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Oshidori International Holdings Limited

1

Interim Report 2020

CONTENTS

Page(s)

Corporate Information

2

Financial Highlights

3

Management Discussion and Analysis

4-18

Other Information

19-25

Report on Review of Interim Financial Information

26

Condensed Consolidated Statement of Profit or Loss and

Other Comprehensive Income

27

Condensed Consolidated Statement of Financial Position

28

Condensed Consolidated Statement of Changes in Equity

29-30

Condensed Consolidated Statement of Cash Flows

31

Notes to the Condensed Consolidated Financial Statements

32-54

2 Oshidori International Holdings Limited Interim Report 2020

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Ms. WONG Wan Men Margaret

Mr. WONG Yat Fai

Non-executive Directors

Mr. Alejandro YEMENIDJIAN

  • (Appointed as Non-executive Director and
  • Non-executiveChairman on 9 June 2020) Hon. Joseph Edward SCHMITZ
  • (Appointed on 17 January 2020)

Mr. SAM Nickolas David Hing Cheong

  • (Re-designatedfrom Executive Director and
  • Chairman to Non-executive Director
  • on 5 June 2020)

Independent Non-executive Directors

Mr. CHEUNG Wing Ping

Mr. HUNG Cho Sing

Mr. CHAN Hak Kan

AUTHORISED REPRESENTATIVES

Ms. WONG Wan Man Margaret Mr. WONG Yat Fai

  (Appointed on 8 July 2020)

Mr. SAM Nickolas David Hing Cheong

  • (Ceased to be Authorised Representative
  • on 8 July 2020)

AUDIT COMMITTEE

Mr. CHEUNG Wing Ping (Chairman)

Mr. HUNG Cho Sing

Mr. CHAN Hak Kan

NOMINATION COMMITTEE

Mr. CHEUNG Wing Ping (Chairman) Mr. HUNG Cho Sing

Mr. CHAN Hak Kan

Ms. WONG Wan Man Margaret   (Appointed on 5 June 2020)

Mr. SAM Nickolas David Hing Cheong

  • (Ceased to be member of the nomination
  • committee on 5 June 2020)

REMUNERATION COMMITTEE

Mr. CHEUNG Wing Ping (Chairman) Mr. HUNG Cho Sing

Mr. CHAN Hak Kan

Ms. WONG Wan Man Margaret   (Appointed on 5 June 2020)

Mr. SAM Nickolas David Hing Cheong

  • (Ceased to be member of the remuneration
  • committee on 5 June 2020)

COMPANY SECRETARY

Ms. LIU Tsui Fong

LEGAL ADVISORS

REGISTERED OFFICE

Clarendon House

2 Church Street

Hamilton HM 11

Bermuda

PRINCIPAL PLACE OF BUSINESS

25th Floor, China United Centre

28 Marble Road, North Point

Hong Kong

Telephone

:

(852) 3198 0622

Facsimile

:

(852) 2704 2181

Stock Code :

622

Website

:

www.oshidoriinternational.com

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

MUFG Fund Services (Bermuda) Limited 4th floor, North Cedar House

41 Cedar Avenue

Hamilton HM 12 Bermuda

HONG KONG BRANCH SHARE REGISTRAR

Computershare Hong Kong Investor Services Limited

46th Floor, Hopewell Centre

183 Queen's Road East

Wanchai

Hong Kong

HONG KONG BRANCH SHARE TRANSFER OFFICE

Computershare Hong Kong Investor Services Limited

Shops 1712-1716, 17th Floor

Hopewell Centre

183 Queen's Road East

Wanchai

Hong Kong

AUDITOR

Mazars CPA Limited

Certified Public Accountants

42nd Floor, Central Plaza

18 Harbour Road

Wanchai

Hong Kong

PRINCIPAL BANKERS

Bank of China

Bank of China (Hong Kong) Limited

Hang Seng Bank Limited

The Hongkong and Shanghai Banking

Corporation Limited

(As to Bermuda law) Conyers Dill & Pearman

Oshidori International Holdings Limited

3

Interim Report 2020

FINANCIAL HIGHLIGHTS

Financial highlights of Oshidori International Holdings Limited (the "Company") and its subsidiaries (collectively the "Group") for the six months ended 30 June 2020

  • Revenue is a positive amount of approximately HK$68.4 million.
  • Loss attributable to owners of the Company amounted to approximately HK$3.7 million.
  • Basic loss per share is approximately HK0.06 cents.

4 Oshidori International Holdings Limited Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

The Group principally engages in investment holdings, tactical and/or strategical investment, and the provisions of financial services including the Securities and Futures Commission (the "SFC") regulated activities namely Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 6 (advising on corporate finance), Type 9 (asset management); and provision of credit and lending services regulated under the Money Lenders Ordinance. The Group is currently pursuing the development of an integrated resort ("IR") in Nagasaki, Japan and is actively preparing for a unique proposal to win the bid.

BUSINESS REVIEW

With the world brought down to its knees by the COVID-19 pandemic and many countries imposing lockdown or movement control restrictions, the global economy is facing and will continue to experience slowdown until the pandemic is under control. Despite the COVID-19 stimulus packages introduced by governments around the world including Hong Kong, consumer demand remains weak while businesses globally struggle to stay afloat. According to the Gross Domestic Product Second Quarter 2020 report published by Census and Statistics Department of Hong Kong, the Gross Domestic Product (GDP) decreased by 9.0% in real terms from a year earlier, compared with the decrease of 9.1% in the first quarter. Private consumption expenditure decreased by 14.2% in real terms in the second quarter of 2020 from a year earlier, deteriorating from the 10.6% decline in the first quarter. With this backdrop, the Group's financial services business was extremely challenging in the first half of 2020.

For the six months ended 30 June 2020, the Group's revenue amounted to HK$68.4 million, as compared with the amount of HK$205.6 million for the same period last year. The global pandemic has severely affected the Hong Kong economy and financial markets in the first half of 2020, leading to a drop of 71.6% and 54.4% respectively in the Group's revenue generated from securities brokerage and margin financing businesses, as compared to the corresponding period last year.

Loss for the six months ended 30 June 2020 amounted to HK$3.7 million compared to the loss of HK$198.7 million for the corresponding period last year. Basic loss per share for the six months ended 30 June 2020 was HK0.06 cents, as compared with loss per share of HK3.42 cents for the corresponding period last year.

The turnaround was mainly due to net realised and unrealised gains on financial assets at fair value through profit or loss ("FVPL") of HK$203.7 million (six months ended 30 June 2019: net realised and unrealised losses of HK$139.5 million) and the 75.1% growth in the credit and lending business, as compared to the corresponding period last year.

Oshidori International Holdings Limited

5

Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

  1. Financial Services (SFC Type 1, 2, 4, 6 and 9 regulated activities)

The Group through its wholly-owned subsidiary, namely Win Wind Securities Limited ("WWSL"), principally engages in financial services. WWSL is licensed by the SFC to conduct regulated activities including Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities) and Type 9 (asset management). In order to trade in securities through the trading facilities of The Stock Exchange of Hong Kong Limited (the "Stock Exchange"), WWSL, among other things, holds a Stock Exchange Trading Right and is an Exchange Participant of the Stock Exchange. Being a Stock Exchange Participant, WWSL is a licensed corporation under the Securities and Futures Ordinance (the "SFO") for Type 1 (dealing in securities) regulated activity and complies with the financial resources requirements as specified by the Financial Resources Rules and the Stock Exchange. WWSL is also a China Connect Exchange Participant, offering our clients a platform to trade eligible stocks listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange. WWSL intends to widen its business scope by offering futures contracts brokerage services. In order to trade in futures contracts through the trading facilities of Hong Kong Futures Exchange Limited, WWSL is a licensed corporation under the SFO for Type 2 (dealing in futures contracts) regulated activity and has submitted its application for obtaining a Futures Exchange Trading Right and becoming an Exchange Participant of Hong Kong Futures Exchange Limited.

The Group through its wholly-owned subsidiary, namely Enerchine Corporate Finance Limited ("ECFL"), carries out Type 6 (advising on corporate finance) regulated activities under the SFO since 2005.

The Group also set up a new company called Win Wind Finance Limited in order to strengthen its revenue stream by obtaining the SFC license of Type 8 (securities margin financing), so that the Group can attract clients with sound financial background, particularly for clients who hold significant shareholding of a single stock, but are unable to seek additional financing for acquisition of securities and/or for continuing holding of securities from banks and/or other brokers. The proposed new margin financing service is part of the Group's plan to further expand its scope of businesses and attract new clients.

6 Oshidori International Holdings Limited Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

  1. Securities Brokerage Services and Margin Financing Services
    For the six months ended 30 June 2020, the brokerage commission income generated from securities brokerage services decreased by 71.6% to HK$0.3 million (six months ended 30 June 2019: HK$1.2 million), which was due to the volatile local stock market and negative global investment sentiments.
    For the six months ended 30 June 2020, the interest income generated from provision of margin financing services amounted to HK$13.3 million (six months ended 30 June 2019: HK$29.1 million). The Group will continue to balance risk and return and maintain a cautious approach to the credit control of its margin financing business.
  2. Placing and Underwriting Services
    For the six months ended 30 June 2020, WWSL, a wholly-owned subsidiary of the Company, has placed and underwritten securities with a value of HK$44.9 million, and generated placement commission income of HK$0.3 million (six months ended 30 June 2019: nil). WWSL has executed one placement and underwriting (including sub-placing activity) during the period.
    The Group has maintained a cautious approach before committing to underwriting and placing services at times of market turbulence.
  3. Corporate Finance Advisory
    No corporate finance advisory income has been generated for the six months ended 30 June 2020 (six months ended 30 June 2019: HK$0.3 million).
  4. Asset management
    No asset management income has been generated for the six months ended 30 June 2020 (six months ended 30 June 2019: nil).

Oshidori International Holdings Limited

7

Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

  1. Credit and Lending Services

The Money Lenders Ordinance, Chapter 163 of the Laws of Hong Kong, is the principal statute which governs the money lending business in Hong Kong. The Company's credit and lending business has been conducted through its wholly-owned subsidiaries, namely Win Wind Resources Limited ("WWRL") and Citizens Money Lending Corporation Limited ("Citizens"). WWRL provides loan facility of over HK$25 million and Citizens provides loan facility of up to HK$25 million. Both WWRL and Citizens obtained money lender's license granted by the Licensing Court and renewed its money lenders license on an annual basis.

The credit and lending business performed well in the first half of 2020. The interest income generated from the credit and lending services soared by 75.1% to HK$40.6 million for the six months ended 30 June 2020 (six months ended 30 June 2019: HK$23.2 million).

The Group's credit and lending business generates clientele by way of existing goodwill and word of mouth referrals by clients to fulfil the working capital needs of borrowers from time to time. The main financial challenge facing small and medium enterprises ("SMEs") is access to affordable credit over a reasonable period. Despite the financial reforms aimed at improving SMEs, access to finance for SMEs remains a recurrent problem.

The economic activities and business sentiment have been affected by the COVID-19 pandemic. Many enterprises suffer from a plunge in business turnover, resulting in a liquidity problem, in particular those SMEs which have difficulty in obtaining commercial bank loans due to their scale of operation. This may provide potential opportunities for licensed money lenders, particularly when banks' lending policies have become more conservative under the worsened economic environment. It is expected that there will be increasing demand of loans across industries at these difficult times which will broaden the client base and mitigate the Group's customer concentration risks. The Group remains positive about its credit and lending business and will continue to provide high-quality services to its clients.

  1. Tactical and/or Strategical Investment

The Group engages in tactical and/or strategical investment of a diversified portfolio, which is overseen by a professional investment team holding Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), and Type 9 (asset management) licences under the SFO. The fair value of financial assets at FVPL amounted to HK$2,586.2 million (31 December 2019: HK$2,132.0 million) and a realised gain on financial assets at FVPL of HK$0.3 million was recognised, as compared to that of HK$103.5 million in the corresponding period last year. Dividend income decreased by 75.6% to HK$9.8 million, as compared to that of HK$40.1 million in the corresponding period last year.

8 Oshidori International Holdings Limited Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

SIGNIFICANT INVESTMENTS

During the period, the Group's significant investments that were classified as financial assets designated at fair value through other comprehensive income ("Designated FVOCI") and financial assets at FVPL are detailed as follows:

Net gain (loss)

Dividend

Approximate

Percentage of

Percentage of

Net gain (loss)

for

received

% to the

shareholding

shareholding

for the period

the period

for the period

Group's total

Market

Market

as at

as at

ended

ended

ended

assets as at

Investment

value as at

value as at

Name of investments

Notes

30 Jun 2020

31 Dec 2019

30 Jun 2020

30 Jun 2019

30 Jun 2020

30 Jun 2020

cost

30 Jun 2020

31 Dec 2019

%

%

HK$'000

HK$'000

HK$'000

%

HK$'000

HK$'000

HK$'000

Designated FVOCI

Unlisted shares in overseas

- Satinu Resources Group Ltd.

1

11.68

11.68

(65,297)

90,730

-

7.25

823,136

539,408

604,705

Listed shares in Hong Kong

- Shengjing Bank Co., Ltd.

(stock code: 2066)

2

8.12

8.12

199,500

463,600

-

18.14

1,254,000

1,349,000

1,149,500

  • ZhongAn Online P&C Insurance Co., Ltd.

(stock code: 6060)

3

2.02

3.40

128,326

(106,572)

-

4.89

258,777

363,520

448,546

Financial assets at FVPL

Listed shares in Hong Kong

  • China Evergrande New Energy Vehicle Group Limited

(stock code: 708)

4

1.40

1.40

315,484

(218,730)

-

16.88

530,871

1,254,683

939,199

- C C Land Holdings Limited

(stock code: 1224)

5

4.79

4.79

(3,720)

(12,753)

3,714

4.43

356,943

329,256

332,762

The above table lists out the significant investments of the Group. To give details of other investments would result in particulars of excessive length.

Oshidori International Holdings Limited

9

Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

The performance and prospects of the Group's significant investments during the period are detailed as follows:

1. Satinu Resources Group Ltd. ("Satinu")

Satinu and its subsidiaries engage in integrated financial services, securities brokerage services, money lending, securities and other direct investments. Given recent merger and acquisition deals of financial related companies by Chinese enterprises and low interest rate environment, Satinu has a strategic investment value.

2. Shengjing Bank Co., Ltd. ("Shengjing") (Stock Code: 2066)

Shengjing principally engages in the provision of corporate and personal deposits, loans, and advances, settlement, treasury business and other banking services as approved by the China Banking Regulatory Commission.

In 2019, Shengjing has creatively completed domestic and overseas capital increase and share expansion, deepened the reform of the management system and gradually rationalised the operating mechanism of corporate governance, optimised the organisational structure and personnel structure, and constantly improved the performance remuneration system, cultivated multi-dimensional marketing management system and increased marketing efforts, and strengthened the construction of a comprehensive risk management system, and strictly observed a sound business bottom line.

In 2019, Shengjing achieved a profit before taxation of RMB6.143 billion, representing a year-on-year increase of RMB0.604 billion or 10.9%, and achieved a net profit of RMB5.438 billion, representing a year-on-year increase of RMB0.312 billion or 6.1%.

Going forward, Shengjing will continue to adhere to its four business orientations of "developing the bank through deposits, compliance, talents and technology", to comprehensively establish the development concept, consolidating the foundation and strengthening capacity, optimise the structure to lay a solid foundation for building a "sound bank" in the new era. From a long-term perspective, Shengjing appears to have good prospects and the Company considers its investment in Shengjing has strategic investment value.

3. ZhongAn Online P & C Insurance Co., Ltd ("ZhongAn") (Stock Code: 6060)

ZhongAn is the first Internet-based Insuretech company in the People's Republic of China (the "PRC"). ZhongAn offers extensive property and casualty insurance products, covering accident insurance, bond insurance, health insurance, liability insurance, credit insurance, cargo insurance, household property insurance, etc. It focuses on the integration of its products into the various scenarios, so as to optimise customer experience.

10 Oshidori International Holdings Limited Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

ZhongAn recorded a total Gross Written Premium ("GWP") of RMB14,629.6 million in 2019. Driven by its health and lifestyle consumption ecosystem businesses, total GWP recorded a year-on-year increase of 30.0%, and GWP growth in the second half of the year rallied up to 43.0%. ZhongAn continued to strengthen users' insurance awareness, and provide more inclusive health insurance products through its proprietary platforms and the platform of Alipay Insurance operated by Ant Financial. It has also enhanced strategic cooperation with Ant Financial, and together with other ecosystem partners, actively explore product innovation and upgrade, leading to a 130.8% GWP growth of the lifestyle consumption ecosystem business. It has also strategically increased investments in the development of its proprietary platform business, while facilitated the implementation of an automatic and intelligent business process with the application of technology. In December 2019, ZhongAn Bank launched its trial pilot and became the first virtual bank in trial operation in Hong Kong. In the same month, ZhongAn also launched its internet hospital, which provides users with one-stop services covering online medical advice and doorstep medicine delivery, establishing a closed-loop health ecosystem.

The unexpected outbreak of COVID-19 in China delivered a heavy blow to the social and economic development, while to a certain extent it provided good development opportunities for the digital transformation of the insurance industry. Facing the epidemic, ZhongAn will continue its keen observation and leverage on its advantages to continuously enhance its technology strengths and optimise its online and mobile-based services. Considering ZhongAn's growth momentum and its pioneering role in the blue ocean of Insuretech and digital transformation, the Company is optimistic with ZhongAn's long-term prospects and believes the investment in ZhongAn is of great strategic value.

4. China Evergrande New Energy Vehicle Group Limited ("Evergrande Auto") (Stock Code: 708)

Evergrande Auto and its subsidiaries engage in technology research and development, production and sales of new energy vehicles in the PRC and in other countries, as well as the "Internet+" community health management, international hospitals, and elderly care and rehabilitation in the PRC.

Evergrande Auto is developing its new energy vehicle business in full speed and has built a new energy vehicle industry chain covering power battery, motor powertrain, advanced vehicle manufacturing, vehicle sales and smart charging. Equipped with world-leading core technologies in key aspects, Evergrande Auto has implemented a global integrated research and development model to coordinate research and development works in China, Sweden, Germany, the United Kingdom, the Netherlands, Austria, Italy, Japan, South Korea and other countries. Evergrande Auto strives to become the world's largest and most powerful new energy vehicle group within 3-5 years. As the new energy vehicle has become the most important business, it changed its name from Evergrande Health Industry Group Limited to China Evergrande New Energy Vehicle Group Limited in August 2020.

Oshidori International Holdings Limited

11

Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

On 10 June 2020, Evergrande Auto became the sole shareholder of NEVS, which is a Sweden-based company focusing on fields including intelligent electric vehicle manufacturing, motor electronic control, smart charging and vehicle-sharing. Evergrande Auto can therefore benefit from the enormous potential of the new vehicle market to develop its own automobile brand "Hengchi". On 3 August 2020, Evergrande Auto announced the six first-phase "Hengchi" vehicle models, covering all major passenger car categories including sedan, sport utility vehicles and multi-purpose vehicles.

Evergrande Auto's prospecting extension into the industry of New Energy Auto is an innovative and enlightened approach to respond to China's strategic goal of reinvigoration through science and technology and to protect the environment. The investment in Evergrande Auto will bring in a heathy return in the medium to long run.

During the six months ended 30 June 2020, Evergrande Auto's turnover amounted to RMB4,510.32 million, representing an increase of 70.30% as compared to RMB2,648.40 million in the corresponding period of 2019.

5. C C Land Holdings Limited ("C C Land") (Stock code: 1224)

C C Land focuses on property investment and development business, with projects in the major cosmopolitan cities of the world, namely, London, Melbourne and Hong Kong. By adhering to its prudent strategy of achieving asset growth through improving earnings, C C Land continues to enhance its property business and explore global opportunities in metropolitan cities to expand the recurrent income base. Its relatively low gearing level, ample liquidity and strong financial fundamentals have always been solid anchor features. C C Land fortunately reported that the pandemic had only limited impact on its rental business for the six months ended 30 June 2020. The revenue for the first half of 2020 was steady, reflecting a slight drop on rental revenue as a result of the depreciation of approximately 4% of the average exchange rate of the GBP against the HK$ compared with the corresponding period last year. The London investment property portfolio continues to provide a stable source of rental income of HK$236.1 million for the period ended 30 June 2020 (six months ended 30 June 2019: HK$239.9 million). Within its portfolio, the rental recovery has been over 94% due to its heavy weighting of blue chip tenants and high quality asset management. C C Land has maintained a strong capital base and sufficient financial resources to support business development and growth. As at 30 June 2020, its total equity amounted to HK$16.9 billion. The Company is optimistic with C C Land's long-term prospects and believes the investment in C C Land is of great strategic value.

Going forward, the Group will continue to pursue attractive investment and business opportunities which will have strategic investment value and is in line with the Group's corporate mission and goals. The Group expects that the stock markets in Hong Kong and the PRC will remain challenging for 2020, as the COVID-19 continues to haunt the world and as the economies across countries continue to show signs of uncertainty. The Group will continue to adopt prudent capital management and liquidity risk management policies and practices to preserve adequate capital to meet the challenges ahead.

12 Oshidori International Holdings Limited Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL POSITION

A portion of the Group's bank balances are denominated in USD and RMB in the amount of HK$299.5 million and HK$136.7 million respectively. The Group's financial services business is not exposed to significant foreign exchange risk as most of the transactions are denominated in HK$. No financial instruments were used for hedging purposes.

CAPITAL COMMITMENTS

As at 30 June 2020, the Group had no capital commitments in respect of the acquisition of property and equipment.

MATERIAL TRANSACTIONS

  1. Grant of Share Options and Awarded Shares in relation to Proposed Issuance of New Shares

On 22 January 2020, the Board resolved to grant an aggregate of 120,000,000 share options with no vesting conditions to 10 option grantees under the share option scheme, of which, (i) 100,000,000 share options were granted to 9 independent option grantees; and (ii) 20,000,000 share options were granted to an Executive Director, Ms. Wong Wan Men Margaret ("Ms. Wong") at an exercise price of HK$0.865 per share.

On 22 January 2020, the Board also resolved to award an aggregate of 95,000,000 awarded shares to the corresponding 10 persons under the share award scheme, of which, (i) 85,000,000 awarded shares were awarded to 9 independent grantees by way of issue and allotment of new shares pursuant to the specific mandate; and (ii) 10,000,000 connected awarded shares were awarded to Ms. Wong by way of issue and allotment of new shares pursuant to the specific mandate. All the awarded shares shall be vested on the fourth anniversary of the date of grant (i.e. 22 January 2024), subject to the grantees remaining as eligible persons on 22 January 2024 and all of the other conditions being satisfied.

As Ms. Wong is a connected person of the Company, the issue and allotment of the connected awarded shares (the "Award") to her constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and shall be subject to the approval by the independent shareholders. The special general meeting was convened and held on 25 March 2020 and the Award to Ms. Wong was approved.

On 9 June 2020, the Board further resolved to grant 60,000,000 share options with no vesting conditions to a non-executive director, Mr. Alejandro Yemenidjian, under the share option scheme at an exercise price of HK$0.840 per share.

Oshidori International Holdings Limited

13

Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

  1. Share Swap Agreement with Hao Tian International Construction Investment Group Limited ("Hao Tian")

On 2 April 2020, the Company entered into a share swap agreement with Hao Tian under which the Company would issue shares representing 3.13% of the enlarged issued share capital of the Company and Hao Tian would issue shares representing 12.37% of the enlarged issued share capital of Hao Tian, ("Hao Tian Share Swap Transaction"). Hao Tian Share Swap Transaction was completed on 28 April 2020. 187,500,000 shares of the Company were issued at a price of HK$0.70 per share to a nominee of Hao Tian in exchange for 625,000,000 shares of Hao Tian as consideration shares at a price of HK$0.21 per share for a total consideration of HK$131,250,000. Details of Hao Tian Share Swap Transaction are set out in the Company's announcements dated 2 April 2020 and 28 April 2020. Hao Tian and its subsidiaries principally engage in the business of (a) provision of financial services and related financial advisory services through subsidiaries licensed to conduct (i) Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type

  1. 4 (advising on securities) and Type 9 (asset management) regulated activities under the SFO; (ii) money lending activities; and (iii) brokerage of general insurance and long term (including linked long term) insurance; and (b) rental and trading of construction machinery.

  2. Share Swap Agreement with Imagi International Holdings Limited ("Imagi")

On 6 April 2020, the Company entered into a share swap agreement with Imagi under which the Company would issue shares representing 1.93% of the enlarged issued share capital of the Company and Imagi would issue shares representing 16.63% of the enlarged issued share capital of Imagi, ("Imagi Share Swap Transaction"). Imagi Share Swap Transaction was completed on 22 May 2020. 114,342,857 shares of the Company were issued at a price of HK$0.70 per share to a nominee of Imagi in exchange for 138,000,000 shares of Imagi as consideration shares at

  1. price of HK$0.58 per share for a total consideration of HK$80,040,000. Details of Imagi Share Swap Transaction are set out in the Company's announcements dated 6 April 2020, 4 May 2020, 18 May 2020 and 22 May 2020. Imagi and its subsidiaries principally engage in integrated financial services, investment holdings, computer graphic imaging and entertainment business. Imagi Brokerage Limited, a wholly-owned subsidiary of Imagi, is the major financial service arm of Imagi. Imagi Brokerage Limited holds licenses in Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 5 (advising on futures contracts) and Type 9 (asset management) regulated activities under the SFO.

While working on the IR project bid, the Directors have also remained vigilant in identifying opportunities for its financial services businesses. Following negotiations to acquire a strategic stake in Hao Tian and Imagi with an intention to strengthen cooperation between the companies' financial services subsidiaries, a work group was formed between the companies' senior management and securities professionals to explore opportunities on (i) cooperation and implementation of projects that are of mutual interests and benefits; (ii) exchanging and referring business opportunities as the parties think appropriate; and (iii) sharing market knowledge for the benefit and risk management of respective parties' businesses.

14 Oshidori International Holdings Limited Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

IMPORTANT EVENTS AFTER THE REPORTING PERIOD

Save as disclosed in the note 21 to the Condensed Consolidated Financial Statements, there were no other significant events affecting the Group since the end of the reporting period.

LITIGATION

  1. Updates on the previous disposal of shares in Shenzhen Fuhuade Electric Power Co., Ltd. ("Fuhuade")

During the year ended 31 December 2011, the Group disposed of its 100% equity interest in Fuhuade to CNOOC Gas & Power Group (the "Buyer"). The total consideration of the disposal of RMB1,037,642,000 (equivalent to approximately HK$1,247,166,000) was payable in instalments, the payment of which was subject to finalisation and confirmation of the results of supplemental audit. As at 31 December 2012, the supplemental audit was not yet finalised and the outstanding instalments were not received from the Buyer. In view of this, the Group made a provision for doubtful consideration receivable of HK$93,132,000 for the year ended 31 December 2012.

Oshidori International Holdings Limited

15

Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

As at 31 December 2013, the Group was still not able to secure a satisfactory conclusion on the supplemental audit. Under the circumstances, the Board is of the opinion that the timing and eventual outcome of the finalisation of the supplemental audit and hence the settlement of the outstanding instalments cannot be estimated with reasonable certainty. It is determined that the receivable amount should be fully provided for until such time as the eventual outcome can be reliably estimated. Accordingly, the Group fully wrote down the receivable amount of HK$255,185,000, being the amount of consideration receivable amounting to HK$358,921,000 as originally stated after deducting estimated other taxes payable arising from the disposal of the subsidiary of HK$103,736,000, in the profit and loss account for the year ended 31 December 2013.

On 20 December 2017, the Group received a civil judgement (廣東省深圳市中級人民法院民事判決 書[2014]深中法涉外初字第59號) in favour of the Group in relation to the litigation on the previous disposal of shares in Fuhuade, pursuant to which the Group is judged to receive approximately RMB85,545,000 (equivalent to approximately HK$102,327,000) (before tax) together with related interest of approximately RMB28,326,000 (equivalent to approximately HK$33,883,000) (before tax).

On 16 April 2019, the Group further received a civil judgment (廣東省深圳市中級人民法院 民事判決書[2016]粵03民初第662號) in favour of the Group in relation to the litigation on the previous disposal of shares in Fuhuade, pursuant to which the Group is judged to receive approximately RMB113,486,000 (equivalent to approximately HK$129,102,000) (before tax) together with related tax subsidies of approximately RMB29,066,000 (equivalent to approximately HK$33,030,000) (before tax).

Up to 31 December 2019, approximately RMB127,624,000 (equivalent to approximately HK$145,566,000) was received from CNOOC Gas for settlement of judged consideration receivables of the third instalment of approximately RMB113,486,000 (equivalent to approximately HK$129,102,000) and tax subsidies of approximately RMB21,025,000 (equivalent to approximately HK$24,335,000) after deducting withholding tax of approximately RMB6,887,000 (equivalent to approximately HK$7,871,000).

Apart from the above, the Group is still awaiting a second instance decision from the Guangdong Provincial People's High Court regarding the amount of fuel subsidy (廣東省深圳市中級人民法院 [2016]粵03民初661號).

16 Oshidori International Holdings Limited Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

  1. Writs of Summons issued by Allied Weli Development Limited and John Howard Bachelor and Kenneth Fung as Joint and Several Liquidators (the "Liquidators of Allied Weli Development Limited")

ECFL, Win Wind Capital Limited, Win Wind Investment (Holdings) Limited, Enerchine Nominee Limited and WWSL (the "Defendant Parties"), which as of the date hereof are wholly-owned subsidiaries of the Company, have been named, inter alia, as defendants in two separate writ of summons in the High Court of Hong Kong (the "Writs") by the plaintiffs, Allied Weli Development Limited (in Liquidation) and John Howard Bachelor and Kenneth Fung as Joint and Several Liquidators (the "Liquidators") of Allied Weli Development Limited. The Liquidators have not served the Writs on the Defendant Parties. On 2 February 2018, the Group, through its legal advisors, requested the Liquidators to (i) serve the Writs of Summons on the Defendant Parties by 20 February 2018 as required under the Rules of the High Court (Order 12, rule 8A) or (ii) to discontinue the Writs against the Defendant Parties. On 15 February 2018, the Group received a letter from the Liquidator's lawyers stating, inter alia, that the Liquidators may ultimately decide not to pursue a claim against the Defendant Parties at all. As the Writs have not been served on the Defendant Parties, accordingly no provision has been made in the Interim Financial Statements. However, the management of the Company considers the Writs are not only groundless but the Liquidator's actions are a flagrant and calculated abuse of the law, designed solely to drag the Group's good name and good will through process of the Hong Kong Courts in hopes of profit that they will clearly not be entitled to.

  1. Legal proceeding against Celebrate International Holdings Limited ("Celebrate")

On 12 May 2020, Citizens (a wholly-owned subsidiary of the Company), as a creditor, commenced legal proceedings by filing a winding-up petition with the Court of First Instance of Hong Kong, against Celebrate as debtor regarding an outstanding loan in an amount of HK$27,155,161.50 together with the interests thereon pursuant to a loan agreement entered by Citizens and Celebrate on 25 January 2019 ("Celebrate Loan"). Celebrate Loan was secured by a debenture incorporating a floating charge over Celebrate's total assets in favor of Citizens along with a debenture incorporating a floating charge over the total assets of Celebrate's wholly-owned subsidiary, Long Peace Group Limited. On 10 July 2020, Citizens appointed joint and several receivers and managers to Celebrate so as to realise the charged assets. The Court granted the winding-up order against Celebrate on 22 July 2020 and appointed liquidators to proceed with the winding-up procedure.

Oshidori International Holdings Limited

17

Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

OVERVIEW

With the decelerating momentum of global economic growth and increasing uncertainties due to the COVID-19 pandemic, the first half of 2020 has been challenging in Hong Kong. The latest economic figures of Hong Kong as of 30 June 2020 showed a severe year-on-year economic contraction in multiple aspects including negative real GDP growth, declining private consumption and merchandise exports as well as increasing unemployment rate, implying more downward pressure to Hong Kong's financial market.

OUTLOOK

Looking ahead, the economic outlook of the second half of 2020 in Hong Kong remains grim as the COVID-19 pandemic prevails. The consequential global economic volatility is expected to adversely affect market sentiments of the investing public and the Hong Kong economy as a whole.

Amid this challenging environment, the Group will strive to adhere to its goals and continue to explore potential investment opportunities in fintech, lifestyle, real estate and integrated resort projects. Accordingly, the Group will continue to maintain a balanced approach to asset allocation with appropriate risk and potential reward; and the management will maintain strict oversight of operation costs in view of the volatile business environment.

In addition, the Group's financial services arm will continue to adopt prudent capital management and liquidity risk management to meet the challenges ahead, as well as increasing regulatory and supervisory requirements.

INTERIM DIVIDEND

The Board does not recommend the payment of any interim dividend for the six months ended 30 June 2020 (six months ended 30 June 2019: HK$0.005 per share).

EMPLOYEES AND REMUNERATION POLICIES

As at 30 June 2020, the Group employed 36 full time employees for its principal activities. The Group recognises the importance of high calibre and competent staff and continues to provide remuneration packages to employees with reference to prevailing market practices and individual performance. Other various benefits, such as medical and retirement benefits, are also provided. In addition, share options and awarded shares may be granted to eligible employees of the Group in accordance with the terms of the approved share option scheme and share award scheme.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED

SHARES

There was no purchase, sale or redemption of the Company's listed shares by the Company or any of its subsidiaries for the six months ended 30 June 2020.

18 Oshidori International Holdings Limited Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

CORPORATE GOVERNANCE

The Board is committed to maintaining high standards of corporate governance. The Company confirms that it has complied with all code provisions of the Corporate Governance Code contained in Appendix 14 to the Listing Rules during the six months ended 30 June 2020.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules as the code of conduct regarding securities transactions by the Directors. Having made specific enquiry of all Directors, the Company confirmed that in respect of the six months ended 30 June 2020, all Directors have complied with the required standard set out in the Model Code.

SUFFICIENCY OF PUBLIC FLOAT

Based on the information that is publicly available to the Company and within the knowledge of the Directors, as at the date of this interim report, there is sufficient public float of not less than 25% of the Company's issued shares as required under the Listing Rules.

AUDIT COMMITTEE

The Company has an audit committee (the "Audit Committee") which was established in accordance with the requirements of the Listing Rules for the purposes of reviewing and providing supervision over the Group's financial reporting process and internal controls. As at the date of this report, the Audit Committee comprises three Independent Non-Executive Directors. Currently, the members of the Audit Committee are Messrs. Cheung Wing Ping, Hung Cho Sing and Chan Hak Kan. The Audit Committee meets regularly with the Company's senior management and the Company's auditor to consider the Company's financial reporting process, the effectiveness of internal controls, the audit process and risk management.

The interim results of the Group for the six months ended 30 June 2020 had not been audited, but had been reviewed by the Company's auditor, Mazars CPA Limited and the Audit Committee.

APPRECIATION

On behalf of the Board, I would like to take this opportunity to express our gratitude to all staff for their devoted efforts and hard work.

By Order of the Board

Oshidori International Holdings Limited

Wong Wan Men Margaret

Executive Director

Hong Kong, 28 August 2020

Oshidori International Holdings Limited

19

Interim Report 2020

OTHER INFORMATION

DIRECTORS' INTERESTS OR SHORT POSITIONS IN SHARES AND

UNDERLYING SHARES

As at 30 June 2020, the Directors and chief executives of the Company and their associates had the following interests in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the "SFO")) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code:

  1. Long Positions in Shares, Underlying Shares and Debentures of the Company

Number

of underlying

Approximate%

Name of directors

Nature of interest

shares held

of shareholding

Wong Wan Men Margaret

Personal*

30,000,000

(1)

0.49

Alejandro Yemenidjian

Personal*

60,000,000

(2)

0.98

Notes:

  1. Out of 30,000,000 shares, 10,000,000 shares represented the interest in Award Shares granted by the Company and remained unvested, and the balance of 20,000,000 shares represented the interests in share options granted by the Company as beneficial owner. Details of the Awarded Shares and share options granted to this director are set out in "Share Award Scheme" and "Share Option Scheme" sections stated below.
  2. 60,000,000 shares represented the interests in share options granted by the Company as beneficial owner. The details of the share options granted to this director are set out in "Share Option Scheme" section stated below.
    • Interests of beneficial owner
  2. Short Positions in Shares, Underlying Shares and Debentures of the Company

As at 30 June 2020, none of the Directors and chief executives of the Company or their associates had any short positions in the Shares, underlying shares and debentures of the Company or any of its associated corporations (as defined under Part XV of the SFO) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES OF THE COMPANY AND ASSOCIATED CORPORATION

At no time during the six months ended 30 June 2020 were rights to acquire benefits by means of the acquisition of shares in or warrants or debentures of the Company granted to any Director or chief executives of the Company or their respective spouse or minor children, or were any such rights exercised by them, or was the Company or any of its subsidiaries or holding company or fellow subsidiaries a party to any arrangement to enable the Directors to acquire such rights in any other body corporate.

20 Oshidori International Holdings Limited Interim Report 2020

OTHER INFORMATION

SHARE OPTION SCHEMES

  1. 2002 Share Option Scheme

The Company operated a share option scheme adopted by shareholders of the Company on 24 May 2002 (the "2002 Share Option Scheme"), under which the Board may, at its discretion, offer any employees of the Group or any Directors of the Company or any of its subsidiaries options to subscribe for shares of the Company subject to the terms and conditions stipulated in the said scheme. The 2002 Share Option Scheme had a life of 10 years and was terminated at the annual general meeting of the Company held on 17 May 2012.

No further options shall thereafter be offered under the 2002 Share Option Scheme but the options, which had been granted during its life, shall continue to be valid and exercisable in accordance with their terms of issue and in all other respects the provisions of the 2002 Share Option Scheme shall remain in full force and effect.

Following to the lapse of all 28,079,700 outstanding options in 2017, the Company had no underlying shares comprised in options outstanding under the 2002 Share Option Scheme. Details of the 2002 Share Option Scheme were set out in the Company's 2017 annual report.

  1. 2012 Share Option Scheme

A new share option scheme was adopted by shareholders of the Company on 17 May 2012 (the "2012 Share Option Scheme"), under which the Board may, of its discretion, offer any employees of the Group or any Directors of the Company or any of its subsidiaries options to subscribe for shares of the Company subject to the terms and conditions stipulated therein. The 2012 Share Options Scheme has a remaining life of approximately 1.5 years as at the date of this interim report. The general terms and conditions of the 2012 Share Option Scheme are listed as follows:

  1. Purpose

    1. The 2012 Share Option Scheme is a share incentive scheme and is established to enable the Group to (i) recognise and acknowledge the contributions that eligible persons have (or may have) made or may make to the Group (whether directly or indirectly); (ii) attract and retain and appropriately remunerate the best possible quality of employees and other eligible persons; (iii) motivate the eligible persons to optimise their performance and efficiency for the benefit of the Group; (iv) enhance its business, employee and other relations; and/or (v) retain maximum flexibility as to the range and nature of rewards and incentives which the Company can offer to eligible persons. The eligible persons include
    2. any full time or part time employees of the Group or any directors of the Company or any of its subsidiaries; (b) any customer, supplier or provider of services, landlord or tenant, agent, partner, consultant, or adviser of or a contractor to or person doing business with any member of the Group; (c) trustee of any trust the principal beneficiary of which is, or discretionary trust the discretionary objects of which include, any person referred to (a) or
    3. above; (d) a company wholly beneficially owned by any person referred to in (a) or (b) above, and (e) such other persons (or classes of persons) as the Board may in its absolute discretion determine.

Oshidori International Holdings Limited

21

Interim Report 2020

OTHER INFORMATION

  1. Maximum Number of Shares Available for Subscription
    1. Subject to (iv) below, the total number of shares which may be issued upon exercise of all the options to be granted under 2012 Share Option Scheme and any other share option schemes of the Company shall not in aggregate exceed 10% of the shares in issue as at the date of approval of the 2012 Share Option Scheme.
    2. Subject to (iv) below, the Company may seek approval of the Shareholders in general meeting for refreshing the 10% limit set out in (i) above such that the total number of shares which may be issued upon exercise of all options to be granted under the 2012 Share Option Scheme and any other share option schemes of the Company under the limit as refreshed shall not exceed 10% of the total number of the shares in issue as at the date of approval to refresh such limit.
    3. Subject to (iv) below, the Company may seek separate approval from the Shareholders in general meeting for granting options beyond the 10% limit provided the options granted in excess of such limit are granted only to eligible persons specifically identified by the Company before such approval is sought. In such case, the Company shall send a circular to its Shareholders containing the information required under the Listing Rules.
    4. in respect of which options may be granted under the 2012 Share Option Scheme together with any options outstanding and yet to be exercised under the 2012 Share Option Scheme and any other share option schemes of the Company must not exceed 30% (or such higher percentage as may be allowed under the Listing Rules) of the total number of shares in issue from time to time. No option may be granted under the 2012 Share Option Scheme or any other share option schemes of the Company if this will result in such limit being exceeded.
  3. Total Number of Securities Available for Issue
    The scheme mandate limit was refreshed on 5 June 2020, pursuant to which the Company was authorised to grant options to subscribe for up to a maximum of 611,360,913 shares, being 10% of the total issued shares of the Company as at 5 June 2020. There were 252,000,000 options outstanding as of 30 June 2020. The total number of shares which may be issued upon exercise of all options granted and to be granted under the 2012 Share Option Scheme was 863,360,913 shares, representing 14.12% of the shares of the Company in issue as at the date of this interim report.
  4. Maximum Entitlement to Shares of Each Eligible Person
    1. The total number of shares issued and to be issued upon exercise of the options granted to each eligible person (including both exercised, cancelled and outstanding options) in any 12-month period shall not exceed 1% of the total number of shares in issue.
    2. Notwithstanding (i) above, any further grant of options to an eligible person in excess of the 1% limit shall be subject to approval by the Shareholders in general meeting with such eligible person and his or her associates abstaining from voting. The number and the terms of the options to be granted to such eligible person shall be fixed before the Shareholders' approval and the date of the Board meeting for proposing such further grant should be taken as the date for grant for the purpose of calculating the subscription price.

22 Oshidori International Holdings Limited Interim Report 2020

OTHER INFORMATION

    1. Where the Board proposes to grant any option to an eligible person who is a substantial Shareholder or an independent non-executive Director, or any of their respective associates and such option which if exercised in full, would result in such eligible person becomes entitled to subscribe for such number of shares, when aggregated with the total number of shares already issued and issuable to him or her pursuant to all options granted and to be granted (including options exercised, cancelled and outstanding) to him or her in the 12-month period up to and including the date of such grant: (1) representing in aggregate more than 0.1% of the relevant class of securities of the Company in issue on the date of such grant; and (2) having an aggregate value, based on the closing price of the shares at the date of each grant, in excess of HK$5,000,000, such proposed grant of options must be approved by the Shareholders in general meeting.
  2. Acceptance of Offer
    Offer of an option shall be deemed to have been accepted by the grantee when the duplicate of the relevant offer letter comprising acceptance of the option duly signed by the grantee together with a remittance in favour of the Company of HK$1.00 (or such other nominal sum in any currency as the Board may determine) by way of consideration for the grant thereof.
  3. Exercise of Options
    An option may be exercised in accordance with the terms of the 2012 Share Option Scheme and such other terms and conditions upon which an option was granted, at any time during the option period after the option has been granted by the Board but in any event, not longer than 10 years from the date of grant. An option shall lapse automatically and not be exercisable (to the extent not already exercised) on the expiry of the option period. Subject to the discretion of the Board in accordance with the terms of the 2012 Share Option Scheme, there is no minimum period for which an option must be held before it can be exercised and no performance targets need to be achieved by the grantee before the option can be exercised.
  4. Exercise Price
    The exercise price shall be determined by the Board at its sole discretion and notified to the eligible persons and shall be no less than the highest of (i) the closing price of the shares as stated in the Stock Exchange's daily quotations sheet on the date on which an option is granted, (ii) the average closing prices of the shares as stated in the Stock Exchange's daily quotation sheets for the 5 business days immediately preceding the date on which an option is granted; and (iii) the nominal value of a share on the date on which an option is granted.

On 22 January 2020, the Board resolved to grant an aggregate of 120,000,000 share options with no vesting conditions to 10 option grantees under the 2012 Share Option Scheme, of which, (i) 100,000,000 share options were granted to 9 independent option grantees; and (ii) 20,000,000 share options were granted to Ms. Wong, at an exercise price of HK$0.865 per share. The validity period of the share options is 10 years from the date of grant (i.e. 22 January 2020 to 21 January 2030).

On 9 June 2020, the Board further resolved to grant 60,000,000 share options with no vesting conditions to a non-executive director, Mr. Alejandro Yemenidjian under the 2012 Share Option Scheme, at an exercise price of HK$0.840 per share. The validity period of the share options is 10 years from the date of grant (i.e. 9 June 2020 to 8 June 2030).

Oshidori International Holdings Limited

23

Interim Report 2020

OTHER INFORMATION

As at 30 June 2020, there were share options relating to 252,000,000 shares granted by the Company representing 4.12% of the issued shares of the Company as at the date of this interim report pursuant to the 2012 Share Option Scheme which were valid and outstanding.

Details of the share options granted under the 2012 Share Option Scheme that remain outstanding as at 30 June 2020 are as follows:

Number of share options

Exercise

As at

Forfeited/

As at

Exercisable

Grant Date

Price

Grantees

1/1/2020

Granted

Lapsed

30/6/2020

period

HK$

29/3/2019 (note 1)

0.82

Employees

72,000,000

-

72,000,000

29/3/2019 -

28/3/2029

22/1/2020 (note 2)

0.865

Wong Wan Men

-

20,000,000

-

20,000,000

22/1/2020 -

Margaret

21/1/2030

22/1/2020 (note 2)

0.865

Other participants

-

100,000,000

-

100,000,000

22/1/2020 -

21/1/2030

9/6/2020 (note 3)

0.840

Alejandro

-

60,000,000

-

60,000,000

9/6/2020 -

Yemenidjian

8/6/2030

Total

72,000,000

180,000,000

-

252,000,000

Notes:

  1. The closing market price per share of the Company as at the date preceding the date on which the share options were granted and stated in the Stock Exchange's daily quotation sheet on 28 March 2019 was HK$0.80.
  2. The closing market price per share of the Company as at the date preceding the date on which the share options were granted and stated in the Stock Exchange's daily quotation sheet on 21 January 2020 was HK$0.86.
  3. The closing market price per share of the Company as at the date preceding the date on which the share options were granted and stated in the Stock Exchange's daily quotation sheet on 8 June 2020 was HK$0.83.

Additional information in relation to the Company's Share Option Schemes are set out in note 18 to the consolidated financial statements.

24 Oshidori International Holdings Limited Interim Report 2020

OTHER INFORMATION

SHARE AWARD SCHEME

The share award scheme was adopted by the shareholders at the special general meeting of the Company held on 19 December 2019 ("2019 Share Award Scheme").

The Board shall not make any further grant of awarded shares which will result in the total number of shares awarded by the Board under the 2019 Share Award Scheme exceeding 10% of the issued share capital of the Company as at the adoption date of 2019 Share Award Scheme (i.e. 19 December 2019).

Subject to the 2019 Share Award Scheme limit, the maximum number of awarded shares which may be awarded by the Board in any financial year shall not be more than 3% of the issued share capital of the Company ("Annual Limit") provided that if the Annual Limit is not fully utilised in any financial year, further awarded shares may be awarded by the Board in subsequent financial year(s) up to such Annual Limit. The Annual Limit may be refreshed by Shareholders who are permitted under the Rules Governing the Listing of Securities (the "Listing Rules") to vote at a general meeting of the Company so that the Annual Limit refreshed shall not exceed 3% of the issued share capital of the Company as at the date of the general meeting approving such refreshment. The maximum aggregate number of the shares which may be awarded to a selected grantee under the 2019 Share Award Scheme shall not exceed 1% of the issued share capital of the Company from time to time.

The objectives of the 2019 Share Award Scheme are: (i) to recognise the contributions by certain eligible participants and to provide them with incentives in order to retain them for the continual operation and development of the Group's existing and other new potential business including integrated resort development; and (ii) to attract suitable personnel with relevant experience in the Group's existing and other new potential business including integrated resort development.

On 22 January 2020, the Board resolved to award an aggregate of 95,000,000 awarded shares to the same 10 persons under the 2019 Share Award Scheme, of which, (i) 85,000,000 awarded shares were awarded to 9 independent grantees by way of issue and allotment of new shares pursuant to the specific mandate; and (ii) 10,000,000 connected awarded shares were proposed to Ms. Wong by way of issue and allotment of new shares pursuant to the specific mandate. All the awarded shares shall be vested on the fourth anniversary of the date of grant (i.e. 22 January 2024), subject to the grantees remaining as eligible persons on 22 January 2024 and all of the other conditions being satisfied. The share price of the Company at the date of grant was HK$0.85 per share.

The movements of share awards under the 2019 Share Award Scheme during the period are as follows:

Number of awarded shares

Unvested

As at

as at

Grant Date

Grantees

1/1/2020

Granted

Forfeited

30/6/2020

Vesting Date

22/1/2020

Wong Wan Men

-

10,000,000

-

10,000,000

To be vested on

Margaret

22/1/2024

22/1/2020

Other participants

-

85,000,000

-

85,000,000

To be vested on

22/1/2024

Total

-

95,000,000

-

95,000,000

Oshidori International Holdings Limited

25

Interim Report 2020

OTHER INFORMATION

SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS

The register of the interests and short positions maintained by the Company pursuant to Section 336 of the SFO shows that the following shareholder had notified the Company of relevant interests and short positions in the issued shares of the Company as at 30 June 2020:

Long position in shares of the Company

Approximate

percentage

Number of

of the issued

Name of

issued ordinary

share capital

substantial shareholders

Capacity

shares held

of the Company

Peak Trust Company - NV

Beneficial owner

1,151,976,600

18.84%

VMS Investment Group Limited

Beneficial owner (Note)

575,003,000

9.41%

Note: Ms. Mak Siu Hang, Viola holds 100% of the equity interest in VMS Investment Group Limited ("VMS"). Therefore, Ms. Mak Siu Hang, Viola is deemed to be interested in the Shares of the Company which are owned by VMS.

Save as disclosed above, as at 30 June 2020, the Company has not been notified of any other interests or short positions in the shares and underlying shares of the Company which had been recorded in the register required to be kept under Section 336 of the SFO.

CHANGES IN DIRECTORS' INFORMATION

Pursuant to Rule 13.51B(1) of the Listing Rules, the changes in information of Directors since the Company's Annual Report 2019 and up to the date of this report are set out as below:

  1. Mr. Alejandro Yemenidjian has been appointed as non-executive chairman of Guess?, Inc., a company listed on the New York Stock Exchange with effect from 14 August 2020.
  2. Mr. Sam Nickolas David Hing Cheong resigned as an authorised representative and Mr. Wong Yat Fai has been appointed as an authorised representative of the Company with effect from 8 July 2020.
  3. Mr. Sam Nickolas David Hing Cheong has been re-designated from executive director and chairman to non-executive director of the Company with effect from 5 June 2020.
  4. Mr. Cheung Wing Ping resigned as an independent non-executive director of China Shandong Hi-Speed Financial Group Limited (HKEX stock code: 412) with effect from 14 May 2020.

26 Oshidori International Holdings Limited Interim Report 2020

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

MAZARS CPA LIMITED

中審眾環（香港）會計師事務所有限公司 42nd Floor, Central Plaza,

18 Harbour Road, Wanchai, Hong Kong 香港灣仔港灣道 18 號中環廣場 42 樓

Tel 電話: (852) 2909 5555

Fax 傳真: (852) 2810 0032

Email 電郵: info@mazars.hk

Website 網址: www.mazars.hk

Introduction

We have reviewed the interim financial information set out on pages 27 to 54, which comprises the condensed consolidated statement of financial position of Oshidori International Holdings Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") as at 30 June 2020 and the related condensed consolidated statement of profit or loss and other comprehensive income, the condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows for the six months period then ended and other explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard ("HKAS") 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA"). The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with HKAS 34.

Our responsibility is to express a conclusion on this interim financial information based on our review and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of review

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the HKICPA. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information is not prepared, in all material respects, in accordance with HKAS 34.

Mazars CPA Limited

Certified Public Accountants

Hong Kong, 28 August 2020

Oshidori International Holdings Limited

27

Interim Report 2020

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2020

Six months ended

30 June 2020

30 June 2019

Note

HK$'000

HK$'000

(Unaudited)

(Unaudited)

Revenue

3

205,642

68,390

Other income

4

4,173

19,570

Other gains and losses

5

3,102

21,536

Net unrealised fair value gain (loss) on financial assets

203,405

at fair value through profit or loss ("FVPL")

3

(243,008)

Net impairment loss in respect of loan receivables

13(d)

(60,211)

(70,085)

Depreciation of property and equipment and

(21,203)

right-of-use assets

(11,864)

Employee benefits expenses

6

(41,826)

(39,084)

Other expenses

6

(103,838)

(57,428)

Share of results of associates

(2,232)

(3,574)

Finance costs

6

(10,580)

(22,653)

Profit (Loss) before taxation

6

39,180

(200,948)

Income tax (expense) credit

7

(42,905)

2,251

Loss for the period

(3,725)

(198,697)

Other comprehensive income (loss):

Items that will not be reclassified to profit or loss

Fair value change on financial assets designated

at fair value through other comprehensive income

250,557

("Designated FVOCI")

241,556

Items that are reclassified or may be reclassified

subsequently to profit or loss

Fair value change on financial assets mandatory

at fair value through other comprehensive income

(180)

("Mandatory FVOCI")

196

Fair value change on Mandatory FVOCI reclassified to

740

profit or loss upon disposal

-

Exchange differences arising on translation to

(3,753)

presentation currency

(5,152)

(3,193)

(4,956)

Total other comprehensive income for the period

247,364

236,600

Total comprehensive income for the period

243,639

37,903

(Loss) Profit for the period attributable to:

(3,738)

Owners of the Company

(198,674)

Non-controlling interests

13

(23)

(3,725)

(198,697)

Total comprehensive income (loss) for the period

attributable to:

242,992

Owners of the Company

42,903

Non-controlling interests

647

(5,000)

243,639

37,903

HK cents

HK cents

Loss per share

9

(0.06)

Basic

(3.42)

Diluted

(0.06)

(3.42)

28 Oshidori International Holdings Limited Interim Report 2020

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 JUNE 2020

30 June

31 December

2020

2019

Note

HK$'000

HK$'000

(Unaudited)

(Audited)

Non-current assets

196,722

Property and equipment

10

260,214

Right-of-use assets

10,852

16,715

Financial assets at fair value through

3,221,385

other comprehensive income ("FVOCI")

11

3,007,433

Financial assets at FVPL

14

250,852

-

Interests in associates

12

92

2,324

Intangible assets

3,908

3,908

Other deposits

425

503

Loan receivables

13

56,767

210,653

3,741,003

3,501,750

Current assets

644,802

Trade, loan and other receivables

13

473,543

Income tax recoverable

16,692

17,050

Financial assets at FVPL

14

2,335,387

2,132,047

Bank balances - trust and segregated accounts

9,190

19,928

Cash and cash equivalents

688,062

695,894

3,694,133

3,338,462

Current liabilities

476,685

Trade and other payables

15

470,806

Lease liabilities

11,047

10,521

Income tax payable

4,656

1,674

Loan payable

16

155,634

150,855

648,022

633,856

Net current assets

3,046,111

2,704,606

Total assets less current liabilities

6,787,114

6,206,356

Non-current liabilities

65,097

Deferred taxation

25,532

Lease liabilities

-

6,335

65,097

31,867

NET ASSETS

6,722,017

6,174,489

Capital and reserves

305,680

Share capital

17

290,588

Reserves

6,411,319

5,879,530

Equity attributable to owners of the Company

6,716,999

6,170,118

Non-controlling interests

5,018

4,371

TOTAL EQUITY

6,722,017

6,174,489

Oshidori International Holdings Limited

29

Interim Report 2020

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2020

Attributable to equity holders of the Company

Non-controlling interests

Investment

Investment

Investment

revaluation

revaluation

revaluation

reserve

Share

Share

Share of

reserve

Share

Share

Translation

Contribution

reserve

(non-

option

award

Retained

other equity

(non-

capital

premium

reserve

surplus

(recycling)

recycling)

reserve

reserve

earnings

Total

components

recycling)

Total

Total

Note

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

At 1 January 2020 (Audited)

290,588

-

(87,753)

5,682,380

(560)

(658,141)

24,720

-

918,884

6,170,118

5,748

(1,377)

4,371

6,174,489

(Loss) Profit for the period

-

-

-

-

-

-

-

-

(3,738)

(3,738)

13

-

13

(3,725)

Other comprehensive income (loss)

Items that will not be reclassified to

profit or loss

Fair value change on Designated FVOCI

-

-

-

-

-

249,923

-

-

-

249,923

-

634

634

250,557

Fair value change on Designated FVOCI

reclassified to retained earnings upon

disposal

-

-

-

-

-

(32,865)

-

-

32,865

-

594

(594)

-

-

-

-

-

-

-

217,058

-

-

32,865

249,923

594

40

634

250,557

Items that are reclassified or may be

reclassified subsequently to

profit or loss

Fair value change on Mandatory FVOCI

-

-

-

-

(180)

-

-

-

-

(180)

-

-

-

(180)

Fair value change on Mandatory FVOCI

reclassified to profit or loss upon

disposal

-

-

-

-

740

-

-

-

-

740

-

-

-

740

Exchange differences arising on

translation to presentation currency

-

-

(3,753)

-

-

-

-

-

-

(3,753)

-

-

-

(3,753)

-

-

(3,753)

-

560

-

-

-

-

(3,193)

-

-

-

(3,193)

Total other comprehensive income for

the period

-

-

(3,753)

-

560

217,058

-

-

32,865

246,730

594

40

634

247,364

Total comprehensive income for the period

-

-

(3,753)

-

560

217,058

-

-

29,127

242,992

607

40

647

243,639

Transactions with owners:

Contribution and distribution

Issue of new shares upon share swap

17

15,092

196,198

-

-

-

-

-

-

-

211,290

-

-

-

211,290

Recognition of equity-settled

share-based payments

18

-

-

-

-

-

-

82,505

10,094

-

92,599

-

-

-

92,599

Total transactions with owners

15,092

196,198

-

-

-

-

82,505

10,094

-

303,889

-

-

-

303,889

At 30 June 2020 (Unaudited)

305,680

196,198

(91,506)

5,682,380

-

(441,083)

107,225

10,094

948,011

6,716,999

6,355

(1,337)

5,018

6,722,017

30 Oshidori International Holdings Limited Interim Report 2020

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2020

Attributable to equity holders of the Company

Non-controlling interests

Investment

Investment

Investment

revaluation

revaluation

revaluation

reserve

Share

Share of

reserve

Share

Share

Translation

Contribution

reserve

(non-

option

Retained

other equity

(non-

capital

premium

reserve

surplus

(recycling)

recycling)

reserve

earnings

Total

components

recycling)

Total

Total

Note

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

At 1 January 2019 (Audited)

290,588

5,739,250

(78,522)

544

-

(856,748)

-

1,318,903

6,414,015

80,707

4,696

85,403

6,499,418

Loss for the period

-

-

-

-

-

-

-

(198,674)

(198,674)

(23)

-

(23)

(198,697)

Other comprehensive income (loss)

Items that will not be reclassified to profit or loss

Fair value change on Designated FVOCI

-

-

-

-

-

246,533

-

-

246,533

-

(4,977)

(4,977)

241,556

Fair value change on Designated FVOCI

reclassified to retained earnings upon disposal

-

-

-

-

-

(17,195)

-

17,195

-

-

-

-

-

-

-

-

-

-

229,338

-

17,195

246,533

-

(4,977)

(4,977)

241,556

Items that are reclassified or may be

reclassified subsequently to profit or loss

Fair value change on Mandatory FVOCI

-

-

-

-

196

-

-

-

196

-

-

-

196

Exchange differences arising on translation to

presentation currency

-

-

(5,152)

-

-

-

-

-

(5,152)

-

-

-

(5,152)

-

-

(5,152)

-

196

-

-

-

(4,956)

-

-

-

(4,956)

Total other comprehensive income (loss)

for the period

-

-

(5,152)

-

196

229,338

-

17,195

241,577

-

(4,977)

(4,977)

236,600

Total comprehensive income (loss)

for the period

-

-

(5,152)

-

196

229,338

-

(181,479)

42,903

(23)

(4,977)

(5,000)

37,903

Transactions with owners:

Contribution and distribution

Recognition of equity-settledshare-based

payments

18

-

-

-

-

-

-

24,720

-

24,720

-

-

-

24,720

Dividend paid

8

-

-

-

-

-

-

-

(87,176)

(87,176)

-

-

-

(87,176)

Acquisition of non-controlling interests in

a subsidiary

-

-

-

-

-

-

-

(24)

(24)

(74,976)

-

(74,976)

(75,000)

Transfer

-

(5,739,250)

-

5,681,836

-

-

-

57,414

-

-

-

-

-

Total transactions with owners

-

(5,739,250)

-

5,681,836

-

-

24,720

(29,786)

(62,480)

(74,976)

-

(74,976)

(137,456)

At 30 June 2019 (Unaudited)

290,588

-

(83,674)

5,682,380

196

(627,410)

24,720

1,107,638

6,394,438

5,708

(281)

5,427

6,399,865

Oshidori International Holdings Limited

31

Interim Report 2020

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

Six months ended

30 June 2020

30 June 2019

Note

HK$'000

HK$'000

(Unaudited)

(Unaudited)

NET CASH USED IN OPERATING ACTIVITIES

(56,213)

(500,836)

INVESTING ACTIVITIES

Deposits paid for acquisition of property and equipment

-

(1,290)

Dividend received

9,787

40,119

Interest received

4,710

15,527

Purchase of property and equipment

10

(15)

(333)

Proceeds from disposal of property and equipment

42,557

-

Purchase of Designated FVOCI

(1,364)

(737,368)

Proceeds from disposal of Designated FVOCI

219,910

40,604

Purchase of financial assets at FVPL

(250,905)

-

Purchases of Mandatory FVOCI

-

(19,159)

Proceeds from disposal of Mandatory FVOCI

18,419

-

Redemption of other investments

-

170,455

Proceeds from disposal of an associate

12

8,433

-

Settlement of promissory note receivable

in relation to disposal of an associate

-

50,000

Acquisition of an associate

-

(59,840)

Net cash flows arising from disposal of a subsidiary

423

-

NET CASH FROM (USED IN) INVESTING ACTIVITIES

51,955

(501,285)

FINANCING ACTIVITIES

Drawdown of loan payables

155,600

150,000

Repayment of loan payables

(150,000)

-

Lease payments

(6,064)

(4,480)

Dividend paid

8

-

(87,176)

Settlement of promissory note payable in relation to

acquisition of non-controlling interests in a subsidiary

-

(100,000)

Cash outflow arising from acquisition of non-controlling

interests in a subsidiary

-

(75,000)

NET CASH USED IN FINANCING ACTIVITIES

(464)

(116,656)

Net decrease in cash and cash equivalents

(4,722)

(1,118,777)

Cash and cash equivalents at beginning of

the reporting period

695,894

1,390,337

Effect on exchange rate changes on cash and

cash equivalents

(3,110)

(4,101)

Cash and cash equivalents at end of the reporting

period, represented by cash and bank balances

688,062

267,459

32 Oshidori International Holdings Limited Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

1. GENERAL INFORMATION

The Company is a public limited company incorporated in Bermuda as an exempted company and its shares are listed on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). The address of the registered office and principal place of business of the Company are disclosed in the corporate information section to the interim report.

The principal activities of the Company and its subsidiaries (together the "Group") are investment holdings, tactical and/or strategical investment, and the provisions of (i) securities brokerage services, (ii) margin financing services, (iii) placing and underwriting services, (iv) corporate finance advisory services, (v) investment advisory and asset management services, and (vi) credit and lending services.

Certain group entities are licensed under the Hong Kong Securities and Futures Ordinance with the following regulated activities:

Type 1: Dealing in securities

Type 2: Dealing in futures contracts

Type 4: Advising on securities

Type 6: Advising on corporate finance

Type 9: Asset management

A group entity obtained the license in dealing in futures contracts during the year ended 31 December 2019 but the application of such trading rights is still in progress during the six months ended 30 June 2020. The business of dealing in futures contracts has not yet been commenced during the period.

2. PRINCIPAL ACCOUNTING POLICIES

Basis of preparation

The condensed consolidated financial statements of the Group for the six months ended 30 June 2020 (the "Interim Financial Statements") are prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") and the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange. The Interim Financial Statements should be read in conjunction with the 2019 annual financial statements. The accounting policies adopted in preparing the Interim Financial Statements are consistent with those in the preparation of the Group's annual financial statements for the year ended 31 December 2019, except for the adoption of the new/revised standards of Hong Kong Financial Reporting Standards ("HKFRSs") which are relevant to the Group's operation and are effective for the Group's financial year beginning on 1 January 2020 as described below.

Oshidori International Holdings Limited

33

Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

2. PRINCIPAL ACCOUNTING POLICIES (Continued)

Adoption of new/revised HKFRSs

Amendments to HKASs 1 and 8

Definition of Material

Amendments to HKAS 39, HKFRSs 7 and 9

Interest Rate Benchmark Reform

Amendments to HKFRS 3

Definition of a Business

The adoption of these new and revised HKFRSs in the current period has no material impact on the Group's results and financial position for the current or prior periods and does not result in any significant change in accounting policies of the Group.

3. REVENUE AND SEGMENT INFORMATION

The Group determines its operating segment and measurement of segment profit based on the internal reports to executive directors, the Group's chief operating decision makers, for the purposes of resource allocation and performance assessment.

The Group's reportable and operating segments are as follows:

  1. the provision of securities brokerage services, margin financing services, placing and underwriting services, investment advisory services, assets management services and corporate financial advisory services ("financial services");
  2. tactical and/or strategical investment*; and
  3. credit and lending services*.
  • The chief operating decision makers have updated the name of its reportable and operating segments for clearer descriptive information about them.

34 Oshidori International Holdings Limited Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

3. REVENUE AND SEGMENT INFORMATION (Continued)

Segment revenue and results

The following is an analysis of the Group's revenue and results by reportable and operating segments.

For the six months ended 30 June 2020 (Unaudited)

Revenue

Revenue from financial services

Revenue from tactical and/or strategical investment Revenue from credit and lending services

Total revenue

Net unrealised fair value gain on financial assets at FVPL

Segment revenue

Segment profit (loss)

Unallocated other income

Net exchange gain

Unallocated other gains and losses

Share of results of associates

Unallocated finance costs

Central corporate expenses

Tactical and/

Credit and

Financial

or strategical

lending

services

investment

services

Total

HK$'000

HK$'000

HK$'000

HK$'000

13,886

-

-

13,886

-

13,939

-

13,939

-

-

40,565

40,565

13,886

13,939

40,565

68,390

-

203,405

-

203,405

13,886

217,344

40,565

271,795

3,917

184,244

(37,551)

150,610

2,436

1,168

2,824

(2,232)

(2,654)

(112,972)

Profit before taxation

39,180

Oshidori International Holdings Limited

35

Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

3. REVENUE AND SEGMENT INFORMATION (Continued)

Segment revenue and results (Continued)

For the six months ended 30 June 2019 (Unaudited)

Tactical and/

Credit and

Financial

or strategical

lending

services

investment

services

Total

HK$'000

HK$'000

HK$'000

HK$'000

Revenue

Revenue from financial services

30,614

-

-

30,614

Revenue from tactical and/or strategical investment

-

151,861

-

151,861

Revenue from credit and lending services

-

-

23,167

23,167

Total revenue

30,614

151,861

23,167

205,642

Net unrealised fair value loss on financial assets at FVPL

-

(243,008)

-

(243,008)

Segment revenue

30,614

(91,147)

23,167

(37,366)

Segment profit (loss)

12,499

(134,764)

(53,556)

(175,821)

Unallocated other income

12,054

Net exchange gain

21,211

Unallocated other gains and losses

325

Share of results of associates

(3,574)

Central corporate expenses

(55,143)

Loss before taxation

(200,948)

Segment revenue includes revenue from financial services, tactical and/or strategical investment and credit and lending services. In addition, the chief operating decision makers also consider net unrealised fair value gain (loss) on financial assets at FVPL as segment revenue.

Segment result represents the profit earned or loss incurred by each segment without allocation of certain other income, certain other gains and losses, share of results of associates, certain finance costs and central corporate expenses. This is the measure reported to the chief operating decision makers for the purposes of resource allocation and performance assessment.

36 Oshidori International Holdings Limited Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

3. REVENUE AND SEGMENT INFORMATION (Continued)

Segment assets and liabilities

The following is an analysis of the Group's assets and liabilities by reportable and operating segments.

At 30 June 2020 (Unaudited)

Tactical and/

Credit and

Financial

or strategical

lending

services

investment

services

Total

HK$'000

HK$'000

HK$'000

HK$'000

Segment assets

255,921

5,839,654

898,279

6,993,854

Unallocated property and equipment

189,785

Unallocated right-of-use assets

8,965

Interests in an associate

92

Unallocated other receivables

15,103

Income tax recoverable

16,692

Unallocated cash and cash equivalents

210,645

Consolidated assets

7,435,136

Segment liabilities

8,782

455,601

155,673

620,056

Unallocated other payables

14,198

Unallocated lease liabilities

9,112

Income tax payable

4,656

Deferred taxation

65,097

Consolidated liabilities

713,119

Oshidori International Holdings Limited

37

Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

3. REVENUE AND SEGMENT INFORMATION (Continued)

Segment assets and liabilities (Continued)

At 31 December 2019 (Audited)

Tactical and/

Credit and

Financial

or strategical

lending

services

investment

services

Total

HK$'000

HK$'000

HK$'000

HK$'000

Segment assets

232,148

5,303,204

640,232

6,175,584

Unallocated property and equipment

252,133

Unallocated right-of-use assets

13,798

Interests in associates

2,324

Unallocated other receivables

16,022

Income tax recoverable

17,050

Unallocated cash and cash equivalents

363,301

Consolidated assets

6,840,212

Segment liabilities

22,899

427,066

7,694

457,659

Unallocated other payables

16,103

Unallocated lease liabilities

13,900

Income tax payable

1,674

Loan payable

150,855

Deferred taxation

25,532

Consolidated liabilities

665,723

For the purposes of monitoring segment performances and allocating resources between segments:

  • all assets are allocated to operating and reportable segments other than certain property and equipment, certain right-of-use assets, interests in associates, certain other receivables, income tax recoverable and certain cash and cash equivalents.
  • all liabilities are allocated to operating and reportable segments other than certain other payables, certain lease liabilities, income tax payable, loan payables and deferred taxation.

38 Oshidori International Holdings Limited Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

4. OTHER INCOME

Six months ended

30 June 2020

30 June 2019

HK$'000

HK$'000

(Unaudited)

(Unaudited)

Interest income on:

- bank deposits

1,834

4,977

- promissory note receivable

-

4,833

- other investments

-

2,285

- others

2

43

1,836

12,138

Others

2,337

7,432

4,173

19,570

5. OTHER GAINS AND LOSSES

Six months ended

30 June 2020

30 June 2019

Note

HK$'000

HK$'000

(Unaudited)

(Unaudited)

Bad debts written off

(5,700)

-

Net exchange gain

1,168

21,211

Amortisation of deferred day-one gain

14(b)

4,810

-

Loss on disposal of property and equipment

(5,610)

-

Gain on disposal of a subsidiary

1

-

Gain on disposal of an associate

12

8,433

-

Gain on deemed disposal of an associate

-

325

3,102

21,536

Oshidori International Holdings Limited

39

Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

6.

PROFIT (LOSS) BEFORE TAXATION

This is stated after charging:

Six months ended

30 June 2020

30 June 2019

HK$'000

HK$'000

(Unaudited)

(Unaudited)

Finance costs

Interest on loan payables

2,492

855

Interest on margin financing

7,833

15,362

Interest on promissory note payable

-

6,230

Imputed interest on lease liabilities

255

206

10,580

22,653

Employee benefits expenses

(including directors' emoluments)

Salaries and other benefits

12,410

14,032

Retirement benefit scheme contributions

307

332

Share-based payment expenses

29,109

24,720

41,826

39,084

Other expenses

Business development expenses

22,854

25,943

Business registration fees, statutory fees and listing fees

891

1,534

Financial information charges

878

1,062

Handling and settlement expenses

276

724

Insurance

581

713

Investment transaction cost

97

3,209

Lease payments for short-term leases

1,338

1,254

Legal and professional fees

2,890

9,200

Marketing expenses

6,509

9,281

Other operating expenses

4,034

4,508

Share-based payment expenses to service providers

63,490

-

103,838

57,428

40 Oshidori International Holdings Limited Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

7. INCOME TAX (EXPENSE) CREDIT

The two-tiered profits tax rates regime have been implemented from 1 April 2018, under which, the profits tax rate for the first HK$2,000,000 assessable profits arising from Hong Kong of qualifying entities will be taxed at 8.25%, and assessable profits arising from Hong Kong above HK$2,000,000 will continue to be taxed at the rate of 16.5%. As only one of the subsidiaries in the Group is eligible to elect the two-tiered profits tax rates, profits of the remaining subsidiaries of the Group will continue to be taxed at a flat rate of 16.5%.

For the six months ended 30 June 2020 and 2019, Hong Kong Profits Tax is calculated in accordance with the two-tiered profits tax rates regime.

Six months ended

30 June 2020

30 June 2019

HK$'000

HK$'000

(Unaudited)

(Unaudited)

Current tax

Hong Kong Profits Tax

3,340

4,225

Deferred taxation

Origination and reversal of temporary difference

39,565

(6,476)

Income tax expense (credit)

42,905

(2,251)

8. DIVIDENDS

The directors of the Company do not recommend the payment of an interim dividend in respect of the six months ended 30 June 2020 and a final dividend in respect of the year ended 31 December 2019 (six months ended 30 June 2019: approved and paid a final dividend in respect of the year ended 31 December 2018 of HK$0.015 per share amounting to approximately HK$87,176,000 and declared an interim dividend in respect of the six months ended 30 June 2019 of HK$0.005 per share amounting to approximately HK$29,059,000).

Oshidori International Holdings Limited

41

Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

9. LOSS PER SHARE

The calculation of the basic and diluted loss per share is based on loss attributable to the equity holders of the Company and the weighted average number of ordinary shares in issue during the period as follows:

Loss

Six months ended

30 June 2020

30 June 2019

HK$'000

HK$'000

(Unaudited)

(Unaudited)

Loss for the period attributable to equity shareholders

of the Company, for the purpose of basic and

diluted loss per share

(3,738)

(198,674)

Number of shares

Six months ended

30 June 2020

30 June 2019

(Unaudited)

(Unaudited)

Weighted average number of ordinary shares,

for the purpose of basic and diluted loss per share

5,902,830,646

5,811,766,282

Note:

For the six months ended 30 June 2020, the outstanding share options and unvested awarded shares of the

Company have not been included in the computation of diluted loss per share as they are anti-dilutive.

For the six months ended 30 June 2019, the outstanding share options of the Company had not been included in the computation of diluted loss per share as they are anti-dilutive.

10. PROPERTY AND EQUIPMENT

During the six months ended 30 June 2020, the Group had acquired and disposed of property and equipment of approximately HK$15,000 and HK$48,167,000 respectively (six months ended 30 June 2019: acquired property and equipment of approximately HK$333,000).

42 Oshidori International Holdings Limited Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

11. FINANCIAL ASSETS AT FVOCI

30 June

31 December

2020

2019

Note

HK$'000

HK$'000

(Unaudited)

(Audited)

Designated FVOCI

Equity securities - listed

Listed in Hong Kong

2,416,449

2,096,293

Listed in the United States

24,865

45,855

2,441,314

2,142,148

Equity securities - unlisted

(a)

780,071

846,686

3,221,385

2,988,834

Mandatory FVOCI

Debt securities listed in Singapore

-

18,599

3,221,385

3,007,433

Note:

  1. As at 30 June 2020, the amount represented the investments in unlisted equity securities issued by private entities. Included in the unlisted investments as at 30 June 2020, the Group held approximately 2.95% (31 December 2019: 2.95%) of the issued shares of Co-Lead Holdings Limited ("Co-Lead") in the amount of HK$90,465,000 (31 December 2019: HK$85,398,000) and approximately 11.68% (31 December 2019: 11.68%) of the issued shares of Satinu Resources Group Ltd. ("Satinu") in the amount of HK$539,408,000 (31 December 2019: HK$604,705,000), which are companies incorporated in the British Virgin Islands. Co-Lead and its subsidiaries principally engage in securities trading and investment holding business in Hong Kong and Satinu and its subsidiaries principally engage in integrated financial services, securities brokerage services, money lending, securities and other direct investments in Hong Kong.

Oshidori International Holdings Limited

43

Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

12. INTERESTS IN ASSOCIATES

30 June

31 December

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Unlisted shares

Shares of net assets

-

2,205

Goodwill

92

119

92

2,324

As at 31 December 2019, interests in associates represented the Group's interests in 25% of the issued ordinary share capital of Eternal Billion Holding Group Limited and Topwish Holdings Limited.

On 12 June 2020, the Group entered into a sale and purchase agreement with an independent third party to dispose of 25% equity interests in Topwish Holdings Limited at a consideration of HK$8,433,000 which was payable in cash, the transaction resulted in a gain on disposal of HK$8,433,000 recognised during the six months ended 30 June 2020. The disposal was completed on the same day.

44 Oshidori International Holdings Limited Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

13. TRADE, LOAN AND OTHER RECEIVABLES

30 June

31 December

2020

2019

Note

HK$'000

HK$'000

(Unaudited)

(Audited)

Trade receivables

Trade receivables arising from the business of

securities brokerage and margin financing

- cash clients

85

102

- margin clients

(b)

130,591

138,873

- Hong Kong Securities Clearing

Company Limited ("HKSCC")

(c)

336

598

(a)

131,012

139,573

Trade receivable arising from the provision of

corporate finance advisory services

320

340

131,332

139,913

Loan receivables

Loan and interest receivables

- from independent third parties

565,012

475,053

- from a related company

132,370

151,414

697,382

626,467

Less: Loss allowance

(162,587)

(102,376)

(d)

534,795

524,091

Less: Non-current portion

(56,767)

(210,653)

Current portion

478,028

313,438

Other receivables

Deposits with securities brokers

(e)

3,299

886

Other receivables, deposits and prepayments

32,143

19,306

35,442

20,192

644,802

473,543

Oshidori International Holdings Limited

45

Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

13. TRADE, LOAN AND OTHER RECEIVABLES (Continued)

Notes:

  1. No aging analysis by invoice date is disclosed as in the opinion of the directors of the Company, the aging analysis does not give additional value in view of the nature of securities brokerage and margin financing business.
  2. Trade receivables from margin clients are repayable on demand and bear interest ranging from 8% to 30% (31 December 2019: 8% to 30%) per annum at the end of the reporting period. The loans are secured by pledged marketable securities with a total fair value of approximately HK$412,978,000 (31 December 2019: HK$434,135,000). The Group is permitted to sell or repledge the marketable securities if the customers default on the payment when requested by the Group.
  3. The settlement terms of trade receivables arising from the provision of securities brokerage business with HKSCC are usually two days after trade date.
  4. At the end of the reporting period, loan receivables include both fixed and variable rate loan advances to independent third parties of approximately HK$252,141,000 (31 December 2019: HK$160,916,000) which are secured by the pledge of certain collaterals and personal/corporate guarantees, bearing interest ranging from 3% to 48% (31 December 2019: 3% to 48%) per annum and have contractual loan period between 6 months and 30 years (31 December 2019: between 6 months and 30 years). The remaining unsecured balance includes (i) a fixed rate loan advance to a company, of which Mr. Wong Yat Fai was a common director, of approximately HK$132,370,000 (31 December 2019: HK$151,414,000) which is bearing interest of 8% (31 December 2019: 8%) per annum and has contractual loan period of 18 months (31 December 2019: 18 months); and (ii) both fixed and variable rate loan advances to independent third parties of approximately HK$150,284,000 (31 December 2019: HK$211,761,000) which are bearing interest ranging from 5% to 36% (31 December 2019: 5% to 36%) per annum. The contractual loan period for majority of the unsecured loan receivables from third parties is between 2 months and 5 years (31 December 2019: between 3 months and 5 years).
    The amount granted to individuals and corporates depends on management's assessment of credit risk of the customers by evaluation on background check (such as their profession, salaries and current working position for individual borrowers and their industry and financial position for corporate borrowers) and repayment abilities. During the six months ended 30 June 2020, the Group recognised a net impairment loss in respect of loan receivables of approximately HK$60,211,000 (six months ended 30 June 2019: HK$70,085,000).
    Aging analysis of loan receivables (net of loss allowance) prepared based on contractual due date is as follows:

30 June

31 December

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Not yet past due

534,740

495,966

Less than 1 month past due

-

2,940

4 to 6 months past due

-

4,059

7 to 12 months past due

-

21,071

Over 12 months past due

55

55

At the end of the reporting period

534,795

524,091

As at 30 June 2020, the Group has concentration of credit risk as 25% and 87% (31 December 2019: 29% and 66%) of the total loans was due from the Group's largest borrower and the five largest borrowers respectively, within the credit and lending services segment. Management of the Group monitors the exposure from time to time to assess their recoverability.

  1. Deposits with securities brokers represented the funds deposited with the brokers' houses for securities trading purpose.

46 Oshidori International Holdings Limited Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

14. FINANCIAL ASSETS AT FVPL

30 June

31 December

2020

2019

Note

HK$'000

HK$'000

(Unaudited)

(Audited)

Mandatorily measured at FVPL:

- Listed shares in Hong Kong

2,206,479

2,022,155

- Listed shares in the United States

2,539

-

- Unlisted investment funds

(a)

329,317

77,512

- Unlisted callable fixed coupon notes

23,223

-

- Unlisted convertible notes

(b)

24,681

32,380

2,586,239

2,132,047

Analysed as:

Non-current

250,852

-

Current

2,335,387

2,132,047

2,586,239

2,132,047

Notes:

  1. The unlisted investment funds are mainly subscribed from independent financial institutions. The portfolios of these funds mainly comprise securities listed in Hong Kong and overseas and unlisted debt and equity securities in Asia-Pacific region. The funds are redeemable at the discretion of the Group from time to time and the intention of holding them was for short-term investment, except for the unlisted investment funds of approximately HK$250,852,000 which was held for long-term investment.
  2. The unlisted convertible notes were subscribed from an independent third party at a consideration of HK$40,500,000 on 18 June 2019. The convertible notes are bearing coupon interest rate of 8% per annum in a principal amount of HK$81,000,000 which will mature on 31 December 2020. Based on conversion price of HK$0.05 per share, the Group could convert into a maximum of 1,620,000,000 ordinary shares of the issuer.
    At the date of purchase, the convertible notes was recognised at fair value of HK$78,880,000 which was determined based on valuation carried out by independent professional valuer. The difference between the transaction price and fair value of the convertible notes at purchase date of HK$38,380,000 was adjusted to deferred day-one gain. Subsequently, the deferred day-one gain is amortised over the term of the convertible notes on straight line basis.

Oshidori International Holdings Limited

47

Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

14. FINANCIAL ASSETS AT FVPL (Continued)

Notes: (Continued)

  1. (Continued)
    The movement of the investment in unlisted convertible notes is as follows:

At date of purchase Fair value change Amortisation Derecognition upon conversion Derecognition upon disposal

At 31 December 2019 (Audited) Fair value change Amortisation (Note 5)

At 30 June 2020 (Unaudited)

Deferred

Fair value

day-one gain

Total

HK$'000

HK$'000

HK$'000

78,880

(38,380)

40,500

43,460

-

43,460

-

10,692

10,692

(49,017)

11,122

(37,895)

(31,324)

6,947

(24,377)

41,999

(9,619)

32,380

(12,509)

-

(12,509)

-

4,810

4,810

29,490

(4,809)

24,681

During the six months ended 30 June 2020, interest income from the convertible notes amounting to approximately HK$1,676,000 (six months ended 30 June 2019: Nil) was settled by scrip from the note issuer. The fair value of the shares at the date of distribution of interest was approximately HK$1,676,000 which is determined by the quoted market price. The Group irrevocably designated the shares received as Designated FVOCI at the date of distribution of interest.

The fair value of the unlisted convertible notes is determined based on valuation carried out by independent professional valuer at the end of reporting period.

48 Oshidori International Holdings Limited Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

15. TRADE AND OTHER PAYABLES

30 June

31 December

2020

2019

Note

HK$'000

HK$'000

(Unaudited)

(Audited)

Trade payables

Trade payables arising from the business of

securities brokerage

- cash clients

515

1,711

- margin clients

8,168

20,754

(a)

8,683

22,465

Secured margin loans from securities brokers

(b)

448,173

415,516

456,856

437,981

Other payables

Other payables and accrued charges

19,829

32,825

476,685

470,806

Notes:

  1. Trade payables to cash and margin clients are repayable on demand. In the opinion of the directors of the Company, no aging analysis is disclosed as the aging analysis does not give additional value.
  2. For secured margin loans from securities brokers, the loans are repayable on demand (except certain balances arising from trades pending settlement or margin deposits) and are interest-bearing at the prevailing market interest rate (31 December 2019: a range from 2.97% to 7.236%) per annum. The total market value of equity securities (31 December 2019: debt and equity securities) pledged as collateral in respect of the loans was approximately HK$2,808,712,000 (31 December 2019: HK$2,318,260,000) as at 30 June 2020.

16. LOAN PAYABLE

The loan from an independent third party as at 30 June 2020 is unsecured, interest bearing of 8% (31 December 2019: 6.5%) per annum and repayable within 6 months (31 December 2019: 1 year) from drawdown date.

Oshidori International Holdings Limited

49

Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

17. SHARE CAPITAL

Number

Share

of shares

capital

Note

HK$'000

Ordinary shares of HK$0.05 (31 December 2019:

HK$0.05) each

Authorised:

At 1 January 2019, 31 December 2019,

1 January 2020 and 30 June 2020

20,000,000,000

1,000,000

Issued and fully paid:

At 1 January 2019, 31 December 2019 and

1 January 2020

5,811,766,282

290,588

Issue of shares on:

- share swap in April 2020

(a)

187,500,000

9,375

- share swap in May 2020

(b)

114,342,857

5,717

At 30 June 2020

6,113,609,139

305,680

Notes:

  1. Pursuant to the share swap agreement entered into with Hao Tian International Construction Investment Group Limited ("Hao Tian"), a company listed on the Stock Exchange, on 2 April 2020, Hao Tian subscribed for, and the Company issued and allotted, 187,500,000 shares at a consideration of HK$131,250,000 under the Company's general mandate, representing approximately 3.13% of the enlarged issued share capital of the Company while the Company subscribed for, and Hao Tian issued and allotted, 625,000,000 shares of Hao Tian under the general mandate of Hao Tian, representing approximately 12.37% of the enlarged issued share capital of Hao Tian. The share swap was completed on 28 April 2020. Approximately HK$85,625,000 has been recorded as Designated FVOCI at the end of the reporting period.
  2. Pursuant to the share swap agreement entered into with Imagi International Holdings Limited ("Imagi"), a company listed on the Stock Exchange, on 6 April 2020, Imagi subscribed for, and the Company issued and allotted, 114,342,857 shares at a consideration of HK$80,040,000 under the Company's general mandate, representing approximately 1.93% of the enlarged issued share capital of the Company while the Company subscribed for, and Imagi issued and allotted, 138,000,000 shares of Imagi under the general mandate of Imagi, representing approximately 16.63% of the enlarged issued share capital of Imagi. The share swap was completed on 22 May 2020. Approximately HK$99,360,000 has been recorded as Designated FVOCI at the end of the reporting period.

50 Oshidori International Holdings Limited Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

18. SHARE OPTION AND SHARE AWARD SCHEMES

2012 Share Option Scheme

On 17 May 2012, the Company adopted a share option scheme (the "2012 Share Option Scheme") which has a life of ten years from 17 May 2012. Under the 2012 Share Option Scheme, the Board of Directors may, at its discretion, offer the eligible persons (including any executive director, non-executive director and independent non-executive director) of the Company or its subsidiaries options to subscribe for shares in the Company subject to the terms and conditions stipulated therein. The maximum number of shares which may be issued upon exercise of all options to be granted under the 2012 Share Option Scheme, which shall not in aggregate exceed 10% of the total number of shares in issue at the date of approval of the refreshment of the scheme limit (i.e. 5 June 2020). The total number of shares issued and to be issued upon exercise of the options granted to each eligible person in any 12-month period shall not exceed 1% of the total number of shares in issue.

On 22 January 2020, the Company granted 120,000,000 share options with no vesting conditions to 10 eligible persons of the Group under the 2012 Share Option Scheme (of which 100,000,000 and 20,000,000 share options were granted to 9 independent eligible persons and an executive director, Ms. Wong Wan Men Margaret respectively) at an exercise price of HK$0.865 per share. The validity period of the share options is 10 years from the date of grant (i.e. 22 January 2020 to 21 January 2030).

On 9 June 2020, the Company further granted 60,000,000 share options with no vesting conditions to a non-executive director, Mr. Alejandro Yemenidjian, under the 2012 Share Option Scheme at an exercise price of HK$0.840 per share. The validity period of the share options is 10 years from the date of grant (i.e. 9 June 2020 to 8 June 2030).

During the six months ended 30 June 2020, the Group recognised approximately HK$82,505,000 (six months ended 30 June 2019: HK$24,720,000), with reference to the fair value of the above share options determined at the date of grant using the binomial model, as the equity-settledshare-based payment expenses, with the corresponding amounts being credited to share option reserve.

No share options were exercised during the six months ended 30 June 2020. The following tables disclose details of the Company's share options held by eligible persons and movement in such holdings during the six months ended 30 June 2020:

Number of the share options

Outstanding

Granted

Outstanding

Exercisable

at 1 January

during

at 30 June

at 30 June

2012 Share Option Scheme

2020

the period

2020

2020

Directors of the Company

-

80,000,000

80,000,000

80,000,000

Employees

72,000,000

-

72,000,000

72,000,000

Other participants

-

100,000,000

100,000,000

100,000,000

72,000,000

180,000,000

252,000,000

252,000,000

Weighted average exercise price

HK$0.82

HK$0.86

HK$0.85

HK$0.85

Oshidori International Holdings Limited

51

Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

18. SHARE OPTION AND SHARE AWARD SCHEMES (Continued)

2019 Share Award Scheme

On 19 December 2019, the Company adopted a share award scheme (the "2019 Share Award Scheme") which has a life of ten years from 19 December 2019. Under the 2019 Share Award Scheme, the Board of Directors may, at its discretion, issue awarded shares to the eligible persons (including any executive director, non-executive director and independent non-executive director) of the Company or its subsidiaries subject to the terms and conditions stipulated therein. The maximum number of awarded shares which can be issued under the 2019 Share Award Scheme, shall not in aggregate exceed 10% of the issued share capital of the Company as at the adoption date of 2019 Share Award Scheme (i.e. 19 December 2019). Subject to the aforesaid scheme limit, the maximum number of awarded shares which may be awarded in any financial year shall not be more than 3% of the issued share capital of the Company. The maximum aggregate number of the shares which may be awarded to each eligible person shall not exceed 1% of the issued share capital of the Company from time to time.

On 22 January 2020, the Company granted 95,000,000 awarded shares to 10 eligible persons under the 2019 Share Award Scheme (of which 85,000,000 and 10,000,000 awarded shares were awarded to 9 independent eligible persons and an executive director, Ms. Wong Wan Men Margaret, respectively) by way of issue and allotment of new shares pursuant to the specific mandate. All the awarded shares shall be vested on the fourth anniversary of the date of grant (i.e. 22 January 2024), subject to the grantees remaining as eligible persons on 22 January 2024 and all of the other conditions being satisfied.

The fair value of the shares granted amounting to HK$80,750,000, which is determined based on the share price of the Company at the date of grant of HK$0.85 per share, shall be recognised as share-based payment expenses over 4 years from the date of grant on a straight line basis. During the six months ended 30 June 2020, the Group recognised approximately HK$10,094,000 (six months ended 30 June 2019: Nil) as the equity-settledshare-based payment expenses, with the corresponding amounts being credited to share award reserve.

Movements of the awarded shares granted under the 2019 Share Award Scheme are as follows:

Number of awarded shares

Granted

Unvested

At 1 January

during

at 30 June

2019 Share Award Scheme

2020

the period

2020

Director of the Company

-

10,000,000

10,000,000

Other participants

-

85,000,000

85,000,000

-

95,000,000

95,000,000

52 Oshidori International Holdings Limited Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

19. FAIR VALUE MEASUREMENTS

The following presents the assets and liabilities measured at fair value or required to disclose their fair value in these financial statements on a recurring basis across the three levels of the fair value hierarchy defined in HKFRS 13, Fair Value Measurement, with the fair value measurement categorised in its entirety based on the lowest level input that is significant to the entire measurement. The levels of inputs are defined as follows:

  • Level 1 (highest level): quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date;
  • Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;
  • Level 3 (lowest level): unobservable inputs for the asset or liability.
  1. Fair value of the Group's financial assets that are measured at fair value on a recurring basis

Fair value as at

30 June 2020

31 December 2019

Fair value

Valuation techniques

Financial assets

(Unaudited)

(Audited)

hierarchy

and key inputs

1)

Investments in listed equity

Listed equity securities in:

Listed equity securities in:

Level 1

Quoted bid prices in

securities classified as

- Hong Kong

- Hong Kong

an active market

financial assets at FVPL

HK$2,206,479,000

HK$2,022,155,000

- United States

HK$2,539,000

2)

Investments in unlisted

HK$329,317,000

HK$77,512,000

Level 2

Derived from quoted

investment funds classified

prices from pricing

as financial assets at FVPL

services based on net

asset value of the funds

3)

Investments in unlisted

HK$23,223,000

-

Level 2

Quoted price from

callable fixed coupon notes

broker

classified as financial assets

at FVPL

4)

Investments in unlisted

HK$24,681,000

HK$32,380,000

Level 3

Discounted cash flow

convertible notes classified

method and binomial

as financial assets at FVPL

tree model, based on

spot price, volatility and

discount rate

5)

Investments in listed equity

Listed equity securities in:

Listed equity securities in:

Level 1

Quoted bid prices in an

securities classified as

- Hong Kong

- Hong Kong

active market

Designated FVOCI

HK$2,416,449,000

HK$2,096,293,000

- United States

- United States

HK$24,865,000

HK$45,855,000

6)

Investments in unlisted

HK$58,097,000

HK$58,315,000

Level 2

Determined by the

equity securities classified

management by

as Designated FVOCI

reference to available

market information

adjusted to reflect

liquidity of the

investments

Oshidori International Holdings Limited

53

Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

19. FAIR VALUE MEASUREMENTS (Continued)

  1. Fair value of the Group's financial assets that are measured at fair value on a recurring basis (Continued)

30 June 2020

Fair value as at

Fair value

Valuation techniques

31 December 2019

Financial assets

(Unaudited)

(Audited)

hierarchy

and key inputs

7)

Investments in unlisted

HK$683,074,000

HK$749,471,000

Level 3

Derived from

equity securities classified

unobservable inputs

as Designated FVOCI

for the asset or liability

by the management

(31 December 2019: an

independent professional

valuer)

8)

Investment in unlisted equity

HK$38,900,000

HK$38,900,000

Level 2

Estimated by external

securities classified as

fund manager by

Designated FVOCI

reference to recent

comparable transactions

9)

Investments in listed debt

-

Listed debt securities in:

Level 1

Quoted bid prices in an

securities classified as

- Singapore

active market

Mandatory FVOCI

    HK$18,599,000

There were neither transfers between Level 1 and Level 2 fair value measurement nor transfers into and out of Level 3 fair value measurement during both periods.

Note:

The fair value of the unlisted equity securities without an active market classified in Level 3 was determined by the management. The fair value of the unlisted equity securities is estimated by a number of significant unobservable inputs including the expected assets-based multiples (e.g. enterprise value to assets), expected net assets-based multiples and adjustment for a lack of marketability associated with the investment.

  1. Fair value of the Group's financial assets and financial liabilities that are not measured at fair value on a recurring basis

The management of the Group estimates the fair value of its financial assets and financial liabilities measured at amortised cost using the discounted cash flows analysis. The management of the Group considers that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated statement of financial position approximate their fair values.

Valuation process

The management of the Group is responsible to determine the appropriate valuation techniques and inputs for fair value measurements.

In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Group will establish the appropriate valuation techniques and inputs to the model. Management reports to executive directors semi-annually to explain the cause of fluctuations in the fair value of the assets.

Information about the valuation techniques and inputs used in determining the fair value of various assets are disclosed above.

54 Oshidori International Holdings Limited Interim Report 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

20. RELATED PARTY TRANSACTIONS

During the period, the Group had following transactions with related parties:

Six months ended

30 June 2020

30 June 2019

Related party relationship

Nature of transaction

HK$'000

HK$'000

(Unaudited)

(Unaudited)

A related company, of which

Interest income from loan

Mr. Wong Yat Fai was

receivables

5,956

a common director

-

The key management personnel are the directors of the Company. During the six months ended 30 June 2020, the emoluments of key management personnel were HK$32,680,000 (six months ended 30 June 2019: HK$3,652,000).

Except for those disclosed elsewhere in these condensed consolidated financial statements, the Group does not have any significant related party balances as at the end of the reporting periods.

21. EVENT AFTER THE REPORTING PERIOD

In addition to the events disclosed elsewhere in these condensed consolidated financial statements, the Group had the following subsequent events:

  1. Subsequent to the period ended 30 June 2020, certain loan and interest receivables of approximately HK$168,715,000 with accumulated loss allowance of approximately HK$148,252,000 have been recovered by means of participation by an independent third party at a consideration of HK$155,000,000 and repayment from the borrower of approximately HK$12,467,000. A gain of approximately HK$146,930,000 will be recognised in the profit or loss upon the subsequent recoveries.
  2. On 4 August 2020, First Avenue Limited ("First Avenue"), a wholly owned subsidiary of the Company, and Planetree (Cayman) Capital Limited ("Planetree Capital") (formerly known as Liberty Capital Limited) entered into a repurchase agreement pursuant to which both parties conditionally agreed Planetree Capital to repurchase all the shares, 440 shares, held by First Avenue at a consideration of HK$51,480,000 payable by cash upon completion. As at the date of repurchase agreement, the Group held 440 shares in Planetree Capital, representing approximately 9.8% shareholding therein which is classified as Designated FVOCI. The repurchase was completed on the same date. Upon completion of the repurchase on 4 August 2020, the Group no longer has any interests in Planetree Capital.
  3. On 12 August 2020, Uptown WW Value Investments Limited, a wholly owned subsidiary of the Company, and High Rhine Limited, an independent third party, entered into a sale and purchase agreement pursuant to which High Rhine Limited has conditionally agreed to acquire and Uptown WW Value Investments Limited has conditionally agreed to sell 100,000,000 ordinary shares of Satinu, representing approximately 8.06% of the issued share capital of Satinu at a consideration of HK$650,000,000 which is payable in cash. On the same date, a non-refundable deposit of HK$200,000,000 was received by the Group and the remaining balance of HK$450,000,000 is payable to the Group on or before 31 December 2020. The Board of Directors intends to apply the sale proceeds from the disposal towards development of the Group's comprehensive financial services. Details of the disposal were set out in the Company's announcement dated 12 August 2020. As at the date of sale and purchase agreement, the Group held approximately 11.68% of the issued share capital of Satinu which is classified as Designated FVOCI. Upon completion of the disposal, the Group's equity interests in Satinu will reduce from approximately 11.68% to approximately 3.62%. The transaction is not yet completed at the date of approving the Interim Financial Statements.

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Enerchina Holdings Limited published this content on 23 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 September 2020 08:39:02 UTC