAS 17 and HK(IFRIC)-Int4 Determining whether an Arrangement contains a Lease and not apply this standards to contracts that were not previously identified as containing a lease. Therefore, the Group has not reassessed contracts which already existed prior to the date of initial application.
   For contracts entered into or modified on or after 1 January 2019, the Group applies the definition of a lease in accordance with the requirements set out in HKFRS 16 in assessing whether a contract contains a lease.
   As a lessee
   The Group has applied HKFRS 16 retrospectively with the cumulative effect recognised at the date of initial application, 1 January 2019. Any difference at the date of initial application is recognised in the opening retained profits and comparative information has not been restated.

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 23

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

2. PRINCIPAL ACCOUNTING POLICIES (continued)

Application of new and amendments to HKFRSs (continued)

2.1 Impacts and changes in accounting policies of application on HKFRS 16 Leases (continued)

2.1.2 Transition and summary of effects arising from initial application of HKFRS 16 (continued) As a lessee (continued)

When applying the modified retrospective approach under HKFRS 16 at transition, the Group applied the following practical expedients to leases previously classified as operating leases under HKAS 17, on lease-by-lease basis, to the extent relevant to the respective lease contracts:

1. elected not to recognise right-of-use assets and lease liabilities for leases with lease term ends within 12 months of the date of initial application;
2. excluded initial direct costs from measuring the right-of-use assets at the date of initial application;
3. applied a single discount rate to a portfolio of leases with a similar remaining terms for similar class of underlying assets in similar economic environment; and
4. used hindsight based on facts and circumstances as at date of initial application in determining the lease term for the Group's leases with extension and termination options.

On transition, the Group has made the following adjustments upon application of HKFRS 16:

As at 1 January 2019, the Group recognised additional lease liabilities and right-of-use assets at amounts equal to the related lease liabilities adjusted by any prepaid or accrued lease payments by applying HKFRS 16.C8(b)(ii) transition.

The Group recognised lease liabilities of USD496,000 and right-of-use assets of USD496,000 at 1 January 2019.

When recognising the lease liabilities for leases previously classified as operating leases, the Group has applied incremental borrowing rates of the relevant group entities at the date of initial application. The weighted average incremental borrowing rate applied is 5.125%.

	At 1 January
	2019
	USD'000
Operating lease commitments disclosed as at 31 December 2018	907
Add: Early termination options reasonably certain not to be exercised	170
Less: Recognition exemption - short-term leases	(558)
	519
Lease liabilities relating to operating leases recognised upon application
of HKFRS 16 as at 1 January 2019	496
Analysed as
Current	271
Non-current	225
	496

The carrying amount of right-to-use assets as at 1 January 2019 related to operating leases recognised upon application of HKFRS 16 was under land and building of USD496,000.

24 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

2. PRINCIPAL ACCOUNTING POLICIES (continued)

Application of new and amendments to HKFRSs (continued)

2.1 Impacts and changes in accounting policies of application on HKFRS 16 Leases (continued)

2.1.2 Transition and summary of effects arising from initial application of HKFRS 16 (continued)

As a lessor

In accordance with the transitional provisions in HKFRS 16, the Group is not required to make any adjustment on transition for leases in which the Group is a lessor but account for these leases in accordance with HKFRS 16 from the date of initial application and comparative information has not been restated.

1. Upon application of HKFRS 16, new lease contracts entered into but commence after the date of initial application relating to the same underlying assets under existing lease contracts are accounted as if the existing leases are modified as at 1 January 2019. The application has had no impact on the Group's condensed consolidated statement of financial position at 1 January 2019. However, effective 1 January 2019, lease payments relating to the revised lease term after modification are recognised as income on straight-line basis over the extended lease term.

The following adjustments were made to the amounts recognised in the condensed consolidated statement of financial position at 1 January 2019. Line items that were not affected by the changes have not been included.

	Carrying
	amounts		Carrying
	previously		amounts under
	reported at		HKFRS 16 at
	31 December		1 January
	2018	Adjustments	2019
	USD'000	USD'000	USD'000
NON-CURRENT ASSETS
Right-of-use assets	-	496	496
CURRENT LIABILITIES
Lease liabilities	-	271	271
NON-CURRENT LIABILITIES
Lease liabilities	-	225	225

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 25

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

3. SEGMENT INFORMATION

Information reported to the executive directors of the Company, being the chief operating decision makers, for the purpose of resource allocation and assessment of segment performance focuses on the nature of their operations and types of products and services provided. Each of the Group's business segments represents a strategic business unit that offers products and services which are subject to risks and returns that are different from those of the other business segments.

The Group has three operating business units which represent three operating segments, namely, principal investment business, financial services business and real property business for both periods.

1. Segment revenue and results

An analysis of the Group's revenue and results by operating segment is as follows:

For the six months ended 30 June 2019 (Unaudited)

	Principal	Financial	Real
	investment	services	property
	business	business	business	Total
	USD'000	USD'000	USD'000	USD'000
Interest income	9,409	216	-	9,625
Dividend and distribution income	1,188	-	-	1,188
Fee and commission income	-	1,181	-	1,181
Rental income	-	-	1,120	1,120
Segment revenue	10,597	1,397	1,120	13,114
Segment results	33,398	(1,082)	1,138	33,454
Unallocated corporate expenses				(3,218)
Increase in fair value of investment
properties				3,481
Provision of impairment on non-financial
assets				(4,327)
Profit before taxation				29,390

For the six months ended 30 June 2018 (Unaudited)

	Principal	Financial	Real
	investment	services	property
	business	business	business	Total
	USD'000	USD'000	USD'000	USD'000
Interest income	4,689	1,417	-	6,106
Dividend and distribution income	5,217	-	-	5,217
Fee and commission income	-	291	-	291
Rental income	-	-	1,159	1,159
Segment revenue	9,906	1,708	1,159	12,773
Segment results	32,535	(883)	1,139	32,791
Unallocated corporate income				51
Unallocated corporate expenses				(5,765)
Increase in fair value of investment
properties				6,800
Profit before taxation				33,877

26 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

3. SEGMENT INFORMATION (continued)

1. Segment assets and liabilities

An analysis of the Group's assets and liabilities by operating segment is as follows:

At 30 June 2019 (Unaudited)
	Principal	Financial	Real
	investment	services	property
	business	business	business	Total
	USD'000	USD'000	USD'000	USD'000
ASSETS
Segment assets	1,315,858	88,878	98,015	1,502,751
Unallocated corporate assets				24,538
Total assets				1,527,289
LIABILITIES
Segment liabilities	107	39,570	806	40,483
Liabilities relating to discontinued operation				9,839
Unallocated corporate liabilities				228
Total liabilities				50,550
At 31 December 2018 (Audited)
	Principal	Financial	Real
	investment	services	property
	business	business	business	Total
	USD'000	USD'000	USD'000	USD'000
ASSETS
Segment assets	1,279,917	100,502	94,310	1,474,729
Unallocated corporate assets				28,829
Total assets				1,503,558
LIABILITIES
Segment liabilities	121	46,552	805	47,478
Liabilities relating to discontinued operation				9,839
Unallocated corporate liabilities				1,055
Total liabilities				58,372

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 27

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

4. REVENUE

The following is an analysis of the Group's revenue from its major products and services:

	For the six months ended 30 June
		2018
	2019
	USD'000	USD'000
	(Unaudited)	(Unaudited)
Interest income from financial products	4,632	4,689
Interest income from money lending business	7	949
Interest income from margin financing	209	468
Interest income from financial institutions' term deposits	4,777	-
Interest income	9,625	6,106
Dividend and distribution income from financial products	1,188	5,217
Commission income and handling charges from financial services	970	291
Asset management fee income	211	-
Fee and commission income	1,181	291
Rental income	1,120	1,159
	13,114	12,773

5. TAXATION

Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profits for both periods.

For the six months ended 30 June

Hong Kong Profits Tax Current tax Over-provision in prior year

Taxation for the period

2019	2018
USD'000	USD'000
(Unaudited)	(Unaudited)
-	61
(4)	-
(4)	61

28 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019
6.	PROFIT FOR THE PERIOD
		For the six months ended 30 June
			2018
		2019
		USD'000	USD'000
		(Unaudited)	(Unaudited)
	Profit for the period has been arrived at after charging/(crediting):
	Depreciation of property, plant and equipment	257	1,148
	Depreciation of right-of-use assets	138	-
	Provision of impairment on non-financial assets:
	- Asset held for sale	4,327	-
	Exchange loss/(gain), net, included in other loss/gain	2,347	(1,447)
	Interest income	(17,498)	(13,703)

7. DIVIDEND

No dividend were paid or proposed during the six months ended 30 June 2018 and 2019 nor has any dividend been proposed since the end of the reporting period.

8. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share attributable to owners of the Company is based on the following data:

	For the six months ended 30 June
		2018
	2019
	USD'000	USD'000
	(Unaudited)	(Unaudited)
Profit for the period attributable to owners of the Company, for the
purposes of basic and diluted earnings per share	29,461	34,233
	Number of shares
	2019	2018
Weighted average number of ordinary shares for the purposes of
basic and diluted earnings per share	27,048,844,786	27,048,844,786

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 29

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

9. MOVEMENT IN PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 June 2019, the Group acquired furniture, fixture and equipment at a total cost of USD19,000. During the six months ended 30 June 2018, the Group acquired furniture, fixture and equipment at a total cost of USD29,000 and the disposed aircraft at a net carrying value amounted to USD12,121,000 through disposal of a subsidiary.

10. INVESTMENT PROPERTIES

At fair value

At 1 January 2018

Fair value change during the year Exchange realignments

At 31 December 2018 and 1 January 2019 Fair value change during the period Exchange realignments

At 30 June 2019

USD'000

83,384

10,896

(185)

94,095

3,481

321

97,897

The investment properties comprise commercial office units and car park spaces situated in a commercial building in Hong Kong. All of the Group's property interests held under operating leases to earn rentals or for capital appreciation purposes are measured using the fair value model and are classified and accounted for as investment properties.

The fair value of the Group's investment properties at 30 June 2019 and 31 December 2018 has been arrived at on the basis of a valuation carried out by Valtech Valuation Advisory Limited, independent qualified professional valuers not connected to the Group.

Valtech Valuation Advisory Limited has appropriate qualifications and recent experience in the valuation of properties in the relevant locations. The fair value was determined based on direct comparison method that reflects recent transaction prices for similar properties, adjusted for differences in nature, location and condition of the properties under review.

30 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

11. INVESTMENTS IN DEBT INSTRUMENTS MEASURED AT AMORTISED COST/FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Investments in debt instruments measured at amortised cost Debt securities listed outside Hong Kong

Fixed Rate Senior Notes (Notes a, b, c)

Floating Rate Perpetual Notes (Notes a, d)

Floating Rate Senior Notes (Notes a, e)

Less: Expected credit losses

Less: Investments in debt instruments measured at amortised cost classified as current assets

Investments in debt instruments measured at amortised cost classified as non-current assets

Financial assets at fair value through profit or loss classified as non-current assets

Unlisted securities

Managed investment funds

Unlisted security investments (Note f)

Financial assets at fair value through profit or loss classified as current assets

Hong Kong listed equity securities (Note g)

Notes:

30 June	31 December
2019	2018
USD'000	USD'000
(Unaudited)	(Audited)

78,89090,218

57,03356,478

35,36935,434

1. (333)
   171,059181,797

(7,185)(4,147)

163,874177,650

-889

176,363159,723

176,363160,612

61,22457,189

1. The listed Senior Notes, Perpetual Notes and Perpetual Securities were measured at amortised cost since the Group's business model is to hold these investments for collection of contractual cash flows, and the cash flows represent solely payments of principal and interest on the principal amount outstanding. The Group's investments in debt instruments measured at amortised cost mainly comprise instruments that have a low risk of default and the counterparties have a strong capacity to repay (e.g. financial instruments that are of investment grade or issuer with good credit history and capacity to repay, etc).
2. During the six months ended 30 June 2019, one of the Fixed Rate Senior Notes was redeemed and one of the Fixed Rate Senior Notes matured. The gain on disposal including redemption of investments in debt instruments measured at amortised cost was USD44,000. During the six months ended 30 June 2018, one of the Perpetual Securities was sold and one of the Fixed Rate Senior Notes was redeemed. The gain on disposal including redemption of investments in debt instruments measured at amortised cost was USD1,532,000.
3. Senior Notes held by the Group bear a fixed coupon interest of ranging from 2.375% to 7.5% (31 December 2018: from
   2.375% to 8.5%) per annum and with maturity dates from 19 October 2019 to 13 November 2024 (31 December 2018: from 4 June 2019 to 13 November 2024).
4. Perpetual Notes held by the Group bear a floating rate of ranging from 4.5% to 7.625% (31 December 2018: from
   4.5% to 7.625%) per annum and it is callable from 23 September 2019 to 16 May 2025 (31 December 2018: from
   23 September 2019 to 16 May 2025). The interest rate is subject to change at reset day with reset rate ranging from 2.648% to 7.773% (31 December 2018: from 2.648% to 7.773%) plus mid-market swap rate or USD 5 years mid-swap rate or the prevailing yield for U.S. Treasury Securities having a designated maturity of 5 years or 3 months USD LIBOR or semi-annual USD 5 years mid-swap rate.

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 31

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

11. INVESTMENTS IN DEBT INSTRUMENTS MEASURED AT AMORTISED COST/FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (continued)

Notes: (continued)

1. Senior Notes held by the Group bear a floating rate of ranging from 3.887% to 5% (31 December 2018: from 3.887% to
   5%) per annum and with maturity dates from 10 August 2021 to 9 November 2047 (31 December 2018: from 10 August 2021 to 9 November 2047). The interest rate is subject to change at reset day with reset rate ranging from 1.400%
   to 3.472% (31 December 2018: from 1.400% to 3.472%) plus 3 months USD LIBOR or the prevailing yield for U.S. Treasury Securities having a designated maturity of 5 years or USD 5 years mid-swap rate.
2. As at 30 June 2019, the unlisted security investments classified as financial assets at fair value through profit or loss ("financial assets at FVTPL") include unlisted investment funds and an unlisted equity investment with carrying value of USD138,255,000 and USD38,108,000 (31 December 2018: USD129,723,000 and USD30,000,000), respectively. In accounting for the fair value measurement of the investment in unlisted investment funds, management has determined that the reported net asset value of the unlisted investment funds provided by the general partners represent the fair value of the unlisted investment funds. The general partners used methodology based on relevant comparable data whether possible to quantify the adjustment from cost or latest financing price when adjustment if necessary, or to justify that cost or latest financing price is still a proper approximation of fair value of the underlying investments held by the investment funds in determining the net asset value. The factors to be considered in assessment may require the judgement. The underlying investments held by the investment funds were valued using transaction prices or latest finance price without adjustment.
   In estimating the fair value of the unlisted equity investment, the Group engages an independent valuer to perform the valuation that is reviewed by management. The independent valuer utilised the market approach and the valuation method used is the Enterprise Value Multiples Methodology, adjusted for consideration of discount for lack of marketability.
   As at 30 June 2019, one (31 December 2018: one) out of these four (31 December 2018: four) unlisted security
   investments accounted for 74% (31 December 2018: 78%) of the aggregate carrying value, with the investment portfolio is focused in unlisted equity investments in technology, media and telecommunications industry.
   During the six months ended 30 June 2019, an increase in fair value of USD8,520,000(six months ended 30 June 2018: USD9,553,000) was recognised in the profit or loss. The Group received returns of capital of USD2,428,000 (six months ended 30 June 2018: USD9,151,000) and plus distribution of USD74,000 (six months ended 30 June 2018: USD3,859,000) from one (six months ended 30 June 2018: two) of its unlisted securities investments.
3. The fair value is determined based on the closing price per share quoted on the Hong Kong Stock Exchange and quoted market bid price as at the end of the respective reporting periods apart from the shares which were suspended from trading as described below.
   As at 30 June 2019, one of the financial assets at FVTPL of USD7,161,000 (31 December 2018: USD7,138,000) was shares which were suspended from trading. As there was an absence of quoted prices for the shares which were suspended from trading, the fair value was determined by valuation conducted by an independent valuer. The fair value was estimated based on the last market bid price before suspension and adopted a discount for lack of marketability.

32 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

12. ACCOUNTS AND OTHER RECEIVABLES AND DEPOSITS

Accounts receivables from the business of dealing in securities: Clients (Note b)

Clearing house and brokers

Accounts receivables from the business of dealing in futures contracts: Clearing house and brokers

Accounts receivables (Note a) Other receivables and deposits Less: Impairment allowance (Note c)

Less: Other receivables and deposits classified as non-current assets Accounts and other receivables classified as current assets

30 June	31 December
2019	2018
USD'000	USD'000
(Unaudited)	(Audited)
3,848	11,229
239	3,232
559	705
4,646	15,166
5,138	13,294
(3)	(2)
9,781	28,458

1. (789)
   8,99027,669

Notes:

1. As at 30 June 2019 and 31 December 2018, accounts receivables from clearing house and certain clients from the business of dealing in securities is repayable on the settlement date, which is two business days after trade date, except for the remaining accounts receivables from the business of dealing in securities and futures contracts are repayable on demand. No ageing analysis is disclosed as, in the opinion of the directors of the Company, an ageing analysis does not give additional value in view of the nature of these businesses.
2. Majority of the accounts receivables form clients are secured by clients' securities as collaterals with fair value of USD34,782,000 (31 December 2018: USD55,310,000). Significant portion of the collaterals are listed equity securities in Hong Kong. These receivables are mainly repayable on demand subsequent to settlement date and carry interest typically at 1.875% to 12.25% (31 December 2018: 1.875% to 12.25%) per annum as at 30 June 2019. The collateral held can be sold at the Group's discretion to settle any outstanding amount owed by customers. No ageing analysis is disclosed as, in the opinion of the directors of the Company, an ageing analysis does not give additional value in view of the nature of the business.
3. Impairment assessment on accounts and other receivables with ECL model
   As part of the Group's credit risk management, the Group applied internal credit rating for its customers and considers the fair value of its collateral. The Group assessed the ECL for accounts receivables from clients individually as at 31 December 2018 and 30 June 2019.
   The Group held collateral of listed equity securities with a fair value of USD34,872,000 (31 December 2018: USD55,310,000) at the end of the reporting period in respect of accounts receivables from clients. No impairment allowance has been made for accounts receivables from clients with an aggregate outstanding balance of USD3,802,000 (31 December 2018: USD11,197,000) based on the Group's impairment assessment with ECL model.

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 33

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

13. BANK TRUST ACCOUNTS BALANCES

The Group maintains segregated trust accounts with licensed financial institutions to hold clients' monies arising from the business of dealing in securities and futures contracts. The Group has classified the clients' monies as cash held on behalf of customers under the current assets of the condensed consolidated statement of financial position and recognised the corresponding accounts payables to respective clients on grounds that it is liable for any loss or misappropriation of clients' monies. The Group is not allowed to use the clients' monies to settle its own obligations.

14. ACCOUNTS AND OTHER PAYABLES

	30 June	31 December
	2019	2018
	USD'000	USD'000
	(Unaudited)	(Audited)
Accounts payables from the business of dealing in securities:
Clients	37,170	30,563
Clearing house and brokers	77	-
Accounts payables from the business of dealing in futures contracts:
Clients	1,192	1,371
Accounts payables (Note a)	38,439	31,934
Other payables (Note b)	11,439	12,279
	49,878	44,213

Notes:

1. Accounts payables to clients mainly include money held in banks, brokers and clearing house on behalf of customers from the business of dealing in securities and futures contracts. The majority of the accounts payables from the business of dealing in securities and futures contracts are repayable on demand except for certain accounts payables from the business of dealing in securities are repayable on settlement date, which is two business days after trade date. No ageing analysis is disclosed for the accounts payables from the business of dealing in securities and futures contracts as, in the opinion of directors of the Company, an ageing analysis does not give additional value in view of the nature of these businesses.
2. As at 30 June 2019, included in other payables are USD9,839,000 (31 December 2018: USD9,839,000) relating to the liabilities arising from the disposal of mining business.

15. SHARE CAPITAL

	Number of shares	Value
		USD'000
Authorised:
Ordinary shares of HKD0.01 each
At 1 January 2018 (Audited), 31 December 2018 (Audited),
1 January 2019 (Audited) and 30 June 2019 (Unaudited)	60,000,000,000	76,923
Issued and fully paid:
Ordinary shares of HKD0.01 each
At 1 January 2018 (Audited), 31 December 2018 (Audited),
1 January 2019 (Audited) and 30 June 2019 (Unaudited)	27,048,844,786	34,871

34 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

16. SHARE-BASED PAYMENT TRANSACTIONS

The Company's share option scheme was adopted pursuant to a resolution passed on 30 July 2004 (the "2004 Scheme") which was expired on 29 July 2014. The Company adopted a new share option scheme pursuant to a resolution passed by shareholders on 18 June 2014 (the "2014 Scheme") for the purpose of providing incentives or rewards to directors, employees, customers, suppliers, providers of research, development or technical support, shareholders and holders of securities of the Group and its invested entities, in which the Group holds not less than 10% equity interest ("Eligible Participants"). Under the 2014 Scheme, the Board of Directors of the Company may grant options to Eligible Participants to subscribe for shares in the Company.

Share-based payment was recognised over the vesting period based on the management's estimation of the timing when the vesting conditions are met. No share option was granted under the 2004 Scheme and 2014 Scheme during the six months ended 30 June 2019 and 30 June 2018.

17. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS

The fair value of financial assets are measured at fair value on a recurring basis:

• the fair value of Hong Kong listed equity securities with standard terms and conditions and traded in active liquid markets are determined with reference to quoted market bid prices; except for the shares which were suspended from trading, the fair value was estimated based on the last market bid price before suspension and adopted a discount of lack of marketability; and
• the fair value of unlisted managed investment funds and unlisted security investments is based on fair value of quoted prices in the open market or observable prices or using valuation techniques, more details are stated in note 11.

The fair value of financial assets and financial liabilities are not measured at fair value on a recurring basis:

• the fair value of other financial assets and financial liabilities (excluding financial assets at FVTPL, financial assets at fair value through other comprehensive income ("financial assets at FVTOCI")) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis.

The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the condensed consolidated financial statements approximate their fair values.

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 35

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

17. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (continued)

Fair value measurements recognised in the condensed consolidated statement of financial position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the input to the fair value measurements are observable and the significance of the inputs to the fair value measurement:

At 30 June 2019 (Unaudited)

Financial assets

Unlisted security investments (classified as financial assets at FVTPL) (Note a)

Hong Kong listed equity securities (classified as financial assets at FVTPL) (Note b)

Sub-total

At 31 December 2018 (Audited) Financial assets

Unlisted managed investment funds (classified as financial assets at FVTPL) (Note a)

Unlisted security investments (classified as financial assets at FVTPL) (Note a)

Hong Kong listed equity securities (classified as financial assets at FVTOCI) (Note b)

Hong Kong listed equity securities (classified as financial assets at FVTPL) (Note b)

Sub-total

Notes:

Level 1	Level 2	Level 3	Total
USD'000	USD'000	USD'000	USD'000

-	-	176,363	176,363
54,063	-	7,161	61,224
54,063	-	183,524	237,587

-	889	-	889
-	-	159,723	159,723
15,852	-	-	15,852
50,051	-	7,138	57,189
65,903	889	166,861	233,653

1. The fair value of the unlisted managed investment fund classified as financial assets at FVTPL was determined based on the market transaction prices of the similar properties of the relevant location of the real estate property held by the investment fund. The higher the market price of the properties, the higher the fair value of the unlisted managed investment fund.
   The fair value of unlisted security investments classified as financial assets at FVTPL include unlisted investment funds and an unlisted equity investment. In accounting for the fair value measurement of the investment in unlisted investment funds, management has determined that the reported net asset value of unlisted investment funds provided by the general partners represent the fair value of the unlisted investment funds. The general partners used methodology based on relevant comparable data whether possible to quantify the adjustment from cost or latest financing price when adjustment if necessary, or to justify that cost or latest financing price is still a proper approximately of fair value of the underlying investments held by the investment funds in determining the net asset value. The factors to be considered in assessment may require the judgement. The underlying investments held by the investment funds were valued using transaction prices or latest finance price without adjustment. The higher the latest financing price, the higher the fair value of the unlisted investment funds. The fair value of the unlisted equity investment was determined using the Enterprise Value Multiples Methodology, adjusted for consideration of discount of lack of marketability. The lower the discount rate, the higher the fair value of the unlisted equity investment.

36 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

17. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (continued)

Fair value measurements recognised in the condensed consolidated statement of financial position (continued)

Notes: (continued)

1. The fair value of Hong Kong listed equity securities included in financial assets at FVTOCI and financial assets at FVTPL with standard terms and conditions and traded in active liquid markets are determined with reference to quoted market bid prices; except for the shares which were suspended from trading, the fair value was estimated based on the last market bid price before suspension and adopted a discount for lack of marketability, key inputs are detailed in note 11. The lower the discount for lack of marketability, the higher the fair value.
2. There is no transfer among Level 1, 2 and 3 during both periods.

Reconciliation of Level 3 fair value measurements of financial assets

	USD'000
At 31 December 2017 (Audited)	12,610
Remeasurement from cost less impairment to fair value	92,001
At 1 January 2018 (restated)	104,611
Purchases	40,252
Return on capital	(7,973)
Gain/(loss) recognised in
- profit or loss	30,003
- OCI (Note)	(32)
At 31 December 2018 (Audited)	166,861
Purchases	10,548
Return on capital	(2,428)
Gain/(loss) recognised in
- profit or loss	8,520
- OCI (Note)	23
At 30 June 2019 (Unaudited)	183,524

Note: The gain or loss included in OCI for the year related to the Hong Kong listed equity securities which were suspended from trading held at the end of the reporting period and are reported as changes of "exchange reserve".

18. OPERATING LEASES

The Group as lessor

During the six months ended 30 June 2019, the Group had property rental income of approximately USD1,120,000 (the six months ended 30 June 2018: USD1,159,000).

At the end of the reporting period, the Group had contracted with tenants for the following future minimum lease payments:

	At 30 June	At 31 December
	2019	2018
	USD'000	USD'000
	(Unaudited)	(Audited)
Within one year	2,034	2,108
In the second to fifth year inclusive	2,046	3,181
	4,080	5,289

G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT 37

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

19. OTHER COMMITMENTS

At the end of the reporting period, the Group had the following other commitments:

	At 30 June	At 31 December
	2019	2018
	USD'000	USD'000
	(Unaudited)	(Audited)
Other commitments contracted for but not provided for in the
condensed consolidated financial statements in respect of
capital contribution in unlisted security investments which are
recognised as financial assets at FVTPL	112,694	120,814

20. RELATED PARTY DISCLOSURES

Key management personnel compensation

	For the six months ended 30 June
		2018
	2019
	USD'000	USD'000
	(Unaudited)	(Unaudited)
Short-term benefits	230	644
Post-employment benefits	2	4
	232	648

38 G-RESOURCESGROUP LIMITED2019 INTERIM FINANCIAL REPORT